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Last Updated: Monday, 15 December, 2003, 09:39 GMT
Glaxo bows to pressure over pay
Jean-Pierre Garnier
GSK boss Jean-Pierre Garnier has come under fire from shareholders
Drug giant GlaxoSmithKline has bowed to shareholder pressure and unveiled new pay and reward deals for executives.

The UK group has scrapped two-year rolling contracts for executive directors, which had sparked anger from investors over so-called "fat cat" pay.

GSK said it planned to replace the executive contracts with a single year deal without compensation.

The move comes after shareholders voted against a multi-million pay and rewards package for bosses earlier in the year.

Clear policy

The unprecedented revolt was highlighted by a controversial "golden parachute" pay deal for chief executive Jean-Pierre Garnier, which caused heated debate at the company's annual general meeting in May.

GSK said it had held talks with major shareholders, the Association of British Insurers and the National Association of Pension Funds before arranging its revised pay arrangements.

Chairman Sir Christopher Hogg said: "The new policy is clear and unambiguous and will be operated consistently."

He added: "No other pharmaceutical company has adopted such demanding performance criteria."

Salaries review

The National Association of Pension Funds said it welcomed GSK's decision, describing the move to reduce executive contracts as "good news".

The group said it also backed GSK's review of salaries, which could see Mr Garnier earn up to $10m (5.7m).

A spokesman said: "We understand that there is a global market out there and so you may have to pay global prices to get the best, but it has to be linked to performance."

GSK said it had simplified the terms of Mr Garnier's pension into an annual contribution of 15% of his salary and bonus.

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