GlaxoSmithKline: Why cut in new CEO's pay isn't necessarily something to celebrate

Pharma giant GlaxoSmithKline woke this morning to a new chief executive formally taking the reins, with the official retirement of Andrew Witty.

As has been much discussed, his successor could earn up to 25 per cent less than he did, and you might expect someone who regularly highlights the grotesque nature of CEO pay in this country to be pleased with that.

Yet, there is something ever so slightly discomforting about the fact that this seemingly sensible move is being imposed upon the company’s first female boss.

It’s not that Emma Walmsley is exactly going hungry. She will make a frankly absurd amount of money, with a starting salary of £1m, some 10 per cent less than Mr Witty’s basic, representing just one part of what is still a bloated package.

The total could reach £8.8m, by dint of the bonus schemes and sweeties companies hand to their CEOs on top of their basic pay. However, Mr Witty’s package was worth up to £11.6m.

So if she ticks all the boxes, or if the remuneration committee takes some of the boxes away (as too often happens), Ms Walmsley stands to make 25 per cent less than he could have.

The reasons for that look eminently justifiable. GSK’s big institutional investors have been voicing unhappiness about the largesse bestowed by the company on its executives, and they have every right to do that. They should do it more commonly and with more companies in which they invest on our behalf.

GSK has said it gave “careful and detailed consideration” to what they had to say. It also took note of the fact that this is Ms Walmsley's first stint as a group CEO. Nor does she have the pharma experience that Mr Witty had (she had previously been the boss of the consumer healthcare division, a role she was appointed to in 2010).

However, despite all that, a question has to be asked: Would the same reductions have been imposed had Ms Walmsley been Mr Walmsley and had the same experience (or lack of).

If you think I’m splitting hairs here, consider that the gender pay gap in Britain currently stands at 18 per cent according to official figures. However, the divide widens the higher up the salary scale that you go. Back in 2015, the TUC found that it stood at 55 per cent among the top 2 per cent of earners. Among the top 5 per cent it was 45 per cent.

That is quite wrong. You shouldn’t receive less than the going rate for a job based on your gender (or based on your ethnicity, sexuality or any disability you might you have for that matter). It's a quesiton of fairness, and of justice.

It is for that reason that I raise the issue of Ms Walmsley’s package. The fact that she could earn £8.8m, if she hits on the usual nebulous set of targets, is ridiculous. But it is just as ridiculous that women at the top so commonly earn an awful lot less than their male colleagues for doing the same jobs.

I have no doubt GSK that would vehemently deny that Ms Walmsley’s gender played any part in its decision making. The company should actually be congratulated for joining the minority of FTSE 100 outfits with a female boss. But the message it could be sending about pay for women at the top, given the gap that exists between male and female earnings, is something we should think about all the same.