Glaxo investors furious at Garnier pay rise plan
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Your support makes all the difference.GlaxoSmithKline is facing a showdown with shareholders this week as it steps up its campaign to boost the pay package of its chief executive Jean-Pierre Garnier.
The looming pay battle comes after weekend reports suggested Glaxo is a front runner to buy the pharmaceutical division of German chemicals company Bayer in a deal worth €8bn (£5bn). Glaxo declined to comment yesterday on whether or not it may be interested in making a bid.
Mr Garnier, 54, is already one of the UK's top paid executives, earning £3.5m in total pay and bonuses, but Glaxo believes this is not enough to hold on to top flight management talent.
The proposals for increasing Mr Garnier's salary come at a time when shares in Glaxo have slumped more than 40 per cent this year and are languishing at seven-year lows.
Mr Garnier has also exercised £2.15m of share options this year. His pension, which is not part of this round of negotiations, has already been topped up by Glaxo to give him £1m a year when he retires.
Mr Garnier's total pay package is reckoned to be in the region of £7m, making him Britain's fourth highest paid director. He is also in line to collect a bonus equal to his last year's salary if he stays until 15 February 2005 for integrating GlaxoWellcome and SmithKline.
"We design remuneration packages that allow us to recruit, retain and motivate top talent. It is a competitive market and we want long-term incentive plans which align," a spokesman for the company said. He said Mr Garnier's basic pay was lower than many of his global pharmaceutical counterparts. Henry McKinnell of Pfizer earned $4.3m in 2001 before share options, and Sidney Taurel, chairman and chief executive of Eli Lily, earned $4.3m before share options. This compares with $4m for Mr Garnier on a similar basis.
The initial reaction from shareholders, however, who have already received the glossy brochure entitled "Performance with Integrity; How we reward our leaders" outlining the proposals to bump up Mr Garnier's pay, show he faces a tough task in convincing them he is worth an increased salary and extra share options. The company will have to persuade shareholders ahead of GlaxoSmmithKline's annual general meeting in May.
Analysts have raised concerns about the future growth prospects of the company as many of its drug patents expired this year. Bayer, the company that invented Aspirin, had sales of €4.5bn last year and would give Glaxo several new product lines, such as the anthrax drug Cipro.
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