Shareholders to oppose drug giant's 'golden farewell'
Drugs giant GlaxoSmithKline is heading for another face-off with shareholders at its annual general meeting next month over a “golden farewell” package for chief executive Jean-Pierre Garnier.
Groups representing shareholders have already spoken out against the concept of two-year rolling contracts for directors, of the kind that will entitle Mr Garnier to around £5m (€7.2m) severance pay were he to leave the company.
Both the National Association of Pension Funds and Association of British Insurers are likely to oppose his contract at the meeting on May 19.
Shareholder groups have argued that two-year rolling deals can lead to excessive payments for failures with executives still benefiting from huge pay-outs even if they are forced to leave their posts for poor performances.
Glaxo was forced to pull proposals to award Mr Garnier a remuneration package of at least £11m (€15.87m) after shareholders objected last November.
Last year he received £2.45m (€3.5m), including his bonus, and was awarded shares worth £1.7m (€2.45m) with options to buy a further 900,000 later.
Under his current contract, Mr Garnier would be entitled to two years’ salary and bonus on termination of his contract. He would also continue to benefit from the long-term incentive plans for a year after he left Glaxo.
Accountancy firm Deloitte & Touche has been hired by Glaxo to review all aspects of its remuneration policy.
The company has argued it must keep pay in line with US pharmaceutical giants to attract and retain the best corporate talent.
