UK - GlaxoSmithKline, the pharmaceuticals giant, has suffered one of the biggest shareholder revolts in British corporate history following the rejection of a 'golden parachute' deal for chief executive Jean-Pierre Garnier.
The controversial deal, worth an estimated £22m, was defeated by shareholders following an annual general meeting yesterday, but only by a slim margin.
Some 50.72% voted against the pay package, while 49.28% were in favour. Abstentions were not disclosed.
The result will force GSK to rethink its remuneration policies. The company has already brought in consultants Deloitte & Touche to a review its pay structure.
GSK's chairman, Sir Christopher Hogg, said: The Board takes this result very seriously.
“The major reason for this negative vote has been the fact that there are elements of our senior level remuneration package which do not accord with what is regarded as best practice by shareholders.”
The National Association of Pension Funds said that the move should signal a new wave of shareholder activism to boardrooms across the UK.
Andy Fleming, spokesman for the NAPF, said: “It’s a welcome indication of growing shareholder activism.
“We’re pleased that the company has recognised the strength of feeling here and has undertaken to do something about it. We hope that other companies will note that when it comes to devising their own corporate governance approach. It’s just a case of shareholders being prepared to draw a line in the sand.”
Trade union leaders also hailed the defeat as a victory for shareholders.
Brendan Barber, TUC general secretary-elect, said: “This is an extremely significant result that will have repercussions way beyond GlaxoSmithKline.
“Britain’s boardrooms are now on notice but there is no guarantee they will act unless the government changes the law to ban payments for failure.”
The Association of British Insurers, another staunch critic of GSK’s remuneration policies in the past, said of the vote: Shareholders have given a clear signal that the severance package available to Mr Garnier is far too generous.
“The outcome of the vote means that the principles of good practice have been upheld. In particular it shows that shareholders will not tolerate arrangements that have potential to reward executives for failure.”
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