UK - GlaxoSmithKline has officially "postponed" a proposal to increase the value of its chief executive remuneration package by £7.5m.
The decision was taken after discussions with shareholders opposed to long-term incentive awards for Jean-Pierre Garnier.
A statement from the pharmaceutical giant said: “After taking account of shareholder views, the company has decided to postpone a decision on this matter and will now take further time to consider the way forward.”
Last week GSK said that it would reconsider increasing its chief executive’s remuneration from £3.51m to £11.5m following pressure from pension funds.
The proposed increase was designed to bring Jean-Pierre Garnier’s pay package into line with his peers. But the proposal was attacked by investors as it coincided with a sharp fall in the firm’s share price.
GSK’s chairman Sir Christopher Hogg said he would meet the head of its remuneration committee and former chief executive Paul Allaire to reconsider the Garnier’s pay package.
NAPF voting issues service manager Chris Baldry said at the time: “It is a sensible response to the opposition of institutional investors and shows that the process of consultation and engagement can be highly effective.
“We look forward to receiving details of any new arrangements planned for the chief executive’s remuneration package.”
Pensions & Investment Research Consultants added that the move was a sign of how institutional investor activism was changing the corporate climate.
Research director Stuart Bell said: “Starting with Prudential back in May [which withdrew an executive share plan] there is a new mood of anger and uncompromising attitude among shareholders, who have seen executive pay go up in salaries, bonuses and share schemes.
“There are enough shareholders now that are saying ‘enough is enough’.”
Bell admitted that while GSK had not tried to “steamroll” the pay award through to its board, it had misread the level of shareholder anger.
He added: “It really goes to show that in the current climate there is danger of a real mismatch between what companies think they can get away with and what shareholders will let them do.”
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