Jean-Pierre Garnier was in high spirits at a meeting with analysts yesterday at GlaxoSmithKline's glass palace in Brentford, west of London.
The "fat cat" of the day's newspaper headlines was laughing and joking on the subject of the company's defeat over executive pay, cracking self-deprecating funnies on the notorious £23m golden parachute.
"He was not a bitter and twisted figure, shattered by the shareholders' vote," said one person who was there. "He's above all that. He's wealthy. And I am not sure he feels he has totally made his mark in the industry."
In other words, the chief executive is not likely to walk. That has been the fear of many of those fund managers who refused to back the rebellion that led to Monday's unprecedented rejection of the drug maker's pay policies. Many were stressing yesterday that this did not amount to a vote of no confidence in Mr Garnier.
Over 60 per cent of voting shareholders did not support the remuneration policy, if abstentions are included. Mr Garnier himself was re-elected with three-quarters of the vote, despite the recommendation by some corporate governance advisers that investors should not support executives on two-year contracts.
Many had been told that Mr Garnier could quit over pay back in November, when the company was canvassing views on whether to double his annual package to £12m - when shareholders called GSK's bluff.
Mr Garnier now declares himself "flexible" on pay and conditions, and it is certain that the company's review of executive remuneration will leave him with a much reduced severance package - as it will the finance director, John Coombe, who was also on a two-year notice period.
But not all the shareholders who voted against the pay policy did so because of the enormous and extraordinary "reward for failure". Others felt it was time to reject US-sized pay packets outright. There are big battles on a new pay policy still to come between GSK and its shareholders and, in all probability, within the boardroom.
Sir Christopher Hogg, the chairman, wants to stay on to oversee the review and to patch relations with shareholders, but some investors believe his credibility is seriously damaged. One of GSK's biggest shareholders said: "He had a difficult job to do this week and he did it well, but the non-executives have been sleeping on the job recently, and as their head he is clearly going to be considering his position. I think he will probably leave during the course of the year." Another big investor said Sir Christopher should groom a successor from the new non-executives he has promised to bring on to the board. Fans say he received one of the biggest positive votes of the directors up for re-election this week.
The choice of a new head for the remuneration committee will be Sir Christopher's trickiest immediate decision. The American Paul Allaire, the current chairman, is tainted by his stewardship of photocopier group Xerox, where a $2bn fraud happened on his watch. Shareholders would prefer a European head for the committee, to signal an end to US-style packages, but many believe the GSK board would be split on such a move. Two British knights, Sir Roger Hurn, former chairman of Marconi, and Sir Peter Job, ex-chief executive at Reuters, are also likely to leave when replacements are found.
Mr Garnier is still making the case for a strong US focus for the company and for executive pay that compares with that on offer in the US, and not just in private. At Monday's meeting he scoffed at the notion that AstraZeneca - the UK's second biggest drug maker - was a shining example of how to retain and motivate staff without tipping over into corporate excess. We wanted Ron Krall to run our worldwide drug development, so we went to AstraZeneca and got him like that, Mr Garnier said with a snap of his fingers.
It is something of a running sore across the UK pharmaceutical industry, whose companies know that the fattest profits are to be had across the Atlantic, in the biggest drugs market in the world. The boardroom rows that led to the ousting of Rolf Stahel as head of Shire Pharmaceuticals, one of the UK's fastest growing drugs groups, are believed to flow from disagreements over where future acquisitions should be made. And GSK itself was convulsed at the time of the merger over whether the company should move its operational headquarters officially to the US, as many from the US-focused SmithKline Beecham side argued. The former number two to Jan Leschly at SKB, Mr Garnier's personal decision to continue to live in Philadelphia was still rankling at the AGM this week, although he insists he spends 80 per cent of his time travelling.
Mr Garnier's arguments still carry considerable weight and, for all the negative publicity on his pay, his personal stock has in fact been rising in the City over recent months. Partly this is because he has articulated more clearly his strategy for navigating the challenges facing the industry, partly because he has spent more time here doing so.
In Mr Leschly's shadow, Mr Garnier was always seen as "the more cerebral one" at SKB, analysts say. As head of GSK he has successfully squeezed the promised cost-savings from the merger, but the big challenges are still ahead and it is his view of these that makes analysts believe he will stick at GSK.
In a performance that gradually but noticeably quietened during Monday's shareholder meeting, he set out his view of a "perfect storm" of challenges: increasing litigiousness and pressure on drug prices in the US, price controls in Europe, falling research productivity across the industry and the loss of patents on key drugs. Mr Garnier has begun musing privately about ways to change the shape of the giant pharmaceutical company if these challenges do not abate.
This process of establishing a reputation in the City is only just beginning, though, and could be stopped in its tracks in December, when the first verdict will come in on his own strategic innovation, the creation of competing "centres of excellence" in GSK's research operation. The quantity of new drugs actually elicited an impressed whistle in the hall on Monday; the quality will be judged at the company's "R&D Day" at the end of the year. One analyst said: "This is Mr Garnier's moment of truth, the moment we can do a cost-benefit analysis on his time in the job."Reuse content