Glaxo chief's pay and bonuses soar to pounds 2.15m

Top jobs controversy: Criticism for Sir Richard Sykes' package ! NatWest banker's rewards overtake his chief executive's
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The Independent Online
Glaxo Wellcome's chief executive, Sir Richard Sykes, looks set to spark a new controversy over executive salaries after it emerged that his total emoluments soared to pounds 2.15m in 1995, making him one of the best paid directors in Britain. The news came as it was revealed that Martin Owen, head of NatWest Markets, received a 26 per cent pay rise to pounds 617,000 last year, overtaking his boss, chief executive Derek Wanless.

The payment to Sir Richard covers a year when the giant drugs group announced 7,500 redundancies in the aftermath of its pounds 9.3bn merger with rivals Wellcome.

It comes just as senior management are set to move to a new incentive scheme inspired by the Greenbury report last year on executive pay which could net them over pounds 20m in the next three years.

Sir Richard's pay last year compares with a redundancy payment of less than pounds 60,000 which a 45-year-old worker with 20 years service could have expected to receive after the closure of Wellcome's Beckenham research centre in Kent last year.

Paul Talbot, national officer of the MSF union, which represents workers at Glaxo Wellcome, said: "This is just disgraceful in view of the number of people who have lost their jobs in the last 12 months. That's not justifiable."

Most of the recent controversial increases in executive pay were in the privatised utilities. But after a 42 per cent rise this week in the remuneration package of Sir Ronald Hampel, chairman of ICI and of the new corporate governance committee that is to follow up the Greenbury work, there are concerns that the issue of rising pay at the top may spread to other companies this year.

The latest figure for Sir Richard covers the 18 months to the end of December, reflecting a changed year end, but still represents a considerable increase on the pounds 931,000 he was paid for the 12 months to June 1994, even when account is taken of the extended accounting period.

But the company defended the payment yesterday, citing the distortions caused by the changed year end and extra payments made to buy out a former incentive scheme.

A spokesman said: "Our view is that salaries are competitive and appropriate, given the company's size and complexity and its place in the international pharmaceuticals market. The new [incentive] schemes provide demanding targets."

Sir Richard's basic annual salary went up from pounds 700,000 to pounds 800,000 last year, which came out at pounds 1.125m for the 18 months. On top of that, he picked up a performance bonus of pounds 212,000 relating to the 1993-94 financial year, which was paid in the latest period due to the changed year end, and pounds 41,000 in other benefits. He received a further pounds 770,000 to buy out the old incentive scheme, known as the performance unit plan or PUP for short.

The new incentive schemes involve an annual element and a long-term plan. Essentially directors can collect up to 200 per cent of their salaries in shares after four years if certain personal and corporate performance targets are met.

In Sir Richard's case, this could be close to pounds 5m over the three-year period in which, amongst other things, the company must rank amongst the top 10 companies in the FT-SE 100 index.

Meanwhile, the premium for top investment bankers was underlined yesterday with the publication of the pounds 617,000 total remuneration paid to Martin Owen, the chief executive of NatWest Markets. He earned more than his boss, Derek Wanless, the chief executive of the whole NatWest Group.

According to NatWest's annual report and accounts for 1995, Mr Wanless had a total remuneration package of pounds 595,000, a 19 per cent increase on the previous year.