Leschly defends his pounds 10m pay

JAN LESCHLY, chief executive of SmithKline Beecham, yesterday defended the pounds 10m pay package he earned last year and indicated that the company would resist any shareholder attempts to modify its incentive schemes at next week's annual meeting.

Speaking as SKB unveiled a better-than-expected 16 per cent rise in first- quarter profits to pounds 510m, Mr Leschly said: "Obviously there are some people who don't like it, but our shareholders have benefited massively. The shareholders have nothing to complain about."

Mr Leschly's pay was the subject of new controversy earlier this month when it emerged that his total package, including salary and share options, has been worth pounds 93m in the nine years he has headed the group.

Last year his pounds 1.9m salary was boosted by an award of shares worth a further pounds 8.5m under SKB's long-term incentive and share options programmes.

Mr Leschly argued that the market value of SKB had risen from pounds 8bn to pounds 50bn over the same period. He also said the company had "co-operated closely with its major shareholders" in setting remuneration policy, pointing out that 95 per cent of SKB's sales were outside the UK while its management competed on a global scale with US and European rivals.

He said the response from institutions had been supportive, even though one or two big shareholders, led by Standard Life, were unhappy with the way incentive schemes were framed. "We will be debating this next week, and we always listen to what our major shareholders have to say," Mr Leschly added.

He said SKB expected to get approval to start marketing its biggest-selling drug, the anti-depressant treatment Seroxat, as a treatment for social phobia.

He also said he expected to receive US approval in May for its next blockbuster, the diabetes treatment Avandia. There are 100 million sufferers of type two diabetes worldwide, of which 16 million are in the US, and the market for treatments is put at several billion pounds.

But SKB has stopped work on the development of its herpes drug, Famvir, as a treatment of hepatitis B as clinical trials had not shown the hoped- for benefits. For the same reason, idoxifene is not now being developed as a treatment for osteoporosis, but its trials in advanced breast cancer are continuing.