Garnier's pay jumps to £2.8m at GSK

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The Independent Online

Jean-Pierre Garnier, the chief executive of GlaxoSmithKline, received a 14 per cent pay rise last year, despite the poor performance of the company's share price.

Jean-Pierre Garnier, the chief executive of GlaxoSmithKline, received a 14 per cent pay rise last year, despite the poor performance of the company's share price.

The news, revealed in the pharmaceuticals giant's annual report, will add to the controversy over Mr Garnier's pay and employment conditions.

He picked up £2.79m for 2003, up from £2.45m the previous year. The company has been hit by poor operating performance and concerns over patents, and the group's shares underperformed in the European pharmaceuticals sector by nine per cent last year. In recent months, GSK shares have fallen off steeply, from 1,390p in November, to close yesterday at 1,080p.

GSK unveiled revised pay and rewards contracts for executives in December after shareholders voted against a proposed multimillion-pound pay and rewards package. The company was forced to back down over a plan to double Mr Garnier's remuneration.

The group's investors also hit out at the concept of two-year rolling contracts that could have entitled Mr Garnier to about £5m in severance pay, were he to leave the company.

The 2003 pay rise for Mr Garnier included a reward of £182,000 for holding on to share options, rather than cashing them in at the time of the merger of Glaxo Wellcome and SmithKline Beecham in 2000. GSK's annual report also disclosed that its former chairman Sir Richard Sykes received a windfall of £941,000 from this scheme, which promised to pay option holders 10 per cent of the value of the options if they held them for at least two years.

Mr Garnier received £916,000 in basic salary, a £1.49m bonus, plus £386,000 in other benefits last year. He is paid in dollars and his total remuneration would have been higher, once translated into pounds, for reporting purposes, had it not been for the weakness of the dollar. The company has drawn up a new top management reward package that strengthens the link between pay and performance and reduces contracts to 12 from 24 months. It hopes to win shareholder approval for the plan at this year's annual meeting.

Separately, GSK said it donated £338m, or 5.3 per cent of pre-tax profit, to charity in 2003 under a variety of "corporate responsibility" programmes. That was well up on the 2002 level of £239m, equivalent to 4.3 per cent of profit, which was already the highest donation from any company in the FTSE 100.

The money was channelled into a range of projects including free medicines for Iraq, tablets to fight elephantiasis in Africa, and assistance schemes for uninsured Americans.

Mr Garnier said: "Corporate responsibility has particular resonance for the pharmaceutical sector. Our business is creating medicines and vaccines to treat and prevent disease - something that society needs and values."

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