US active investor joins revolt over Garnier's pay deal at GSK

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The Independent Online

The shareholder revolt over Jean-Pierre Garnier's estimated £23m severance package grew yesterday, when the influential Californian state pension fund said it would vote against GlaxoSmithKline's remuneration policy.

The shareholder revolt over Jean-Pierre Garnier's estimated £23m severance package grew yesterday, when the influential Californian state pension fund said it would vote against GlaxoSmithKline's remuneration policy.

Mr Garnier, the chief executive of the UK's largest drugmaker, is on a two-year notice period that contravenes UK corporate governance rules, but news that Calpers is to abstain from supporting the package undermines the company's argument that directors' remuneration is acceptable in the context of the global pharmaceutical industry.

Mr Garnier's package has already attracted criticism from the Association of British Insurers and the UK's National Association of Pension Funds, which is recommending that its members abstain from supporting the remuneration policy. GSK is braced for a showdown with small shareholders at its annual general meeting in London on 19 May.

In the event of Mr Garnier parting company with GSK, he would be paid his two-year notice period and have his pension topped up as if he had worked for the company for an extra three years. Other benefits from long-term incentive plans take the total to £5m, according to the corporate governance service Manifest. Adding in possible gains on the share options Mr Garnier could still be granted after he leaves, other organisations believe he could walk away with up to £23m – a figure GSK says is exaggerated.

Brad Pacheco, a spokesman for Calpers, said: "We are voting no to be consistent with our beliefs about excessive compensation packages."

Mr Garnier has argued that his two-year contract is not out of line with the industry and Sir Christopher Hogg, GSK's chairman, has commissioned the accountants Deloitte & Touche to review the whole of the company's remuneration policy. Sir Christopher says executives are paid substantially below their global peers.

Mr Garnier has already once been humiliated by shareholders over pay, when a revolt forced the company to scrap plans that would have doubled his annual pay and bonus package to £11m.

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