Retired SmithKline executive receives pounds 2.8m pay packet

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Bob Bauman was paid pounds 2.81m last year by SmithKline Beecham, despite retiring nearly two years ago as chief executive of the drugs giant.

The payment was disclosed in SmithKline's annual report, entitled Striving to Make People's Lives Better, which was released yesterday.

Harry Wendt, a former chairman who retired on the same day as Mr Bauman in April 1994, took home a further pounds 392,000 last year, adding to the pounds 840,000 he pocketed in the previous year.

SmithKline also revealed that its new chief executive and former Wimbledon finalist, Jan Leschly, picked up pounds 1.8m last year, down from pounds 2.44m in 1994.

However, stripping out an pounds 850,000 one-off payment for moving expenses in the previous year, the 1995 figure actually represented a 13 per cent increase.

The disclosures are likely to raise more eyebrows about the increasing levels of boardroom pay, particularly in the light of the Government's calls for pay restraint to help beat inflation.

SmithKline's five executive directors were paid a total of pounds 4.91m last year, and the 10 non-executive members of the board shared pounds 609,000.

Hugh Collum, finance director, made a pounds 1.53m profit from exercising share options.

News of the pay increases for SmithKline's present and former directors comes just days after it was revealed that Sir Richard Sykes, chief executive of drugs rivals Glaxo Wellcome, saw his remuneration rise to pounds 2.1m for the 18 months to December 1995.

Sir Ronald Hampel, ICI chairman, won a 42 per cent rise in emoluments to pounds 863,000 last year.

SmithKline last night defended the payments. A spokesman said: "We are a global health-care company and, as we have said in previous years, to attract the calibre of executive director we require, we must pay competitive salaries. These are comparable with similar sized global operations."

Mr Bauman earned a reputation as one of the UK's most lavishly rewarded directors while he was at SmithKline. In 1993, he picked up pounds 1.9m, before a pension contribution of pounds 1.16m, some 9 per cent down on the pounds 2.1m he received in 1992. He is now part-time chairman of British Aerospace.

Most of of Mr Bauman's emoluments from SmithKline last year came from cashing in so-called "stock appreciation rights" (SARs), which are linked to the growth in the share price and form part of the company's long-term incentive scheme. He exercised nearly 863,000 SARs to net pounds 1.71m. Under the terms of his contract, he is still entitled to payments until he reaches the age of 65 in September this year.

Most of SmithKline's executive directors continue to be on three-year contracts, in apparent contradiction to the current trend to move towards two-year contracts. Mr Leschly is on a two-year contract, although he is entitled to three years' pay in the event of a takeover.

His basic salary and fees rose from pounds 765,000 to pounds 800,000 in 1995, while the bonus he received jumped from pounds 654,000 to pounds 928,000.

The spokesman said the company had added a tremendous amount of value to shareholders over the past few years, and the shares had been one of the best performers in their sector over 12 months.