Shareholders vote against Glaxo executives pay deal

Pharmaceuticals giant GlaxoSmithKline (GSK) suffered an unprecedented defeat at its annual general meeting last night when shareholders voted against a multi-million pound pay and rewards package for executives.

A controversial "golden parachute" deal for Mr Jean-Pierre Garnier caused a storm at the London meeting, which saw one of the biggest shareholder revolts against "fat cat" pay in British corporate history.

Figures from the voting showed that 50.72 per cent refused to back the resolution on executive pay. The remaining 49.2 per cent voted with GSK's board of directors.

The result, although not binding, means GSK will be forced to look again at its remuneration policies.

The company has already appointed City accounting firm Deloitte & Touche to examine all aspects of its remuneration policy.

GSK's chairman Sir Christopher Hogg said: "The board takes this result very seriously. The major reason for this negative vote has been the fact that there are elements of our senior level remuneration package which do not accord with what is regarded as best practice by some shareholders."

Mr Brendan Barber, general secretary elect of the TUC, said: "This is an extremely significant result that will have repercussions way beyond GlaxoSmithKline. Britain's boardrooms are now on notice but there is no guarantee they will act unless the government changes the law to ban payments for failure."

The news was also welcomed by ordinary shareholders, many of whom gathered at the meeting to register their displeasure at the level of executive pay.

Shareholder Mr Martin Simons said: "I think they have got the message." Another shareholder attending the meeting was Mr Michael Weinstein, president of the Aids Healthcare Foundation. He said: "It is unprecedented in terms of the vote. The outcome is more symbolic than anything."

Mr Peter Montagnon, head of investment affairs at the Association of British Insurers, said: "The size of the protest vote has been so large that the company really must listen very carefully to what the shareholders have been saying and must turn this into action."

Insurance group Standard Life, which manages more than 110 million shares in GSK, is understood to have voted against the proposals due to concerns about the present pay policies.