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Shell Retention Bonuses AGM Vote: “Together with those who abstained from the vote, a total of 49.5 percent didn’t support the bonuses.”


Glaxo Investors Tighten Vote Against Managers’ Pay (Update2) 

By Andrea Gerlin and Trista Kelley

May 22 (Bloomberg) — GlaxoSmithKline Plc said almost 40 percent of shareholders either abstained or voted against the company’s pay plan at the annual meeting as investors complain about the drugmaker’s executive compensation.

Investors holding about 29 percent of the stock didn’t vote on the package yesterday, London-based Glaxo said today in a statement. Of those who voted, about 86 percent supported the plan, while 14 percent were against it. That compares with 92.5 percent backing the plan last year, when 1 percent of votes were withheld.

Several shareholders attending the meeting spoke out against pay levels of Glaxo executives and directors. They complained it was “excessive” and not linked to the performance of the company’s stock. Glaxo traded at 1,890 pence a share at the end of 2000, when it was formed in a merger of two of the U.K.’s largest drugmakers. The stock, which has declined 12 percent this year, closed at 1,129.5 pence in London today.

“You’re hoping to get shares up for the benefit of the directors and their bonuses,” shareholder Robert Muriel said, to applause from other investors.

Chairman Christopher Gent said executive and director compensation were linked to Glaxo’s performance. He said the company, Europe’s largest drugmaker, had paid long-term compensation only once because of what he called the “derating” of shares.

Shareholder Return

“Most of the bonuses are linked to total shareholder return,” Gent said. “It’s nothing to do with improving performance for the benefit of bonuses.”

The shareholders join those of Royal Dutch Shell Plc and other U.K. companies in complaining about executive pay this year. Just under half of Shell shareholders May 20 failed to back a proposal to award three board members bonuses to stay at Europe’s biggest oil company.

A total of 31.76 percent of voting shareholders rejected a plan to award Malcolm BrindedLinda Cook and Peter Voser bonus payments of one million euros ($1.57 million), according to Shell’s Web site. Together with those who abstained from the vote, a total of 49.5 percent didn’t support the bonuses. The proposal would have been rejected if 50 percent plus one vote had opposed the bonuses.

HSBC Holdings Plc investors are voting May 30 on proposed changes in the bank’s executive pay plan, and an investment adviser is urging them to reject the package because it’s too generous.

London-based Pensions Investment Research Consultants Ltd. said “the combined level of potential awards to be excessive” at Shell and that “average salaries are currently at the top end of the U.K. sector.”

Previous Complaints

Yesterday’s protest vote wasn’t the first for Glaxo investors. In 2003, Europe’s biggest drugmaker revised its executive pay after shareholders deemed it to be too generous.

Some investors questioned the company’s 12 billion-pound ($23.8 billion) two-year share buyback program, saying that fewer shares outstanding artificially inflated earnings per share, enabling Glaxo managers to claim improved performance.

Glaxo raised former Chief Executive Officer Jean-Pierre Garnier‘s salary by 11 percent to $6 million in 2007. His compensation package included $1.8 million in salary, $2.7 million in bonus and $1.5 million in other benefits, according to the annual report posted on the company’s Web site. He became CEO at the time of the merger, and retired yesterday.

Gent, the former CEO of Vodafone, was paid 576,000 pounds in salary and benefits in 2007, an increase of 15 percent from 2006. Gent took over as chairman in January 2005 after joining in June 2004.

To contact the reporter on this story: Andrea Gerlin in London at[email protected]

Last Updated: May 22, 2008 11:50 EDT and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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