Emma Walmsley, the new CEO at GlaxoSmithKline (GSK), and one of just seven female FTSE 100 leaders, is to be paid 25% less than the man she replaced at the helm of the pharmaceutical giant, it has been announced
Sir Andrew Witty will be stepping down as GSK’s CEO with effect from 31 March 2017. According to the company’s 2016 annual report, the remuneration committee ‘gave careful and detailed consideration to Emma’s remuneration package for 2017, taking into account all relevant factors.’
These included the feedback received from shareholders which resulted in a number of refinements to the original proposals and ‘mean reductions have been made to all elements of Walmsley’s remuneration package in comparison to Sir Andrew’s current arrangements’, it stated.
Her overall package for 2017 will be around 25% less than that received by Witty, and she has the potential to earn £8.8m a year, while Witty’s package had a maximum total of £11.6m. Walmsley’s £1m basic salary is 10% below her predecessors, while 20% of her salary is paid into her pension, which GSK says is ‘significantly lower’.
Walmsley’s annual bonus is worth up to 100% of her salary, or 200% in exceptional circumstances – less than the 125% of salary that Witty could have achieved; and a long-term incentive plan award of shares worth up to 550% of her salary, is below the 700% grant that Witty could have received.
In June 2016, 15% of GSK’s shareholders voted against the firm’s remuneration report which was released on 5 May. In 2015, Witty was paid £6.6m while the finance director was paid £3.3m.
Urs Rohner, chair of the GSK remuneration committee, said: ‘It is the committee’s intention to keep Emma’s package under review in the coming years subject to her development and performance in the role.’
In 2016, the median salary in FTSE 100 companies increased by just 2.2% and around one third of CEOs saw their salary frozen. Bonus payments were up by 3% but total pay was down 3% on the previous year, according to research from PwC.
PwC’s research found that shareholder dissatisfaction with companies’ top level pay rates was increasing, with some of the key reasons for negative shareholder voting being due to: perceived misalignment between pay and performance, and poor disclosure of the targets on which pay outcomes were based, with shareholders increasingly focused on the quality of disclosure of non-financial targets.
Further reading
Demand for FTSE 100 executive pay reform increases and PwC’s remuneration research is available to read here.
