GlaxoSmithKline says it has identified "a significant competitiveness gap for our CEO" in terms of pay and increased the remuneration package for Sir Andrew Witty by 84% in 2011 from the year before.
Sir Andrew (pictured) saw his total package, including pay, bonus and other incentives, rise to £6.8 million last year from £3.7 million in 2010. For 2012, his base salary has been increased by 4%, in line with the average rise for GSK’s UK employees and his "performance-related remuneration" has been upped by raising his share award from 500% to 600% of salary.
Writing in the drug giant's annual report, Sir Crispin Davis, GSK's remuneration committee chairman, said the firm "is mindful of its responsibility to pay appropriately, but not excessively". However when comparing Sir Andrew's wages with peers, there was concern that a gap has appeared, notwithstanding "Sir Andrew’s strong performance [which] is widely acknowledged".
Following his appointment as CEO in 2008, Sir Andrew’s package was set "conservatively and significantly below that of his predecessor", Jean-Pierre Garnier. Sir Crispin noted that "we set his primary benchmark to a UK cross-industry comparator group rather than the much higher benchmark of global pharmaceutical companies", adding that "he was a new CEO who needed to demonstrate performance in his role".
Sir Andrew's salary has not increased for over three years but he has been coming up with the goods, GSK feels, pointing out that in 2011, underlying sales and profits performed well. Notably, the group’s increase in total shareholder returns of 25% was the best since the formation of GSK in 2000.
Sir Crispin adds that "Sir Andrew’s vision and leadership are fundamental to this performance" but notes that even after these adjustments, "his remuneration will still be in the bottom quartile when compared to GSK’s pharmaceutical peers".