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GSK puts new slant on Garnier pay battle

Published on 24/10/03 at 04:36pm

GlaxoSmithKline is to raise the issue of Chief Executive Jean-Pierre Garnier's pay once again this week, saying it is intended as part of a wider increased remuneration package for 700 senior executives.

The company was forced to back down last November on plans to substantially increase Garnier's pay to $18 million, but now looks set to promote the proposals as part of wider efforts to retain its management talent.

The Anglo-American company will announce its 2002 full year results this week, and is expected to underline the need to increase the pay of its top executives following an exodus of R&D executives last year.

Mr Garnier's pay deal would bring him close to parity with the $20 million salary earned by Pfizer's Hank McKinnell, and GSK argues that a similar pay gap between its top executives and those at US rivals Pfizer and Merck must also be closed to retain the best talent.

Opposition to Mr Garnier's increased pay and stock options has been fed by GSK's underperformance on the stockmarket and in its R&D pipeline, but analysts Deutsche Bank and Merrill Lynch now say the company's prospects are improving.

Deutsche Bank says the company has doubled the number of new drugs going into clinical trials and quadrupled the number of those moving on to phase II trials, as well as engaging in a flurry of in-licensing.

The departure of four senior R&D executives including the defection of James Palmer, Head of New Product Development, Research & Development, to rivals Bristol-Myers Squibb fuelled doubts about the re-organisation of the newly merged company R&D facilities, but GSK now looks ready to discuss its progress.

An R&D update for analysts postponed from last year because of a lack of good news is now expected to go ahead, and will coincide with the introduction of a new Head of Worldwide Development.

Dr Ronald Krall will take on responsibility for clinical development, medical affairs and regulatory affairs, and represents a recruitment coup for GSK, leaving his post as head of US drug development at Anglo-Swedish rivals AstraZeneca.

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