GlaxoSmithKline Shareholders Reject Executive Compensation Package; AIDS Drug Advocates, CalPERS Protest Package
Shareholders of GlaxoSmithKline, a top producer of antiretroviral drugs, on Monday voted to reject a proposed pay package valued at $35 million for Jean-Pierre Garnier, the company's CEO, the Wall Street Journal reports (Naik, Wall Street Journal, 5/20). The vote makes GSK the first large British company to have its shareholders reject an executive pay package (Hirschler, Reuters/Philadelphia Inquirer, 5/20). The compensation package was rejected by several large shareholders, including the California Public Employees' Retirement System, one of the world's largest investors (Timmons, New York Times, 5/20). CalPERS, which owns 20.2 million shares of GSK stock valued at nearly $760 million, has a reputation for being an influential shareholder. Last month, at the urging of the Los Angeles-based AIDS Healthcare Foundation, CalPERS sent a letter to GSK, asking the company to reevaluate its antiretroviral drug pricing for developing countries and to look into licensing for generic antiretrovirals for humanitarian purposes (Kaiser Daily HIV/AIDS Report, 4/16). Two weeks later, GSK cut the prices of its antiretrovirals by as much as 47% for 63 nations, but claimed that the CalPERs letter had no bearing on the decision (Kaiser Daily HIV/AIDS Report, 4/28). "The $36 million severance package proposed for Mr. Garnier could provide life-saving antiretroviral treatment to more than 100,000 people with AIDS for one full year," Michael Weinstein, president of AHF, said (Treanor, Guardian, 5/18). The compensation plan was also rejected by the California State Teachers' Retirement System, the Association of British Insurers and Britain's National Association of Pension Funds and Trade Unions Congress (AHF release, 5/20). In rejecting the executive compensation plan, shareholders "appear to be signaling their concern" about the company's performance under Garnier, according to the Journal. While the company has reported fairly strong sales and profits since Garnier took over three years ago, its stock price has suffered amid fears that several of its best-selling drugs, including its antiretroviral drugs, could face cut-price competition sooner than expected and that the company does not have enough new drugs to replace them (Wall Street Journal, 5/20).This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.