GlaxoSmithKline has signalled a re-think over Chief Executive Jean-Pierre Garnier's $35.7 million (£22m) 'golden parachute' pay deal after a shareholder revolt of unprecedented scale.

The row over the money Dr Garnier would receive if he were dismissed came to a head as 51% of shareholders voted against the package, making it the biggest revolt of its kind in UK corporate history.

One of the leaders of the dissent, Roger Lyons, Joint General Secretary of the manufacturing union Amicus, said the vote represented a landmark victory. "Corporate greed will never have the same free reign", he said.

Michael Weinstein, President of the AIDS Healthcare Foundation, used the meeting to press for further action from GSK on access to medicines, but also hailed the shareholder vote.

"Today's vote by GSK shareholders is an historic repudiation by institutional investors of an inflated severance package for Dr Garnier", he said. "The Compensation Committee assertion that such an excessive pension package is routine and customary for top executives at US companies clearly fell on deaf ears. We thank all shareholders who spoke out and voted down this bloated golden parachute".

Angry private shareholders came together with institutional investors including the Association of British Insurers, which controls around 25% of the UK stock market, to defeat the package, claiming it represented a widespread corporate culture of rewarding executives with millions even when their companies perform badly.

The Trade Union Congress has already called for votes against 'fat cat' pay deals at Corus, Shell and Reuters, and says the Government must change the law to ban "payments for failure".

The Confederation of British Industry Chief, Digby Jones, hit out at the trade unions for perpetuating what he called "some good old-fashioned anti-capitalist, anti-business myths", but said he was nevertheless committed to companies becoming more accountable.

He said: "Business and shareholders must take the bit between their teeth and deal with this issue. It is vital that it does not undermine the reputation of business".

In a clear indication of how far the balance of power has already shifted, Mr Jones indicated greater shareholder input was now the most favoured option.

"We need to show that shareholder activism is the way forward, not legislation which would create confusion and uncertainty. Business can and should do more to improve transparency and forge better links between performance and remuneration".

For GSK, the revolt is just one more embarrassing defeat and public relations disaster. The pay-off row has been brewing ever since shareholders forced GSK to climbdown over a £20 million pay deal for Dr Garnier in November.

This was recently compounded by GSK announcing price cuts in its HIV medicines for developing countries its insistence that the price reductions were due to new manufacturing economies of scale were widely interpreted as a mere face-saving device, and campaigners continue to push for more action.

Chairman Sir Christopher Hogg was yet again on the back foot, claiming the vote had been pre-empted by the company.

"The major reason for this negative vote has been the fact that there are elements of our senior level remuneration package which do not accord with what is regarded as best practice by some shareholders".

"That is something the board is aware of and it was one of the reasons that the remuneration committee decided to appoint Deloitte & Touche some months ago to conduct a completely independent review of our approach".

"The review includes all aspects of remuneration, including those to which we are bound contractually".

The revolt also underlines the stark contrast between the overwhelmingly UK-based shareholders and Dr Garnier's aspirations to make GSK a US-style company, paying generous US-size packages.

The Frenchman's remarks in 1999 - "if you pay peanuts you get monkeys and we cannot have monkeys running this company"  - have now come back to haunt him, with 17% of shareholders voting against his re-election to the company's board.

Shareholders have also raised serious questions about GSK's non-executives, who include Sir Roger Hum, former chairman of beleaguered telecomms company Marconi, and Paul Allaire, ex-chairman of Xerox, who could now both be forced out.

The company is now hinting that three new non-executives could be appointed, including one as a successor to Sir Christopher, who has now presided over his second executive pay battle following a similar furore at Reuters.

pharmafocus@pharmafile.co.uk