GlaxoSmithKline ($GSK) CEO Andrew Witty (photo) saw a big pay hike in 2011--and he's due another increase this year, the company's compensation committee says. Last year, Witty collected a pay package worth £6.7 million, or about $10.5 million, almost double his take in 2010, The Guardian reports. Witty's compensation included a £2 million bonus and £3.7 million incentive-plan payout (out of a possible £5 million).
Still, the 2011 total wouldn't have been enough to crack FiercePharma's latest ranking of the 10 highest-paid CEOs in the industry. That threshold stood at $14.2 million, the amount collected by Gilead Sciences' ($GILD) John Martin for 2010.
Witty's proposed 2012 compensation would have made that list, however--provided he hits his bonus targets. He could earn £10.4 million if all the performance criteria are met, or about $16.3 million at today's exchange rates. The proposed hike is designed to address a "competitiveness gap" when measuring Witty's pay against that of other U.K. CEOs and global pharma companies, the company said. The GSK chief's pay has been in the bottom quartile compared with his Big Pharma peers, even after the 2011 increase, the company said.
But as a special report in The Washington Post noted last year, the practice of putting a CEO's pay on par with peers ratchets up everyone's compensation over time. The average-or-better benchmark isn't unique to biopharma, of course, but many drugmakers' compensation formulas do rely on the "everyone's above average" approach, leading to what the Post dubbed the "Lake Wobegon effect."
Leaving Witty's bonus and incentives aside, he's set for a 4% increase in base salary for 2012--exactly the percentage GSK employees are scheduled to get, on average, in the U.K. Workers in the U.S. are budgeted for a 3% average rise, Employee Benefits reports.
Special Report: Top 10 Pharma CEO salaries of 2010