GlaxoSmithKline missed its 2010 profit targets, so CEO Andrew Witty (photo) is missing the $1.2 million cut from his paycheck. Witty saw his compensation drop by £734,000, to £2.3 million, or $3.74 million, Reuters reports.
GSK disclosed Witty's pay in its annual report that was released yesterday. It showed the CEO received the same base salary of £1 million, but his bonus was reduced by 41 percent from 2009 levels. For 2010, he collected roughly £1.18 million in bonus pay, down from £2 million the previous year.
Witty certainly had his work cut out for him in 2010. The ongoing debate over the safety of GSK's diabetes drug Avandia erupted in regulatory action on both sides of the Atlantic; the FDA decided to restrict the drug severely, while EU regulators chose to pull it from the market. Sales of the drug were already dropping, but they plummeted after those decisions, the company said.
Meanwhile, GSK took billions of dollars in charges against earnings for legal reasons. It's working to resolve Avandia-related litigation, in which plaintiffs argue that the drug caused their heart problems. It agreed to pay $750 million to settle a government probe into manufacturing shortfalls at a now-closed plant in Puerto Rico, and it's in the process of wrapping up a deal to resolve a Justice Department investigation into its marketing practices.
The annual report admitted that 2010 was tough for the company, "due to the effect of generic competition in the U.S., rapid loss of sales of diabetes drug Avandia following regulatory decisions in the autumn, U.S. healthcare reform and significant litigation costs." Obviously, Witty is sharing that pain.