GlaxoSmithKline ($GSK) is already searching for a top-notch candidate to replace CEO Andrew Witty when he and the company go their separate ways next year. But if it wants to attract one with U.S. industry experience, it may need to pay up.
Witty earned £6.7 million ($9.6 million) in 2015, half the take-home of Pfizer helmsman Ian Read, Bloomberg reports. Even John Lechleiter, head honcho at smaller U.S. drugmaker Eli Lilly ($LLY), received a fatter paycheck.
But it’s not just stateside chief execs who are taking home more than Witty. He banks less than his fellow European skippers, too, the news service notes, trailing behind Novartis ($NVS) CEO Joe Jimenez and even brand-new Sanofi ($SNY) chief Olivier Brandicourt. And that could make attracting a candidate from a rival company all the more difficult.
The British pharma giant is well aware that factor may be standing in its way, and its board is weighing offering a performance-based bonus of up to 9 times base salary in its new CEO’s first year, Ashley Hamilton Claxton, corporate governance manager at Glaxo shareholder Royal London Asset Management, told Bloomberg. That’s a big step up from what Witty can achieve with his current pay package; the incentive would measure 50% more than his performance-based compensation maximum.
“What companies say--and we are sensitive to this--is that they often do feel the need to compete with U.S. pharmaceuticals, who pay a lot more,” Hamilton Claxton said. “This would be drop in the bucket for some of their pay packages.”
But if it does move to offer more money, GSK may get an earful from its critics. Executive pay has been sparking more and more pushback in the U.K., and even within the pharma industry: Shire ($SHPG) may face some of its own later this month after a pair of influential advisory firms recommended that shareholders vote against its compensation package for CEO Flemming Ornskov (who, by the way, also made more than Witty last year).
Luckily for Glaxo, it has time to figure out its plans. Amid demands from high-profile investors to can Witty, the company announced last month that its top dog would be stepping down next March.
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