Following an investor revolt against the golden parachute payment for GlaxoSmithKline’s chief executive yesterday, one of the UK’s largest investor groups, Co-operative Insurance Services, said today it hoped this decision would make other companies reconsider their directors’ contracts.
Calling the revolt ‘a watershed for investor power,’ the CIS confirmed it had voted against GSK chief Jean-Pierre Garnier’s £15m severance pay packet. A spokesman said: ‘It sends a clear message to the boards that excessive pay will not be tolerated.’
Another leading fund manager ISIS Asset Management said investors were growing bolder. Katrina Litvak, ISIS head of corporate governance said: ‘The spectacular defeat at GSK sent a clear warning that, unless companies made a genuine effort to reach an understanding with their shareholders, there would be more confrontations.
And Tesco, whose agm is scheduled for June 13, could be the next on the firing line of investor anger. The supermarket’s chief executive Sir Terry Leahy is believed to have been given a 15% boost in his pay packet, taking his salary to £2.8m.
The supermarket’s pay packets have raised concerns at investor group PIRC. It says the two year rolling contracts for Tesco bosses are at the heart of their worries.
PIRC research director Stuart Bell, said: ‘Lots of GSK shareholders were surprised they managed to achieve a majority. If they are being consistent in the way they look at contractual terms, we think there are similar issues at Tesco.’
Mark McMullen joins the private client services team from Smith & Williamson
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