Shareholders of pharmaceutical company GlaxoSmithKline on Monday rejected a proposed $36 million compensation package for CEO Jean-Pierre Garnier, citing in part the inequity of providing the executive with a huge salary that could instead be used to provide HIV antiretroviral drugs in developing countries, The Wall Street Journal reports. The shareholders also objected to a provision of the package that would have provided a payout of $23.7 million to Garnier if he resigned or was fired before 2007.
The package was rejected by several of the largest Glaxo shareholders, including the California Public Employees Retirement System, which owns 20.2 million shares of Glaxo stock. CalPERS sent a letter to Glaxo officials in April urging them to cut prices on HIV antiretroviral drugs in poor countries, a move the company made two weeks later but claimed was unrelated to the CalPERS request. Other groups to oppose the compensation plan included the California State Teachers Retirement System, the Association of British Insurers, and the U.K.'s National Association of Pension Funds and Trade Unions Congress. The pay package was rejected by 50.72% of the shareholders. Although the company's board can disregard the shareholder directive and grant the compensation package, analysts believe board members will follow the shareholders' wishes.
AIDS activists praised the rejection of the pay package, which marked the first time any group of shareholders blocked a compensation package for any top pharmaceutical executive. "The $36 million package proposed for Mr. Garnier could provide life-saving antiretroviral treatment to more than 100,000 people with AIDS for one full year," said Michael Weinstein, president of the California-based AIDS Healthcare Foundation. Glaxo markets more anti-HIV drugs than any other pharmaceutical company. Glaxo's antiretroviral drugs include Epivir (3TC), Retrovir (AZT), Ziagen, Combivir, Trizivir, and Agenerase.