Executive pay continues to rankle many shareholders. So I’m reading the remuneration reports of leading FTSE 100 companies to help you decide whether your investments are being run by herd of ‘fat cats’. I’ve just looked at the 2013 annual report of GlaxoSmithKline (LSE: GSK) (NYSE: GSK.US) and here’s what I discovered:
1) The chief executive of GSK has during the past five years earned anywhere between £4.6m and £7.2m including all benefits. In contrast, the average GSK staff member in 2013 earned almost £63,000. The boss’s base salary was increased by 2.5% last year, while other employees enjoyed an average 2.7% pay rise. You may like to know the chief exec claimed travel expenses of £35,960 last year as well.
2) Boardroom pay policies for 2014 could see the chief exec collect a minimum total remuneration of £2m and a maximum of £11.6m. Plus, his base pay will once again advance by 2.5% to £1.1m.
3) The company’s three executive directors collected an aggregate £14m in 2013, and senior managers at GSK took home a combined £23m between them.
4) Some £2.1m was paid by GSK as fees to no less than 13 non-executive directors last year. The same non-execs also collected a further £583,000 as benefits, which covered travel and subsistence costs relating to board and committee meetings and other GSK-hosted events.
5) GSK distributed about £3.7bn as dividends during 2013 (down 3.5%), compared to £7.6bn paid to staff (up 9.5%). The chief exec owns 734,000 ordinary shares, which last year delivered an annual dividend income of about £572,000 – some 46% less than his basic pay.
During the AGM in May, shareholders approved GSK’s remuneration report with a 98.5% vote and approved the directors’ remuneration policy with a 97.4% vote.
Of course, whether GSK’s senior directors are truly worth their wage slips – or are simply trousering the company’s cash at your expense – is something only you can decide.
