Glaxo to pay 1st female CEO less, citing lack of experience
Walmsley to earn 25% less than Witty in her first year at helm
Bonus for CEO capped at 100% of base salary in policy change
Emma Walmsley, poised to take over as the first female chief executive officer of GlaxoSmithKline Plc, will earn about a quarter less than her predecessor Andrew Witty to reflect her lack of experience at the helm.
Walmsley will be paid an annual base salary of about 1 million pounds ($1.2 million), the London-based drugmaker said in its annual report. That compares to Witty’s pay of 1.15 million pounds last year. Her bonus will also be capped so that it can’t exceed her salary, whereas Witty was given the opportunity to collect 125 percent of his pay through the bonus.
The lower compensation, for a woman who is breaking the gender barrier to become the first female to manage one of the world’s top 25 pharmaceutical companies, is likely to re-ignite a debate on the pay gap between the sexes. But it isn’t unusual that compensation levels change when a new CEO takes office as boards seek to link pay packages to the person’s level of experience and tenure.
“This is the moment to reassess the executive pay structure,” said Stefan Stern, director of the High Pay Centre, a think tank on top U.K. executive remuneration. “It’s good to focus on the contribution from the new person and it’s good to be tough and pay somebody less than their predecessor if their CV is at a different stage.”
Glaxo’s Chairman Phil Hampton, who as director at Anglo American Plc oversaw the capping of executives’ bonuses there, also heads a government-backed review on how to increase the number of female executives at the U.K.’s biggest 350 companies.
The compensation decision at Glaxo was part of a broader review of the U.K. drugmaker’s pay policy for top executives, which also resulted in demanding more share ownership and simplified the annual bonus system. The panel that sets pay was “particularly thoughtful about the quantum of the incentives” for the new CEO, according to annual report.
Walmsley’s task won’t be easy: the 47-year-old Oxford graduate inherits the challenge of piloting cutting-edge treatments for cancer and infectious diseases through clinical tests and onto pharmacy shelves to boost earnings and revive Glaxo’s shares.
Other recent CEO appointees in the industry hadn’t led a company before, including AstraZeneca Plc’s Pascal Soriot, Novartis AG’s Joe Jimenez — who came from a consumer goods background, like Walmsley — and Roche Holding AG’s Severin Schwan.
Walmsley, who takes over as CEO at the end of the month, comes from Glaxo’s consumer health business, known for brands such as Sensodyne, Panadol and Voltaren. She previously worked at cosmetics giant L’Oreal SA. Witty would have been CEO for almost a decade when he leaves the role.