Pharmaceutical giant GlaxoSmithKline has announced new executive remuneration arrangements which will cover both its Executive Directors and the company's top executive team.
Earlier this year, shareholders voted against the firm's controversial pay and benefits package with anger focussing on two-year rolling contracts for executive directors and the £22m "golden parachute" payment that GSK chief executive Jean-Pierre Garnier would receive if he lost his job.
GSK has now scrapped the rolling contracts and replaced them with a single year deal without compensation.
The new arrangements mean that Jean-Pierre Garnier's basic pay will remain unchanged at $1.5m, although with bonuses and options his total remuneration could still rise to up to £$10 million.
Glaxo said that the arrangements follow extensive shareholder consultation and talks with the Association of British Insurers and the National Association of Pension Funds.
GSK's Chairman, Sir Christopher Hogg, said that the company had listened carefully to the views of its major shareholders in developing the new policy.
"The new remuneration arrangements are closely aligned with UK shareholder best-practice guidelines whilst at the same time allowing GSK to secure, retain and motivate key talent in the globally competitive marketplace in which we operate," he said.
"As well as reducing executive director notice periods without compensation, we have introduced tougher performance conditions which clearly correlate pay with the delivery of strong financial performance and superior returns compared with our peer group. No other pharmaceutical company has adopted such demanding performance criteria."
But Peter Montagnon of the Association of British Insurers, said he would like to see more details of how Mr Garnier's pay would be related to performance targets. "Performance hurdles must be set in such a way that there is a proper link between performance and reward," he said.
The GSK announcement comes just days after research by executive compensation consultancy Halliwell Consulting found that executives in most FTSE 100 companies are receiving 'performance-related' incentives even when their companies perform significantly under market expectations.