Andrew Witty, chief executive officer at drug giant GlaxoSmithKline (NYSE: GSK), more than doubled his pay in 2011 to $10.7 million. But he could earn as much as $16.6 million this year as the company is concerned about what it calls a “significant competitiveness gap” in comparison to other CEO compensation.

Thus in its annual report GSK says Witty, who recently was knighted, is due the bigger compensation package.

He also will receive a basic pay raise of 4 percent.

Notes the UK Guardian: 

“The company, which was the first in the UK to have its pay policies voted down in 2003 over a pay deal for Witty’s predecessor Jean-Pierre Garnier, said it already has shareholder approval for the changes to the chief executive’s pay deal as the company’s existing schemes permit 600% of Witty’s salary to be handed out in share awards.”

The newspaper said Witty received some $5.9 million in shares out of a possible $8 million.

“During 2011, we assessed the competitiveness of the remuneration of the Executive  Directors and other CET members and were satisfied that in most instances their remuneration was appropriate. However, we did identify a significant competitiveness gap for our CEO,” the annual report states.

“This is a particular concern for the Committee, because Sir Andrew’s strong performance is widely acknowledged. On appointment as CEO in 2008, we set Sir Andrew’s remuneration conservatively and significantly below that of his predecessor, as we set his primary benchmark to a UK cross-industry comparator group rather than the much higher benchmark of global  pharmaceutical companies. We also took into account that he was a new CEO who needed to demonstrate performance in his role. We have not increased his remuneration for over three years.

“Since Sir Andrew’s appointment, there has been a continual and marked improvement in the Group’s performance. Most recently, in 2011, underlying sales and profits have performed well, and the Group’s increase in TSR of 25% was in the upper quartile of the FTSE 100, of our UK corporate comparator group and of our global pharmaceutical peer group. This is the Group’s best TSR performance since the formation of GSK in 2000. GSK’s strategy has momentum and Sir Andrew’s vision and leadership are fundamental to this performance.

“The Committee believes that the reward level offered to the CEO should now reflect his achievements to date and has therefore increased the level of his performance related remuneration by raising his performance share award from 500% to 600% of salary, within the limit previously approved by shareholders. These performance shares will continue to vest based on Group performance after three years, but 25% of the shares vesting from the grant will now have to be retained for a further two years.

“We have also increased Sir Andrew’s base salary by 4%, which is in line with the average salary increase for GSK’s UK employees. These changes will position him more competitively against his UK peers. It should be noted that, even after these adjustments, his remuneration will still be in the bottom quartile when compared to GSK’s pharmaceutical peers.

“You will also see that Sir Andrew’s total remuneration achieved in 2011 has increased significantly from 2010. This directly reflects our pay for performance policy. In 2011, GSK delivered good underlying financial performance, pipeline progress and strong cash generation. Together with upper quartile share price performance, this enabled the best annual total shareholder returns (+25%) since 2000. Sir Andrew deserves both credit and reward for these.”

Read The Guardian report here.

Read the annual report here.

GSK maintains its U.S. headquarters in RTP.

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