Friday, December 14, 2007

Crozier vs. Garnier

During the research for a project I'm working on I found myself looking through GlaxoSmithKline's accounts. Remembering the debate over the Public Sector Rich List I got curious and wondered just how much JP Garnier - the reputedly well-paid boss of what is a huge company - gets paid. The figure is $5,413,000. That's a lot of money, not bad if you can get it. However, GSK are really massive and. I wondered how much more it was than the £1,256,000 that Crozier takes home in total remuneration and whether Garnier or Crozier make more per pound of their company's revenue.

I've done those calculations. They are entirely reliable with the proviso that the exchange rate is today's rather than last year's. Royal Mail revenue and operating profit figures are from their accounts:

(click to enlarge)

What that shows is that Royal Mail pay Crozier more compared to their profit and revenue than GSK pay Garnier. Adam Crozier is, at least compared to JP Garnier, well paid even relative to the scale of the company he is running. Even at the very top end the public sector now pays really well.

Given that public sector organisations don't depend on success in the market to attract customers or strong financial results to attract shareholders there is no reason to assume these salaries are likely to be justified.

Cross-posted from the TaxPayers' Alliance blog


Henry said...
This comment has been removed by the author.
Gracchi said...

Come on Matt- that's a rather selective example. I expect for example I could find an equally good example to prove that Crozier was underpaid- say the Chief Exec of Northern Rock! I think a discussion of the averages would be interesting though- say for the FTSE 100 against publically owned corporations of the same rough size.

Matthew Sinclair said...

No, not at all! JP Garnier is one of the few execs so well remunerated it led to a shareholder revolt over his golden parachute. He does very well.

Unity said...


You forgot that Garnier got $15.3 million in share options in addition to his remuneration.

That's something that seems to habitually neglected in these kinds of calculations. The private sector have the option of rewarding their top staff with share options, a facility lacking in the public sector.

If you're going to make a life for comparison then it has to be on the basis that you factor in any dividends on share options and a notion sum to cover any increase in the value of the shares.

Matthew Sinclair said...

Did I? Shit, I apologise. I'll go check it out and then update the main post. That would definitely mean Garnier is getting more for the size of his company.

The main report included no such comparisons. Again, all apologies if I've misled people.

Matthew Sinclair said...

Hmm... can you point me to the page on the accounts where this sum is mentioned. I'm afraid I'm having some trouble working out exactly what you're referring to. I can't see such a figure.

Increases in the values of shares shouldn't be included on a like-for-like comparison. We didn't include increases in the values of pension funds in the totals in the Public Sector Rich List. We only included pensions at all when a sum for the employers' contribution in the year was explicitly mentioned. As such, increases in the value of shares or pension funds should be left off any private sector figure used for comparison.