Sir Andrew Witty paid a price—but less than 10% of his total 2013 compensation—for the scandal resulting from Chinese officials accusing GlaxoSmithKline (GSK) employees of paying off healthcare officials and doctors as well as committing tax fraud.
Witty lost $410,000 he would otherwise have received in bonus pay as a result of the Chinese investigation of GSK activities, which resulted in an 18% year-over-year sales drop in pharmaceuticals and vaccines in the world’s most populous nation, led by declines in respiratory and hepatitis products. According to GSK’s annual report, Witty was left with £1.875 million (approximatel $3.13 million) of a potential £2.12 million ($3.54 million) bonus for 2013.
“Both Sir Andrew and the board are mindful of the impact this issue has had on the reputation of the company. As a result, the bonuses awarded for 2013 were lower than they otherwise might have been,” the chairman of the GSK board’s remuneration committee, Tom de Swaan, said in a statement included within the company’s Annual Report for 2013.
Yet that bonus is more than double the £905,000 ($1.5 million) Witty racked up last year, since GSK’s board opted also to reward him for approvals of new GSK treatments by regulators worldwide, including for the respiratory drugs Anoro and Breo, the melanoma treatments Tafinlar and Mekinist, and Tivicay for HIV. Another drug, once-weekly Eperzan™ (albiglutide) for type 2 diabetes, won favorable recommendation in January from the European Medicines Agency’s Committee for Medicinal Products for Human Use (CHMP).
Witty’s total compensation during 2013 rose 64% from 2012, to £7.207 million ($12.05 million) from £4.386 million ($7.33 million). The figures include pension payments as well as salary, bonus and stock.
In addition to the regulatory approvals, the board opted to reward Witty for “meeting the top end of our  financial guidance, and delivering the best total shareholder return since the formation of the company with more than £5 billion (about $8.4 billion) returned to shareholders,” an unnamed GSK spokesman told The Guardian.
Chinese authorities have accused GSK of funneling of up to RMB 3 billion ($488 million) to travel agents, using the money to bribe doctors and officials or “cater to their pleasures,” as China’s official Xinhua news agency delicately reported, as well as inflating drug prices and committing tax fraud. GSK said it continues to cooperate with investigators.