Is GSK's Andrew Witty really underpaid?

After Sir Martin Sorrell at WPP, Sir Andrew Witty of GlaxoSmithKline is probably the FTSE 100 chief executive least likely to quit to join a rival.

Witty joined Glaxo as a management trainee and clearly adores the place. He can be seen in an online recruitment advert enthusing about how the pharmaceutical giant has lived up to all his expectations for his career. Glaxo has "not disappointed for a single day," he tells graduates pondering where to send their CVs.

But there's a problem – or so Sir Crispin Davis, chair of GSK's remuneration committee, thinks. The non-executives have identified "a significant competitiveness gap for our CEO". To wit, Witty can't earn enough. He should be given the chance to earn 600% of his £1m-a-year salary under a long-term incentive plan, and not a mere 500%.

As it happens, Glaxo makes a fair case that Witty's pay does indeed fall short of his peers', both in the pharmaceutical industry and among Britain's biggest companies. There are three charts in the pay report to illustrate the results of the benchmarking exercise undertaken by Davis's committee and the unspoken message seems clear enough: you should see what they hand out at Novartis, Roche, Barclays etc. Fair point.

And, as the report also points out, Witty is paid considerably less than his predecessor, JP Garnier, and is seen to be doing a good job. Those with longer memories will also recall that Jan Leschly, boss of SmithKline Beecham, had accumulated a share option package worth $100m at the time of the merger with Glaxo Wellcome in 2000. Against that benchmark, Witty's take-home pay last year of £5.7m (£1m salary, £2m bonus, £3.7m long-term reward) looks positively mean. So it's a reasonable guess that Glaxo will not suffer an embarrassing vote against its remuneration report, as happened in 2003.

What can be said, though, is that we've reached the point where the chief executive of a top FTSE 100 company can expect to earn about £10m-a-year if all the performance targets are achieved. That's seems to be the approximate benchmark Glaxo is using.

Would there be mass desertions to the detriment of shareholders if this potential annual jackpot was somehow halved overnight? Unlikely: not all bosses are one-company loyalists like Witty, but many of the best are.