A REBELLION by shareholders last night signalled the beginning of the end of "fat cat" pay deals in Britain's boardrooms.

In an unprecedented revolt, City institutions and an army of small investors joined forces to reject a multi-million pound pay and rewards package for executives at drugs group GlaxoSmithKline.

Under the proposals it was reported that chief executive Pierre Garnier would be entitled to a pay-off of up to £22m if he was forced to leave the company through poor performance.

But at the annual general meeting, 50.72 per cent of shareholders refused to support the rewards package.

Although the result is not binding, GSK directors are expected to revise the terms of their deals.

GSK's chairman Sir Christopher Hogg said last night: "The board takes this result very seriously. The major reason for this negative vote has been the fact that there are elements of our senior level remuneration package which do not accord with what is regarded as best practice by some shareholders."

The scale of the shareholder protest will send shockwaves through British boardrooms.

Brendan Barber, general secretary elect of the TUC, said: "This is an extremely significant result that will have repercussions way beyond GSK. Britain's boardrooms are now on notice. But there is no guarantee they will act unless the Government changes the law to ban payments for failure."

Amicus joint general secretary Derek Simpson said: "This represents a new era of corporate accountability. I want to see bosses' pay linked to workers'."

The proposed deal for Mr Garnier angered workers at the GSK plant at Barnard Castle, where 400 redundancies were announced last year.

GMB regional organiser Derek Cattell said: "When negotiating for better pay deals and being told there is not the money to cover it, the unions have argued the toss about the huge pay deals for the chief executive. There is a real resentment about him among the workforce."

Last year, Mr Garnier was paid £2.5m in salary, bonus and other benefits. A shift worker at the Barnard Castle plant earns £18,000 a year.

Ken Coates, who took voluntary redundancy last year, is a GSK shareholder. He said: "Our redundancy packages seemed good to us at the time, but not compared to what the chief executive will be getting.

"As a shareholder myself, I am happy to see the other shareholders at this meeting taking a stand against this man."

Peter Montagnon, head of investment affairs at the Association of British Insurers, said: "The size of the protest vote has been so large that the company really must listen very carefully to what the shareholders have been saying and must turn this into action."

City commentators last night warned GSK that it would face another shareholders revolt next year unless the concerns over boardroom pay were addressed.

The revolt follows a similar protest last week at insurance giant Royal & Sun Alliance's meeting which saw a third of voters refuse to back its pay awards for executives.