The board of GlaxoSmithKline, the UK pharmaceuticals company, has suffered a humiliating defeat over its controversial pay packets for top executives at its annual general meeting, in the biggest demonstration to date of shareholders' increasing inclination to use their power.

Although the majority that voted against the resolution - 50.7% - was wafer-thin, it is the first time in UK corporate history that shareholders have voted against directors' recommendations. Fund managers have predicted that the result will place the company in a far weaker position for discussions following a review of executive remuneration that is already being conducted.