GSK Annual Report 2002

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38 GlaxoSmithKline Corporate governance The Sarbanes-Oxley Act 2002 Following a number of corporate and accounting scandals in the USA, Congress passed the Sarbanes-Oxley Act 2002 (Sarbanes- Oxley) which took effect on 30th July 2002. Sarbanes-Oxley establishes new or enhanced standards for corporate accountability in the USA. A number of provisions of Sarbanes-Oxley apply to GlaxoSmithKline because the company is quoted on the New York Stock Exchange in the form of ADSs. Although the company’s corporate governance structure is believed to be robust and in line with best practice, certain changes were necessary to ensure compliance with Sarbanes-Oxley. As recommended by the Securities and Exchange Commission (SEC), GlaxoSmithKline has established a Disclosure Committee. The Committee reports to the CEO, the CFO and to the Audit Committee. It is chaired by the Company Secretary and the members consist of senior managers from finance, legal, compliance and public and investor relations. It has responsibility for considering the materiality of information and on a timely basis, determination of the disclosure and treatment of material information. The Committee also has responsibility for the timely filing of reports with the SEC and the formal review of the contents of GlaxoSmithKline’s Annual Report on Form 20-F. CEO/CFO Certifications Sarbanes-Oxley has introduced a requirement that the CEO and the CFO must complete formal certifications, which require confirmation that: • they have reviewed the Annual Report on Form 20-F • it contains no material misstatements or omissions • the Financial statements and other financial information fairly presents, in all material aspects, the financial condition, results of operations and cash flows for the period under the report • they are responsible for establishing and maintaining disclosure controls and procedures that ensure material information is made known to them and that they have evaluated the effectiveness of these controls and procedures within the past 90 days, the results of such evaluation being contained in the report • they have disclosed to the auditors and the Audit Committee all significant deficiencies and material weaknesses in the design or operation of internal controls and any fraud (regardless of materiality) involving persons that have a significant role in the internal controls of GlaxoSmithKline • they have indicated in the report whether there were any significant changes in internal controls including any corrective actions. The CEO and CFO have completed these certifications which will be filed with the SEC in the USA as part of the Group’s Form 20-F. Evaluation of disclosure controls and procedures Within the 90 days prior to the date of this report, the Group carried out an evaluation under the supervision and with the participation of the Group’s management, including the CEO and CFO, of the effectiveness of the design and operation of the Group’s disclosure controls and procedures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon and as of the date of the Group’s evaluation, the CEO and CFO concluded that the disclosure controls and procedures are effective in all material respects to ensure that information required to be disclosed in the reports the Group files and submits under the US Securities Exchange Act of 1934, as amended, is recorded, processed, summarised and reported as and when required. Related party transactions GlaxoSmithKline held a 23 per cent interest in Quest Diagnostics Inc. throughout 2002. This holding was reduced to 21 per cent in February 2003 following Quest’s acquisition of Unilab Corporation. In December 2002 GlaxoSmithKline and Quest amended the terms of their Global Trials Agreement, which is a long-term contractual relationship under which Quest is the primary provider of clinical laboratory testing to support the Group’s clinical trials testing requirements worldwide. In February 2002, Mr Ingram, then a member of the CET, purchased a portion of land being part of a residential property owned by the Group that was adjacent to Mr Ingram’s own residence. The total sale price was $16,500 based on an independent valuation of the land. The Group subsequently determined that retention of the residential property no longer served its business needs and listed the property for sale. An independent valuation of the property on 3rd June 2002 valued it at $1,050,000 and the property was offered for sale through an estate agent. Mr Ingram made the highest offer for the property and purchased it from the Group for total consideration of $1,070,000. Documents on display Documents referred to in this Annual Report are available for inspection at the Registered Office of the company.
Remuneration report GlaxoSmithKline 39 The Remuneration report sets out the remuneration policies operated by GlaxoSmithKline and disclosures on Directors’ remuneration including those required by schedule 7A to the Companies Act 1985, The Directors’ Remuneration Report Regulations 2002 (the Regulations). In accordance with the Regulations, the following sections of the Remuneration report are subject to audit: Annual remuneration; Non-Executive Directors’ share arrangements; Share options; Incentive plans and Pensions. The remaining sections are not subject to audit. 40 Remuneration introduction This describes the processes, policies and programmes which were in effect in 2002. 46 Directors’ remuneration 2002 This sets out the remuneration earned in 2002 by Directors of GlaxoSmithKline, together with their interests in share options and share incentive plans. 50 Directors and Senior Management This sets out the interests of Directors of GlaxoSmithKline in shares of GlaxoSmithKline plc and in contracts. Information is also provided on the aggregate remuneration and interests of Directors and Senior Management of GlaxoSmithKline.
Page 1 and 2: Do more, feel better, live longer T
Page 3 and 4: The Annual Report was approved by t
Page 5 and 6: Joint statement by the Chairman and
Page 7 and 8: 04 GlaxoSmithKline Joint statement
Page 9 and 10: Products - Pharmaceuticals Descript
Page 11 and 12: Additionally, GlaxoSmithKline marke
Page 13 and 14: Competition - Consumer Healthcare T
Page 15 and 16: Operating activities Marketing and
Page 17 and 18: Description of business GlaxoSmithK
Page 19 and 20: Description of business GlaxoSmithK
Page 21 and 22: Product approvals Country/Region Pr
Page 23 and 24: As part of GlaxoSmithKline’s majo
Page 25 and 26: Operating resources Intellectual pr
Page 27 and 28: Compensation philosophy and program
Page 29 and 30: Access to healthcare in the develop
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Page 33 and 34: Corporate governance This section d
Page 35 and 36: Corporate Executive Team (CET) JP G
Page 37 and 38: The Annual General Meeting takes pl
Page 39: Research and development Safety of
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Page 45 and 46: Performance graph 100 90 80 70 60 N
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Page 51 and 52: Incentive plans Remuneration report
Page 53 and 54: Operating and financial review and
Page 55 and 56: 2002 Year World economy The world
Page 57 and 58: Pharmaceutical sales by therapeutic
Page 59 and 60: Consumer Healthcare sales 2002 2001
Page 61 and 62: Earnings 2001 2002 (restated) CER%
Page 63 and 64: Contractual obligations and commitm
Page 65 and 66: Funding, maturity and counterparty
Page 67 and 68: Stricter regulatory controls also h
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Page 73 and 74: Selected financial data UK/US GAAP
Page 75 and 76: Financial statements GlaxoSmithKlin
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Page 79 and 80: Consolidated statement of profit an
Page 81 and 82: Consolidated statement of cash flow
Page 83 and 84: Company balance sheet at 31st Decem
Page 85 and 86: 2 Accounting policies Consolidation
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7 Merger items, restructuring costs
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Notes to the financial statements G
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13 Earnings per share Notes to the
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19 Equity investments Notes to the
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30 Legal proceedings The Group is i
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30 Legal proceedings continued In F
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30 Legal proceedings continued In 2
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31 Acquisitions and disposals conti
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32 Financial instruments and relate
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32 Financial instruments and relate
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33 Employee costs continued Notes t
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33 Employee costs continued Notes t
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34 Employee share schemes continued
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34 Employee share schemes continued
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37 Reconciliation to US accounting
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38 Principal Group companies Notes
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38 Principal Group companies contin
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Financial record GlaxoSmithKline 14
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Investor information GlaxoSmithKlin
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Shareholder information Ordinary sh
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Share capital GlaxoSmithKline 155 A
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Cross reference to Form 20-F GlaxoS
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Index A Access to healthcare 27 Acc
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Contact details INTERNET Informatio
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GSK Annual Report 2002

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