GSK Annual Report 2002

44 GlaxoSmithKline Remuneration report
In the event of retirement on the expiry of his service agreement or
in the event of termination of his employment by SmithKline
Beecham Corporation (other than for cause) or in the event of
Dr Garnier not being elected or retained as a Director of
GlaxoSmithKline (or any merged company), or as a result of a
change of control of GlaxoSmithKline (provided that such
resignation occurs on or within 30 days after the first anniversary
of such change in control), then (a) all share option grants will vest
immediately and will remain exercisable until the expiry of the
option period as if Dr Garnier had still been employed by SmithKline
Beecham Corporation and all performance and time conditions
shall be deemed to have been satisfied, and (b) final awards under
the Performance Share Plan will be determined after the end of
the full performance period originally specified for the relevant
participation without any proportionate reduction because of such
retirement, termination or resignation. In respect of Dr Garnier’s
participation in the SmithKline Beecham Senior Executive Bonus
Investment Plan, provided that his agreement is terminated other
than for cause, any deferred amount and any income, gains and
losses, are automatically distributed as soon as administratively
practicable after his termination. If Dr Garnier resigns, retires or
the termination is for cause then any deferred amount is not
distributed until the end of a minimum three year deferral period.
Mr J D Coombe
Mr Coombe has a service agreement with Glaxo Wellcome plc,
now GlaxoSmithKline Services Unlimited, dated 14th February
2000. The agreement expires on 31st March 2005, being the last
day of the month in which Mr Coombe reaches his 60th birthday.
Mr Coombe’s current basic salary is £475,000, and will be increased
to £495,000 on 1st April 2003.
Mr Coombe may terminate the agreement on giving 12 calendar
months’ written notice.
GlaxoSmithKline Services Unlimited may terminate the agreement
on 24 calendar months’ written notice or without notice in the
event of Mr Coombe’s gross misconduct, wilful neglect, dishonesty,
bankruptcy or conviction of a criminal offence affecting his position
as a senior executive.
Mr Coombe’s agreement specifies that the compensation in cash
to be paid in the event of redundancy will be as follows:
• an amount equal to twice his annual rate of salary
• an amount on account of bonus equal to 80 per cent of his
annual rate of salary
• an amount equal to the value of two years’ benefit.
In such circumstances, Mr Coombe’s pension entitlement will also
be augmented by an amount equal in value to the pension which
would have accrued to him over the period of 24 months
commencing on the date of termination of his employment.
After a period of 12 consecutive months incapacity or after
Mr Coombe becomes entitled to a disablement pension, he is
entitled to an amount equivalent to the amount he would have
received had he worked for a period of 24 months from the first
day of his absence less any amounts actually received during that
period.
In addition, if Mr Coombe leaves employment through incapacity
before the age of 60, the pension he has already accrued becomes
payable from the date of his incapacity and may be augmented by
the trustees of the pension plan to the amount to which he would
have been entitled had he been employed in full service until 60.
In the event that notice of termination is given, other than in the
case of redundancy, Mr Coombe is required to mitigate any loss of
earnings resulting thereafter.
In the event of Mr Coombe’s early retirement as a result of
termination by GlaxoSmithKline Services Unlimited (other than for
cause or redundancy), all outstanding options granted under the
GlaxoSmithKline share option plan must be exercised within
48 months from the date of grant. All outstanding options granted
under the Glaxo Wellcome share option plans must be exercised
within 12 months from cessation of employment or by the end of
the option period, if earlier, where such options are more than
three years old and outstanding options less than three years old
must be exercised within 42 months from the date of grant. In
each case, the Remuneration Committee may use its discretion to
allow a longer period of exercise.
In the case of awards under the Performance Share Plan, if
Mr Coombe’s employment contract is terminated for redundancy,
retirement or his employing company ceases to be a member of
the GlaxoSmithKline Group then the Remuneration Committee
will determine the percentage of each award that will vest under
the Plan rules after the end of the financial year in which the
cessation of employment occurred. This will ordinarily be calculated
by reference to the performance period which has elapsed and the
extent to which the performance condition has been satisfied over
that period. If his employment ceases for any other reason before
the end of the awards performance period, the awards will lapse
unless the Committee determines otherwise.
In respect of Mr Coombe’s participation in the Glaxo Wellcome
Long Term Incentive Plan (LTIP) special rules apply when a
participant’s employment ends. However all awards made to
Mr Coombe under the LTIP have now vested on the completion
of the measurement period.
Other entitlements
In addition to the contractual provisions outlined above in the
event that Dr Garnier or Mr Coombe’s service agreements are
terminated by their employing company they would be entitled to:
• the Special Deferred Bonus awarded to each member of the
CET in respect of 2001 and payable on 15th February 2005,
unless terminated for cause prior to that date. Details of this
bonus are given on page 46
• in the case of awards under the GlaxoSmithKline Annual
Investment Plan, provided that their agreement is terminated
other than for cause, any deferred amount and any income,
gains and losses, are automatically distributed as soon as
administratively practicable after termination. If they resign,
retire or the termination is for cause then any deferred
amount is not distributed until the end of a minimum
three year deferral period.