GSK Annual Report 2002

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48 GlaxoSmithKline Remuneration report Share options Granted Weighted average Options – ADSs At 31.12.01 grant price Number At 31.12.02 Dr J P Garnier 2,897,443 $37.25 450,000 3,347,443 Granted Weighted average Options – Shares At 31.12.01 grant price Number At 31.12.02 Mr J D Coombe 867,948 £11.78 291,031 1,158,979 Sir Richard Sykes 634,701 – – 634,701 Dr J P Garnier was granted 450,000 options over ADSs during 2002. These were granted on 3rd December 2002 at a grant price of $37.25. Mr J D Coombe was granted 290,000 options over shares on 3rd December 2002 at a grant price of £11.79. He was also granted 1,031 options over shares in the GlaxoSmithKline Sharesave scheme on 1st December 2002 at a grant price of £9.16. For those options outstanding at 31st December 2002 the earliest and latest vesting and lapse dates for those above and below the market price for a GlaxoSmithKline share at the year end are given in the table below. Vesting date Lapse date Weighted average grant price Number earliest latest earliest latest Dr J P Garnier Above market price at year end $54.45 2,258,772 13.11.00 28.11.04 12.11.07 27.11.11 Below market price at year end $26.62 1,088,671 31.05.97 03.12.05 30.05.04 02.12.12 Mr J D Coombe Above market price at year end £16.97 867,948 01.12.02 28.11.04 31.05.03 27.11.11 Below market price at year end £11.78 291,031 01.12.05 03.12.05 31.05.06 02.12.12 All options held by Sir Richard Sykes have a grant price above the market price of a GlaxoSmithKline share at year end. GlaxoSmithKline grants share options to Executive Directors and Senior Managers on an annual basis around November. An initial grant was made following completion of the merger in March 2001. The measurement period for the options granted in March 2001 commenced on 1st January 2001. The measurement period for options granted in November 2001 and 2002 commenced on 1st January 2002 and 2003 respectively. The Directors hold these options under the various share option plans referred to in Note 34 to the Financial statements, ‘Employee share schemes’. None of the other Directors had an interest in any option over the company’s shares. Following the merger, each of the Directors above elected to exchange their outstanding options in the legacy share option plans for options over GlaxoSmithKline shares. These Directors and all other participants in those legacy schemes who made such an election, will receive an additional benefit of a cash sum equal to ten per cent of the grant price of the original option. This additional benefit will be given when the new option is exercised or lapses, provided the exercise or lapse is on or after the second anniversary of the effective date of the merger (or, as in the case of Sir Richard Sykes, on cessation of executive employment, if earlier). The highest and lowest closing prices during the year ended 31st December 2002 for GlaxoSmithKline shares were £17.80 and £10.57 respectively. The highest and lowest prices for GlaxoSmithKline ADSs during the year to 31st December 2002 were $50.87 and $32.86 respectively. The market price for a GlaxoSmithKline share on 31st December 2002 was £11.92 (on 31st December 2001 – £17.23) and for a GlaxoSmithKline ADS was $37.46 (on 31st December 2001 – $49.82). The share price on 3rd March 2003 was £11.22 per GlaxoSmithKline Share and $35.27 per GlaxoSmithKline ADS. 2002 2001 Options exercised – ADSs Gain Gain Dr J P Garnier – £2,407,497 Options exercised – shares 2002 Gain 2001 Gain Mr J D Coombe – – Sir Richard Sykes – £1,495
Incentive plans Remuneration report GlaxoSmithKline 49 Performance Share Plan – ADSs ADSs at 31.12.01 Number Granted Market price ADSs at 31.12.02 Dr J P Garnier – 2001 award 70,000 – – 70,000 2002 award 70,000 – – 70,000 2003 award – 70,000 $37.25 70,000 Performance Share Plan – shares Shares at 31.12.01 Number Granted Market price Shares at 31.12.02 Mr J D Coombe – 2001 award 40,000 – – 40,000 2002 award 40,000 – – 40,000 2003 award – 40,000 £11.79 40,000 The Performance Share Plan (PSP) is a medium-term incentive scheme introduced during 2001. The PSP replaces the Long-Term Incentive Plan and the Mid-Term Incentive Plan operated respectively by Glaxo Wellcome and SmithKline Beecham. Under the terms of the PSP the number of shares actually vesting is determined following the end of the relevant three year measurement period and is dependent on GlaxoSmithKline’s performance during that period as described on page 42. The share awards are granted annually in November or December and the measurement period commences on the following 1st January and ends after three years, on 31st December. Following completion of the merger an initial grant was made in March 2001. The measurement period for those awards commenced on 1st January 2001 and will end on 31st December 2003. Market Average Shares exercised Money price on market price value on Long-Term Incentive Plan – shares Shares at 31.12.01 Number award £ on exercise £ exercise £ at 31.12.02 Mr J D Coombe 41,100 18,087 18.58 16.22 293,370 23,013 The Long-Term Incentive Plan (LTIP) was a share award scheme operated by Glaxo Wellcome. The plan closed to new entrants upon completion of the merger and no further grants have been made. The awards made to Mr Coombe in March 1999 and February 2000 vested in March 2002 and February 2003 respectively on completion of the measurement periods. In connection with the merger the performance conditions in respect of the grants made in March 1999 and February 2000 have been waived. Awards made under the LTIP will lapse if not exercised within 12 months of vesting. Shares under the LTIP are awarded at nominal cost to the recipient. Vested and Vested and Unvested Participations Unvested deferred Participations Dividends deferred participations vesting participations participations vested reinvested participations Mid-Term Incentive Plan – ADSs at 31.12.01 in 2002 at 31.12.02 at 31.12.01 in 2002 in 2002 at 31.12.02 Dr J P Garnier 73,970 36,985 36,985 76,323 36,985 2,701 116,009 The Mid-Term Incentive Plan (MTIP) was a share award scheme operated by SmithKline Beecham. The plan closed to new entrants upon completion of the merger and no further participations have been granted. In connection with the merger, the performance conditions in respect of grants made in 1999 have been waived. The measurement period ended on 31st December 2002. The participations that vested in 2002 were awarded to Dr Garnier on 29th October 1998 when the ADS price was $54.48. The ADS price at the time of vesting was $47.50. Where a final award of ADS is made, receipt of the award may be deferred by a Director. Dr Garnier deferred receipt of the full amount awarded in 1999, 2000, 2001 and 2002. The deferred awards, together with any additional ADSs subsequently received through dividend reinvestment, are not included in the Directors’ interests table on page 47 since technically they are retained in the MTIP until paid out. Average Stock Appreciation Rights (SARs) – ADSs At 31.12.01 At 31.12.02 grant price Dr L Shapiro 1,487 1,487 $50.34 All SARs held by Dr L Shapiro have a grant price above the market price of a GlaxoSmithKline ADS at year end. Dr Shapiro is a member of GlaxoSmithKline’s Scientific Advisory Board (SAB). Dr Shapiro was a member of SmithKline Beecham’s SAB from 1993 until the completion of the merger with Glaxo Wellcome. Along with other members of the SAB, she received annual grants of SmithKline Beecham SARs which, in general, vested three years from the date of grant and will expire 10 years from the date of grant. Grants of SARs to SAB members ceased in 1999. SARs entitle the holder to a cash sum at a future date based on share price growth between the date of grant and the date of exercise. Full provision is made in the financial statements for accrued gains on SARs from the date of grant. In connection with the merger, all previously granted SARs became immediately exercisable.
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
Page 31 and 32: GlaxoSmithKline gave unrestricted g
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 and 40: Research and development Safety of
Page 41 and 42: Remuneration report GlaxoSmithKline
Page 43 and 44: The majority of the competitor pane
Page 45 and 46: Performance graph 100 90 80 70 60 N
Page 47 and 48: Non-Executive Directors Non-Executi
Page 49: Non-Executive Directors’ share ar
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
Page 69 and 70: Operating and financial review and
Page 71 and 72: Latin America reported eight per ce
Page 73 and 74: Selected financial data UK/US GAAP
Page 75 and 76: Financial statements GlaxoSmithKlin
Page 77 and 78: Independent Auditors’ report to t
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
Page 87 and 88: 2 Accounting policies continued Sto
Page 89 and 90: 6 Segment information continued Not
Page 91 and 92: 7 Merger items, restructuring costs
Page 93 and 94: Notes to the financial statements G
Page 95 and 96: 13 Earnings per share Notes to the
Page 97 and 98: Notes to the financial statements G
Page 99 and 100: 19 Equity investments Notes to the
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Notes to the financial statements G
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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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