GSK Annual Report 2002

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.