GlaxoSmithKline PLC Director/PDMR Shareholding (0669F)

TIDMGSK

RNS Number : 0669F

GlaxoSmithKline PLC

15 February 2018

GlaxoSmithKline plc (the 'Company')

2017 Performance Share Plan Award and 2017 Performance Measures

2017 Performance Share Plan Award

On 14 February 2018, the Company granted conditional share awards to a Person Discharging Managerial Responsibilities ('PDMR') under the GlaxoSmithKline 2017 Performance Share Plan (the 'Plan'). The Plan was approved by shareholders on 4 May 2017, and allows a performance-related opportunity in the form of conditional awards to be granted to senior executives in the Group, including the Executive Directors and PDMRs.

Under the terms of the Plan, conditional awards are granted over a specific number of Ordinary Shares or American Depositary Shares ('ADS'), and the percentage of awards that ultimately vests is dependent on the level of achievement against performance targets set by the Remuneration Committee.

This PDMR joined the Company in 2017. These 2017 Performance Share Plan ('PSP') awards were granted to this PDMR under the terms of the offer of employment.

2017 Performance Measures

The performance condition information that follows applies to these 2017 PSP Awards. This performance condition is the same that was announced by the Company on 28 July 2017 for the awards granted to Executive Directors and PDMRs on 27 July 2017.

The performance period for these awards is the three financial years from 1 January 2017 to 31 December 2019. The awards are based on three equally weighted performance measures:

 
 Performance Measure                  Proportion 
                                     of each award 
---------------------------------  --------------- 
 Total Shareholder Return (TSR)         1/3rd 
---------------------------------  --------------- 
 Adjusted Free Cash Flow (AFCF)         1/3rd 
---------------------------------  --------------- 
 Research & Development (R&D) New       1/3rd 
  Product performance 
---------------------------------  --------------- 
 

TSR measure

This measure compares the TSR of the Company's Ordinary Shares over the performance period with the TSR of the shares of nine (9) other global pharmaceutical companies (i.e. a comparator group of ten (10) companies including the Company).

The vesting schedule is based on delivering 30% vesting for achieving median performance. However, in a group of 10 companies, the median (position 5.5) falls between two companies. Therefore, 0% will vest if the Company's TSR is ranked 6(th) and 44% will vest if its TSR is ranked 5(th) , i.e. above median, in the comparator group. The maximum amount will vest for this element, if the Company's TSR is ranked in positions 1, 2 or 3.

The companies in the TSR comparator group are: AstraZeneca, Bristol-Myers Squibb, Eli Lilly, Johnson & Johnson, Merck & Co, Novartis, Pfizer, Roche Holdings, Sanofi and GlaxoSmithKline.

Adjusted Free Cash Flow measure

The use of cash flow as a performance measure is intended to recognise the importance of effective working capital management and of generating cash to fund the Group's operations, investments, and Ordinary dividends to shareholders.

Free cash flow represents the operating profit of the business adjusted for non-cash items after deducting the cost or benefit of working capital, capital expenditure, contingent consideration payments, net interest, dividends paid to non-controlling interests and taxation.

The adjustments to free cash flow, used to set the AFCF target for the purpose of the performance measure, include major legal settlements, special pension contributions, foreign exchange, divestments and acquisitions. The measure post-adjustment is the "adjusted free cash flow" target.

This element of the award will vest as follows:

 
 Performance Level      Adjusted Free      Proportion Vesting 
                       Cash Flow target 
-------------------  -------------------  ------------------- 
 Below threshold        < GBP 11.47bn              0% 
-------------------  -------------------  ------------------- 
 Threshold               GBP 11.47bn              25% 
-------------------  -------------------  ------------------- 
               GBP 11.82bn                        50% 
 ---------------------------------------  ------------------- 
               GBP 13.00bn                        75% 
 ---------------------------------------  ------------------- 
 Maximum                 GBP 13.59bn              100% 
-------------------  -------------------  ------------------- 
 

The proportions vesting between the above vesting levels will be calculated on a straight-line basis.

R&D New Product measure

Due to commercial sensitivity, the Remuneration Committee remains of the view that the R&D new product target cannot be published at the time of grant. However, the target and vesting outcome will be disclosed in full at the end of the performance period.

25% of this element will vest if the performance threshold level is attained, rising to 100% for stretching performance exceeding 122% of the set threshold. Below the set threshold, none of this element will vest.

Notes

1. To the extent that each element of a conditional award does not vest at the end of the three-year performance period, it will lapse.

2. The PDMR in the transaction notifications below was granted conditional awards under the terms of the GlaxoSmithKline 2017 Performance Share Plan. Awards granted are of Ordinary Shares.

3. Dividends will accrue on the conditional award of Ordinary Shares during the performance period, but will only vest to the extent that the awards themselves vest at the end of the performance period. These dividends are not included in the figures below.

Transaction notification

 
 1.    Details of PDMR/person closely associated 
        with them ('PCA') 
====  ===================================================================== 
 a)    Name                         Mr L Miels 
====  ============================  ======================================= 
 b)    Position/status              President, Global Pharmaceuticals 
====  ============================  ======================================= 
 c)    Initial notification/        Initial Notification 
        amendment 
====  ============================  ======================================= 
 2.    Details of the issuer, emission allowance 
        market participant, auction platform, auctioneer 
        or auction monitor 
====  ===================================================================== 
 a)    Name                         GlaxoSmithKline plc 
====  ============================  ======================================= 
 b)    LEI                          5493000HZTVUYLO1D793 
====  ============================  ======================================= 
 3.    Details of the transaction(s): section 
        to be repeated for (i) each type of instrument; 
        (ii) each type of transaction; (iii) each 
        date; and (iv) each place where transaction(s) 
        has been conducted 
====  ===================================================================== 
 a)    Description                   Ordinary shares of 25 pence 
        of the financial              each ('Ordinary Shares') 
        instrument 
                                      ISIN: GB0009252882 
====  ============================  ======================================= 
 b)    Nature of the                A conditional award of Ordinary 
        transaction                  Shares under the Company's 2017 
                                     Performance Share Plan. 
====  ============================  ======================================= 
 c)    Price(s) and                   Price(s)           Volume(s) 
        volume(s) 
====  ============================   =================  ================= 
    GBP12.91                                             366,704 
   ===================================================  ================= 
 
 d)    Aggregated                   n/a (single transaction) 
        information 
==== 
  Aggregated 
   volume Price 
 ================================================  ======================== 
 e)    Date of the                  2018-02-14 
        transaction 
====  ============================  ======================================= 
 f)    Place of the                 n/a 
        transaction 
====  ============================  ======================================= 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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February 15, 2018 12:57 ET (17:57 GMT)