Expert Corporate Governance Service (ECGS)
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GlaxoSmithKline - AGM 08 May 2019

The AGM is followed by an EGM to be held at 15:30 in the same location.

 AGM Item 2: Approve the Remuneration Report

The remuneration structure is unsatisfactory.  The main concern is the potential for excessive incentive pay with a maximum of 850% of base salary.  In addition, the use of qualitative criteria exceeds guidelines and accelerated vesting is possible.  The quantum for the year is also considered excessive.  We recommend shareholders oppose.

 EGM Item 1: To approve the transaction between GlaxoSmithKline Consumer Healthcare Holdings Ltd and Pfizer Inc

The Company is seeking shareholder approval of a related party transaction, whereby a Company subsidiary will enter into a joint venture with Pfizer Inc   (“Pfizer”)The proposed joint venture will combine the two groups' consumer healthcare businesses. The Board states that the transaction will benefit the Company through a strong brand portfolio, leadership positions in key geographic areas, scale and innovation, and cost synergies. They also note that the management team has experience integrating businesses.

On completion, the Company will own a majority controlling equity interest of 68% and the Pfizer Group will own the remaining 32% of the joint venture. Ultimately, the intention is to list the joint venture separately.  However, this would be conditional upon shareholder approval at that time.

As no governance concerns have been identified, the Board has presented a strategic justification for the proposed joint venture and separate shareholder approval would be sought for the spin-off should it occur, we recommend shareholders vote in favor.

GlaxoSmithKline PLC

GlaxoSmithKline is a global healthcare company. Co.'s segments include: Pharmaceuticals; Vaccines; and Consumer Healthcare. The Pharmaceuticals segment is focused on developing new medicines in respiratory, HIV, oncology and immuno-inflammation, with discovery research exploring these and other areas. The Vaccines segment has a portfolio and pipeline of vaccines to help protect people throughout life. Co. delivers vaccines to people living in over 160 countries. The Consumer Healthcare segment develops and markets consumer-preferred brands in oral health, pain relief, respiratory, nutrition/gastro-intestinal and skin health.


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