gsk201602126k.htm
FORM 6-K
 
 
SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549
 
 
Report of Foreign Issuer
 
 
Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934
 
 
 
For period ending February 2016
 
GlaxoSmithKline plc
(Name of registrant)


 
 
980 Great West Road, Brentford, Middlesex, TW8 9GS
(Address of principal executive offices)


 
 
Indicate by check mark whether the registrant files or
will file annual reports under cover Form 20-F or Form 40-F


 
 
Form 20-F x     Form 40-F

 
--

 
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.


 
 
Yes      No x
--

 
 
GlaxoSmithKline plc
 
Notification of Transactions of Directors and Persons Discharging Managerial Responsibility
 
Grant of Conditional Share Awards under GlaxoSmithKline Share Plans
 
Conditional Share Awards
On 11 February 2016 the Company granted conditional share awards to Executive Directors and Persons Discharging Managerial Responsibility (PDMRs) under the GlaxoSmithKline 2009 Performance Share Plan and the GlaxoSmithKline 2009 Deferred Annual Bonus Plan.
 
2009 Performance Share Plan
The 2009 Performance Share Plan (PSP) was approved by shareholders on 20 May 2009, and allows a performance-related opportunity in the form of conditional awards to be made to senior executives in the Group, including the Executive Directors.
 
Under the terms of the PSP, 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.
 
The PSP awards made on 11 February 2016 are based on three equally weighted performance measures:
 
 
Key strategic priorities
Performance Measure
Proportion  of each award
Deliver value to shareholders
Total Shareholder Return (TSR)
1/3rd
Simplify the operating model
Adjusted free cash flow
1/3rd
Deliver more products of value
Research & Development (R&D) new product performance
1/3rd
 
The performance period for the awards is the three financial years from 1 January 2016 to 31 December 2018. 
 
TSR measure
One third of each conditional award is based on relative TSR.  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 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 6th and 44% will vest if its TSR is ranked 5th, 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, Novartis, Pfizer, Roche Holdings, Sanofi and GlaxoSmithKline.
 
Adjusted free cash flow measure
One third of each conditional award is based on adjusted free cash flow. 
 
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.  The free cash flow target represents the operating profit of the business adjusted for non-cash items after deducting the cost or benefit of working capital, capital expenditure and taxation, and after adding back planned restructuring costs for the period of £2.3bn which are being separately funded from retained divestment proceeds.  In order to incentivise management to deliver the restructuring at or below those planned costs, any overspend or underspend versus the £2.3bn will then translate into an adjustment in determining adjusted free cash flow performance relative to target.
 
The adjustments to free cash flow, used to set the target for the purpose of the performance measure, include legal settlements, special pension contributions, foreign exchange, divestments and acquisitions.  The measure post-adjustment is the "adjusted free cash flow".
 
This element of the award will vest as follows:
 
Performance Level
Adjusted Free Cash Flow (£billions)
 
Proportion  Vesting
%
Below threshold
< £ 11.6bn
0%
Threshold
£ 11.6bn
25%
 
£ 12.0bn
50%
 
£ 13.2bn
75%
Maximum
£ 13.8bn
100%
 
R&D new product measure
One third of each conditional award is based on R&D new product performance.  Due to commercial sensitivity, the Remuneration Committee has decided that the R&D new product target cannot be published at the time of grant.  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. 
 
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.
 
The Executive Directors or PDMRs in the tables below were each granted a conditional award under the terms of the PSP. Awards granted are of Ordinary Shares or ADS. The table below shows the number of Ordinary Shares or ADS which can potentially vest in respect of this incentive opportunity.
 
Dividends will accrue on the conditional award of Ordinary Shares or ADS 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.
 
 
 
Number of Ordinary Shares/ADS potentially vesting in respect of the element of the award subject to the TSR measure
 
(N.B. One ADS represents two Ordinary Shares)
 
 
Ordinary Shares
6th position or below
5th position
Maximum
 
Sir Andrew Witty*
Nil
72,168
164,017
 
Mr S Dingemans*
Nil
31,755
72,171
 
Mr R Connor
Nil
17,268
39,244
 
Mr N Hirons
Nil
7,123
16,188
 
Mr A Hussain
Nil
34,535
78,489
 
Mr D Redfern
Nil
12,519
28,452
 
Ms C Thomas
Nil
15,757
35,810
 
Mr P Thomson
Nil
9,065
20,603
 
Dr P Vallance
Nil
36,694
83,394
 
Ms E Walmsley
Nil
29,571
67,206
 
ADS
 
Dr M Slaoui*
Nil
23,278
52,905
 
Mr D Troy
Nil
14,618
33,222
 
* Denotes an Executive Director
     
       
 
 
 
Number of Ordinary Shares/ADS potentially vesting in respect of the element of the award subject to the adjusted free cash flow and R&D new product measures
 
(N.B. One ADS represents two Ordinary Shares)
 
Ordinary Shares
Below threshold
At threshold
Maximum
 
 
Sir Andrew Witty*
Nil
82,009
328,035
 
Mr S Dingemans*
Nil
36,085
144,341
 
Mr R Connor
Nil
19,622
78,489
 
Mr N Hirons
Nil
8,094
32,377
 
Mr A Hussain
Nil
39,245
156,978
 
Mr D Redfern
Nil
14,226
56,904
 
Ms C Thomas
Nil
17,905
71,621
 
Mr P Thomson
Nil
10,302
41,207
 
Dr P Vallance
Nil
41,697
166,789
 
Ms E Walmsley
Nil
33,603
134,412
 
ADS
 
Dr M Slaoui*
Nil
26,452
105,809
 
Mr D Troy
Nil
16,611
66,445
 
* Denotes an Executive Director
     
 
Subject to the below qualification regarding the awards to Executive Directors, the vesting date for these conditional awards will be the date, following the end of the three year performance period, on which the Remuneration Committee determines the extent to which the performance conditions have been achieved or such other later date as determined by the Remuneration Committee.
 
For Executive Directors, the award is subject to an additional vesting period of two years from the normal vesting date, i.e. five years in total.  During the additional vesting period, the relevant Ordinary Shares or ADS would only be forfeited in the event that the Executive Director was terminated for cause.
 
All of the above conditional awards were made on 11 February 2016 and were determined, in accordance with the PSP rules, using an Ordinary Share price of £13.59, being the closing price quoted on the London Stock Exchange on 10 February 2016 and an ADS price of $39.13, the closing price quoted on the New York Stock Exchange on 10 February 2016.
 
2009 Deferred Annual Bonus Plan
 
The 2009 Deferred Annual Bonus Plan (DABP) was approved by shareholders on 20 May 2009, and allows a performance related opportunity in the form of conditional awards to be made to eligible employees. 
 
All Executive Directors and Corporate Executive Team (CET) members are required to defer 25% of any bonus earned into Ordinary Shares or ADSs and may choose to invest up to an additional 25% (i.e. up to a maximum of 50%) (Deferred Bonus Award).
 
The Company will match Ordinary Shares or ADS up to one-for-one depending on the achievement of performance targets (Matching Award).  The performance measures, vesting schedules and performance period for the Matching Award will be the same as for the PSP awards described above.
 
The awards of Deferred and Matching shares have been granted as nil-cost options over Ordinary Shares for UK based pre-tax participants and conditional awards over ADS for US pre-tax participants. The percentage of Matching shares that ultimately vests will be dependent on the achievement against the performance targets.
 
Dividends accrue on the Deferred shares during the performance period. Dividends also accrue on the conditionally awarded Matching shares during the performance period, but will only vest to the extent that the Matching shares themselves vest at the end of the relevant performance period. These dividends are not included in the figures below.
 
The following individuals have deferred a proportion of their bonus into the DABP in respect of the 2015 bonus that they have earned on a gross or pre-tax basis. The following awards are gross of tax:
 
Deferred Bonus Awards
 
 
 
Number of Ordinary Shares/ADS potentially vesting in respect of the Deferred Bonus Award
(N.B. One ADS represents two Ordinary Shares)
 
Number of Ordinary Shares subject to Deferred Bonus Award
Number of ADS subject to Deferred Bonus Award
Sir Andrew Witty*
40,003
 
Mr S Dingemans*
36,381
 
Dr M Slaoui*
 
20,854
Mr R Connor
9,359
 
Mr N Hirons
13,452
 
Mr A Hussain
31,788
 
Mr D Redfern
17,120
 
Ms C Thomas
25,046
 
Mr P Thomson
7,662
 
Mr D Troy
 
14,760
Dr P Vallance
29,462
 
Ms E Walmsley
27,549
 
* Denotes an Executive Director
 
 
Matching Awards
 
 
 
Number of Ordinary Shares/ADS potentially vesting in respect of the element of the Matching Award subject to the TSR measure
(N.B. One ADS represents two Ordinary Shares)
Ordinary Shares
6th position or below
5th position
Maximum
Sir Andrew Witty*
Nil
5,867
13,334
Mr S Dingemans*
Nil
5,336
12,127
Mr R Connor
Nil
1,373
3,120
Mr N Hirons
Nil
1,973
4,484
Mr A Hussain
Nil
4,662
10,596
Mr D Redfern
Nil
2,511
5,707
Ms C Thomas
Nil
3,673
8,349
Mr P Thomson
Nil
1,124
2,554
Dr P Vallance
Nil
4,321
9,821
Ms E Walmsley
Nil
4,041
9,183
ADS
Dr M Slaoui*
Nil
3,059
6,951
Mr D Troy
Nil
2,165
4,920
* Denotes an Executive Director
   
 
 
 
 
Number of Ordinary Shares/ADS potentially vesting in respect of the element of the Matching Award subject to the adjusted free cash flow and R&D new product measures
(N.B. One ADS represents two Ordinary Shares)
Ordinary Shares
Below threshold
At threshold
Maximum
Sir Andrew Witty*
Nil
6,667
26,669
Mr S Dingemans*
Nil
6,064
24,254
Mr R Connor
Nil
1,560
6,239
Mr N Hirons
Nil
2,242
8,968
Mr A Hussain
Nil
5,298
21,192
Mr D Redfern
Nil
2,853
11,413
Ms C Thomas
Nil
4,174
16,697
Mr P Thomson
Nil
1,277
5,108
Dr P Vallance
Nil
4,910
19,641
Ms E Walmsley
Nil
4,592
18,366
ADS
Dr M Slaoui*
Nil
3,476
13,903
Mr D Troy
Nil
2,460
9,840
* Denotes an Executive Director
   
 
The vesting date for these conditional awards will be the later of the date, following the end of the three year performance period, on which the Remuneration Committee determines the extent to which the performance measures have been achieved, the third anniversary of the Award Date or such other later date as determined by the Remuneration Committee.
 
All of the above conditional awards were made on 11 February 2016. The awards made were determined, using an Ordinary Share price of £13.59 the closing price quoted on the London Stock Exchange on 10 February 2016 and an ADS price of $39.13 the closing price quoted on the New York Stock Exchange on 10 February 2016.
 
The Company, Executive Directors and PDMRs were advised of these transactions on 12 February 2016.
 
This notification is made in accordance with Disclosure and Transparency Rule 3.1.4R(1)(a).
 
V A Whyte
Company Secretary
 
12 February 2016
 
 
 
SIGNATURES
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorised.



 
 
GlaxoSmithKline plc
(Registrant)


Date: February 12, 2016 
 
 
By: VICTORIA WHYTE
----------------------
 
 
Victoria Whyte
Authorised Signatory for and on
behalf of GlaxoSmithKline plc