Gsk (LSE:GSK)
Historical Stock Chart

From Apr 2019 to Apr 2024

TIDMGSK

RNS Number : 7999U

GlaxoSmithKline PLC

31 July 2015

GlaxoSmithKline plc

(the 'Company')

Adjusted Free Cash Flow Performance Measure for 2015-17 awards

under GlaxoSmithKline Share Plans

GSK has today set out the Adjusted Free Cash Flow (AFCF) Performance Measures for the conditional award of shares under the Group's Performance Share Plan and Deferred Annual Bonus Plan for the period 2015-2017. Conditional awards are subject to the achievement of three equally weighted performance measures:

1) Total Shareholder Return (TSR)

2) R&D new product performance

3) Adjusted Free Cash Flow (AFCF)

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.

Details of the TSR and R&D new product performance measures were set out in an announcement on 12 February 2015 and in the company's Annual Report. At the time of the grant it was determined that, given the transformational nature of the three-part transaction with Novartis, the AFCF measure and associated vesting levels would be established following the completion of the transaction.

In considering the AFCF performance measures for the period 2015-17, the Remuneration Committee has considered GSK's future business performance and the scale of restructuring triggered by the Novartis transaction across the Group's three businesses.

As a result, the Remuneration Committee has determined a threshold performance level for AFCF of GBP11.5 billion over the period 2015-17. This level reflects an estimated reduction of GBP2.2 billion due to currency movements for the period 2015-17 compared to 2014-16.

In addition, in order to fully assess disciplined use of restructuring funds over the period 2015-2017, the Remuneration Committee has decided to exclude the costs and associated capital expenditure for the Group's restructuring and integration programmes, triggered by the Novartis transaction, from the AFCF used to set the performance measures. The Committee has set a specific target of GBP3.3 billion for this restructuring and capital expenditure.

The vesting schedule is as outlined below:

 
 Performance Level    Adjusted Free Cash    Proportion Vesting 
                       Flow (GBPbillions)            % 
-------------------  --------------------  ------------------- 
 Below threshold             <11.5                  0% 
-------------------  --------------------  ------------------- 
 Threshold                   11.5                  25% 
-------------------  --------------------  ------------------- 
                             11.9                  50% 
-------------------  --------------------  ------------------- 
                             13.0                  75% 
-------------------  --------------------  ------------------- 
 Maximum                     13.6                  100% 
-------------------  --------------------  ------------------- 
 

V A Whyte

Company Secretary

31 July 2015

This information is provided by RNS

The company news service from the London Stock Exchange

END

MSCPKDDBABKDKON