SERVICE AGREEMENT
Exhibit
4.3
Dated
16th
May
2006
SMITHKLINE
XXXXXXX CORPORATION
and
MONSIF
SLAOUI
This
Agreement is
made on
16th
May 2006
between:
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(1)
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SMITHKLINE
XXXXXXX CORPORATION whose
registered office is at Xxx Xxxxxxxx Xxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx
00000, XXX (the “Company”);
and
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(2)
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MONSIF
SLAOUI (the
“Executive”).
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1
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Interpretation
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1.1
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In
this
Agreement (and any schedules to it)
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“Accrued
Obligations”
means:
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1.1.1
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the
Executive’s full salary under this Agreement through to the end of the
month in which the Termination Date occurs at the rate in effect
on the
Termination Date and the reimbursement (in accordance with
Group Policy)
of any expenses incurred by the Executive prior to the Termination
Date;
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1.1.2
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any
unpaid
bonus pertaining to the previous financial year and the product
of any
target bonus for the financial year in which the Termination
Date occurs
and a fraction, the numerator of which is the number of days
in the
Company’s current financial year up to the Termination Date and the
denominator of which is 365;
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1.1.3
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any
remuneration previously deferred by the Executive (together
with any
accrued interest) and not yet paid by the Company including
payment for
any accrued holiday not taken by the Executive; and
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1.1.4
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any
other
benefits to which the Executive is entitled, as determined
in accordance
with the applicable plans and policies of the
Company;
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“Board”
means
the board
of directors of the Company from time to time or any person or committee
nominated by that board as its representative for the purposes of this
Agreement;
“Chief
Executive Officer”
means
the Chief
Executive Officer of GSK plc from time to time;
“Employment”
means
the
employment governed by this Agreement;
“Group”
means
the Company
and any other Company controlling, controlled by or under the direct
or indirect
common control of the Company, including, without limitation, GSK plc
and any of
its subsidiaries from time to time;
“Group
Company”
means
a member of
the Group and “Group
Companies”
will
be
interpreted accordingly;
“GSK
Board”
means
the board
of directors of GSK plc from time to time or any person or committee
nominated
by that board as its representative for the purposes of this
Agreement;
“GSK
plc”
means
GlaxoSmithKline plc
“Termination
Date”
means
the date on
which the Employment terminates, whether on the expiration of notice
to
terminate the Employment pursuant to Section 3 or otherwise pursuant
to this
Agreement;
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1.2
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References
to
any statutory provisions include any modifications or re-enactments
of
those provisions.
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- 2 -
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1.3
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In
this
Agreement terms used in the context of the GlaxoSmithKline
Share Option
Plan and Performance Share Plan shall have the meaning ascribed
to them in
such plans.
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2
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Employment
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The
Company
confirms the employment of the Executive, and the Executive confirms
his
employment with the Company, on the terms and conditions set out in this
Agreement.
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3
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Termination
by Notice
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3.1
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The
Executive’s continuous employment began on 3 October
1988.
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3.2
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The
Employment under the terms of this Agreement shall be deemed
to have
commenced on 1 June 2006 and the Employment shall continue
until:
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(i)
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the
Employment is otherwise terminated in accordance with this
Agreement;
or
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(ii)
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not
less than
12 calendar months’ notice in writing is given by the Company to the
Executive; or
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(iii)
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not
less than
12 calendar months’ notice in writing is given by the Executive to the
Company; or
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(iv)
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the
first day
of the month coincident with and next following the date on
which the
Executive attains age 60. In the event that this Agreement
shall terminate
pursuant to this Clause 3.2(iv), then the Executive shall thereafter
be
deemed an Employee at will and shall be entitled only to payment
of
Accrued Obligations.
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3.3
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The
Company
may, in its absolute discretion, lawfully terminate the employment
of the
Executive at any time by paying to the Executive the Lump Sum
set out in
Section 15.1.5.
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4
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Duties
and Responsibilities
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4.1
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The
Executive
is the Chairman, R&D of GSK plc. This position is classified as grade
Band A, tranche 2. The Executive shall have such powers and
duties as are
from time to time given to him by the Chief Executive Officer
or, if
different, the person to whom the Executive reports, consistent
with the
Employment and this Agreement.
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4.2
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During
the
Employment, the Executive shall devote his full business time
and energies
to the business and affairs of the Company and GSK plc, consistent
with
any other duties and responsibilities he may have to any Group
Companies.
The Executive’s time shall be allocated among the Group Companies in
accordance with the Executive’s reasonable judgment and dependent upon the
level of his responsibilities to any other Group Company, subject
to the
overall supervision and direction of the Chief Executive Officer
or, if
different, the person to whom the Executive
reports.
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4.3
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The
Executive
shall not, without the prior written consent of the GSK Board,
accept
directorships, trusteeships and other appointments (other than
of Group
Companies) or carry on or be engaged, concerned or interested
either
directly or indirectly in any other business or activity. A
list of the
directorships and outside interests of the Executive approved
by the GSK
Board as at the date of this Agreement is attached as Appendix
1 to this
Agreement. Any fees earned by the Executive in respect of such
authorised
activities may be retained by the
Executive.
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4.4
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The
location
of the Executive’s activities shall be in Philadelphia, Pennsylvania, but
subject to the overall supervision and direction of the Chief
Executive
Officer, and to perform properly his duties, he may be required
to
undertake reasonable travel elsewhere in the world. The Executive
is
required to reside at a location convenient to the Company’s offices in
Philadelphia, Pennsylvania (or such other location as the Company
may
determine) during the Employment.
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5
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Salary,
etc.
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5.1
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In
consideration of the services to be rendered by the Executive
under this
Agreement the Executive shall be paid a salary at the rate
of $600,000 per
annum payable in accordance with the Company’s pay practices for its
executives from time to time in force (but not less frequently
than
calendar monthly). The salary will be credited to the Executive’s bank
account notified to the Company for the purpose. Salary shall
be reviewed
annually in accordance with the Company’s normal administrative practices
for its executives and may be increased (but not reduced) by
the Company
by such amount (if any) as it shall think fit.
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5.2
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The
Executive
shall be entitled, subject to Section 6.4, to participate
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in
all such
cash bonus plans and programmes as are made available from
time to time
for executives of the Company generally of the same grade in
the relevant
jurisdiction in accordance with the Company’s policy (or GSK plc’s policy,
as applicable); and
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| (ii) |
in
respect of
the salary provided by Section 5.1, in such incentive programmes
as are
made available from time to time for executives of the Company
and/or GSK
plc generally who are of the same grade in the relevant
jurisdiction,
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in
each case, subject to the terms and conditions of such bonus plans and
programmes from time to time in force. Any grant of share options or
awards of
performance shares under such plans and programmes shall be granted subject
to
performance conditions as determined by the GSK Board. Any shares received
under
the Performance Share Plan- US concerning Target Awards granted in respect
of
any Performance Period commencing on or after 1st
January 2006 must
be held by the Executive for a period of 2 years following vesting. For
the
avoidance of doubt, the two year period commences the day next after
the
cessation of the Performance Period, notwithstanding that the Executive
may
defer payment of such a Final Award in accordance with the rules of the
plan.
The Executive’s future participation in certain of these plans and programmes
may be affected if the Executive does not satisfy the Share Ownership
Requirements (as amended from time to time). It is agreed that in the
event of
the Executive retiring from the Company, the Executive will retain the
relevant
number of shares (as set out in the Share Ownership Requirements) until
at least
one year after the earlier of (i) the date upon which the Executive retires
from
the Company in accordance with the terms of any Company policy that may
be in
force from time to time, or (ii) the date on which the Executive’s employment is
terminated pursuant to Section 3.2(iv) of this Agreement.
| 5.3 |
The
Executive’s salary under Section 5.1 of this Agreement shall be inclusive
of any fees or other remuneration to which the Executive may
be entitled
or receives as a Director, alternate Director, specialist adviser,
consultant or by virtue of any other office or appointment
in any Group
Company. The Executive shall account to the Company for all
such fees or
other remuneration by paying over or procuring to be paid over
the same to
the Company.
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| 5.4 |
GSK
shall
not be
liable for any costs or expenses, including any
costs or
expenses pertaining to travel undertaken by the Executive, incurred
as a
result of any activity or participation in any role or capacity
external
to and unrelated to GSK or any Group Company. It is agreed
that the
Executive will promptly reimburse GSK against any such costs
that may be
incurred by GSK.
Further, the
Executive authorises the Company at any time to deduct from
his salary, or
any other monies payable to him by the Company, all sums which
he owes the
Company. If this is insufficient, the Company will require
repayment of
the balance.
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6
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Expenses
and other Benefits
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6.1
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The
Company
shall promptly reimburse to the Executive all reasonable travel
and other
out of pocket expenses properly incurred by him in the performance
of his
duties under the Employment. The Executive will submit claims
for expenses
reimbursement to the Company regularly with appropriate supporting
documentation.
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6.2
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The
medical
benefit arrangements for the Executive and his family are as
set out in
the GlaxoSmithKline Executive Medical Plan (as amended from
time to time).
Details, including eligibility criteria will be provided by
US Benefits
Department
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6.3
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The
Company
at its expense shall provide the Executive with other benefits
provided to
executives of the Company of the same grade, and the Executive
shall be
entitled to participate in all benefit plans, practices and
policies as
are made available by the Company from time to time to its
executives
generally of the same grade subject to their terms and conditions
from
time to time in force. A list of all plans and programmes currently
in
operation is set out in Appendix 2. Details of the relevant
plans and
programmes are set out in the TotalReward
section on
myGSK.
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6.4
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GSK
shall not
be liable for any costs or expenses, including any
costs or
expenses pertaining to travel undertaken by the Executive, incurred
as a
result of any activity or participation in any role or capacity
external
to and unrelated to GSK or any Group Company. It is agreed
that the
Executive will promptly reimburse GSK against any such costs
that may be
incurred by GSK. Further, the Executive authorises the Company
at any time
to deduct from his salary, or any other monies payable to him
by the
Company, all sums which he owes the Company. If this is insufficient,
the
Company will require repayment of the
balance.
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6.5
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The
Company
(and GSK plc, as applicable) reserves the absolute right and
discretion to
amend, modify or terminate all such benefits, plans and programmes
as are
referred to in Sections 5.2, 6.2, 6.3 and 8 at any time and
for any
reason.
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7
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Vacation
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In
addition to all Company Holidays, the Executive shall be entitled to
25 days’
vacation in each year at full pay in accordance with Company policy from
time to
time in force, which shall accrue rateably during the calendar year,
to be taken
at such times as the business of the Company may permit. On termination
of the
Employment the Executive will be entitled to be paid for any accrued
vacation
not taken and will reimburse the Company for any vacation taken but not
accrued.
- 5 -
Vacation
which is
not taken in the year in which it is accrued may be carried forward
in
accordance with the Company’s rules on the banking of vacation outlined in its
Vacation Policy, as amended from time to time. Any vacation which
is not carried
forward in accordance with these rules will be lost.
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8
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Pension
and Life Insurance
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The
Executive shall
be entitled to participate in the GlaxoSmithKline Cash Balance Pension
Plan and
the GlaxoSmithKline Supplemental Pension Plan and any other retirement
plans or
deferred compensation programmes made available by the Company to
its senior
executives in the United States, including, without limitation, the
GlaxoSmithKline Retirement Savings Plan and the GlaxoSmithKline Executive
Supplemental Savings Plan , subject to the terms and conditions of
such
programmes from time to time in force. Details of such current plans
and
programmes are set out in the TotalReward
section
on myGSK and are subject to amendment or withdrawal at the Company’s
discretion.
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9
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Sickness
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9.1
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The
Executive
shall comply with the Company’s sick pay rules from time to time in
force.
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9.2
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The
Executive
shall be entitled to participate in the Company’s short-term and long-term
disability plans or programmes in force from time to time.
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9.3
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The
Company
may require the Executive to have a medical examination
every year (or at
such shorter intervals as they may agree between them),
by a doctor
approved by the Company. The costs of such examinations
shall be borne by
the Company. The Executive shall authorise such doctor
to submit to the
Director of Human Resources of the Company a copy of the
medical report or
results of any tests prepared or obtained as a result of
that examination
(which shall omit reference to any medical condition which
in the doctor’s
opinion would not affect the Executive’s capability to perform his duties
then or in the future).
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10
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Inventions
and Copyright
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The
Company’s
standard policy on inventions and copyright from time to time in
force shall
apply to the Executive.
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11
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Confidentiality;
Company Securities
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11.1
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Without
prejudice to any other duty owed to the Company or to any
Group Company,
the Executive shall not, except in the proper performance
of his duties or
as authorised by the Board, during or after the Employment,
use or
disclose to any person any Confidential Information obtained
by him during
the Employment.
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11.2
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In
the course
of the Employment, the Executive is likely to obtain trade
secrets and
confidential information belonging to or relating to Group
Companies and
other persons. He will treat such information as if it
falls within the
terms of Section 11.1 and Section 11.1 will apply with
any necessary
amendments to such information. If requested to do so by
the Company, the
Executive will enter into an agreement with other Group
Companies and any
other persons in the same terms as Section 11.1 with any
amendments
necessary to give effect to this
provision.
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11.3
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For
the
purposes of this Agreement, the term “Confidential Information” shall
include, but not be limited to confidential commercial,
financial and
strategic data pertaining to the Group and any other confidential
information relating to the business or affairs of the
Group including,
without limitation, any invention, trade secret, manufacturing
process or
patent information. The term “Confidential Information” shall not include
any information:
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11.3.1
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which
is or
becomes generally available to the public,
or
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11.3.2
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which
is
acquired by the Executive apart from his association with
the
Group
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other
than, in each
case, as a result of disclosure by the Executive or by any person
to whom he has
supplied information or by any person in breach of a duty of
confidentiality.
In
addition, the term “Confidential Information” shall not include any information
which the Executive is required to disclose by applicable law or
regulation or
by order of a court or governmental body of competent jurisdiction,
so long as
the Executive gives the Chief Executive Officer of the Company reasonable
prior
notice of such required disclosure.
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11.4
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During
the
Employment, the Executive shall be bound, in respect of
transactions in
securities issued by any Group Company, by the Company’s and GSK plc’s
policies from time to time in effect on employee securities
dealing. In
particular, the Executive shall advise the Company Secretary,
CFO, CEO or
Chairman of GSK plc before he or any member of his immediate
family seeks
to trade in such securities and shall be bound by any directions
given by
the Company Secretary, CFO, CEO or
Chairman.
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12
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General
Termination Provisions
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12.1
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On
the
termination of the Employment for whatever reason, or at
any other time
when requested to do so by the Company, the Executive,
upon receipt of
written request from the Company, shall promptly
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| (i) |
deliver
up to
the Company any property belonging to the Company or any
other Group
Company which may be in his possession or under his control
including
Confidential Information, lists of customers, correspondence,
documents
and other property. The Executive will not retain any copies
of any
materials or other information. The Company shall promptly
return to the
Executive and permit him to remove from the premises of
the Company and
any other Group Company, any property, personal records,
files, etc.
belonging to the Executive; and
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| (ii) |
resign
on
request by the Company or the GSK Board (if he has not
already done so)
from all offices held by him in the Company and any other
Group Company
(except for any he is entitled to retain under any separate
agreement with
any Group Company), failing which the Executive irrevocably
authorises the
Company or GSK plc to appoint an officer of the Company
or GSK plc to
execute all documents on his behalf and do all things necessary
to effect
such resignations; PROVIDED, however, that any such resignations
pursuant
to this Section 12.1(ii) shall be without prejudice to
the Executive’s
rights under this Agreement.
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| 12.2 |
Any
termination of the Employment shall be without prejudice
to the
Executive’s and the Company’s continuing obligations under this
Agreement.
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| 12.3 |
Upon
the
termination of the Executive’s employment for whatever reason, the
Executive shall immediately repay all outstanding debts
or loans due to
the Company or any Group
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Company
and the Company is hereby authorised to deduct from any
payment of wages any sum in repayment of all or any part of such
debts or
loans.
| 12.4 |
The
terms of
the US GSK Severance Policy as in force from time to time,
shall not apply
to the Executive.
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13
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Termination
due to Death or Disability
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13.1
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In
the event
of the Executive’s death the Employment will terminate automatically on
the date of his death, which shall be the Termination Date
for the
purposes of this Agreement. His duly qualified executor
shall be entitled
to receive the Accrued Obligations.
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13.2
|
The
Company
may elect to terminate the Employment immediately without
notice or
payment in lieu of notice by serving written notice (“Termination
Notice for Disability”),
if an
independent physician selected by the Company has certified
in writing
that, by reason of a physical or mental illness or other
condition of the
Executive, the Executive is unlikely to be able to resume
performance of
duties under the Employment for the foreseeable future.
The Employment
will terminate on the Termination Date specified in the
Termination Notice
for Disability. Provided that the Company shall not be
entitled to
terminate the employment by reason of physical or mental
illness or other
condition if this would lead to the Executive becoming
dis-entitled to
benefits under the Company’s or GSK plc’s permanent health insurance
plan.
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13.3
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In
the event
the Company delivers a Termination Notice for Disability,
the Executive
shall immediately be relieved from all offices, appointments
and
responsibilities that he may then hold under the Employment
and be
relieved of any duty to work for or serve the Company or
any Group
Company. The Executive shall be entitled only to the Accrued
Obligations,
together with such rights as are provided for in the applicable
benefits
plan(s) in which the Executive
participates.
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14
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Termination
for Cause
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14.1
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The
Company
shall be entitled to terminate the Employment immediately
without notice
or payment in lieu of notice for Cause (as defined in this
Section 14) by
serving written notice (“Notice
of Termination for Cause”).
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14.2
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“Cause”
shall
mean:
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14.2.1
|
the
Executive
is convicted of any criminal offence which in the reasonable
opinion of
the Chairman of GSK plc or the GSK Board affects the Executive’s position
as Chairman R&D of GSK plc (other than a motoring offence for which no
custodial sentence is given to him) ;
or
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14.2.2
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the
Executive, in carrying out his duties under the Employment,
is guilty of
gross neglect or gross misconduct;
or
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14.2.3
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the
Executive
shall become personally bankrupt or insolvent;
or
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14.2.4
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the
Executive
shall be or become prohibited by law from being a director;
or
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14.2.5
|
the
Executive
commits a material breach of any term of this
Agreement.
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14.3
|
Any
delay or
forbearance by the Company in exercising any right of termination
shall
not constitute a waiver of it.
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14.4
|
In
the event
that the Employment is terminated for Cause, the Employment
shall
terminate upon the date on which the Board serves Notice
of Termination
for Cause and the Executive shall be entitled only to payment of all
previously accrued and unpaid salary then due and owing
under this
Agreement, up to the date of termination including reimbursement
for
expenses previously incurred and, save for the provisions
of this Section
14.4, the Executive will have no claim for damages or any
other remedy
against the Company or any Group
Company.
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15
|
Termination
by Notice
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15.1
|
If
either
notice to terminate the Employment is given by the Executive
according to
Section 3.2 (iii) above, or if the Executive resigns without
giving due
notice and the Company does not accept his resignation
or the Company has
given notice in accordance with Section 3.2 (ii) above
then the Company
may require the Executive to comply with any and all of
the provisions in
this Section 15.1 for a maximum period of 12 months (the
“Garden
Leave Period”).
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15.1.1
|
The
Company
may require that the Executive does
not:
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(i)
|
enter
or
attend the premises of the Company, or any Group Company;
or
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(ii)
|
contact
or
have any communication with any customer or client of the
Company, or any
Group Company in relation to the business of the Company,
or any Group
Company; or
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(iii)
|
contact
or
have any communication with any employee, officer, director,
agent or
consultant of the Company, or any Group Company in relation
to the
business of the Company, or any Group Company;
or
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(iv)
|
become
employed or engaged by any company, partnership or other
entity whether as
an employee, director, partner or consultant or carry on
any business
either on his own account or for any other person whether
directly or
indirectly (except as the holder, directly or indirectly,
of less than 5
per cent of the shares or save for those activities permitted
in
accordance with Section 4.3);
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(v)
|
remain
or
become involved in any aspect of the business of the Company,
or any Group
Company except as required by such
companies.
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15.1.2
|
The
Company
may require the Executive:
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(i)
|
to
comply
with the provisions of Section 12;
and
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(ii)
|
to
immediately resign from any directorship which he holds
in the Company,
and any Group Company or any other company where such directorship
is held
as a consequence or requirement of the Employment, unless
he is required
to perform duties to which any such directorship relates
in which case he
may retain such directorships while those duties are ongoing.
The
Executive hereby irrevocably appoints the Company to appoint
an officer of
GSK plc as his attorney to execute any instrument and do
anything in his
name and on his behalf to effect his resignation if he
fails to do so in
accordance with this Section
15.1.2(ii).
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15.1.3
|
During
any
Garden Leave Period the Company may appoint another individual
to carry
out the duties of the Executive and the Executive
shall:
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(i)
|
continue
to
be bound by the provisions of this Agreement and conduct
himself with good
faith towards the Company and not do anything that is harmful
to the
Company or any Group Company;
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(ii)
|
remain
available to perform any reasonable duty requested by the
Company or any
Group Company and to co-operate generally with the Company
or any Group
Company to ensure a smooth handover of his duties (provided
that if the
Executive should fail to make himself available for such
work having been
requested by the Company or any Group Company to attend
he shall,
notwithstanding any other provision of this Agreement forfeit
his right to
salary and contractual benefits in respect of such period
of
non-availability).
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15.1.4
|
During
the
Garden Leave Period, the Executive will be entitled to
receive his salary
and benefits in accordance with the terms of this Agreement
including any
bonus payable in accordance with Section 5.2 but excluding
any share
entitlements under Section 5.2
above.
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15.1.5
|
Where
the
Company gives notice to terminate the Employment in accordance
with
Section 3.2 (except where termination is effected pursuant
to the terms of
Section 14) above then notwithstanding the continuation
of the Employment
during any period after notice has been given, including
any Garden Leave
Period, within 30 days of the date such notice was given
to the Executive,
the Company shall pay to the Executive as a lump sum his
full salary,
bonus and 12 months pension contributions at the rate of
eighteen per cent
(18%) of the Executive’s full salary and bonus, in respect of the entire
period of notice (except for any part of it attributable
to the period
falling after the Termination Date contemplated in Section
3.2(iv) and
subject to deduction of tax and any other deductions required
to be made)
(the “Lump
Sum”).
For this
purpose, full salary shall be the basic salary in effect
at the date such
notice is given to the Executive, and bonus shall be calculated
on the
basis of the Executive achieving 100 per cent of the target
bonus at Bonus
Level 1. For the avoidance of doubt, the payment by the
Company to the
Executive of the Lump Sum will extinguish any and all liability
imposed on
the Company under this Agreement to make any further payment
to the
Executive in respect of salary and bonus under this Agreement
during any
period after notice has been given, including, any Garden
Leave
Period.
|
|
15.1.6
|
After
the
payment of a Lump Sum pursuant to Section 15.1.5, at the
end of or at any
time during the Garden Leave Period the Company may at
its sole and
absolute discretion terminate the Employment by further
written notice to
the Executive without any further payment. In any event
at the end of the
12 month Garden Leave Period the Employment will also terminate
automatically and the Company shall be under no obligation
to make any
further payment to the Executive, save for in respect of
any Accrued
Obligations that may exist.
|
|
15.1.7
|
However,
in
the event that the Executive obtains an offer of future
alternative
employment with another employer, or otherwise wishes to
take up
alternative business activities, and he can satisfy the
GSK Board that
such employment/activities are not in breach of Section
16, the Company
will waive the balance of any unexpired notice period or
the Garden Leave
Period so as to enable the Executive to take up such alternative
employment/activities; whereupon, subject to Section 12.3
above, the
Company’s obligations to the Executive under this Section 15.1
shall cease
with effect from the agreed revised Termination
Date.
|
- 10 -
|
15.1.8
|
The
Company
and the Executive agree that if the Company shall fully
perform, when due,
all its obligations under this Section 15, such performance
shall be in
full and final settlement of all and any claims or rights
of action which
the Executive might have against the Company, or any
Group Company arising
out of this Agreement or its termination or otherwise
howsoever relating
to the Employment.
|
|
15.1.9
|
A
removal by
the Company of the Executive from his current position
which results in a
demotion to a position with less responsibility than
his current position,
or a change in reporting relationships which results
in the Executive no
longer reporting directly to the GSK Board, or any successor
board, will
be deemed to be a termination by the Company on notice
pursuant to Section
15 of this Agreement.
|
|
16
|
Restrictions
during and after Termination of
Employment
|
|
16.1
|
In
this
Section:
|
“Restricted
Business”
means
the
businesses of the Company or any Group Company at the Termination
Date (or if
earlier the start of any Garden Leave Period ending on the Termination
Date)
with which the Executive was involved to a material extent during
the last 12
months of the Employment.
“Restricted
Period”
means
any period
during which the Executive is employed by the Company (including
for the
avoidance of doubt, any Garden Leave Period) and the period of
12 months, less
any Garden Leave Period imposed by the Company under Section 15
and less any
period of notice worked by the Executive during the notice period
set out in
Section 3, commencing on the Termination Date.
| 16.2 |
The
Executive
is likely to obtain trade secrets and confidential
information and
personal knowledge of and influence over customers,
clients and employees
of the Company, GSK plc and its Group Companies during
the course of the
Employment. To protect these interests, the Executive
agrees with the
Company and GSK plc that the Executive will be bound
by the following
covenants:
|
|
16.2.1
|
During
the
Restricted Period he will not be engaged in (except as
the holder,
directly or indirectly, of less than 5 per cent of the
shares) any
business which is or is about to be in competition with
the Restricted
Business.
|
|
16.2.2
|
During
the
Restricted Period the Executive will not, canvass or
solicit in
competition with the Company, or any Group Company the
custom of any
person who was during the last 12 months of the Employment
a customer, or
client of, or in the habit of dealing with, the Company,
or (as the case
may be) any Group Company and in respect of which the
Executive had access
to confidential information or with whose custom or business
the Executive
is or was personally concerned, during that 12 month
period with a view to
providing goods or services to that person in competition
with any
Restricted Business.
|
|
16.2.3
|
During
the
Restricted Period he will not, in the course of any business
concern which
is in competition with the Restricted Business provide
goods or services
to or otherwise have any dealings with any person who
was during the last
12 months of the Employment a customer, or client of,
or in the habit of
dealing with the Company, or any Group Company, and in
respect of which
the Executive had access to confidential information
or with whose custom
or business the Executive is or was personally concerned
during that 12
month period.
|
- 11 -
|
16.2.4
|
During
the
Restricted Period he will not, interfere or endeavour
to interfere with
the continuance of the provision of goods or services
to the Company, or
any Group Company, by any supplier which was a supplier
of goods or
services to the Company, or any Group Company during
the last 12 months of
the Employment and with whom the Executive dealt to a
material extent
during that period.
|
|
16.2.5
|
During
the
Restricted Period he will not entice or try to entice
away from the
Company or any Group Company any person who is still
employed by the
Company or a Group Company during the Restricted Period
and is a senior
employee, director or full time senior consultant of
such a company and
with whom he worked closely in the last six months of
the
Employment.
|
|
16.3
|
Each
of the
obligations imposed on the Executive by this Section
16 extend to him
acting not only on his own account but also on behalf
of any other firm,
company or other person and shall apply whether he acts
directly or
indirectly.
|
|
16.4
|
Following
the
Termination Date, the Executive will not represent himself
as being in any
way connected with the businesses of the Company, GSK
plc or of any other
Group Company (except to the extent agreed in writing
by such a
company).
|
|
16.5
|
Any
benefit
given or deemed to be given by the Executive to any Group
Company under
the terms of Section 16 is received and held on trust
by the Company for
the relevant Group Company. The Executive will enter
into appropriate
restrictive covenants directly with other Group Companies
if asked to do
so by the Company or GSK plc.
|
|
17
|
Reasonableness
of Restrictions
|
|
17.1
|
Each
of the
obligations on the Executive contained in Section 16
constitutes a
separate and independent restriction on the Executive
notwithstanding that
they may be contained in the same Section, paragraph
or
sentence.
|
|
17.2
|
Should
the
restrictions contained in Section 16 be found to be void
but would be
valid if some part thereof were deleted or the period
or radius of
application reduced, then such restriction shall apply
with such
modification as may be necessary to make it valid and
effective. In
particular, the Executive agrees that the restrictions
are reasonable and
necessary for the protection of the Company and the Group
Companies.
|
|
17.3
|
If
the
Executive shall, during the Restricted Period, receive
from any person,
firm or company, an offer to provide services in any
capacity whatsoever,
or to enter into employment where acceptance of such
offer, or the taking
of such employment, might render him in breach of the
provisions of this
Agreement, he shall promptly advise the offeror of the
existence of the
restrictions set forth in Section 16 of this
Agreement.
|
|
17.4
|
The
Executive
acknowledges that the Company may have no adequate remedy
at law and would
be irreparably harmed if the Executive breaches or threatens
to breach the
provisions of Section 16 above and, therefore, agrees
that the Company
shall be entitled to injunctive relief to prevent any
breach or threatened
breach of Section 16 above, and to specific performance
of the terms of
each such Section in addition to any other legal or equitable
remedy it
may have. The Executive further agrees that he shall
not, in any equity
proceedings involving him relating to the enforcement
of Section 16 above
raise the defence that the Company has an adequate remedy
at law. Nothing
in this Agreement shall be construed as prohibiting the
Company from
pursuing any other remedies at law or in equity that
it may
have.
|
- 12 -
|
18
|
Severability
|
In
the event that any provision or portion of this Agreement shall
be determined to
be invalid or unenforceable for any reason, the remaining provisions
or portions
of this Agreement shall be unaffected thereby and shall remain
in full force and
effect to the fullest extent permitted by law.
|
19
|
Successors
and Assigns
|
|
19.1
|
This
Agreement shall be binding upon and inure to the benefit
of the Company or
any corporation or other entity to which the Company
may transfer all or
substantially all of its assets and business and to which
the Company may
assign this Agreement, in which case “Company”,
as used in
this Agreement, shall mean such corporation or other
entity. The foregoing
shall not relieve the Company of any of its obligations
under Section 15
of this Agreement. The rights of the Executive shall
inure to the benefit
of his heirs, executors, administrators and other personal
representatives.
|
|
19.2
|
The
Executive
may not assign this Agreement or any part of it, or any
rights thereunder
or delegate any duties to be performed by him under it
to anyone
else.
|
|
20
|
Survivorship
|
To
the extent contemplated by this Agreement, respective rights and
obligations of
the parties set out in this Agreement shall survive any termination
of this
Agreement to the extent necessary to the intended preservation
of such rights
and obligations.
|
21
|
Notices
|
Any
notice
(including any Termination Notice) required or permitted to be
given under this
Agreement shall be in writing and shall be deemed to have been
given when
delivered personally or sent by courier, duly addressed to the
party concerned
at the address set out above or to such other address as the party
may notify to
the other. Any notice delivered personally under this Section 21
shall be deemed
given on the date delivered and any notice sent by courier shall
be deemed given
on the date delivery is recorded by such courier.
|
22
|
Entire
Agreement
|
|
22.1
|
This
Agreement supersedes any previous written or oral agreement
between the
parties in relation to the matters dealt with in it.
It, together with
such letter of appointment, contains the whole agreement
between the
parties relating to the Employment at the date the agreement
was entered
into (except for those terms implied by law which cannot
be excluded by
the agreement of the parties). The Executive acknowledges
that he has not
been induced to enter into this Agreement by any representation,
warranty
or undertaking not expressly incorporated into
it.
|
|
22.2
|
Neither
party’s rights or powers under this Agreement will be affected
if:
|
|
22.2.1
|
one
party
delays in enforcing any provision of this Agreement;
or
|
|
22.2.2
|
one
party
grants time to the other party.
|
- 13 -
|
23
|
Amendment
or Modification; Waiver
|
No
provision of this Agreement may be amended or waived unless such
amendment or
waiver is agreed to in writing, signed by the Executive and by
a duly authorised
officer of the Company who shall supply the Executive with evidence
of such
authority.
|
24
|
Withholding
|
Anything
to the
contrary notwithstanding, all payments required to be made by the
Company under
this Agreement to the Executive, or to his estate or beneficiaries,
shall be
subject to withholding of such amounts relating to taxes as the
Company may be
required to withhold pursuant to any applicable statute, law or
regulation.
|
25
|
Indemnification
and Insurance
|
|
25.1
|
The
Company
agrees that if the Executive is made a party or is threatened
to be made a
party to any action, suit, proceeding or governmental
or other
investigation by reason of the fact of the Employment
or that he is or was
a director, officer or employee of the Company or is
or was serving at the
request of the Company as a director, officer, employee
or agent of
another Group Company or entity except for any action
instigated by the
Company or the Executive (a “Proceeding”),
he shall
be indemnified by the Company to the fullest extent permitted
by
applicable law against all expenses, liabilities and
losses reasonably
incurred or suffered by the Executive in connection with
such a Proceeding
(including any tax payable by the Executive as a result
of payments made
by the Company pursuant to this indemnity), including,
without limitation,
payment of expenses incurred in defending a Proceeding
prior to the final
disposition of such Proceeding; PROVIDED, however, that
written notice of
such Proceeding is given promptly to the Company by the
Executive and the
Company is permitted (where appropriate) to participate
in and assume the
defence of such Proceeding. The provisions of this Section
25 shall
survive the termination of the Employment and shall be
in addition to any
other rights to indemnification to which the Executive
may from time to
time be entitled, whether under any applicable insurance
policies or
otherwise.
|
|
25.2
|
The
Company
will provide the Executive with Legal Expenses Insurance
and Directors’
and Officers’ Liability Insurance under the Company’s policy current from
time to time in force subject to such cover being available
at reasonable
commercial rates.
|
|
26
|
Collective
Agreements - Disciplinary Rules and
Procedures
|
There
are no
collective agreements which directly affect the terms and conditions
set out in
this Agreement.
The
Company’s
harassment and bullying policies, disciplinary rules and procedures
and
grievance procedures, as in force from time to time, shall apply
to the
Executive. The Company reserves the right to leave out any or all
of the stages
of those rules and procedures where it considers it appropriate
to do
so.
|
27
|
Data
Protection
|
The
Executive
consents to the Company or any Group Company holding and processing
both
electronically and manually the data it collects which relates
to the Executive
for the purpose of the administration and management of its employees
and its
business and for
- 14 -
compliance
with
applicable procedures, laws and regulations. The Executive also
consents to the
transfer of such personal information to other offices the Company
may have or
to a Group Company or to other third parties whether or not outside
the United
States for administration purposes and other purposes in connection
with the
Executive’s employment where it is necessary or desirable for the Company
to do
so.
|
28
|
Governing
Law
|
This
Agreement
shall be deemed a contract made under, and for all purposes shall
be construed
in accordance with, the laws of the Commonwealth of Pennsylvania.
Each of the
parties submits to the exclusive jurisdiction of the Commonwealth
of
Pennsylvania’s courts as regards any claim or matter under this
Agreement.
|
29
|
Titles
|
Titles
to the
Sections in this Agreement are intended solely for convenience
and no provision
of this Agreement is to be construed by reference to the title
of any
Section.
In
witness
whereof the
parties hereto have executed this Agreement as a deed on the day
and year first
above written
| SMITHKLINE XXXXXXX CORPORATION | ||||
| By: | /s/ Xxxxxx X Xxxxxx | |||
|
|
||||
| Name: | Xxxxxx X Xxxxxx | |||
| Title: | Vice President & Secretary | |||
| Date: | May 5, 2006 | |||
|
/s/
Monsif
Slaoui
Signed
Sealed
and Delivered by the
said
MONSIF SLAOUI in the presence
of:
|
} |
May
8,
2006
|
||
| Name: | ||||
| Address: | ||||
|
Occupation
|
||||
- 15 -
Appendix
1: Schedule of Directorships and Outside Interests
A
list of the directorships and outside interests of the Executive
approved by the
GSK Board as at the date of this Agreement is set out below:
Company
Name Title
- 16 -
Appendix
2: Other Benefits
TotalReward
makes the spirit
of GSK an everyday reality for our people and is a major building
block for
achieving our mission. The principles have been developed to ensure
that the
interest of our employees is very closely aligned with GSK's.
TotalReward
is a competitive
package designed to attract, retain, motivate and develop the best
talent. At
the same time, it is cost-effective, benefiting GSK and our employees.
Below is
a list providing examples of the benefits currently provided as
at the date of
the contract.
TotalReward
includes:
Total
Cash
opportunities - Salary, Bonus, Share Option Plan, Performance Share
Plan
Long
term savings
and retirement plans - Cash Balance Pension Plan, Supplemental
Cash Balance
Pension Plan, Retirement Savings Plan, Executive Supplemental Savings
Plan
(ESSP)
An
array of comprehensive benefits to protect your health and welfare
programs to
help you better balance your work life and your personal life -
Executive Life
Insurance Plan, Executive Medical Plan, Retiree Medical Plan.
The
Executive’s
future participation in certain of these plans and programmes may
be affected if
he does not satisfy the Share Ownership Requirements (as amended
from time to
time).
Details
of the
relevant plans and programmes and Share Ownership Requirements
are set out in
the TotalReward
section on
myGSK.
The
Company
reserves the right to amend, modify or withdraw the benefits, from
time to
time.
- 17 -
Appendix
3: GSK US Localisation Policy
The
US Localisation
Policy is an extract
from GSK
Global Assignment Policy which was effective in March 2006.
Philosophy
One
of the
consequences of undertaking a Global Assignment is that there may
be a desire by
both the employee and the Host Company for the employee to remain
in the Host
country. In these circumstances the Localisation policy will apply.
Therefore
at the
end of an assignment it may be mutually agreed that the Global
Assignee will
permanently localise to the assignment location. This means the
assignment
location will become the new Home location on a permanent basis.
Where
localisation
occurs the individual will become an employee of the new country
business and
will sever all employment links with their original Home country
business.
Objective
The
objective of
localisation is to integrate a Global Assignee into the new Home
location's
Total Reward system, recognising that a period of transition may
be necessary
before the Global Assignee achieves equity with peers in the new
Home
location.
Localisation
Principles
If
a localisation is to proceed, the following will occur:
| · |
Global
Assignment Terms and Conditions cease on
localisation
|
| · | Old Home country Terms and Conditions cease on localisation |
| · | New Home country Terms and Conditions will be adopted on localisation |
At
the end of the any transition period (see Section 13.6.6/7 Transition
Allowance)
the localised employee will be on an equitable basis with their
local peers and
other localised/transitioned employees.
Scope
Global
Assignments
do not exceed three (3) years, unless the CEO and appropriate CET
member agree a
maximum extension of one (1) year.
Global
Assignees
will be offered localisation for one (1) or more of the reasons
below:
| · |
The
Host
Company wishes to retain and utilise the Global Assignee's
skills longer
than the maximum Global Assignment duration. The Global
Assignee agrees to
be localised and to adopt the new Home location Terms
and
Conditions.
|
| · |
There
is no
alternative role available to the Global Assignee on
completion of the
assignment; however the Host Company wishes to retain
and utilise the
Global Assignee's skills. The Global Assignee agrees
to be localised and
to adopt the new Home location Terms and
Conditions.
|
- 18 -
| · |
The
Global
Assignee wishes to be localised and to adopt the new
Home location Terms
and Conditions. The Host Company wishes to retain and
utilise the Global
Assignee's skills and agree to support the
localisation.
|
- 19 -
Compensation
Payment
and
delivery of all compensation will be in accordance with the new
Home location
policies and procedures, as follows:
Job
Grading
Band
C and
Above
The
GSK worldwide
Job Grading structure and process will be applied to all localised
positions
Below
Band
C
Local
grade
structures will apply
Salary
Will
be managed
according to the new Home location business guidelines, as will
any Salary
Review and/or promotion increases awarded
Bonus
If
a Bonus scheme is applicable, a localised employee will participate
in the new
Home location Bonus scheme appropriate to their job grade
Long
Term
Incentive
A
localised employee
will be eligible to participate in the new Home location Long Term
Incentive
Plans, if appropriate for their job grade.
Benefits
A
localised employee will participate in all the new Home location
Benefit Plans,
i.e. Healthcare Plan, Pension Plan, Company car etc.
Saving
Schemes
A
localised employee will be eligible to participate in Saving Schemes
applicable
to the new Home location
Healthcare
An
employee localised to a country that does not provide appropriate
levels of
Healthcare coverage, in line with the old Home location, should
be covered by an
alternative Company funded plan. This will be dependent on practice
in the new
Home location.
- 20 -
Pension
Plan
An
employee localised to a country that does not provide an appropriate
Pension
Plan, should be covered under an alternative State or Company funded
plan. This
will be dependent on practice in the new Home location.
Annual
Holiday/Vacation Entitlement and Hours of Work
A
localised employee's holiday/vacation entitlement and hours of
work will be
determined by the new Home location's business sector guidelines.
Home
Leave
(Original Home location)
During
a three (3)
year transition period the Company will pay for the employee and
their
dependants to return to their original Home location on two (2)
occasions.
A
local transportation component of 14 days car hire, to assist with
airport
transfer costs and local transport during each of the two (2) Home
Leave trips,
will also be included. Home Leave will be paid as a Lump Sum. Home
Leave must be
taken from the employee's holiday/vacation entitlement.
Economy
class
return airfares should be used, however if the flight time to the
old Home
location is more than 15 hours, an employee and dependants may
purchase a
Business Class ticket (at the most economical rate). The difference
between the
Economy and the Business Class ticket can be reclaimed via travel
expenses, on
production of receipts.
Transition
Allowance
A
Transition allowance will be paid if the net salary in local currency
is less
than the net salary level from the original Home location, once
differences in
the cost of living allowance, location allowance, income tax and
social security
taxes have been taken into account. This allowance will be paid monthly
as a
separate allowance, subject to tax and will be phased out over
a three (3) year
period:
Year
1
100%
Year
2
66%
Year
3
33%
Transition
Allowance - Other
Local
HR may have
to recognise other benefits to be considered for transition purposes,
i.e.
Schooling, Storage etc.
Before
a
localisation can proceed HR will need to take the following steps:
| · |
Understand
the reason for localising the Global Assignee (see Section
13.4
Scope)
|
| · |
Understand
the consequences of the Global Assignment Terms and Conditions
ceasing, on
the localising employee and
dependants
|
- 21 -
| · |
Understand
the old Home location Terms and Conditions, which will
cease on
localisation, in comparison to the new Home location
Terms and
Conditions
|
The
above should be
used as the basis for decisions on:
| · |
Allowances
that are considered for transitioning
purposes
|
| · |
How
an
allowance will be phased out
|
Home
Location Owned
Property (Principal Residence)
GSK
will provide
assistance to localising employees in buying and selling property
in line with
the Home and Host permanent relocation policies. GSK
also operates a
Mortgage Assistance Programme.
Immigration
The
Company will
sponsor and arrange for work permit applications and permanent
residency
applications for the localised employee as appropriate.
Household
Goods
Shipment
The
Company will
pay for the shipment of a Global Assignee's personal and household
goods
(including personal computers) by surface and sea transport to
the new Home
location. Shipment expenses covered by the Company include the
cost of
packing/unpacking, shipping and insuring reasonable household effects
In
addition to or instead of surface and sea transport for
intercontinental/cross-border moves, the Company will transport
by air freight,
household goods to the new Home location of up to:
| · |
500
lbs. (225
Kilos) or less, for unaccompanied Global
Assignees
|
| · |
1000
lbs.
(450 Kilos) or less, for accompanied Global
Assignees
|
One
(1) air freight
shipment, if applicable, should be used for localisation.
Employment
Legislation
The
employee will
be subject to the employment legislation guidelines and policies
of the new Home
location.
Global
Tax
Support Service
The
Company will
pay for the services of a Global Tax Support Service to prepare
tax returns for
a localised Global Assignee and to provide tax advice on tax matters
related to
the localisation.
Tax
advice will be
provided in the year of the localisation and for a further year,
if required.
This advice will cover all departure and new Home location tax
returns that are
required.
The
localised
employee is liable to the new Home location tax rules on Salary,
Bonus,
Executive Share Plans, Housing support and Educational support.
- 22 -
As
is more fully explained in the Appendices addressing GSK Tax Policies,
your
personal tax liability and our tax support in the year of localization
and the
subsequent year extends to LTIs. The taxation of LTIs in the context
of cross
border assignments can be complicated; moreover, assignment related
tax matters
(tax reporting, withholding and compliance) can extend beyond the
actual
assignment term because the LIT accrual, vesting and award timeline
could span
several years beyond the close of an assignment or the localisation.
Consequently, you should expect that the tax and support policies
we have
developed will ensure that you bear your appropriate level of tax
on LTIs, and
that assignment related home and host country issues may be addressed
well
beyond the completion of your assignment and the year of localization
in the
case of LTIs.
For
additional
information about the Company’s Tax Protection policy, please refer to
|
·
|
Appendix
H:
Global Tax Support Service
|
|
·
|
Appendix
M:
Tax Equalisation/Protection Policy on
LTIs
|
Appendix
H:
Global Tax Support Service
Overview
This
appendix
outlines the services provided by the Global Tax Support Service
engaged by the
Company.
Scope
Global
Assignees
are covered for these services commencing with the tax year the
assignment
begins and ending with the calendar or fiscal tax year when the
assignment is
completed. The Global Assignee may remain in the programme for
an extended
period following repatriation, at the Company's discretion, in
the case of LTI
awards which have assignment tax consequences, or if post assignment
payments or
credits occur.
Tax
Return
Preparation
After
the close of
each tax year having assignment tax consequences, the Global Assignee
will be
contacted by the Global Tax Support Service as necessary so that
all required
tax returns can be prepared and filed.
The
fee for tax
return preparation will be borne by the Company as long as it relates
to the
assignment and is approved by the Company. The cost of any personal
income,
estate tax, planning consultation or preparation of returns for
family members
will be the Global Assignee's responsibility.
Global
Assignees
are required to use the Global Tax Support Service's tax return
preparation
services. The Company will not reimburse any fees incurred in utilising
other
services.
- 23 -
Additional
Support
In
addition to tax return services, the Global Tax Support Service
will also
provide the following assistance to the Global Assignees:
| 1. |
Pre
Assignment Tax Consultation
|
As
soon as practical after approval of the assignment, the Global
Assignee will
meet with a tax consultant to discuss the tax consequences of the
assignment.
The
tax
consultation will address the following issues:
|
·
|
Home
location
tax rules and requirements
|
|
·
|
Tax
rules for
rental of principal residence
|
|
·
|
Record
keeping requirements
|
|
·
|
Review
of
taxability of capital gains and stock option transactions
related to the
Company's compensation and benefits
programmes
|
|
·
|
Preparation
of applicable withholding tax
certificates
|
|
·
|
Explanation
of estimated hypothetical tax
|
|
·
|
Social
security tax implications of the
assignment
|
| 2. |
Post
Arrival Tax Consultation
|
As
soon as practical after arriving in the assignment location, the
Global Assignee
will meet with the tax consultant's assignment location tax advisors
for a
review of the local tax rules, tax return preparation requirements
and tax
return filing deadlines.
- 24 -
| 3. |
On
Assignment Assistance
|
The
tax consultant
will work with the Global Assignee to ensure timely filing of Home and
assignment location returns as described above.
In
addition, services will include preparation of the annual Tax Equalisation
Settlement Calculation, where applicable, and settlement of tax
advances.
| 4. |
Post
Assignment Services
|
At
the completion of the assignment, the Global Assignee will meet with the tax
consultant to discuss the following issues:
|
·
|
Assignment
location tax authority departure
requirements
|
|
·
|
Preparation
of final assignment location tax returns
|
|
·
|
Preparation
of the Final Tax Equalisation Calculation and settlement of remaining
tax
advances
|
In
addition, should there be a need for home or host country post assignment tax
support occasioned by post assignment tax events, including bonuses, LIT awards,
tax examinations or tax payments, GSK will provide tax services to the extent
that the service would not have been needed but for the assignment.
Global
Assignee Responsibilities
As
a condition of employment, it is the responsibility of the Global Assignee
to
provide all necessary and appropriate documentation to the tax service in a
timely manner in order to allow preparation of tax returns prior to filing
deadlines. It is the responsibility of the Global Assignee to file the completed
Home and assignment location tax returns in accordance with applicable
laws.
Global
Assignee’s
have a personal obligation and responsibility to comply with all applicable
Home
and assignment location tax return filing requirements. Specifically, Global
Assignees are responsible for:
|
·
|
Arranging
their financial affairs so as to comply with all applicable Home
and
assignment location income tax
requirements
|
|
·
|
Providing
the
tax preparer with complete tax information soon after the close of
the tax
year, to ensure that the required assignment and Home location income
tax
returns are prepared and filed on a timely basis to avoid the imposition
of interest or penalties
|
|
·
|
Providing
the
Company and the tax preparer with proof of payment of taxes other
than
through normal payroll withholding (e.g. cancelled cheques etc) in
order
to document that the reimbursed taxes have been
paid
|
|
·
|
Reviewing
and
settling the Tax Equalisation Settlement Calculation on an annual
basis
|
|
·
|
Authorising
the tax preparer to release summary tax data to the Company for the
purpose of reviewing the Tax Equalisation Settlement
Calculation
|
- 25 -
|
·
|
Repaying
all
refunds received from the assignment location and/or Home location
Revenue
Authority to the Company, if
appropriate
|
|
·
|
Paying
all
estimated taxes on net personal income if
required
|
|
·
|
Notifying
the
Company in advance of any significant income events (e.g. sale of
an
appreciated asset, exercise of stock options etc) to allow for
consultation with the tax advisor and implementation of appropriate
tax
planning opportunities
|
|
·
|
Providing
the
Company and tax preparer with all necessary assistance and information
to
ensure that GSK is able to comply with all applicable tax laws governing
tax events occurring after the assignment, e.g. bonuses, LTI awards,
tax
examinations or tax payments.
|
The
Global Assignee
will be asked to complete tax organisers, which are designed to collect tax
information so that the tax advisor can prepare the actual tax returns. It
is
essential that the organiser be completed carefully and returned to the tax
advisor by the designated date, because the actual returns will be prepared
from
this data. Non compliance with this procedure will result in interest and
penalties charged to the Global Assignee.
General
Tax
Administration Issues: Filing Status
The
Global Assignee
is expected to use the filing status that produces the lowest possible tax
cost
to the Company, as determined by the tax advisor. If another filing status
is
elected, the Global Assignee will be responsible for any additional tax
generated.
The
tax advisor
will determine whether state and/or local filing requirements exist. As the
Global Assignee is responsible for a state hypothetical tax, any actual taxes
resulting from the need to file a state and/or local return will be paid by
the
Company.
Should
the Global
Assignee elect to file a state tax return against the recommendation of the
tax
advisor or be unable to break residency for purely personal reasons, the Company
will not protect the Global Assignee against any state or local tax in excess
of
the hypothetical tax incurred due to assignment related income.
Penalties
and Interest
Penalties
and
interest attributable to Company related matters for which Global Assignees
are
not at fault will be paid by the Company. Global Assignees will pay any
penalties and interest only if they are responsible. For example, a Global
Assignee may be required to provide the tax advisor with an estimate of net
personal income in order to evaluate the need for estimated tax payments or
actual withholding. If the estimate proves to be understated and results in
penalties and interest, the Global Assignee will be responsible for these
costs.
In
addition, a Global Assignee who does not provide the tax advisor with complete
and timely tax data will also be responsible for any late payment penalties,
interest and increased tax advisor fees.
- 26 -
Revenue
Authority Interest and Penalty Assessments
In
cases where a cost versus benefit analysis warrants response to a governmental
notice, the tax advisor should assist the Global Assignee in responding to
the
notice. Generally, all such “nuisance” notices under US$400 tax (or the
equivalent in local currency) are not worth pursuing. Global Assignees will
be
advised to pay the amount due after contacting the tax advisor. Reimbursement
may be obtained from the Company for payment of these tax
assessments.
Revenue
Authority Examinations
The
tax preparer
will counsel and assist Global Assignees on examination notices received from
any taxing authority relative to tax returns prepared by the preparer and filed
under the programme. However, if the adjustment/s to the Global Assignee’s
return is US $1,000 tax or less, regardless of the issues involved, the Global
Assignee will be advised to pay the tax and seek reimbursement from the
Company.
Scope
of
the Tax Assistance Programme
Any
work performed
by the designated tax advisor not specifically outlined herein must be approved
by the Company prior to commencement.
If
Global Assignee needs assistance from the Company for payment of Company related
tax balances, the Company will advance the necessary funds, provided adequate
documentation is forwarded to the applicable Global Assignments Centre contact
in a timely manner.
- 27 -
APPENDIX
M: GSK
TAX EQUALISATION/PROTECTION POLICY ON LTIS
Objective
GSK
currently
offers employees of particular grades eligibility to participate in the
following Long Term Incentive Plans (LTIP’s):
|
·
|
Share
Options, with a 10 year lifespan;
|
|
·
|
Performance
Share Plan (PSP), with a three (3) year
lifespan;
|
|
·
|
Share
Value
Plan (SVP), with a three (3) year
lifespan.
|
Each
has a
different set of Plan rules which, in turn, may be treated differently across
the country tax jurisdictions in which eligible employees work.
When
an eligible
employee transfers to a country to work outside of his/her home country, he/she
may be subject to taxation in the host country. He/she may still be subject
to
taxation in the home country or, additionally, subject to taxation in another
country in which he/she has worked during the life span of the LTIP.
As
a result of multiple tax jurisdictions an employee may have a tax burden which
is greater or lower than it would have been had he/she continued to work in
the
home country.
Because
of this
potential inequity, GSK has developed a tax equalisation/protection policy
(Tax
Policy).
Application
GSK
policy for the
tax treatment of employees, who have two or more country LTIP tax liabilities,
is based on circumstances which, generally, fall into the following
categories:
|
·
|
Current
Global Assignees including
Commuters;
|
|
·
|
Former
Global
Assignees including Commuters, that have:
|
|
1.
|
returned
to
their Home country, or
|
|
2.
|
localised
in
their Host Country, or
|
|
3.
|
localised
in
another country;
|
|
·
|
Permanent
Internationally Relocated employees, relocated
at:
|
|
1.
|
GSK’s
request, or
|
|
2.
|
the
individual’s own voluntary request;
|
|
·
|
Business
Traveller with Two Country Tax Liability(TCTL) working and/or rewarded
across borders;
|
|
·
|
Former
Business Traveller with TCTL that have:
|
|
1.
|
returned
to
their Home country, or
|
|
2.
|
localised
in
their Host Country, or
|
|
·
|
Good
Leavers
for all of the above categories;
and
|
|
·
|
Bad
Leavers
for all of the above categories.
|
- 28 -
Two
separate tax
policies, and one level of tax support, will be applied depending on which
of
the above categories the employee falls.
Tax
Equalisation
Tax
Equalisation is
applied to all LTIP transactions of a current Global Assignee and Commuter:
ie,
an employee assigned to another (Host) country under the PfGA
policy.
A
hypothetical tax will be deducted at the same time that a tax withholding
liability would have arisen under the Global Assignee’s home country tax rules.
The hypothetical amount will be based on the actual withholding rate of the
employee’s Home location.
Tax
Protection
A
tax protection policy applies to the following GSK employees:
|
·
|
Former
Global
Assignees including Former Commuters, that
have:
|
|
1.
|
returned
to
their Home country, or
|
|
2.
|
localised
in
their Host Country, or
|
|
3.
|
localised
in
another country*;
|
|
·
|
Permanent
Internationally Relocated employees, relocated at GSK’s
request;
|
|
·
|
Business
Travellers with TCTL working and/or rewarded across
borders;
|
|
·
|
Former
Business Travellers with TCTL that have:
|
|
1.
|
returned
to
their Home country, or
|
|
2.
|
localised
in
their Host Country, or
|
|
·
|
Good
Leavers
for all of the above categories.
|
Individuals
within
the above categories will be required to pay tax on LTIP transactions, in
whatever country tax jurisdictions it arises, up to the amount of tax that
would
have been payable if the individual had been resident throughout in the
responsible tax country (ie, the country to where he/she is tax
equalised/protected). For staff who continue to be employed by GSK, the
responsible tax country will be their current country of employment at the
time
of exercise. Good leavers, including retired staff, will have their last country
of employment identified as the responsible country.
Any
amount of tax
that is due over and above the amount of responsible tax calculated will be
met
by GSK.
TAX
POLICY
PROCEDURES
Assistance
At
GSK’s discretion, employees will be provided with assistance with country tax
return preparation, tax equalisation reconciliation and tax audit
representation. This assistance will be provided through Ernst & Young
LLP.
- 29 -
Tax
Equalisation
Hypothetical
Tax
For
tax equalised
individuals, GSK will retain hypothetical tax based on the tax withholding
rate
of the country to where the employee is tax equalised (ie, to the extent
allowable under law). GSK’s inability or failure to retain hypothetical tax does
not invalidate the tax equalisation process.
In
general, the highest rates of withholding of each country will be applied,
even
if a reduced rate of withholding tax can be applied. The rate of tax and social
security deducted is based on the advice / instruction given by the local GSK
company.
Where
the employee
is tax equalised to a non-withholding country, no hypothetical tax will be
deducted at exercise. However, Home country hypothetical tax will be required
to
be paid to GSK, by the employee, on the same date the employee would have paid
tax to the Home country tax authorities.
Social
security
will be payable at maximum rates unless an income, or similar, cap is
applicable. In this case it will be assumed that the cap threshold has
reached.
Tax
Reconciliation and Settlement
A
tax reconciliation will be made to determine the difference between the
employee’s responsible tax and his/her expenditures for hypothetical tax and
actual home country tax. This calculation and reconciliation will be made by
Ernst & Young LLP, once the appropriate tax returns have been prepared, who
will advise the employee and GSK of the resulting settlement amount.
The
party owing the
settlement amount will make payment within a reasonable time period. If payment
is not made within a reasonable time period, legal proceedings may
commence.
Tax
Protection
Tax
protected
individuals will be required to pay tax on LTIP transactions, in whatever
country tax jurisdictions it arises, up to the amount of tax that would have
been payable if the individual had been resident throughout in the responsible
tax country (ie, the country to where he/she is tax
equalised/protected).
Any
amount of tax
that is due over and above the amount of responsible tax calculated will be
met
by GSK.
|
1.
|
Former
Global Assignees and Commuters that have returned to their Home
country
|
The
above
individuals will be required to pay any tax due on LTIP transactions, in the
Home and former Host country (and in any other country that tax may be payable)
up to the amount of tax that would have been payable if they had been resident
throughout in their Home location. All payments must be made in accordance
with
each country’s payment rules.
- 30 -
Any
amount of tax
that is due over and above the amount of responsible tax calculated will be
met
by GSK.
Actual
country tax
withholding due will be payable by the individual, but only to the extent of
that which would have been payable if they had been resident throughout in
their
Home location.
|
2.
|
Former
Global Assignees and Commuters that have localised in their Host
Country
|
The
above
individuals will be required to pay any tax due on LTIP transactions, in their
Host and former Home country (and in any other country that tax may be payable)
up to the amount of tax that would have been payable if they had been resident
throughout in their Host location. All payments must be made in accordance
with
each country’s payment rules.
Any
amount of tax
that is due over and above the amount of responsible tax calculated will be
met
by GSK.
Actual
country tax
withholding due will be payable by the individual, but only to the extent of
that which would have been payable if they had been resident throughout in
their
Host location.
|
3.
|
Former
Global Assignees and Commuters that have localised in another country*
|
The
above
individuals will be required to pay any tax due on LTIP transactions, in their
former Host, former Home and in any other country tax may be payable, up to
the
amount of tax that would have been payable if they had been resident throughout
in their current location (*ie, the employee’s country of residence, for GSK
payroll purposes, on the earlier of the date at which the tax becomes payable,
or the date of cessation of employment from GSK). All payments must be made
in
accordance with each country’s payment rules.
Any
amount of tax
that is due over and above the amount of responsible tax calculated will be
met
by GSK.
Actual
country tax
withholding due will be payable by the individual, but only to the extent of
that which would have been payable if they had been resident throughout in
their
current location (as defined above).
|
4.
|
Permanent
Internationally Relocated employees relocated at GSK’s
request
|
The
above
individuals will be required to pay any tax due on LTIP transactions, in their
current location and former Home country (and in any other country that tax
may
be payable) up to the amount of tax that would have been payable if they had
been resident throughout in their current location. All payments must be made
in
accordance with each country’s payment rules.
- 31 -
Any
amount of tax
that is due over and above the amount of responsible tax calculated will be
met
by GSK.
Actual
country tax
withholding due will be payable by the individual, but only to the extent of
that which would have been payable if they had been resident throughout in
the
location to where they have been permanently relocated.
|
5.
|
Business
Travellers with TCTL working and/or rewarded across
borders
|
The
above
individuals will be responsible for paying any tax due on LTIP transactions,
in
all locations in which they have performed duties, and/or their Home country,
up
to the amount of tax that would have been payable if they had been resident
throughout in their country of residence (ie, for GSK payroll purposes, on
the
earlier of the date at which the tax becomes payable, or the date of cessation
of employment from GSK). All payments must be made in accordance with each
country’s payment rules.
Any
amount of tax
that is due over and above the amount of responsible tax calculated will be
met
by GSK.
Actual
country tax
withholding due will be payable by the individual, but only to the extent of
that which would have been payable if they had been resident throughout in
their
country of residence (as defined above).
|
6.
|
Former
Business Travellers with TCTL that have returned to their Home
country
|
The
above
individuals will be responsible for paying any tax due on LTIP transactions,
in
all locations in which they have performed duties, and/or their Home country,
up
to the amount of tax that would have been payable if they had been resident
throughout in their Home country. All payments must be made in accordance with
each country’s payment rules.
Any
amount of tax
that is due over and above the amount of responsible tax calculated will be
met
by GSK.
Actual
country tax
withholding due will be payable by the individual, but only to the extent of
that which would have been payable if they had been resident throughout in
their
Home country.
|
7.
|
Former
Business Travellers with TCTL that have localised in their Host
country
|
The
above
individuals will be responsible for paying any tax due on LTIP transactions,
in
all locations in which they have performed duties, and/or their former Home
country, up to the amount of tax that would have been payable if they had been
resident throughout in their Host country. All payments must be made in
accordance with each country’s payment rules.
Any
amount of tax
that is due over and above the amount of responsible tax calculated will be
met
by GSK.
- 32 -
Actual
country tax
withholding due will be payable by the individual, but only to the extent of
that which would have been payable if they had been resident throughout in
their
Host country.
Actual
country tax
withholding due will be payable by the individual, but only to the extent of
that which would have been payable if they had been resident throughout in
their
current location (as defined above).
Tax
Reconciliation and Settlement
A
tax reconciliation will be made to determine the difference between the
employee’s responsible tax and his/her expenditures for actual country
withholding tax. This calculation and reconciliation will be made by Ernst
&
Young LLP, once the appropriate tax returns have been prepared, who will advise
the employee and GSK of the resulting settlement amount.
The
party owing the
settlement amount will make payment within a reasonable time period. If payment
is not made within a reasonable time period, legal proceedings may
commence.
DEFINITIONS
For
purposes of the
GSK Tax Policy, the following terms will have the stated meaning:
Actual
Home
Country Tax
The
tax liability
properly calculated on the employee’s actual Home country tax return(s) or, if
applicable, the actual tax liability assessed by the Home country tax
authorities.
Actual
Host
Country Tax
The
tax liability
properly calculated on the employee’s actual Host country tax return(s) or, if
applicable, the actual tax liability assessed by the host country tax
authorities.
Home
Country
The
country in
which the individual was employed, prior to performing employment duties in
another country, and to which the employee intends to return once those foreign
employment duties have ceased. An employee may have only one home country for
the purposes of the Tax Policy.
Host
Country
The
country, other
than the Home country, in which an individual carries out GSK employment
duties.
- 33 -
Hypothetical
Tax
The
estimated
amount of responsible tax that GSK retains from the employee. Hypothetical
tax
does not belong to the employee nor is it remitted to the Home or Host country
tax authorities as withholding. Instead, it is a reduction of the employee’s
compensation.
Responsible
Tax
The
amount
calculated according to the GSK Tax Policy, and related procedures, which the
employee is obliged to pay. The responsible tax is an approximation of the
country tax liability which would have arisen had the employee been resident
throughout in the country to where he/she is tax equalised/protected.
Responsible
Tax Country
The
country in
which individuals within the above categories will be required to pay tax on
LTIP transactions, in whatever country tax jurisdictions it arises, up to the
amount of tax that would have been payable if the individual had been resident
throughout in the responsible tax country (ie, the country in which he/she
is
deemed to be resident at the time of LTIP transaction).
Tax
All
income and
social taxes imposed by the taxing jurisdiction (e.g. federal, state, city,
province, canton, etc.). The term does not include estate, inheritance, gift,
sales, or value added taxes.
TCTL
Two
Country Tax
Liability
Two
Country LTIP Tax Liability - Summary
|
Category
of Employee
|
|
Tax
Equalisation
|
|
Tax
Protection
|
|
Tax
Support
|
|
Current
Employee - 10 year timescale
|
|
|
|
|
|
|
|
Global
Assignee
|
|
To
Home
country
|
|
N/A
|
|
Yes
|
|
Former
Global
Assignee including Commuter
- returned
to
their Home country
|
|
N/A
|
|
To
Home
country
|
|
Yes
|
|
- localised
in
their Host country
|
|
N/A
|
|
To
Host
country
|
|
Yes
|
|
- localised
in
another country
|
|
N/A
|
|
To
other
country
|
|
Yes
|
|
Permanent
Internationally relocated employee
- GSK
request
|
|
N/A
|
|
To
Host
country
|
|
Yes
|
|
- voluntary
request
|
|
N/A
|
|
N/A
|
|
Yes
|
|
Business
Travellers with TCTL working and/or rewarded across
borders
|
|
N/A
|
|
To
Country
granting LTIP
|
|
Yes
|
|
Former
Business Travellers with TCTL
- returned
to
their Home country
|
|
N/A
|
|
To
Home
country
|
|
Yes
|
|
- localised
in
their Host country
|
|
N/A
|
|
To
Host
country
|
|
Yes
|
|
|
|
|
|
|
|
|
|
Good
Leaver –
3 year
timescale
|
|
|
|
|
|
|
|
Global
Assignee including Commuters
- returned
to
their Home country
|
|
N/A
|
|
To
Home
country
|
|
Yes
|
|
- not
returning
to their Home country
|
|
N/A
|
|
To
Home
country
|
|
Yes
|
|
Former
Global
Assignee including Commuters
- returned
to
their Home country
|
|
N/A
|
|
To
Home
country
|
|
Yes
|
- 34 -
|
- localised
in
their Host country
|
|
N/A
|
|
To
Host
country
|
|
Yes
|
|
- localised
in
another country
|
|
N/A
|
|
To
other
country
|
|
Yes
|
|
Permanent
Internationally relocated employee
- GSK
request
|
|
N/A
|
|
To
Host
country
|
|
Yes
|
|
- voluntary
request
|
|
N/A
|
|
N/A
|
|
Yes
|
|
Business
Travellers with TCTL working and/or rewarded across
borders
|
|
N/A
|
|
To
Country
granting LTIP
|
|
Yes
|
|
Former
Business Travellers with TCTL
- returned
to
their Home country
|
|
N/A
|
|
To
Home
country
|
|
Yes
|
|
- localised
in
their Host country
|
|
N/A
|
|
To
Host
country
|
|
Yes
|
|
|
|
|
|
|
|
|
|
Bad
Leaver - immediate year timescale
|
|
|
|
|
|
|
|
Global
Assignee including Commuters
- returned
to
their Home country
|
|
N/A
|
|
N/A
|
|
No
|
|
- not
returning
to their Home country
|
|
N/A
|
|
N/A
|
|
No
|
|
Former
Global
Assignee including Commuters
- returned
to
their Home country
|
|
N/A
|
|
N/A
|
|
No
|
|
- localised
in
their Host country
|
|
N/A
|
|
N/A
|
|
No
|
|
- localised
in
another country
|
|
N/A
|
|
N/A
|
|
No
|
|
Permanent
Internationally relocated employee
- GSK
request
|
|
N/A
|
|
N/A
|
|
No
|
|
- voluntary
request
|
|
N/A
|
|
N/A
|
|
No
|
|
Business
Travellers with TCTL working and/or rewarded across
borders
|
|
N/A
|
|
N/A
|
|
No
|
|
Former
Business Travellers with TCTL
- returned
to
their Home country
|
|
N/A
|
|
N/A
|
|
No
|
|
- localised
in
their Host country
|
|
N/A
|
|
N/A
|
|
No
|
- 35 -
