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Letter to shareholders 2004

This document is important and requires your immediate attention. If you are in any doubt as to what action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional advisor immediately.

26th March 2004

To the holders of the company's Ordinary Shares and American Depositary Shares and, for information, to the holders of the SmithKline Beecham plc Loan Stock.

Dear Shareholder,

Annual General Meeting 2004

Prior to our AGM I thought it would be helpful to provide you with some background on governance matters affecting your company.

As a result of the Higgs Report, now embodied in the New Combined Code on Corporate Governance, and the adverse vote on the Remuneration Report at last year's AGM, the Board devoted significant attention to governance issues during 2003.

Following the 2003 AGM, extensive consultations with regard to both governance and remuneration were held with GSK's leading shareholders. The Board had already engaged Deloitte and Touche to provide it with external professional advice on remuneration policy. In August it also engaged professional advisors to provide ongoing help with Board appraisal and development.

Remuneration

The Remuneration Report, which is the subject of Resolution 2, embodies the results of the Board's thorough review of remuneration policy. The thrust of the revised policy is to reward performance and eliminate what might be deemed 'payment for failure'. This policy has resulted in significant voluntary changes to the contracts of the Executive Directors and the senior executive group; and I thank the executive, particularly Dr Garnier and John Coombe, for their help in working with the Board's Non-Executive Directors to determine what was in the best interests of GSK, and acting accordingly.

After the very full consultation with shareholders in June and July, the Board decided the changes in remuneration policy that would best bridge the gap between the views of shareholders and the competitive needs of the business. These were announced in December and are outlined in the Remuneration Report.

Since then we have held further discussions with shareholders to ascertain if and where there still exist points of difference. We had always recognised that, due to GSK's transatlantic straddle, some would remain. However, the recent discussions have confirmed that we have moved substantially towards compliance with shareholders' guidelines. They have also, I hope, engendered trust that we will continue to listen to shareholders; and that we are committed to timely and appropriate consultation hereafter in order to avoid the differences of view which we have had to resolve in 2003.

Governance

In addition to the moves on remuneration, the Board has made governance changes to accommodate the views expressed by shareholders. These are outlined in the governance section of the Annual Report and include changes in the structure and organisation of the Board to bring GSK's governance into line with the New Combined Code as early as possible. I am grateful to all my Board colleagues of the past year for their understanding and support in dealing with governance issues and to the Board's Committees, particularly their Chairmen, for the work accomplished.

I ask shareholders to support the election of three new Non-Executive Directors - Larry Culp, Crispin Davis and Sir Robert Wilson - all of whom are independent according to the guidelines of the New Combined Code and have already played a full part for some months in the work of the Board. All were selected against agreed specifications and on the recommendation of the Nominations Committee, assisted by external professional advisors, and all bring to the Board substantial and successful experience of top level management in large companies. I also ask you to support the election of a new Executive Director, Dr Tachi Yamada, who is responsible for GSK's Research & development activities, and who brings to the Board his considerable knowledge and experience of this vital part of the Company's business.

Notice of Meeting

I am pleased to enclose the Notice of Meeting for the fourth Annual General Meeting ('AGM') of GlaxoSmithKline plc. The AGM will be held at 2.30pm on Monday, 17th May 2004 at the Queen Elizabeth II Conference Centre, Broad Sanctuary, Westminster, London SW1.

Attendance at AGM

If you will not be attending you may wish to appoint a proxy electronically via www.shareview.co.uk or www.sharevote.co.uk or if you hold your shares in CREST via the CREST system or by completing and returning the enclosed form of proxy. In each case notice of your appointment of a proxy should reach the company's registrar no later than 2.30pm on Saturday, 15th May 2004.

The Annual Review enclosed contains summary financial statements for the year to 31st December 2003. A copy of the Annual Report is also enclosed for those who have requested a copy. A resolution referring to the financial statements is included in the ordinary business of the AGM. Explanatory notes for the business of the AGM are given on page 5 of this document.

Recommendation

Your Board believes that the resolutions contained in the Notice of Meeting are in the best interests of the company and shareholders as a whole and recommends you to vote in favour of them, as your Directors intend to do in respect of their beneficial shareholdings.

Yours sincerely

Sir Christopher Hogg
Chairman GlaxoSmithKline

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