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Explanatory Notes

Explanatory Notes to Business of the Annual General Meeting 2009

Ordinary Business
Each resolution will be proposed as an ordinary resolution. This means that for each of the resolutions to be passed, more than half of the votes cast must be in favour of the resolution.

Resolution 1 – To receive and adopt the Directors’ Report and the Financial Statements for 2008
For each financial year, the Directors must present the Directors’ Report, the audited Financial Statements and the independent Auditors’ reports to shareholders at a General Meeting.

Resolution 2 – To approve the 2008 Remuneration Report
In accordance with the Directors’ Remuneration Report Regulations 2002, shareholders are invited to vote on the Remuneration Report, which may be found on pages 78 to 98 of the 2008 Annual Report.

Resolutions 3-7 – Election and Re-election of Directors
The company’s Articles of Association require any Director newly appointed by the Board to retire at the first Annual General Meeting (“AGM”) after appointment. You are therefore asked to elect as a Director, Mr James Murdoch, who has been appointed by the Board since last year’s AGM. The Board considers that his experience of global business, marketing and communications will bring a unique and alternative perspective to the Board and he will also be an excellent addition to the Board’s Corporate Responsibility Committee, an area where he has shown particular leadership at BSkyB and News Corporation. The Board has determined
that he will be an independent Non-Executive Director in accordance with the Combined Code on Corporate Governance.

The Articles of Association also require certain of the current Directors to retire at each AGM dependent on their length of service and the period since their last re-election. All of the Directors are eligible to seek re-election by shareholders at the AGM, if they so wish. Mr Larry Culp, Sir Crispin Davis, Sir Ian Prosser, Dr Ronaldo Schmitz, Dr Moncef Slaoui and Mr Tom de Swaan are all retiring by rotation. Neither Sir Ian nor Dr Schmitz will seek re-election and will retire from the Board at the conclusion of the AGM. Mr Culp and Sir Crispin were elected to the Board in 2004. Dr Slaoui and Mr de Swaan were elected to the Board in 2006.

Mr Culp, Sir Crispin, Dr Slaoui and Mr de Swaan each offer themselves for re-election at the AGM. The Chairman is satisfied that each of them continues to perform effectively and demonstrates commitment to their role including commitment of time for Board and committee meetings and their other duties.

Mr Culp, Sir Crispin, and Mr de Swaan are all Non-Executive Directors and have letters of appointment rather than service contracts. Dr Slaoui has a service contract with a notice period of 12 months. The Non-Executive Directors’ letters of appointment and Executive Directors’ service contracts are available for inspection as specified in Note (viii) above.

Biographical details for each of the Directors standing for election or re-election to the Board at the Meeting are given in the company’s 2008 Annual Report. In addition, current biographical details for each Director are maintained on www.gsk.com.

Resolutions 8 and 9 – To authorise the Audit Committee to re-appoint PricewaterhouseCoopers LLP as Auditors to the company and to determine their remuneration
At every General Meeting at which accounts are presented to shareholders, the company is required to appoint auditors to serve until the next such meeting. PricewaterhouseCoopers LLP have indicated that they are willing to continue as the company’s Auditors for another year. You are asked to re-appoint them and, following normal practice, to authorise the Audit Committee to determine their remuneration. Details of the company’s policy with regard to non-audit work and details of work undertaken by the Auditors and their remuneration are given in the company’s Annual Report which can be viewed on www.gsk.com.

Special Business
Where resolutions are passed as special resolutions, in order for those resolutions to be passed at least three-quarters of the votes cast must be in favour of the resolution.

Resolution 10 – Donations to political organisations & political expenditure (Ordinary resolution)
The 2006 Act requires companies to obtain shareholder approval before they can make donations to EU political organisations or incur EU political expenditure. However, the company does not make and does not intend to make donations to political parties or independent election candidates, nor does it make any donations to EU political organisations or incur EU political expenditure. The definitions of political donations, political expenditure and political organisations used in the 2006 Act are very wide. In particular, the definition of political organisations may extend to bodies such as those concerned with policy review, law reform, the representation of the business community and special interest groups such as those concerned with the environment, which the company and its subsidiaries might wish to support. As a result, the definitions may cover legitimate business activities not in the ordinary sense considered to be political donations or political expenditure. Such activities are not designed to support any political party or independent election candidate or to influence public support for any political party or independent election candidate. The authority which the Board is requesting is a precautionary measure to ensure that the company and its subsidiaries do not inadvertently breach the 2006 Act.

No payments have ever been made under this authority, which is specific to political donations and political expenditure in relation to any and all EU member states. In addition, with effect from 1st January 2009, to ensure a consistent approach to political contributions across the GSK group, the company introduced a global policy to voluntarily stop all political contributions. In the past, GSK, in common with many companies and in full compliance with local laws, has made a number of political contributions in countries outside the EU, such as the US and Canada. Further details of the payments made in 2008 can be found in the 2008 Annual Report.

Resolution 11 – Authority to allot shares (Ordinary resolution)
Paragraph (a) of this resolution gives the Directors authority to allot unissued share capital with a nominal value of up to £432,359,137 (representing 1,729,436,548 Ordinary shares of 25 pence each) which, as at 24th February 2009, being the last practicable date prior to the publication of this Notice, represented just less than one third of the issued share capital of the company (excluding treasury shares).

In line with recent guidance issued by the Association of British Insurers, paragraph (b) of this resolution gives the Directors authority to allot Ordinary shares in connection with a rights issue in favour of ordinary shareholders with a nominal value of up to £864,692,333 (representing 3,458,769,332 Ordinary shares of 25 pence each), as reduced by the nominal amount of any shares issued under paragraph (a) of this resolution. This amount (before any reduction) represents just less than two-thirds of the issued ordinary share capital of the company (excluding treasury shares) as at 24th February 2009, being the last practicable date prior to publication of this Notice.

The authorities sought under paragraphs (a) and (b) of this resolution will expire at the earlier of 30th June 2010 (being the last date by which the company must hold an AGM in 2010) or the conclusion of the AGM of the company held in 2010.

The Directors have no present intention to exercise either of the authorities sought under this resolution, except, under paragraph (a), to fulfil the company’s obligations under its executive and employee share plans.

Resolution 12 – Disapplication of pre-emption rights (Special resolution)
This resolution gives the Directors authority to allot Ordinary shares (including any Ordinary shares which the company has purchased and elected to hold as treasury shares) for cash without first offering them to existing shareholders in proportion to their existing shareholdings and is limited to allotments in connection with rights issues or other pre-emptive offers, or otherwise up to a maximum nominal amount of £64,854,519 (representing 259,418,076 Ordinary shares of 25 pence each) which, as at 24th February 2009, being the last practicable date prior to the publication of this Notice, represented just less than 5% of the company’s issued share capital (excluding treasury shares). In respect of this aggregate nominal amount, the Directors confirm their intention to follow the provisions of the Pre-Emption Group’s Statement of Principles regarding cumulative usage of authorities within a rolling three-year period where the Principles provide that usage in excess of 7.5% should not take place without prior consultation with shareholders.

This authority will expire at the earlier of 30th June 2010 or the conclusion of the AGM of the company in 2010. This authority is granted under section 95 of the 1985 Act and is a standard annual resolution for most UK companies listed on the London Stock Exchange.

Resolution 13 – Purchase of own shares by the company (Special resolution)
This resolution seeks authority for the company to make market purchases of its own Ordinary shares. Purchases of the company’s own shares will be made only after considering the effects on earnings per share and the benefits for shareholders generally. The company does not expect to make any significant repurchases in 2009. You are asked to consent to the purchase by the company of up to a maximum of 518,836,153 Ordinary shares, which, as at 24th February 2009 being the last practicable date prior to the publication of this Notice, represented just less than 10% of the company’s issued share capital (excluding treasury shares). This authority will expire at the end of the next AGM or, if earlier, on 30th June 2010. The maximum price which may be paid for an Ordinary share will be the higher of (i) 105% of the average middle market quotations for the five business days preceding the purchase and (ii) the higher of the price of the last independent trade and the highest current independent bid at the time the purchase is carried out. The minimum price which may be paid for an Ordinary share is its nominal value of 25p. The company may either retain any of its own shares which it has purchased as treasury shares with a view to possible re-issue at a future date, or cancel them. The company would consider holding any of its own shares that it purchases pursuant to the authority conferred by this resolution as treasury shares. This would give the company the ability to re-issue treasury shares quickly and cost-effectively, and would provide the company with additional flexibility in the management of its capital base.

The total number of options over Ordinary shares outstanding as at 24th February 2009, being the last practicable date prior to the publication of this Notice, was approximately 319 million representing approximately 6.15% of the issued share capital (excluding treasury shares). If the authority to buy back shares under this resolution were exercised in full, the total number of options to subscribe for Ordinary shares outstanding as at 24th February 2009 would, assuming no further Ordinary shares are issued, represent 6.83% of the issued share capital (excluding treasury shares). The total number of options as set out above includes options granted by the company and legacy companies, Glaxo Wellcome plc and SmithKline Beecham plc. The obligations of the company in respect of Ordinary shares issuable under options outstanding are partly hedged by Ordinary shares held by the Group’s employee share ownership trusts, details of which can be found in the 2008 Annual Report which is available on the company’s website at www.gsk.com.

The company’s current intention is to satisfy the exercise of outstanding options over approximately 90 million Ordinary shares, representing approximately 1.74% of the issued share capital of the company (excluding treasury shares), by the release of Ordinary shares from the Group’s employee share ownership trusts, which on 24th February 2009 held approximately 157 million Ordinary shares, and the remainder by the issue of new Ordinary shares.

Resolution 14 – Exemption from statement of the name of the senior statutory auditor in published copies of the Auditors’ reports (Ordinary resolution)
For financial years beginning on or after 6th April 2008, every copy of the Auditors’ reports to the company’s shareholders on the Annual Report and other auditable reports that is or are published by or on behalf of the company must state, where the company’s Auditors are a firm, the name of the person who signed them in his or her own name as senior statutory auditor in relation to the audit, for and on behalf of the Auditors. However, the 2006 Act provides an exemption from this requirement if the company considers on reasonable grounds that statement of the individual’s name would create or be likely to create a serious risk that they or any other person would be subject to violence or intimidation. For many years, the company and its legacy companies, together with its employees, have been the focus of protests by various animal protection groups, some of which have engaged in aggressive, abusive and hostile acts. The Directors therefore believe that it is appropriate that the company should seek to utilise the confidentiality afforded to the senior statutory auditor of the company’s Auditors under the new legislation. This resolution therefore seeks shareholder approval for the Auditors’ reports for the financial year ending 31st December 2009 to omit the name of the senior statutory auditor. The company would give notice to the Secretary of State in the appropriate format if this resolution is passed.

Resolution 15 – Reduced notice of a general meeting other than an annual general meeting (Special resolution)
This resolution seeks shareholder approval to continue to be able to call general meetings other than AGMs on not less than 14 days’ notice as currently permitted under the 2006 Act.

The UK Government is proposing to bring into force on 3rd August 2009 regulations to implement the EU Shareholder Rights Directive (the “Directive”) on the exercise of certain rights of shareholders in listed companies. The regulations implementing the Directive will require that listed companies provide 21 days’ notice of a general meeting. However, the UK Government will be taking advantage of an option within the Directive, which will allow companies to retain a 14 clear days’ notice period for calling a general meeting (other than an AGM, which must continue to be called on notice of at least 21 clear days) if two conditions are met. These are (a) that shareholders have, at the immediately preceding AGM or at a general meeting held since the immediately preceding AGM, passed a resolution to approve the holding of general meetings on not less than 14 clear days’ notice; and (b) that the company offers the facility for shareholders to vote by electronic means accessible to all shareholders.

The Government has indicated that companies can pass the type of resolution referred to at (a) above in advance of the regulations being finalised, in order to be able to continue, after August 2009, to take advantage of the shorter notice period once the regulations come into force, subject to meeting the requirements for electronic voting under the Directive. The Government has recommended that companies seeking to propose this resolution in advance of the regulations being finalised should consider doing so as a special resolution.

If approved, Resolution 15 will enable the company to retain maximum flexibility to seek shareholder approval for any future change or transaction that may require such approval. The approval will be effective until the company’s next AGM, when it is intended that a similar resolution will be proposed.

Resolutions 16, 17 and 18 – Approval of the adoption of the GlaxoSmithKline 2009 Performance Share Plan, the GlaxoSmithKline 2009 Share Option Plan and the GlaxoSmithKline 2009 Deferred Annual Bonus Plan (Ordinary resolutions)
Shareholders are asked to approve the adoption of the rules of the GlaxoSmithKline 2009 Performance Share Plan, the GlaxoSmithKline 2009 Share Option Plan and the GlaxoSmithKline 2009 Deferred Annual Bonus Plan, (together, the “Plans”) to replace the company’s existing plans which expire in 2010. These plans have been designed to deliver the new Remuneration Policy which is set out in the company’s Annual Report.

The principal terms of the Plans are set out on the next pages.

1 Common features
The following features are common to the Plans.

1.1 Operation
The company’s Remuneration Committee is responsible for granting awards to and operating the Plans with regard to Executive Directors and Corporate Executive Team members (together, the “Executives”). The Board, or a duly authorised committee of the Board (which may be the Remuneration Committee), is responsible for granting awards to and operating the Plans with regard to all other employees.

1.2 Eligibility
Employees and Executive Directors of the company and any subsidiaries of the company (as designated by the Directors) are eligible to participate in the Plans.

1.3 Timing of operation
Awards will normally be granted under the Plans within 42 days of the announcement of the company’s results for any period but may be granted at other times if the Remuneration Committee considers the circumstances to be exceptional. However, at all times the grant of awards will be subject to the terms of the Model Code for transactions in securities by Directors and the company’s share dealing code. Subject to shareholder approval, the first awards under the GlaxoSmithKline 2009 Performance Share Plan are expected to be granted shortly after the adoption of the Plans at the AGM.

1.4 Grant of awards
Awards may be satisfied with newly issued shares, treasury shares or shares purchased in the market in conjunction with an employee benefit trust established by the company.

At the discretion of the Remuneration Committee, awards may be granted subject to the participant agreeing to satisfy the employer’s social security liabilities arising on the award.

1.5 Dilution limits
In any 10 year period, not more than 10% of the issued ordinary share capital of the company may be issued or issuable under the Plans and all other employee share plans adopted by the company.

In addition, in any 10 year period, not more than 5% of the issued ordinary share capital of the company may be issued or issuable under the Plans and all other discretionary employee share plans adopted by the company.

These limits do not include awards and options which have lapsed or been surrendered.

So long as this is required under the guidelines of the Association of British Insurers’ Investment Committee, the company will include in this calculation any treasury shares used to satisfy awards and options granted under the Plans.

1.6 Variation in share capital
Awards may be adjusted at the discretion of the Remuneration Committee following any rights issue, special dividend, de-merger, consolidation, sub-division, reduction or other variation in the share capital of the company.

1.7 Issue of shares
Any shares issued under the Plans will rank equally with shares of the same class in issue on the date of allotment except in respect of rights arising by reference to a prior record date.

1.8 Amendments
The Remuneration Committee may amend the Plans as it considers appropriate. However, shareholder approval will be required to amend certain provisions to the advantage of participants. These provisions relate to: eligibility, individual and plan limits, adjustment of awards on a variation in the company’s share capital and the amendment powers. Shareholder approval is not required for changes that are minor in nature or for changes intended to benefit the administration of the Plans, or to comply with or take account of existing or proposed legislation or any changes in legislation or to secure favourable tax treatment for the company, members of its group or participants.

1.9 Other features
Awards granted under the Plans are not pensionable and are not generally transferable (except in the case of death).

1.10 Termination
The Plans may be terminated by the Remuneration Committee at any time. Awards may not be granted after the tenth anniversary of the approval of the Plans by shareholders.

1.11 Forfeiture
The Remuneration Committee may reduce grant levels or outstanding awards or options granted under the Plans that have not yet vested or been exercised (with the exception of Invested Shares granted under the Deferred Annual Bonus Plan), if it is determined that a participant has engaged in conduct which is contrary to the legitimate expectations of the company for an employee in the participant’s position.

2 GlaxoSmithKline 2009 Performance Share Plan
2.1 Outline
The Remuneration Committee may grant conditional share awards or nil-cost options to selected eligible employees (“Awards”).

2.2 Individual limits
The aggregate value (at the time of the grant) of shares subject to all Awards granted to a participant under this plan in any year will not exceed 6 times the participant’s base salary, except in exceptional circumstances. The value of the Awards to be granted to the Chief Executive Officer in 2009 will be 5 times his base salary. In
applying the plan limit, no account will be taken of shares representing notional dividends on Awards or shares which have been awarded to ensure that a participant is not financially disadvantaged if he or she agrees to satisfy the employer’s social security liability in relation to his or her Award.

2.3 Performance condition
The Remuneration Committee will set performance conditions annually, which must normally be satisfied before an Award can vest. For Executives, the performance conditions will normally be measured over a period of at least three financial years. The Remuneration Committee may change a performance condition if there is a situation which causes it to consider that the changed performance condition would be a fairer measure of performance.

The performance conditions for Awards granted to Executives in 2009 will be based on relative Total Shareholder Return (“TSR”) over three financial years as to 30% of the Award, TSR over four financial years as to 30% of the Award and free cash flow targets as to 40% of the Award over three financial years. The performance period for Awards granted in 2009 will begin on 1st January 2009.

For the Awards made in 2009, TSR performance will be measured by comparing the TSR achieved by the company with that of a comparator group currently comprising the following 12 global pharmaceutical companies: Abbott Laboratories, AstraZeneca, Bristol-Myers Squibb, Eli Lilly, Johnson & Johnson, Merck, Novartis, Pfizer, Roche Holdings, Sanofi-Aventis, Schering-Plough and Wyeth. Awards will not vest if the company’s TSR performance is below median. If the company’s TSR performance is median, 30% of the Award will vest, with full vesting for upper quartile performance. Between these levels, Awards will vest proportionally.

If the free cash flow threshold is met, 25% of the Award will vest, with full vesting if the threshold is exceeded by the margin specified by the Remuneration Committee. Between these points, vesting will increase on a pro rata basis. If the threshold target is not met, no portion of the Award subject to free cash flow will vest. The free cash flow targets may be adjusted for material factors, which could distort free cash flow as a performance measure. These will typically include exchange rate movements and may include legal and major taxation settlements and special pension contributions, which could materially distort this calculation in either direction. The impact of any acquisition or divestment will be quantified and adjusted for at the time of the event.

It is the Remuneration Committee’s intention to disclose the targets for each Award in the announcement to the London Stock Exchange at the time the Award is made. For the Awards in 2009, the threshold free cash flow target will be £13.5 billion, with maximum vesting for £16 billion.

2.4 Acquisition of shares
A participant will normally only acquire the shares subject to Awards to the extent that the performance conditions have been satisfied and provided that the participant remains in employment. When shares are acquired, the participant may also receive additional shares (or an equal cash amount) which reflect reinvested dividends that would have been paid on the vested portion of the Award during the performance period.

2.5 Leaving employment
If an Executive leaves employment due to retirement or redundancy, Awards will normally vest on the original vesting date, subject to the satisfaction of the performance condition over the original period. Any Awards granted within 12 months of cessation will lapse on the date of cessation. The Committee may determine that any unvested Awards should lapse immediately, if the participant takes up employment with a competitor company during the performance period.

Alternatively, the Remuneration Committee may decide that on retirement or redundancy, Executives’ Awards will vest at the end of the financial year in which the cessation occurred or at another point that the Remuneration Committee decides at its discretion, normally taking account of performance to that point. In this case, the Committee may also adjust the number of shares which may be acquired to take account of the time the Executive was employed during the performance period.

If an Executive leaves employment due to death, ill-health, injury or disability, or the sale or transfer of the participant’s employing business, Awards will vest at the end of the financial year in which the cessation occurred or at another point that the Remuneration Committee decides at its discretion, normally taking into account performance to that time. The Committee may also adjust the number of shares which may be acquired to take account of the time the Executive was employed during the performance period.

Awards held by participants other than Executives who leave due to retirement or redundancy will normally vest at the end of the financial year in which the cessation occurred or at another point that the Remuneration Committee decides at its discretion, normally taking into account performance to that time. The Committee may also adjust the number of shares which may be acquired to take account of the time the participant was employed during the performance period.

Awards held by participants other than Executives who leave due to death, ill-health, injury or disability, or the sale or transfer of the participant’s employing business will vest at the end of the financial year in which the cessation occurred or at another point that the Remuneration Committee decides at its discretion, normally taking into account performance to that time. The Committee may also adjust the number of shares which may be acquired to take account of the time the participant was employed during the performance period.

If any participant (Executive or otherwise) leaves employment for any other reason, Awards will normally lapse.

2.6 Change of control, de-merger or other reorganisations
Generally, Awards will vest on a change of control taking into account performance to that point. Unless the Remuneration Committee decides otherwise, the number of shares which may be acquired will also be reduced to take account of the time the participant was employed during the performance period.

The Remuneration Committee has the discretion to allow or require rollover of Awards on a change of control or other corporate reorganisation. The new Awards will be subject to appropriate performance conditions. On a de-merger, if the Remuneration Committee so decides, Awards may be adjusted or allowed to vest.

3 GlaxoSmithKline 2009 Share Option Plan
3.1 Outline
Selected eligible employees may be granted market value options (“Options”) over the company’s shares or equity-settled Stock Appreciation Rights. The Option price will not be less than the market value of a share on the business day before the date of grant or the average market value over the three preceding business days.

3.2 Individual limits
Where a participant receives Options under the company’s 2009 Share Option Plan and Awards under the company’s 2009 Performance Share Plan in any year, it is currently intended that the expected value of Options granted to him or her in that year will not exceed 60% of the aggregate expected value of Options and Performance Share Plan Awards granted to him or her in that year. In applying this limit, no account will be taken of shares which have been awarded to ensure that a participant is not financially disadvantaged if he or she agrees to satisfy the employer’s social security liability in relation to the Options. Where a participant is not granted Awards under the company’s 2009 Performance Share Plan, the annual Share Option Plan limit will be calculated on an equivalent basis to that which applies to the company’s 2009 Performance Share Plan. It is the current intention that Options will not be granted to the Chief Executive Officer or Chief Financial Officer.

3.3 Performance condition
The Remuneration Committee may, and for Executives will, set a performance condition annually, and any such performance condition imposed must normally be satisfied before the exercise of an Option. The performance condition will normally be measured over a period of at least three financial years.

In line with previous option grants, the performance condition for any Options granted to Executives in 2009 is based on the company’s Earnings Per Share (“EPS”) relative to the Retail Prices Index (“RPI”). Options will not vest if compound EPS growth is less than RPI plus 3% per annum. If compound EPS growth is RPI plus 3% per annum Options will vest as to 30%, if it is RPI plus 4%, they will vest as to 65% and if it is RPI plus 5%, they will vest as to 85%. Full vesting will occur if compound EPS growth is at least RPI plus 6% per annum. In between these levels, Options will vest on a pro rata basis. The performance period for Options granted in 2009 to Executives will begin on 1st January 2009 and will be three financial years in respect of 50% of the award and four financial years in respect of the remaining 50% of the award.

3.4 Exercise of Options
Options will normally vest (become exercisable) no less than three years following the date of grant, subject to any performance condition being satisfied and to the participant remaining in employment.

In respect of the Options granted to Executives in 2009, subject to performance and remaining in employment, 50% of the Options will vest following the determination of the satisfaction of the performance condition over three financial years by the Remuneration Committee and the remaining 50% following the determination of the performance condition over four financial years.

Options will normally lapse on the tenth anniversary of the grant date.

3.5 Leaving employment
If an Executive leaves employment due to retirement or redundancy, Options will normally vest on the original vesting date, subject to the satisfaction of the performance condition over the original period. The Remuneration Committee may determine that any Options granted within 12 months of cessation will lapse on the date of cessation. The Committee may also determine that unvested Options will lapse immediately if the participant takes up employment with a competitor company prior to vesting.

Alternatively, the Remuneration Committee may decide on retirement or redundancy, that Options for Executives will vest at the end of the financial year in which the cessation occurred or at another point that the Remuneration Committee decides at its discretion, normally taking into account performance to that point.

If an Executive leaves employment due to death, ill-health, injury, disability or due to a sale or transfer of the participant’s employing business, Options will vest at the end of the financial year in which the cessation occurred or at another point that the Remuneration Committee decides at its discretion, normally taking into account performance to that point.

Options held by participants other than Executives who leave for any of the reasons described above will normally vest at the end of the financial year in which the cessation occurred or at such earlier point that the Remuneration Committee decides at its discretion.

In all leaver circumstances described above, vested Options may be exercised up to the later of 48 months from grant, 24 months from the cessation of employment and six months from the normal vesting date (apart from on death, in which case they will be exercisable for 12 months from the date of death). If not exercised within the specified period, the Options will lapse.

If any participant (Executive or otherwise) leaves employment for any other reason, unvested Options will normally lapse.

3.6 Change of control, de-merger or other reorganisations
Generally, Options will vest on a change of control taking into account performance to that point, and the level of vesting may be adjusted if the Remuneration Committee considers it appropriate. Vested Options may be exercised for six weeks and if not exercised within this period, the Options will lapse.

The Remuneration Committee has the discretion to allow or require rollover of Options on a change of control or other corporate reorganisation. The new Options will be subject to equivalent performance conditions, if any. On a de-merger, if the Remuneration Committee so decides, Options may be adjusted or allowed to vest.

4 GlaxoSmithKline 2009 Deferred Annual Bonus Plan
4.1 Outline
Selected eligible employees may be invited to invest an element of their pre-tax or net annual bonus in the company’s shares (“Invested Shares”). Participants will then be granted an award of matching shares (“Matching Shares”). Such awards may take the form of a conditional share award or a nil-cost option (or other forms with an economically equivalent value). The receipt of Matching Shares is normally subject to the satisfaction of a performance condition, continued employment and the continued holding of the Invested Shares until the point when the Matching Shares vest. Executives who did not receive option grants in 2009 will be invited to invest up to 50% of their pre-tax or net annual bonus in the plan.

4.2 Individual limits
Matching Shares will be calculated on the basis of a maximum of one share for each share invested by the participant (determined on a pre-tax basis).

4.3 Performance condition
The Remuneration Committee will set a performance condition for the Matching Shares which must normally be satisfied before Matching Shares can vest.

The performance condition will be measured over a period of at least three financial years. The performance condition for Matching Shares granted in respect of the 2009 bonus will be based on TSR, and will be the same as the TSR performance condition for PSP Awards, as described on page 16 above. The TSR performance condition for all Matching Shares will be measured over three financial years.

4.4 Acquisition of shares
A participant will only acquire the Matching Shares if they vest, to the extent that the performance condition has been satisfied and provided that the participant remains in employment for that period. On release, the participant will also receive shares or a cash amount with a value equal to reinvested dividends that would have been paid on those shares during the performance period.

Invested Shares will be released at the end of the performance period.

4.5 Leaving employment
Invested Shares will be released when a participant is no longer eligible to receive Matching Shares in respect of those Invested Shares, whatever the reason.

Matching Shares held by leavers will be treated as described on page 17 in relation to Awards granted under the company’s 2009 Performance Share Plan.

4.6 Change of control, de-merger or other reorganisations
Invested Shares will be released on a change of control unless Matching Shares are exchanged as described below.

Generally, Matching Shares will vest on a change of control taking into account performance to that point. Unless the Remuneration Committee decides otherwise, the number of shares which may be acquired will also be reduced to take account of the time the Executive was employed during the performance period.

The Remuneration Committee has the discretion to allow or require rollover of Matching Shares on a change of control or other corporate reorganisation. The new Matching Shares will be subject to equivalent performance conditions, if any. On a de-merger, if the Remuneration Committee so decides, Matching Shares may be adjusted or allowed to vest. In this case, Invested Shares will not be released but will be exchanged for shares in the acquiring company.

Issued share capital
All references to the company’s ‘issued share capital’ in the Explanatory Notes above are to the company’s issued share capital as at 24th February 2009, which was 5,188,361,535 Ordinary shares, excluding any Ordinary shares held as treasury shares. As at 24th February 2009, the company held 474,194,158 Ordinary shares as treasury shares, representing 9.14% of the company’s issued share capital (excluding treasury shares) as at that date. As at 24th February 2009, the total number of voting rights in the company was 5,188,361,535.

The following information is provided in respect of section 992 Companies Act 2006:

Share capital and control
As at 31st December 2008, the company’s authorised share capital comprised £2,500,000,000, divided into 10,000,000,000 Ordinary shares of 25p each nominal value, representing 100% of the total authorised share capital. On 31st December 2008 there were 5,187,122,079 Ordinary shares in issue, excluding 474,194,158 treasury shares (which represented 9.14% of the total issued capital).

GSK’s shares are listed on the London Stock Exchange and are also quoted on the New York Stock Exchange in the form of American Depositary shares (“ADSs”). Each ADS represents two Ordinary shares.

The holders of Ordinary shares are entitled to receive dividends, when declared, the company’s report and accounts, to attend and speak at General Meetings of the company, to appoint proxies and to exercise voting rights.

There are no restrictions on transfer, or limitations on the holding of Ordinary shares and no requirements to obtain prior approval to any transfers. No Ordinary shares carry any special rights with regard to control of the company and there are no restrictions on voting rights. Major shareholders have the same voting rights per share as all other shareholders. There are no known arrangements under which financial rights are held by a person other than the holder of the shares and no known agreements or restrictions on share transfers or on voting rights.

Shares acquired through GSK share schemes and plans rank equally with the other shares in issue and have no special rights. The trustees of the company’s Employee Share Ownership Plan (“ESOP”) trusts have waived their rights to dividends on shares held by the ESOP trusts.

Change of control
The company is not party to any significant agreements that would take effect, alter or terminate upon a change of control following a takeover bid.

The company does not have agreements with any Director or Officer that would provide compensation for loss of office or employment resulting from a takeover, except that provisions of the company’s share plans may cause options and awards granted under such plans to vest on a takeover.

Interests in voting rights
Other than as stated below, as far as the company is aware, there are no persons with significant direct or indirect holdings in the company. Information provided to the company pursuant to the Financial Services Authority’s (“FSA”) Disclosure and Transparency Rules (“DTRs”) is published on a Regulatory Information Service and on the company’s website.

At 24th February 2009, the company had received notifications in accordance with the FSA’s DTRs of the following notifiable interests, in the voting rights in the company’s issued share capital:

	No. of shares	Percentage of issued capital (%)*
Barclays plc	186,518,653	3.59

* Percentage of Ordinary shares in issue, excluding treasury shares as at 24th February 2009.

The Bank of New York Mellon is the Depositary for the company’s ADRs, which are listed on the New York Stock Exchange. Ordinary shares representing the company’s ADR program, which are managed by the Depositary, are registered in the name of BNY (Nominees) Limited.

The company has not acquired or disposed of any interests in its own shares, other than in connection with the company’s share buy-back programme. Details of the shares purchased, cancelled and held in treasury are given in the Annual Report.

Directors and Officers
The interests of Directors and Officers and their connected persons in the issued share capital of the company are given in the Annual Report.

The rules about the appointment and replacement of Directors are contained in the company’s Articles of Association. The company’s Articles must be approved by shareholders in accordance with the legislation in force from time to time.

The Articles provide that Directors may be appointed by an ordinary resolution of the members or by a resolution of the Directors, provided that, in the latter instance, a Director appointed in this way retires at the first AGM following his appointment.

The Articles also require that at every AGM certain of our current Directors retire by rotation, and detail the circumstances in which and how they may be re-elected. The company’s members may remove a Director by passing an ordinary resolution of which special notice has been given. A Director will automatically cease to be a Director if (i) he becomes bankrupt or compounds with his creditors generally, (ii) he is or has been suffering from mental ill health and the Board resolves that his office is vacated, (iii) he has missed Directors’ meetings for a continuous period of six months without permission and the Board resolves that he shall cease to be a Director, (iv) he is prohibited from being a Director by law, (v) he ceases to be a Director by virtue of UK companies legislation or is removed from office pursuant to the company’s Articles of Association, (vi) he resigns, (vii) he offers to resign and the Board accepts that offer, or (viii) his resignation is requested by all of the other Directors and all of the other Directors are not less than three in number.

The company’s Articles may be amended by a special resolution of the members.

The powers of the Directors are determined by UK legislation and the company’s Memorandum and Articles of Association, available on www.gsk.com. As provided in those Articles, the Directors may exercise all the company’s powers provided that the Articles or applicable legislation do not stipulate that any such powers must be exercised by the members. The Directors have been authorised to issue and allot Ordinary shares, and have authority to make market purchases of shares. Renewal of these authorities is sought from shareholders at each AGM. Any shares purchased may be cancelled or held as treasury shares.

Information on how to vote

Voting using Shareview
If you have a Shareview portfolio, you may register your vote electronically by visiting www.shareview.co.uk, logging into your account and following the instructions provided.

Voting using Sharevote
You may register your vote electronically by visiting www.sharevote.co.uk and following the instructions provided.

Voting using CREST’s electronic proxy appointment service
If you hold your shares in uncertificated form in CREST you may use the electronic proxy appointment service operated by CREST to appoint a proxy and register your vote. CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so for the AGM to be held on Wednesday, 20th May 2009 and any adjournment(s) thereof by utilising the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear’s specifications and must contain the information required for such instructions, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or an instruction to a previously appointed proxy, must be transmitted so as to be received by the issuer’s agent, Equiniti ID RA19 by 2.30pm on Monday, 18th May 2009 in order to be valid.

For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.

CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions.

It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST Personal Member or sponsored member or has appointed (a) voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.

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