GlaxoSmithKline plc – Annual report – 31 December 2023
Industry: pharmaceuticals
Continuous engagement and key decisions
Prioritising continuous engagement
Our stakeholders rightly have high expectations of us, and the company’s dynamic operating environment presents many challenges and opportunities. As a Board we aim to make sure that being commercially successful is balanced and aligned with meeting our stakeholders’ expectations, upholding our reputation, maintaining our licence to operate and building trust. We engage with or are briefed about our stakeholders’ views to make sure we identify and respond to their expectations effectively and appropriately.
How we engage with our main stakeholder groups – including patients, shareholders, consumers, customers and our people – across the company is covered in the pages of the Strategic report.
Patients and our people are two stakeholders at the heart of our culture, with all our people ambitious for patients, accountable for outcomes and committed to doing the right thing. Our culture is described on pages 14 and 15 of the Strategic report.
The influence and importance of different stakeholder groups can vary, depending on the matter being considered. Certain stakeholders’ interests can be in conflict, meaning that we, as a Board, need to make balanced judgements.
Continuous stakeholder engagement and feedback helps us identify emerging issues. It also enables us to make decisions in the context of what is relevant and important to each of them.
Our principal Board committees, and the GLT, undertake engagement on the Board’s behalf according to their remit. This means that they can build a detailed understanding of how our actions or plans are affecting or might affect stakeholders. These insights are then shared with the Board.
In particular, the Board receives briefings on stakeholders’ perspectives from the work of the Corporate Responsibility Committee, which is discussed on pages 128 and 129. Board members regularly receive:
- the CEO’s Board report
- a specific external stakeholder insights report. This provides strategic insights based on an analysis of key developments, achievements and risks affecting our reputation and the perceptions of all our external stakeholders
- a regular investor relations report which summarises investor perceptions
- regular corporate governance, litigation and regulatory updates
The Board also learns of stakeholders’ views through:
Engagement and feedback events: such as quarterly investor results calls, the Annual General Meeting, employee survey reports, the Board’s workforce engagement activities, and from experts presenting at Board or committee meetings. The Chair also holds regular investor check-in meetings, which the SID, Charlie Bancroft, sometimes joins, and is available for individual meetings with investors.
Other opportunities: Board members also gain wider stakeholder views during the annual strategy meeting with the GLT, as part of the yearly review of strategy, budget and planning processes. This also includes a review of specific aspects of the company’s policies or strategy. In addition, Board members are encouraged to meet individually with employees, shareholders and other key stakeholders during their induction, and then on an ongoing basis. They are encouraged to report to the Board on such experiences where relevant and material.
Engaging with our people
We have well-established and strong engagement mechanisms with our employees, which are described on pages 14 and 15, and which the Board monitors regularly. Four key governance channels help the Board understand what our people are thinking:
- regular Board updates from our Chief People Officer and the CEO on culture and talent
- feedback from an annual employee engagement survey, including questions on engagement, confidence and inclusivity
- a range of pulse surveys of different-sized employee groups to help check sentiment on a quicker and more frequent basis, and to provide valuable insights on the impact of major initiatives, events or communications
- direct engagement by the Board
Workforce engagement: Before the company’s demerger, the Board reviewed its formal workforce engagement arrangements. It was decided to move from a specific Workforce Engagement Director model and to apply an ‘alternative arrangement’ to the three methods set out in the FRC’s Code.
Given that the new GSK Board was recently refreshed in terms of tenure, with more than half the independent Non-Executive Directors having served for less than three years, and given GSK’s renewed purpose and focus as a global biopharma company, it was considered important to adopt a collective Board engagement model. This was agreed to be the most effective approach to ensure newer Board members meet employees and hear their views.
This new model operated in 2023 through:
- direct in-person receptions with local employees during Board site visits, including in Wavre, Belgium (as one of our two global Vaccines hubs), Boston, US, and our global headquarters in Brentford
- the Chair’s site visits, including to the Wavre and Singapore Vaccine manufacturing sites, and the Philadelphia Commercial site
- the Chair’s attendance at management meetings, including China Commercial employees, the Commercial Core Leadership team in the UK, China regional general managers and Commercial talent and Saudi Arabia general management team
- the Chair and Corporate Responsibility Committee Chair convene and attend ongoing meetings with leaders of the company’s employee resource groups to talk about how they experience GSK, how they think the DEI agenda and ambitions are progressing and sharing their suggestions to further enhance our DEI agenda
- utilising a variety of bespoke engagements that have enabled a broad and open dialogue and facilitated firsthand engagement discussions between the NEDs and our people individually and as part of small groups, encompassing perspectives on our strategy, purpose and Ahead Together culture, and DEI
Engaging with our shareholders
As a Board we aim to directly engage with and be directly accountable to institutional investors and private retail shareholders. We do this in several ways, including regular communications, the Annual Governance Meeting, our Annual General Meeting, and through the work of our Investor Relations team, the Chair, Jonathan Symonds, and our Company Secretary, Victoria Whyte. Our SID, Charlie Bancroft, is another point of contact for our shareholders.
Each quarter, our CEO, Emma Walmsley, and CFO, Julie Brown, give results presentations to institutional investors, analysts and the media by webcast. They are also regularly joined by the CSO, the Chief Commercial Officer (CCO), and CEO, ViiV. They are able to provide investors with more detailed insights into their specific areas of responsibility.
Through regular meetings, they each have an ongoing and active dialogue with institutional shareholders about the company’s performance, plans and objectives. In 2023,
- CEO: 103 engagements, representing 38% of the company’s share register
- The current and previous CFO: 60 and 51 engagements, comprising 33% and 31% of the register
- CSO: 90 engagements, representing 31% of the register
- CCO: 80 engagements, representing 39% of the register
- CEO, ViiV: 61 engagements with 39% of the register
Our Chair maintains a consistent dialogue with shareholders too – including fund and portfolio managers – and regularly engages with governance and ESG professionals. During 2023 and up to the date of publication of this Annual Report, Jon held over 30 individual engagements with a range of institutional shareholders, which make up approximately 30% of the company’s share register. This enables him to gain a current understanding of shareholders’ views, insights and perspectives of the company. He also discusses the continual evolution of the many aspects of Board governance, performance oversight and succession.
This year our Chair, CEO and the rest of the Board and key GLT members focused on communicating the strong ongoing performance of GSK as a global biopharma business, the successful launch of Arexvy, the world’s first RSV vaccine, and progressing our pipeline across the core therapy areas of infectious diseases, HIV, respiratory/immunology.and oncology.
Annual Governance Meeting
This year’s hybrid meeting was held in central London. Institutional shareholders, key investment industry bodies and proxy advisory firms were invited. 15 representatives of various institutional shareholders and proxy advisers attended the event, comprising approximately 25% of the company’s share register.
The meeting had a new format to make it as interactive as possible. It began with Jon sharing with investors the Board’s priorities and focus for 2023 and beyond, with Charlie then providing his reflections on the year. Jon, Charlie and our Non-Executive Directors then held an informal and open discussion of those issues on shareholders’ minds, which helped foster a richer dialogue.
The key themes covered included the:
- Board changes and succession planning arrangements
- work of and challenges for the Board over the last year
- company’s current and future momentum and excellent execution of our key priorities
- harnessing of digital, technology and talent, driven by our Ahead Together purpose
- positive signs of the influence of our culture of being ambitious for patients, accountable for impact and doing the right thing
The meeting and its new format were well received and shareholder feedback was shared with the full Board.
Annual General Meeting
We were pleased to hold the company’s hybrid AGM at the Sofitel Heathrow in May 2023. 72 shareholders joined the meeting in person and 49 shareholders joined virtually via the Lumi platform to watch or listen to updates from our Chair and the CEO, and to vote. Shareholders were able to ask questions during the meeting in person and virtually. All our proposed resolutions were approved by shareholders, with majorities ranging from 89% to 99%.
Our hybrid AGM this year will be held at a new venue, Royal Lancaster Hotel in Central London, which is located close to our new global headquarters. For more details see page 298.
Section 172 statement
Board members are required by law to promote the success of their company for the benefit of both shareholders and wider stakeholders, including employees, suppliers and society. This statement meets the requirement, as set out in Section 172 and Section 414CZA of the Companies Act 2006 (Act). It summarises how, during 2023, our Directors addressed the matters set out in Section 172(1) (a) to (f) of the Act when performing their duties.
The Board considers that this statement focuses on those risks and opportunities that are strategically important to GSK, consistent with the Group’s size and complexity. This allows it to properly understand the potential effects of the decisions it makes on all stakeholders.
The details of our engagement with our main stakeholder groups, including our patients, shareholders, consumers, customers and employees across the organisation, is summarised generally throughout the pages of our Strategic report. The Board’s continuous engagement with the company’s shareholders and people in particular is set out in this section on pages 121 to 127. Our corporate governance architecture and processes are summarised on pages 116 to 118.
The Board seeks to consider all relevant matters when making decisions, most especially when these are to continue to drive performance and momentum for GSK into the future.
Accounts examples 