32. Warrant plans

32. Warrant plans

Presented below is a summary of warrant plans activities for the reported periods. Various warrant plans were approved for the benefit of employees of the Group, Directors and independent consultants of Galapagos NV. For warrant plans issued prior to 2011, the warrants offered to the employees and independent consultants vest according to the following schedule: 10% of the warrants vest on the date of the grant; an additional 10% vest at the first anniversary of the grant; an additional 20% vest at the second anniversary of the grant; an additional 20% vest at the third anniversary of the grant; and an additional 40% vest at the end of the third calendar year following the grant. The warrants granted under warrant plans created from 2011 onwards vest at the end of the third calendar year following the year of the grant, with no intermediate vesting. The warrants offered to Directors vest over a period of 36 months at a rate of 1/36th per month. Warrants cannot be exercised before the end of the third calendar year following the year of the grant. Pursuant to a resolution adopted at the Extraordinary Shareholders’ Meeting held on 23 May 2011, a provision has been incorporated in the warrant plans, which provides that in the event of a change of control of the Group, all outstanding warrants vest immediately and will be immediately exercisable.

After the reverse 4:1 share split approved by the Shareholders’ Meeting held on 29 March 2005, four warrants under Warrant Plan 2002 Belgium entitle the warrant holder to subscribe for one ordinary share. For the warrant plans created from 2005 onwards, one warrant entitles the warrant holder to subscribe for one ordinary share. In the summaries and tables below, the numbers of warrants issued under Warrant Plan 2002 Belgium are divided by four to avoid a mixture of rights.

The table below sets forth a summary of warrants outstanding and exercisable at December 31, 2014, per warrant plan:

Warrants

Allocation date

Expiry date

Exercise price (€)

Outstanding per 1 January 2014

Granted during the year

Exercised during the year

Forfeited during the year

Expired during the year

Outstanding per 31 December 2014

Exercisable per 31 December 2014

2002 B

09.07.2004

08.07.2017

4

31,250

 

 

 

 

31,250

31,250

2002 B

31.01.2005

30.01.2017

6.76

47,500

 

2,500

 

 

45,000

45,000

2005

04.07.2005

03.07.2018

6.91

145,000

 

14,000

 

 

131,000

131,000

2005

23.11.2005

22.11.2018

8.35

32,500

 

 

 

 

32,500

32,500

2005

15.12.2005

14.12.2018

8.6

12,500

 

 

 

 

12,500

12,500

2005

22.11.2006

21.11.2019

8.65

1,050

 

525

 

 

525

525

2006 BNL

13.02.2006

12.02.2019

8.61

46,470

 

11,372

 

 

35,098

35,098

2006 BNL

22.11.2006

21.11.2019

8.65

6,000

 

6,000

 

 

0

0

2006 BNL

04.05.2007

03.05.2020

9.22

7,500

 

 

 

 

7,500

7,500

2006 BNL

28.06.2007

27.06.2020

8.65

735

 

 

 

 

735

735

2006 BNL

21.12.2007

20.12.2020

7.12

2,100

 

 

 

 

2,100

2,100

2006 UK

01.06.2006

31.05.2014

8.7

3,748

 

3,748

 

 

0

0

2006 UK

22.11.2006

21.11.2014

8.65

735

 

735

 

 

0

0

2006 UK

28.06.2007

27.06.2015

8.43

6,000

 

6,000

 

 

0

0

2007

28.06.2007

27.06.2015

8.65

108,126

 

 

 

 

108,126

108,126

2007

28.06.2007

27.06.2020

8.65

104,644

 

 

 

 

104,644

104,644

2007 RMV

25.10.2007

24.10.2020

8.65

50,400

 

1,050

 

 

49,350

49,350

2008

26.06.2008

25.06.2021

5.6

136,140

 

5,525

 

 

130,615

130,615

2009

01.04.2009

31.03.2017

5.87

278,500

 

120,250

 

 

158,250

158,250

2009 B

02.06.2009

01.06.2014

7.09

42,540

 

42,540

 

 

0

0

2009 B

02.06.2009

01.06.2017

7.09

75,000

 

75,000

 

 

0

0

2010

27.04.2010

26.04.2018

11.55

456,750

 

210,750

 

 

246,000

246,000

2010 B

27.04.2010

26.04.2015

11.55

190,108

 

5,088

 

 

185,020

185,020

2010 C

23.12.2010

26.04.2018

11.74

75,000

 

 

 

 

75,000

75,000

2011

23.05.2011

22.05.2019

9.95

536,500

 

 

54,000

 

482,500

 

2011 B

23.05.2011

22.05.2016

9.95

127,750

 

 

 

 

127,750

 

2012

03.09.2012

02.09.2020

14.19

435,490

 

 

60,000

 

375,490

 

2013

16.05.2013

15.05.2021

19.38

592,040

 

 

138,800

 

453,240

 

2013 B

18.09.2013

17.09.2021

15.18

75,000

 

 

 

 

75,000

 

2014

25.07.2014

24.07.2022

14.54

 

571,660

 

 

 

571,660

 

2014B

14.10.2014

13.10.2022

11.93

 

150,000

 

 

 

150,000

 

Total

 

 

 

3,627,076

721,660

505,083

252,800

 

3,590,853

1,355,213

 

Warrants

Weighted average exercise price (€)

Outstanding on 31 December 2012

3,347,709

9.51

Exercisable on 31 December 2012

844,181

 

 

 

 

Granted during the period

677,790

 

Forfeited during the year

(71,010)

 

Exercised during the period

(326,468)

 

Expired during the year

(945)

 

Outstanding on 31 December 2013

3,627,076

11.50

Exercisable on 31 December 2013

1,138,438

 

 

 

 

Granted during the period

721,660

 

Forfeited during the year

(252,800)

 

Exercised during the period

(505,083)

 

Expired during the year

 

 

Outstanding on 31 December 2014

3,590,853

12.06

Exercisable on 31 December 2014

1,355,213

 

The table below sets forth the inputs into the valuation of the warrants.

Belgian Plans

 

 

 

 

 

 

2014

2014

2013

2013

 

14 Oct

25 Jul

16 May

18 Sep

Exercise price (€)

11.93

14.54

19.38

15.18

Current share price (€)

10.95

14.38

17.74

14.87

Fair value on the grant date (€)

4.35

6.14

7.75

6.80

Estimated volatility (%)

38.03

38.76

38.76

38.76

Time to expiration (years)

8

8

8

8

Risk free rate (%)

0.58

0.58

1.99

1.99

Expected dividends

None

None

None

None

The exercise price of the warrants is determined pursuant to the applicable provisions of the Belgian Companies Code .

The estimated volatility is calculated on the basis of the historical volatility of the share price over the expected life of the warrants, validated by reference to the volatility of a representative biotech index.

The time to expiration of the warrant is calculated as the estimated duration until exercise, taking into account the specific features of the plans.

The warrants have been accounted for in accordance with International Financial Reporting Standard 2 on Share Based Payments. IFRS 2 takes effect for all warrants offered after 7 November 2002.

Warrants expense of the Group in 2014 amounted to €2,952 thousand (2013: €2,742 thousand).

The following table provides an overview of the outstanding warrants per category of warrant holders at 31 December 2014.

Category

 

 

 

 

Year ended 31 December,

(in number of warrants)

2014

2013

Non-executive directors

199,070

192,350

Executive team

1,445,000

1,382,500

Other

1,946,783

2,052,226

Total warrants outstanding

3,590,853

3,627,076

The outstanding warrants at the end of the accounting period have an average exercise price of €12.06 (2013: €11.50) and a weighted average remaining expected life of 1,639 days (2013: 1,628 days).