Remuneration of non-executive directors of Galapagos NV
Upon recommendation of the nomination and remuneration committee, the annual shareholders’ meeting of 26 April 2016 resolved that the compensation (excluding expenses) of the non-executive directors for the exercise of their mandate during the financial year ending 31 December 2016 was established as follows: (i) chairman of the board (Dr. Parekh): €80,000; (ii) other non-executive board members (Dr. Cautreels, Dr. Van Barlingen, Mr. Rowe, Ms. Bosley and Dr. Mummery): €40,000 each; (iii) annual additional compensation for membership of a board committee (audit committee: Mr. Rowe and Dr. Van Barlingen; nomination and remuneration committee: Dr. Cautreels and Ms. Bosley): €5,000; (iv) annual additional compensation for the chairmanship of a board committee (audit committee: Dr. Cautreels; nomination and remuneration committee: Dr. Parekh): €10,000.
The shareholders’ meeting of 26 July 2016, which resolved upon the appointment of Dr. Mary Kerr as Director of Galapagos NV, acknowledged that the aforementioned remuneration principles for the financial year ending on 31 December 2016 approved by the annual shareholders’ meeting of 26 April 2016 applied to determine the compensation (excluding expenses) of Dr. Kerr, pro rata temporis, for the period starting on the date of her appointment and ending on 31 December 2016. The compensation of Dr. Kerr for her mandate as non-executive director during the financial year ending 31 December 2016 hence amounted to €17,282.31.
The remuneration of the non-executive directors does not contain a variable part; hence no performance criteria apply to the remuneration of the non-executive directors.
In 2016, we issued two warrant plans for the benefit of employees of the group and of the directors and one independent consultant of Galapagos NV: Warrant Plan 2016 and Warrant Plan 2016 RMV. In accordance with the resolution of the annual shareholders’ meeting of 26 April 2016, the following number of warrants were offered under Warrant Plan 2016 to the non-executive directors: Dr. Parekh: 15,000 warrants; and Dr. Cautreels, Ms. Bosley, Dr. Van Barlingen, Mr. Rowe and Dr. Mummery: each 7,500 warrants. All directors accepted the warrants offered. These warrants have a term of eight years. The exercise price of the warrants is €46.10. As regards the directors, the warrants vest over a period of 36 months at a rate of 1/36th per month. The warrants cannot be transferred and cannot be exercised prior to the end of the third calendar year following the year of the grant. No warrants were offered to directors under Warrant Plan 2016 RMV. The board of directors does not consider the above warrants as variable remuneration as defined by the Belgian Companies Code as they are not subject to any performance-related criteria.
The board of directors points out that provision 7.7 of the Belgian Corporate Governance Code 2009 stipulates that non-executive directors should not be entitled to performance-related remuneration such as stock-related long-term incentive schemes. In deviation from this provision, the board of directors has decided to grant warrants to non-executive directors. This way, Galapagos has additional possibilities to attract competent non-executive directors and to offer them an attractive additional remuneration that does not affect Galapagos’ cash position. Furthermore, the grant of warrants is a commonly used method in the sector in which Galapagos operates. Without this possibility, Galapagos would be confronted with a considerable disadvantage compared to competitors and peer companies who do offer stock-related incentive schemes to their non-executive directors. The board of directors is of the opinion that the granting of warrants has no negative impact on the functioning of the non-executive directors.
In addition to the benefits set forth above, the non-executive directors also received benefits consisting of tax advisory services in 2016 for an amount of €14,495.