Conflict of interests and related parties

In the event of a transaction where a Director’s interest conflicts with the interest of Galapagos NV, the Director shall notify the Board of Directors in advance of the conflict and will act in accordance with the relevant rules of the Belgian Companies Code (i.e. article 523 of the Belgian Companies Code). In addition, Galapagos’ Corporate Governance Charter includes a policy for transactions between Galapagos and its Directors and members of its Executive Committee. Without prejudice to the procedure defined in article 523 of the Belgian Companies Code, this policy provides that all transactions between Galapagos and its Directors, its members of the Executive Committee or its representatives need the approval of the Board of Directors, whose approval can only be provided for transactions at normal market conditions. Such a conflict of interest, even in the event it is not a conflict of interest as provided for in article 523 of the Belgian Companies Code, shall be enacted in the minutes, and the Director or member of the Executive Committee shall abstain from voting.

In 2014, three cases of conflict of interests between Galapagos NV and a Director within the meaning of article 523 of the Belgian Companies Code were noted:

1. In a meeting of the Board of Directors held on 27 March 2014, it was resolved that the Board would make a recommendation to the next Shareholders’ Meeting for a grant of warrants to the CEO and the other members of the Board under a proposed Warrant Plan 2014 as follows: Mr Van de Stolpe: 100,000 warrants; Dr Parekh: 5,400 warrants; Dr Cautreels: 3,780 warrants; Ms. Bosley, Dr Van Barlingen, Mr Rowe and Dr Sato: each 2,520 warrants. Pursuant to section 523 of the Belgian Companies Code, the following was reported in connection with the proposed warrant offer for the CEO: The Chairman declared that Mr Onno van de Stolpe had informed the Board of Directors of a conflict of interest, concerning the proposed award to him of 100,000 warrants. It was explained to the Board that said warrant offer is proposed upon recommendation of the Remuneration Committee, is consistent with past practice and is a justified reward for the results achieved by Mr Van de Stolpe. The award of this benefit will have no material impact on the financial position of the company. The Board shared the opinion of the Remuneration Committee that the proposed benefit is justified and reasonable. Mr Van de Stolpe did not take part in the deliberation and the vote concerning this decision. Furthermore, as a warrant offer is proposed to each Director, the same procedure was followed for each Director individually.
   
   
2. In a meeting of the Board of Directors held on 5 June 2014, the following was reported in application of article 523 of the Belgian Companies Code and in connection with the recommendation of the Remuneration Committee, further to the resolution of the Shareholders’ Meeting of 29 April 2014, as to the allocation of the aggregate annual remuneration of €200,000 (plus expenses) for Directors (other than Dr Parekh and Mr Van de Stolpe) for the exercise of their mandate as Director: the Chairman declared that the Directors involved had informed the Board of a conflict of interest, concerning their proposed remuneration. It has been explained to the Board that the proposed remuneration for each Director is a continuation of the level of the fees as paid in previous years, without increase. The level of these remunerations will have no material impact on the financial position of the company. Insofar as it related to his/her individual remuneration, the Director involved did not take part in the deliberation and the vote concerning this decision.
   
   
3. In a meeting of the Board of Directors held on 17 December 2014 the following was reported in application of article 523 of the Belgian Companies Code and in connection with the salary increase and bonus for the CEO: the Chairman declares that Mr Onno van de Stolpe has informed the Board of Directors of a conflict of interest, concerning the proposed award to him of a salary increase and a bonus. The salary of Mr Van de Stolpe was increased with 2% as of 2015. Given the actual level of achievement of the criteria from the Senior Management Bonus Scheme to be entitled to a bonus (i.e. the corporate objectives for 2014) a bonus of €268,000 (i.e. 60% of his 2014 salary) has been awarded to Mr Van de Stolpe for 2014. It has been explained to the Board that said salary increase and bonus is a justified reward for the results achieved by Mr Van de Stolpe in 2014. The salary increase and bonus will have no material impact on the financial position of the company. The Board shares the opinion of the Remuneration Committee that the proposed salary increase and bonus is justified and reasonable. Mr Van de Stolpe did not take part in the deliberation and the vote concerning this decision.

In addition, the conflict of interests procedure set forth in Galapagos’ Corporate Governance Charter was applied twice in 2014 with respect to conflicts that do not qualify as conflicts of interests within the meaning of article 523 of the Belgian Companies Code.