Remuneration of non-executive Directors of Galapagos NV
Pursuant to the decision of the Annual Shareholders’ Meeting of 28 April 2015, the total maximum amount of the annual remuneration for all Directors together (other than Dr. Parekh and the CEO) for the exercise of their mandate as a Director of Galapagos NV is fixed, on an aggregate basis, at €200,000 (plus expenses). The same Annual Shareholders’ Meeting granted a power of attorney to the Board to determine the remuneration of the individual Board members within the limits of said aggregate amount. Pursuant to this power of attorney, the Board determined, after discussion within the Nomination and Remuneration Committee, the allocation of the aggregate annual remuneration for Directors as follows: (a) annual remuneration for each non-executive Director (Dr. Cautreels, Dr. Van Barlingen, Mr. Rowe and Ms. Bosley): €40,000; and (b) additional remuneration for the chairman of the Audit Committee (Dr. Cautreels): €5,000. Dr. Mummery, being appointed as non-executive Director as from 30 September 2015, received €10,000 as remuneration for the performance of her mandate during the last quarter of 2015.
In the event a Director has an attendance rate at Board meetings that is below 75%, the amounts referred to above are proportionally decreased. Directors representing a shareholder in the Board of Directors would only receive reimbursement of the expenses incurred for participating in the Board of Directors (there were no such Directors in 2015).
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.
The Chairman of the Board of Directors, Dr. Parekh, does not receive remuneration like the other Directors. However, a consultancy contract was made with him in 2005, under which he receives an annual fee of £50,000 as compensation for giving strategic advice.
In 2015, we issued three warrant plans for the benefit of employees of the Group and of the Directors and one independent consultant of Galapagos NV: Warrant Plan 2015, Warrant Plan 2015 (B) and Warrant Plan 2015 RMV. In accordance with the resolution of the Annual Shareholders’ Meeting of 28 April 2015, the following number of warrants were offered under Warrant Plan 2015 to the non-executive Directors: Dr. Parekh: 5,400 warrants; Dr. Cautreels: 3,780 warrants; and Ms. Bosley, Dr. Van Barlingen and Mr. Rowe: each 2,520 warrants. All Directors accepted the warrants offered. These warrants have a term of eight years. The exercise price of the warrants is €28.75. 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. Moreover, in accordance with the resolution of the Special Shareholders’ Meeting of 22 December 2015, the following number of warrants were offered under Warrant Plan 2015 (B) to the non-executive Directors: Dr. Parekh: 15,000 warrants; Dr. Cautreels, Dr. Van Barlingen, Mr. Rowe, Ms. Bosley 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 €49.00. 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 third anniversary of the notary deed enacting the acceptance of the warrants. No warrants were offered to Directors under Warrant Plan 2015 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.
Except as set forth above, there are no other benefits granted to the non-executive Directors.