Conflict of interests and related parties

Conflict of interests and related parties
 CSR report
Galapagos NV • Annual Report 2020

We consider that Gilead became a related party of Galapagos in 2019 because of Gilead’s then 25.84% shareholding (now: 25.54%) in Galapagos and the fact that Gilead is entitled to propose two candidates to be appointed to our supervisory board under the share subscription agreement.

On 15 December 2020, we entered into a related party transaction with Gilead within the meaning of article 7:116 of the Belgian Companies Code, by agreeing to amend the structure of our agreement relating to the development and commercialization of filgotinib in Europe. The press release issued on 15 December 2020, available on our website, contains the disclosures required under article 7:116 of the Belgian Companies Code. Daniel O’Day and Linda Higgins recused themselves from the supervisory board meetings held on 3 December 2020 and 15 December 2020 regarding this related party transaction, since they are representatives of Gilead.

A more detailed explanation of our transactions with Gilead in 2020 can be found in the section titled Agreements with major Galapagos NV shareholders. We further refer to note 30.

In the event of a transaction where a supervisory board member’s interest conflicts with the interest of Galapagos NV, the board member shall notify the board in advance of the conflict and will act in accordance with the relevant rules of the Belgian Companies Code (i.e. article 7:115 of the Belgian Companies Code for supervisory board members). In the event of a transaction where a management board member’s interest conflicts with the interest of Galapagos NV, the management board shall refer the decision regarding such transaction to the supervisory board.

In addition, Galapagos’ Corporate Governance Charter and Galapagos’ Related Person Transaction Policy contain procedures for transactions between Galapagos and its supervisory board members, management board members, major shareholders or any of their immediate family members and affiliates. Without prejudice to the procedure defined in articles 7:115 and 7:117 of the Belgian Companies Code, these policies provide that all transactions between Galapagos and its supervisory board members, management board members or its representatives need the approval of the audit committee and the supervisory board, which approval can only be provided for transactions at normal market conditions. Moreover, conflicts of interest, even in the event they are not a conflict of interest within the meaning of articles 7:115 and 7:117 of the Belgian Companies Code, are enacted in the meeting minutes, and the relevant board member cannot participate in the voting.

In 2020, the following conflicts of interests between Galapagos NV and a director within the meaning of article 7:115 of the Belgian Companies Code were noted:

  • in a meeting of the board of directors held on 17 February 2020, the following was reported in accordance with article 7:115 of the Belgian Companies Code in connection with the proposed amendment of the remuneration practices for the members of the executive committee: the chairman declared that Mr. Onno van de Stolpe had informed the board of directors of a potential conflict of interest, concerning the proposed amendment of the remuneration practices for the members of the executive committee. The board considered that said compensation review was based on a benchmark exercise, and that the proposed amendments aim to align the remuneration practices with the practices among other Belgian listed companies. The review of the remuneration practices will have no material impact on the financial position of the company. The board shared the opinion of the remuneration committee that the proposed amendments are justified and reasonable. Mr. van de Stolpe did not take part in the deliberation and the vote concerning this decision.
  • in a meeting of the board of directors held on 24 March 2020, the following was reported in accordance with article 7:115 of the Belgian Companies Code in connection with the grant of RSUs to the CEO: the chairman declared that Onno van de Stolpe had informed the board of directors of a conflict of interest, concerning the proposed award to him of RSUs. Further to the resolutions of the board of directors of 17 December 2019, a bonus equal to 75% of his 2019 salary was awarded to Mr. Van de Stolpe in cash and an equivalent number of RSUs (based on the average share price of the Galapagos share on Euronext Amsterdam during the month of April 2020) to be granted under the Annual Long-Term Incentive Plan 2020. In addition, the grant of RSUs under the RSU Retention Plan 2020 to Mr. Van de Stolpe was approved by the board. The board considered that said RSU grants are a justified reward for the results achieved by Mr. Van de Stolpe in 2019. Furthermore, the board deemed the grant of RSUs to be an important tool in the retention of Mr. Van de Stolpe as CEO of the company. The RSU grants will have no material impact on the financial position of the company. The board shared the opinion of the remuneration committee that the RSU grants are justified and reasonable. Mr. Van de Stolpe did not take part in the deliberation and the vote concerning this decision.