Remuneration of management board members

Remuneration structure components

The remuneration of management board members consists of (i) fixed remuneration consisting of base salary, pension and other benefits and (ii) variable remuneration consisting of a cash bonus and the grant of restricted stock units (“RSUs”) and subscription rights (“SRs”). For the variable part of the management board members’ remuneration, performance criteria apply.

Performance criteria and evaluation methods for management board members

For 2021, the performance criteria considered in decision-making for cash bonuses and annual RSU grants include the elements identified in the table below, whereby each of the corporate objectives is further detailed in a clear and measurable way to enable robust evaluation by the nomination and remuneration committee as well as the supervisory board. Our ambition is to establish ourselves as a successful commercial stage biopharmaceutical company focused on the discovery, development and commercialization of novel medicines in areas of unmet medical needs to improve the lives of people suffering from serious diseases. In order to achieve this long-term goal, we want to keep innovation in our research efforts while making sound clinical progress year over year and maintaining a healthy cash position. In addition, our corporate development and business goals aim to foster the growth of the company and the creation of value for all shareholders, including via business development opportunities in our core therapeutic areas. Finally, our commercial development goal is intended to continue to build our filgotinib franchise throughout Europe, remain on track to complete the transition of the full European commercial operations for filgotinib from Gilead to us and becoming a commercially successful biopharmaceutical company which brings novel medicines to market (subject to having obtained governmental approvals).

In terms of the individual performance evaluation, this is supported by the group’s performance management system that assesses the performance of all employees (including management board members) over the calendar year against a set of objectives determined at the start of the year.

Finally, Galapagos’ policy is to grant a number of subscription rights each year based on a consideration of each management board member’s role, individual performance for the performance year as well as individual impact on long-term value creation.

The nomination and remuneration committee is responsible for evaluating the management board members’ performance in accordance with the principles set out above. The nomination and remuneration committee is composed exclusively of non-executive directors and a majority of its members qualify as independent supervisory board members. This helps prevent the occurrence of conflicts of interest regarding the implementation of the remuneration policy in relation to the management board members. The management board members are not invited to take part in any discussions of the nomination and remuneration committee related to their own individual remuneration.

Total remuneration

Fixed remuneration

The supervisory board, for the CEO upon recommendation of the nomination and remuneration committee and for the other management board members upon proposals of the CEO, decided that for the financial year 2021 each management board member received the base salary (gross amount) as identified in the total remuneration table above. The fixed remuneration is a base salary designed to fit responsibilities, relevant experience and competences, in line with market rates for equivalent positions.

Variable remuneration

Galapagos’ policy is to grant a number of long-term incentives based on the individual performance for the performance year while also considering individual impact on long-term value creation. Bonuses consist both of a short-term cash component and a long-term RSU component. Management board members were also offered subscription rights in 2021.

Under our remuneration policy, the CEO’s cash bonus can be maximum 75% of base salary. The aggregate cash bonuses of the other members of the management board can be maximum 50% of the aggregate base salaries. An equivalent number of RSUs will be granted to the CEO and the other members of the management board under the RSU Annual Long-Term Incentive Plan.

(a) Short-term variable remuneration

The supervisory board determined an overall achievement of 75% (out of a maximum of 100%) against the 2021 corporate objectives. In arriving at this determination, the supervisory board considered that some of the objectives were not achieved, some had been achieved and some overachieved. Highlights over 2021 included commercialization efforts to deliver Galapagos’ first medicine to patients, the refocusing of our pipeline and rightsizing of our operations, and strong financial discipline and operational excellence ensuring a long-term sustainable business. 

The 75% corporate funding level is applicable to the wider Galapagos workforce for the corporate component of their bonus funding, including the management board members. The supervisory board, for the CEO upon recommendation of the nomination and remuneration committee and for the other management board members upon proposals of the CEO, considered this level of funding, as applied to the wider workforce, together with individual performance of management board members in order to determine the individual cash bonus outcomes for 2021 set out in the total remuneration table above: Mr. Onno van de Stolpe (€360,000; 56.63% of 2021 base salary), Mr. Bart Filius (€215,906; 43.18% of 2021 base salary), Dr. Andre Hoekema (€92,531; 24.35% of 2021 base salary), Dr. Walid Abi-Saab (€154,219; 36.29% of 2021 base salary) and Mr. Michele Manto (€154,219; 45.36% of 2021 base salary). These 2021 cash bonuses will be paid in April 2022. With the exception of the retiring CEO, each of the management board members will be granted an equivalent number of RSUs under the 2022 RSU Annual Long-Term Incentive Plan as long-term variable remuneration. Galapagos applied a maximum corporate funding (100%) for the determination of Dr. Wigerinck's bonus and Dr. Wigerinck received a pro rata maximum cash bonus for 2021 (€194,792; 45.83% of 2021 base salary). His bonus has been paid out in December 2021 and he will not be entitled to any subsequent RSU grant. 

(b) Long-term variable remuneration

In 2021 the management board members were offered new subscription rights under Subscription Right Plan 2021 BE and each accepted all subscription rights granted as per the following: Mr. Onno van de Stolpe: 85,000 subscription rights, Mr. Bart Filius: 50,000 subscription rights, each of Dr. Piet Wigerinck and Dr. Walid Abi-Saab: 40,000 subscription rights and each of Dr. Andre Hoekema and Mr. Michele Manto: 30,000 subscription rights. Further reference is made to the Equity components of the remuneration section, which contains, among others, a description of the 2021 grant of subscription rights.

The total remuneration table above sets forth the value of the number of RSUs vested and paid out in 2021 for each management board member. Each RSU represents the right to receive, at Galapagos’ discretion, one Galapagos share or a payment in cash of an amount equivalent to the volume-weighted average price of the Galapagos share on Euronext Brussels over the 30-calendar day period preceding the relevant vesting date. During 2021, there were RSU vestings under three different RSU plans: Plan 2019.II, Plan 2019.III and Plan 2020.II. The pay-outs to the management board members occurred accordingly and the aggregate amounts are set forth in the total remuneration table above. Reference is made to the Equity components of the remuneration section.

For a description of the RSU grants to the management board members in 2021, reference is made to the Equity components of the remuneration section. This section also sets out the main characteristics of the different RSU plans issued by Galapagos to its management board members in 2019, 2020 and 2021.

The 50% deferred part of the bonus awarded and relating to the financial year 2018 was entirely forfeited and not paid out in 2021 as a result of the share performance of Galapagos NV’s share over the period 2018 – 2021 relative to the Next Biotech Index (which tracks Euronext-listed biotech companies) as per the provisions of the Senior Management Bonus Scheme.

Pension and other components

In addition, the management board members enjoy a number of benefits such as a retirement plan, insurance programs (covering life insurance, disability, travel insurance and health), company cars and the provision of tax advisory services. The aforementioned retirement plan is set up as a defined contribution arrangement and is in line with market practice in Belgium. The pension and other components of the remuneration of each management board member are summarized in the total remuneration table above.