Introduction: remuneration report 2022
Galapagos’ remuneration policy
Galapagos’ current remuneration policy was prepared in accordance with the Belgian Companies Code and approved by Galapagos’ shareholders at the 2022 Annual Shareholders’ Meeting with 64.40% of shareholder votes. The policy became effective as from 1 January 2022 and applies for the reporting year beginning on 1 January 2022. In this report we will look back at 2022 and reflect on how the progress made with regard to our 2022 corporate objectives has influenced the remuneration outcomes.
Galapagos encourages an open and constructive dialogue with its shareholders to discuss its approach to governance, including remuneration, and to understand what they consider best practices. The disclosure in the remuneration report reflects the input received from Galapagos’ shareholders over the years as well as developments in the legislative framework, including the introduction of the comparison table and pay ratio.
The objective of our remuneration policy is to attract, motivate and retain diverse, qualified and expert individuals who are key in order to achieve our strategic and operational objectives. Our further goals are to be competitive in the appropriate market by benchmarking against relevant peer groups, incentivizing performance at the highest possible level, allowing for differential rewards according to individual performance, not to discriminate on any grounds other than performance, and to reinforce an open, fair, consistent and equitable culture.
Peer group and benchmarking
Galapagos’ remuneration policy strives to take into account relevant benchmarks with appropriate peer companies and, for the Executive Committee members, the group’s performance management system is also considered. Over the years, our Nomination and Remuneration Committee has conducted such benchmarking exercise and has been supported by external advisors during the performance of its responsibilities.
Currently a new benchmarking exercise for Executive Committee roles is ongoing in the light of our strategic transformation and reviewed R&D strategy, focused on immunology and oncology with the aim to transform patient outcomes through life-changing science and innovation. Galapagos is at a pivotal juncture in its history to reset its strategic path, and is building an oncology franchise where attracting and retaining highly specialized expertise in an international labor market is essential to succeed.
The peer groups currently determined by the Remuneration Committee consist of publicly listed biotechnology companies with a comparable market capitalization in the U.S. and biotechnology and pharmaceutical companies with a broadly comparable market capitalization in Europe, in both cases taking into account the R&D and commercialization profile and business model to the extent possible. The Committee considers both these reference points given the talent pool for the Executive Committee extends to both Europe and the U.S., with the majority of our competitors based in the U.S. These benchmarks will support the Remuneration Committee in its decision making, also taking into account Galapagos’ strategic context and requirements, company performance, individual performance and skills as well as broader workforce considerations. Finally, the Committee also determined to maintain a view to a Bel20 (the benchmark stock market index of Euronext Brussels) general industry peer group (excluding financial services companies) to ensure an understanding of the local Belgian listed market given the location of our headquarters; however, given the international nature of our executive leadership and specific sector considerations, it is not the reference to inform our pay policy.