31. Share-Based Payments

Subscription right plans

Presented below is a summary of subscription right activities for the reported periods. Various subscription right plans were approved by the Board of Directors for the benefit of our employees, members of the Board of Directors and Executive Committee, and independent consultants.

The subscription rights offered to members of the Board of Directors vest over a period of 36 months at a rate of 1/36th per month. Effective January 1, 2020, we no longer grant subscription rights to members of the Board of Directors (Non-Executive Directors), taking into account the stricter rules of the Belgian Companies Code and 2020 Corporate Governance Code.

Within the framework of the authorized capital and for the benefit of the Executive Committee members and employees of the Galapagos group, the Board of Directors issued “Subscription Right Plan 2024 BE”, “Subscription Right Plan 2024 RMV” and “Subscription Right Plan 2024 ROW”, for a total of 1,340,000 subscription rights (after acceptance by the beneficiaries) on May 16, 2024, and for a total of 41,000 subscription rights (after acceptance by the beneficiaries) on October 1, 2024. 

Following table shows when a subscription right becomes exercisable, per issued subscription right plan:

In the event of a change of control over Galapagos NV, all outstanding subscription rights vest immediately (to the extent they had not all vested yet) and will become immediately exercisable in accordance with the relevant subscription right plan rules.

The table below sets forth a summary of subscription rights outstanding and exercisable on December 31, 2024, per subscription right plan:

The table below sets forth the inputs into the valuation of the subscription rights.

The exercise price of the subscription rights is determined pursuant to the applicable provisions of the Belgian Law of March 26, 1999.

The weighted average estimated volatility is calculated on the basis of the implied volatility of the share price over the weighted average expected life of the subscription rights. For the plans issued in 2024 we used the historical volatility.

The weighted average expected life of the subscription right is calculated as the estimated duration until exercise, taking into account the specific features of the plans. For the plans issued in 2024 we assumed an exercise at mid-point.

Our share-based compensation expense in 2024 in relation to subscription right plans amounted to €19,886 thousand (2023: €56,718 thousand), of which €17,685 thousand (2023: €36,628 thousand) from continuing operations and €2,201 thousand (2023: €20,090 thousand) from discontinued operations.

The following table provides an overview of the outstanding subscription rights per category of subscription right holders on December 31, 2024 and December 31, 2023:

The outstanding subscription rights at the end of the accounting period have a weighted average exercise price of €73.19 (2023: €77.93) and a weighted average remaining life of 1,560 days (2023: 1728 days).

Restricted stock units (RSUs)

Each RSU represents the right to receive, at our 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, in accordance with the terms and conditions of the relevant RSU program.

We currently have the following RSU programs:

Plan 2020.I, Plan 2021.I, Plan 2022.I, Plan 2023.I and Plan 2024.I: these plans are intended to provide a long-term incentive to certain of our employees and Executive Committee members;

Plan 2020.II, Plan 2021.II, Plan 2021.IV, Plan 2022.II, Plan 2023.II and Plan 2024.II: these plans are designed with the aim to retain a specific group of our key employees and Executive Committee members whose retention is considered so important for our future performance that an additional incentive is desirable. The beneficiaries are nominated by the Remuneration committee and the Board of Directors approves this list of beneficiaries. The four-year vesting period is designed to be aligned with long-term shareholder interests;

Plan 2021.III and Plan 2022.III: these plans are intended to compensate employees who transferred from Gilead to us in the framework of the transfer of European commercialization rights, for the long-term incentive plans within Gilead under which unvested RSU awards lapse upon transfer out of the Gilead group. These employees received a one-time RSU grant from us.

The main characteristics of all these plans are as follows:

• the RSUs are offered for no consideration;
• generally four-year vesting period, with 25% vesting each year, except for some plans or some beneficiaries for which the RSUs will all vest at the same time three years after the offer date (bullet vesting); vest 50% after two years and 50% after three years or vest over three years with 34% vesting the first year and 33% in each of the remaining two years;
• payout will be in cash or shares, at our discretion, it being understood that in respect of members of the Executive Committee, any vesting prior to the third anniversary of the offer date will always give rise to a payment in cash rather than a delivery of shares;
• any unvested RSUs are forfeited upon termination of service before the vesting date.

The table below sets forth a summary of RSUs outstanding at December 31, 2024, per RSU plan:

The RSUs are measured based on the volume-weighted average price of the Galapagos share on Euronext Brussels over the 30-calendar day period preceding the reporting period and they are re-measured at each reporting date. We recognize the corresponding expense and liability over the vesting period. The total liability relating to outstanding RSUs on December 31, 2024 amounted to €16.7 million (2023: €13.8 million).

The following table provides an overview of the outstanding RSUs per category of RSU holders on December 31, 2024 and December 31, 2023.