EXPLANATORY NOTES REMUNERATION POLICY 2024
1/13
1. INTRODUCTION
1.1. GENERAL
1.1.1. Since the approval of our current remuneration policy
at our 11 May 2021 AGM (the “2021 Policy”), we have
gone through a period of rapid growth and
development, into a global, integrated biotech
company with commercial activities worldwide. We
now find our remuneration policy is in need of an
update to address our evolving needs. We furthermore
acknowledge that support for our advisory say-on-pay
vote has declined in recent years (76.6% in 2021, 51.9%
in 2022 and 44.1% in 2023), and view the revision of our
remuneration policy as an opportunity to also address
shareholder concerns.
1.1.2. These explanatory notes to our new draft remuneration
policy (the “2024 Policy” or the “new policy”) describe:
- How we addressed key stakeholder feedback in
drafting our new policy;
- The key changes we made in comparison to our
2021 policy, and the rationale for such changes.
1.2. POLICY SCOPE
1.2.1. Our 2021 Policy applied to our statutory directors
(executive directors and non-executive directors of our
Board of Directors (the “Board”)). The 2024 Policy will
be expanded to apply not only to our non-executive
directors (“NEDs”) and our Chief Executive Officer (and
sole executive director) (CEO) but also to our Chief
Financial Officer (CFO) and Chief Operating Officer
(COO) who are not statutory directors (hereinafter the
CEO, CFO and COO are together referred to as named
executive officers, or “NEOs”).
2. STAKEHOLDER ENGAGEMENT
2.1.1. We have reached out to all our known holders of more
than 1% of share capital and those otherwise
voluntarily engaging with us on this topic (jointly
representing more than 60% of our share capital) as
well as with key proxy advisors and external
remuneration advisors. This has led to more than 40
interactions since our last annual general meeting,
including more than 20 live meetings with top holders
and proxy advisors. Senior company personnel working
on our remuneration policies were involved in the
interactions and/or their preparations, including
members of our senior management team. Our NEDs,
led by the members of our Remuneration and
Nomination Committee, have been heavily involved in
the process of collecting, reviewing and weighing the
shareholder feedback received, and several meetings
took place between our Board and its Remuneration
and Nomination Committee (the “Committee”) and
senior management since our 2023 AGM to ensure we
are appropriately collecting and addressing stakeholder
concerns with the highest degree of responsiveness.
3. KEY FEEDBACK TO 2021 POLICY; KEY
CHANGES
3.1. GENERAL
When reflecting on stakeholder feedback in this
section, we are sharing a summary of the main
stakeholder feedback received per topic. There was no
consensus on almost any topic throughout the
engagements, and we note that where we reference
‘stakeholder feedback’ this reflects feedback we
received and feel is relevant to share and address, but
it does not mean that this feedback was shared by
multiple or a majority of stakeholders we engaged with.
3.2. NEDS PARTICIPATING IN STOCK OPTION PLAN
3.2.1. Stakeholder feedback
- NEDs should not participate in performance-
based equity programs such as stock option plans.
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3.2.2. Company evaluation
- We no longer deem it necessary to grant stock
options to NEDs to be able to offer competitive
director compensation.
3.2.3. Outcome for the 2024 Policy
- We will not grant stock options to NEDs.
3.3. NEDS RECEIVING EQUITY COMPENSATION
3.3.1. Stakeholder feedback
- Some stakeholders prefer that we grant no equity
compensation to NEDs at all, but this did not seem
to be the case for the majority of stakeholders.
Many stakeholders recognize that the granting of
equity to NEDs is accepted practice in the markets
where we operate.
3.3.2. Company evaluation
- Granting equity compensation to NEDs continues
to be the dominant market practice, especially for
our NASDAQ-listed reference companies. We
need to attract and retain top talent on our Board,
with skills and experience appropriate for a high-
growth, globally active, dual-listed company with
significant activities in the United States. We
deem it in the interest of the Company and its
stakeholders to continue to ensure we are able to
attract highly talented individuals to our Board of
directors, and as such we want to ensure we can
offer compensation in line with market practice
and to offer RSU grants to our NEDs. We consider
that vesting after one year combined with a 3-
year post-vesting holding period for NED equity is
appropriate.
3.3.3. Outcome for the 2024 Policy
- NED compensation will be in the form of cash and
RSUs, which will be subject to a one year vesting
period and a 3-year post vesting holding
requirement.
3.4. COMPENSATION QUANTUM FOR NEDS
3.4.1. Stakeholder feedback
- Some stakeholders were concerned with respect
to our overall reported pay levels for NEDs.
3.4.2. Company evaluation
- Our practice has been to benchmark the target
value ahead of each calendar year, and set the
number of units we will grant to NEDs in the
following year. Due to stock price developments
between the benchmark date and the grant date,
this has in the past led to the reported Black-
Scholes valuation of equity granted differing from
the target value used to set the number of units.
3.4.3. Outcome for the 2024 Policy
- Value for RSU grants to NEDs will be set in a fixed
USD amount.
- USD amount will be paid out in RSUs at the share
price applicable no more than 30 days before the
time of grant.
3.5. VESTING PERIOD FOR NED EQUITY
3.5.1. Stakeholder feedback
- Some stakeholders disfavored service based
vesting periods for NED equity.
3.5.2. Company evaluation
- We believe that Company equity held by NEDs
should be a long term investment in the
Company, aligning the interests of the Company
and the directors around objectives that
contribute to long term value creation, and
discourage short term thinking. For this reason,
we continue to deem it appropriate to have a
combination of vesting requirements and post
vesting holding requirements for NED equity.
3.5.3. Outcome for the 2024 Policy
- Vesting period for NED RSUs reduced to one year.
- 3-year post-vesting holding requirement for all
NED equity introduced.
3.6. EXECUTIVE EQUITY PROGRAM: PERFORMANCE CONDITIONS
3.6.1. Stakeholder feedback
- Certain stakeholders request the introduction of
performance conditions for executive equity
compensation. There appears to be no consensus
on this topic, with some shareholders taking the
view that performance share programs have not
3/13
proven to guarantee pay for performance, and
they would instead prefer for example straight
forward RSU programs with long vesting terms.
3.6.2. Company evaluation
- We have carefully considered the views for and
against the introduction of a performance share
unit program. We recognize that a stock option
program rewards share value generation, but that
share value is not the sole performance metric we
should consider when rewarding for Company
performance. We also recognize that our
Company continues to be in rapid development,
and it may prove challenging to set performance
targets which, more than 3 years from setting the
targets, will still appear achievable, relevant and
challenging. We want to ensure our executive
compensation plan continues to be competitive
and effective, and helps us attract and retain the
best talent, on which the success of our business
largely depends.
- As from the 2024 Policy, we believe we are in a
position to set relevant and challenging long term
vesting conditions in relation to equity
compensation, and consequently are proposing
the introduction of a performance share unit
(PSU) program. We do however wish to ensure
some flexibility in our equity plan composition
going forward, over the projected 4-year term of
the 2024 Policy, to allow us to learn and adjust as
needed along with the growth of the Company,
including by adjusting the relevant components of
the equity plan (stock options, PSUs and/or RSUs).
For this reason, instead of fixing the equity mix for
the full term of the policy, we are proposing
flexibility in the equity plan composition.
3.6.3. Outcome for the 2024 Policy
- Introducing a performance share unit program for
our NEOs.
- At least 50% of equity pay-out to NEOs will be
linked to performance conditions other than
share price performance.
- At least 50% of equity performance conditions
linked to financial targets.
- Performance period is at least 3 years.
- Goals will be specified and disclosed proactively
where possible, retroactively where necessary
due to competitive sensitivity.
- PSU pay-out capped at 200% of target value,
rewarding overachievement based on clear
measurable stretch performance metrics which
we will report along with the final calculations and
pay-out rationale.
3.7. EXECUTIVE EQUITY PROGRAM: USE OF STOCK OPTIONS
3.7.1. Stakeholder feedback
- Certain stakeholders oppose the use of stock
options, although many stakeholders were not
opposed to their use. The key concern raised
against stock options is that they could incentivize
short-term thinking and reward only for share
price performance which is not the only relevant
success metric.
- Some questions demonstrated that we needed to
more clearly state that our CEO stock options
cannot be exercised prior to the 4th year from the
grant date. This is not a change from our policy.
3.7.2. Company evaluation
- We continue to view stock options as an effective
tool to align the interest of our management team
with those of our shareholders by rewarding
share value appreciation over the long term.
- Furthermore, within our reference group of
companies competing for talent in the same
markets where we operate, the use of stock
options continues to be common practice.
3.7.3. Outcome for the 2024 Policy
- Stock options continue to be included in our
policy for NEOs.
- Retaining restriction on CEO stock options, which
cannot be exercised prior to the 4th year
following the year of grant.
- Stock options for other NEOs will continue to
vest 1/3 after the first anniversary of the
grant date and in 24 equal instalments after
that, leading to a total vesting term of 3 years
aligned with benchmarked market practice.
4/13
Our retention policy applies until 2 years
after NEO departure from the company (see
section 3.9 of the 2024 Policy).
3.8. EXECUTIVE EQUITY PROGRAM: OVERALL PAY QUANTUM
3.8.1. Stakeholder feedback
- Some shareholders raised questions about our
overall pay quantum in the form of equity.
3.8.2. Company evaluation
- Our target equity pay levels are positioned
between the 50th and 75th percentile of our
reference group. We note that due to the time
difference, between the moment where we
benchmark and translate the benchmarked value
into a target number of equity instruments, has
sometimes led to a different reported pay value
than the actual target equity value at grant, as a
result of share price movements between the
date of setting the target level, and the actual
grant.
- We also note that differences in parameters we
are required to apply to equity valuation in
different regions, have led us to report
significantly higher equity values for the same
equity instruments granted to Belgian
participants compared to non-Belgian
participants.
3.8.3. Outcome for the 2024 Policy
- Equity target levels continue to be based on
benchmarked dollar value amounts between the
50th and 75th percentile of our reference group.
- Target dollar amounts will be disclosed.
- Overall caps on equity pay targets will be
implemented in our policy.
- Company will continue to review ways to reduce
time lag between setting pay target levels and
grant.
- Transparency and explanations on benchmarked
equity values and target values at grant will be
further improved to ensure shareholders can
understand the process and can appreciate that
the value we are setting is reasonable and fair.
3.9. EXECUTIVE SHORT TERM INCENTIVE PROGRAM
3.9.1. Stakeholder feedback
- Stakeholders have requested increased
transparency on the target setting, weighing,
evaluation and pay-out of our short-term
incentive program.
3.9.2. Company evaluation
- As we continue to evolve, and especially since the
launch of our first commercial product and our
starting to generate revenues from product sales,
we are now able to set more quantitative,
financial performance targets.
- We do continue to believe that in order to build
long-term value, we have to set objectives which
include success milestones in our research and
development programs, and which support
building the Company and company culture for
the long term.
3.9.3. Outcome for the 2024 Policy
- Increased disclosure on short-term incentive
payout, including weighting per target, evaluation
per target, payout per target, all in percentages
and dollar amounts for maximum transparency.
- Portion of short-term variable pay linked to
quantitative performance targets increased.
3.10. REFERENCE/PEER GROUP
3.10.1. Stakeholder feedback
- Some stakeholders have opposed the relevance
of US-based companies in our reference group.
3.10.2. Company evaluation
- We do not consider country of incorporation or
country of primary listing important factors for
the selection of reference companies, as we have
not found them to be a relevant indicator of
whether those companies compete with us for
talent in our key talent markets. For example,
globally present US headquartered companies
may (and do) recruit European based directors or
executives and vice versa. Also when selecting
NEDs we typically select persons with extensive
global industry practice and who have the right
experience and expertise to serve on the board of
5/13
a company listed (also) on NASDAQ, and we have
found that those qualities do not necessarily
correlate with an individual’s nationality or
country of residence.
- While some proxy advisor firms (such as
Institutional Shareholder Services Inc., or ISS)
consider that the inclusion of US peers can be
inappropriate, we note that in our case there is no
real alternative. If we would set our global
remuneration policy at the median of a purely
European-headquartered peer group, our pay
levels and practices would not be competitive
against US-based companies who compete for
talent in the same markets we do (including
Europe) but apply a global approach to pay. We
also note that the US-based companies we
include in our reference group typically do not
distinguish in their equity pay practices
depending on their executives’ nationality or
primary country of residence. For these reasons,
in the interest of our long-term talent acquisition
and retention capabilities and the resulting
potential for success in our global mission and the
related stakeholder value creation, we will
continue to select reference companies based on
company criteria other than country of
incorporation or country of primary listing.
- Finally, as a result of rapid successes and failures,
growth and acquisitions, our landscape of
reference companies continually evolves. In
addition, our own company profile evolves rapidly
as we continue on our path from a European-
based R&D company to a globally present and
commercially active fully integrated biotech
company. Consequently, we regularly review the
reference group we use to ensure it continues to
be a reliable representation of the companies
with whom we compete for talent.
3.10.3. Outcome for the 2024 Policy
- Peer group continues to be selected based on
objective criteria other than country of
incorporation or headquarters, meaning that as
long as most of our key competitors for talent are
US-based and/or apply US market practice
remuneration principles, we will continue to align
with the relevant peer group to ensure
effectiveness of our program in attracting and
retaining our key talent and being competitive.
- When determining pay values, we will not
consider peer companies that have received a
negative ‘say-on-pay’ vote in their two most
recent reporting cycles.
3.11. OTHER RELEVANT CHANGES
3.11.1. We consider it in the interest of the Company to ensure
a smooth and correct tax reporting of NED income from
argenx, which can be complex due to our cross-
jurisdictional presence. We are introducing a re-
imbursement of advisory fees for tax filings of director
compensation based on actual cost, and not exceeding
USD 10,000 per annum per NED.
REMUNERATION POLICY 2024
subject to approval at our general meeting of 7 May 2024
This policy is subject to a 75% majority approval at our general meeting. If no such approval can be obtained, the company is
required to continue to apply the current (2021) policy.
6/13
1. INTRODUCTION AND KEY PRINCIPLES
1.1. SCOPE
1.1.1. This 2024 Policy applies to our non-executive directors
(“NEDs”), our Chief Executive Officer (and sole
executive director) (CEO) and our Chief Financial Officer
(CFO) and Chief Operating Officer (COO) (hereinafter
the CEO, CFO and COO are referred together as named
executive officers, or “NEOs”).
1.2. OUR MISSION AND VALUES, GOALS OF THIS POLICY
1.2.1. Our mission is to transform patients’ lives by providing
them with life-changing medicines which build on
scientific breakthroughs in immunology. To achieve our
mission, we will need to be successful across a range of
challenging activities in an extremely competitive
environment. This includes the discovery, research, and
development of highly innovative pharmaceutical
product candidates, entering into and maintaining
successful collaborations with key industry experts
across the globe, managing our limited resources in a
disciplined manner to enable us to progress our
products all the way through to regulatory approval,
and finally to successfully commercialize our products
by bringing our innovative therapies to the patients
who need them.
1.2.2. We strongly believe our long-term success depends on
our ability to attract and retain exceptionally talented
people focused on the execution of our business
objectives while promoting and upholding our identity
and core values along the way. Our core values are:
- Co-Creation. We create through collaboration.
- Humility. We listen to patients and their
communities.
- Excellence. We live by our reputation for data-
driven decision-making.
- Empowerment. We develop our people based on
strengths to benefit the broader team.
- Innovation. We live to innovate and do so at every
step.
1.2.3. This remuneration policy is designed to support our
mission, our identity, and our core values. We believe
in the intrinsic motivation of our entire team to
contribute to our mission and we know that maximum
alignment between the interests of our senior
leadership team and our stakeholders is supportive of
our long-term success. We believe in ensuring pay-for-
performance, and more particularly, for the
achievement of our business goals in line with our
company culture. This means that when setting targets
as well as when determining pay levels, we evaluate
both the ‘what’ and the ‘how’: we strive to deliver a
balanced incentive package which rewards delivering
on key business value drivers in a way that effectively
reinforces our core values, contributing to long-term,
sustainable success.
1.2.4. This 2024 Policy is designed to allow us to:
- attract, retain and motivate top talent to serve on
our senior leadership team by offering
remuneration packages that are competitive in the
markets where we operate;
- effectively reward strong performance, where
possible pre-defined by defined metrics which
contribute to key company value drivers in a way
that reinforces our core values (taking into account
the ‘what’ and the ‘how’) in achieving company
objectives;
- promote sustainable long-term value creation over
short-term success through co-ownership of our
business;
7/13
- encourage effective risk management in line with
the Company's risk appetite.
1.3. ENSURING COMPETITIVENESS, FAIRNESS AND BROAD
SUPPORT FOR OUR REMUNERATION PRACTICES
1.3.1. In determining the remuneration packages offered to
our NEDs and NEOs we perform benchmarking
exercises to ensure that the remuneration offered by us
is competitive and in line with market practice.
Benchmarking outcomes will be considered as one
component in a multi-faceted review of overall
compensation practices, along with Company and
individual performance, pay development over time,
overall pay ratios throughout the Company,
shareholder say-on-pay feedback and other relevant
circumstances.
1.3.2. We annually review the ratio between our CEO's
remuneration package and that of our median
employee remuneration package, report our
remuneration practices (including pay ratios) to our
shareholders and discuss the application of our
remuneration policy in the previous year. We are
committed to being transparent about our
remuneration practices and seeking meaningful
dialogue with our stakeholders to help us continually
improve the quality of our disclosures.
1.3.3. Any decision to set or change the remuneration level of
our NEDs and NEOs is based on a recommendation from
our Remuneration and Nomination Committee (the
“Committee”). The Committee substantiates why its
recommendations are competitive, reasonable, and
fair, on the basis of:
- the unique talents and expertise of the individual
concerned and the value they bring to the
Company,
- external benchmarking activities against a pre-
selected peer group of companies operating in the
markets where we operate,
- the pay ratios within the Company, and
- the feedback from our shareholders and external
stakeholders to date, securing continued public
support for our remuneration policy and practices.
1.3.4. Prior to establishing the remuneration packages for our
NEDs and NEOs, our Board performs a scenario analysis
to simulate the possible outcomes of the proposed
remuneration. For NEO remuneration, the analysis
serves to ensure the remuneration correlates directly to
the value of the individual's contributions to the
Company as well as overall company performance and
value creation. The Committee furthermore requests
and considers feedback from the individual on their
own proposed remuneration changes prior to making
recommendations to the Board in relation thereto.
2. COMPETING GLOBALLY, BENCHMARKING
2.1. REFERENCE GROUP SELECTION
2.1.1. We perform external benchmarking through
independent third-party advisors to ensure that our
total remuneration packages, including fixed cash
compensation amounts, variable cash compensation
amounts, equity incentive grants and other benefits are
fair, reasonable and competitive in the geographical
markets where we operate.
2.1.2. Target NEO and NED pay levels are set between the
50th and 75th percentile of the global reference group.
2.1.3. Actual remuneration levels may be lower than the
targeted benchmark value, in which case the Board may
propose fair and reasonable step by step changes to the
remuneration, which are explained in the Company’s
remuneration report.
2.1.4. Our reference group will include a representative
number (no less than 12) of public life sciences
companies with a global presence, with a preference for
companies commercializing their own pipeline of
innovations who compete for talent in the same key
markets we do. To identify the final reference group
from the available peers, we will consider primarily
stage and rate of growth, number of employees,
company market cap, global presence, complexity,
market capitalization, revenues and profitability. We
will report on the reference group(s) we use for our pay
practices, as well as the selection criteria applied, in our
annual remuneration report for maximum
transparency.
8/13
3. NAMED EXECUTIVE OFFICER (NEO)
REMUNERATION
3.1. REMUNERATION PACKAGE COMPONENTS
Our NEOs receive a remuneration consisting of a fixed
cash compensation and customary fringe benefits, as
well as performance-based compensation consisting of
an annual variable cash compensation (short-term
incentive plan or “STIP”) and a long-term incentive plan
(“LTIP”) in the form of stock options, performance share
units (“PSUs”) and/or Restricted Stock Units (“RSUs”).
3.2. FIXED CASH COMPENSATION
Target NEO cash pay levels are set between the 50th
and 75th percentile of the reference group. The final
determination of an NEO's fixed pay is made
considering this benchmark, the individual's skills,
experience and performance, the remuneration
practices and conditions across the wider organization
and our interactions with key stakeholders to secure
broad public support for our remuneration practices.
The rationale for significant pay increases year-over-
year, will be explained in detail in our remuneration
report.
3.3. SHORT TERM INCENTIVE PLAN (STIP)
3.3.1. Our NEOs are eligible to receive an annual short-term,
performance-based incentive in the form of a variable
cash remuneration equal to a percentage of their total
base pay. The relative portions are as follows,
expressed as a percentage of base pay:
Target
Max
CEO
60%
120%
COO
50%
100%
CFO
40%
80%
3.3.2. The Board shall set at least 4 performance targets for
each NEO per year, aligning STIP payout with the
achievement of key objectives of the Company for the
year and rewarding the achievement of those
objectives while taking into account the Company’s
core values. The STIP may contain a mix of financial and
non-financial performance targets. The following will be
taken into account for STIP targets set under this 2024
Policy:
- All targets will be correlated to key value drivers for
the Company;
- A significant portion of the targets will be linked to
financial performance metrics;
- Qualitative targets will be milestone-based to the
extent possible, and measurement and payout
determinations will be linked to objective criteria
which we will disclose in our remuneration report.
Targets will be set on ‘building the business’ and
‘building the organization’ objectives, which may
include for example:
- generating revenue, components of revenue, profit,
cash flow from operations, growth, attributable
profit, EBIT and/or other financial metrics;
- progressing our product candidates through
specific stages of development and/or submitting
applications for the marketing approvals for our
products;
- entering into or successfully developing
collaborations with third parties or achieving
certain milestones under such collaborations;
- achieving (revenue generating or other) milestones
under our collaborations with third parties and/or
achieving other means of financing our business
goals;
- successfully hiring and/or developing key talent and
building out new segments of our organization in
line with our company's development stage and
strategic goals;
- supporting and promoting our company culture and
promoting a 'tone at the top' that supports our
identity and core values; and
- building the Company's reputation and brand value
in support of our mission.
3.3.3. Payout of the STIP is determined by the Board and
reported in the Company’s remuneration report,
including the relative value of each target, its measured
achievement and the corresponding payout. When
determining the payout, the Board shall consider both
the ‘what’ (% of target achieved) as well as the ‘how’
(alignment with core company values). Pay-out occurs
in the first quarter of the year following the year for
which the targets where achieved. In the case of an NEO
leaving the Company (other than in the event of
termination for cause), if any payment is made under
an existing STIP, such payment will be pro-rated for
time and performance.
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3.3.4. The Board may adjust the total variable pay payout
(upward or downward) under the STIP if necessary to
ensure fair pay-for-performance outcomes (the Board
has this right by operation of Dutch corporate law), for
example to take into account the impact of
circumstances which were reasonably unforeseeable at
the time of setting the targets. In the event of an
adjustment of targets or of payout, this will be
explained in detail in the Company’s remuneration
report.
3.3.5. Overall STIP payout will in any case not exceed the
maximum STIP opportunity for the relevant year.
3.4. EQUITY INCENTIVE (LTIP) COMPOSITION, QUANTUM &
GRANT PRACTICE
3.4.1. Our NEOs may receive annual grants of equity
incentives, consisting of stock options, PSUs and/or
RSUs, the amount and mix of which will be determined
by the Board at the recommendation of the
Remuneration and Nomination Committee. The equity
package composition and its incentivizing and retentive
effects will be reviewed on an annual basis and the
Board may adjust the value allocation between the
various instruments taking into account overall
(expected) pay outcomes, changes to market practice in
our reference group and stakeholder feedback as part
of our annual say-on-pay votes.
3.4.2. For 2024, the benchmarked target grant value for our
CEO equity is USD 10,734,000 and for our other NEOs
this is USD 3,540,000 and comprises of a 50/50 target
value allocation between stock options and PSUs.
3.4.3. We will review target pay opportunities regularly and
perform an external benchmark at least once every 4
years.
3.4.4. Total target equity grant value will not exceed 15x base
salary for any NEO.
3.4.5. Grant practices
To allow us to follow a ‘steady-course-of-action’ and to
ensure we are able to grant equity at a pre-defined time
to defined persons, with pre-defined terms and in pre-
defined numbers, we will operate an annual ‘equity
allocation scheme’ setting out the total number of
instruments to be granted in the following calendar
year, based on role level. We will evaluate ways to
minimize the time between setting the allocation
scheme and granting the equity, to limit differences in
valuation at benchmarking and at grant, to the extent
possible within the (Dutch) legal framework in which we
operate.
3.5. VESTING SCHEMES AND OTHER LTIP TERMS
3.5.1. Stock options
- Stock options granted to our CEO are not
exercisable until the 4
th
calendar year after the year
in which they were granted;
- Stock options will vest over a period of no less than
3 years, but the Board may set longer vesting
periods if deemed appropriate based on then
current benchmark data;
- Exercise price of stock options will be set at fair
market value (Euronext closing price the trading day
prior to the date of grant), no discounts will apply;
- No vesting will occur in the first year;
- We will not reprice stock options.
3.5.2. PSUs
- PSUs will have a performance period of no less than
3 years;
- PSUs will vest at once at the end of the performance
period, subject to the achievement of the defined
performance criteria;
- PSUs will have the following type of performance
targets and weighting:
o Financial performance targets (totaling at
least 50% of target PSU pay), aimed at driving
financial performance metrics;
o Innovation and pipeline development targets
(milestone based, at least 25% of target PSU
pay), aimed at driving long-term value
creation opportunities through innovation;
and
o People and culture targets, aimed at building a
long-term sustainable company in line with
our cultural values.
- Targets will be set on an annual basis and will be
disclosed in our remuneration report, proactively
where possible, retroactively where necessary (due
to potential competitive sensitivity).
- In the event of an NEO leaving the Company, the
following will apply for unvested PSUs:
10/13
Reason for departure
- Dismissal by the Company
for reasons unrelated to
personal performance;
- Resignation by the NEO as
a result of reaching legal
retirement age.
Serious long term or
permanent illness and
inability to continue to
perform their role as a result
(determined by the Board in
good faith) or (iii) death of the
NEO
All other circumstances
3.5.3. RSUs
- RSUs will vest over a period of no less than 4 years;
- No vesting will occur in the first year.
3.6. BENEFITS
We offer our NEOs participation in the benefit plans
which are customary for employees of the legal entity
of which the NEO is an employee, and which we apply
consistently for employees of the relevant legal entities.
Depending on the market, these may be comprised of
pension contributions, a representation allowance,
hospitalization and disability insurance and/or the use
of a company car, phone and laptop.
3.7. PAY MIX AND PAY RATIO REPORTING
The mix between fixed and variable remuneration
components for our NEOs for at least the last 3 years is
available in our annual remuneration report, published
on our website.
3.8. SEVERANCE ARRANGEMENTS
3.8.1. We will under this remuneration policy not offer
severance arrangements to NEOs that are in excess of
the statutory arrangements applicable to them under
the law governing their employment contract.
Contractual arrangements already in place at the time
this 2024 Policy is adopted will not be affected by this
policy and are disclosed in our remuneration report.
3.8.2. We will prevent 'pay for failure' and will therefore not
pay a severance arrangement in the event of seriously
culpable or negligent behavior on the part of an NEO
being dismissed. We will also not pay severance if the
agreement is terminated at the initiative of the NEO,
other than due to serious culpable conduct or neglect
on the part of the Company.
3.8.3. If deemed necessary to attract NEOs, we may offer one
time sign-on grants to new NEOs of no more than 2x
target equity value, which may consist of a mix of stock
options, PSUs and/or RSUs.
3.8.4. If deemed necessary by the Board in the interest of the
Company to attract key talent, the Board may decide to
grant a ‘buy-out’ award to new NEOs to compensate
executives for awards foregone at their previous
employer, in which case the cost is kept to a minimum
and shall not exceed the realistic value of rewards
forfeited by changing employer.
3.9. HOLDING REQUIREMENTS
3.9.1. NEOs are required to build up a holding of shares in the
Company, and to retain such holding for at least 2 years
until after their departure from the Company. The
minimum holding requirement applicable for 2024 is 3x
annual cash compensation for the CEO and 1x annual
cash compensation for other NEOs. This holding
requirement may be revisited from time to time to
ensure it represents assurance of a meaningful long-
term investment in the Company.
11/13
3.10. CLAW-BACK POLICY
3.10.1. In accordance with the Dutch Civil Code, US listing
requirements and our Claw Back Policy (available on our
website here), we will partially or fully claim back
variable compensation components paid to NEOs to the
extent that such variable compensation was paid out on
the basis of erroneous information about the
achievement of the performance targets underlying
such variable compensation or the circumstances on
which such variable compensation was conditional, for
example as a result of material restatements of
financials (refer to the aforementioned Claw Back Policy
for further details). The covered period under our Claw
Back Policy is three fiscal years prior to any Restatement
Date (defined in the policy) and any transition period of
less than nine months following those three completed
fiscal years.
3.11. MAIN CHARACTERISTICS OF NEO AGREEMENTS
3.11.1. The following are the main terms of engagement of our
NEOs:
Term
Indefinite
Notice period
Per local laws, otherwise
not exceeding 12 months*
Supplementary
pension
schemes and
early retirement
schemes
Per local market practice, in
line with local employee
base
Conditions for
termination and
severance
payments
Per local laws/local market
practice**
* our CEO (whose contract predates this 2024
Policy) has a contractual termination period of
18 months
** our current NEO contracts other than the
CEO contract do not include severance
arrangements in excess of local employment
law requirements.
4. NON-EXECUTIVE DIRECTOR (NED) REMUNERATION
4.1. CASH COMPENSATION
Our NEDs receive a fixed remuneration for their
services as NEDs, and may receive an additional
remuneration for serving on special committees and/or
for being chairperson of the Board or any of its
committees. As of 2024, the fees are as follows:
USD
Board of Directors
Chairperson
95,000
Member
60,000
Audit & Compliance
committee / R&D
committee
Chairperson
25,000
Member
12,500
Remuneration &
Nomination committee
and Commercial
committee
Chairperson
20,000
Member
10,000
These amounts have been updated to align with our
most recent benchmark data, and take into account the
significantly increased time commitment required from
our NEDs, including as a result of the growth of the
range, scale and complexity of our activities globally
and the resulting need for more frequent interactions
between our Board members and our management
team, increased duration and frequency of formal and
informal Board and committee meetings and calls and
contact in between formal meetings. Our fees had been
set at our Euronext initial public offering in 2014 and
have since been adjusted only once in 2022 (€10,000
increase).
These amounts may be adjusted from time to time as
necessary to ensure that we continue to offer fair and
competitive remuneration.
Fees for being on special committees of the Board serve
as compensation for the significant additional time
commitment and responsibilities that come with
fulfilling these duties in addition to those generally
required for serving as a non-executive director on our
Board. A non-executive director serving multiple
committee positions will receive the appropriate
additional compensation for each of these committee
positions. Members of ad-hoc committees will not
receive additional remuneration for their membership
of such committees.
12/13
4.2. EQUITY COMPENSATION
4.2.1. Our NEDs will receive an annual grant of RSUs. These
RSUs will vest on the first anniversary of the grant date.
A post holding requirement of 3 years after vesting
applies. The sole exception to the holding period, is the
sale of shares required to cover immediate tax liabilities
as a result of the grant and/or vest of the RSUs granted.
4.2.2. The number of RSUs granted will be in the value of
400,000 USD (expressed in shares at the share price no
more than 30 days prior to the actual grant date of the
RSUs). The aforementioned amount of USD 400,000 is
for 2024, and may be adjusted from time to time as
necessary to ensure that we continue to offer fair and
competitive remuneration.
4.2.3. For the sake of completeness, we note that this 2024
Policy does not affect the vesting periods, holding
requirements and other rights/restrictions applicable to
equity grants made prior to the date hereof (and which
have been disclosed in the relevant annual reports and
remuneration reports disclosed prior to the date
hereof).
4.3. COST REIMBURSEMENTS
4.3.1. Reasonable out-of-pocket (travel) costs incurred by
NEDs in their duties are reimbursed by us.
4.3.2. We (through a third-party service provider or
otherwise) may support NEDs in the preparation and/or
filing of tax returns related to the services provided for
the Company. External costs incurred or reimbursed for
this purpose shall not exceed USD 10,000 per NED per
year.
4.4. LEAVER EQUITY
Equity granted to NEDs under this 2024 Policy shall vest
after one year. If any NED leaves the Board prior to the
first anniversary of any equity granted to them herein,
they shall forfeit the unvested equity. Equity granted
under prior remuneration policies shall be treated in
accordance with the contractual terms applicable to
such equity (typically set out in the then applicable
equity plan or grant agreement).
4.5. HOLDING REQUIREMENT
4.5.1. NEDs are required to build up a holding of shares in the
Company, and to retain such holding for at least 2 years
after their departure from our Board. The minimum
holding requirement applicable for 2024 is 3x annual
cash compensation. This holding requirement may be
updated from time to time to ensure it adequately
reflects a meaningful long-term investment in the
Company.
5. PROCESS FOR DETERMINING, REVISING AND
APPLYING THE REMUNERATION POLICY
5.1. DETERMINING THE REMUNERATION POLICY
Our remuneration policy and any revisions thereof are
established by our general meeting with a 75% majority
vote, at the proposal of our Board. If a newly proposed
remuneration policy is not approved at our general
meeting with the required majority, we are required by
law to continue the remuneration practices and policies
we then have in place, and to make a new remuneration
policy proposal at the next general meeting. We will put
our remuneration practices up for an advisory vote
annually and will submit our remuneration policy to our
shareholders for (renewed) approval every four years.
We will take into account stakeholder feedback on our
annual remuneration report in our application of this
2024 Policy in the years following such feedback.
5.2. DEVIATING FROM THE REMUNERATION POLICY
Our Board may in specific circumstances temporarily
deviate from this 2024 Policy, if deviation is deemed
necessary to serve the long-term interests and
sustainability of the Company or to safeguard the
viability of the Company.
In case the Board intends to grant any remuneration in
deviation from this 2024 Policy, the following
requirements and restrictions apply:
(i) the principles of this 2024 Policy and its core
objectives may not be deviated from, and
specifically remuneration offered to any individual
shall be based on the value that individual brings to
the Company, shall be competitive in the relevant
markets where we compete for talent and shall for
executives include a significant variable component
linked to specific performance targets aligned with
our company strategy, and that we will avoid pay-
for-failure;
13/13
(ii) unless the deviation is proposed by the
Remuneration and Nomination Committee, the
Committee will be consulted on the necessity,
extent, manner and proportionality of the proposed
deviation and will be allowed sufficient time to
deliberate the impact thereof;
(iii) the deviation will be limited in time until the next
scheduled meeting where we will propose any
amendments to this 2024 Policy as needed;
(iv) we will report any deviations from this 2024 Policy
in our annual remuneration report delivered to our
shareholders, and such report will include an
overview of the key considerations for deviating
from the 2024 Policy and the expected duration of
the deviation, and our shareholders will be asked to
provide an advisory vote on our remuneration
practices for the respective year; and
(v) we will not deviate from section 1 and this section
5 of the 2024 Policy.
***