Letter from the Chair of the Remuneration Committee
On behalf of the Board of Directors and the Remuneration Committee of Galenica, I am pleased to present the Remuneration report for 2021.
The remuneration policy of Galenica aims to attract, motivate and retain best-in-class employees who are entrepreneurially minded, success-oriented and have high personal standards. The remuneration system is designed to support the achievement of the strategic goals defined by the Board of Directors and to provide appropriate compensation in a competitive employment market and in a complex sector. It is aligned with the long-term Group strategy and its pay-for-performance philosophy. The remuneration system of Galenica aims to strengthen the overall market position of the company while delivering the expected returns to its shareholders.
2021 was a very successful year for Galenica. Sales increased massively against the backdrop of Covid-19, and sales of medicines for colds and flu infections rose towards the end of the year. Although the one-off extraordinary income from the sale of the property at Galenica's headquarters was not taken into account when assessing the Galenica Economic Profit (GEP) target, the short-term bonus (STI) almost reached the maximum payout level thanks to the excellent results. Under the long-term remuneration (LTI) 2019-2021, the realised GEP resulted in an overall vesting multiple of 200%. Further details on the performance achieved and the payouts under the incentive plans are provided in this report.
As discussed in last year’s Remuneration report, the Remuneration Committee performed a thorough review of the compensation system applicable to the Corporate Executive Committee in 2020. While the Remuneration Committee concluded that overall, the remuneration structure was appropriate and in line with market practice, it proposed to make the following changes related to the performance conditions of the incentive schemes:
- Group annual sales growth was included as a financial performance objective in the STI,
- A sustainability component (ESG [Environment, Social, Governance]) was included in the individual STI performance objective,
- Relative total shareholder return (TSR) was introduced in the LTI in addition to the GEP; furthermore, the determination of operating performance was slightly modified to reflect the average annual GEP over the performance period, and
- The governance related LTI provisions were updated to include clawback/malus provisions and stricter termination rules.
No revisions were made to the compensation programme for the Board of Directors.
Besides its regular activities throughout the year, the Remuneration Committee conducted a benchmark analysis of the compensation levels of the Corporate Executive Committee in the reporting year. The outcome of this analysis is summarized in this report.
Going forward, the Remuneration Committee will continue to regularly review the remuneration system to ensure that it is still fit-for-purpose in the evolving context in which the company operates. The Remuneration report provides detailed information on our remuneration system and on the remuneration awarded in 2021 to the Corporate Executive Committee and the Board of Directors and will be submitted to the shareholders at the Annual General Meeting on 11 May 2022 for a non-binding consultative vote.
We would like to thank our employees for their commitment and hard work, and you, dear shareholders, for your trust.
Chairman of the Remuneration Committee