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 2022.
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 remuneration 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.
The Galenica Group performed very well in a challenging market environment in 2022. As a result, the short-term bonus targets were exceeded with a GEP achievement of 208.2% and the net sales growth achievement of 192.1% while the target achievement of the LTI plan 2020–2022 due in 2023 was 140.4%. Further details on the performance achieved and the payouts under the incentive plans are provided in this report.
Back in 2020, the Remuneration Committee performed a thorough review of the remuneration system applicable to the Corporate Executive Committee. As a result of this review, the Remuneration Committee adopted specific changes related to the STI and LTI KPIs as well as the clawback/malus provisions, applicable as of 2021. In the reporting year, the Remuneration Committee proposed to further tailor the STI KPI framework. Consequently, as of 2023, the individual objectives – constituting 25% of the STI – will be replaced by a collective environmental, social and governance (ESG) component. This means that while ESG was included in one of the three individual objectives in 2022 (namely with an employee satisfaction target), it will make up the entire 25% in 2023. The following collective ESG KPIs will be applied to the STI in 2023: Net Promoter Score (NPS) and employees who recommend Galenica as an employer. The selected ESG KPIs are fundamental and key strategic goals for Galenica, which will now also be anchored in the variable remuneration. Apart from this adaption, the Remuneration Committee concluded that no changes to the remuneration system were required and that the overall remuneration structure was appropriate and in line with market practice.
In terms of remuneration levels of the Corporate Executive Committee, a benchmarking analysis was last conducted in 2021. The outcome of this analysis is summarised in this report. In line with the review cycle in place, the Remuneration Committee will conduct the next benchmarking analysis between 2023 and 2025.
With respect to the remuneration programme for the Board of Directors, the Remuneration Committee conducted a benchmarking analysis and review of the remuneration structure and levels in the reporting year. While the overall structure and levels are in line with market practice, the Remuneration Committee proposed to express the remuneration of the Board of Directors in gross terms, rather than in net terms. This is not a change of the remuneration system or levels but an improvement in terms of disclosure and transparency.
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 the remuneration awarded in 2022 to the Corporate Executive Committee and the Board of Directors and will be submitted to the shareholders at the Annual General Meeting on 3 May 2023 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