3.12 Application of article 523 of the Companies Code
EXCERPT FROM THE MINUTES OF THE MEETING OF THE BOARD HELD ON 21 FEBRUARY 2018
Article 523 of the Belgian Companies Code was applied by the Board of 21 February 2018 in the context of the decisions relating to the CEO remuneration, the performance bonus and LTI grants (relevant excerpt from the minutes of the meeting):
Prior to any deliberation or decision by the Board of Directors concerning the approval of the CEO bonus based on 2017 performance, the CEO 2018 base salary and the CEO 2018 LTI grant (stock options, stock awards and performance shares), as well as the approval of the 2017 bonus payout and LTI vesting and of the 2018 LTI plans, metrics and grants, J.-C. Tellier stated that he had a direct financial interest in the implementation of said decisions. In accordance with Art. 523 of the Company Code, he withdrew from the meeting of the Board of Directors in order not to participate in the deliberation and the vote relating to these issues. The Board of Directors established that Art. 523 of the Company Code was applicable to these operations. – J.-L. Fleurial also left the room before any deliberation or decision on these issues.
CORPORATE RESULTS 2017 BONUS PAYOUT/LTI AWARD VESTING AND 2018 TARGETS
Decision: After review, the Board overall approved the recommendations of the Governance, Nomination and Compensation Committee (‘GNCC’) relating to (i) the 2017 bonus payout based on the year end 2017 results (REBITDA), (ii) the REBITDA target for 2018 bonus payout and (iii) the metrics used for the Performance Share Plan 2018-2020 (payout 2021). It further endorsed the vesting (and total payout) in 2018 relating to the 2015-2017 Performance Share Plan as well as the stock award vesting for the 2015-2017 plan.
UCB LONG TERM INCENTIVES GRANTS IN 2018
Decision: Upon recommendation of the GNCC, the Board unanimously approved the following Long Term Incentive Plans and the main terms and conditions thereof:
- UCB stock option plan 2018: issue of 900 000 stock options (target + 15% to take into account performance differentiation), in principle on April 1, 2018 unless exceptional circumstances, for approximately 380 employees (not taking into consideration employees hired or promoted to eligible levels between January 1, 2018 and April 1, 2018);
The exercise price of these options will be the lower of (i) the average of the closing price over the 30 calendar days preceding the offer (i.e. in principle from March 2-31, 2018) or (ii) the closing price of the day preceding the offer (in principle March 31, 2018).
UCB will determine a different exercise price for those eligible employees subject to legislation which requires a different exercise price. Stock options will have a vesting period of 3 years as of the date of grant, except for countries where this is not allowed or is less favorable.
- Stock awards and Performance Shares (“PSP”) grants 2018 – 2020: allocation of an initial amount of 1 098 000 shares of which:
- an estimated number of 955 000 shares to eligible employees, namely to about 1 760 employees (excluding new hires and promoted employees up to and including April 1, 2018), according to the applicable allocation criteria (target +15% to take into account performance differentiation). These free shares will be allocated if and when the eligible employees are still employed with the UCB Group 3 years after the grant of awards;
- an estimated number of 143 000 shares to Upper Management employees for the Performance Share Plan 2017, namely to about 54 individuals, according to the applicable allocation criteria. These free shares will be delivered after a 3-year vesting period and the number of shares actually allocated will vary from 0% to 150% of the number of shares initially granted depending on the level of achievement of the performance conditions set by the Board of UCB SA/NV prior to the moment of the grant.
- It was acknowledged that the financial impact for the Company of the granting of options is linked to the difference between the acquisition cost of own shares by the Company (or the share price at vesting date for cash settled plans) on the one hand and the strike price of the options paid to the Company by the beneficiary upon exercise of the options on the other hand. For the stock awards and the PSP, the financial impact corresponds to the value of the UCB shares at the time of acquisition by the Company in view of delivery, or at the time of vesting for cash settled plans.
- The Board further decided to delegate all powers to the members of the Executive Committee, acting jointly two by two and with faculty of sub-delegation, to do whatever is necessary, required or useful to execute and implement the above decisions, including the finalization of all required documentation, the actual grant decision, the final terms and conditions and modalities of the plans and incentives.
CEO COMPENSATION AND LTI
Decision: Upon recommendation of the GNCC, the Board unanimously approved the following:
- CEO base salary as of 01.03.2018: € 1 077 607 (against € 1 046 220 in 2017);
- CEO bonus pay-out 2018 (performance 2017): 1 536 217€;
- CEO LTI 2018:
- stock options: 44 741 (3-years and 9 months vesting);
- stock awards: 12 561 (3-years vesting);
- performance shares: 20 745 (3-years vesting).