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3. Corporate Governance Statement

3.4 Board of Directors and Board committees

3.4 Board of Directors and Board committees

The governance of UCB is based on a “one-tier” structure. This means that the company is administrated by a Board of Directors and run by an Executive Committee, whose respective functions and responsibilities are defined below in accordance with the Articles of Association of the Company and the Charter. The Board did not opt for a “two tier” structure based on a separate Supervisory Board and Management Board. It considers that the current system foresees an appropriate balance of powers between the Board and the management, and the composition of the Board is in line with UCB’s shareholder structure. It also did not want to permanently delegate to management the powers granted to the Board by the law in its current one-tier structure, nor the general representation of UCB. The Board will review its governance structure at least once every 5 years. The last review was performed by the Board in October 2019.

3.4.1 Board of Directors

Composition of the Board and independent Directors

As of the General Meeting held on April 30, 2020, the Board of Directors was composed as follows:

Mandates of Board Members in other listed companies are marked with an *

The Secretary of the Board is Xavier Michel, Group Secretary General. The role and responsibilities of the secretary of the Board are described in the UCB Charter.

At the General Meeting of April 30, 2020, the mandates of Charles-Antoine Janssen, Pierre Gurdjian (independent Director) and Ulf Wiinberg (independent Director) were renewed for a term of 4 years.

Alice Dautry, Kay Davies, Albrecht De Graeve, Viviane Monges, Pierre Gurdjian, Jan Berger and Ulf Wiinberg all qualify as independent Directors and meet the independence criteria as set forth by the 2020 Code and the Board.

Evelyn du Monceau, Charles-Antoine Janssen, Cyril Janssen and Cédric van Rijckevorsel are representatives of the Reference Shareholder and, as such, are not eligible to qualify as independent Director. Roch Doliveux was the CEO of UCB from 2005 until December 31, 2014. He also has a long tenure in the Board of UCB and for these reasons, he does not qualify as independent Director within the meaning of the 2020 Code.

In 2020, the Board was therefore composed of a majority of independent Directors.

The mandates of Albrecht De Graeve, Viviane Monges and Roch Doliveux will expire at the Annual General Meeting of April 29, 2021 (AGM 2021). Roch Doliveux informed the Board that, for personal reasons, he will not be candidate for a further renewal of his mandate and will therefore leave the Board and UCB at the end of the term of his current mandate (i.e. the AGM 2021).

Alice Dautry reached the age limit after the AGM of 2020 and has accepted to stay with the Board of UCB until her successor could replace her, i.e. until December 31, 2020. As from January 1, 2021, Alice Dautry was replaced by Susan Gasser who has been coopted by the Board for the period from January 1, 2021 until April 29, 2021. She is also replacing Alice Dautry as a member of the Scientific Committee of the Board. The appointment of Susan Gasser was recommended to the Board by its Governance, Compensation and Nomination Committee (“GNCC”), which manages the succession planning and search in accordance with the UCB Charter. When a directorship becomes vacant in the course of the mandate, the Board has the right to fill the vacancy by cooptation in accordance with the rules of the BCCA and the Articles of Association of the Company, but the cooptation must be ratified by the next AGM. On April 29, 2021, the Board will therefore request the ratification of Susan Gasser’s cooptation by the AGM for said period and will thereafter also propose to the AGM the approval of her appointment for a full mandate of 4 years, starting on the date of said AGM (April 29, 2021) until the AGM of 2025. Susan Gasser qualifies as independent Director in accordance with the independence criteria of the 2020 Code. If her appointment is confirmed by the AGM 2021, she will continue to be a member of the Scientific Committee of the Board. A curriculum vitae of Susan Gasser is available on UCB website.

Kay Davies will reach the age limit a few days before the AGM 2021. Given the resignation of Alice Dautry, the Board has decided, in accordance with rule 3.2.4 of the Charter, to make an exception to the age limit for directors to allow Kay Davies to continue her current mandate until the end of its term (i.e. the AGM of April 28, 2022) to ensure continuity in the Scientific Committee and to allow an appropriate onboarding of Susan Gasser in this Committee. Kay Davies will also continue to be a member of the GNCC until the end of her current mandate.

Since Evelyn du Monceau, current Chair of the Board, has also reached the age limit in the course of 2020, she will resign from the Board with effect immediately after the closing of the AGM 2021.

In addition to the above mentioned appointment of Susan Gasser, and upon recommendation of the GNCC (in charge of succession planning and search for the Board), the Board will propose the following appointments to the AGM of April 29, 2021:

  • The appointment of Mr. Stefan Oschmann as independent Director for a mandate of 4 years (until the General Meeting of 2025). Stefan Oschmann meets all criteria to qualify as independent Director in accordance with the criteria set forth by the 2020 Code and the Board. If elected by the AGM 2021, Stefan Oschmann will become the Chair of the Board in replacement of Mrs. Evelyn du Monceau as well as a member of the GNCC.

  • The appointment of Mrs. Fiona du Monceau as Director for a mandate of 4 years (until the General Meeting of 2025). If elected by the AGM 2021, she will become Vice Chair of the Board in replacement of Pierre Gurdjian, who will stay in the Board as independent Director for the remainder of his mandate. She will also become the Chair of the GNCC. Fiona du Monceau is a representative of the Reference Shareholder and does not qualify as independent Director in accordance with the criteria of the 2020 Code.

  • The appointment of Mr. Jonathan Peacock as independent Director for a mandate of 4 years (until the General Meeting of 2025). Jonathan Peacock meets all criteria of the 2020 Code and the Board to qualify as independent Director. If he is elected by the AGM 2021, Jonathan Peacock will become the Chair of the Audit Committee in replacement of Albrecht De Graeve.

  • The renewal of the mandate of Albrecht De Graeve as Director for a term of 4 years (until the General Meeting of 2025). Albrecht De Graeve will qualify as independent Director only for the first year of his renewed mandate of 4 years (until the General Meeting of 2022). In accordance with the rules of the 2020 Code, non-executive board members qualify as independent if their total tenure does not exceed 12 years. Albrecht De Graeve was appointed for the first time as independent Director at the General Meeting of April 29, 2010 and can therefore only qualify as independent Director for 1 additional year, until the General Meeting of 2022. If re-elected, Albrecht De Graeve will stay as independent member of the Audit Committee for one additional year (until the General Meeting of April 2022). From the General Meeting of 2022 until the end of his mandate (2025) Albrecht De Graeve will remain non-independent member of the Board and will no longer be member of the Audit Committee. In the context of the overall succession plan, the Board is of the opinion that, given his key role as Chair of the Audit Committee since 2015, it is important to keep Albrecht De Graeve as an independent member of the Board and of the Audit Committee for an additional year to ensure a smooth transition and succession in a year of critical changes in the governance of the Company: change of the Chair and Vice Chair of the Board (respectively Stefan Oschmann and Fiona du Monceau), of the Chair of the Audit Committee (Jonathan Peacock) and of the GNCC (Fiona du Monceau) as well as a change of the external statutory auditor (the change of external auditor process started in 2018 and is conducted under the supervision of the Audit Committee - see below for further details). Ensuring continuity in the Audit Committee with the presence of Albrecht De Graeve in such a year of transition is therefore considered essential. Beyond 2022, Albrecht De Graeve will continue to bring his experience and valuable contribution to the Board as non-independent/non-executive Member.

  • The renewal of the mandate of Mrs. Viviane Monges as independent member of the Board for a term of 4 years (expiring at the General Meeting of 2025). Viviane Monges meets all criteria of the 2020 Code and the Board to qualify as independent Director. If her mandate is renewed by the AGM 2021, Viviane Monges will remain independent member of the Audit Committee.

Upon confirmation of the above renewals by the General Meeting of April 29, 2021, and in accordance with the Charter, the Board will continue to be composed of a majority of independent non-executive Directors. All special Board Committees will also continue to be composed of a majority of independent Directors (Audit Committee : Jonathan Peacock (Chair & independent), Albrecht De Graeve (independent until AGM 2022), Viviane Monges (independent) and Charles-Antoine Janssen (non- independent); GNCC: Fiona du Monceau (Chair and non-independent), Stefan Oschmann (independent), Pierre Gurdjian (independent) and Kay Davies (independent); Scientific Committee: Kay Davies (Chair & independent) and Susan Gasser (independent)). Jean-Christophe Tellier is the only executive Director (CEO) in the Board.

Considering the departure of Evelyn du Monceau, Alice Dautry and Roch Doliveux, and if all above mentioned mandates are approved by the AGM 2021, the total number of Board members will increase from 13 to 14 members, which is within the maximum limit currently set forth in the UCB Charter. This increase is to ensure a smooth transition, continuity and succession planning in years of important changes in the Board composition. Out of the 14 members, 9 members will be independent (and 8, as of April 2022).

In 2020, the Board of Directors of UCB was composed of 5 women out of a total of 13 members, exceeding the minimum required by article 7:86 of the BCCA.

Following the proposed above changes in the Board composition, and if approved by the AGM 2021, the Board will be composed of 5 women out of 14 members (35%), which remains in compliance with the gender diversity requirement of Article 7:86 BCCA.8

Functioning of the Board

In 2020, the Board met six times for its regular meetings, including for its annual strategic meeting (October). Because of the COVID-19 pandemic, and except for its meeting of February 2020, all meetings were held by videoconference, which is allowed by Belgian law and the articles of association of the Company. The attendance rate of its members for its regular meetings was as follows:

 

Attendance rate

Evelyn du Monceau, Chair

100%

Pierre L. Gurdjian, Vice Chair

100%

Jean-Christophe Tellier, Executive Director

100%

Jan Berger

100%

Alice Dautry

100%

Kay Davies

100%

Albrecht De Graeve

100%

Roch Doliveux

100%

Charles-Antoine Janssen

100%

Cyril Janssen

100%

Viviane Monges

100%

Cédric van Rijckevorsel

100%

Ulf Wiinberg

100%

On top of its regular meetings, the Board also met several times via shorter ad hoc videoconferences to decide on specific projects or matters (in early April to assess the impact of the COVID-19 pandemic, in May to approve the acquisition of Engage Therapeutics and in September to approve the acquisition of a new site for its operations in the U.K.).

Throughout the year, and to ensure a continuous engagement of the Board on the implementation of the strategy in the particular context of the COVID-19 pandemic as well as to prepare their strategic Board session of October, the Board had several informal sessions on specific themes or matters such as the digital transformation, the evolution of the environment in the U.S. and the launch preparedness for its late-stage pipeline. It also used the written procedure at one occasion (to decide on the conditions and exceptional format of the AGM 2020 in light of the physical meeting ban decided by the Belgian Government to fight against the COVID-19 pandemic. During the COVID-19 pandemic, the Board was also informed of the situation on a global and weekly basis (through a dedicated reporting process). During 2020, the Board’s main areas of discussion, review and decisions included:

  • The strategy of UCB and the overall supervision of its implementation by the Management, including ESG matters and the integration of sustainability into the overall ambition and activities of the Company, the long-term innovation strategy, and manufacturing capabilities.

  • The performance of the Company and the monitoring of the impact of the COVID-19 pandemic on the performance and the overall business and activities of the Company.

  • The progress on initiatives of the Company, as part of its commitments to sustainability, and its societal contribution in the context of the COVID-19 pandemic.

  • The strategic M&A (including the closing of the acquisition of Ra Pharmaceuticals, the acquisition of Engage Therapeutics, the partnership with Roche in Alzheimer’s disease, the acquisition of Handl in Gene therapy).

  • Board succession planning.

  • IT and cybersecurity.

  • Digital business transformation and evolution of Go-to-Market model.

  • Launch preparedness for the late-stage pipeline products.

  • Resource & cash allocation and budget.

  • Through its GNCC, the implementation of the Shareholders Right Directive II, the 2020 Code and the BCCA, with a focus on the Remuneration Report and Remuneration Policy.

  • Enterprise Risk Management.

UCB’s sustainability strategy is embedded in the overall strategy of UCB as defined by the Board, upon proposal of the Executive Committee. The Head of Sustainability directly reports to the CEO. In terms of governance, the company has established a Sustainability Governance Committee at Management level as well as an external Sustainability Advisory Board, composed of a diversity of external international experts in sustainability who can inspire, challenge and advise on the sustainability dimension of UCB’s strategy and results and provide an outside in perspective. Board members have access to the meetings of External Sustainability Advisory Board. The external members of this advisory board are currently Mr. Elhadj As Sy (President Kofi Annan Foundation), Ms. Sandrine Dixson-Declève (Co-President Club of Rome), Ms. Charlotte Ersbøll (Trustee Forum for the Future), Ms Teresa Fogelberg (Former GRI deputy Chief Executive), Ms. Hannah Jones (President Nike Valiant Labs), and Mr Bright Simons (Founder and President mPedigree).

The general oversight of the IT strategy as well as cybersecurity is part of the Board’s mission. Every year, the Board and its Audit Committee in particular have specific sessions dedicated to IT and cybersecurity strategies and operations. Digital transformation and strategy are also fully embedded in the overall strategy of UCB as defined by the Board, upon proposal of the Executive Committee.

There were no transactions or contractual relationships in 2020 between UCB, including its affiliated companies, and a member of the Board, giving rise to conflicts of interest, except as reported in section 3.12 .

There has been no specific Board induction program this year since there was no new director appointed in 2020. As mentioned above, Management continued to engage with the Board throughout the year to answer questions or ensure proper follow up and understanding of UCB’s business and environment.

Since 2014 and twice a year (June and December Board meetings), the Board also holds a special session where the executive member (the CEO) is not present.

Assessment of the Board

In accordance with its Charter (section 3.5), the Board is to conduct an (internal) assessment on a regular basis and at least every other year. The last assessment was carried out in 2019 by an external consultant and was reported in the Integrated Annual Report 2019.

Honorary directors

The Board has nominated following directors as honorary directors:

  • Karel Boone, Honorary Chair

  • Mark Eyskens, Honorary Chair

  • Georges Jacobs de Hagen, Honorary Chair

  • Daniel Janssen, Honorary Deputy Chair

  • Gerhard Mayr, Honorary Chair

  • Prince Lorenz of Belgium

  • Alan Blinken

  • Arnoud de Pret

  • Peter Fellner

  • Guy Keutgen

  • Jean-Pierre Kinet

  • Tom McKillop

  • Gaëtan van de Werve

  • Jean-Louis Vanherweghem

  • Bridget van Rijckevorsel

  • Norman J. Ornstein

The Board has also nominated Alice Dautry as Honorary Director of UCB with effect as of January 1, 2021.

3.4.2 Board committees

Audit Committee

The Board has set up an Audit Committee whose functioning and terms of reference are in accordance with the BCCA, the 2020 Code and the Charter. It is composed of a majority of independent Directors, all non-executive Directors, and is chaired by Albrecht De Graeve, also an independent Director. All members have the competencies in audit and accounting matters as required by article 7:99 of the BCCA.

 

End of term of office

Independent Director

Attendance rate

Albrecht De Graeve, Chair

2021

X

100%

Charles-Antoine Janssen

2024

 

100%

Viviane Monges

2021

X

100%

Ulf Wiinberg

2024

X

75%

The Audit Committee met four times in 2020. Each Audit Committee meeting includes separate private sessions attended solely by the internal and external auditors respectively without management presence. As necessary, the external auditors attended all or part of each Audit Committee meeting. Because of the COVID-19 pandemic, the meetings of the Audit Committee took place by videoconference, except for the meeting of February that was in-person.

The Audit Committee meetings were also attended by Detlef Thielgen (former EVP - Chief Financial Officer & Corporate Development), Sandrine Dufour (as of July 2020) (EVP - Chief Financial Officer & Corporate Development), Doug Gingerella (Global Internal Audit) and Xavier Michel (Group Secretary General), who acts as secretary of the Audit Committee.

The meetings were also partly attended on a regular basis by Jean-Christophe Tellier (CEO), Evelyn du Monceau (Chair of the Board) and other members of the management or staff depending on the topic (accounting, tax, risk, pensions, quality, IT, etc.).

In 2020, and in accordance with its terms of reference (see the Charter available on UCB website ), the Audit Committee monitored the financial reporting process (including the financial statements); internal control and risk management systems of UCB and their effectiveness; the internal audit and its effectiveness; the Audit Plan and resulting achievements; the statutory audit of the annual and consolidated accounts; the review and monitoring of Pensions schemes and liability; the independence of the external auditor including the provision of additional services to UCB, which the Audit Committee reviewed and for which it authorized the fees. The Audit Committee also focused on the mandatory rotation of the external auditor and the supervision of the procedure for the appointment of a new external auditor by the AGM 2021. It also closely monitored cybersecurity and IT controls. Risks related to the COVID-19 pandemic and the potential impact on UCB activities and financials was also part of the agenda of the Committee in 2020.

Governance, Nomination and Compensation Committee

The Board has set up a Governance, Nomination and Compensation Committee (the “GNCC”), whose composition, functioning and terms of reference are in accordance with the BCCA, the 2020 Code and the Charter. The composition of the GNCC is currently as follows:

 

End of term of office

Independent director

Attendance rate

Evelyn du Monceau, Chair

2023

 

100%

Kay Davies

2022

X

100%

Pierre L. Gurdjian

2024

X

100%

The GNCC met five times in 2020. The committee was attended by Jean-Christophe Tellier (CEO), except when discussing issues relating to him, and by Jean-Luc Fleurial (EVP & Chief Human Resources Officer), who has been acting as secretary of the GNCC, except when discussing issues relating to him and to the CEO compensation. Because of the COVID-19 pandemic, the meetings of the GNCC were organized by videoconference, except for the meeting of February that was in-person.

In 2020, and in accordance with its terms of reference (see the Charter available on UCB website ), the GNCC reviewed and made recommendations with respect to the appointments to be submitted to Board approval (Executive management as well as senior management positions), the performance of the Executive Committee members and their remuneration. It also proposed and reviewed the succession planning and new appointments of the members of the Board, the Executive Committee and senior executives. There was a focus this year on the succession of the Chair and the Vice Chair as well as a change of the Chair of the Audit Committee. It reviewed and made relevant proposals or recommendations to the Board with respect to the future composition of the Board and of its committees, to be effective as of approval by the General Meeting of April 29, 2021 (see above for the proposed resolution). It is to be noted that with respect to the succession of the Chair and upon recommendation of the GNCC, the Board appointed a special (enlarged) committee with the sole mission of conducting and supervising the process related to the succession of the Chair, in order to secure a process that would be more inclusive and representative of the various views within the Board. This ad-hoc committee was composed of six people including three members who were not representatives of the Reference Shareholder (Albrecht De Graeve, Roch Doliveux and Kay Davies) and three members who were representatives of the Reference shareholder (Charles-Antoine Janssen, Cyril Janssen and Evelyn du Monceau).

The GNCC had a particular attention throughout the year on the UCB response to the COVID-19 pandemic, including UCB's contribution to society, communities, patients, and employees.

The GNCC also focused on the implementation of the Shareholders Right Directive II, the new BCCA and the 2020 Code, especially in relation to remuneration related matters (remuneration policy and Remuneration report).

It reviewed and submitted to Board approval the remuneration policy, the long-term incentives to be granted to the management (including the CEO) and the performance criteria to which these grants were linked.

The GNCC has also been closely following up on corporate governance matters.

A majority of the members of the GNCC is independent and meets the independence criteria stipulated by the 2020 Code and the Board. All members have the competencies and the expertise in matters of remuneration policies as required by article 7:100, §2 BCCA.

Scientific Committee

The Scientific Committee assists the Board in its review of the quality of UCB’s R&D science and its competitive standing. The Scientific Committee is composed of members who have scientific and medical expertise and who are currently (and will continue to be) all independent.

 

End of term of office

Independent director

Attendance rate

Kay Davies, Chair

2022

X

100%

Alice Dautry*

2023

X

100%

* resigned per December 31, 2020

They meet regularly with Dhaval Patel, EVP & Chief Scientific Officer. The members of the Scientific Committee are also closely involved in the activities of UCB’s Scientific Advisory Board (SAB) composed of external leading scientific medical experts (usually 3 meetings per year). The SAB, composed of ad hoc experts, will provide scientific appraisal and strategic input as to the best way for UCB to become a more robust and thriving biopharmaceutical leader and to advise the Executive Committee on the strategic choices related to early-stage R&D. The Scientific Committee’s main task is to report to the Board on the SAB’s appraisal of UCB’s research activities and strategic orientations.

In the course of 2020, SAB meetings continued in the virtual mode due to the COVID-19 pandemic and the key opinion leaders remained very engaged in the discussions and reviews. The members of the Scientific Committee participated in a full “in-person” portfolio overview meeting that was held in January 2020. Throughout the year, the members of the Scientific Committee continued to meet regularly with Dhaval Patel, UCB’s Chief Science Officer, to maintain a continuous engagement and dialogue on the science and early pipeline. There has been also a close look and focus on the strategy in Gene Therapy.