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3. Corporate Governance Statement

3.7 Remuneration Report

3.7 Remuneration Report

At UCB, we have a fundamental commitment to enabling people living with severe diseases, their caregivers, and their families to live their best lives. We work in a way that is sustainable for the patients who need our solutions, for our employees, and for wider society, including local communities, our shareholders, and the planet. We continuously need to innovate to bring differentiated solutions with unique outcomes, which help specific patients achieve their life goals and create the best individual experience for them. This also means ensuring access for all who need these solutions, in a way which is viable for patients, society, and UCB.

Our reward offering is designed to attract, develop, and retain talented people who can support us in navigating in an increasingly complex, dynamic, and global healthcare environment. Our priority is to reflect, in our rewards, the strong cultural foundation shared by all our colleagues, to help drive the value that we aim to create for our stakeholders while fostering a working environment where our people can thrive by being happy, healthy and safe.

In this report we will look back at 2020 and reflect on how our performance, including our progress on sustainability, impacted executive remuneration, considering also the context of last year's exceptional events.

2020 performance highlights

In 2020, UCB made further progress towards achieving our 2025 goal to be the leader in specific patient populations, by focusing on our core strategic imperatives: keeping patients and innovation at the core of our activities; remaining connected to the world and generating value for society; and leveraging our leadership and capabilities. 

Despite the challenges created by the ongoing COVID-19 pandemic, UCB continues to grow in a sustainable way. We achieved a strong financial performance in 2020, while investing in research and development and making progress on our commitments to society. Some of our key achievements in the past year include:

  • Sustained financial performance with revenue in 2020 reaching € 5.3 billion, up by 9% (+8% at constant exchange rates (CER)) as compared to the previous year. Net sales increased to € 5.1 billion by 8% (+7% CER ).

    • This solid growth, mainly driven by the enduring growth of UCB’s core products, exceeded both the financial expectations set by UCB in February 2020 as well as internally defined targets, especially when considering the challenging context faced.

    • Adjusted EBITDA by comparison did not grow at the same year on year rate as revenue (+1%; -4% CER), since there were higher research and development expenses due to pipeline additions and pipeline progression, and higher marketing and selling costs due to launches and pre-launch activities, as anticipated and in line with company guidance. Part of these costs were offset by positive other operating earnings, for instance from Evenity partnering, and overall internal targets were exceeded.

    • While profit decreased to € 761 million from € 817 million (-7%; -14% CER) this was mainly due to acquisition fees. Adjusting for these items, as reflected in the core EPS calculation, the company exceeded guidance as well as internal targets.

  • Completing the acquisition of Ra Pharmaceuticals, Inc., thus enhancing our leadership in improving treatment options for people living with myasthenia gravis and other rare diseases.

  • Acquiring Engage Therapeutics, Inc. a clinical-stage pharmaceutical company developing Staccato® Alprazolam for the rapid termination of epileptic seizures.

  • Acquiring Handl Therapeutics BV, a rapidly growing and transformative gene therapy company based in Leuven, Belgium and beginning a new collaboration with Lacerta Therapeutics, a U.S.-based clinical stage gene therapy company, to accelerate UCB’s ambitions in gene therapy.

  • Further reinforcing sustainability as our business approach, by focusing on four priority areas to improve societal health overall through scientific innovation, access to medicines, employees’ health, safety and wellbeing, and protecting the health of the planet while strengthening two foundational topics (embedding diversity, equity, and inclusion across our business, and adhering to the ethical principles of transparency, respect, and integrity) alongside. This also encompassed the creation of a new sustainability governance framework.

  • Accelerating our digital business transformation across the company, in order to amplify the power of scientific innovation and ensure patients can live the lives they want

Our pay decisions for the CEO and the Executive Committee considered the following factors:

  • The company’s performance against both short- and long-term goals.

  • The team’s individual and collective contribution.

  • External market forces.

  • Our reward philosophy, as applied to the wider workforce.

We have engaged with several of our institutional investors and with proxy advisors to understand their specific priorities and to solicit their feedback on planned policy changes. While both our remuneration report (86.78% votes in favor) and policy (93.96% votes in favor) passed with a majority vote, we have incorporated feedback from these discussions into our 2021 remuneration policy and into this report. The proposed changes are summarized in the “remuneration policy as of 2021” section below.

2020 remuneration outcomes

All 2020 related remuneration decisions were taken in accordance with our approved remuneration policy. The key recommendations made to the UCB Board by the Governance, Nomination and Compensation Committee (GNCC) were the following:

  • Annual bonus outcomes were determined in reference to performance against objectives and the GNCC’s assessment of the CEO and Executive Committee members’ levels of performance. This has resulted in a bonus payment above target. For the CEO specifically, the overall payout was also above target (see below for more details). The GNCC and Board believe that these bonus outcomes appropriately reflect the overall 2020 performance.

  • Vesting of the performance share plan was based on achieving several pre-determined measures: R&D pipeline milestones; cashflow conversion rate; relative revenue growth over the three years; and level of employee engagement. This resulted in an overall vesting level of 111% against a maximum potential payout of 150% of target. In addition, Stock Options and Stock Awards vested as detailed below.

When the GNCC recommended salary, bonus and LTI outcomes to the Board, following a full assessment of performance across all relevant measures, it did not derogate from the 2020 remuneration policy in its determination.

The remuneration policy for UCB’s Executive Committee Members and Non-Executive Directors was reviewed and validated by the GNCC on February 18, 2020 and approved by the Board of Directors on February 19, 2020. The policy was adopted during the General Meeting of Shareholders on April 30, 2020 and became effective as of January 1, 2020.

Remuneration policy as of 2021

As part of our sustainability commitment to adhering to ethical principles of transparency, respect, and integrity we are increasing the overall level of disclosure around our goals and KPIs in relation to variable pay, in both our remuneration report and our 2021 remuneration policy. While we need to balance any sensitive, competitive information, we see this as an opportunity to better showcase our strategic focus areas and to help our stakeholders better understand how our remuneration policy reflects and contributes to the company strategy.

As part of this increased level of disclosure, we are also sharing our compensation comparator group, to provide additional context for our overall pay evolution.

Furthermore, we are currently in the process of introducing shareholding guidelines for our CEO and Executive Committee members, to align more closely with evolving governance requirements and to formally reinforce existing practices.

Finally, we are also introducing clawback provisions for our CEO and Executive Committee to meet  increasing legislative requirements and demonstrate the importance we attribute to the integrity of our financial statements and executive incentives. ​

A change in the annual fee for the Chair of the Board is proposed to the General Meeting of shareholders of 29 April 2021, which would increase these fees from € 240 000 to € 330 000. This fee will include any participation on Board committees.

The proposed increased remuneration corresponds to a level closer to the (regressed) median level of our European Biopharma reference UCB peer group, as disclosed in the 2020 Remuneration Report .

A revised remuneration policy including such changes will be submitted for approval to the General Meeting of Shareholders of April 29, 2021.

Remuneration in 2020

1. Executive Committee total remuneration

The total remuneration package of the Executive Committee members consists of the following elements that will be further outlined below:

From the total remuneration, there is a strong focus on total direct compensation (base salary plus bonus and long-term incentives). The total direct compensation mix at target has a higher weight on variable elements.

The pay for performance impact can be illustrated as follows for the CEO and is described in more detail below:

2. Peer group and competitive positioning

UCB refers primarily to a European peer group for comparing pay policy and decisions (see below). A separate U.S. peer group is maintained to ensure a good understanding of this specific market, given the international character of our Executive Committee, but is not the reference for our pay policy, for instance when setting bonus and LTI target levels.

Both groups include international biopharmaceutical (pharmaceutical and/or biotechnology) companies with whom UCB competes for talent. These companies vary in size and therapeutic area.

We prioritize fully-integrated biopharmaceuticals peer companies operating in a complex research-driven environment and which have both development and commercialization capabilities. Where possible we aim to include companies competing in the same therapeutic areas.

While we do target companies that broadly reflect UCB’s size, company size is not the primary factor, given the limited nature of this group. Regression analysis is therefore used, where relevant, to adjust the market data to UCB’s size. The composition of our compensation peer group is regularly monitored and adjusted as needed, for instance when industry consolidation leads to less robust benchmarking.

UCB’s competitive positioning policy is to target median pay levels of this comparator group for all elements of Total Direct Compensation (base salary + variable remuneration). The bonus and LTI target levels are benchmarked against European biopharma levels. The actual compensation for each individual is determined based on their experience in relation to the benchmark, as well as their impact on company performance.

European Peer Group

Almirall

Leo Pharma A/S

AstraZeneca PLC

Merck KGaA

Bayer AG

Novartis AG

Chiesi Farmaceutici S.p.A.

Novo Nordisk A/S

GlaxoSmithKline PLC

Recordati S.p.A.

H. Lundbeck A/S

Roche Holding AG

Ipsen SA

Sanofi SA

3. Executive Committee remuneration elements

Pay Element - Fixed Remuneration

Pay Element – Fixed Remuneration

Description

Base Salary

Base Salary is defined in relation to the specific job dimensions and the median level of base salary in the market for similar roles. The individual’s impact on the business and their level of skill and experience is also taken into consideration.

Fees

Any director fees for executive directors are paid on top of the remuneration received as an Executive. This is only applicable to the CEO.

The director fees have not changed since 2019 but were previously reported separately in the Director fee section of our Remuneration Report and not with CEO total remuneration. 

Other Benefits

Executive Committee Members receive benefits in line with UCB’s remuneration policy, including participation in a healthcare plan, executive life insurance, and executive perquisites such as a company car. Executive Committee members  can also receive additional in-kind benefits in line with our standard Global Mobility  policies. These amounts can vary from year to year but are reported here due to their recurring nature. 

Pay Element – Variable Remuneration

Pay Element – Variable Remuneration

Description

Bonus

The bonus target is subject to a double performance multiplier which rewards the achievement of  corporate and individual objectives.

The target bonus was set at 90% of base salary for the CEO and 65% for the other Executive Committee members. The overall bonus opportunity is capped at 175% of the target for the CEO and the Executive Committee.

Corporate Objectives

To encourage focus on revenue growth but also on underlying profitability, UCB considers annual Adjusted Earnings Before Interest Tax Depreciation and Amortization (“ Adj. EBITDA”) as a shared short-term corporate performance metric, for the CEO and Executive Committee, as well as the wider workforce, under the corporate bonus plan. This target is defined company-wide and is translated into a payout curve which ensures that only an acceptable range of performance is rewarded. The philosophy is that Adj. EBITDA, as a proxy for UCB’s underlying profitability, ensures that the overall bonus plan is self-funding, rewarding collective efforts across the organization. For performance between the defined payout levels shown, linear interpolation is used to determine the payout:

Adj. EBITDA vs target

Payout vs target

<85%

0%

85%

30%

93%

90%

100%

100%

106%

110%

113%

150%

Individual Objectives

Individual objectives are defined according to the extent to which annual objectives have been met, as well as the behaviors demonstrated by the individual in relation to UCB’s Patient Value principles.

The CEO’s individual objectives mainly represent the overall company objectives, covering both financial and extra-financial priorities. The CEO’s individual objectives can be summarized under the following categories, representing the value UCB aims to create for all stakeholders. No specific weighting is defined per category as we believe that performance needs to be measured in a holistic and qualitative way, considering short-term impact and overall long-term company sustainability. The GNCC and Board consider all relevant elements to arrive at the individual performance multiplier:

Performance measure

Value Creation

Financial priorities

Sustainability is our business approach. Our financial health is key to our overall sustainability and ability to continue to create value for patients, our employees, and society more widely, now and into the future. We are strongly focused on delivering on the following financial targets:

  • Revenue

  • Profitability-related priorities

  • Net Sales across our product portfolio

  • Cashflow generation

Extra-financial priorities

Value for patients – building a pipeline of differentiated solutions and improving patient access to these solutions

Value for our people – fostering a working environment where our people can thrive by being happy, healthy and safe

Value for the planet - transitioning UCB towards a low carbon and green economy

Other – priorities that span several of the above such as societal value or other company strategic goals and personal development goals.

Other Executive Committee members’ goals are derived from the same goals and according to their specific area of impact. UCB is currently embedding its sustainability goals within the objectives of the entire Executive Committee. As we gain experience with these goals and KPIs, our aim is to integrate these into our corporate  objectives  to illustrate our collective commitment.   

Long-Term incentives

The LTI program is a two-tiered incentive program which includes:

A stock option plan representing (30%) of the LTI grant and a performance share plan for (70%).

Target LTI levels represented 140% of base pay for the CEO and 80% for the other Executive Committee Members.

The actual LTI grant size is adjusted from year to year, bearing in mind individual past performance as a proxy for future impact and value creation, as well as other factors such as market premiums observed for certain roles. The LTI grant value is translated into a number of long-term incentives considering the binomial value of each award. The actual grant can represent up to 150% of the target (i.e. up to 210% of the current base salary for the CEO and 120% of base salary for the other Executive Committee members) at the moment of the award determination.

Stock Options

Our option plan has a minimum vesting period of three years. As from the moment of vesting the beneficiary can exercise the option until 10 years from the date of grant.

The evolution of the share price determines the realizable value of the long-term incentive plan.

UCB does not facilitate entering into derivate contracts related to Stock Option, nor do we hedge the attached risk, as this is not consistent with the purpose of the Stock Options.

For incumbents based in Belgium, options granted in April 2020 cannot be exercised before 1 January 2024, nor can they be exercised later than 31 March 2030. For incumbents based in other countries, options granted in April 2020 cannot be exercised before 1 April 2023, nor can they be exercised later than 31 March 2030.

Performance shares

Performance shares are subject to a three year vesting period and vest upon condition of meeting pre-determined company targets.

The level of 2020 grant was based on our performance against two performance criteria: Adjusted Cumulative Operating Cashflow and Compounded Revenue Growth, both weighted at 50%. These criteria ensure a strong focus on growth
and sustainability, so that we can continue to invest in innovative solutions for patients.

The number of shares awarded is adjusted at the end of the performance period based on the company’s performance against the targets defined at the time of grant. If actual company performance is below a specified threshold or the beneficiary leaves prior to the vesting date, no shares are awarded. The maximum vesting level is 150% of the original grant if results significantly exceed the targets.

Pay Element – Extraordinary Items & Pension

Pay Element

Description

Extraordinary items

Any non-recurring remuneration for 2020, such as sign-on awards or termination pay, are reported further in the present remuneration report and elaborated in our remuneration policy

For instance, the company may decide to award a sign-on award, via cash or shares, to new Executive Committee members. This is not an automatic practice and considers various factors such as losses that the individual would otherwise incur in leaving another employer or other negative cashflow effects. Any sign-on awards are deliberated and approved by the GNCC.

Pension

The CEO participates in a cash balance retirement benefit plan which is fully funded by UCB and in the UCB Executive supplementary defined contribution plan. The other Executive Committee members each participate in the pension plans available in their country of contract; those incumbents based in Belgium participate in the same plans as the CEO.

4. Other policy provisions

Clawback and malus provisions

Given the uncertainties around the validity and interest of claw- back clauses under Belgian law, UCB did not operate clawback provisions in its variable pay programs for 2020.

Please refer to the introduction of this remuneration report for the changes to the 2021 remuneration policy with regards to clawback and malus provisions.

Shareholding guidelines

Given that the mix of LTI consists of performance shares that only vest upon meeting stretch performance goals, and stock options, which are by design long-term vehicles, UCB did not require the CEO or the Executive Committee members to hold a minimum threshold of shares in 2020. The weight of LTI in our overall pay mix results in our Executive Committee members having a meaningful stake in unvested (and vested) LTI at any moment.

Please refer to the introduction of this remuneration report for the changes to the 2021 remuneration policy with regards to shareholding guidelines.

Termination arrangements

Given the international character of our Executive Committee as well as the dispersal of our various activities across different geographies our members have agreements governed by different legal jurisdictions.

  • A Belgian service contract was established during 2014 for Jean-Christophe Tellier and maintains similar termination conditions to those in place under his previous U.S. employment agreement, comprising a lump sum equal to 18 months base compensation plus the average of the actual bonuses paid for the three previous years if the contract is terminated by the company or if there is a change of control of UCB.

  • Several Executive Committee agreements (Emmanuel Caeymaex, Iris Löw-Friedrich and Detlef Thielgen) were signed before the entry into force of the Belgian Corporate Governance law of 6 April 2010 which limits the level of termination indemnities.

  • Emmanuel Caeymaex has no specific termination provisions in his Belgian contract. In case of involuntary termination, lo- cal employment law and practices apply. The same applied to Detlef Thielgen who left the organization in 2020 and who was subject to statutory provisions, described below.

  • Jean-Luc Fleurial, Sandrine Dufour, Dhaval Patel, and Charl van Zyl have Belgian employment contracts including a termination clause which entitles them to a severance payment of 12 months base salary and bonus if the contract is terminated by the company or of there is a change of control of UCB. The same applied to Pascale Richetta who left the organization in 2020.

  • Iris Löw-Friedrich has a German employment agreement which provides a six months’ notice period and a termination indemnity equal to one-year base salary and bonus. The same conditions applied to Alexander Moscho who left the organization in 2020.

  • Kirsten Lund-Jurgensen and Bill Silbey hold a U.S. employment agreement, and each has a termination clause which provides for a severance payment of 12 months base salary and bonus if the contract is terminated by the company or if there would be a change in control in UCB.

5. Non-Executive Directors

The level of pay for the Board of Directors is regularly assessed against both European peer companies as well as companies listed on Euronext Brussels benchmark stock market index (BEL 20). Peer company data constitutes the primary reference, given our need to attract experts with a deep knowledge of our industry. The median levels of this peer group are the target.

Per the policy terms, Non-Executive Directors are entitled to the following fees:

 

Board

Committee annual fees

Other

 

Annual Fees

Attendance Fees

Audit

Scientific

GNCC

Travel

Chair

€ 240 000

-

€ 33 500

€ 33 500

€ 22 500

 

Vice-Chair

€ 120 000

€ 1 500

    

Directors

€ 80 000

€ 1 000

€ 22 500

€ 22 500

€ 17 000

 

Special Travel Allowance

     

€ 7 500

In accordance with the policy, Non-Executive Board members do not receive variable or equity-related remuneration, based on the position that shareholding could create a conflict of interest for long-term mandates, nor are they entitled to receive benefits. Board members residing in a country where the time zone difference with Belgium is five hours or more receive a special travel allowance.

2020 Remuneration Outcomes for the CEO and the Executive Committee Members

1. Total Remuneration summary

Following new reporting standards, below provides an overview of the total remuneration of our CEO and Executive Committee members:  

Incumbent Name

1 - Fixed Remuneration

2 - Variable Remuneration

3 - Extraordinary Items

4 - Pension Expense

5 - Total Remuneration

Proportion of Fixed and Variable Remuneration

Base Pay

Fees

Other Benefits

One-Year Variable (Bonus)

Multi-Year Variable (LTI)

Fixed

Variable

(1 + 4) / (5 – 3)

2 / (5 -3)

Jean-Christophe Tellier – CEO

€ 1 137 683

€ 86 000

€ 1 370 958

€ 1 508 485

€ 2 358 199

-

€ 371 422

€ 6 832 747

44%

57%

Other Members of the Executive Committee 

€ 4 528 443

-

€ 2 873 879

€ 3 075 441

€ 4 50 1278

€ 8 664 548

€ 2 267 983

€ 25 911 572

56%

44%

As a comparison to the 2019 Remuneration Report, the CEO’s total direct compensation (base salary + bonus + LTI) for 2020 amounts to € 5 004 367  (excluding pension contributions and other benefits), compared to € 4 739 275  in 2019.  The aggregated Executive Committee compensation (base salary + bonus + LTI) for 2020 amounts to: € 12 105 162  (excluding pension contributions and other benefits), compared to € 19 566 387 in 2019.

A. Fixed Remuneration

Base Salary

The table below show the 2020 base salary levels of the CEO and the Executive Committee:

Incumbent Name

2020

Jean-Christophe Tellier - CEO

€1 137 683

Other Members of the Executive Committee

€4 528 443

The CEO’s salary evolved by 3% according to observed market movements and in line with the overall salary movements of the broader workforce. 

Fees

The Chief Executive Officer is also entitled to director fees as Board member of UCB SA. For 2020, these fees amounted to € 86 000 (€ 80 000 in annual fees and € 6 000 in presence fees).

The director fees have not changed since 2019 but were reported separately in the Director fee section of our Remuneration Report and not with CEO total remuneration. 

Other Benefits

Insurances, as well as benefits due in line with our standard Global Mobility policies and our remuneration policy, are included in “other benefits”.  

The impact of the COVID-19 pandemic resulted in UCB incurring exceptional costs in 2020, linked to our standard Global Mobility policies. While these costs did not result in additional net pay, they did represent an exceptional cost to the company and are therefore reported as a benefit in-kind.

For the CEO these other benefits represented an amount of € 1 370 958, while for other Executive Committee members this amounted to a total aggregate amount of € 2 873 879.

B. Variable Remuneration

Bonus (“One-Year Variable”) 2020 performance against targets

The achievement of performance targets was measured during the period that started on 1 January 2020 and ended on 31 December 2020. In line with the remuneration policy, corporate objectives are defined by the percentage of actual Adj. EBITDA versus the budget, at constant exchange rates. As the target set for 2020 was exceeded, the Company Performance Multiplier is above target.

The payout level for the individual objectives for the CEO were proposed to the Board by the GNCC based on the performance assessment at the end of the cycle as summarized below in the key priority areas for 2020. The outcome for 2020 is as follows:

CEO Bonus

Target

Actual

Actual

% of Base Salary

% of Base Salary

Amount

Jean-Christophe Tellier

90%

133%

€ 1 508 485

Performance measure

2020 CEO performance against key priority areas

Financial priorities

UCB continued to grow in a sustainable way, achieving a strong financial performance, mainly above our guidance as well as internally defined targets, while investing heavily in innovation and R&D.                                                                   

Despite the challenges created by the ongoing COVID-19 pandemic we were largely able to continue our product supply and deliver our solutions to the patients that need them.

Thanks to significant improvements in agile, fact-based resource reallocation across the organization, we were able to strengthen our resilience.

Our revenue, product net sales, adjusted EBITDA, net profit and cash conversion rate results generally exceeded internally defined targets (refer to introduction to remuneration report for more detail).

Value for patients

Enrich pipeline by bringing new assets into existing and new populations

  • Ra Pharma successfully integrated expanding our ability to help people living with myasthenia gravis and other rare diseases

  • Early pipeline was strengthened through delivery of several new candidates from research and several early stage assets progressed towards POC, supporting sustained long-term growth.

Increase our ability to demonstrate differentiation

  • Successfully completed all phase III psoriasis milestones and demonstrated superiority against standard of care comparators with bimekizumab

Increase sustainable patient value through affordable access and a focus on unmet patient needs.

  • Strong increases in patient net promoter score, on target increases in number of patients served and moderate increases in patient access in the EU

  • Enhanced patient assistance programs in the U.S. by expanding our level of support

  • Incorporated affordability as an essential element of all pricing and contracting strategies to reach more patients

  • Increased capabilities and readiness to deploy value-based agreements

  • Several label extensions approved for instance, Vimpat approval for extended pediatric use in the EU and the U.S.

Progress key assets in terms of quality, sustainability and timeliness

  • Digital business transformation milestones progressed as planned or ahead of schedule. This has enabled innovation in clinical development, accelerating cycles while improving the patient experience.

  • In Europe, APAC and the U.S., progress was made with efficient, multi-channel commercialization as the demand for virtual, digital channels increased during a time when access to customers has been restricted.

Expand into new patient populations leveraging new scientific technologies

  • Acquisitions of Handl Therapeutics and Lacerta Therapeutics have further reinforced our gene therapy capabilities.

  • Several transformational projects which are now embedded in the corporate strategy, building our digital health innovation capabilities

Bring Evenity© to patients in Europe

  • Progressed well in all geographies. Despite some setbacks in Europe due to the effects of COVID-19, in the second half of 2020 Evenity became profitable for UCB, enabling further investments in patient value activities.

Value for our people

Further develop our strategic capabilities, our people leadership competency and increase team dynamics

  • Accelerated our strategic capabilities including for instance, patient-value focused launch preparation, agile organization, digital & data literacy, dermatology and patient experience

  • Leadership development program revamped and successfully launched

Further progress on our Diversity, Equity and Inclusion ambitions to increase our impact

  • Developed a clear and actionable diversity ambition, progressed on our inclusive mindset learning curriculum and developed a baseline methodology for measuring pay equity.

Maintain a high level of engagement while building new capabilities and reinforcing our talent pool

  • UCB Voices, our company wide engagement survey, carried out at the peak of COVID-19 crisis, showed a highly engaged workforce that is proud to work for UCB. The level of sustainable engagement at UCB, as compared to benchmarks, is comparable to the highest performing companies covered by the survey (run by an independent, leading global survey provider).

  • We have been able to attract new talents over 2020 in preparation of our upcoming priorities, welcoming a record number of new employees (>1300), despite challenges faced by COVID-19.

Progress on our health, safety and wellbeing goals

  • Reduced number of people getting injured whilst working (while met, this was difficult to compare in context of COVID-19)

  • Company-wide survey performed to set a baseline for measuring health, safety and wellbeing to track future progress

Value for the Planet

As part of our 2030 green target to reduce carbon emissions by 35%, decrease waste generation by 25% and water consumption by 20%, we progressed ahead of plan for 2020 across all targets. While some of this was due to the effect of COVID-19, when this effect was adjusted, targets were still met or exceeded.

A robust methodology has been developed to help us to minimize our environmental footprint (CO2, water use, waste) for any new asset.

Other goals

Successful implementation of our internal engagement and communication plan on sustainability as a business approach and have embarked on a company-wide reflection on the role we should play in tackling wider societal challenges.

Our sustainability governance framework has been strengthened by the creation of a Sustainability Governance Committee and External Sustainability Advisory Board with direct connection to UCB Executive Committee members.

Launch of the UCB Community Health Fund, to address health disparities amongst vulnerable populations, including completion of the first call for projects. 

Overall we believe that excellent progress was made on our commitments to creating value for patients, our people, share- holders, and society. As well as the progress against goals, the navigation of the challenges brought by COVID-19 was handled commendably, with patient, employee and societal value at the core of all our actions.

The CEO proposed individual performance multipliers for each of the other Executive Committee members to the GNCC for consideration prior to Board endorsement. The combined total value of cash bonuses paid to the Executive Committee amounted to € 3 075 441.

LTI (“Multi-Year Variable”)

In 2020, the CEO and Executive Committee members were awarded an LTI grant between the LTI target and the maximum policy value. 

A) Grant made in 2020

The table below details the number of stock options and performance shares that were granted in 2020:  

Stock options and performance shares

 

Stock Options

Performance Shares

Incumbent Name

Number of Stock Options Granted

Vesting Date

Strike Price (1)

Binomial value per Unit (2)

Binomial Value at Grant

Number of Performance Shares Granted

Vesting Date

Binomial value per Unit (2)

Binomial Value at Grant

Total Binomial Value at Grant

Jean-Christophe Tellier – CEO

40214

1-Jan-24

76.21

19.04

€ 765 675

27024

1-Apr-23

58.93

€ 1 592 524

€ 2 358 199

Emmanuel Caeymaex

10966

1-Jan-24

76.21

19.04

€ 208 793

7369

1-Apr-23

58.93

€ 434 255

€ 643 048

Jean-Luc Fleurial

8695

1-Jan-24

76.21

19.04

€ 165 553

5843

1-Apr-23

58.93

€ 344 328

€ 509 881

Iris Loew-Friedrich

11775

1-Apr-23

76.21

19.04

€ 224 196

7913

1-Apr-23

58.93

€ 466 313

€ 690 509

Kirsten Lund-Jurgensen

8617

1-Apr-23

79

19.04

€ 164 068

5791

1-Apr-23

58.93

€ 341 264

€ 505 331

Dhaval Patel

13328

1-Jan-24

76.21

19.04

€ 253 765

8957

1-Apr-23

58.93

€ 527 836

€ 781 601

Bill Silbey

10858

1-Apr-23

79

19.04

€ 206 736

7297

1-Apr-23

58.93

€ 430 012

€ 636 749

Charl van Zyl

12520

1-Jan-24

76.21

19.04

€ 238 381

8413

1-Apr-23

58.93

€ 495 778

€ 734 159

  • 1 Average of the closing prices between 2 March and 31 March of the year or closing price of 31 March as specified by Belgian or other relevant legislation
  • 2 Binomial valuation: an objective technique for pricing long-term incentives and which determines a fair value of the stock price over the life of a long-term incentive

Sandrine Dufour was appointed in July 2020 after the grant date and was therefore not eligible to join the 2020 LTI plans.

B) LTI Vesting in 2020

The table available through the link below details the number of stock options, stock awards and performance shares, granted to the Executive Committee members in previous years (reported in previous annual reports) and which have vested during the calendar year 2020 (not to be aggregated with the information in the above table which details the long-term incentives granted in 2020).

Download table “LTI Vesting in 2020”

The performance shares vesting in 2020 relate to the 2017 grant. The vesting of those performance shares was subject to three-year performance against the following criteria:

  • Cashflow conversion ratio (35%)

  • Relative revenue growth (35%)

  • Reaching defined pipeline milestones (20%)

  • UCB global employee engagement score (10%)

Based on the performance against each of the targets, the number of shares that vested was equal to 111% of the target number of shares conditionally granted, due to performance at or above target against each of the plan's four performance criteria.

C) LTI Forfeited in 2020

The table below details the number of stock options, stock awards and performance shares, granted to the Executive Committee members in previous years and which were forfeited in 2020:

LTI Forfeited in 2020

Name

Date of grant

Number of shares forfeited

Date Forfeited

Alexander Moscho

Stock Options - 2018

1-Apr-18

8 647

31-Jan-20

Stock Options - 2019

1-Apr-19

8 922

31-Jan-20

Performance Shares - 2018

1-Apr-18

4 009

31-Jan-20

Performance Shares - 2019

1-Apr-19

6 245

31-Jan-20

Pascale Richetta

Performance Shares - 2018

1-Apr-18

6 069

15-Apr-20

Performance Shares - 2019

1-Apr-19

7 489

15-Apr-20

Detlef Thielgen

Performance Shares - 2018

1-Apr-18

7 032

10-Apr-20

Performance Shares - 2019

1-Apr-19

7 759

10-Apr-20

Alexander Moscho

Stock Awards - sign on

1-Oct-17

3 000

31-Jan-20

Stock Awards - 2018

1-Apr-18

2 428

31-Jan-20

Pascale Richetta

Stock Awards - 2018

1-Apr-18

3 675

15-Apr-20

Detlef Thielgen

Stock Awards - 2018

1-Apr-18

4 258

10-Apr-20

C. Extraordinary Items

Termination payments

Alexander Moscho, Pascale Richetta, and Detlef Thielgen left UCB in 2020. Settlement agreements were proposed to the Board by the GNCC, who reviewed and concluded them to be in line with their contractual arrangements and UCB’s practices for Executive Committee members.

  • Alexander Moscho left UCB on January 31, 2020 and Pascale Richetta stepped down from the Executive Commitee on January 31, 2020 and left UCB on April 15, 2020. Settlement agreements were concluded in accordance with applicable labor laws and in line with their employment agreements i.e. termination payments not exceeding 12 months of base salary and bonus).

  • Detlef Thielgen left UCB on April 10, 2020. His Belgian employment contract was terminated in accordance with Belgian labor law provisions, which resulted in an indemnity in lieu of notice. The calculation basis of the indemnity consists of fixed compensation, variable compensation (bonus and long-term incentives), and other remuneration elements related to his Belgian contract and taking into account his 31 years of seniority with the company. The German employment contract was terminated in accordance with German labor law provisions resulting in a statutory notice period.

The aggregate amount of 2020 termination payments is € 6 861 668. 

Sign-on fees

At  the time of hire, Sandrine Dufour was awarded € 600 000 cash sign-on bonus and 12 000 sign-on phantom stock awards.  Both the stock award and the cash sign-on fee were exceptional one-time grants made in order to be competitive, to compensate losses incurred when leaving her previous employer and to ensure retention ahead of the UCB LTI plan starting to vest.  

The cash sign-on bonus is repayable in full should she voluntarily leave UCB within the first two years of her employment.  The sign-on phantom stock awards, valued at €1 202 880 on the date of grant, will vest in three equal tranches of 4 000 shares on the condition of being in service on each of the vesting dates in 2021, 2022, 2023.    

Sandrine Dufour will be eligible to participate in UCB’s LTI plan as of April 2021; as both stock options and performance shares in our LTI plan are subject to a minimum three-year cliff vesting requirement, Sandrine Dufour will have no LTI vesting from UCB’s regular plans over the same time period as the sign-on phantom stock awards vesting. 

D. Pension expense

Incumbent Name - Position

Pension Expense

Jean-Christophe Tellier - CEO

 € 371 422

Other Members of the Executive Committee

€ 2 267 983 

E. CEO and Executive Committee pay comparison  

Remuneration of Executive Committee, Employees and Company Performance over 5 years ​

The below table is a summary of the evolution of total remuneration of our CEO, Executive Committee, our average employee and compared to company performance over the last five years, represented here by year on year growth of revenue and adj. EBITDA . 

Remuneration of Executive Committee, Employees and Company Performance over 5 years ​

 

2016

2017

2018

2019

2020

Remuneration of CEO*

€ 4 331 103

€ 5 275 994

€ 5 308 237

€ 5 813 173

€ 6 832 748

Change year on year (YoY)

 

21.8%

0.6%

9.5%

17.5%

      

Remuneration of members of the Executive Committee **

€ 21 679 113

€ 25 150 536

€ 20 605 133

€ 24 788 507

€ 19 049 904

Change YoY

 

16.0%

-18.1%

20.3%

-23.2%

      

Company Performance

     

Revenue (Change YoY)

     

at real rate

7%

9%

2%

6%

9%

at constant rate

6%

11%

5%

7%

8%

Adj. EBITDA (Change YoY)

     

at real rate

26%

33%

2%

2%

1%

at constant rate

18%

34%

5%

11%

-4%

Total Remuneration of employees (in EUR Millions)

996

1079

1057

1169

1180

FTE

7579

7368

7304

7429

7899

Average cost per FTE (IFRS)

€ 131 412

€ 146 439

€ 144 725

€ 157 361

€ 149 392

Change YoY

 

11.43%

-1.17%

8.73%

-5.06%

  • 1 * Board fees are reported as part of the total remuneration of CEO**The CEO 2020 remuneration includes the exceptional item referenced in the “other benefits” section above
  • 2 **Executive Committee composition has varied in recent years.
  • 3 We note that terminations payments have been excluded from Executive Committee remuneration, due to their non-recurrent nature.
    Average employee remuneration is calculated on the basis of actual employee salary and benefit costs (excluding employer social security charges and CEO remuneration), divided by the number of employees, on a year by year basis.
Total Remuneration of CEO versus Lowest Remunerated Employee

The below table shows a comparison of the 2020 remuneration of our CEO (in €), to the 2020 remuneration of the lowest paid fulltime UCB SA employee (in €). The remuneration includes fixed and variable remuneration as well as employee benefits, excluding employer social security charges.

 

2020

Ratio of Total Remuneration of CEO versus Lowest Remunerated Employee

1:126

F. CEO and Executive Committee Share-based Remuneration

The tables available through the links below detail the opening and closing balance, as well as movements during the year of share-based remuneration for each of the Executive Committee Members (both current and former).

Download table "The main conditions of the share option plans"
Download table "The main conditions of the stock awards plans"
Download table "The main conditions of the performance share plans"

2020 Remuneration of Non-Executive Directors

The following table sets out the remuneration received by each Non-Executive Director in 2020. This includes the fixed annual payment for Board and Committee memberships, the attendance fees per Board meeting, and any travel allowances paid.

2020 Remuneration of Non-Executive Directors

Name of Director 

Board of Directors 

Committee annul fees (fixed fee)

Travel Allowance

Total

Fixed Fee 

Attendance Fees 

Audit 

Scientific 

GNCC 

Evelyn du Monceau 

€ 240 000

   

€ 22 500

 

€ 262 500

Pierre Gurdjian 

€ 120 000

€ 9 000

  

€ 17 000

 

€ 146 000

Jan Berger 

€ 80 000

€ 6 000

   

€ 7 500

€ 93 500

Alice Dautry 

€ 80 000

€ 6 000

 

€ 22 500

  

€ 108 500

Kay Davies 

€ 80 000

€ 6 000

 

€ 33 500

€ 17 000

 

€ 136 500

Albrecht De Graeve 

€ 80 000

€ 6 000

€ 33 500

   

€ 119 500

Roch Doliveux 

€ 80 000

€ 6 000

    

€ 86 000

Charles-Antoine Janssen 

€ 80 000

€ 6 000

€ 22 500

   

€ 108 500

Cyril Janssen 

€ 80 000

€ 6 000

    

€ 86 000

Viviane Monges 

€ 80 000

€ 6 000

€ 22 500

   

€ 108 500

Cédric van Rijckevorsel 

€ 80 000

€ 6 000

    

€ 86 000

Ulf Wiinberg 

€ 80 000

€ 6 000

€ 22 500

  

€ 7 500

€ 116 000

Total 

€ 1 160 000

€ 69 000

€ 101 000

€ 56 000

€ 56 500

€ 15 000

€ 1 457 500

The fees received by the CEO as Board member of UCB SA are included in Section 5 under the Remuneration Policy in 2020.