Annual report 2018

72 | Galenica annual report 2018 As a rule, the three-year assessment period must be com- plete in order for employees to be eligible for a payment of shares. If the employment relationship is terminated during a current assessment period prior to publication, an LTI payment of 80% of the pro-rata target entitlement for the current cycle will be made. Where the period has been concluded but the results have not yet been published, the entitlement will be calculated and paid out after the annual results have been published. In order to create a comparable basis for the prospective shareholder vote on the maximum remuneration of mem- bers of the Board of Directors and the Corporate Executive Committee, remuneration paid or attributed in 2018 is pre- sented on the same basis perspective of cost to the com- pany. Accordingly, shares of Galenica distributed as part of the remuneration are shown at market value at the date of allocation. The added value of the 25% discount granted for tax purposes in relation with the blocking period of five years is offset (see tables on pages 73 and 75). Pensions and other employee benefits Employee benefit plans consist mainly of retirement plans and insurance plans that are designed to protect the employees against the risks disability and death. The CEO and the members of the Corporate Executive Committee are covered by the pension scheme applicable to all employ- ees. The pension solution of Galenica exceeds the legal requirements of the Swiss Federal Law on Occupational Pension Schemes (BVG) and is in line with what is being offered by other listed companies of comparable size. Galenica subject to the attainment of a performance target defined by the Remuneration Committee over a three-year period. Performance units are virtual; no real units are issued. The number of performance units allocated at the beginning of the plan period depends on a defined percent- age of the annual base salary as well as the average share price during the final month prior to the allocation, i.e. February. The performance target for each three-year LTI plan is defined by the Remuneration Committee by setting a target GEP increase reflecting the risk-appropriate return requirements of its shareholders over the plan period. The number of performance units initially allocated increases or decreases depending on the proportion of the achievement of the GEP target set at the end of the three-year plan period. Upon completion of the three-year plan period, such performance units are transformed into a corresponding number of shares of Galenica. Accordingly, the main factor influencing the transformation of performance units into Galenica shares is the operating performance of the Galenica Group over the respective three-year period. A linear interpolation is applied between the threshold of the GEP at the time of the allocation of the performance units and a maximum target attainment of 200% (cap). At the beginning of each financial year, a new LTI plan with a new three-year target and assessment period is issued. Per year Duration 3 years Bonus LTI 25% personal objectives 75% GEP 100% GEP Influence on variable remuneration of the GEP increase 2016 2017 2018 2019 1) 2017 2018 2019 2020 1) 2018 2019 2020 2021 1) LTI three-year programme 1) Transformation of performance share units into number of shares and allocation of shares Remuneration Report Galenica