Annual Report 2022

Annual Report 2022

Remuneration Report and Compensation Statement


We are pleased to present our 2022 remuneration report and compensation statement. At our 2021 General Meeting, we received just over 51% approval for our 2021 remuneration report and compensation statement. Recognizing that there is room for improvement, we have since had over 30 bilateral engagement meetings with shareholders and shareholder representatives (jointly representing an estimated 50% or more of our share capital) to obtain their feedback and understand any concerns with our remuneration policy and practices. We believe that shareholder engagement is a fundamental element in the decision-making process and therefore we actively seek feedback on an ongoing basis. We have carefully considered the feedback received and have reviewed our remuneration practices in the key markets where we compete for talent. We also compared our practices to our most recent reference group data (as of September 2022). The results of these efforts have led to a number of key changes to our remuneration practices and a higher level of detail in this remuneration report compared to prior years. We are committed to continually reviewing and improving our remuneration and remuneration reporting practices.

Before going into detail on the key changes we have made, we want to highlight the fact that as a dual listed, global biotech company, we face some unique challenges in establishing an effective and appropriate performance-based remuneration programme. In particular, it is challenging to balance adherence to local market (Dutch) remuneration best practices and those of the countries in which we are listed (Belgium and the U.S.) as these requirements are different and sometimes in conflict. Adding to this challenge, we are simultaneously striving to ensure a remuneration structure that is competitive in the global markets for talent in which we compete, in particular in the U.S. This is especially true with respect to the design of our long-term incentive program in the form of equity compensation, which was a recurring topic in most of the investor engagements we had in the 12 month period leading up to this Annual Report. To be succesful in our global mission, we need to effectively compete for top talent across a number of regions which have differing and at times conflicting remuneration practices. To be able to effectively compete for talent, we collect benchmark data on the composition and size of remuneration packages offered by our reference companies in these key jurisdictions, including both EU and U.S. companies in our reference group (as further detailed in section below), and to a large extent align our remuneration practices with those of our peers. We aim to take a balanced approach by adopting practices that help attract top talent while taking account of the best practices in our home jurisdiction (the Netherlands) and those of the countries in which our shares are listed (Belgium and the U.S.).

Changes to our remuneration practices in response to shareholder dissent

The feedback we collected showed differing views on the various remuneration practices and components including on our equity incentive practices and other methods of linking pay and performance. In particular:

  1. We grant stock options to non-executive directors which is a form of performance-based incentives and as such not in line with Dutch remuneration best practices;
  2. We grant stock options and RSUs to our executives which are linked to Company (share price) performance but are not linked to individual performance targets;
  3. Some shareholders were of the view that we did not sufficiently disclose the method of setting award levels under our equity plan;
  4. The RSUs we grant vest in equal portions of 25% over a four-year period, and underlying shares may be sold on vesting. This is not in line with Dutch remuneration best practices (requiring a five-year holding period for shares). Additionaly, we did not impose holding requirement for executives;
  5. We did not disclose in detail the short-term performance targets and their achievements and corresponding pay-outs for our CEO and other key executives;
  6. Certain proxy voting agencies held that we did not sufficiently address shareholder concerns raised in relation to our 2020 annual report (76% majority approved).

To address shareholder feedback, we want to take the opportunity to further explain our rationale for the abovementioned remuneration practices, and report on any changes to our remuneration practices (implemented or expected) in relation thereto.

  1. We grant stock options to our non-executive directors which is a form of performance-based incentives and is as such not in line with Dutch remuneration best practices.

With regard to non-executive directors participating in our Equity Incentive Plan specifically: the DCGC recommends, as best practice, not to grant equity incentives to non-executive directors; in contrast, the Belgian Corporate Governance Code requires that at least part of the compensation of non-executive directors be paid in the form of equity. Moreover, granting equity to non-executive directors is common practice among the companies in our U.S. reference group (100% of these companies granted equity in 2021, 94% of which also offered stock options) and to a lesser but still significant extent, our 2022 EU reference group (56% grant equity, 33% of which also offered stock options). Considering the anticipated need to attract a number of new, highly qualified directors to our Board of Directors, our remuneration and nomination committee recommended our Board of Directors continue to align the remuneration practices for non-executive directors with those of our global reference group. We note that this practice continues to be fully aligned with our shareholder-approved remuneration policy. In 2022, based on the benchmarking exercise performed, we reduced the total number of equity instruments to be granted to non-executive directors, to re-align the projected value with the 50th percentile of our reference group.

In addition to stock options being a common remuneration component in the markets where we compete for talent, they have the advantage of aligning the interests of our non-executive directors with those of our shareholders. The use of stock options rewards a focus on long-term value creation over short-term successes, as the value of a stock option depends on the company’s value increasing in the time between the grant and exercise of the stock option. To further solidify this effect, we have implemented a three- year cliff vesting on stock options for non-executive directors and post-termination holding requirements, to ensure equity incentive instruments are held as long term investments in the Company.

Some shareholders hold that alignment of interests between the non-executive directors and the shareholders should be avoided, as it could impact our directors’ independence. We note that our Board of Directors (with the exception of our CEO) qualifies as independent under Dutch, Belgian and U.S. independence rules. To address this concern further, we have updated our Equity Performance Plan such that equity incentives granted to directors and vested will not be forfeited if directors leave our Board of Directors, unless they are discharged by the shareholders, thereby ensuring that directors are not disincentivized from resigning from the Board of Directors if they are unable to reconcile their views with management team’s or the other directors’. Directors who are discharged by shareholders, however, will lose their unvested equity. Finally, we have implemented post-termination holding requirements for non-executive directors which continue to apply for 24 months after a director leaves the Board of Directors.

  1. We grant stock options and RSUs to our executives which are linked to company (share price) performance but are not linked to individual performance targets. Some shareholders disagree with the use of stock options altogether.

Stock options are by nature performance-linked equity instruments. When we grant options, the exercise price is set at the market value of the shares at the grant date. The stock options vest over an extended time period (three years) and are bound to further holding requirements or exercise restrictions for our directors and senior management team, in line with our equity holding guidelines (see section, paragraph 4 below). In addition, our executives who are Belgian tax residents (including our CEO) may not exercise stock options in the first three years after they are granted. As a result, only successful long-term value creation will lead to an actual value attribution to stock options, thereby directly aligning shareholder interests with the interests of individual key persons. Multi-year vesting periods ensure that decision making in favor of long-term value creation is prioritized over short-term successes. The post-termination holding requirements further amplify this effect.

A vast majority of our reference group companies continue to use stock options as an important compensation element. Moving away from stock options may harm our competitive position in the key jurisdictions where we operate and compete for talent, which we believe would not support long-term value creation.

Some shareholders have questioned the overall award levels or overall value generated in the form of stock options. We note that the number of stock options and RSUs we grant, is based on an expected value of such grant at the time the award level is set, and which is aligned with the peer group percentile targets explained in section below. Any value creation beyond the projected value at grant corresponds with real value generated for our stakeholders, including shareholders, patients and employees, by delivering on our key company goals and building our Company’s long-term success and value. We believe that award value realized should not be viewed in isolation, but should be viewed in light of the overall shareholder return realized. For illustration purposes, we provide shareholder return realized in the 5-year period for argenx shareholders versus European and U.S. biotech peers, as well as the Bel20 as reference for other large cap Belgian listed companies.

Period: 5 years
(comparing closing prices on January 1, 2018 and December 31, 2022)

argenx stock price evaluation



NASDAQ Biotech index



Next Biotech






We have so far not linked the vesting or exercisability of stock options to individual performance targets. However, continued engagement with the Company is a requirement for vesting equity. Persons who have not performed adequately do not receive full recurring equity grants but may receive a reduced grant or no grant at all. As a result, granted and vested stock options are linked to Company performance but are no longer linked to individual performance, receiving and vesting a grant of stock options requires continued high performance of the individual.

  1. We are evaluating our options to address shareholder feedback with respect to linking equity awards to performance. Some shareholders were of the view that we did not sufficiently disclose the method of setting award levels under our equity plan;

We have included a more detailed explanation on how we set award levels under the Equity Incentive Plan in section of this Annual Report.

  1. The RSUs we grant, vest in equal portions of 25% over a 4 year period, and underlying shares may be sold upon vesting. This is not in line with Dutch remuneration best practices (requiring a 5 year holding period for shares). Additionally, we did not impose a holding requirement for executives;

In addition to the participation of non-executive directors in our Equity Incentive Plan, we also reviewed our reference group’s practices with respect to equity vesting and exercisability requirements. The DCGC recommends that any shares granted to executive directors are held for at least five years. However, 100% of our U.S. peers granted annual equity which vested after one year. Instead of a five- year lockup, our U.S. reference group companies typically implemented holding requirements which prescribe a continued holding of company stock at a certain multiple of an individual’s base salary, but they did not implement extended lock-up periods. In order not to risk the competitiveness of our plan and to ensure it is in line with market practice, we continue to allow RSUs to vest over four-years (25% each anniversary of the grant date). However, to ensure that company equity is held as a long term investment by our non-executive directors and our senior management team, we have implemented holding requirements for the duration of their engagement with the Company and a period of 24 months thereafter, as further detailed below:

Holding requirements

Following feedback from our shareholders on our 2021 remuneration report, our Board of Directors introduced equity holding guidelines for our Board of Directors and senior management team. The guidelines became effective in February 2022. Under these guidelines, the following minimum shareholding requirements apply for the following persons:

  • Non-executive directors 1-year cash compensation
  • Executive directors 3-year base cash compensation
  • Senior management members 1-year base cash compensation

The holding requirements must be built up over a period of no more than five years, and the shares beneficially held under such holding requirement may not be disposed of for the duration of such director or senior management member’s service period with the Company and a period of 24 months thereafter. The holding requirements do not apply to directors or executives who had already retired or announced their retirement prior to implementation of the policy on 3 March 2023.

  1. We did not disclose in detail the short term performance targets and their achievement and corresponding pay out for our CEO and other key executives.

We now disclose (retrospectively) the full set of short term performance targets for our CEO, CFO and COO, which we understand to be market practice for companies of our size and in our industry.

  1. Certain proxy voting agencies held that we did not sufficiently address shareholder concerns raised in relation to our 2021 report (76% majority approved).

We have attempted to collect as much feedback as we could by reaching out to a large number of stakeholders. We have summarized the key findings of those engagements in this section and provided detailed explanations and (where appropriate) remediating actions accordingly.