Peer group selection

Biopharmaceutical companies have characteristic pay and incentive structures compared to other industries.
Within the biopharmaceutical industry, excluding diagnostics and animal health companies is appropriate because the talent focus of such companies is different and therefore they are not typically our competitors for talent. In addition, their pay structures tend to differ from those in our industry making these less relevant comparators.

Being listed on a major US stock exchange brings additional complexity, expertise requirements and potential liabilities to company officers and directors, which is typically reflected in a different pay structure of executives and board members serving on US listed companies, versus companies without a US listing. Our benchmark exercise shows that having a listing on a major US stock exchange tends to have a more significant relevance for pay structure applied by companies than does location of headquarters, which is why we do not apply a ‘location of headquarters’ filter.

Innovation focused, R&D driven companies tend to have a typical remuneration structure which differs from companies who focus on commercializing external innovations.
To ensure we continue to be able to compete with other innovators, we limit our peer group selection to other companies who continue to significantly invest in their R&D activities.

Leading commercial operations both inside and outside the United States puts unique demands on the skills and expertise of key individuals, in addition to the strain of splitting their time and efforts across continents. For this reason, we compare pay practices to other global companies instead of companies with mostly local activities.

We compare ourselves to organizations that also have significant product revenues, as a reflection of overall size and complexity of the organization. Using a relatively wide range for this metric is appropriate to ensure we include relevant peers while ensuring a level of stability in the peer group over time. In setting the range, we also considered the rapid development in our own revenues since our first year of product commercialization (2023) and our internal revenue projections for the immediate future.

Whereas market cap can give some indication of overall size and complexity of comparator organizations, we also recognize that companies in our sector tend to have volatile stock prices and market cap can vary significantly even throughout a given calendar year.¹⁾
Using a relatively wide range for this metric is appropriate to ensure we include relevant peers while ensuring a level of stability in the peer group year-over-year.
By going as low as 1/4x our value and as high as 4x our value, we aim to ensure that we are not positioning ourselves on either end of the peer group for this metric, to avoid establishing a peer group that is considered aspirational.
Finally, given that market cap is influenced by a range of factors that do not necessarily correlate to the organization’s size or complexity or talent needs, we deem this the least relevant filter. If we are unable to reach our minimum of 15 peer companies meeting all selection criteria, we will include companies who meet all other criteria and are closest to our market cap criterion (but no more than 2x the high end of our range) in order to make up the 15. If we cannot make up to 15 applying this modified filter, we will include companies who are outside of but close to our revenue filter limits.