Remuneration Report

Philippe Weber
Chairman of the Remuneration and Nomination Committee

Dear Shareholders,

On behalf of the Board of Directors and the Remuneration and Nomination Committee, I am pleased to present PolyPeptide’s Remuneration Report for 2022. The Remuneration Report explains our remuneration policies, principles and elements, as well as the key activities of the Remuneration and Nomination Committee during the year and how PolyPeptide’s performance results for 2022 impacted the variable incentive remuneration to the Executive Committee.

The current term of the Remuneration and Nomination Committee began following the annual general meeting held on 26 April 2022, where shareholders voted on the maximum aggregate remuneration amounts for the Board of Directors and the Executive Committee, with approval rates of 97.35% and 96.37%, respectively. In addition, shareholders approved the Remuneration Report 2021 in a consultative vote, achieving an approval rate of 96.63%. We thank PolyPeptide’s shareholders for their feedback and welcome their clear mandate. Our goal remains to ensure that PolyPeptide’s remuneration provides optimal incentives for successful leadership and is closely aligned with the interests of our shareholders.

The Remuneration and Nomination Committee remained active during the course of 2022 as we continued to develop a remuneration structure and governance framework that is simple, clear and transparent. One key activity in furtherance of this was a comprehensive benchmark review of the compensation of the Board of Directors and the Executive Committee, described in greater detail herein. One key observation following the benchmark review of the Executive Committee compensation was that all peers included a long-term incentive component alongside short-term incentive remuneration. The Remuneration and Nomination Committee considered the expansion of the LTIP to the full Executive Committee. However, in light of PolyPeptide’s weak financial and operational performance, the Remuneration and Nomination Committee ultimately recommended to the Board of Directors not to grant any long-term incentive awards for the financial year 2022. The Remuneration and Nomination Committee plans to revisit this topic during the course of 2023.

Focusing on one of PolyPeptide’s most important assets (i.e., its people), the Remuneration and Nomination Committee together with the Group’s Chief Human Resources Officer also looked more closely at PolyPeptide’s approach to human capital management. The Remuneration and Nomination Committee supported the Board of Directors during the recent changes to the Executive Committee and remains focused on succession planning at PolyPeptide. As announced on 30 January 2023, Raymond De Vré resigned as CEO. PolyPeptide is currently conducting a CEO search, and we are committed to identifying a candidate who has the leadership skills and relevant experience to drive our growth and expansion plans. We have established a comprehensive search process.

Furthermore, in an increasingly competitive labor market, the Group relies on a qualified and engaged workforce to closely collaborate with customers on new solutions and to ensure high performance and quality. In the second half of 2022, PolyPeptide was impacted by technical and manufacturing process issues, highlighting the need for us to take measures to address these challenges. These measures include the strengthening of our workforce capabilities and the provision of improved training. This is underpinned by new leadership, including the appointment of a new Director Global Operations in December 2022. Attracting and retaining the right talent, along with the appropriate human capital development, is essential for PolyPeptide to grow its business. The Remuneration and Nomination Committee intends to further strengthen the attractiveness of PolyPeptide as an employer of choice.

Looking ahead, we will continue to proactively assess and review our remuneration programs to ensure that they are fulfilling their purpose in the evolving world in which we operate, remaining competitive to retain and attract the best talent and rewarding individual performance, competence and desired behaviors in line with PolyPeptide’s values and leadership principles. We also appreciate the importance of ESG topics to all of our stakeholders and as PolyPeptide develops its sustainability targets further, the Remuneration and Nomination Committee is committed to strengthening the link between sustainability objectives and the remuneration of PolyPeptide’s management towards the achievement of such targets. As an initial step, “green chemistry” was added as a performance measure to the 2022 Global Balanced Scorecard to advance PolyPeptide’s sustainability objectives.

We encourage candid dialogue with our shareholders as we continue to evolve and improve PolyPeptide’s remuneration structure. At the general meeting in April 2023, you will have the opportunity to express your opinion on our remuneration policies, principles and elements through a consultative vote on this Remuneration Report. We will also ask for your approval of the aggregate compensation amount to be awarded (i) to the Board of Directors for the period until the next general meeting in 2024 and (ii) to the Executive Committee for the financial year 2024. We respectfully request your endorsement of these agenda items at the general meeting in April 2023.

I would like to thank you for your ongoing support and trust that you will find PolyPeptide’s Remuneration Report interesting and informative.

Sincerely,

Philippe Weber
Chairman of the Remuneration and Nomination Committee