Remuneration and Nomination Committee

3. Remuneration and Nomination Committee

3.1 Terms of reference

The Remuneration and Nomination Committee ensures that the appointment and re-election process is organised objectively and professionally and proposes the remuneration policy for non-executive Directors and executive managers. For the latter the Remuneration and Nomination Committee proposes compensation programs that are fair and appropriate to attract, retain and motivate management and are reasonable in view of company economics and the relevant practices of other global biopharma companies, using outside consultants when needed.

The Chairman of the Remuneration and Nomination Committee prepares with the Chairman of the Executive Committee and the Executive Vice-President Human Resources the meetings of the Remuneration and Nomination Committee.

3.1.1 Concerning appointments, the Remuneration and Nomination Committee has particular duties as follows:

following examination, to submit to the Board of Directors the names of candidates for new members of the Board of Directors and the Executive Committee and to make proposals to the Board in the event of renewal, resignation or possible retirement of (a) Director(s). With regard to proposals for appointment of members of the Board of Directors, the Remuneration and Nomination Committee predetermines together with the Board of Directors the Board of Director's equilibrium criteria and the profile of the candidate.  See 3.2.2 and 3.2.5. With regard to candidates for new members of the Executive Committee other than the Chairman, the Chairman of the Remuneration and Nomination Committee consults the Chairman of the Executive Committee before the latter proposes candidates to the Remuneration and Nomination Committee; the same procedure is followed in the event of proposals for removal or dismissal. The Remuneration and Nomination Committee proposes to the Board of Directors the candidature or dismissal of the Chairman of the Executive Committee.

3.1.2 Concerning remuneration, the Remuneration and Nomination Committee has particular duties as follows:

o Makes recommendations to the Board of Directors in relation to remuneration of the members of the Board of Directors, to be submitted for approval at the General Meeting of Shareholders (see 3.6.1.).

o proposes to the Board of Directors the Policy of Remuneration for the Executif Committee  members:
 - Salary Position on the market
 - Base salary, bonus and long term incentives mix and position in the market
 - General pensions philosophy

o on an annual basis, examines and assesses the performance of members of the Executive Committee and determines the individual compensations of the members of the Executive Committee in accordance with the policy decided by the Board. For members of the Executive Committee excluding the CEO the Remuneration and Nomination Committee consults with the Chairman of the Executive Committee who makes recommendations.

The Board is informed of the Committee's decisions regarding the Chairman of the Executive Committee and on an aggregate basis (base salary, bonus cash, pension, insurance, other benefits) for the other members of the Executive Committee.  For free stock awards and stock options for the Executive Committee Members the information will be individualized.

o approves any changes in the system of remuneration of the Group's senior executives.

o determines the criteria for awarding free stock or stock options within the free stock or stock option plans, as decided by the Board of Directors.

o recommends for Board approval the global award criteria and the maximum amount of company shares to be committed per stock awards plan, stock options plan, stock purchase plan, stock performance plan, as well as the company performance criteria for the latter.

3.1.3. The Chairman of the Remuneration and Nomination Committee and the Chairman of the Board of Directors are responsible for conducting the regular assessment process of the Board of Directors and for reporting the results to the Board (see 3.5.).

3.2. Composition of the Remuneration and Nomination Committee

The Remuneration and Nomination Committee is composed of four non-executive Directors of various experience and skills, who are all independent from management. Two of them meet the independence criteria set by the Code (see 2.3). The Board is of the opinion that the independence required to fulfil the duties entrusted to the Remuneration and Nomination Committee in the best interests of the Company, is to be measured versus management and that the presence of members representing the reference shareholder does not, in nomination or compensation matters, prevent the best decision making process; to the contrary: as all the other shareholders of the Company, the reference shareholder who is not directly involved in the executive management of the Company has a particular interest to have the best organisation in place to govern the Company, with a right balance of power between shareholders and management at a cost that is appropriate and reasonable.

The Remuneration and Nomination Committee is chaired by the Vice-Chairman of the Board of Directors.

3.3 Functioning of the Remuneration and Nomination Committee

3.3.1 The Remuneration and Nomination Committee is to meet twice a year and additionally whenever circumstances make this appropriate.

3.3.2 The Remuneration and Nomination Committee is attended by the Chairman of the Executive Committee - except when it deals with issues discussed which directly concern him - and the Executive Vice President Human Resources, who is also the Committee's secretary for the meetings. It is also advised by external experts when this is deemed useful.