Gschäftsbericht 2018

Galenica financial statements 2018 | 123 Finance Notes to the consolidated financial statements of the Galenica Group 27. Share-based payments Accounting principles The employees of Galenica participate in share-based payment plans. These plans qualify as equity-settled share-based payment plans and are settled in shares of Galenica Ltd. The share-based payments are measured at fair value at grant date. Galenica estimates the number of Galenica shares which are expected to vest. The expense is recognised over the vest- ing period as part of personnel costs and an increase in shareholders’ equity for the best estimate of the number of shares Galenica expects to vest. Expense adjustments due to changes in expectations regarding the number of Galenica shares expected to vest are recognised in personnel costs for the relevant reporting period. If the arrangements are modified during the life of an equity-settled share-based payment plan, any incremental fair value is recognised over the remaining vesting period. If the plan is cancelled, the rights are assumed to be exercised at the date of cancellation and the expense is recognised immediately in profit or loss. If the cancelled plan is replaced by a new share-based payment plan identified as a replacement award, the expense is recognised in the same way as for modifi- cations. Remuneration for members of the Board of Directors The members of the Board of Directors receive fixed annual remuneration and can choose whether to receive it in full or in part (50%) in shares of Galenica Ltd. The amount settled in shares is paid out with a discount of 25%. The shares may not be traded for the first five years for tax reasons. The fair value of the shares granted is equivalent to the amount to be paid out in shares plus the discount of 25%. Share plan for members of senior management According to the participation plan, members of senior management receive their performance-related bonus partly in cash and partly in shares of Galenica Ltd. The proportion of cash to shares is set out in the regulations and is based on the salary grade of the recipient. In addition, all members of senior management are obliged to hold a number of shares of Galenica. The amount to be settled in shares is paid out in the form of shares of Galenica Ltd. with a discount of 25%. The shares may not be traded for the first five years for tax reasons. The fair value of the shares granted is equivalent to the amount to be paid out in shares plus the discount of 25%. Long-term incentive plan (LTI) Members of the Corporate Executive Committee of Galenica and certain members of senior management participate in a LTI plan for the allocation of performance share units. The number of these performance share units is based on the extent to which defined long-term performance targets are attained. A LTI plan always runs for a vesting period of three years. At the beginning of each financial year a new LTI plan with a new vesting period of three years is issued. At the start of the vesting period a defined number of performance share units are individually allocated. The number of performance share units allocated is dependent on the defined percentage of the annual salary incorporated into the LTI plan as well as the effective share price at the time of the allocation. At the end of the vesting period performance share units are paid out to eligible beneficiaries in the form of shares of Galenica Ltd. 23,199 performance share units (previous year: 22,508 performance share units) were granted to beneficiaries at a fair value of CHF 45.05 (previous year: CHF 44.87) at the beginning of the reporting period for the 2018 LTI plan.