Share-based incentive programs

Xbrane has six ongoing share-based incentives programs that include company management, certain board members and staff. There are three share-saving program “LTIP 2017, LTIP 2018 and LTIP 2019”. At the Extraordinary General Meeting in April 2018, further warrants were introduced to certain Board members; “TO Series 1 2018/2021” and “TO Series 2 2018/2021”, as well as a warrants program directed to certain senior executives “TO 2018/2022). Below is a brief explanation of the various programs. For other information about the incentive programs, see Xbrane’s Annual Report for 2018.

 

LTIP 2017

At Annual  General Meeting in Xbrane on May 18, 2017, it was decided to adopt a long-term equity-based incentive program (“LTIP 2017”) for all employees in both Sweden and Italy.LTIP 2018 comprises a total of 21 senior executives and employees in the Group, of whom 17 are employed in Xbrane and 4 are employed by the subsidiary. The purpose of LTIP 2017 is to enable Xbrane and the Group to attract skilled employees and motivate them to stay in the Group and motivate them to create value for shareholders.

LTIP 2017 is based on the desirability that employees and other key persons within the Group are shareholders in the Company. By offering a grant of performance-based share options based on the fulfillment of established performance and performance-based terms, participants are rewarded for increased shareholder value. Linking employee compensation to Company earnings and value creation will also promote continued loyalty to the Company and thus to its long-term value.

LTIP 2017 will be implemented in 2017-2019 and is designed as a share saving program in which employee involvement requires an investment in Xbrane’s shares, the so-called savings shares, worth 150,000 SEK before the end of February 2018. For each savings-share (1) that the employee has acquired, the employee may acquire one (1) so-called matching-share and up to one (1) s performance-share for quota value. The outcome of performance shares is based on the fulfillment of the objectives set by LTIP 2017 and related to development, implementation and results from clinical studies, market approval, licensing and sales of the Spherotide and Xlucane products. Eligibility for shares is further conditional upon the participant being employed in the Group and that all of its investment shares are allocated to LTIP 2017 during the vesting period.

The company has secured the program by decision by the AGM on May 24, 2018, for the issue of 19,538 warrants. The maximum dilution for the program amounts to 0.31 percent of the share capital and votes in the Company. Costs of the program include social costs for the amounts that employees are expected to be allocated, which are expensed over the period 2017-2019. All employees have had the opportunity to participate in the program on the same terms. 57% of employees have chosen to participate in the program.

LTIP 2018

At the Annual General Meeting in Xbrane on May 24, 2018, it was decided to adopt a long-term equity-based incentive program (“LTIP 2018”) for all employees in both Sweden and Italy.LTIP 2018 comprises a total of 26 senior executives, employees and other key employees in the Group, of whom 18 are employed or will be employed in Xbrane and 8 persons are employed by the subsidiary. The purpose of LTIP 2018 is to enable Xbrane and the Group to attract skilled employees and motivate them to stay in the Group and motivate them to create value for shareholders.

LTIP 2018 is based on the desirability that employees and other key persons within the Group are shareholders in the Company. By offering a grant of performance-based share options based on the fulfillment of established performance and performance-based terms, participants are rewarded for increased shareholder value. Linking employee compensation to Company earnings and value creation will also promote continued loyalty to the Company and thus to its long-term value.

LTIP 2018 will be implemented in 2018-2020 and is designed as a share saving program in which employee participation requires an investment in Xbrane’s shares, so-called savings stocks, up to total 2,200 shares for senior executives and up to a total of 1,500 shares for other employees before the end by February 2019. For each savings share (1) the employee has acquired, the employee may acquire one (1) so-called matching share and up to three (3) s performance share for quota value. The outcome of performance shares is based on the fulfillment of the targets determined by LTIP 2018 and related to (i) total return on shares, (ii) compliance with certain milestones for the Company, and (iii) fulfillment of certain milestones for the Subsidiary. Equity for shares is further conditional upon the participant being employed in the Group and that all of its investment shares are allocated to LTIP 2018 during the vesting period.

The company has secured the program by the AGM on 24 May 2018 to decide on the issue of 172,800 warrants. The maximum dilution for the program amounts to 2.66 percent of the share capital and votes in the Company. Expenses for the program include social costs for the amounts that employees are expected to be allocated, which is expensed over the period 2018-2020. All employees have had the opportunity to participate in the program on the same terms.

 

LTIP 2019

At the Annual General Meeting in Xbrane on May 16, 2019, it was decided to adopt a long-term equity-based incentive program (“LTIP 2019”) for all employees in both Sweden and Italy. LTIP 2019 comprises a total of 35 senior executives, employees and other key employees in the Group, of whom 27 are employed or will be employed in Xbrane and 8 persons are employed by the subsidiary. The purpose of LTIP 2019 is to enable Xbrane and the Group to attract skilled employees and motivate them to stay in the Group and motivate them to create value for shareholders.

LTIP 2019 is based on the desirability that employees and other key persons within the Group are shareholders in the Company. By offering a grant of performance-based share options based on the fulfillment of established performance and performance-based terms, participants are rewarded for increased shareholder value. Linking employee compensation to Company earnings and value creation will also promote continued loyalty to the Company and thus to its long-term value.

LTIP 2019 will be implemented in 2019-2021 and is designed as a share saving program in which employee participation requires an investment in Xbrane’s shares. This requires investment in so-called savings stocks, up to total 1,500 shares before the end of 31 January 2020. The share rights are divided in different series, Serie A (matching right), Serie B, Serie C and Serie D. The outcome of these share rights are dependent upon the fulfillment of the performance requirements which mainly is connected to the total return of shares under the period 1 January 2019 – 31 December 2021 (measurement period).

The employees can only invest 1,500 investments shares within the boundaries of LTIP 2019. Each investment share are entitled to, at the most, 1 share right of Serie A, 1 Serie B, 1 Serie C and 1 Serie D, which results in a maximum of 4 share rights at full outcome of the performance terms.
If a employee do not invest its full part of investment shares before the 31 January 2020, other employees then have the right to invest in further investment shares, no later then 31 January 2020, which in turn would bring the same rights to the unused investment shares. There are no guaranteed dividend when investing in more than the initial 1,500 investment shares. If there is an over notification of the remaining investment shares, the following procedures should be done. First, the allocation should be done at pro rata in relation to the amount of invested investment shares. Secondly the allocation should be done through a draw, conducted by the board.

As a result of the LTIP 2019, the highest number of shares that could be allocated is 210,000. The dilution of the total share capital and the votes at the Company is approximately 2,47 percent. The dilution from the LTIP 2019 including the outstanding warrants is calculated to approximately 6,15 percent of the total number of shares and votes within the Company. Provided that there is a full coverage of the warrants as well as the outstanding warrants. Expenses for the program include social costs for the amounts that employees are expected to be allocated, which is expensed over the period 2019-2021. All employees have had the opportunity to participate in the program on the same terms.

 

Warrants Series Series 2018/2021

The Extraordinary General Meeting of Shareholders on April 3, 2018, decided to issue no more than 49,285 warrants, in which the incumbent Chairman Anders Tullgren was offered to subscribe for warrants. All warrants were subscribed by Anders Tullgren at a price corresponding to the market value of the options calculated in accordance with the Black & Scholes valuation model. Each warrant entitles the holder to subscribe for a new share during the period from 1 April 2021 until 31 May 2021. In case all outstanding warrants are exercised, the number of shares in the Company will increase by 49,285 shares and the share capital by approximately 11,049.00 SEK. If all outstanding warrants in Series 2018/2021 warrants are used, dilution will amount to approximately 0.77 percent of the share capital and votes in the Company.

Warrants Series II 2018/2021

The Extraordinary General Meeting of Shareholders on April 3, 2018, decided to issue no more than 15,000 warrants for the five Board members registered at Xbrane (excluding Saeid Esmaeilzadeh) at the time of the meeting, which allowed Board members to subscribe for no more than 3,000 warrants each. A total of 13,500 warrants were subscribed by the subscribers at a price corresponding to the market value of the options calculated in accordance with the Black & Scholes valuation model. Each warrant entitles the holder to subscribe for a new share during the period from 1 April 2021 until 31 May 2021. In case all outstanding warrants are exercised, the number of shares in the Company will increase by 13,500 shares and the share capital by approximately 3,026.70 SEK. If all outstanding warrants in Series II 2018/2021 warrants are used, dilution will amount to approximately 0.21 percent of the share capital and votes in the Company.

Warranty Series 2018/2022

The Extraordinary General Meeting of Shareholders on April 3, 2018, decided to issue no more than 96,000 warrants to Group Management consisting of up to four positions to subscribe between 6,000 and 24,000 warrants, whereby the CEO was offered to subscribe for no more than 24,000 warrants and the remaining 24,000 warrants totaling no more than 96,000 warrants. A total of 79,000 warrants were subscribed by the subscribers at a price corresponding to the market value of the options calculated in accordance with the Black & Scholes valuation model. Each warrants entitles the holder to subscribe for a new share during the period from April 1, 2022 to May 31, 2022. In case all outstanding warrants are exercised, the number of shares in the Company will increase by 79,000 shares and the share capital by 17,711.8 SEK. If all outstanding warrants in warrants 2018/2022 are used, dilution will amount to approximately 1.23 percent of the share capital and votes in the Company.