Remuneration

Remuneration to the board of directors

At the Annual General Meeting 2020, it was decided, in accordance with the Nomination Committee’s proposal, stipulated that fees to the Board, until the end of the next Annual General Meeting, will total of 2 600 000 SEK. The remuneration for regular board work shall amount to a total of 2 125 000 cash, of which the Chairman of the Board will receive SEK 625 000 and each of the other members shall receive SEK 250 000. In addition to the fees above for regular Board work, it was determined that each board member resident in the United States will receive an additional fee of SEK 90,000 and that each board member resident in Europe but outside the Nordic countries will receive an additional fee of SEK 45,000.

Name Board Position Additional Country Payment Audit Committee Remuneration Committee
Per Wold-Olsen Chairman EU Committee member Chairman
Jonas Brambeck Board member Committee member Committee member
Cecilia Daun-Wennborg Board member Chairman
Per Samuelsson Board member Committee member Committee member
Ulf Jungnelius Board member EU
Brian Stuglik Board member US
Jennifer Jackson Board member US

Guidelines for remuneration to members of senior management

According to the Swedish Companies Act, the general meeting shall resolve on guidelines for remuneration to the CEO and other members of senior management according to the Board’s proposal to the AGM. At the general meeting held on May 26, 2020, guidelines were adopted with the following content.

The Company’s starting point is that salary and other terms and conditions shall enable the group to attract and retain qualified management persons at a reasonable cost for the Company. The remuneration for management persons shall be decided in accordance with Oncopeptides remuneration policy, which is assumed annually by the Board and adds to the guidelines.

The remuneration for management persons consist of fixed salary, variable remuneration, pension and other benefits. In order to avoid that the management persons take unnecessary risks there shall be a fundamental balance between fixed and variable remuneration.

Furthermore, the annual general meeting in Oncopeptides may, if so is ordered, offer long-term incentive programmes such as share or share price related incentive programmes. Each management person shall be offered a market level fixed salary based on the degree of difficulty, responsibilities, experience and performance. In addition, each management person may from time to time, be offered a variable remuneration (bonus) to be paid in cash. The variable remuneration shall be based on clear predetermined and measurable performance criteria and economic results, as well as predetermined individual objectives and business objectives, and shall also be designed to promote Oncopeptides long-term value creation. Management persons shall be offered pension terms that are in accordance with market practice in the country where the management persons habitually resides. Non-monetary benefits shall facilitate the work of the management persons and shall correspond to what is considered reasonable in relation to market practice. The fixed salary during the notice period shall, together with severance pay, not exceed 24 months’ fixed salary.

Insofar board members who are elected by the general meeting carry out work in addition to work on the board of directors, it shall be possible to remunerate them for such work. The remuneration shall be in accordance with market terms and shall be approved by the board of directors.

The board of directors shall be entitled to deviate from the guidelines in individual cases should there be special reasons for doing so. The board of directors shall, before every annual general meeting, consider whether or not additional share or share price-related incentive programmes shall be proposed to the general meeting.

It is the general meeting that resolves upon such incentive programmes. Incentive programmes shall promote long-term value growth. New share issues and transfers of securities resolved upon by the general meeting in accordance with the rules of Chapter 16 of the Swedish Companies Act are not covered by the guidelines to the extent the annual general meeting has taken, or will take, such decisions.

Share-related incentive programmes

The Group’s incentive programs are aimed at creating a long-term commitment to Oncopeptides, creating opportunities to attract and retain expertise, and delivering long-term shareholder value. Participants are allotted warrants that will only be earned on condition that specific performance requirements are fulfilled. Participation in a program is decided by the Board of Directors and no individual is contractually entitled to participate in the plan or receive any guaranteed benefits.

At year-end 2019, Oncopeptides had eight active programs covering the company’s management, certain Board members, founders and other employees. Two incentive programs were established in 2013: “Founder Option Program” and “Employee Option Program 2012/2019”. Both of these programs expired in 2019. “Employee Option Program 2016/2023” was established in 2016. In May 2017, the incentive program “Co-worker LTIP 2017” was established. At the 2018 AGM, two incentive programs were established: “Co-worker LTIP 2018” and “Board LTIP 2018”. At an EGM in December 2018, “Board LTIP 2018.2” was established, and at the 2019 AGM, it was resolved that two new incentive programs were to be introduced: “Co-worker LTIP 2019” and “Board LTIP 2019”. A brief description of the programs follows below. See Note 26 in the 2019 Annual Report and the Minutes from AGM 2020 for further information on the incentive programs.

Employee option programme 2016/2023

Employee options were allotted free of charge to participants. Allotted employee options are vested gradually over a four-year period calculated from the starting date (aside from 60 options in the series that vest and are allotted over a period of 12 months). Vesting requires that the holder remain employed by the company and that the employment is not terminated as per the day of vesting of each employee option. Each vested option entitles the holder to subscribe for 900 new shares in the company up to and including November 30, 2023 at the latest.

Co-worker LTIP 2017

The options were allotted free of charge to participants of the program. The options have a three-year vesting period calculated from the allotment date, provided that, with customary exceptions, the participants remain as employees of, or continue to provide services to, Oncopeptides. Once the options are vested, they can be exercised within a four-year period.

Each vested option entitles the holder to acquire one share in the company at a predetermined price. The price per share is to be equivalent to the weighted average price that the company’s shares were traded for on Nasdaq Stockholm during the five trading days preceding the allotment date.

Co-worker LTIP 2018

The options were allotted free of charge to participants of the program. The options have a three-year vesting period calculated from the allotment date, provided that, with customary exceptions, the participants remain as employees of, or continue to provide services to, Oncopeptides. Once the options are vested, they can be exercised within a four-year period.

Each vested option entitles the holder to acquire one share in the company at a predetermined price. The price per share is to be equivalent to the weighted average price that the company’s shares were traded for on Nasdaq Stockholm during the five trading days preceding the allotment date.

Co-worker LTIP 2019

The options were allotted free of charge to participants of the program. The options have a three-year vesting period calculated from the allotment date, provided that, with customary exceptions, the participants remain as employees of, or continue to provide services to, Oncopeptides. Once the options are vested, they can be exercised within a four-year period.

Each vested option entitles the holder to acquire one share in the company at a predetermined price. The price per share is to be equivalent to the weighted average price that the company’s shares were traded for on Nasdaq Stockholm during the five trading days preceding the allotment date.

Board LTIP 2018

The share awards were allotted to participants free of charge. Share awards are vested over a three-year period, with one-third per year during the period from one AGM to the next. The share awards are also subject to performance-based vesting, based on the performance of Oncopeptides’ share price during the period from the date of the 2018 AGM up to and including the date of the 2021 AGM. The share price’s performance will be measured as the volume-weighted average price of the company’s share 30 trading days immediately after the 2018 AGM and 30 trading days immediately before the 2021 AGM. If Oncopeptides’ share price has then increased by over 60 percent, 100 percent of the share awards will be vested, and if the share price has increased by 20 percent, 33 percent of the share awards will be vested. In the event of an increase in the share price by 20 to 60 percent, the share awards will be vested in a linear manner. If the share price increases by less than 20 percent, there will be no vesting. Each time-based and performance-based vested share award entitles the holder to obtain one share in Oncopeptides free of charge. Vested share awards are automatically exercised the day after the 2021 AGM.

Board LTIP 2018.2

The share awards were allotted to participants free of charge. Share awards are vested over a three-year period, with one-third per 12-month period after the allotment date. The share awards are also subject to performance-based vesting, based on the performance of Oncopeptides’ share price during the period from the allotment date up to and including the final vesting date. The share price’s performance will be measured as the volume-weighted average price of the company’s share 10 trading days immediately after the allotment date and 10 trading days immediately before the final vesting date. If Oncopeptides’ share price has then increased by over 60 percent, 100 percent of the share awards will be vested, and if the share price has increased by 20 percent, 33 percent of the share awards will be vested. In the event of an increase in the share price by 20 to 60 percent, the share awards will be vested in a linear manner. If the share price increases by less than 20 percent, there will be no vesting. Each time-based and performance-based vested share award entitles the holder to obtain one share in Oncopeptides free of charge. Vested share awards can be exercised on the final vesting date at the earliest.

Board LTIP 2019

The share awards were allotted to participants free of charge. Share awards are vested over approximately three years until either the 2022 AGM or June 1, 2022 (whichever occurs first) with one-third per year during the period from one AGM to the date immediately before the next AGM or the final vesting date. The share awards are also subject to performance-based vesting, based on the performance of Oncopeptides’ share price during the period from the allotment date up to and including the day before the final vesting date. The share price’s performance will be measured as the volume-weighted average price of the company’s share 10 trading days immediately after the allotment date and 10 trading days immediately before the final vesting date. If Oncopeptides’ share price has then increased by over 60 percent, 100 percent of the share awards will be vested, and if the share price has increased by 20 percent, 33 percent of the share awards will be vested. In the event of an increase in the share price by 20 to 60 percent, the share awards will be vested in a linear manner. If the share price increases by less than 20 percent, there will be no vesting. Each time-based and performance-based vested share award entitles the holder to obtain one share in Oncopeptides free of charge. Vested share awards can be exercised on the final vesting date at the earliest.

Board LTIP 2020

The share awards were allotted to participants free of charge. Share awards are vested over approximately three years until either the 2023 AGM or June 1, 2023 (whichever occurs first) with one-third per year during the period from one AGM to the date immediately before the next AGM or the final vesting date. The share awards are also subject to performance-based vesting, based on the performance of Oncopeptides’ share price during the period from the allotment date up to and including the day before the final vesting date. The share price’s performance will be measured as the volume-weighted average price of the company’s share 10 trading days immediately after the allotment date and 10 trading days immediately before the final vesting date. If Oncopeptides’ share price has then increased by over 60 percent, 100 percent of the share awards will be vested, and if the share price has increased by 20 percent, 33 percent of the share awards will be vested. In the event of an increase in the share price by 20 to 60 percent, the share awards will be vested in a linear manner. If the share price increases by less than 20 percent, there will be no vesting. Each time-based and performance-based vested share award entitles the holder to obtain one share in Oncopeptides free of charge. Vested share awards can be exercised on the final vesting date at the earliest.

Dilution

To ensure the delivery of shares to participants in the company’s incentive programs as well as to cover social security contributions when share awards and employee options are exercised, the Parent Company has issued warrants to its subsidiary
Oncopeptides Incentive AB, which entitle holders to subscribe for a total of 5,279,995 shares in the Parent Company.

The full utilization of granted options and share awards as of December 31, 2019, corresponding to 2,569,177 shares, would result in a dilution for shareholders of 4.4 percent. The full utilization of all resolved warrants corresponding to a total of 5,279,995 shares (including unallotted employee options and hedging of social security contributions) would result in a dilution for shareholders of 8.7 percent.