Incentive program

Incentive program 2019

The annual general meeting resolved on 16 May 2019 on a long-term incentive program and issuance of warrants in accordance with the below (“LTIP 2019”).
In total, not more than 500,000 warrants to a subsidiary of the company for subsequent transfer to key persons and members of the executive management of the Hembla AB group, within the scope of a long-term incentive program (“LTIP 2019”) in accordance with the following.

LTIP 2019 will encompass not more than 55 key persons and members of the executive management of the Hembla AB group. Furthermore, future key persons and members of the executive management within the Hembla AB group can be invited to participate. In order to be entitled to participate in the incentive program, participants must have entered into a pre-emption agreement with a company within the Hembla AB group.

The Board of Directors proposes that not more than 500,000 warrants may be issued under LTIP 2019. The company’s wholly-owned subsidiary Holmiensis Bostäder AB shall be entitled to subscribe for all warrants. The warrants shall be issued free of charge to Holmiensis Bostäder AB and thereafter be transferred to participants of LTIP 2019. The transfer of warrants to participants shall be made at a price corresponding to the market value of the warrants, based on the Black & Scholes-formulae. The valuation of the warrants shall be made by an independent financial adviser or accounting firm. Transfer of warrants to participants of LTIP 2019 shall be made in accordance with the following.

Not more than 55 individuals within the Hembla AB group will be offered warrants under LTIP 2019. Allocation will be resolved by the Board of Directors between two categories of participants, “Top Management” (approximately 10 individuals), and “Other key persons” (approximately 45 individuals), and the maximum number of warrants that may be acquired per participant in the program shall not exceed 200,000 warrants. Hembla’s CEO and the directors of the Board of Directors will not receive allocation in LTIP 2019.

Each warrant entitles to subscription of one class B share in Hembla during the period from and including 1 June 2022 up to and including 31 August 2022 at an exercise price equal to 135 per cent of the volume-weighted average price of the company’s class B share during the period of ten trading days falling immediately before the relevant allocation date, however as a minimum the quota value of the share. The calculated exercise price shall be rounded off to nearest even tenth of a krona, whereupon 0.05 krona will be rounded up.

The number of shares that each warrant entitles to subscribe for as well as the strike price shall be recalculated in the event of a share split, share consolidation, share issue, etc. in accordance with customary conversion conditions. The warrants may, in accordance with customary terms and conditions, be exercised prior to the exercise period in the event of, for example, compulsory acquisition of shares, liquidation or merger whereupon Hembla will merge into another company.
The last day for acquisition of warrants shall be the day prior to the annual general meeting 2020. For participants who subscribe after the first grant date, acquisitions must be made at the current market value on such later allocation day. The Board of Directors shall be able to cancel warrants that have not been transferred to participants or that have been repurchased from participants.

Holmiensis Bostäder AB shall, in connection with the transfer of warrants to participants of LTIP 2019, and with certain exceptions, reserve a pre-emption right regarding the warrants if the participant’s employment or assignment in the group ends or if the participant wishes to transfer the warrants prior to the warrants being exercisable.

The warrant issue entails a dilution effect of approximately 0.5 per cent of the share capital and the votes in the company if the proposed warrants are exercised in full. Considering also the shares which may be issued pursuant to previously implemented incentive programs in the company, the maximum dilution amounts to 4.5 per cent.

The warrants will be transferred at market value and therefore no social security contributions are to be paid by the group in relation to the issue of the warrants. However, the loan arrangement described below will have a financial impact on the company’s balance sheet of a maximum of SEK 5.1 million. It is estimated that other costs for LTIP 2019 will not exceed SEK 0.25 for the duration of LTIP 2019. Accordingly, LTIP 2019 is expected to have a marginal effect on the company’s key ratios.
The market value of the warrants corresponds to approximately SEK 10.2 per warrant, assuming a share price of the company’s class B share of SEK 182 per share and a strike price corresponding to SEK 245.70 per share, based on the Black & Scholes-formulae.

To encourage participation in LTIP 2019, individuals who choose to participate in the program will be offered the opportunity to borrow an amount at market terms, equal to 100 per cent of the market value of the warrants to be purchased.

Incentive program 2017

The annual general meeting resolved on 10 May 2017 on a long-term incentive program and issuance of warrants in accordance with the below (“LTIP 2017”).

In total, no more than 2,730,000 warrants is proposed to be issued through LTIP 2017 for the executive management in accordance with the below. The warrants will be issued in three series with one-third of the total number of warrants in each series. Entitled to subscribe for all warrants is the wholly owned subsidiary Holmiensis Bostäder AB, which will transfer the warrants to employees in the company. The warrants shall be issued free of charge to Holmiensis Bostäder AB.

Transfer of warrants to participants shall be made at a price corresponding to the market value of the warrant (i.e. the warrant premium) determined using the Black & Scholes-formula. The valuation of the warrants shall be made by an independent financial adviser or accounting firm.

Transfer of warrants to participants in LTIP 2017 shall be made in accordance with the allocation below. The participants will be divided into two different categories for the purpose of resolving on the grant of warrants:

  • The CEO of the company is entitled to not more than 840,000 warrants,
  • and Other senior executives in the group (ten persons) are entitled to not more than 1,890,000 warrants, whereof each participant is entitled not more than 252,000 warrants.

Not more than a total of 2,730,000 warrants may be allotted within LTIP 2017.

Each warrant of series 1 entitles to subscription of one share in Hembla during the period from and including 15 May 2020 up to and including 30 September 2022. Each warrant of series 2 entitles to subscription of one share in Hembla during the period from and including 1 May 2021 up to and including 30 September 2022. Each warrant of series 3 entitles to subscription of one share in Hembla during the period from and including 1 May 2022 up to and including 30 September 2022. All three warrant series has an exercise price corresponding to the average volume weighted share price of Hembla as quoted on Nasdaq Stockholm’s official price list during the period 2 – 8 May 2017 with an addition of SEK 50. The calculated exercise price shall be rounded off to nearest even tenth of a krona, whereupon 0.05 krona will be rounded up.

The exercise price and number of shares that each warrant entitles to subscribe for shall be recalculated in the event of a share split, share consolidation, new issue, etc. in accordance with customary conversion conditions. The warrants may, in accordance with customary terms and conditions, be exercised prior to the exercise period in the event of, for example, compulsory acquisition of shares, liquidation or merger whereupon Hembla will merge into another company.

Right to hold and exercise the warrants assumes that the holder is employed in the company up until the moment when the warrants may be exercised. In connection with the transfer of warrants to the participants, Holmiensis Bostäder AB will reserve the right to buy back the warrants if the participant’s employment or assignment in the company ends or if the participant wants to reassign the warrants. However, the buyback right only applies to warrants that are not already exercisable. As an example, if an employment ceases after four years and the employee holds 45,000 warrants, Holmiensis Bostäder AB will not have the right to buy back 30,000 warrants (the warrants of series 1 and series 2) but only the 15,000 warrants in series 3 that are not yet exercisable. This will not apply in case the employment is terminated for cause. In such case the company shall have the right to buy back all the warrants not yet exercised.

LTIP 2017 entails a dilution effect corresponding to a maximum of approximately 3.5 per cent of the shares and votes in the company if the proposed warrants are exercised in full. LTIP 2017 is expected to have a marginal effect on the company’s key ratios, and is not expected to be followed by further warrant programs for participants in LTIP 2017 in the next 5 years.

The subscription price at the transfer of warrants will correspond to the market value of the warrants, with no costs pertaining to employees or social costs will arise for the company in connection with the issue of warrants. However, the loan arrangement described below will have a financial impact of on the company of a maximum of SEK 0.1 million. It is estimated that the other costs for LTIP 2017 will not exceed SEK 1.0 million for the duration of LTIP 2017 (not taking into account any cash compensation to be paid under the below described loan arrangements which can amount to a maximum of SEK 5.1 million).

The market value of the warrants, according to a preliminary valuation based on the market value of the underlying share corresponding to the share price of the company’s share on 21 March 2017, is SEK 4.10 per warrant, assuming a strike price of SEK 155 per share. The Black & Scholes-formulae has been used for the valuation.

To encourage participation in the LTIP 2017, employees who choose to participate in the program will be offered the opportunity to borrow an amount, equal 70 percent of the market value of the warrants to be purchased, from the company at market terms. The remaining 30 percent of the market value of the warrants to be purchased shall be paid by the participant in cash. Further, participants who borrow less than 70 percent of the market value of the warrants to be purchased will receive cash compensation from the company. The compensation amount to SEK 100,000 (as a gross salary payout) for every SEK 100,000 that the participant chooses not to draw under the loan. In total, if all participants lend the full amount, the employees lending will amount to approx. SEK 3.9 million. The CEO will not be offered to borrow from the company.

Incentive program 2016

The company has a warrants program comprising 807,000 issued subscription warrants, corresponding to 1.04 % of the number of outstanding ordinary shares. The warrants carry an entitlement to subscribe for newly issued class B ordinary shares in Hembla. The warrants may be exercised for subscription commencing May 21, 2019 up to and including August 30, 2019.

The subscription price for class B ordinary shares pursuant to the warrants is SEK 113.50. The warrant program was aimed at all staff employed in the Hembla group as of 12 May, 2016. Market-based pricing was applied for the offering of warrants.

Incentive program 2015

The company has a warrants program comprising 998 200 issued subscription warrants, corresponding to 1.4 % of the number of outstanding ordinary shares. The warrants carry an entitlement to subscribe for newly issued class B ordinary shares in Hembla. The warrants may be exercised for subscription commencing May 21, 2018 up to and including August 31, 2018.

The subscription price for class B ordinary shares pursuant to the warrants is SEK 72.84. The warrant program was aimed at all staff employed in the Hembla group as of 12 May, 2015. Market-based pricing was applied for the offering of warrants.