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Incentive programs

Long-term share-based incentive programmes to senior executives and other employees

In connection with the admission to trading of the company’s B-shares on Nasdaq Stockholm, Storskogen will implement two share-based incentive programmes: a warrant programme and a share savings programme. The purposes of the incentive programmes are, inter alia, to encourage a broad ownership amongst the company’s employees, facilitate recruitment, maintain competent employees, increase the alignment of interest between the employees and the company’s shareholders, encourage the company’s long-term growth as well as to increase motivation to reach or exceed the company’s financial targets.

The maximum number of B-shares that may be allotted to the participants of the warrant programme and the share savings programme is not more than 12,303,560, corresponding to approximately 0.7 per cent of the share capital and 0.4 of the votes in the company after the completion of the offering (assuming that the offering is fully subscribed and that the overallotment option is exercised in full). The maximum number of B-shares that may be issued under the warrant programme and the share savings programme when including hedge for social security contributions is 13,963,798 B-shares, corresponding to approximately 0.8 per cent of the share capital and 0.5 per cent of the votes in the company after the completion of the offering (assuming that the offering is fully subscribed and that the overallotment option is exercised in full).

Warrant programme

An extraordinary general meeting of the company held on 24 September 2021 resolved to implement a long-term incentive programme in the form of a warrant programme for certain senior executives and other key employees of the group.

In total, the warrant programme will comprise a maximum of 141 individuals and not more than 6,872,046 warrants of series 2021/2024. The maximum number of B-shares that may be subscribed for by the participants by exercise of the warrants corresponds to approximately 0.4 per cent of the share capital and 0.2 per cent of the votes in the company following the completion of the offering (assuming that the offering is fully subscribed and that the overallotment option is exercised
in full).

The warrants shall be issued to the participants at fair market value, which shall be determined pursuant to Black & Scholes after the final offering price has been determined. The number of warrants offered to each participant depends on the participant’s position and responsibilities within Storskogen. The maximum investment allowed in the warrants is an amount corresponding not more than ten per cent of each participant’s annual base salary.

The maximum number of warrants that the senior executives have committed to subscribe for is presented in Group management.

Subscription for B-shares by the exercise of the warrants can be made during a subscription period from and including the day following the publication of the interim report for the period
1 January–30 September 2024 and during a period of thirty days thereafter, however not earlier than the day that falls three years after the final offering price has been determined and not later than the day that falls four months thereafter. If a participant is prohibited from exercising warrants due to applicable insider rules, the company may extend the subscription period. Each warrant may be exercised to subscribe for one B-share in the company during the subscription period.

The subscription price for subscription of B-shares by exercise of the warrants shall correspond to 150 per cent of the offering price, but may not be lower than the quotient value of the share. The complete terms and conditions of the warrants also include customary re-calculation provisions.
The company will reserve the right to repurchase warrants, for example, if the participant’s employment with the company is terminated.

Assuming an increase of the market price of the B-shares of 100 per cent, the company’s total costs for the warrant programme during the vesting period is not expected to exceed approximately SEK 0.5 million (mainly relating to social security contributions for participants in jurisdictions where participa-tion in the warrant programme is taxed as earned income).

Share savings programme

The extraordinary general meeting of the company held on 24 September 2021 also resolved to implement a long-term incentive programme in the form of a share savings programme for certain senior executives and other key employees of the group.

In total, the share savings programme will comprise a maximum of 341 individuals. Key employees in the group are expected to be offered to participate in the share savings programme. Participation will require the employees to make own investments in the company’s B-shares at market price on Nasdaq Stockholm or allocate B-shares already held to the share savings programme (“Savings Shares”). The maximum investment permitted in Savings Shares is based on an amount corresponding to not more than 12 per cent of each participant’s annual fixed salary.

Participants who retain the Savings Shares during the share savings programme’s term of three years and also remain employed by Storskogen throughout the whole period may at the end of the period be eligible for free additional B-shares if the two pre-determined performance criteria (total shareholder return “TSR” and EBITA development) have been met (“Performance Shares”). The performance criteria will have equal weight in determining the number of Performance Shares to be allotted. The TSR performance criteria is that the TSR needs to be more than 15 per cent during the vesting period (45 per cent for full allotment). The EBITA performance criteria is that the EBITA increase needs to be more than 15 per cent during the vesting period (45 per cent for full allotment).

For each Savings Share held, 2–6 Performance Shares may be awarded depending on which category the employee belongs to. The share saving programme will be subject to customary
re-calculation provisions.

Full allotment of Performance Shares would mean that the total number of B-shares under the share savings programme will amount to not more than 5,431,514 B-shares, corresponding to approximately 0.3 per cent of the share capital and 0.2 per cent of the votes in the company following the completion of the offering (assuming that the offering is fully subscribed and that the overallotment option is exercised in full). The maximum number of B-shares that may be issued under the share savings programme when including hedge for social security contributions is 7,091,752 B-shares, corresponding to approximately 0.4 per cent of the share capital and 0.2 per cent of the votes in the company after the completion of the offering (assuming that the offering is fully subscribed and that the overallotment option is exercised in full).

The cost for the share savings programme will be accounted for in accordance with IFRS 2—Share-Based Payments. Storskogen’s total IFRS 2 cost for the share savings programme is not expected to exceed approximately SEK 206.1 million (assuming that the maximum number of Performance Shares are allotted to the participants and that the market price of the B-shares increases with a maximum of 50 per cent). Of the total costs, outgoing social security charges are estimated to amount to approximately SEK 80.9 million, assuming an increase of 50 per cent of the market price of the B-shares during the vesting period and 30.57 per cent estimated average social security costs.

For the purpose of ensuring delivery of Performance Shares and hedging social security costs under the share savings programme, the extraordinary general meeting also resolved on the issuance of not more than 7,091,752 warrants of series 2021/2024 II without consideration to company itself. At the end of the vesting period, the warrants will be transferred, exercised for subscription of B-shares and/or transferred to participants that have been granted allocation.