4Share-based payment

Share-based payment was introduced in the Group as part of the IPO on SIX Swiss Exchange on 29 April 2021.

For the year ended 31 December 2021, the following equity-settled share-based payment arrangements have been recognized in the financial statements:

IPO share bonus

Eligible members of the Board of Directors, the Executive Committee and certain other senior managers were granted a total of 51,434 number of shares upon the successful listing on SIX Swiss Exchange. The fair value at grant date amounted to kEUR 2,998 and was measured based on the initial public offering price of EUR 58 (CHF 64) per share.

Since all the shares vested immediately upon the listing, the full amount has been recognized in the income statement in 2021 as “General and administrative expenses” (see Note 3). The amount was subsequently fully reimbursed by Draupnir Holding B.V. which has been recognized directly in equity on “Other capital reserves”.

Board of Directors

Members of the Board of Directors have the option to elect to be paid up to 100% of their fixed fee in shares. For Board members electing to receive more than 50% of their fixed fee in shares, the shares exceeding the 50% portion are granted at a discount of 20% to market price. The proportion between shares and cash is selected by each Board member upon election at the annual general meeting and is fixed until next annual general meeting. For the current period (i.e., until the annual general meeting in 2022), the Board of Directors is compensated on a pro-rata basis for the period of service even in the case of early termination or removal.

The fair value at grant date amounted to kEUR 731, reflecting a measurement based on a total number of shares of 12,540 and the initial public offering price of EUR 58 (CHF 64) per share.

Under IFRS, all shares will be fully vested at the annual general meeting in April 2022. In 2021, a total amount of kEUR 713 was recognized as “General and administrative expenses” in the income statement according to the principles of graded vesting in IFRS 2.

Chief Executive Officer

The CEO of the Group, Raymond De Vré, has during 2021 been granted three separate share-based payment arrangements:

• A one-time grant of shares at a value of kCHF 750 which was calculated at a 20% discount to the initial public offering price of CHF 64 as compensation for the loss of unvested options from his previous employer. The fair value at grant date amounted to kEUR 854, reflecting a measurement based on 14,648 number of shares and the initial public offering price of EUR 58 (CHF 64) per share. The grant includes a service condition of three years, one-third vesting each year as of 1 June (starting in 2022). The expenses are recognized in the income statement according to the principles of graded vesting in IFRS 2, resulting in an amount of kEUR 401 recognized as “General and administrative expenses” in 2021.

• A grant of shares at a value of kCHF 100 at 15% discount to the initial public offering price of CHF 64 as compensation for his loss of variable payments for 2020 and 2021 from his previous employer. The fair value at grant date amounted to kEUR 107, reflecting a measurement based on 1,838 number of shares and the initial public offering price of EUR 58 (CHF 64) per share. The grant includes a service condition of one year and will vest at 1 July 2022. The expenses are recognized on a straight-line basis in the income statement, resulting in an amount of kEUR 66 recognized as “General and administrative expenses” in 2021.

• During the second half of 2021, the Board of Directors adopted a Long Term Incentive Plan (“LTIP”) for Executive Committee members and other members of senior management of the Group. Under this share-based incentive program, eligible participants will be awarded the contingent right to receive a certain number of shares in the future (“PSU(s)”) in the Company subject to continued employment and achievement of non-market performance targets. The actual number of PSUs that will eventually vest and be settled in shares depend on the RONOA and EPS performance of the Group over a three-year performance period.
    
  For the year ended 31 December 2021 the only eligible participant in the LTIP was the CEO of the Group, Raymond De Vré. However, the Remuneration and Nomination Committee is currently evaluating the expansion of the LTIP to cover additional members of the Executive Committee as well as other members of senior management in future periods.
  
  The PSUs were granted to Raymond De Vré on 29 November 2021. In accordance with IFRS 2, the maximum number of shares potentially vesting has been used for the determination of the fair value of the grant. As a result, the fair value at grant date amounted to kEUR 1,241, reflecting a measurement based on 9,909 number of PSUs and the share price of PolyPeptide Group AG as of the grant date of EUR 125 (CHF 131). The shares will vest 10 trading days after the shareholders approve the 2023 audited financial statements.
  
  In 2021 an amount of kEUR 28 has been recognized as “General and administrative expenses” in the income statement.