4Share-based payment

The following equity-settled share-based payment arrangements are recognized in the consolidated financial statements:

Board of Directors

Members of the Board of Directors receive at least half of their fixed fees in shares, with 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 (in excess of 50%) and cash is selected by each Board member upon election at the annual general meeting and is fixed until the next annual general meeting. 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.

In 2023, the fair value at grant date amounted to kEUR 886 (2022: kEUR 799), reflecting a measurement based on a total number of shares of 43,690 (2022: 9,835) and a price of EUR 20 (CHF 20) per share as at 12 April 2023 (2022: a price of EUR 81 (CHF 83) per share as at 26 April 2022).

All shares will be fully vested at the annual general meeting in April 2024. In 2023, a total amount of kEUR 892 (2022: kEUR 809) 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 Board of Directors has 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, inter alia, continued employment and achievement of non-market performance targets. The actual number of PSUs that will eventually vest and be settled in shares depends on the RONOA and EPS performance of the Group over a three-year performance period.

For the year ended 31 December 2023, the only eligible participant in the LTIP was the CEO of the Group, Juan José González, who joined the Group in April 2023. The PSUs were granted to Juan José González on 6 September 2023. In accordance with IFRS 2, the maximum number of shares potentially vesting was used for the determination of the fair value of the grant. As a result, the fair value at grant date amounted to kEUR 1,135, reflecting a measurement based on 51,060 number of PSUs and the share price of PolyPeptide Group AG as of the grant date of EUR 23 (CHF 22). The vesting period ends 10 trading days after the shareholders approve the 2025 audited consolidated financial statements.

In January 2023, Raymond De Vré resigned as the CEO of the Group. He was subsequently succeeded by the current CEO of the Group, Juan José González. The resignation of Raymond De Vré has impacted the share-based payment-related expenses as follows:

• When Raymond De Vré joined the Group in 2021, he received 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 included a service condition of three years, one-third vesting each year as of 1 June (starting from 2022). The expenses have been recognized in the income statement as “General and administrative expenses” according to the principles of graded vesting in IFRS 2, resulting in an accumulated expense of kEUR 730 as at 31 December 2022.
  Due to the resignation of Raymond De Vré, the last tranche previously expected to vest in June 2024 did not vest. As a result, an adjustment has been recognized in 2023, resulting in an accumulated expense of kEUR 569 as at 31 December 2023. No further expenses relating to this grant will be recognized in future periods.
• Raymond De Vré participated in the LTIP and was granted PSUs at a fair value of kEUR 1,241 on 29 November 2021. The vesting would end 10 trading days after the shareholders approve the 2023 audited consolidated financial statements. The resignation of Raymond De Vré has changed these vesting terms. However, due to the expected RONOA and EPS performance of the Group over the three-year performance period, no shares from the 2021 grant are expected to vest (similar to the expectation as at 31 December 2022). As a result, no expenses have been recognized in the income statement in 2023 (2022: nil) and the change in the terms due to the resignation has thus not resulted in a financial impact.

The comparative figures for 2022 include an expense of kEUR 45 recognized as “General and administrative expenses” in the income statement, reflecting a grant to Raymond De Vré for his loss of variable payments from his previous employer. The shares vested in 2022 and thus have no impact on 2023.