4Share-based payment

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 general meeting and is fixed until the next 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 2025, the fair value at grant date amounted to kEUR 795 (2024: kEUR 785), reflecting a measurement based on a total number of shares of 51,895 (2024: 25,796) considering a 20% discount for any portion of the fee exceeding 50% of the total board compensation paid in shares. All shares will be fully vested at the general meeting in April 2026. In 2025, a total amount of kEUR 798 (2024: kEUR 802) was recognized as “General and administrative expenses” in the income statement according to the principles of graded vesting in IFRS 2.

Executive Committee and selected key employees

The Board of Directors has adopted a Long-Term Incentive Plan (“LTIP”) for Executive Committee members and selected key employees of the Group. Under this share-based incentive program, eligible participants are 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 market as well as non-market performance targets. The actual number of PSUs that will eventually vest and be settled in shares depends on revenue, EBITDA, and Total Shareholder Return (“TSR”) performance of the Group over a three-year performance period.

In H1 2024, 30 employees of the Group, including members of the Executive Committee, were granted PSUs in the Company. The total fair value at grant date amounted to kEUR 3,408. The fair value at grant date for the PSUs conditioned on revenue and EBITDA performance (i.e., non-market vesting conditions) amounted to kEUR 2,629, reflecting a measurement based on 81,640 number of PSUs potentially vesting and the share price of PolyPeptide Group AG as of the grant date of EUR 32, adjusted for a value cap of 500% at vesting. The impact of the value cap has been determined based on a Monte-Carlo simulation. The fair value at grant date for the PSUs conditioned on TSR performance amounted to kEUR 779, reflecting a measurement based on 17,499 number of PSUs and a fair value per PSU of EUR 45. The fair value per PSU is determined based on a Monte-Carlo simulation that also incorporates a value cap of 500% at vesting.
In H2 2024, three employees of the Group were granted PSUs in the Company. The total fair value at grant date amounted to kEUR 38. The fair value at grant date for the PSUs conditioned on revenue and EBITDA performance (i.e., non-market vesting conditions) amounted to kEUR 30, reflecting a measurement based on 1,056 number of PSUs potentially vesting and the share price of PolyPeptide Group AG as of the grant date of EUR 28, adjusted for a value cap of 500% at vesting. The impact of the value cap has been determined based on a Monte-Carlo simulation. The fair value at grant date for the PSUs conditioned on TSR performance amounted to kEUR 8, reflecting a measurement based on 226 number of PSUs and a fair value per PSU of EUR 38. The fair value per PSU is determined based on a Monte-Carlo simulation that also incorporates a value cap of 500% at vesting.
In H1 2025, 41 employees of the Group, including members of the Executive Committee, were granted PSUs in the Company. The total fair value at grant date amounted to kEUR 3,557. The fair value at grant date for the PSUs conditioned on revenue and EBITDA performance (i.e., non-market vesting conditions) amounted to kEUR 3,203, reflecting a measurement based on 154,364 number of PSUs potentially vesting and the share price of PolyPeptide Group AG as of the grant date of EUR 21, adjusted for a value cap of 500% at vesting. The impact of the value cap has been determined based on a Monte-Carlo simulation. The fair value at grant date for the PSUs conditioned on TSR performance amounted to kEUR 354, reflecting a measurement based on 33,076 number of PSUs and a fair value per PSU of EUR 11. The fair value per PSU is determined based on a Monte-Carlo simulation that also incorporates a value cap of 500% at vesting.
In H2 2025, one employee of the Group joined the Long-Term Incentive Plan and was granted PSUs in the Company. The total fair value at grant date amounted to kEUR 101. The fair value at grant date for the PSUs conditioned on revenue and EBITDA performance (i.e., non-market vesting conditions) amounted to kEUR 85, reflecting a measurement based on 3,602 PSUs potentially vesting and the share price of PolyPeptide Group AG as of the grant date of EUR 24, adjusted for a value cap of 500% at vesting. The impact of the value cap has been determined based on a Monte-Carlo simulation. The fair value at grant date for the PSUs conditioned on TSR performance amounted to kEUR 16, reflecting a measurement based on 772 PSUs and a fair value per PSU of EUR 20. The fair value per PSU is determined based on a Monte-Carlo simulation that also incorporates a value cap of 500% at vesting. During H2 2025, 1,235 PSUs granted to two participants were forfeited due to termination of employment prior to vesting. In accordance with IFRS 2, the related share‑based payment expense recognized in prior periods was reversed, and no further expense is recognized in respect of these forfeited awards.

The participants are compensated for missed dividend payments during the vesting period if the PSUs vest. As a result, expected dividends during the vesting period have not impacted the fair value measurements of the grant.

An expense of kEUR 1,223 (2024: kEUR 512) has been recognized in 2025 as “General and administrative expenses” in the income statement relating to these grants.

Chief Executive Officer

The CEO of the Group, Juan Jose Gonzalez, is participating in the share-based incentive program described above. In addition to these, he was also granted PSUs on 6 September 2023 (“2023 CEO Grant”). The vesting of the PSUs for the 2023 CEO Grant depends on RONOA and EPS performance of the Group over a three-year performance period.

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. The vesting period ends 10 trading days after the shareholders approve the 2025 audited consolidated financial statements.

The participant is compensated for missed dividend payments during the vesting period if the PSUs vest. As a result, expected dividends during the vesting period have not impacted the fair value measurement of the grant.

In 2025, no expense has been recognized in the income statement since it is expected that no PSUs from the 2023 CEO Grant will eventually vest. In H1 2024, an amount of kEUR 146 was recognized as “General and administrative expenses” in the income statement. This amount has been reversed in H2 2024.