Kvika banki hf. : Allocation of stock options

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Kvika banki hf.

Based on an authorization from the annual general meeting of Kvika banki hf., held on March 31, 2022, the board of directors of Kvika approved the granting of stock options for a total of 39,932,524 shares of the company to certain employees of the group and has finalized agreements in this regard.

Employees pay stock options with the deferred portion of performance-based payments that have been granted, among others, for the year 2021. Stock options are granted to align the long-term interests of the company and such employees. For stock options, employees pay a total of ISK 94,461,347 using performance-based deferred payments that have already been expensed. The terms of the stock options are in accordance with the company’s remuneration policy and bonus system, Financial Companies Law no. 161/2002 and Regulation of the Financial Supervisory Authority of the Central Bank of Iceland (FME) No. 388/2016 on bonus schemes under the Financial Companies Act.

The main conditions of the stock options are as follows:

  • The exercise price of the stock options is ISK 22.495 per share, which is equal to the weighted average price of transactions with shares of the company on the Nasdaq OMX Iceland for ten business days prior to the contract date, with an annual interest of 7.5% over the period, and the exercise price will be adjusted by any dividends decided during the vesting period.

  • The vesting period for stock options is 27 months from the grant date. Thereafter, the stock options may be exercised for a period of three months. However, in the event of a merger resulting in the dissolution of the company or in the event of a change of control of the company, as provided for in article 100. 108/2007 on corporate actions, all outstanding stock options will become fully vested. .

  • Generally, stock options will lapse if the stock option holder’s employment relationship with the company ends before the end of the vesting period.

  • The Chief Executive Officer, the Deputy Chief Executive Officer and the Group’s General Management undertake to retain, until the end of their employment, shares whose market value corresponds to the after-tax profit of the stock options used up to the end of their employment. that the value of the shares held by these persons is equivalent to 12 months’ salary for the CEO and deputy general manager of Kvika and six months’ salary for the other members of the executive management.

  • The value of the stock options has been determined by an independent specialist and the value complies with the laws and rules applicable to bonus payments from financial companies.

  • In some cases, the company is entitled to revoke stock options in part or in whole in accordance with FME rules.

The cost of the company’s stock option agreements reported here is estimated at ISK 94,461,347 based on the Black-Scholes calculation model, but in return performance-based payments previously expensed are cancelled. The total number of stock options issued under this award corresponds to approximately 0.84% ​​of the total issued share capital.

See attachments for more information on stock options granted to executives

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