Notice of Annual General Meeting of Orexo
Orexo AB has scheduled its annual general meeting for April 18, 2023, at its Uppsala, Sweden facility. Shareholders must be registered by April 6, 2023, to attend and must notify the company by April 12, 2023. The meeting's agenda includes the election of board members, approval of financial statements, and key resolutions regarding share issuances and incentive programs. Notably, the board proposes no dividend for 2022 and aims to implement two performance-based incentive programs: LTIP 2023 and LTIP Stay-on 2023, aimed at retaining and motivating employees while aligning their interests with shareholders. The company holds a total of 34,710,639 shares, with 343,023 being its own shares.
- Implementation of LTIP 2023 and LTIP Stay-on 2023 to attract and retain talent.
- Proposed incentives align employee interests with shareholders, potentially improving company performance.
- No dilution of shareholding expected from the new incentive programs.
- No dividend proposed for 2022, which could disappoint investors seeking returns.
- Potential volatility in share price due to proposed share issuances.
UPPSALA,
Participation, etc.
Shareholders who wish to participate in the meeting must be recorded in the share register maintained by
The notification shall set forth the name, personal/corporate identity number, the number of shares held, telephone number (daytime) and, where applicable, number of assistants (not more than two) that the shareholder intends to bring to the meeting. Shareholders to be represented by proxy should submit a power of attorney (original document) and a certificate of registration or equivalent together with the notification of attendance. A proxy form is available at www.orexo.com.
Shareholders whose shares are registered in the name of a nominee through a bank or a securities institution must temporarily re-register their shares in their own names to be entitled to participate in the meeting. Such registration, which may be temporary, must be duly effected in the share register maintained by
When this notice to attend the annual general meeting is issued, the total number of shares in the company is 34,710,639 with 34,710,639 votes. In total the company holds 343,023 own shares. The number of own shares is based on the company's holding as per the close of 14th of
Proposed agenda
1. Opening of the meeting.
2. Election of chairman of the meeting.
3. Preparation and approval of the voting list.
4. Approval of the agenda.
5. Election of one or two persons who shall approve the minutes of the meeting.
6. Determination of whether the meeting has been duly convened.
7. Speech by the chief executive officer.
8. Presentation of the annual report and the auditor's report as well as the consolidated financial statements and the auditor's report on the consolidated financial statements.
9. Presentation of the work performed by the board of directors and its committees.
10. Resolution regarding adoption of the income statement and the balance sheet as well as the consolidated income statement and the consolidated balance sheet.
11. Resolution regarding allocation of the company's result pursuant to the adopted balance sheet.
12. Resolution regarding discharge from liability of the board members and the chief executive officer.
13. Determination of the number of board members and auditors.
14. Determination of fees for the board members and the auditor.
15. Election of board members, chairman of the board and auditor.
16. Presentation of the remuneration report for approval.
17. Resolution regarding nomination committee.
18. Resolution regarding authorization for the board of directors to resolve to issue new shares.
19. Resolution regarding authorization for the board of directors to resolve to repurchase and transfer own shares.
20. Resolution regarding adoption of new performance-based long-term incentive program LTIP 2023.
21. Resolution regarding adoption of new performance-based long-term incentive program LTIP Stay-on 2023.
22. Closing of the meeting.
Proposals regarding chairman of the meeting, the board of directors and auditors (items 2, 13, 14 and 15)
The nomination committee of
- that
Rikard Lindahl , member of theSwedish Bar Association , from Advokatfirman Vinge, is elected chairman of the meeting (item 2), - that the board of directors shall consist of eight board members with no deputy members (item 13),
- that the number of auditors shall be one with no deputy auditors (item 13),
- that the fees to the board of directors shall amount to
SEK 3,550,000 to be allocated as follows:SEK 900,000 to the chairman andSEK 300,000 to each of the other board members, and in totalSEK 400,000 to be allocated to the members of the audit committee so that the chairman of the committee receivesSEK 200,000 andSEK 200,000 are allocated in equal parts between the other members of the committee, and in totalSEK 150,000 to be allocated to the members of the remuneration committee in equal parts between the members of the committee, and that fees to the auditor shall be paid against approved accounts (item 14), - that the independent board members
James Noble ,Staffan Lindstrand ,Fred Wilkinson ,Mary Pat Christie ,Charlotte Hansson ,Christine Rankin and Michael J Matly shall receive an additional fee ofSEK 1,050,000 , subject to (i) the board member's acquisition of shares inOrexo for the entire part (after taxes) of such additional board fee as soon as possible following the annual general meeting's resolution and the pay-out of the additional board fee, and (ii) the board member's commitment not to sell the shares during the board member's entire tenure on theOrexo board. The additional board fee is to be allocated as follows:SEK 450,000 to the chairman, corresponding to 50 percent of the ordinary board fee to the chairman, andSEK 100,000 to each ofStaffan Lindstrand ,Fred Wilkinson ,Mary Pat Christie ,Charlotte Hansson ,Christine Rankin and Michael J Matly, corresponding to 33 percent of the ordinary board fee to such board members. In the event that the board member, before the succeeding annual general meeting, is dismissed due to breach ofhis/her obligations as a board member or leaves the board at his/her own request, the board member must repay the entire additional board fee (after taxes).James Noble has not participated in the nomination committee's handling of the proposal insofar as it concerns himself (item 14), - that the board members
James Noble ,Staffan Lindstrand ,Henrik Kjær Hansen ,Fred Wilkinson ,Mary Pat Christie ,Charlotte Hansson ,Christine Rankin and Michael J Matly are re-elected, all for the period up until the end of the next annual general meeting (item 15), - that
James Noble is re-elected as chairman of the board (item 15), and - that Ernst & Young Aktiebolag is re-elected as auditor for the period up until the end of the next annual general meeting. The proposal is in accordance with the recommendation by the audit committee (item 15).
Allocation of the company's result (item 11)
The board of directors proposes that there shall be no dividend for 2022 and that the results of the company shall be carried forward.
Resolution regarding nomination committee (item 17)
The nomination committee proposes that the meeting resolves that the company shall have a nomination committee consisting of a representative of each of the three largest shareholders, based on the number of votes held, together with the chairman of the board. If any of the three largest shareholders declines to appoint a member to the nomination committee, additional shareholders are, by order of size, to be offered appointment until three members are appointed. The names of the members of the nomination committee and the names of the shareholders they represent shall be made public not later than six months before the annual general meeting and be based on shareholding statistics provided by Euroclear Sweden AB per the last banking day in August 2023. Unless the members of the nomination committee agree otherwise, the member representing the largest shareholder, based on the number of votes held, shall be appointed chairman of the nomination committee. If a shareholder representative no longer represents the owner or leaves the nomination committee before its work is completed, the shareholder shall be entitled to appoint a new member of the nomination committee. A shareholder who has appointed a member of the nomination committee has the right to remove such member and appoint a new member of the nomination committee. In the event a shareholder that has appointed a member is no longer one of the three largest shareholders, based on the number of votes held, the appointed member shall resign and be replaced by a new member in accordance with the above procedure. Unless special circumstances apply, no changes should be made in the composition of the nomination committee as a result of minor changes in voting rights or changes in voting rights which occur later than two months before the annual general meeting. Changes in the composition of the nomination committee shall be made public as soon as possible.
The nomination committee shall prepare and submit proposals to the general meeting on chairman of the meeting, board members, chairman of the board, board fees to each of the board members and the chairman as well as remuneration for committee work, if any, fees to the company's auditor, and, when applicable, proposal regarding election of new auditor. Further, the nomination committee shall prepare and propose principles for the composition of the nomination committee to the annual general meeting 2024. The nomination committee shall be entitled to charge the company with costs for consultants and other expenses necessary for the nomination committee to carry out its duties.
Resolution regarding authorization for the board of directors to resolve to issue new shares (item 18)
The board of directors proposes that the annual general meeting authorizes the board of directors to resolve to issue new shares on one or several occasions until the next annual general meeting, with or without preferential rights for the shareholders, against cash payment or against payment through set-off or in kind, or otherwise on special conditions. However, such issue of shares must never result in the company's issued share capital or the number of shares in the company at any time, being increased by more than a total of 20 per cent. The purpose of the authorization is to enable the board to make corporate acquisitions, product acquisitions or to enter into collaboration agreements, or to raise working capital or broaden the shareholder base.
The CEO shall be authorized to make such minor adjustments to this resolution that may be necessary in connection with the registration thereof.
Resolution regarding authorization for the board of directors to resolve to repurchase and transfer own shares (item 19)
The board of directors proposes that the annual general meeting authorizes the board of directors to resolve to repurchase, on one or several occasions until the next annual general meeting, as many own shares as may be purchased without the company's holding at any time exceeding 10 per cent of the total number of shares in the company. The shares shall be purchased on Nasdaq Stockholm and only at a price per share within the price range applicable, i.e. the range between the highest purchase price and the lowest selling price.
The board of directors also proposes that the annual general meeting authorizes the board of directors to resolve, on one or several occasions until the next annual general meeting, to transfer (sell) own shares. Transfers may be carried out on Nasdaq Stockholm at a price within the price range applicable, i.e. the range between the highest purchase price and the lowest selling price. Transfers may also be made in other ways, with or without preferential rights for the shareholders, against cash payment or against payment through set-off or in kind, or otherwise on special conditions. Upon such transfers, the price shall be established so that it is not below market terms. However, a discount to the stock market price may apply, in line with market practice. Transfers of own shares may be made of up to such number of shares as is held by the company at the time of the board of director's resolution regarding the transfer.
The purpose of the authorization to repurchase own shares is to promote efficient capital usage in the company, to provide flexibility as regards the company's possibilities to distribute capital to its shareholders and for use in the context of the company's incentive plans. The purpose of the authorization to transfer own shares is to enable the board to make corporate acquisitions, product acquisitions or enter into collaboration agreements, or to raise working capital or broaden the shareholder base or for use in the context of the company's incentive plans.
The board of director's statement in accordance with chapter 19 section 22 of the Swedish Companies Act is made available together with the proposal.
The CEO shall be authorized to make such minor adjustments to this resolution that may be necessary in connection with the registration thereof.
Resolution regarding adoption of new performance-based long-term incentive program LTIP 2023 (item 20)
The board of directors proposes that the annual general meeting resolves to implement a new performance-based long-term incentive program for not more than 130 selected employees within the
LTIP 2023 is a three-year performance-based program. Under LTIP 2023, the participants will be granted, free of charge, (i) performance-based share awards ("Share Awards"), and (ii) performance-based employee stock options ("Employee Stock Options"), entitling to a maximum of 2,076,770 shares in
The rationale for the proposal
LTIP 2023 substantially corresponds with the performance based long-term incentive program adopted at the annual general meeting 2022 (LTIP 2022). LTIP 2023 is intended for certain senior executives and employees within the
The purpose of LTIP 2023 is to attract, retain and motivate employees of the
Conditions for Share Awards and Employee Stock Options
The following conditions shall apply for the Share Awards and the Employee Stock Options.
- The Share Awards and the Employee Stock Options shall be granted free of charge to the participants as soon as possible following the annual general meeting 2023 and no later than on
30 June 2023 . Out of the granted Share Awards and Employee Stock Options, 30 percent shall constitute Share Awards and 70 percent shall constitute Employee Stock Options. - Each Share Award entitles the holder to receive one share in the company free of charge, except for the appropriate taxes, three years after the granting of the Share Award (the vesting period), provided that the holder, with some exceptions, still is employed by the
Orexo group. - Each Employee Stock Option entitles the holder to receive one share in the company upon payment of the strike price, three years after granting of the Employee Stock Option (the vesting period), provided that the holder, with some exceptions, still is employed by the
Orexo group. The strike price shall be fixed to 100 percent of the volume-weighted average price for theOrexo share during the ten trading days preceding the date of the annual general meeting 2023. - A prerequisite for entitlement to receive shares on the basis of Share Awards is that Performance Targets 1 and/or 2 have been satisfied pursuant to the terms and conditions specified below.
- A prerequisite for entitlement to receive shares on the basis of Employee Stock Options is that Performance Target 1 has been satisfied pursuant to the terms and conditions specified below.
- The number of Share Awards and Employee Stock Options encompassed by LTIP 2023 is to be re-calculated in the event that changes occur in
Orexo's equity capital structure, such as a bonus issue, merger or consolidation of shares, new issue, reduction of the share capital or similar measures. - To make the participants' interest equal with the shareholders',
Orexo will compensate the participants for distributed dividends, if any, during the vesting period by increasing the number of shares that each Share Award and each Employee Stock Option, respectively, entitles to after the vesting period. - The Share Awards and the Employee Stock Options are non-transferable and may not be pledged.
- The Share Awards and the Employee Stock Options can be granted by the parent company and any other company within the
Orexo group.
Performance Conditions
The Share Awards are to be divided according to two different performance conditions encompassed by LTIP 2023. The performance conditions focus on the holder still being employed by the
The Employee Stock Options are to be divided according to one performance condition encompassed by LTIP 2023, which is Performance Target 1. Of each participant's granted Employee Stock Options, 100 percent will pertain to Performance Target 1, meaning that no Employee Stock Options will vest unless the performance target is met.
The allotment of shares that each participant later may receive depends on achievement of the established performance targets as described below.
Performance Target 1 (for Share Awards and Employee Stock Options): This target pertains to the holder still being employed by the
Performance Target 2 (for Share Awards): This target pertains to the fulfilment of the financial and operational targets for the financial year 2023 as established by the board of directors and relates to
The board of directors will present the rate of achievement of Performance Target 2 in the annual report for 2023.
Allocation
The participants are divided into two allocation categories: (i) CEO and other members of group management; (ii) other personnel. The maximum number of Share Awards and Employee Stock Options that a participant may be granted in LTIP 2023 depends on the category to which the participant belongs.
To ensure that the value of the share-based remuneration does not reach an unintended level in relation to other remuneration, the value of the Share Awards and Employee Stock Options granted to the CEO and group management must not, at the time of the grant, exceed a value equal to the person's current annual base salary. For other personnel the value must not exceed 33 percent of the annual base salary.
The board of directors shall resolve upon the final allocation of the Share Awards and Employee Stock Options as soon as possible after the annual general meeting. Several factors will be considered in order to secure recruitment, retention and motivation when deciding upon individual allocations including position within Orexo, individual performance and total value of current remuneration package. Individual allocation cannot exceed the above-mentioned limit for the category that the individual belongs to. Out of the allocated Share Awards and Employee Stock Options, 30 percent will constitute Share Awards and 70 percent will constitute Employee Stock Options.
The share price that is to form the basis for calculating the number of Share Awards and Employee Stock Options is to correspond to the average last price paid during a given period of trading. This period comprises the first ten days of trading immediately following the date of the 2023 annual general meeting. The share price is then divided by the individual granting value in order to arrive at the total number of Share Awards and Employee Stock Options granted per participant.
Preparation and administration
The board of directors shall be responsible for preparing the detailed terms and conditions of LTIP 2023, in accordance with the mentioned terms and guidelines. To this end, the board of directors shall be entitled to make adjustments to meet foreign regulations or market conditions. The board of directors may also make other adjustments if significant changes in the
Preparation of the proposal
LTIP 2023 has been initiated by the board of directors of
Scope and costs of the program
LTIP 2023 will be accounted for in accordance with "IFRS 2 – Share-based payments". IFRS 2 stipulates that the Share Awards and Employee Stock Options should be expensed as personnel costs over the vesting period and will be accounted for directly against equity. Personnel costs in accordance with IFRS 2 do not affect the company's cash flow. Social security costs will be expensed in the income statement during the vesting period.
Assuming a share price at the time of implementation of SEK 17, that Performance Target 1 is achieved and that Performance Target 2 is achieved at 50 percent, including a share price increase of 30 percent during the vesting period, the annual cost for LTIP 2023 including social security costs is estimated to approximately
LTIP 2023 will have marginal effects on
Since delivery of shares under LTIP 2023 shall be made by way of transfer of
Information on
Delivery under LTIP 2023
The board of directors proposes that delivery of shares under LTIP 2023 shall be made by way of transfer of
Resolution regarding adoption of new performance-based long-term incentive program LTIP Stay-on 2023 (item 21)
The board of directors proposes that the annual general meeting resolves to implement a new performance-based long-term incentive program for certain Global Management Team ("GMT") employees and US Leadership Team ("USLT") employees within the
LTIP Stay-on 2023 is a three-year performance-based program. Under LTIP Stay-on 2023, the participants will be granted, free of charge, (i) performance-based share awards ("Share Awards"), and (ii) performance-based employee stock options ("Employee Stock Options"), entitling to a maximum of 60,000 shares in
The rationale for the proposal
LTIP Stay-on 2023 substantially corresponds with the performance based long-term incentive program adopted at the annual general meeting 2022 (LTIP Stay-on 2022). LTIP Stay-on 2023 is intended for certain GMT and USLT employees within the Orexo group and qualification for participation in LTIP Stay-on 2023 is conditional upon the participant either keeping shares from allocations in
The purpose of LTIP Stay-on 2023 is to attract, retain and motivate employees of the
Conditions for Share Awards and Employee Stock Options
The following conditions shall apply for the Share Awards and the Employee Stock Options.
- Qualification for participation in LTIP Stay-on 2023 is conditional upon the participant
(i) keeping shares from allocations in any of Orexo's implemented LTIPs between
- Under Opt-in 2, the Share Awards and the Employee Stock Options shall be granted free of charge to the participants as soon as possible after
- Out of the granted Share Awards and Employee Stock Options, 50 percent shall constitute Share Awards and 50 percent shall constitute Employee Stock Options. Every five (5) shares kept in accordance with Opt-in 1 and every five (5) shares acquired in accordance with Opt-in 2, respectively, entitle the participant to one (1) Share Award and one (1) Employee Stock Option.
- Each Share Award entitles the holder to receive one share in the company, free of charge, except for the appropriate taxes, three years after the granting of the Share Award (the vesting period), provided that the holder, with some exceptions, still is employed by the
- Each Employee Stock Option entitles the holder to receive one share in the company upon payment of the strike price, three years after the granting of the Employee Stock Option (the vesting period), provided that the holder, with some exceptions, still is employed by the
- A prerequisite for entitlement to receive shares on the basis of Share Awards is that Performance Targets 1 and/or 2 have been satisfied pursuant to the terms and conditions specified below.
- A prerequisite for entitlement to receive shares on the basis of Employee Stock Options is that Performance Target 1 has been satisfied pursuant to the terms and conditions specified below.
- The number of Share Awards and Employee Stock Options encompassed by LTIP Stay- on 2023 is to be re-calculated in the event that changes occur in
- To make the participants' interest equal with the shareholders', Orexo will compensate the participants for distributed dividends, if any, during the vesting period by increasing the number of shares that each Share Award and each Employee Stock Option, respectively, entitles to after the vesting period.
- The Share Awards and the Employee Stock Options are non-transferable and may not be pledged.
- The Share Awards and the Employee Stock Options can be granted by the parent company and any other company within the
Orexo group. - Performance Conditions
The Share Awards are to be divided according to two different performance conditions encompassed by LTIP Stay-on 2023. The performance conditions focus on the holder still being employed by the
The Employee Stock Options are to be divided according to one performance condition encompassed by LTIP Stay-on 2023, which is Performance Target 1. Of each participant's granted Employee Stock Options, 100 percent will pertain to Performance Target 1, meaning that no Employee Stock Options will vest unless the performance target is met.
The allotment of shares that each participant later may receive depends on achievement of the established performance targets as described below.
Performance Target 1 (for Share Awards and Employee Stock Options): This target pertains to the holder still being employed by the
Performance Target 2 (for Share Awards): This target pertains to the fulfilment of the financial and operational targets for the financial year 2023 as established by the board of directors and relates to
The board of directors will present the rate of achievement of Performance Target 2 in the Annual Report for 2023.
Allocation
Every five (5) shares kept in accordance with Opt-in 1 and every five (5) shares acquired in accordance with Opt-in 2, respectively, entitle the participants of LTIP Stay-on 2023 to one (1) Share Award and one (1) Employee Stock Option. Out of the allocated Share Awards and Employee Stock Options, 50 percent will constitute Share Awards and 50 percent will constitute Employee Stock Options.
In relation to allocation under Opt-in 1, the board of directors shall resolve upon the final allocation of the Share Awards and Employee Stock Options as soon as possible after
Preparation and administration
The board of directors shall be responsible for preparing the detailed terms and conditions of LTIP Stay-on 2023, in accordance with the mentioned terms and guidelines. To this end, the board of directors shall be entitled to make adjustments to meet foreign regulations or market conditions. The board of directors may also make other adjustments if significant changes in the
Preparation of the proposal
LTIP Stay-on 2023 has been initiated by the board of directors of Orexo and has been structured in consultation with external advisers based on an evaluation of prior incentive programs and best market practices. LTIP Stay-on 2023 has been prepared by the Remuneration Committee and reviewed at meetings of the board of directors.
Scope and costs of the program
LTIP Stay-on 2023 will be accounted for in accordance with "IFRS 2 – Share-based payments". IFRS 2 stipulates that the Share Awards and Employee Stock Options should be expensed as personnel costs over the vesting period and will be accounted for directly against equity. Personnel costs in accordance with IFRS 2 do not affect the company's cash flow. Social security costs will be expensed in the income statement during the vesting period.
Assuming a share price at the time of implementation of SEK 17, that Performance Target 1 is achieved and that Performance Target 2 is achieved at 50 percent, including a share price increase of 30 percent during the vesting period, the annual cost for LTIP Stay-on 2023 including social security costs is estimated to approximately
LTIP Stay-on 2023 will have marginal effects on
Since delivery of shares under LTIP Stay-on 2023 shall be made by way of transfer of Orexo's repurchased shares, LTIP Stay-on 2023 entails no dilution of the shareholding of the company. The maximum level of dilution for all other outstanding long-term incentive programs in the company amounts to 0 percent, since delivery of shares shall be made by way of transfer of
Information on
Delivery under LTIP Stay-on 2023
The board of directors proposes that delivery of shares under LTIP Stay-on 2023 shall be made by way of transfer of
A resolution in accordance with the board of directors' proposal in item 18 shall only be valid where supported by not less than two-thirds of both the votes cast and the shares represented at the meeting and resolutions in accordance with the board of directors' proposal in items 19, 20 and 21 shall only be valid where supported by not less than nine-tenths of both the votes cast and the shares represented at the meeting.
The shareholders are reminded of their right to request information in accordance with Chapter 7 Section 32 of the Swedish Companies Act. The annual report and all other documents, including the nomination committees' motivated statement and the auditor's report pursuant to Chapter 8 Section 54 of the Companies Act, are available at the company's office at Rapsgatan 7E, in Uppsala and at www.orexo.se no later than three weeks before the meeting and will be sent to shareholders who so request and who inform the company of their postal address. This notice is a translation of a Swedish notice and in case of any deviations between the both language versions, the Swedish version shall prevail.
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Uppsala, March 2023
Orexo AB (publ)
Contacts:
The board of directors
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