Employee LTIP
A long-term share-related incentive plan in the form of a share option plan for members of Group management and other employees of the Company was approved by the 2022 EGM (“Employee LTIP 2022”), with the aim of aligning the interests of the members of Group management and other employees with the interests of the shareholders, as well as to provide market appropriate reward for a new business focused on growth, reflecting continuity, commitment and share price appreciation. The Board believes that the Employee LTIP 2022 provides the Company with a crucial component to a competitive total compensation package to attract and retain employees who are critical to the Company’s future. In order to secure the Company’s obligations under the Employee LTIP 2022, the Company has issued 8,560,000 warrants.
The Employee LTIP 2022 was introduced as part of a new holistic remuneration approach within the updated Policy on Remuneration for Group management, where base salaries and annual bonus opportunities were set below the market average and in return, the long-term incentives were designed to strongly emphasise Group management’s delivery of material shareholder returns, which is appropriate for a newly formed entrepreneurial organisation focused on growth. The Employee LTIP 2022 is designed to promote business decisions that support long-term value creation and share price appreciation, rather than delivering scale and size without clear shareholder return. As the Company operates in a business environment where renewable energy projects take a long time to mature and ultimately crystallise value, the Employee LTIP 2022 has been designed to incentivise decision making in support of this long-term value creation, which is being reflected in the length of the exercise and vesting periods. The Employee LTIP 2022 is further fully aligned with the interest of shareholders as any pay-out will require a share price increase, which is considered to be an appropriate performance criterion given the Company’s current phase of development. The share price is the best measure to determine shareholder value creation, and the Employee LTIP 2022 will only deliver value to the extent that Group management are able to increase the Company’s valuation. It is also challenging to find a suitable peer group at this phase of the Company’s development, or other performance conditions, which would adequately assess the Company’s performance against market. A performance condition focused on growth targets may not lead to share price appreciation and could in essence reward outcomes, which are not aligned with value appreciation for shareholders, in particular under current market conditions. The Board therefore believes that the Employee LTIP 2022 is the best way to ensure a clear alignment between performance outcomes for both shareholders and Group management. It is also considered that the Employee LTIP 2022 is best financed through delivery of shares allowing the Company to allocate all available capital towards growth. To minimise dilution and impact on shareholders, the net equity settlement method has been chosen to ensure that only the value created over and above the market price of the share at award is delivered, leading to a significantly lower dilution than the headline amount of options issued. As an example, assuming a scenario with an average share price growth of 10 percent per annum over seven years, the dilution to shareholders would reduce by 50 percent compared to the headline dilution shown.
A similar plan was approved by the 2023 AGM (“Employee LTIP 2023”). In order to secure the Company’s obligations under the Employee LTIP 2023, the 2023 AGM resolved to approve that the Company enters into an equity swap arrangement with a third party, whereby the third party in its own name shall be entitled to acquire and transfer shares (including to the participants) in accordance with the terms and conditions of Employee LTIP 2023. The equity swap arrangement was concluded during the second quarter 2023. The Employee LTIP 2023 was offered as a complement to base salaries to create an overall remuneration approach that further emphasises the long-term sustainable growth and strategic success of the Company.
Board LTIP
The 2022 EGM resolved to approve a one-off long-term share-related incentive plan for members of the Board (“Board LTIP 2022”) in the form of a share option plan (“Board Options”). The reason for establishing a one-off long-term share-related incentive plan for the members of the Board was to align their interests with the interests of the shareholders, as well as to provide market appropriate reward reflecting responsibilities, commitment and share price appreciation.
