The Share Rights Program 2025 include both current and future executive management and other key individuals, meaning that a maximum of 15 individuals within the Sveafastigheter group will be able to participate (the “Participants“). The Participants will be given the opportunity to receive shares free of charge within the framework of the Share Rights Program 2025, so-called “Performance Shares“, in accordance with the terms and conditions set out below.
Within the framework of the Share Rights Program 2025, the company may allot Participants rights to Performance Shares, which means that, subject to certain conditions being met, the right to receive one (1) Performance Share free of charge (“Share Rights”).
Background and rationale
The purpose of the Share Rights Program 2025 is to create the conditions for attracting, motivating and retaining competent employees within the Sveafastigheter group and to increase the coherence between the employees’, shareholders’ and the company’s objectives, as well as to increase the motivation to reach and exceed the company’s financial and non-financial targets. The Share Rights Program 2025 has been designed so that the program includes both current and future executive management and other key individuals.
By offering Share Rights that are based on a combination of net operating income development of the comparable portfolio and relative total return performance of the company in relation to a selected reference group, the Participants are rewarded for increased shareholder value/value-creating measures. The Share Rights Program 2025 also rewards employees’ continued loyalty and thus the long-term value growth of the company. Further, the Board of Directors considers that the Share Rights Program 2025 will have a positive effect on the future development of the Sveafastigheter group and will consequently be beneficial for both the company and its shareholders.
Terms and conditions
A Share Right may be exercised provided that the Participant, with certain exceptions, from the start of the Share Rights Program 2025 for each Participant, up until and including the date three (3) years thereafter (the “Vesting Period“), is still employed by the Sveafastigheter group. The last day for the start of the Share Rights Program 2025 shall be the day before Sveafastigheter’s Annual General Meeting 2026. In addition to the requirement of the Participant’s continued employment as set out above, the final number of Performance Shares that each Participant is entitled to receive shall also be subject to performance conditions as set out below (the “Performance Conditions”). The Performance Conditions shall be fulfilled during the measurement period 1 January 2025–31 December 2027 (the “Measurement Period”).
- Performance Condition 1: fifty (50) percent of the Performance Shares will vest based on a performance metric that measures the relative growth of shareholders’ total return (“Total Shareholder Return” or “TSR“)[1] on a scale from median to upper quartile, whereby the company’s TSR is compared with the corresponding TSR for a group of reference companies (the “Reference Group“)[2] . TSR is measured for each company in the Reference Group as the growth in the share price plus reinvested dividends. The measurement is based on an average of the share price during the three months prior to the first day of the Measurement Period and is compared with an average of the share price during the three months prior to the last day of the Measurement Period. Participants will receive allotment as set out below after the end of the Vesting Period.
- If the company’s TSR is in the upper quartile relative to the Reference Group, the Participant will receive full allotment of the half of the Performance Shares allotted under Performance Condition 1.
- If the company’s TSR is the same as the median in the Reference Group, the Participant will receive one third (1/3) of the full allotment of the half of the Performance Shares allotted under Performance Condition 1, whereby the number of Performance Shares shall be rounded up to a whole number.
- If the company’s TSR is between the median and the upper quartile relative to the Reference Group, the Participant will receive a pro-rata share depending on the company’s TSR between one third (1/3) of full allotment under Performance Condition 1 (median) and full allotment of the half of the Performance Shares (upper quartile) allotted under Performance Condition 1, whereby the number of Performance Shares shall be rounded up to a whole number.
- If the company’s TSR is lower than the median in the Reference Group, the Participant will not receive an allotment of the half of the Performance Shares allotted for under Performance Condition 1.
- Performance Condition 2: fifty (50) percent of the Performance Shares will vest based on net operating income development in relation to the comparable portfolio (“Net Operating Income Development”), which is compared to the average consumer price index[3] (“CPI”) during the Measurement Period. The Participants will receive allotment after the end of the Vesting Period. Depending on how the company’s Net Operating Income Development relates to CPI during the Measurement Period, the Participant may receive full allocation (maximum level), no allocation (below the minimum level), or pro-rata allocation (from the minimum level up to the maximum level) of the half of the Performance Shares allotted under Performance Condition 2. For stock market and competitive reasons, the minimum and maximum levels for Performance Condition 2 are not specified. Information on the Performance Condition 2 and the outcome will be communicated to the shareholders after the expiry of the Share Rights Program 2025.
The Board of Directors shall be entitled to decide that all or certain Share Rights shall be canceled or reclaimed if the company’s TSR and/or reporting of Net Operating Income Development is the result of intentional or significantly misleading inaccuracies in the financial reporting or gross misconduct. The Board of Directors shall also, in exceptional cases, be able to reduce or postpone the vesting of the Performance Shares if the company’s TSR and/or Net Operating Income Development, according to the Board of Directors, does not reflect the underlying business performance.
In order to further increase the alignment of interests with shareholders, Participants shall over time build up a holding of the company’s shares corresponding to the value of three (3) months’ salary of each person’s base salary, with exception to the CEO who over time shall build up a holding of the company’s shares corresponding to the value of six (6) months’ salary of the CEO’s base salary, calculated based on the value after tax. The Board of Directors shall have the right to waive this condition in certain circumstances, e.g. if the Participant’s employment is terminated due to long-term illness.
The Share Rights shall, in addition to what is set out above, be governed by the following terms and conditions:
- Share Rights are allotted free of charge no later than the day before the Annual General Meeting 2026.
- The Performance Shares attributable to the Share Rights vest during the Vesting Period.
- Share Rights may not be transferred or pledged.
- Each Share Right entitles the Participant to receive one (1) Performance Share free of charge after the end of the Vesting Period (with certain exceptions where the Vesting Period may be accelerated), if the Participant, with certain exceptions, is still employed by the Sveafastigheter group by the end of the Vesting Period.
- In the event of change of ownership, resulting from a public takeover offer or another type of transaction, vesting will be accelerated if at least fifty (50) percent of the shares or voting rights in the company are controlled, directly or indirectly, by one or more persons who are not Samhällsbyggnadsbolaget i Norden AB (publ) or companies in a group with Samhällsbyggnadsbolaget i Norden AB (publ). The Measurement- and Vesting Period shall then end during the last complete quarter and the maximum number of Performance Shares shall be calculated pro-rata in relation to the original Vesting Period and the new Vesting Period.
Preparation of the program, design and administration
The Board of Directors, or a special committee set up by the Board of Directors, shall be responsible for preparing the detailed design and administration of the terms and conditions of the Share Rights Program 2025, in accordance with the presented terms and guidelines including provisions for recalculation in the event of an in-between bonus issue, share split, rights issue and/or other similar measures. In connection therewith, the Board of Directors shall be entitled to make adjustments to meet specific foreign regulations or market conditions. The Board of Directors shall also be entitled to make other adjustments if significant changes occur in the Sveafastigheter group or in its environment that would result in that the adopted terms of the Share Rights Program 2025 no longer fulfill their objectives or the rationale for the purpose including, inter alia, that adjustments may be decided with respect to the terms and conditions for the Performance Conditions, and the basis for such calculation.
Allotment of Share Rights
The Participants are divided into three categories and a maximum of 165,000 Share Rights can be allotted to Participants within the different categories. For the Share Rights Program 2025, the value of the Share Rights (based on the value of the Performance Shares) for the CEO (category 1) will not exceed an amount corresponding to three (3) months’ salary, for the executive management and other key employees (category 2) will not exceed an amount corresponding to two (2) months’ salary and for other employees (category 3) will not exceed an amount corresponding to one (1) months’ salary.
[1] TSR is measured in Swedish krona and calculated in accordance with market practice.
[2] Atrium Ljungberg, Castellum, Fabege, Wallenstam, Genova, Heba, John Matsson, Brinova, Klarabo, Neobo, Trianon, NP3, Diös, Alm Equity och Fortinova.
[3] As calculated and published by Statistics Sweden (Sw. Statistikmyndigheten SCB).