Shareholders in Moberg Pharma AB (publ) (reg. no. 556697-7426) (the “Company”) are hereby convened to the Annual General Meeting on Tuesday, May 15, 2018 at 5:00 p.m. (CET) in the Company’s premises in Bromma, address Gustavslundsvägen 42, 5 tr, 167 51 Bromma (Alviks torg), Sweden.
Attendance at the Annual General Meeting
Shareholders who wish to participate in the Annual General Meeting must:
- be recorded in the share register maintained by Euroclear Sweden AB (“Euroclear”), on Tuesday, May 8, 2018, and
- give notice of attendance to the Company under address: Moberg Pharma AB (publ), Gustavslundsvägen 42, 5 tr, 167 51 Bromma, Sweden att. Anna Ljung or by e-mail to anna.ljung@mobergpharma.se, at the latest on Tuesday, May 8, 2018, preferably before 4:00 p.m. (CET).
When giving notice of attendance, shareholders must state their name, civil registration number or corporate registration number, address, telephone number and, where applicable, number of accompanying assistants (no more than two). Shareholders can participate and vote at the Annual General Meeting personally or by proxy. Shareholders whose shares are registered in the name of a nominee must, in order to be entitled to participate in the Annual General Meeting, with the help of the nominee, re-register their shares in their own names in the share register maintained by Euroclear, so that they are registered on Tuesday, May 8, 2018.
Shareholders represented by proxy should submit a power of attorney in original, along with other authorization documents, when giving notice of attendance to the Annual General Meeting. A power of attorney may be valid for up to five years from issuance. The Company provides forms of power of attorney on the Company’s website www.mobergpharma.se. Representatives of legal persons must present a copy of the legal person’s certificate of registration or other equivalent document demonstrating the right to act on behalf of the legal person.
Number of shares and votes
As per the date of this notice, there are a total of 17,440,762 shares and votes in the Company. The Company holds no own shares.
Proposed agenda
Proposals for resolution
Election of Chairman of the Meeting (Item 2)
The Nomination Committee consisting of the Chairman Gillis Cullin representing Östersjöstiftelsen and the members Fredrik Persson representing Zimbrine Holding BV, Anders Rodebjer representing Wolco Invest AB and Thomas Eklund, Chairman of the Board of Directors in the Company, propose to elect Thomas Eklund as Chairman of the Annual General Meeting.
Resolution on allocation of the Company’s result according to the adopted balance sheet (Item 9 (B))
The Board of Directors proposes that no dividend should be paid for the fiscal year 2017.
Election of the Board of Directors and Chairman of the Board of Directors and determination of fees to the Board of Directors and Auditors (Items 10, 11 and 12)
The Nomination Committee proposes that the Board of Directors shall consist of five (5) persons and no deputies.
The Nomination Committee proposes re-election of Thomas Eklund as Chairman of the Board of Directors, and Geert Cauwenbergh, Sara Brandt and Mattias Klintemar as members of the Board of Directors for a period until the next Annual General Meeting. Torbjörn Koivisto and Thomas B. Thomsen, after nine and four years as members of the Board of Directors, have chosen not to be available for re-election. The Nomination Committee proposes that Anna Malm Bernsten is appointed as new member of the Board of Directors.
Anna Malm Bernsten, M.Sc, works as a consultant within business development and management through her own company. She is previous group CEO and CEO of Carmeda AB, and has also had leading positions within international marketing and sales at, amongst others, Pharmacia, ASSA ABLOY and GE Healthcare. Anna is the Chairman of the Board of Directors for Medivir AB and Björn Axén AB, and board member for Cellavision AB, Probi AB and Pågengruppen AB. She has also had previous board assignments for, amongst others, Arcam AB, Biophausia AB, NeuroVive Pharmaceutical AB and Oatly AB.
The Nomination Committee proposes that an aggregate fee of SEK 1,220,000 shall be paid to the members of the Board of Directors, of which SEK 360,000 to the Chairman and SEK 170,000 for all other members of the Board of Directors elected by the Annual General Meeting. An additional fee of SEK 90,000 shall be paid to the members of the Remuneration Committee, SEK 45,000 to the Chairman and SEK 22,500 to the other members (2). A fee of SEK 90,000 shall be paid to the members of the Audit and Finance Committee, SEK 45,000 to the Chairman and SEK 22,500 to the other members (2).
The Nomination Committee proposes, in accordance with the Board of Directors´ recommendation, re-election of EY as Company Auditors, with Andreas Troberg as responsible Auditor for a period until the end of the Annual General Meeting 2019.
The Nomination Committee proposes that fees to the Auditors, for a period until the end of the Annual General Meeting, are to be paid as per approved invoice.
Proposal for resolution on principles for establishing the Nomination Committee and its work (Item 13)
The Nomination Committee proposes that the Annual General Meeting assigns a Nomination Committee according to the following principles. The Annual General Meeting assigns the Chairman of the Board of Directors to contact the three largest shareholders in term of votes or owner groups (hereby referred to both directly-registered shareholders and nominee-registered shareholders), according to a transcript of the share register maintained by Euroclear Sweden AB as per September 28, 2018, each appointing a representative to, besides the Chairman of the Board of Directors, constitute the Nomination Committee for the period until a new Nomination Committee is appointed by mandate from the next Annual General Meeting.
If any of the three largest shareholders or owner groups declines to elect a representative, the fourth largest shareholder or owner group will be asked, and so on, until the Nomination Committee consists of four members. The majority of the members of the Nomination Committee are to be independent of the Company and its executive management. At least one member of the Nomination Committee is to be independent of the Company’s largest shareholder in term of votes, or any group of shareholders that act in concert in the governance of the Company. Neither the Chief Executive Officer nor other members of the executive management are to be members of the Nomination Committee. Board members may be members of the Nomination Committee but may not constitute a majority thereof. If more than one member of the Board of Directors is on the Nomination Committee, no more than one of these may be dependent of a major shareholder in the Company. The Nomination Committee appoints Chairman within the Committee. Neither the Chairman of the Board of Directors nor any other member of the Board of Directors may be Chairman of the Nomination Committee. The names of the members of the Nomination Committee shall be announced no later than six months prior to the 2019 Annual General Meeting. In the event that one of the members of the Nomination Committee resigns before the Committee´s work is completed and if the Nomination Committee is of the opinion that there is a need to replace the member, the Nomination Committee shall appoint a new member according to the principles above, but based on a transcript of the share register maintained by Euroclear Sweden AB, as soon as possible after the member has resigned. A change in the composition of the Nomination Committee shall be announced immediately. No fees shall be paid to the members of the Nomination Committee for their work in the Nomination Committee.
The Nomination Committee shall submit proposals on the following issues for resolution by the 2019 Annual General Meeting:
Proposal for resolution on principles for remuneration of senior executives (Item 14)
The Board of Directors’ proposal for resolution on principles for remuneration of senior executives is consistent with previous years’ principles for remuneration with some minor adjustments and is mainly based on existing con¬tracts between the Company and senior executives.
The Board of Directors proposes that the Annual General Meeting resolves to adopt principles for remuneration of senior executives on the following terms:
The Company is to offer a market-aligned total remuneration package that facilitates the recruitment and retention of qualified senior executives. The remuneration paid to the Chief Executive Officer and other senior executives is to comprise basic salary, variable remuneration, other benefits and pension benefits. The total remuneration is to be based on the basic salary and is to be proportionate to the executive’s responsibilities and authority. Variable remuneration is capped at 25–50% of each executive’s basic annual salary. Variable remuneration is based on results achieved in relation to individually defined qualitative and quantitative targets, as well as the Company’s results in relation to targets set by the Board of Directors. The pensionable salary comprises only the basic salary. To the extent that members of the Board of Directors perform work for the Company or any other group company, in addition to work on the Board of Directors, a market-aligned consultancy fee may be payable.
In case of termination, the notice period is at least three months if this is on the initiative of the senior executive and between three and 12 months if the Company takes the initiative. Severance amounts may apply, however total remuneration during termination including severance amounts will never be more than 12 months’ salary. Any share and share-price-related programs must be adopted by a Shareholders’ Meeting. Allocation from such programs must comply with a resolution from a Share-holders’ Meeting. With the exception of share-based remuneration that has been allocated and vested, and what is provided for under employment contracts as referred to above, senior executives are not entitled to any post-employment/assignment benefits. Furthermore, the Board of Directors shall have
the option of allocating further variable non-recurring remuneration to the management when the
board deems it to be appropriate. The Board of Directors is to be entitled to ignore the aforementioned principles for remuneration of senior executives if there are special reasons for so doing.
The Board of Directors’ proposal regarding the implementation of a long-term incentive program and hedging arrangements in respect of the program (Item 15)
The Board of Directors proposes that the Annual General Meeting resolves on:
(A) implementation of a long-term incentive program 2018 (the “LTI 2018” or the “Program”) for employees and consultants in the Company and in its wholly owned subsidiary Moberg Pharma North America LLC (”Moberg North America”); and
(B) hedging arrangements in respect of the Program, consisting of:
(I) amendments of the Articles of Association to instate redeemable and convertible series C shares;
(II) an authorization for the Board of Directors to decide on a directed issue of redeemable and convertible series C shares;
(III) an authorization for the Board of Directors to decide on a repurchase of series C shares; and
(IV) transfers of own common shares to Program Participants (employees and consultants in the Company and Moberg North America).
Should the majority requirement under item 15 (B) not be reached, the Board of Directors proposes that the Annual General Meeting approves the Company to enter into an equity swap agreement with a third party (item 15 (C)).
Implementation of LTI 2018 (Item 15 (A))
The Board of Directors proposes that the Annual General Meeting resolves on the implementation of the LTI 2018 in accordance with below.
Objectives and reasons for the proposal
For a number of years, the General Meeting of Moberg Pharma has resolved on employee stock option plans with underlying warrants. After evaluating the programs of the past years, the Board of Directors has concluded that it would be more effective to amend the structure of future incentive programs in Moberg with the aim of recruiting, rewarding and retaining valuable employees in a simpler manner, and, by employees own shareholding, promote and create long-term participation in the Moberg group, thereby closely aligning the employees’ interest with those of Moberg’s shareholders.
The LTI 2018 is designed to provide long-term incentives for members of the executive management, as well as other key employees to improve Moberg’s performance and create long-term value. In view of the terms proposed below, the size of the allotment and other circumstances, the Board of Directors assesses that the proposed Program is well-balanced and that it will be beneficial for the Company and its shareholders.
Description of LTI 2018
Costs, dilution and effects on important key ratios
The costs for the Program, which are charged in the profit and loss account, are calculated according to the accounting standard IFRS 2 and distributed over the Vesting Period. The calculation has been made based on the following assumptions: (i) a market price of the Moberg common share of SEK 27.00 based on the closing price as of 29 March 2018, (ii) no dividends are paid by Moberg during the Program and (iii) an assessment of future volatility of 32% in respect of the Moberg common share and (iv) an employee turnover of 10% per year. In total, this can lead to maximum costs for the Program of approximately SEK 0.61 million, excluding social security costs. The costs for social security charges are calculated to approximately SEK 0.19 million assuming an annual share price increase of 15 % during the Vesting Period.
The expected annual cost of the Program, including social security charges of approximately SEK 0.27 million, corresponds to approximately 0.7 % of Moberg’s total annual employee costs.
If the Program had been implemented in 2017, if the Company had costs in accordance with the example in the preceding paragraph, and Performance Shares had been allotted located in 2017 in accordance with the assumptions in the sample calculation, which among other things assumes an annual share price increase of 15 % during the Vesting Period, the earnings per share for the financial year 2017 had decreased by SEK 0.02 to SEK 0.62.
Dilution
Upon full allotment of Performance Shares, the number of shares under the Program amounts to 263,000 common shares in Moberg, corresponding to a dilution effect of approximately 1.5 % of the share capital and votes based on the number of issued shares as per the day of this notice.
Preparation of the proposal etc.
The proposal regarding the LTI 2018 has been prepared by Moberg’s remuneration committee in consultation with external advisors, and adopted by the Board of Directors.
The Board of Directors shall, within the framework of the above terms and conditions, be responsible for the implementation and management of the LTI 2018. All essential decisions relating to the LTI 2018 will be taken by the remuneration committee, with approval by the Board of Directors in its entirety, as required.
Description of ongoing variable compensation programs
Moberg Pharma’s ongoing share-based incentive programs and variable compensation to senior executives are described in the annual report for 2017, note 7 in the consolidated accounts. The Board of Directors’ accounts of the remuneration committee’s evaluation of the principles for remuneration of senior executives which were published on Moberg’s website, describes how Moberg applies its principles for remuneration to senior executives in accordance with the Swedish Corporate Governance Code.
Hedging arrangements in respect of the program (Item 15 (B))
The Board of Directors has evaluated different methods to secure the financial exposure and transfer of shares in accordance with the LTI 2018, such as transfer of own shares and an equity swap agreement with a third party. The Board of Directors considers a directed issue of redeemable and convertible series C shares (following amendments of the Articles of Association) and transfer of such shares to the Participants (following conversion of the shares to common shares) to be the most cost effective and flexible method to secure the financial exposure and transfer of own shares under the LTI 2018.
The Board of Directors proposes that the main option to secure the financial exposure shall be transfer of own shares (item 15 (B)), since the cost associated with an equity swap agreement vastly exceeds the costs of transferring own shares.
Should the majority requirement under item 15 (B) not be reached, the Board of Directors proposes that the Annual General Meeting approves the entering into an equity swap agreement with a third party (item 15 (C)).
At the Annual General Meetings following this Annual General Meeting, the Board of Directors will propose that it will be authorized to cover costs associated with the Program, mainly social security charges, by transferring a certain amount of own shares.
Amendments of the Articles of Association to instate redeemable and convertible series C shares (Item 15 (B) (I))
To make the proposed issue possible, the Board of Directors proposes that the Annual General Meeting resolves to amend § 5 of the Articles of Association as follows:
“§ 5 Number of shares and share classes
The number of shares shall amount to no less than 17,000,000 and no more than 68,000,000.
Shares may be issued in two series, common shares and shares of series C. Common shares may be issued in a maximum number corresponding to not more than 100 % of the total number of shares in the company and series C shares may be issued in a maximum number corresponding to no more than 2 % of the total number of shares in the company.
Each common share entitles the holder to one vote and each series C share entitles the holder to one-tenth of a vote.
Series C shares do not entitle to dividends. Upon the company’s liquidation, series C shares carry an equal right to the company’s assets as common shares, however not to an amount exceeding the share’s quotient value.
If the company decides to issue new common shares and series C shares through a cash issue or an issue against payment trough set-off claims, each owner of common shares and series C shares shall have a pre-emptive right to subscribe for new shares of the same series in proportion to their existing shareholdings (primary pre-emptive rights). Shares not subscribed trough primary pre-emptive rights shall be offered to all shareholders for subscription (subsidiary pre-emptive rights). Should the number of shares offered not be enough for subscription through subsidiary pre-emptive rights, the said shares shall be apportioned among the subscribers in proportion to their existing shareholdings and, to the extent that this cannot be done, by lottery.
If the company decides through a cash issue or a set-off issue to only offer common shares or series C shares, shall all shareholders, regardless of whether their shares are common shares or series C shares, have right to subscribe for new shares in proportion to their existing shareholdings.
The above shall not constitute any restriction on the possibility to decide on a cash issue or a set-off issue, deviating from the pre-emptive rights of the shareholders.
What is stated above about the shareholders´ pre-emptive rights shall apply mutatis mutandis for new issues of warrants and convertibles not made against contribution in kind.
If the share capital is increased through a bonus issue, new shares in each series shall be issued in proportion to the existing number of shares in each series. Old shares in a specific series shall thus carry entitlement to new shares in the same series. The aforesaid shall not constitute any restriction on the possibility to issue new shares of a new series through a bonus issue, following the requisite amendments to the Articles of Association.
The Board of Directors may resolve on reduction of the share capital by redemption of all series C shares. In case of a resolution on redemption, holders of series C shares shall be obliged to redeem all series C shares against a redemption amount corresponding to the share’s quotient value. Payment of the redemption amount shall be made as soon as possible.
Series C shares held by the company itself may, upon request by the Board of Directors, be converted (reclassified) into common shares. Immediately thereafter, the Board of Directors shall report the reclassification to the Swedish Companies Registration Office (Sw. Bolagsverket) for registration. The reclassification is effected when it has been registered in the Swedish Register of Companies and the reclassification been noted in the Swedish Central Securities Depository Register.”
The Board of Directors’ proposal to amend the Articles of Association is conditional upon the Annual General Meeting resolving in accordance with the Board of Directors proposal in item 15 (A) above and item 15 (B) (II)-(IV) below.
Authorization for the Board of Directors to resolve to issue redeemable and convertible series C shares (item 15 (B) (II))
Authorization for the Board of Directors to resolve to issue redeemable and convertible series C shares, on one or more occasions, until the next Annual General Meeting.
The issue shall be effected on the following terms.
Authorization for the Board of Directors to resolve to repurchase all issued redeemable and convertible series C shares (Item 15 (B) (III))
Authorization for the Board of Directors to resolve to repurchase all issued redeemable and convertible series C shares in the Company on the following terms.
The repurchase of own shares is an integrated part of the hedging arrangements for the Program. The reason for the proposed authorization to repurchase own shares is for the Company to be able to fulfil its obligations pursuant to the Program in a cost effective manner.
Resolution on transfer of own common shares to Participants in the Program (Item 15 (B) (IV))
The Board of Directors proposes that the shares issued and repurchased in accordance with item 15 B (II) and (III), after being converted into common shares, may be transferred to the Participants of the Program.
Resolution on transfers of the Company’s own common shares to Program Participants shall be made on the following terms
Entering into an equity swap agreement with a third party (Item 15 (C))
Should the majority required under item 15 (B) above not be reached, the Board of Directors proposes that the Annual General Meeting resolves that the expected financial exposure of the Program shall be hedged by the Company through entering into an equity swap agreement with a third party on terms in accordance with market conditions, whereby the third party in its own name shall be entitled to acquire and transfer common shares in the Company to the Participants of the Program.
Conditions
The Annual General Meeting’s resolution on the implementation of the LTI 2018 according to item 15 (A) above is conditional upon the meeting either resolving in accordance with the Board of Directors’ proposal under item 15 (B) above or in accordance with the Board of Directors’ proposal under item
15 (C).
Majority requirements
The Annual General Meeting’s resolution according to item 15 (A) above requires a simple majority among the votes cast. A valid resolution under item 15 (B) above requires that shareholders representing not less than nine-tenths of the votes cast as well as of the shares represented at the meeting approve the resolution. A valid resolution under item 15 (C) above requires a simple majority among the votes cast.
The issue, repurchase and the transfer of common shares in the Company form part of the proposed Program. Therefore, and in light of the above, the Board of Directors considers it benefit for the Company and the shareholders to offer the Program’s Participants the opportunity to become shareholders in the Company.
For the purpose of minimizing the Company’s costs for the Program, the subscription price has been set at the quotient value of the share.
Proposal for resolution regarding authorization for the Board of Directors to issue new shares (Item 16)
The Board of Directors proposes that the Annual General Meeting authorize the Board of Directors to, within the scope of the Articles of Association, with or without deviation from the shareholders’ pre emptive rights, on one or several occasions during the period until the next Annual General Meeting, resolve to increase the Company’s share capital by issuing new shares in the Company. The total number of shares issued in accordance with this authorization may be equivalent to a maximum of twenty (20) per cent of the shares in the Company at the time of the 2018 Annual General Meeting. The issues shall be made with issue rates at market rate, and where applicable be subject to issue discount at market rate, and payment may, apart from payment in cash, be made in kind or by set-off or otherwise with conditions. The purpose of the authorization and the reasons for any deviation from the shareholders’ preferential right is that the Company shall be able to carry out issues in order to finance the Company’s business, commercialization and development of the Company’s products and/or the acquisition of products, project portfolios, businesses, companies or parts of companies.
The Board of Directors, Chief Executive Officer or such person as the Board of Directors authorize, shall be authorized to carry out amendments and clarifications of the Annual General Meeting’s decisions that are required in connection with the filing with the Companies Registration Office and Euroclear Sweden AB.
A resolution in accordance with this proposal requires the approval of shareholders representing at least two thirds of the votes cast and the shares represented at the Meeting.
Information at the Annual General Meeting
Shareholders may request that the Board of Directors and the Chief Executive Officer provide information regarding circumstances that may affect the assessment of an item on the agenda for the Annual General Meeting, and circumstances that can affect the assessment of the Company’s financial position. The Board of Directors and the Chief Executive Officer shall provide such information at the Annual General Meeting if they believe that it can be done without material harm to the Company. Shareholders wishing to submit questions in advance may send them to Moberg Pharma AB (publ), att. Anna Ljung, Gustavslundsvägen 42, 5 tr, 167 51 Bromma, Sweden, or by e-mail to anna.ljung@mobergpharma.se.
Documents
Copies of accounting documents and the audit report as well as forms of power of attorney will be available for shareholders at the Company and on the Company’s website www.moberpharma.se, as from Tuesday, April 24, 2018. Complete proposals, including the Board of Directors’ complete proposal for principles for remuneration to senior executives and to resolve on the implementation of a long-term incentive program and hedging arrangements pursuant to the program (including amendments to the articles of association, authorization for a directed issue and repurchase of shares as well as transfer of shares) and the Board of Directors’ statement in accordance with Chapter 19 Section 22 of the Swedish Companies Act in addition to the auditor’s statement on the principles for remuneration to senior executives that have applied since the previous Annual General Meeting, as well as other documents according to the Companies Act will be available for shareholders at the Company and on the Company’s website as above, no later than three weeks before the Annual General Meeting. All of these documents will also, without charge, be sent to shareholders who so request and state their address. The documents will also be available at the Annual General Meeting.
_______________________________________
Stockholm in April 2018
Moberg Pharma AB (publ)
The Board of Directors
The information was submitted for publication at 8:30 a.m. (CET) on April 10th 2018.
[1] Excluding dilution as a result of the exercise of warrants issued under pervious incentive programs.
[2] Following consultation with CEO Peter Wolpert, who holds 180,000 employee stock options from previous incentive programs as well as 435,399 shares, the Board of Directors, in line with Peter Wolpert’s own view, proposes that he should not be included in the Program in order to promote the possibility of stronger incentives for other Participants within the dilution level recommended by the Board of Directors.
[3] For further information on how the share price development is calculated during the Performance Period, see note 4 .
[4] In order to properly assess the share price development during the Performance Period, this is normally calculated on basis of the average closing price of the Moberg share on Nasdaq Stockholm for a period of 45 trading days immediately following the commencement and expiration of the Performance Period .
[5] As per the day of this notice, the share’s quotient value is SEK 0.10.