PCI BIOTECH HOLDING ASA PCI Biotech Holding ASA ("PCI Biotech") - Remuneration Report 2022
Introduction
PCI Biotech is a biopharmaceutical company utilising its innovative photochemical internalisation (PCI) technology platform to unlock the true potential of certain classes of innovative medicines, and develop new technologies and innovative products.
This remuneration report provides details on the remuneration of executive management for 2022 and 2021 and an outline of PCI Biotech Holding ASA's guidelines for executive remuneration (the "remuneration guidelines"), adopted by the annual general meeting in May 2021 and implemented in 2021. The remuneration report has been prepared in compliance with the Public Limited Liability Companies Act section 6-16b and the accompanying regulation, and will be presented for an advisory vote at the annual general meeting in May 2023.
PCI Biotech went through a restructuring process during 2022, including downsizing of the full clinical team and part of the executive team. In this process there was one termination payment made to one of the former executive team members, corresponding to an additional three months' notice period to standard Norwegian statutory requirements and the team member was relieved from working obligations. Other employees that were included in the downsizing process were offered a one-month additional notice period and relieved from working obligations after fulfilling agreed work requirements. These termination arrangements are considered as temporary deviations from the current remuneration guidelines and not considered to be subject to amendment of the current remuneration guidelines.
The executive team included for 2021 the following six positions; Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Scientific Officer (CSO), Chief Medical Officer (CMO), Chief Development Officer (CDO) and Chief Business Officer (CBO). The executive team was reduced during 2022 and the CMO and CBO positions were redundant, while the CEO and CFO positions were merged. The executive team per year-end 2022 included the following three positions: Chief Executive Officer (CEO)
- Chief Financial Officer (CFO) (combined position), Chief Scientific Officer (CSO), and a part-time Chief Development Officer (CDO). The change of the executive team positions are made to tailor the team to current operations. The changes are considered normal under the circumstances and are not considered to be subject to amendment of the current remuneration guidelines.
There have not been identified other deviations or derogations from the remuneration guidelines for 2022.
The general meeting in May 2021 adopted the remuneration guidelines with 97.2% of the votes represented and the advisory vote of the first remuneration report regarding 2021 achieved 96.3% of the votes represented at the general meeting in May 2022. On this basis, no actions are taken to amend the guidelines per the date of this report. The remuneration guidelines are available on the company's website, www.pcibiotech.com. The auditor's assurance report regarding whether the company's renumeration report has been prepared, in all material aspects, in accordance with section 6-16 b of the Norwegian Public Limited Liability Companies Act and the accompanying regulation is available at the end of this report.
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Industry alignment is a key component of the remuneration principles, and this is achieved by establishing an appropriate peer group to verify the market competitiveness of the remuneration package and to assess market practice for the different remuneration elements.
Key objectives for the organisation were set for 2021 and 2022 to ensure reward is linked to goal achievements with a balance of short- and long-term performance components and to fulfil one of the overall remuneration principles of pay for performance. The goals for 2021 and 2022 were primarily linked to progress for the development programs and certain corporate goals, with different weighting tailored to the remuneration principle of shareholder alignment, to align the interest of executive management in driving value creation for shareholders. For 2021 the progress of development programs weighted 80% and the corporate goals weighted 20%, while the corresponding weighting for 2022 were 65% on development program goals and 35% on corporate goals.
The Board of Directors ("BoD") has not established a separate remuneration committee. Remuneration of the BoD is not covered by this report as such remuneration is resolved annually by the annual general meeting and disclosed in note 23 Related parties transactions in the annual report for 2022.
Remuneration principles
The remuneration policy for PCI Biotech is based on the principles summarised below:
Principle | Summary | |
Market | competitive | PCI Biotech offers competitive reward opportunities to enable the company to attract, |
remuneration | retain and motivate the talent needed to achieve the vision and business objectives. | |
PCI Biotech shall not be market leader in relative to compensation, but balance the need | ||
to provide competitive levels of reward against a desire to be cost effective when | ||
determining reasonable and responsible rewards. PCI Biotech aim at offering the | ||
executive management team a total compensation package around the median | ||
percentile of the relevant peer group. | ||
Pay for performance | An appropriate proportion of the reward package is performance-based to ensure | |
reward is linked to the achievement of key operational and financial objectives with a | ||
balance of short and long-term performance components. | ||
Transparency | Remuneration programs are designed and communicated in a manner that reinforces | |
the link between business objectives, vision and culture. | ||
Business | alignment | Remuneration decisions are made within an industry framework, with alignment and |
and consistency | consistency of the overall principles and policies of PCI Biotech. | |
The remuneration practices will remain flexible enough to evolve as PCI Biotech's | ||
business priorities change. | ||
Shareholder | The remuneration programs are intended to align the interests of employees in driving | |
alignment | value creation for shareholders. | |
Remuneration elements
The remuneration package for the PCI Biotech employees will comprise all or some of the following elements:
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- Fixed pay
- Base salary
- Variable performance-based pay
- Bonus (short-term incentive)
- Share options (long-term incentive)
- Benefits
- Pension scheme
- Other benefits (including termination and severance payment)
An appropriate proportion of the reward package is variable performance-based annual bonuses used to award current performance, while the use of share options is used for retention of existing employees, attraction of new employees and alignment with shareholders for the continued creation of shareholder value.
Annual review of remuneration elements
The BoD determines the total remuneration of the Chief Executive Officer ("CEO"). The BoD has final approval of the remuneration of the executive team, based on recommendations by the CEO. For the rest of the organisation the BoD approves the overall remuneration level and delegates distribution among the individuals to the CEO. The annual overall company objectives and the individual objectives of the CEO are set by the BoD. These overall company objectives are broken down into subgroup and individual goals, which all are set as transparent and measurable goals for individual impact.
Annual review of short-term incentives - bonus
PCI Biotech's remuneration policy aims at a short-term performance reward up to a fixed level of base salary. There are no changes to the target bonus levels for 2021 or 2022 within the executive positions, and the target bonus in % of base salary was the following:
Name, position | 2021 | Name, position | 2022 |
Per Walday, CEO* | 30 % | Ronny Skuggedal, CEO/CFO***** | 20-30% |
Ludovic Robin, CBO** | 25 % | Anders Høgset, CSO | 15% |
Amir Snapir, CMO*** | 25 % | Kristin Eivindvik, CDO | 10% |
Ronny Skuggedal, CFO | 20 % | ||
Anders Høgset, CSO | 15 % | ||
Kristin Eivindvik, CDO | 10 % | ||
Lucy Wabakken, CDO**** | 10 % |
*P.Walday left the company in May 2022 **L.Robin left the company in May 2022
***A.Snapir left the company in September 2022
****L.Wabakken worked as acting CDO during 2021 and into 2022
*****R.Skuggedal, CFO, assumed the position as Interim CEO from June 2022 and permanently from September 2022 and from then held both positions with a target bonus level of 30% from commencing permanent CEO
The 2022 figures for bonuses disclosed in this report are reflecting remuneration received during 2022, meaning that bonus figures are based on evaluation of the achievement of key objectives set for 2021, and a similar approach applies to the 2021 figures for received bonus payments.
Evaluation of the achievement of key objectives set for 2021, and its relative weighting, resulted in a general bonus level of 65% of the target bonus, with adjustments for individual performance. The
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bonus remuneration based upon goal achievements for 2021 was paid in March 2022. To be entitled to the bonus remuneration the executive team members needed to be under active employment and not have given or received a notice for termination of employment by the payment date, 25th March 2022.
The corresponding evaluation of the achievement of key objectives for 2022, and its relative weighting, resulted in a general bonus level of 50 % of the target bonus, with adjustments for individual performance. The bonus remuneration based upon goal achievements for 2022 was paid in March 2023, and hence not disclosed in this report. To be entitled to the bonus remuneration based on goal achievements for 2022 the executive team members need to be under active employment and not have given or received a notice for termination of employment by the payment date, 24th March 2023.
PCI Biotech has not reclaimed any previously paid bonuses for 2021 or 2022.
Annual review of long-term incentives - share option scheme
As part of a long-term element of the pay for performance and the shareholder alignment principles, PCI Biotech operates with a share option scheme where all employees may participate. No employees are automatic entitled to annual allotment of share options and share options are not allotted to consultants or BoD members.
The purposes of the share option scheme are threefold. First, it aims to align the interest of employees with that of shareholders through linking rewards to future share price development. Secondly, options vesting into the future that are conditional on still being employed by the company will reward those who remain loyal. Finally, options have become an important tool in attracting new hires for executive management.
Share options are meant to be allotted once annually by the BoD, normally within one week after release of the second quarterly report, or in connection with new hires or exceptional reward situations. For 2022 the annual allotment was made after release of the Q3 2022 interim report, November 2022.
At allotment the BoD will seek to allot a number of share options with a total fair value, calculated according to the Black-Scholes model, that is partly linked to the annual base salary for each individual. Other elements that will be assessed in the allotment are the balance between total short- and long- term performance-based rewards, current value of share options held, overall performance, work responsibility, importance of retention and position.
Based on the above considerations the BoD allotted in November 2022 a total of 570.000 share options to employees, where 360.000 of these share options were allotted to the executive management team members. The share options are subject to service-based vesting conditions over three years and other standardised terms and conditions for employee incentive programs with an additional value cap of 20 times the strike price. If the value cap threshold is met, all share options will vest immediately and be available for exercise. Each share option gives the right to acquire one regular share in the company.
No share options were exercised during 2021 or 2022. PCI Biotech has not reclaimed any value of or a number of previous allotted share options in 2021 or 2022.
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Annual review of pension scheme
PCI Biotech has a defined contribution pension scheme according to the mandatory requirements in Norway. For 2021 and 2022 PCI Biotech applied the maximum tax-free contribution level, according to Norwegian regulation, of 7% of annual base salary for the lower 0-7.1G salary range. For the upper 7.1-12G salary range the applied contribution level was 21% for 2021 and 2022. No contributions are made for annual base salary beyond 12G. No review of or changes to the pension scheme were made in 2021 or 2022.
Foreign employees that are not members of the Norwegian national social security scheme are excluded from the company pension scheme. The company had foreign employees during 2021 and until September 2022. For these employees, PCI Biotech arranged for a matching annual pension scheme and schemes were established in Sweden, Finland, and France in 2021. All foreign pension schemes were ended during 2022.
Annual review of benefits in kind
Employees may be given the benefits in kind that are common market practice, i.e., free telephone, free broadband, a laptop, newspapers, healthcare insurance, limited car allowance, etc. on customary terms. It is not given additional remuneration for special services outside the normal functions as an employee. No review of or changes to the types of benefits in kind were made for 2021 or 2022.
Annual review of termination and severance
The current CEO is, pursuant to specific requirements, entitled to severance salary for up to 6 months after the end of a 6 months period of notice. There are no agreements beyond the statutory requirements for other employees. The type and level of benefits for termination and severance, will be reviewed when deemed relevant. There were no termination or severance payments for 2021. PCI Biotech went through a restructuring process during 2022, including downsizing of the full clinical team and part of the executive team. In this process there was one termination payment made to one of the former executive team members, corresponding to an additional three months' notice period to standard Norwegian statutory requirements and the executive team member was relieved from working obligations. Other employees that were included in the downsizing process were offered one- month additional notice period and relieved from working obligations after fulfilling agreed work requirements. These termination arrangements are considered as temporary deviations from the current remuneration guidelines and not considered to be subject to amendment of the current remuneration guidelines.
No review of or changes related to termination and severance were made for 2021 or 2022.
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Disclaimer
PCI Biotech Holding ASA published this content on 04 May 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 May 2023 08:12:06 UTC.
