Company announcement – No. 23 / 2022

Zealand Pharma launches long-term incentive program for Zealand’s Corporate Management and employees for 2022

Copenhagen, DK and Boston, MA, May 25, 2022 – Zealand Pharma A/S (“Zealand”) (Nasdaq: ZEAL) (CVR-no. 20 04 50 78), a Copenhagen-based biotechnology company focused on the discovery and development of innovative peptide-based medicines, announces the implementation of an updated long-term incentive program (the “LTIP”) for Zealand’s Corporate Management and employees in accordance with Zealand's Remuneration policy and overall guidelines for incentive pay, as adopted at the annual general meeting held on April 6, 2022.

Long-term incentive program
Zealand has awarded 266,223 performance stock units ("PSUs"), 99,420 restricted stock units (“RSUs”) and 863,156 warrants to Corporate Management and employees. The warrants are granted under the warrant program covered by the authority pursuant to Section 8.10 of Zealand's Articles of Association, adopted on Zealand's general meeting on April 6, 2022. The total cost of the incentive grants is DKK 69.4 million.

Zealand implemented the LTIP to align with select European and U.S. biotech peers, and is intended to drive long-term performance, align management’s interests with those of Zealand’s shareholders, and support the attraction, retention and motivation of first-rate executive talents.

RSUs and PSUs
With regards to the 2022 RSU grants to the US employees the RSUs will vest annually in equal tranches over three years (from May 25, 2022 to May 25, 2025).

With respect to the PSUs, members of the Corporate Management are eligible to receive an annual grant of PSUs free of charge subject to fulfillment of certain predefined performance targets. Consequently,

• 50% of the PSUs vest based upon certain predefined operational goals that are required for Zealand to meet its strategic plans (such as clinical development advancement), and
  
  
• 50% of the PSUs vest based upon certain pre-defined market-based goals that encourage share performance against comparable companies (such as total shareholder return performance against Nasdaq Biotechnology Index).
  
  

Depending on the level of fulfillment of the goals the PSUs may vest between 0% and 150%.

The grant of RSUs and PSUs under this program will have an estimated fair market value of DKK 33,2 million, based on each RSU having a fair value of DKK 90.7 per share. The value of the RSUs is determined as the closing price of the Company's share on Nasdaq Copenhagen A/S the day prior to the grant.

The number of granted RSUs or PSUs may be adjusted by the Board of Directors due to e.g. changes in Zealand's share capital structure or other significant events, subject to obtaining a calculation made by Zealand's auditor or an independent third party.

Vested RSUs or PSUs entitle the holder to receive shares in Zealand at no cost, provided the holder's continued employment throughout the vesting period. Each vested RSU equals one share in Zealand while PSUs convert into a number of shares equal to between 0% to 150% of the PSUs, depending on the achievement of the performance targets.

Warrants

The warrant program is an incentive scheme reflecting Zealand’s objective to attract and retain first-rate employees and to help ensure shared short- and long-term interests for the management and employees with shareholders of Zealand.

The 863,156 warrants give the rights to subscribe for up to 863,156 newly issued Zealand shares with a nominal value of DKK 1 each, corresponding to total of 1.98% of Zealand's total outstanding share capital. The exercise price is DKK 90.7, calculated as the closing price of Zealand’s shares on Nasdaq Copenhagen on May 24, 2022.

The 229,794 warrants granted to Corporate Management will vest annually in equal tranches over a three year period, and the exercise of the warrants may take place, in whole or in part, in defined time windows from May 25, 2022 up to and including May 25, 2027.

The 633,362 warrants granted to the Danish employees will vest at the three-year anniversary of the grant date, and the exercise of the warrants may take place, in whole or in part after the three-year period, in defined time windows from May 25, 2025 up to and including May 25, 2032.

The exercise windows for all granted warrants are defined as four times a year during a four-week window following the time of publication of either the Zealand's annual report or quarterly or semi-annual reports (three, six and nine months respectively).

The total new warrants granted have a combined market value of DKK 36.3 million calculated on the basis of the Black–Scholes model. The costs of each warrant issued to Corporate Management is DKK 36.65 based on Black-Scholes parameters for Corporate Management grants, which are a volatility of 55.5%, a risk-free interest rate of 0.86% and a share price of DKK 90.7. The cost of the warrants issued to Danish employees is DKK 43.98 based on Black-Scholes parameters for Danish employees, which are a volatility of 48.6%, a risk-free interest rate of 1.2% and a share price of DKK 90.7.

For the financial year 2022, the total value of any share-based remuneration, including both PSUs and warrants, cannot exceed 400% of the fixed annual base salary for the CEO and 250% for other members of the Executive Management.

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About Zealand Pharma A/S
Zealand Pharma A/S (Nasdaq: ZEAL) ("Zealand") is a biotechnology company focused on the discovery and development of peptide-based medicines. More than 10 drug candidates invented by Zealand have advanced into clinical development, of which two have reached the market and three candidates are in late-stage development. In the US Zealand markets V-Go®, a basal-bolus insulin delivery option for people with diabetes, and Zegalogue®, (dasiglucagon), the first and only glucagon analogue for the treatment severe hypoglycemia in pediatric and adult patients with diabetes aged 6 and above. License collaborations with Boehringer Ingelheim and AstraZeneca create opportunities for more patients to potentially benefit from Zealand-invented peptide investigational agents currently in development.

Zealand was founded in 1998 in Copenhagen, Denmark, and has presence throughout the U.S. that includes key locations in Boston, and Marlborough (MA). For more information about Zealand’s business and activities, please visit http://www.zealandpharma.com.

Forward-Looking Statement
The above information contains forward-looking statements that provide Zealand Pharma’s expectations or forecasts of future events. Such forward-looking statements are subject to risks, uncertainties and inaccurate assumptions, which may cause actual results to differ materially from expectations set forth herein and may cause any or all of such forward-looking statements to be incorrect. If any or all of such forward-looking statements prove to be incorrect, our actual results could differ materially and adversely from those anticipated or implied by such statements. All such forward-looking statements speak only as of the date of this release and are based on information available to Zealand Pharma as of the date of this release.

For further information, please contact:

Zealand Pharma Investor Relations
Maeve Conneighton
Argot Partners
investors@zealandpharma.com

Zealand Pharma Media Relations
David Rosen
Argot Partners
media@zealandpharma.com