Company announcement – No. 22 / 2024

Zealand Pharma launches long-term incentive programs for Zealand’s Board of Directors, Corporate Management and employees for 2024

Copenhagen, Denmark, April 19, 2024 – 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 long-term incentive programs (the “LTIP”) for Zealand's Board of Directors, 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 March 20, 2024 (“Remuneration Policy”).

Long-term incentive program

Zealand has made the following awards in its long-term incentive plan. It has awarded:

• 20,497 restricted stock units ("RSUs") to Zealand's Board of Directors
• 52,777 performance stock units ("PSUs") and 52,777 RSUs have been awarded to Zealand’s Corporate Management
• 7,071 RSUs have been awarded to Zealand's US employees and
• 146,260 warrants have been awarded to Zealand's employees in Denmark (except for members of Corporate Management).

The warrants are granted under the warrant program covered by the authorization pursuant to Article 8.10 of Zealand's Articles of Association adopted at Zealand's annual general meeting on April 6, 2022 (the authorization has subsequently been renewed and increased pursuant to Articles 8.13 and 8.14 of Zealand's Articles of Association, most recently at the annual general meeting on March 20, 2024). The total cost of the incentive grants is DKK 122,458,942 million.

Zealand implemented the LTIP to align with selected European and U.S. biotech peers, and it is intended to drive long-term performance, align the Corporate Management’s and employees' interests with those of Zealand’s shareholders, and support the attraction, retention and motivation of first-rate talent.

The number of granted RSUs and PSUs may be adjusted 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. The number of granted warrants may be adjusted as set out in Zealand's Articles of Association.

Board RSUs

To the extent that the Board member holds any additional role as member of Zealand's Audit Committee, Remuneration Committee and/or Scientific Committee, the Board member has received an additional grant of RSUs in accordance with the Remuneration Policy. Such grants are included in the above-mentioned total number.

With regards to the 2024 RSU grants to the Board of Directors, RSUs will vest annually in equal tranches over three years (from April 19, 2024, to April 19, 2027). For any given financial year, the total number of RSUs granted to any member of the Board of Directors cannot exceed 8,000 RSUs, and at the time of grant the total value of RSUs granted to the Chairperson of the Board cannot exceed an amount of DKK 3 million. For Board members serving on a committee (other than the Chairperson of the Board), the total value cannot exceed DKK 1.5 million and for other Board members not serving on a committee, the total value cannot exceed DKK 600,000. Each vested RSU entitles the holder to receive one share in Zealand at no cost subject to certain conditions that include the Board member's continued service on the Board of Directors (or Board Committee where relevant) for the full term of being elected.

The members of the Board of Directors are also subject to a holding requirement to be met within a period of two years from the time the Board member was first elected if they continue to be members of the Board of Directors. This is to align the interests of the Board of Directors and the shareholders. The holding requirement for the members in question amounts to 200% of their annual RSU grant value, as determined at the grant date.

The grant of RSUs for the members of the Board of Directors under this program will have an estimated fair market value of DKK 12.5 million, based on each RSU having a fair market value of DKK 598. The fair market value of the RSUs is determined as the closing price of Zealand's share on Nasdaq Copenhagen A/S the day prior to the grant.

Corporate Management RSUs and PSUs

Members of the Corporate Management are eligible to receive an annual grant of PSUs and RSUs.

The PSU element of the award is free of charge subject to fulfillment of certain predefined performance targets. Consequently, 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%.

With regards to the 2024 RSU grants to Zealand's Corporate Management, RSUs will vest annually in equal tranches over three years (from April 19, 2024, to April 19, 2027). Each vested RSU entitles the holder to receive one share in Zealand at no cost and subject to certain conditions that include the holder's continued employment at Zealand.

The grant of RSUs and PSUs to Zealand's Corporate Management under the aforementioned programs will have an estimated fair market value of DKK 63.5 million, based on each RSU and PSU having a fair value of DKK 598 per share. The fair market value of the RSUs and PSUs is determined as the closing price of Zealand's share on Nasdaq Copenhagen A/S the day prior to the grant.

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.

For the financial year 2024, the total aggregated value of grants under the Long-term incentive programs, including RSUs and PSUs, cannot exceed 400% of the fixed annual salary for the CEO and 250% for other members of Executive Management.

The members of the Executive Management are also subject to a holding requirement to be met within a period of five years from the time of becoming a member of Executive Management. This is to align the interests of the Executive Management and the shareholders. The holding requirement for the members in question amounts to 200% of the fixed annual salary for the CEO, and 100% for other members of Executive Management.

US Employee RSUs

With regards to the 2024 RSU grants to the US employees, the RSUs will vest annually in equal tranches over three years (from April 19, 2024, to April 19, 2027). Each vested RSU entitles the holder to receive one share in Zealand at no cost and subject to certain conditions that include the holder's continued employment at Zealand.

The grant of RSUs to US employees under this program will have an estimated fair market value of DKK 4.5 million, based on each RSU having a fair value of DKK 598 per share. The fair market value of the RSUs is determined as the closing price of Zealand's share on Nasdaq Copenhagen A/S the day prior to the grant.

Vested RSUs entitle the holder to receive shares in Zealand at no cost, subject to the holder's continued employment throughout the vesting period. Each vested RSU equals one share in Zealand.

Warrants to employees in Denmark

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 employees with shareholders of Zealand.

The 146,260 warrants granted give the right to subscribe for up to 146,260 newly issued shares in Zealand with a nominal value of DKK 1 each, corresponding to total of 0.23 % of Zealand's total outstanding share capital. The exercise price is DKK 598, calculated as the closing price of Zealand’s shares on Nasdaq Copenhagen A/S on April 18, 2024. 

The warrants granted to the employees working in Denmark 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 exercise windows in the period from April 19, 2027, up to and including April 19, 2034.

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 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 43 million calculated on the basis of the Black–Scholes model. The cost of the warrants issued is DKK 292.99 based on Black-Scholes parameters for employees in Denmark, which are a volatility of 46.39%, a risk-free interest rate of 2.46 % and a share price of DKK 598.

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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. The company has development partnerships with a number of pharma companies as well as commercial partnerships for its marketed products.

Zealand was founded in 1998 and is headquartered in Copenhagen, Denmark, with a presence in the U.S. For more information about Zealand’s business and activities, please visit 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 as of the date of this release. Except as required by law, Zealand assumes no obligation to update these forward-looking statements publicly.

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