Incentive Programs

Starbreeze Investor Relations

Employee stock option program 2014/2018

The extraordinary general meeting held 15 May 2014 resolved to establish an employee stock option program through a directed issue of 6,250,000 warrants to Starbreeze Studios (conferring rights to subscribe for 9,375,000 Class B shares after the bonus issue executed in 2015). Of the 6,250,000 warrants issued, 5,000,000 were used as underlying warrants in the employee stock option program and 1,250,000 were issued to secure employee social security costs in terms of cash flow. A total of 4,775,000 employee stock options were issued against no monetary consideration to employees and these will vest during a period of 1, 2 and 3 years respectively, provided that the employee is still employed by the Group and provided that set performance requirements are met. Of the 5,000,000 underlying warrants in the employee stock option program, 3,601,643 have been exercised to subscribe for shares, and of the 1,250,000 warrants issued to secure employee social security costs in terms of cash flow,1,217,334 have been exercised. The maximum dilution effect of this program is 3.23 percent. The dilution effect of the issued employee stock options is approximately 3.12 percent, of which approximately 0.64 percent remains to be exercised for subscription of shares by holders of employee stock options.

The strike price for the employee stock options program is approximately SEK 4.80 per share.

Warrants programs 2015/2018 and 2015/2019

The annual general meeting held 12 November 2015 resolved in favor of an additional special share-based incentive program for senior management personnel and certain other key individuals aimed at managing new recruitments and pro-motions. A total of 3,500,000 warrants, conferring the right to subscribe for 3,500,000 Class B shares, were issued to one of the Company’s subsidiaries. The annual general meeting approved the transfer by the subsidiary of the warrants to senior management personnel and certain other key individuals against payment of the market value of the warrants estab-lished in accordance with a Black & Scholes options pricing formula from time to time.

Half of the warrants may be exercised up to 30 November 2018 at a strike price of 200 percent of the average share price during the ten trading days subsequent to 12 November 2015 (SEK 29.10). The other half of the warrants may be exercised up to 30 November 2019 at a strike price of 240 percent of the average share price during the ten trading days subsequent to 12 November 2015 (SEK 34.92). As of 31 December 2016, 1,780,000 warrants had been allocated to senior management personnel and other key individuals, of which 1,750,000 warrants expire in November 2018 and 30,000 warrants expire in November 2019. None of the warrants issued in the warrant programs for 2015/2018 and 2015/2019 have yet been exercised. The maximum dilution effect of this program is approximaely 1.23 percent. The dilution effect for the issued warrants is approximately 0.63 percent, of which approximately 0.63 percent remains to be exercised for subscription of shares by warrant holders.