Kvika banki hf.: Granting of stock options

On the basis of an authorisation by the Annual General Meeting of Kvika banki hf., held on 31 March 2022, Kvika´s Board of Directors has approved to grant stock options to a total of 5,058,621 shares in the company to four employees of the group and has finalized agreements in that regard.

The stock options are assigned as a deferred part of recruitment bonuses that were granted between December 2022 to April 2023. The stock options are granted in order to align the long-term interests of the company and said employees.The terms of the stock options conform with the company´s remuneration policy and bonus scheme, Act on Financial undertakings no. 161/2002 and Rules of the Financial Supervisory Authority of the Central Bank of Iceland (FME) No. 388/2016 on Bonus Schemes under the Act on Financial Undertakings.

The main terms of the stock options are as follows:

• The exercise price of the stock options is ISK 20.107 per share, which is equivalent to the weighted average price in transactions with shares of the company on Nasdaq OMX Iceland for ten business days prior to the contract date, with 7.5% annual interest over the period, and the exercise price shall be adjusted for dividends that may be decided during the vesting period.
• The vesting period of the stock options is 36 months from grant date. Following that the stock options may be exercised for a period of three months. However, in the event of a merger involving a dissolution of the company or if there is a change in the company's control, as discussed in Article 100. Act no. 108/2007 on securities transactions, all outstanding stock options will become fully vested.
• In general, stock options shall lapse if the stock option holder's employment relationship with the company is terminated before the end of the vesting period.
• Executive managers within the group commit to retain, until the end of their employment, shares which market value correspond to profit after taxes of utilised stock options until the value of the shares owned by those individuals is equivalent to six months’ salary.

• The value of the stock options was determined by an independent specialist and the value is in line with the laws and rules applicable to bonus payments of financial undertakings.
• In certain instances, the company is entitled to revoke the stock options in part or in whole in line with FME rules.

The company's cost of stock option agreements announced here is estimated to be ISK 14,670,000 based on the Black-Scholes calculation model. The total number of issued stock options under this allotment correspond to approximately 0.11% of total issued share capital.

See attachments for information on stock options granted to managers.

Attachments

• Birkir Jóhannsson
• Eiríkur Magnús Jesson