Komplett Bank annual report 2019

Note 14 Share option programme The Bank has in 2019 and previous periods established a share option programme for all employees. The plan applies to both employ- ee’s fixed and any variable salary. The option value for the granted options is established based on the full market value calculated using observed trading prices at the grant date and Black & Scholes’s option pricing model. Risk-free interest, using 5-year government bonds, is used as a prerequisite in the calculation. The fixed price for exercising the positions is NOK 1 for all outstanding options. In the case of options granted in 2015 and later, there is also a variable price for exercising the positions, which is equivalent to the social security tax at the date of exercise. The value of vested options is recognised in other paid-in equity. The Bank has a bonus programme for all employees assessed as satisfying the requirements for variable remuneration plans. The com- pany’s variable salaries related to share options releases the options in accordance with Chapter 15 of the Act on financial institutions and financial groups, with regulations and other applicable regulations for bank remuneration plans. OVERVIEWOF GRANTED, EXERCISED AND OUTSTANDING OPTIONS 2019 2018 Outstanding options Outstanding options beginning of period 5,021 801 6,179 580 Adjustment of incoming balance - -259,045 + Granted options 630,969 432,782 - Exercised options -1,507 591 -1,331 516 - Lost options - - - Expired options - - Outstanding options end of period 4,145 179 5,021 801 Number of options Expiration date options 2020 1,873 175 2021 842,452 2022 522,282 2023 304,287 2024 602,983 Total 4,145 179 In 2019, 1,507,591 options were exercised (1,331.516 options in 2018). The weighted average share price at the time when exercised in 2019 is NOK 9.88 (15.07 NOK in 2018). The Board are eligible to extend the exercise period for previous granted options in accordance with note 11 and the Board’s declaration on the determination of salaries and other remuneration for members of the management. It is expected that all options will be exercised. Fair value of the options are estimated by using the Black & Scholes option pricing model. Average fair value of granted options in 2019 is NOK 7.0 million (4.1 million in 2018). No share options connected to the variable remuneration as of today is granted based on employee performance in 2019. In accordance with the Bank’s guidelines on variable remuneration such grant will potentially first happen later in 2020, subsequently to the annual report for 2019 being set by the general meeting. The cost for variable remuneration for 2019 equals NOK 16.8 million (NOK 14.4 million for 2018). The exact number of potentially granted options is dependent on the market value at the time of the grant and other factors described in this note. Komplett Bank Annual Report 2019 93