Clarifying queries related to the AGM 2020
First of all, we are very glad to see the high interest in our Annual General Meeting. The fact that the shareholders are dedicated to contribute to Brighter’s long-term vision to this degree is fantastic. Unfortunately the formal requirements of the Notice of Annual General Meeting are considerable and the language may come across as complicated.
We have received a considerable number of questions from shareholders this week – most of which are related to the Annual General Meeting (”AGM”) to be held on June 15. We have also noticed that there are some faulty interpretations and conclusions drawn from the AGM proposals circulating in certain discussions. Therefore, Brighter would like to officially address this and hopefully clarify these issues.
There are rumours circulating saying that the item 19 proposal indicates that we are selling 35% of Nectarine Health, and at a below market price. This is not correct – Brighter currently holds 1.4 million preferential shares, 85% of Nectarines tax value and 90% of the votes, and 1.4 million normal shares, 15% of the tax value and 10% of the votes. The proposal suggests that a maximum of 35% of the normal shares may be sold to Nectarines employees and key personnel (which means 3.5% of the votes and thus also only 3.5% of the valuation). In addition, if the participants resign during the vesting period, Brighter has the right to buy back shares.
Long-term Incentive Programs for the employees, management and Board of Directors
The main reasons for implementing long-term incentive programs (LTI) are the same for Brighter as any company. The reason is to strengthen a company’s ability to attract and retain sought-after expertise, be an attractive employer, maintain its workforce and to ensure a common focus on long-term growth in shareholder value. Through a performance-based incentive program, the rewards provided to the participants can be linked to Brighter’s future prospects thereby prioritizing long-term growth and ensuring that the shareholders and participants have the same targets. The programs are assessed by the Remuneration Committee as critical to be able to achieve Brighters ambitious goals for the future, and without such risk a loss of key individuals and reduced opportunities for recruiting relevant talents.
The LTI programs not stating the specific performance targets is in lime with general market practice since performance targets are commonly confidential information. The performance targets are established before the programs are implemented but will not be disclosed until after vesting. However, after the program has run its course the performance targets will be publicly available so that there will be full disclosure. This is a practice also used by big companies such Clas Ohlson, Electrolux, Husqvarna, Intrum and Saab.
”Programs of this type are common among companies and are created primarily to attract and retain expertise over time and to create incentives to achieve good results in the business,” says Ola Svanberg, lawyer at Advokatfirman Lindahl and co-author of the book About incentive programs ("Om Incitamentsprogram", Norstedts Juridik).
An alternative would be to increase salaries, or implement cash-driven programs, directly affecting the company’s cash flow. For Brighter, being investment driven, this would result in an increased need for additional capital acquisition and could potentially have a negative effect on the recently launched commercial activities. Furthermore, those alternatives would not need to be as transparent to the market.
The proposed long-term incentive programs are based on a number of performance targets that have to be achieved, besides that the participants have to stay with Brighter for 3 years. The cap for the share price factor of SEK 22.5 is so that the programs can not grow to insane levels. The link between share price in 2023 to today’s share price is to ensure that all participants have an incentive that is aligned with the shareholders. It is a future-oriented incentive, not only to reward employees who, if targets are reached, have made the company successful, but also to maintain the motivation to succeed over time. But perhaps the most crucial factor is to attract and retain the sought-after expertise.
The reason for having the same targets for all programs is to make sure that everyone is aligned. As both EBITDA and revenue are performance factors besides share price, the programs are designed so that the management cannot skew the results by sacrificing profit for volume or vice versa. It is also important to know that the LTIs are structured so that they are cash neutral and put no strain on Brighters cash flow. The programs under item 15 & 17 are proposed to address the tax expense for Brighter resulting from the LTI programs under item 14 & 16. The LTI programs carry their own costs and do not affect company resources, thus they trigger no cost or cash flow effect on the normal business.
The cash remuneration for the board is well below average for a listed company of Brighters size and market cap. Comparable figures from PWC puts Brighters level of cash remuneration below the lowest 10% of comparable companies. The LTI under item 16 for the board is to ensure that Brighter can attract and retain talented individuals willing to take on the risk of being a board member without putting a strain on Brighters cash flow as well as making sure that they have a long term focus that is in line with shareholder value created.
For further information, please contact:
Brighter’s Certified Adviser is Eminova Fondkommission AB, +46 (0)8 – 684 211 10, firstname.lastname@example.org, www.eminova.se.
About Brighter AB (publ)
Brighter is a health-tech company from Sweden with a vision of a world where managing chronic diseases is no longer a struggle. We believe a data-centric approach is key to provide smarter care for chronic conditions. Our daily-care solutions facilitate the flow of real-life treatment data between chronic-disease patients, their loved ones and their care providers – improving quality of life, easing the burden on healthcare systems, and opening new opportunities for data-driven research. Brighter is certified under ISO 13485. In 2019 the company won the Swecare Rising Stars Award. The Company's shares are listed on Nasdaq First North Growth Market/BRIG.