At the heart of this initiative lies a firm belief that Evolution’s stock is undervalued and has the potential to rise by at least 30%.
Evolution shareholders are invited to vote for the programme on 9 November at an extraordinary general meeting, but the programme can only be implemented if it receives the support of shareholders who collectively hold at least 90% of the total votes and shares represented at that meeting.
The incentive programme in brief
Under the proposed incentive programme, up to 2.5 million warrants, equivalent to approximately 1.16% dilution, will be issued to participants, including the CEO, members of the senior management, as well as key personnel.
Warrants are financial derivatives that offer the right, but not the obligation, to buy shares at a predetermined price in the future. Unlike shares, they do not confer ownership or voting rights.
These warrants allow participants to buy Evolution shares in 2026 at 130% of the average share price between 26 October 2023 and 8 November 2023.
The allocation of warrants to employees will be determined based on their performance, including financial metrics like revenue growth and EBITDA margins, as well as non-financial criteria such as adherence to Evolution’s Code of Ethics.
The company believes that this programme, coupled with other factors, will help in attracting the necessary talent to achieve the targeted growth and performance.
Evolution’s board of directors is responsible for deciding the allocation of warrants to participants, with a deadline set for 30 November 2023.
Who can benefit?
The maximum number of warrants that can be allocated to participants varies. For CEO Martin Carlesund, the allocation can go up to 250,000 warrants.Up to 50 members of Evolution’s senior management team and senior key personnel can receive up to 100,000 warrants, while 250 people in other key functions are eligible for up to 75,000 warrants each.
Half of the warrants may be granted at no cost to match warrants acquired by participants at the fair market value, while the remaining warrants will be allotted at fair market value.
However, participants are required to return free warrants if they leave the company and must offer to repurchase any acquired at fair market value.
Evolution itself has conducted a preliminary valuation, pinning the fair market value of each warrant at SEK 114.6.
This valuation hinges on specific assumptions, including an Evolution share price of SEK 1,193.4, which corresponds to the closing price on Nasdaq Stockholm on 13 September 2023 and which implies a subscription price of SEK 1,551.4.
So what’s the catch?
For the warrants to carry any substantial value, Evolution’s share price must surge by more than 30% when compared to the share price during the mentioned 10-day period.
Evolution reached its highest share price at SEK 1,672 on 30 April 2021.
However, in recent times, the company’s stock has faced challenges, with a 6% decline over the past month and a 16% drop over the last six months.
On a more positive note, Evolution has witnessed an almost 6% increase year-to-date and 28% growth over the past 12 months.
This ambitious target comes with no guarantees, as recent stock performance has shown short-term declines, despite long-term positive growth.
Shareholders and programme participants will need to closely watch the company’s performance to determine if this goal is attainable.