Group notes

Note 25 Share-based payments

Share value based incentive programs

Performance based employee stock option plan 2018-2024

Approximately 270 key employees of Epiroc have received under the performance based stock option plan for the years 2018-2024 options related to Epiroc and receive incentives related to the performance of Epiroc. The terms and conditions of the performance based employee stock option plans for the years 2018–2024 are in all material aspects similar to the terms and conditions of the performance based employee stock option plan for 2025 in Epiroc, as described below, except for that the 2018-2024 plans for senior executives also included matching options. The matching options were allotted to the senior executives proportionally to the number of Epiroc A shares acquired which was and still is a condition for participation in the plan. As from 2025 matching options are no longer allotted to senior executives, but the requirement of own investment remains as a condition for participation of the plan.

Performance based employee stock option plan 2025

The Annual General Meeting of Epiroc held on May 8, 2025, resolved, based on a proposal from the Board of Directors, to introduce a performance based employee stock option plan for 2025, which is similar in structure to the previous stock option plans approved by the Annual General Meeting.

The performance based employee stock option plan is directed at a maximum of 140 key employees in Epiroc, who will have the possibility to acquire a maximum of 1 800 000 Class A shares in Epiroc. The issuing of options for all categories depends on the value increase of Epiroc expressed as Economic Value Added during 2025. In an interval of SEK 1 200 000 000, the allotment varies linear from zero to 100% of the maximum number. In 2025, ESG targets were introduced for the CEO and the rest of the Group Management (including Division Presidents). The ESG target having a weight of approximately 15% and Economic Value Added then having a weight of approximately 85%.

The participating key employees are divided into four categories, with different amounts of maximum of options, depending on their positions. The issuing of options will take place no later than March 20, 2026. The term of the options is seven years from granting, and the options are exercisable not earlier than three years from grant date. The exercise price shall be set at an amount corresponding to 110% of the average of the closing rates on Nasdaq Stockholm of Epiroc’s Class A shares during a period of ten business days following the date of the publishing of the Interim report Q4, 2025. A participant must still be employed in order to exercise the options. The options are not transferable and a single payment in relation to an option can never be higher than four times the exercise price of the option.

The costs of the performance based employee stock option plan will, on an on-going basis during the term of the plan, be reported in accordance with IFRS 2, and is estimated to amount up to approximately 36,8. The estimated costs for advice and administration linked to the program are approximately 3.5. In order to limit the exposure of the performance based employee stock option plan, hedging measures have been adopted in the form of share buy-backs (see note 21), which can be transferred to the participants of the plan pursuant to resolutions passed at the Annual General Meeting of Epiroc.

A prerequisite for the participation of senior executives (11 participants) in the performance based employee stock option plan is an investment of a maximum of ten percent of the participants’ respective base salary (20% for expatriates with net salary) for 2025 before tax, in series A shares of Epiroc. The investments may be made in cash or by payment of shares, however, not by shares that are obtained as a part of the performance based employee stock option plans for 2023 – 2024. The senior executive's participation the plan corresponds proportionally to the investment made. The acquired shares need to be kept during the vesting period of the plan. If the number of the acquired shares are reduced, the the right to the options is reduced proportionally. 

For all the programs, 2019–2025, a total maximum of 3 264 256 shares could be delivered to employees, corresponding to approximately 0.3% of the total number of shares in Epiroc.

The Board of Epiroc has the right to decide to implement an alternative incentive solution (SARs) for key persons in such countries where the grant of employee stock options is not feasible. Such alternative incentive solutions (SARs) shall, to the extent possible, have terms and conditions corresponding to the ones applicable to the performance based employee stock option plan.

 

The Black-Scholes model is used to calculate the fair value of the options/SARs in the plans at issue date. For the programs in 2025, the fair value of the options/SARs was based on the following assumptions:

KEY ASSUMPTIONS

¹⁾ Matching options for senior executives.
²⁾ Including adjustments for performance achievement.

The expected volatility has been determined by analyzing the historic development of the Epiroc A Share price and other shares on the stock market. When determining the expected option life, assumptions have been made regarding the expected exercising behavior of different categories of optionees.

For the stock options in the 2018–2025 programs, the fair value is recognized as an expense over the following vesting periods:

PROGRAM

For the 2025 program, a new valuation of the fair value has been performed and will be performed at each reporting date until the issue date, which as indicated below will occur in March 2026.

 

For SARs, the fair value is recognized as an expense over the same vesting period; the fair value is, however, remeasured at each reporting date and changes in the fair value after the end of the vesting period continue to be recognized as a personnel expense.

In accordance with IFRS 2, the expense in 2025 for the Group for all share-based incentive programs amounted to 16 (7) excluding social costs, of which 9 (13) refers to equity-settled options. The related costs for social security contributions are accounted for in accordance with the statement from the Swedish Financial Reporting Board (UFR 7) and are classified as personnel expenses. In the balance sheet, the provision for the Group for share appreciation rights as of December 31, 2025, amounted to 21 (36). See additional information about the Group’s share based incentive program in note 5.

 

SUMMARY OF SHARE VALUE BASED INCENTIVE PROGRAMS

1) A share split and mandatory redemption of the Epiroc share was executed in May 2021. In order to ensure that the economic value for the participant was not negatively affected, the exercise price and the number of stock options, matching options and share appreciation rights were adjusted, similar to the method used by Nasdaq Stockholm to adjust exchange traded option contracts.

 

NUMBER OF OPTIONS/RIGHTS 2025