Share-based payments | 14. Stock Option Plans The Company has a stock options scheme for the employees of the Company and its subsidiaries. In accordance with the terms of the plan, as approved by shareholders, employees may be granted stock options to purchase ordinary shares at an exercise price as mentioned below per ordinary share. The stock options are granted to employees, consultants or directors of the Company and its subsidiaries. The stock options have been granted free of charge. Each employee’s stock option converts into one ordinary share of the Company upon exercise. The stock options carry neither rights to dividends nor voting rights. Stock options may be exercised at any time from the date of vesting to the date of their expiry. As of January 1, 2021, the Company decided to change the vesting period of its sign-on stock options from 4 years to 3 years to make the vesting consistent for all the options granted. The stock options granted (regular and sign-on) vest, in principle, as follows: ● 1/3rd of the total stock options granted will vest on the first anniversary of the granting of the stock options, and ● 1/36th of the total grant on the first day of each month following the first anniversary of the date of grant of the stock options. Upon leave of the employee, consultant or director, stock options must be exercised before the later of (i) 90 days after the last working day at argenx, or (ii) March 31 of the 4th year following the date of grant of those stock options, and in any case no later than the expiration date of the option. In order to prefinance the taxes that are paid upon the grant of stock options, Belgian employees have the ability, in exchange for the taxes due upon the grant of the stock options, to transfer the economic benefits related to part of those stock options to a third party. As of December 31, 2021, the economic benefits of 190,560 stock options, for which accelerated vesting applies, were transferred to a third party. No other conditions are attached to the stock options. The following share-based payment arrangements were in existence during the current and prior years and which are exercisable at the end of each period presented: Exercise price Outstanding per stock stock options on options December 31, Expiry date (in $) (1) 2021 2020 2019 2020 $ 4.47 — — 7,210 2022 2.76 125,339 — — 2023 2.76 — 165,693 211,769 2024 2.76 94,088 100,086 102,696 2024 4.47 6,113 6,238 6,238 2024 8.12 276,500 294,167 335,067 2025 12.96 4,500 21,500 39,000 2025 11.71 — 950 3,000 2025 10.73 105,857 114,232 185,832 2026 12.89 41,000 45,000 45,000 2026 12.99 102,840 127,252 219,791 2026 16.00 117,581 176,426 258,746 2027 20.85 53,143 102,479 108,613 2027 23.98 361,350 460,701 565,798 2023 91.54 85,080 85,077 94,100 2028 91.54 39,515 49,532 73,100 2023 97.77 321,473 325,661 366,260 2028 97.77 350,631 381,317 402,714 2024 128.54 111,174 111,174 111,690 2029 128.54 146,765 163,410 299,560 2024 153.75 203,658 195,452 204,430 2029 153.75 611,122 692,914 717,455 2025 135.38 16,712 19,000 — 2030 135.38 102,558 123,700 — 2025 222.16 129,711 131,770 — 2030 222.16 282,475 325,150 — 2025 226.77 32,100 32,100 — 2030 226.77 136,601 175,200 — 2030 280.43 692,214 728,517 — 2025 280.43 203,214 211,045 — 2026 265.48 24,366 — — 2026 288.93 61,505 — — 2026 293.91 48,138 — — 2031 265.48 42,282 — — 2031 288.93 207,464 — — 2031 293.91 92,456 — — 2026/2031 (2) $ 350.20 389,588 — — 5,619,113 5,365,743 4,358,069 (1) Amounts have been converted to USD at the closing rate as of December 31, 2021. (2) As of December 2021, the Company granted options for which the beneficiaries had a 60-day period to choose between a contractual term of five or ten years 2021 2020 2019 Number of Weighted average Number of Weighted average Number of Weighted average stock options exercise price (*) stock options exercise price (*) stock options exercise price (*) Outstanding at January 1 5,365,743 $ 142.87 4,358,069 $ 78.23 3,536,651 $ 37.54 Granted 882,584 314.99 1,797,652 266.71 1,365,172 144.38 Exercised (503,282) 64.72 (602,463) 38.86 (419,317) 12.75 Forfeited (125,932) 234.98 (187,515) 170.98 (124,437) 99.89 Outstanding at December 31 5,619,113 164.33 5,365,743 142.87 4,358,069 71.62 Exercisable at December 31 3,613,371 $ 106.53 2,833,680 $ 65.24 2,203,476 $ 25.38 (*) amounts have been converted to USD at the closing rate of the respective period. The weighted average share price at the date of exercise of options exercised during the year ended December 31, 2021 was $305.9, compared to $254.54 during the year ended December 31, 2020 and $124.69 during the year ended December 31, 2019. The weighted average remaining contractual life of the stock options outstanding amounted to 6.3 years on December 31, 2021 compared to 7.08 years on December 31, 2020 and 7.27 years on December 31, 2019. The table below shows the weighted average remaining contractual life for each range of exercise price: Weighted average remaining Outstanding on contractual life Exercise price (in $) December 31, 2021 (in years) 2.76 - 4.47 225,540 1.50 8.12 - 10.73 382,357 3.24 11.71 - 16.00 265,921 4.64 20.85 - 23.98 414,493 5.90 91.54 - 97.77 796,699 4.35 128.54 - 153.75 1,191,989 6.50 222.16 - 280.43 1,542,963 7.56 288.93 - 350.20 799,151 9.10 The fair market value of the stock options has been determined based on the Black and Scholes model using the following unobservable assumptions: ● The expected volatility, determined on the basis of the implied volatility of the share price over the expected life of the option. ● The expected option life, calculated as the estimated duration until exercise, taking into account the specific features of the plans. Below is an overview of the parameters used in relation to the determination of the fair value of the grants during 2021: Stock options granted in April 2021 July 2021 Oct 2021 Dec 2021 (1) Number of options granted 67,833 280,339 144,824 389,588 Average Fair value of options (in $) (*) $ 98.96 - 154.88 $ 131.65 - 159.13 $ 101.53 - 131.80 $ 145.35 - 149.09 Share price (in $) (*) $ 248.9 - 283.67 $ 300.78 - 340.95 $ 286.52 - 304.5 $ 351.73 Exercise price (in $) (*) $ 275.33 $ 303.16 $ 301.02 $ 349.92 Expected volatility 54.24 - 60.08 % 45.58 - 47.96 % 46.01 - 48.46 % 43.57 - 43.58 % Average Expected option life (in years) 4 - 6.50 4 - 6.50 4 - 6.50 6.15 - 6.50 (1) Risk‑free interest rate (0.41) - (0.08) % (0.41) - (0.17) % (0.18) - (0.05) % 0.03 - 0.05 % Expected dividends — % — % — % — % (1) In December 2021, the Company granted a total of 389,588 stock options. The beneficiary can choose between a contractual term of five or ten years . The expected option life ranges between 6.15 and 6.50 years. This estimate will be reassessed once the acceptance period of 60 days has passed and the beneficiaries will have made a choice between a contractual term of five or ten years . The total fair value of the grant would range from $45.0 million ( 100% of the stock options with a contractual term of five years ) to $57.1 million ( 100% of the stock options with a contractual term of ten years ). (*) amounts have been converted to USD at the applicable rate prevailing at the grant date. Below is an overview of the parameters used in relation to the determination of the fair value of grants during 2020: Stock options granted in April 2020 June 2020 Oct 2020 Dec 2020 Number of options granted 142,700 550,090 196,500 908,362 Average Fair value of options (in $) (*) $ 76.46 - 148.03 $ 83.46 - 129.64 $ 91.10 - 156.68 $ 101.23 - 229.20 Share price (in $) (*) $ 155.23 - 252.29 $ 224.80 - 281.25 $ 256.46 - 293.52 $ 273.15 - 383.10 Exercise price (in $) (*) $ 146.68 $ 240.70 $ 245.69 $ 303.83 Expected volatility 44.44 - 64.77 % 43.46 - 52.19 % 44.17 - 52.71 % 46.80 - 59.94 % Average Expected option life (in years) 4 - 6.68 4 - 6.68 4 - 6.68 4 - 6.68 Risk‑free interest rate (0.32) - (0.18) % (0.43) - (0.28) % (0.51) - (0.34) % (0.51) - (0.28) % Expected dividends — % — % — % — % (*) amounts have been converted to USD at the closing rate of the respective period. Below is an overview of the parameter used in relation to the determination of the fair value of grants during 2019: Stock options granted in June 2019 Nov 2019 Dec 2019 Number of options granted 423,487 19,800 921,885 Average Fair value of options (in $) (*) $ 71.28 $ 64.81 $ 46.51 - 74.58 Share price (in $) (*) $ 138.40 $ 142.00 $ 146.15-169.30 Exercise price (in $) (*) $ 127.49 $ 127.49 $ 152.50 Expected volatility 45.25 % 44.14 % 43.80 - 44.11 % Average expected option life (in years) 8.59 6.50 4 - 6.5 Risk‑free interest rate 0.07 % (0.05) % (0.57) - (0.24) % Expected dividends — % — % — % (*) amounts have been converted to USD at the closing rate of the respective period. The total share-based payment expense recognized in the consolidated statements of comprehensive income totaled $179.4 million for the year ended December 31, 2021, compared to $96.9 million for the year ended December 31, 2020 and $44.2 million for the year ended December 31, 2019. |