| Share-based compensation | 28. Share-based compensation a) Description of share-based compensation arrangements In connection with the Initial Public Offering (“IPO”) of MYT Netherlands Parent B.V. in January 2021, we adopted the 2020 Plan (MYT Netherlands Parent B.V. 2020 Omnibus Incentive Compensation Plan), under which we granted equity-based awards to selected key management members and supervisory board members on January 20, 2021. Selected key management members were granted an IPO related award package. This package consists of the “Alignment Grant” and the “Restoration Grant”. Furthermore, restricted shares were granted to supervisory board members as part of the annual plan. Additionally, the Compensation Committee of the Supervisory Board decides annually about a Long-Term Incentive Plan (LTI). As of July 1, 2021, 2022 and 2023 the LTI was granted to certain key management members consisting of restricted share units (“RSUs”) with time and performance obligations and for the LTI granted on July 1, 2023 certain stock options were granted to selected key management members under the new 2023 Omnibus Incentive Compensation Plan on the 8 th i) IPO Related One-Time Award Package Alignment Grant Under 2020 Omnibus Incentive Compensation Plan share-based payment program, options were granted to selected key management members. The options vest and become exercisable with respect to 25 % on each on the first four anniversaries of the grant date (January 20, 2021). After vesting, each option grants the right to purchase one American Depositary Share (each, an “ADS”) at a predefined exercise price per share. The vested options can be exercised up to 10 years after the grant date. The granted options are divided into three different tranches which have varying exercise prices. Overall, 6,478,761 options were granted to 21 key management members. The amount recognized as share-based compensation expense under this program is based on a weighted average historical share price of 31 USD. Please also refer to the section titled, “b) Measurement of fair values”. Restoration Grant Under 2020 Omnibus Incentive Compensation Plan share-based payment program, phantom shares were granted to selected key management members. Each phantom share represents the right of the grantee to receive one ADS in exchange for a phantom share. The granted phantom share vested immediately on the grant date and can be converted into an ADS at any time but are subject to transfer restrictions after conversion. Up to 25% of the granted phantom shares can be transferred after conversion at any time after the second anniversary of the grant date. The remaining 75% of the granted phantom shares can be transferred after conversion if certain conditions are met or at the fourth anniversary of the grant date at latest. The phantom shares can be converted into ADSs up to 10 years after the grant date. Overall, 1,875,677 phantom shares were granted to 21 key management members. The amount recognized as share-based compensation expense under this program is based on a weighted average historical share price of 31 USD. Please also refer to b) Measurement of fair values. The following table summarizes the main features of the one-time award package: Type of arrangement Alignment Award Restoration Award Type of Award Share Options Phantom Shares Date of first grant January 20, 2021 January 20, 2021 Number granted 6,478,761 1,875,677 Vesting conditions 25% graded vesting of the granted share options in each of the next four years of service from grant date The restoration awards are fully vested on the Grant Date. ii) Annual Plan Supervisory Board Members Plan As of February 9, 2022, four Supervisory Board Members have been granted 22,880 RSUs. The ADSs (and the shares represented thereby) issued on the grant date pursuant to the restricted share award are subject to forfeiture in the event that grantee resigns or is removed from the supervisory board prior to the vesting date. The granted equity instruments vested on February 9, 2023. As the restricted share awards are not subject to an exercise price, the grant date fair value amounts to USD 16.02, the closing share price on the grant date. As of July 1, 2022, one Supervisory Board Member has been granted 11,467 RSUs. The ADSs (and the shares represented thereby) issued on the grant date pursuant to the restricted share award are subject to forfeiture in the event that grantee resigns or is removed from the supervisory board prior to the vesting date. The granted equity instruments vested on June 30, 2023. As the restricted share awards are not subject to an exercise price, the grant date fair value amounts to USD 9.68, the closing share price on the grant date. As of May 8, 2023, 67,264 RSUs were granted to four Supervisory Board Members. Each RSU represents the right to receive an ADS (and the ordinary shares represented thereby) of MYT Netherlands Parent B.V. upon vesting, based on the deemed value of award on grant date. The total number of RSU’s vested on May 8, 2024. As the RSUs are not subject to an exercise price, the grant date fair value amounts to USD 4.46, the closing share price of the grant date. As of September 5, 2023, 11,478 RSUs were granted to one Supervisory Board Member. Each RSU represents the right to receive an ADS (and the ordinary shares represented thereby) of MYT Netherlands Parent B.V. upon vesting, based on the deemed value of award on grant date. The total number of RSU’s will vest on September 5, 2024. As the RSUs are not subject to an exercise price, the grant date fair value amounts to USD 3.63, the closing share price of the grant date. As of November 8, 2023, 149,147 RSUs were granted to five Supervisory Board Members. Each RSU represents the right to receive an ADS (and the ordinary shares represented thereby) of MYT Netherlands Parent B.V. upon vesting, based on the deemed value of award on grant date. The total number of RSU’s will vest on November 8, 2024. As the RSUs are not subject to an exercise price, the grant date fair value amounts to USD 3.52, the closing share price of the day before the grant date. The following table summarizes the main features of the annual plan: Type of arrangement Supervisory Board Members plan Type of Award Restricted Shares / Restricted Share Units Date of first grant January 20, 2021 July 1, 2021 February 9, 2022 July 1, 2022 May 8, 2023 September 5, 2023 November 8, 2023 Number granted 15,384 7,393 22,880 11,467 67,264 11,478 149,147 Vesting conditions The restricted shares vested in full on December 31, 2021. The restricted shares vested in full on June 30, 2022. The restricted shares vested in full on February 8, 2023. The restricted shares vested in full on June 30, 2023 The restricted shares Units vested in full on May 8, 2024 The restricted shares Units are scheduled to vest in full on September 5, 2024 The restricted shares Units are scheduled to vest in full on November 8, 2024 Long-Term Incentive Plan As of July 1, 2021, 171,164 restricted share units (“RSUs”) were granted to selected key management members. Each restricted share unit (“RSU”) represents the right to receive an ADS (and the ordinary shares represented thereby) of MYT Netherlands Parent B.V. upon vesting, based on the deemed value of award on grant date. Out of the granted RSUs, 62,217 RSUs; “time-vesting RSUs” will be subject to a time-based vesting and 108,947 RSUs; “non-market performance RSUs” will be subject to a time and performance-based vesting. One-third The non-market performance RSUs vested after 3 years on June 30, 2024 and contain a performance condition that will determine the number of shares awardable at the end of the performance period pursuant to the respective vested restricted share units. The performance condition is based upon the three-year cumulative gross profit target. Potential award levels range from 25-200% of the grant depending on the achievement of a gross profit target over the three-year period. As the RSUs are not subject to an exercise price, the grant date fair value amounts to USD 30.68 for 170,221 RSUs and USD 22.38 for 943 RSUs, the closing share price of the grant date. As of July 1, 2022, 674,106 RSUs were granted to selected key management members. Each RSU represents the right to receive an ADS (and the ordinary shares represented thereby) of MYT Netherlands Parent B.V. upon vesting, based on the deemed value of award on grant date. Out of the granted RSUs, 255,754 RSUs; “time-vesting RSUs” will be subject to a time-based vesting and 418,352 RSUs; “non-market performance RSUs” will be subject to a time and performance-based vesting. One-third The non-market performance RSUs will vest after 3 years on June 30, 2025 and contain a performance condition that will determine the number of shares awardable at the end of the performance period pursuant to the respective vested restricted share units. The performance condition is based upon the three-year cumulative gross profit target. Potential award levels range from 25-200% of the grant depending on the achievement of a gross profit target over the three-year period. As the RSUs are not subject to an exercise price, the grant date fair value amounts to USD 9.68 for 674,106 RSUs. As of July 1, 2023, 3,113,125 RSUs were granted to selected key management members. Each RSU represents the right to receive an ADS (and the ordinary shares represented thereby) of MYT Netherlands Parent B.V. upon vesting, based on the deemed value of award on grant date. As the LTI awarded on July 1, 2023 was subject to approval by the shareholders, the grant date was the date of the Annual General Meeting (AGM) when approval was obtained on November 8, 2023. Out of the granted RSUs, 1,696,022 RSUs; “time-vesting RSUs” will be subject to a time-based vesting and 1,417,103 RSUs; “non-market performance RSUs” will be subject to a time and performance-based vesting. One-third The non-market performance RSUs will vest after 3 years on June 30, 2026 and contain a performance condition that will determine the number of shares awardable at the end of the performance period pursuant to the respective vested restricted share units. Potential award levels range from 25-200% and management is currently estimating an award level of 26%, of the grant depending on the achievement of a GMV growth and an adjusted EBITDA margin target over the three-year period. As the RSUs are not subject to an exercise price, the grant date fair value amounts to USD 3.41 for 3,113,125 RSUs, which was approved in the AGM on November 8, 2023. As of July 1,2023, 2,923,280 stock options were granted to selected key management members. One third Additionally, On December 15, 2023 further 682,021 stock options were granted, with service commencement date July 1, 2023 on similar terms to same selected key management members. One third The following table summarizes the main features of the annual plan: Type of Key Management Members arrangement Long-Term Incentive Plan Type of Award Time - Non-market Time - Non - Time - Non-market performance RSUs Stock Options Stock Options Service commencement date July 1, 2021 July 1, 2021 July 1, 2022 July 1, 2022 July 1, 2023 July 1, 2023 July 1, 2023 July 1, 2023 Grant date July 1, 2021 July 1, 2021 July 1, 2022 July 1, 2022 November 8, 2023 November 8, 2023 November 8, 2023 December 15, 2023 Number granted 62,217 108,947 255,754 418,352 1,696,022 1,417,103 2,923,280 682,021 Vesting conditions Graded vesting of 1/3 of the time vesting RSUs over the next three years . 3 year ’s services from grant date and achievement of a certain level of cumulative gross profit. Graded vesting of 1/3 of the time vesting RSUs over the next three years . 3 year ’s services from grant date and achievement of a certain level of cumulative gross profit. Graded vesting of 1/3 of the time vesting RSUs over the next three years . 3 year ’s services from service commencement date and achievement of a certain level of cumulative GMV growth and adjusted EBITDA margin. Graded vesting of 1/3 of the granted share options in each of the next three years of service from service commencement date Graded vesting of 1/3 of the granted share options in each of the next three years of service from service commencement date Employee Share Purchase Program (ESPP) On May 29, 2023, the Company commenced its first open enrollment period for its Employee Share Purchase Program (“ESPP”), which was approved by the shareholders on October 27, 2022, at the Company’s annual general meeting. The objective of the ESPP is to allow employees of the Company (or any of its subsidiaries) to participate in the growth of the Company and to promote long-term corporate engagement by offering eligible employees the opportunity to acquire American Depositary Shares representing shares in the capital of the Company, at a discount, subject to the terms of the ESPP. The discount is fixed to one-fourth one-third four ADSs for the price of three ADSs On May 17, 2024 the Company commenced its second open enrollment period for its Employee Share Purchase Program. The expense that was recorded in equity, displaying the contribution of Mytheresa to the employees, amounted to €18 thousand. 13,149 shares were issued in the program. The grant date fair value amounts to USD 6.00. b) Measurement of fair values Alignment Grant The fair value of the employee share options has been measured using the Black-Scholes formula. The inputs used in the measurement of the fair values at grant date of the equity-settled share-based payment plans were as follows. Black Scholes Model - Weighted Average Values Tranche I Tranche II Tranche III Weighted average fair value $ 25.42 $ 22.93 $ 20.68 Exercise price $ 5.79 $ 8.68 $ 11.58 Weighted average share price $ 31.00 $ 31.00 $ 31.00 Expected volatility 60 % 60 % 60 % Expected life 2.32 years 2.32 years 2.32 years Risk free rate 0.0 % 0.0 % 0.0 % Expected dividends — — — Expected volatility has been based on an evaluation of the historical volatility of publicly traded peer companies, particularly over the historical period commensurate with the expected term. Stock Options from Long-Term Incentive Plan The fair value of the employee share options has been measured using the Black-Scholes formula. The inputs used in the measurement of the fair values at grant date of the equity-settled share-based payment plans were as follows. Grant date Grant date Black Scholes Model - Weighted Average Values November 8, 2023 December 15, 2023 Weighted average fair value $ 0.64 $ 0.65 Exercise price $ 4.00 $ 4.00 Weighted average share price $ 3.41 $ 3.55 Expected volatility 45.83 % 45.32 % Expected life 1.65 years 1.55 years Risk free rate 3.00 % 2.37 % Expected dividends — — Expected volatility has been based on an evaluation of the historical volatility of publicly traded peer companies, particularly over the historical period commensurate with the expected term. Restoration Grant As the phantom shares granted under the Restoration Award are not subject to an exercise price, the grant date fair value amounts to USD 31, the closing share price on the first trading day. c) Share-based compensation expense recognized Amounts recognized for share based payment programs were as follows: Year ended June 30, (in € thousands) 2023 2024 Classified within capital reserve (beginning of year) 128,628 158,453 Expense related to: 29,825 17,137 Share Options (Alignment Grant) 27,541 13,351 Restricted Shares 342 581 Restricted Share Units 1,914 2,292 Employee Share Purchase Program 28 18 Share Option (SO Award) — 896 Classified within capital reserve (end of year) 158,453 175,591 During the year ended June 30, 2024, the Company withheld 287,511 shares to cover tax obligations related to the vesting of RSUs. The total value of the shares withheld was €1,370 thousand which was based on the market price of the Company’s shares on the vesting date. d) Reconciliation of outstanding share options The number and weighted-average exercise prices of share options under the share option programs described under the Alignment award were as follows. Alignment award Wtd. Average Options Exercise Price (USD) June 30, 2022 6,407,675 8.36 forfeited — N/A exercised 210,260 5.79 June 30, 2023 6,197,415 8.55 June 30, 2023 6,197,415 8.55 forfeited 134,325 7.84 exercised — N/A June 30, 2024 6,063,090 8.57 The range of exercise prices for the share options outstanding as of June 30, 2024 is between 5.79 USD and 11.58 USD. The average remaining contractual life is 6.5 years. For options vested on January 20, 2023, the beneficiaries have been given the choice for a cash settlement instead of equity. The amount of the cash settlement was determined based on the difference between the Company’s share price at the time of exercise and the option strike price. €1,545 thousand has been reclassified from equity and recognized as a cash-settled share-based payment liability with giving the option for a cash settlement as of June 30, 2023. Only a total of 24,187 options have been exercised with a payout of €57 thousand as of June 30, 2023. The remaining fair value and corresponding options have been again reclassed to equity and will be settled in shares at future exercises. For all remaining options, the company intends to continue to settle this award in equity. The number and weighted-average exercise prices of share options under the share option programs described in Long-Term Incentive Plan for share options were as follows. S hare Options under the Long-Term Incentive Plan Wtd. Average Options Exercise Price (USD) June 30, 2023 — — forfeited 296,235 4.00 Granted 3,605,301 4.00 June 30, 2024 3,309,066 4.00 The exercise prices for the share options outstanding as of June 30, 2024 is 4.00 USD. The average remaining contractual life is 9.0 years. |
