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Share-based payments
12 Months Ended
Dec. 31, 2022
Share-based payments  
Share-based payments

13.Share-based payments

The Company has an equity incentive plan for the employees, key consultants, board members, senior managers and key outside advisors (“key persons”) of the Company and its subsidiaries. In accordance with the terms of the plan, as approved by shareholders, employees may be granted stock options and/or restricted stock units.

13.1 Stock Option

The stock options are granted to key persons of the Company and its subsidiaries. The stock options may be granted to purchase ordinary shares at an exercise price. 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, 2022, the economic benefits of 242,729 stock options, for which accelerated vesting applies, were transferred to a third party.

No other conditions are attached to the stock options.

The following stock option 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)

    

2022

    

2021

    

2020

2022

$

2.60

125,339

2023

 

2.60

 

 

 

165,693

2024

 

2.60

 

19,743

 

94,088

 

100,086

2024

 

4.21

 

5,127

 

6,113

 

6,238

2024

 

7.65

 

214,800

 

276,500

 

294,167

2025

 

12.20

 

2,000

 

4,500

 

21,500

2025

 

11.02

 

 

 

950

2025

 

10.10

 

101,861

 

105,857

 

114,232

2026

 

12.13

 

30,000

 

41,000

 

45,000

2026

 

12.23

 

99,772

 

102,840

 

127,252

2026

 

15.08

 

115,211

 

117,581

 

176,426

2027

19.64

42,509

53,143

102,479

2027

22.58

303,867

361,350

460,701

2023

86.20

12,111

85,080

85,077

2028

86.20

19,490

39,515

49,532

2023

92.07

124,338

321,473

325,661

2028

92.07

264,392

350,631

381,317

2024

121.04

110,774

111,174

111,174

2029

121.04

110,756

146,765

163,410

2024

144.79

202,852

203,658

195,452

2029

144.79

537,110

611,122

692,914

2025

127.49

16,712

16,712

19,000

2030

127.49

71,486

102,558

123,700

2025

209.21

127,731

129,711

131,770

2030

209.21

223,812

282,475

325,150

2025

213.55

32,100

32,100

32,100

2030

213.55

117,790

136,601

175,200

2030

264.09

620,014

692,214

728,517

2025

264.09

202,475

203,214

211,045

2026

250.01

23,491

24,366

2026

272.09

60,890

61,505

2026

276.78

45,862

48,138

2031

250.01

35,214

42,282

2031

272.09

167,406

207,464

2031

276.78

81,311

92,456

2026

329.79

80,833

82,430

2031

329.79

286,353

307,158

2027

301.31

14,976

2032

301.31

79,155

2027

381.31

61,816

2032

381.31

238,532

2027

393.04

13,764

2032

393.04

85,199

2027/2032 (2)

$

383.55

508,132

 

 

5,511,767

 

5,619,113

5,365,743

(1)Amounts have been converted to USD at the closing rate as of December 31, 2022.
(2)As of December 2022, the Company granted options for which the beneficiaries had a 60-day period to choose between a contractual term of five or ten years

2022

2021

2020

    

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

 

5,619,113

 

$

164.33

 

5,365,743

 

$

142.87

 

4,358,069

 

$

78.23

Granted

 

1,021,642

 

375.58

 

882,584

 

314.99

 

1,797,652

 

266.71

Exercised

 

(1,025,780)

 

92.62

 

(503,282)

 

64.72

 

(602,463)

 

38.86

Forfeited

 

(103,208)

 

273.93

 

(125,932)

 

234.98

 

(187,515)

 

170.98

Outstanding at December 31

 

5,511,767

 

205.02

 

5,619,113

 

164.33

 

5,365,743

 

142.87

Exercisable at December 31

 

3,983,960

 

$

148.11

 

3,613,371

 

$

106.53

 

2,833,680

 

$

65.24

(*) 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, 2022 was $336.5, compared to $305.9 during the year ended December 31, 2021 and $254.54 during the year ended December 31, 2020. The weighted average remaining contractual life of the stock options outstanding amounted to 6.2 years on December 31, 2022 compared to 6.3 years on December 31, 2021 and 7.08 years on December 31, 2020. 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, 2022

    

(in years)

2.6 - 4.21

24,870

1.75

7.65 - 10.1

 

316,661

2.29

11.03 - 15.07

 

246,983

3.66

19.64 - 22.58

346,376

4.90

86.2 - 92.07

420,331

4.32

121.05 - 144.79

1,049,690

5.32

209.21 - 264.09

1,382,627

6.43

272.09 - 329.79

816,786

7.60

381.31 - 393.04

907,443

9.38

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 2022:

Stock options granted in

    

April 2022

    

July 2022

Oct 2022

Dec 2022 (1)

Number of options granted

 

102,081

 

311,311

100,118

508,132

Average Fair value of options (in $) (*)

 

$

111.27 - 140.23

 

$

153.45 - 190.53

$

136.66 - 169.96

$

163.94 - 168.34

Share price (in $) (*)

 

$

320.84 - 321.06

 

$

378.11 - 397.92

$

352.97 - 376.01

$

377.61

Exercise price (in $) (*)

 

$

312.22

 

$

372.69

$

359.80

$

381.97

Expected volatility

 

39.18 - 40.87

%  

41.30 - 43.10

%

39.64 - 45.97

%

39.70 - 39.74

%

Average Expected option life (in years)

 

4 - 6.50

 

4 - 6.50

 

4 - 6.50

6.15 - 6.50

Risk‑free interest rate

 

1.05 - 1.62

%  

1.77 - 2.28

%

2.57 - 2.80

%

3.09 - 3.10

%

Expected dividends

 

%  

%

%

%

(1)In December 2022, the Company granted a total of 508,132 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 $77.4 million (100% of the stock options with a contractual term of five years) to $84.1 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 2021:

Stock options granted in

    

April 2021

    

July 2021

Oct 2021

 

Dec 2021

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

$

75.03 - 145.34

Share price (in $) (*)

 

$

248.9 - 283.67

 

$

300.78 - 340.95

$

286.52 - 304.5

$

277.72 - 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

%

43.24 - 43.64

%

Average Expected option life (in years)

 

4 - 6.50

 

4 - 6.50

 

4 - 6.50

4 - 6.50

Risk‑free interest rate

 

(0.41) - (0.08)

%  

(0.41) - (0.17)

%

(0.18) - (0.05)

%

0.03 - 0.67

%

Expected dividends

 

%  

%

%

%

(*) amounts have been converted to USD at the applicable rate prevailing at the grant date.

Below is an overview of the parameter 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.

The total share-based payment expense related to stock options recognized in the consolidated statements of profit or loss totaled $120.2 million for the year ended December 31, 2022, compared to $171.2 million for the year ended December 31, 2021 and $96.9 million for the year ended December 31, 2020.

13.2 Restricted Stock Units (RSUs)

The RSUs are granted to key persons of the Company and its subsidiaries. The RSUs have been granted free of charge. Each employee’s RSUs converts into one ordinary share of the Company upon vesting. The RSUs carry neither rights to dividends nor voting rights. RSUs once converted into ordinary shares, may be sold at any time from the date of vesting, have no expiry date and may be held by the participant without limitation. The fair value of RSUs is based on the closing sale price of our common stock on the day prior to the date of issuance. RSUs vest over a period of 4 years with 1/4th of the total grant vesting at each anniversary of the date of grant.

The following restricted stock units arrangements were in existence during the current and prior years:

2022

2021

    

    

Weighted average

    

    

Weighted average

Number of

Grant Date

Number of

Grant Date

RSUs

Fair Value

RSUs

Fair Value

Non-vested units at January 1

 

213,038

$

314.25

$

Granted

 

243,010

375.81

216,522

313.84

Vested

 

(53,872)

Forfeited

 

(16,896)

307.11

(3,484)

288.92

Non-vested units at December 31

 

385,280

$

387.20

213,038

$

314.25

The total share-based payment expense related to RSUs recognized in the consolidated statements of profit or loss totaled $36.9 million for the year ended December 31, 2022 compared to $8.1 million for the year ended December 31, 2021. There was no RSUs related expense during the year ended December 31, 2020 as the Company only started granting the RSUs in 2021.