ARVINAS, INC.ARVN
ARVINAS, INC. Stock Compensation Disclosure
Equity
Preferred Stock
As of December 31, 2025 and 2024, the Company had authorized 5,000,000 shares of preferred stock, at a $0.001 par value per share. Preferred stock may be issued in one or more series upon authorization of the Company's board of directors. The board of directors is authorized to fix the designations, powers, preferences and the relative, participating, optional or other special rights and any qualifications, limitations and restrictions of the shares of each series of preferred stock. The authorized shares of the Company's preferred stock are available for issuance without further action by the Company's stockholders, unless such action is required by applicable law or the rules of any stock exchange on which our securities may be listed.
Common Stock
As of December 31, 2025 and 2024, the Company had authorized 200,000,000 shares of common stock, at a $0.001 par value per share. The holders of shares of common stock are entitled to one vote for each share of common stock held at all meetings of stockholders and written actions in lieu of meetings. The holders of shares of common stock are entitled to receive dividends, if and when declared by the board of directors. No dividends have been declared or paid by the Company since its inception.
In November 2023, the Company completed a private placement offering with certain institutional investors in which the Company issued and sold 12,963,542 shares of common stock at a price of $21.36 per share and, to one investor, in lieu of common stock, pre-funded warrants to purchase up to 3,422,380 shares of common stock at a price of $21.359 per pre-funded warrant. Each pre-funded warrant has an exercise price of $0.001 per share, is exercisable immediately and is exercisable until exercised in full. The aggregate gross
proceeds from the issuance of common stock and pre-funded warrants totaled approximately $350.0 million, before deducting placement agent fees and offering costs of approximately $15.9 million. As of December 31, 2025, all outstanding pre-funded warrants had been cashless exercised for no consideration and the Company issued 3,422,186 shares of common stock to the holders.
Share Repurchase Program
On September 17, 2025, the Company announced that its board of directors authorized and approved a share repurchase program for the repurchase of up to $100.0 million of the then-currently outstanding shares of the Company’s common stock. Share repurchases under the share repurchase program may be made from time to time through a variety of methods, which may include open market purchases, privately negotiated block trades, accelerated share repurchases, other privately negotiated transactions or any combination of these methods. Repurchases may also be made under a Rule 10b5-1 plan, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. The share repurchase program is funded using the Company's working capital. The share repurchase program has no time limit and can be modified, suspended or discontinued at any time without prior notice. Repurchased shares are recorded as treasury stock, at cost, and are eligible to be reissued under the Company's stock plans and for other corporate purposes.
During the year ended December 31, 2025, the Company repurchased 10,009,758 shares of its common stock, at an average price of $9.09 per share, for an aggregate purchase price of $91.0 million, plus commissions and excise tax of $0.9 million. As of December 31, 2025, the Company has suspended the program and has no further plans to repurchase additional shares.
Equity Distribution Agreements
In August 2021, the Company entered into an Equity Distribution Agreement with Piper Sandler & Company (“Piper Sandler”) and Cantor Fitzgerald & Co. (“Cantor”), as agents, pursuant to which the Company may offer and sell from time to time, through the agents, up to $300.0 million of the common stock registered under a universal shelf registration statement pursuant to one or more “at-the-market" offerings. During the year ended December 31, 2023, the Company issued 1,449,275 shares of common stock under this agreement resulting in gross proceeds of approximately $37.2 million, less offering costs of approximately $1.1 million.
In November 2023, the Company amended and restated the Equity Distribution Agreement with Piper Sandler and Cantor, pursuant to which the Company may offer and sell from time to time, through the agents, up to approximately $262.8 million of the common stock registered under a universal shelf registration statement pursuant to one or more “at-the-market” offerings. During the years ended December 31, 2025 and 2024, no shares were issued under this amended and restated agreement.
Stock-based Compensation
2018 Employee Stock Purchase Plan
In September 2018, the Company adopted the 2018 Employee Stock Purchase Plan (the "2018 ESPP"), with the first offering period under the 2018 ESPP commencing on January 1, 2020, by initially providing participating employees with the opportunity to purchase an aggregate of 311,850 shares of the Company's common stock. The number of shares of the Company's common stock reserved for issuance under the 2018 ESPP increased, pursuant to the terms of the 2018 ESPP, by additional shares equal to 1% of the Company’s then-outstanding common stock, effective as of January 1 of each year. As of December 31, 2025, 3,577,025 shares remained available for purchase. During the years ended December 31, 2025, 2024 and 2023, the Company issued 110,412, 120,834 and 78,528 shares, respectively, of common stock under the 2018 ESPP.
2018 Stock Incentive Plan
In September 2018, the Company’s board of directors adopted, and the Company’s stockholders approved, the 2018 Stock Incentive Plan (the "2018 Plan"), which became effective upon the effectiveness of the registration statement on Form S-1 for the Company’s initial public offering. The number of common shares initially available for issuance under the 2018 Plan equaled the sum of (1) 4,067,007 shares of common stock; plus (2) the number of shares of common stock (up to 1,277,181 shares) issued in respect of incentive units granted under the Incentive Plan that were subject to vesting immediately prior to the effectiveness of the registration statement that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right; plus (3) an annual increase on the first day of each year beginning with the year ended December 31, 2019 and continuing to, and including, the year ending December 31, 2028, equal to the lesser of 4,989,593 shares of the Company’s common stock, 4% of the number of shares of the Company’s common stock outstanding on the first day of the year or an amount determined by the Company’s board of directors. As of December 31, 2025, 2,966,406 shares are available for issuance under the 2018 Plan. Common shares subject to outstanding equity awards that expire or are terminated, surrendered, or cancelled without having been fully exercised or are forfeited in whole or in part are available for future grants of awards.
Compensation Expense
In connection with the strategic restructuring actions initiated by the Company in the second and third quarters of 2025, as further discussed below in Note 14, Restructuring Activity, the Company modified the vesting terms of certain restricted stock units previously granted to employees. The incremental impact of the modification for the year ended December 31, 2025 totaled $5.3 million, as a decrease to compensation expense.
For the years ended December 31, 2025, 2024 and 2023, the Company recognized compensation expense of $44.0 million, $88.2 million and $71.6 million, respectively, related to the issuance of incentive awards, including $0.5 million, $0.7 million and $0.8 million, respectively, related to the 2018 ESPP.
As of December 31, 2025, there was $30.4 million of compensation expense that is expected to be recognized over a weighted-average period of approximately 1.5 years.
Stock Options
The fair value of the stock options granted during each of the years ended December 31, 2025, 2024 and 2023 was determined using the Black-Scholes option pricing model at the grant date with the following range of assumptions:
| Year ended December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| Expected volatility | 72.1% - 80.4% | (1) | 72.0% - 75.6% | (1) | 71.3% - 75.0% | |||||||||||||||||||||
| Expected term (years) | 5.5 - 5.7 | (2) | 5.4 - 5.5 | (2) | 5.5 - 7.0 | |||||||||||||||||||||
| Risk free interest rate | 3.7% - 4.4% | (3) | 3.5% - 4.6% | (3) | 3.4% - 4.8% | |||||||||||||||||||||
| Expected dividend yield | 0 | % | 0 | % | 0 | % | ||||||||||||||||||||
| Exercise price | $6.61 - $17.70 | $24.19 - $47.00 | $16.21 - $36.27 | |||||||||||||||||||||||
(1) Expected volatility is calculated by utilizing the Company's historical volatility of its stock price over a period equal to the expected term.
(2) Expected term is calculated based on the Company's historical experience.
(3) Risk free interest rate is based on an interpolation of U.S. Treasury rates to reflect the expected term at the date of grant.
During the year ended December 31, 2023, the Company calculated volatility of its common stock by utilizing a weighted-average of a collection of peer company volatilities and its own common stock volatility as the Company’s common stock had not been trading for a sufficient period of time. The expected term was calculated utilizing the simplified method.
A summary of the stock option activity under the 2018 Plan as of December 31, 2025 is presented below. Included in the table are stock options granted to employees, directors and consultants under the 2018 Plan, as well as options to purchase 255,611 shares of common stock granted to certain employees pursuant to the Nasdaq inducement grant exception in accordance with Nasdaq Listing Rule 5635(c)(4).
(dollars in millions, except weighted-average exercise price) | Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | ||||||||||||||||||||||
Outstanding as of December 31, 2024 | 7,892,330 | $ | 44.16 | 6.7 | $ | 3.2 | ||||||||||||||||||||
| Granted | 2,253,860 | $ | 12.41 | |||||||||||||||||||||||
| Forfeited | (1,515,115) | $ | 46.07 | |||||||||||||||||||||||
Outstanding as of December 31, 2025 | 8,631,075 | $ | 35.89 | 6.5 | $ | 5.3 | ||||||||||||||||||||
Vested and exercisable as of December 31, 2025 | 5,607,194 | $ | 44.41 | 5.3 | $ | — | ||||||||||||||||||||
Vested and expected to vest as of December 31, 2025 | 8,304,964 | $ | 36.55 | 6.4 | $ | 4.9 | ||||||||||||||||||||
The weighted-average grant date fair value of options granted during the years ended December 31, 2025, 2024 and 2023 was $8.15, $27.35 and $21.99, respectively. The total intrinsic value of options exercised during the years ended December 31, 2024 and 2023 was $3.6 million and $1.4 million, respectively. There were no options exercised during the year ended December 31, 2025.
Restricted Stock Units
A summary of restricted stock unit ("RSU") activity under the 2018 Plan for the year ended December 31, 2025 is presented below. Included in the table are RSUs granted to employees and directors under the 2018 Plan, as well as RSUs representing 170,365 shares of common stock granted to certain employees pursuant to the Nasdaq inducement grant exception in accordance with Nasdaq Listing Rule 5635(c)(4).
| Shares | Weighted-Average Grant Date Fair Value Per Share | |||||||||||||
Unvested RSUs as of December 31, 2024 | 2,311,291 | $ | 42.25 | |||||||||||
| Granted | 3,440,614 | $ | 12.34 | |||||||||||
| Released | (1,253,564) | $ | 40.06 | |||||||||||
| Forfeited | (874,290) | $ | 22.81 | |||||||||||
Unvested RSUs as of December 31, 2025 | 3,624,051 | $ | 18.59 | |||||||||||
The weighted-average grant date fair value of RSUs granted during the years ended December 31, 2025, 2024 and 2023 was $12.34, $44.43 and $32.27, respectively. The total intrinsic value of RSUs released during the years ended December 31, 2025, 2024 and 2023 was $17.7 million, $13.2 million and $4.3 million, respectively. The total fair value of RSUs vested during the years ended December 31, 2025, 2024 and 2023 was $44.3 million, $13.1 million and $6.9 million, respectively.
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.