Aurinia Pharmaceuticals Inc.AUPH
Aurinia Pharmaceuticals Inc. Stock Compensation Disclosure
Equity Incentive Plans
2021 Equity Incentive Plan and 2025 Amended Equity Incentive Plan
In June 2021, the Company adopted the Amended and Restated Equity Incentive Plan (the “2021 Equity Plan”). The 2021 Equity Plan permits the issuance of various types of share-based compensation awards, including stock options, performance awards (“PAs”) and restricted stock units (“RSUs”) that may be settled in cash and common shares. On May 15, 2025, shareholders approved an Amended and Restated Equity Incentive Plan (the “2025 Equity Plan”) that, among other things, set the total allowable shares issuable under the 2025 Equity Plan to 20.8 million shares.
2021 Employee Stock Purchase Plan
In June 2021, the Company adopted the Employee Stock Purchase Plan (the “2021 ESPP”). Under the 2021 ESPP, eligible employees may purchase common shares of the Company at a discounted price. During 2022, the Company amended the 2021 ESPP for current and future offerings. The amendment: (i) shortened the plan from 4 purchases over a 24-month offering period to 2 purchases over a 12-month offering period; and (ii) added a mechanism to rollover participants into a new 12-month offering period if the stock price on the purchase date is less than the offering price. The 2021 ESPP allows for the issuance of up to 2.5 million shares of which 0.1 million and 0.2 million were purchased during the years ended December 31, 2025 and 2024, respectively.
Inducement Grants
In addition to stock options, PAs and RSUs granted under the 2021 Equity Plan and 2025 Equity Plan, the Company has granted certain stock options and RSUs as inducements to new employees entering into employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4). The inducements were granted outside of the 2021 Equity Plan during 2023.
Stock Options
Generally, stock options have a 10-year term and vest over 3 years with one-third of the shares vesting on the 1-year anniversary and the remaining options vesting monthly thereafter.
The activity related to stock options during the year ended December 31, 2025 consisted of the following:
| Number of Shares (in thousands) | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Life (in years) | Aggregate Intrinsic Value (in thousands) | |||||||||||||||||||||||
| Outstanding at December 31, 2024 | 9,276 | $ | 11.04 | 6.18 | $ | 7,906 | ||||||||||||||||||||
| Granted | 2,544 | $ | 7.83 | |||||||||||||||||||||||
| Exercised/released | (559) | $ | 8.24 | |||||||||||||||||||||||
| Cancelled/forfeited | (2,269) | $ | 12.18 | |||||||||||||||||||||||
| Outstanding at December 31, 2025 | 8,992 | $ | 10.02 | 6.04 | $ | 54,067 | ||||||||||||||||||||
| Options exercisable at December 31, 2025 | 6,532 | $ | 10.87 | |||||||||||||||||||||||
| Vested and expected to vest, December 31, 2025 | 8,725 | $ | 10.08 | |||||||||||||||||||||||
During the years ended December 31, 2025, 2024 and 2023, the intrinsic value of options exercised was $1.4 million, $0.8 million and $2.0 million, respectively. During the years ended December 31, 2025, 2024 and 2023, the total fair value of options vested was $4.2 million, $13.9 million and $40.9 million, respectively.
For the years ended December 31, 2025, 2024 and 2023, the weighted-average grant-date fair value of stock options granted was $5.09, $4.31 and $5.86, respectively. The Company estimated the fair value of each stock option on the date of grant using the Black-Scholes option pricing model with the following assumptions:
Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Expected term (in years) | 5 | 5 | 5 | |||||||||||||||||
Expected volatility | 78 | % | 77 | % | 71 | % | ||||||||||||||
| Risk-free interest rate | 3.98 | % | 4.09 | % | 3.99 | % | ||||||||||||||
Expected dividend yield | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||||||||
Expected term - Expected term is based upon the contractual term, taking into account expected employee exercise and expected post-vesting employment termination behavior. The length of the expected term in 2025 is in line with historic data and what management expects in the future.
Expected volatility - The Company considers historical volatility of its common shares in estimating its future stock price volatility. The expected term of the stock option is used to determine market volatility of the underlying stock. Given the growth of the Company, the expected life used to determine previous market volatility and comparable peer group reflects an appropriate estimate of future volatility.
Risk-free interest rate - The risk-free interest rate for the expected term of the stock options was based on the yield available on government benchmark bonds with an approximate equivalent remaining term at the time of the grant.
Expected dividend yield - The Company has never paid dividends on its common shares and has no plans to pay dividends on the Company's common shares in the near future. Therefore, the Company dividend yield is nil.
Performance Awards and Restricted Stock Units
The fair value of RSUs is based on the market price of the Company’s common shares on the date of the grant. During the year ended December 31, 2025, the Company granted PAs that vest in 4 tranches upon the Company’s common shares achieving four progressively higher target prices, and each tranche is further subject to a one year service period following tranche achievement. RSUs granted prior to 2025 vest in 3 equal annual installments on the first, second and third anniversary of the grant date. The Company estimated the fair value of each award with a market and service condition on the date of grant by using a Monte Carlo simulation (lattice model).
The activity related to PAs and RSUs during the year ended December 31, 2025 consisted of the following:
| Number of Shares (in thousands) | Weighted-Average Grant Date Fair Value | |||||||||||||
| Unvested balance, December 31, 2024 | 7,986 | $ | 8.08 | |||||||||||
| Granted | 1,429 | $ | 6.81 | |||||||||||
| Vested | (3,242) | $ | 8.49 | |||||||||||
| Forfeited | (2,152) | $ | 8.18 | |||||||||||
| Unvested balance, December 31, 2025 | 4,021 | $ | 7.25 | |||||||||||
During the year ended December 31, 2025, the Company began withholding shares to satisfy tax-withholding obligations when PAs and RSUs vest. As a result, employees receive fewer shares than the total number of awards that vest.
The weighted-average grant date fair value of PAs and RSUs granted during the years December 31, 2025, 2024 and 2023 was $6.81, $7.13 and $9.03, respectively. Total intrinsic value of RSUs vested during the years December 31, 2025, 2024 and 2023, was $30.4 million, $16.2 million and $5.4 million, respectively.
Share-based Compensation Expense
The classification of share-based compensation expense consisted of the following (in thousands):
Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Selling, general and administrative | $ | 12,724 | $ | 31,641 | $ | 36,512 | ||||||||||||||
| Research and development | 1,295 | (1,329) | 7,533 | |||||||||||||||||
| Capitalized under inventories | 659 | 1,284 | 1,266 | |||||||||||||||||
| Share-based compensation expense | $ | 14,678 | $ | 31,596 | $ | 45,311 | ||||||||||||||
As of December 31, 2025, total unrecognized share-based compensation expense related to unvested stock options, PAs, RSUs and ESPP was $11.0 million, which is expected to be recognized over a weighted-average period of 0.9 years,
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 15, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 24, 2021 | |
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.