Compass Therapeutics, Inc. Stock Compensation Disclosure
|
9. |
Stock-Based Compensation |
Stock-based compensation expense for the years ended December 31, 2024 and 2023 was classified in the consolidated statements of operations as follows:
|
Year Ended |
||||||||
|
2024 |
2023 |
|||||||
|
(000's) |
||||||||
|
Research and development |
$ | 2,971 | $ | 1,998 | ||||
|
General and administrative |
5,589 | 4,122 | ||||||
|
Total |
$ | 8,560 | $ | 6,120 | ||||
2020 Plan
In June 2020, the Company’s board of directors adopted the 2020 Plan and reserved 2.9 million shares of common stock for issuance under this plan. The 2020 Plan provides that the number of shares reserved and available for issuance under the 2020 Plan will automatically increase each January 1, beginning on January 1, 2021, by the lesser of 4% of the outstanding number of shares of our common stock on the immediately preceding December 31 or such number of shares as determined by the plan administrator no later than the immediately preceding December 31. As of December 31, 2024, 1.4 million shares remain available for future grant. On January 1, 2025, an additional 5.5 million shares became available for issuance based on 4% of the outstanding shares of common stock, for a total of 6.9 million shares available for issuance.
The 2020 Plan authorizes the board of directors or a committee of the board to grant incentive stock options, nonqualified stock options, restricted stock awards and restricted stock units ("RSUs") to eligible officers, employees, consultants and directors of the Company. Options generally vest over a period of years and have a contractual life of years from the date of grant.
Stock Options:
The following table summarizes the stock option activity for the 2020 Plan:
|
Number of |
Weighted |
Weighted |
Aggregate Intrinsic Value (000's) |
|||||||||||||
|
Outstanding at December 31, 2022 |
5,378 | $ | 3.89 | 8.24 | $ | 6,316 | ||||||||||
|
Granted |
2,803 | $ | 3.69 | 9.18 | $ | — | ||||||||||
|
Exercised |
(29 | ) | $ | 1.75 | — | $ | 35 | |||||||||
|
Forfeited/cancelled |
(276 | ) | $ | 4.29 | — | $ | 164 | |||||||||
|
Outstanding at December 31, 2023 |
7,876 | $ | 3.81 | 8.05 | $ | 11 | ||||||||||
|
Granted |
6,193 | $ | 1.58 | 7.10 | $ | — | ||||||||||
|
Exercised |
— | $ | — | — | $ | — | ||||||||||
|
Forfeited/cancelled |
(7 | ) | $ | 3.04 | — | $ | — | |||||||||
|
Outstanding at December 31, 2024 |
14,062 | $ | 2.83 | 6.23 | $ | 579 | ||||||||||
|
Vested at December 31, 2024 |
6,551 | $ | 3.67 | 5.28 | $ | 49 | ||||||||||
For the year ended December 31, 2024, the weighted average grant date fair value for options granted was $1.13. The aggregate intrinsic value for options vested and outstanding as of December 31, 2024 and 2023 was $579 thousand and $11 thousand, respectively. As of December 31, 2024, the unrecognized compensation cost related to outstanding options was $11.1 million, expected to be recognized over a weighted average period of approximately 1.5 years.
The weighted average assumptions used in the Black-Scholes option pricing model to determine the fair value of stock options granted to employees and directors during the years ended December 31, 2024 and 2023 were as follows:
|
Year Ended December 31, |
||||||||
|
2024 |
2023 |
|||||||
|
Expected term (in years) |
6.0 | 6.0 | ||||||
|
Risk-free rate |
3.92 | % | 3.83 | % | ||||
|
Expected volatility |
81 | % | 87 | % | ||||
RSUs:
The following table summarizes the RSU activity for the 2020 Plan:
|
Shares (000's) |
Weighted |
Weighted |
||||||||||
|
Unvested, December 31, 2022 |
900 | $ | 3.83 | $ | 3,447 | |||||||
|
Granted |
900 | 3.93 | 3,537 | |||||||||
|
Vested |
(300 | ) | 3.83 | (1,149 | ) | |||||||
|
Forfeited or canceled |
— | — | — | |||||||||
|
Unvested, December 31, 2023 |
1,500 | $ | 3.83 | $ | 5,745 | |||||||
|
Granted |
2,791 | $ | 1.89 | $ | 5,275 | |||||||
|
Vested |
(525 | ) | 3.87 | (2,032 | ) | |||||||
|
Forfeited or canceled |
— | — | — | |||||||||
|
Unvested, December 31, 2024 |
3,766 | $ | 2.41 | $ | 9,076 | |||||||
Weighted average price per share is the weighted grant price based on the closing market price of each of the stock grants. The weighted average fair value is the weighted average share price times the number of shares.
As of December 31, 2024, remaining unrecognized compensation cost related to RSUs to be recognized in future periods totaled $7.0 million, which is expected to be recognized over a weighted average period of 1.5 years. As of December 31, 2024, the total unrecognized compensation cost from all plans to be recognized in future periods totaled approximately $18.1 million.
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.