9.	Stock-Based Compensation

Summary of Stock-Based Compensation Plans

At December 31, 2024, the Company has a stock-based compensation plan where the Company’s common stock has been made available for equity-based incentive grants as part of the Company’s compensation programs. In December 2019, the Company adopted the 2019 Omnibus Equity Incentive Plan (the “2019 Plan”) which provided originally for the issuance of up to 4,000,000 shares of the Company’s common stock, subsequently increased to 7,000,000 in December 2021, and increased to 10,000,000 in December 2023 in the form of options, stock appreciation rights, restricted stock and other stock-based awards to employees, officers, directors, consultants and other eligible persons. At December 31, 2024, 4,135,213 shares were available for future grant under the 2019 Plan. Also, the Company previously had the 2009 Incentive Compensation Plan (the “2009 Plan”) which, after amendments, provided for issuance of up to 6,733,334 shares of the Company’s common stock in the form of options, stock appreciation rights, restricted stock and other stock-based awards to employees, officers, directors, consultants and other eligible persons. Provisions of the 2009 Plan stipulated that no grants could be made after February 2019; however, grants made prior to that date remain outstanding for their legal term.

Stock-Based Compensation

Following is the stock-based compensation expense related to common stock options, restricted common stock, common stock warrants and deferred stock units:

	Year Ended December 31,
	2024		2023
Research and development	$	1,222	$	829
General and administrative		1,225		1,432
Total stock-based compensation expense	$	2,447	$	2,261

The fair value of the options granted is determined using the Black-Scholes option-pricing model. The following weighted average assumptions were used:

	2024			2023
Risk-free interest rate		3.89	%		3.84	%
Expected life of the options	5.4 years			5.7 years
Expected volatility of the underlying stock		75.1	%		85.6	%
Expected dividend rate		0	%		0	%

As noted above, the fair value of stock options is determined by using the Black-Scholes option pricing model. For all options granted since January 1, 2006 the Company has generally used option terms of between 5 to 10 years, generally with 5 to 6 years representing the estimated life of options granted to employees. The volatility of the common stock is estimated using historical volatility over a period equal to the expected life at the date of grant. The risk-free interest rate used in the Black-Scholes option pricing model is determined by reference to historical U.S. Treasury constant maturity rates with terms equal to the expected terms of the awards. An expected dividend yield of zero is used in the option valuation model, because the Company does not expect to pay any cash dividends on common stock in the foreseeable future. At December 31, 2024, the Company does not anticipate any option awards will be forfeited in the calculation of compensation expense due to the limited number of employees that receive stock option grants and the Company’s historical employee turnover; however, any forfeitures will be accounted for as incurred.

The following table summarizes the stock option activity in the stock-based compensation plans:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding, December 31, 2022		5,745,561		$	2.90
Granted		1,025,000			1.18
Forfeited/Cancelled		(436,720	)		2.23
Exercised		—			—
Outstanding, December 31, 2023		6,333,841		$	2.66
Granted		1,373,000			1.86
Forfeited/Cancelled		(348,750	)		6.35
Exercised		(503,333	)		1.71
Outstanding, December 31, 2024		6,854,758		$	2.39		6.27	$	183
Exercisable, December 31, 2024		6,138,254		$	2.45		6.00	$	176

The aggregate intrinsic value in the table above represents the total pre-tax amount, net of exercise price, which would have been received by option holders if all option holders had exercised all options with an exercise price lower than the market price on December 31, 2024, based on the closing price of the Company’s common stock of $1.29 on that date.

The weighted-average grant-date fair values of options granted during 2024 and 2023 were $1.26 and $0.85, respectively. As of December 31, 2024 and 2023, there were unvested options to purchase 716,504 and 1,792,080 shares of common stock, respectively. Total expected unrecognized compensation cost related to such unvested options is $775,000 at December 31, 2024, which is expected to be recognized over a weighted-average period of 1.0 years.

During the years ended December 31, 2024 and 2023, 1,966,167 and 1,119,168 options became vested, respectively. The total grant date fair value of options vested during the years ended December 31, 2024 and 2023 was $2,772,748 and $1,384,284, respectively.

The following table summarizes additional information regarding outstanding and exercisable options under our stock-based compensation plans at December 31, 2024:

	Options Outstanding						Options Exercisable
Exercise Price (Range)	Number of Shares		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Number of Shares		Weighted Average Exercise Price
			(in years)
$0.89 – 1.50		1,134,206		7.13	$	1.16		934,202	$	1.12
$1.51 – 2.50		3,691,315		6.88		2.02		3,199,815		2.02
$2.51 – 5.00		1,809,237		4.88		3.48		1,784,237		3.48
$5.01 – 6.71		220,000		3.10		5.92		220,000		5.92
		6,854,758		6.27	$	2.39		6,138,254	$	2.45

Restricted Stock Issuances

In January 2024, the Company issued 408,000 restricted stock units to its employees valued at $734,000 at the date of grant. These restricted stock units would vest 100% if the Company publicly presents the results of the Interim Analysis of its NAVIGATE clinical trial on or before December 31, 2024. The Company believed it was probable that the vesting condition will be met and is amortized the restricted stock unit expense ratably in 2024. The vesting condition was met in December 2024.

In January 2024, one director elected to take a restricted stock grant in lieu of cash retainers for 2024. A total of 23,256 shares of restricted stock valued at approximately $40,000 was amortized to expense on a straight-line basis until December 31, 2024 when the stock vested in full.

In January 2023, one director elected to take a restricted stock grant in lieu of cash retainers for 2023. A total of 36,036 shares of restricted stock valued at approximately $40,000 was amortized to expense on a straight-line basis until December 31, 2023 when the stock vested in full.

Deferred Stock Units

In September 2020, the Company entered into an employment agreement with its new Chief Executive Officer whereby 20% of his base salary and performance bonuses will be paid in cash, and 80% will be paid in the form of deferred stock units (“DSUs”) through December 31, 2022 in accordance with the terms and subject to the provisions set forth in the DSU Agreement. DSUs credited to Mr. Lewis as of any date shall be fully vested and nonforfeitable at all times. Pursuant to an amendment to the DSU Agreement in July 2022, the Company shall issue the shares earned through December 31, 2022 underlying the outstanding whole number of DSUs credited to Mr. Lewis as follows: twenty five percent shall be issued on March 1, 2023, fifty percent shall be issued on March 1, 2024 and twenty five percent shall be issued on September 1, 2028.

On March 1, 2024, fifty percent of the DSU’s were issued to Mr. Lewis in accordance with the DSU Agreement. A total of 367,800 shares were due to be issued; however, 153,288 shares were withheld to cover income tax withholding of $300,445 resulting in 214,512 shares actually issued. On March 1, 2023, twenty five percent of the DSU’s were issued to Mr. Lewis in accordance with the DSU Agreement. A total of 183,900 shares were due to be issued; however, 75,529 shares were withheld to cover income tax withholding of $156,345 resulting in 108,371 shares actually issued.

Additionally, a 2023 DSU Agreement was executed in July 2022, whereby Mr. Lewis would continue to receive 20% of salary in cash and 80% in DSUs for 2023. The shares under the 2023 DSU Agreement are to be issued fifty percent on March 1, 2025 and fifty percent on January 5, 2026.

For the year ended December 31, 2023, approximately $459,000 of his compensation was recorded as stock compensation expense representing 275,126 shares of common stock to be issued under the DSU agreement with a weighted average grant date fair value of $1.71 per share. For the year ended December 31, 2022, approximately $418,000 of his compensation was recorded as stock compensation expense representing 268,596 shares of common stock to be issued under the DSU agreement with a weighted average grant date fair value of $1.56 per share.

Also, Mr. Lewis’ bonus for the year ended December 31, 2022 of $210,000 (which was included in accrued compensation at December 31, 2022) was approved in January 2023 and represents 143,836 shares of common stock to be issued under the DSU agreement with a grant date fair value of $1.46 per share. The $210,000 was reclassified from accrued compensation to additional paid in capital in January 2023. Mr. Lewis’ bonus for the year ended December 31, 2021 of $200,000 (which was included in accrued compensation at December 31, 2021) was approved in January 2022, and represents 103,627 shares of common stock to be issued under the DSU agreement with a grant date fair value of $1.93 per share. The $200,000 was reclassified from accrued compensation to additional paid in capital in January 2022.

There is no unrecognized compensation expense related to the DSUs.

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.

GALECTIN THERAPEUTICS INC Stock Compensation Disclosure

About Stock Compensation Disclosures

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