Longeveron Inc. Stock Compensation Disclosure

8. Equity Incentive Plan

RSUs

As part of the Company’s IPO, the Company adopted and approved the 2021 Incentive Award Plan, which has been subsequently amended and restated twice (as accordingly amended and restated, the “2021 Incentive Plan”). Under the 2021 Incentive Plan, the Company may grant cash and equity incentive awards to employees and eligible service providers in order to attract, motivate and retain the talent for which the Company competes.

RSUs are taxable upon vesting based on the market value on the date of vesting. The Company is required to make mandatory tax withholding for the payment and satisfaction of income tax, social security tax, payroll tax, or payment on account of other tax related to withholding obligations that arise by reason of vesting of an RSU. The taxable income is calculated by multiplying the number of vested RSUs for each individual by the closing share price as of the vesting date and a tax liability is calculated based on each individual’s tax bracket. During the year ended December 31, 2024, a total of 566,904 RSUs vested for Class A common stock shares. Of that amount, the Company withheld 142,306 Class A common stock shares to satisfy employee tax liabilities.

During the year ended December 31, 2023, a total of 25,308 RSUs vested for Class A common stock shares. Of that amount, the Company withheld 5,223 Class A common stock shares to satisfy employee tax liabilities. The shares withheld are available for reissuance pursuant to the Company’s Second Amended and Restated 2021 Incentive Award Plan. Each RSU grant made during 2024 and 2023 is expensed ratably over its respective vesting period, with prorated adjustments made as needed to align with grant dates and the applicable service periods.

As of December 31, 2024 and 2023, the Company had 806,001 and 11,239, respectively RSUs outstanding (unvested).

Stock Options

Stock options may be granted under the 2021 Incentive Plan. The exercise price of options is equal to the fair market value of the Company’s Class A common stock as of the grant date. Options historically granted have generally become exercisable over three or four years and expire ten years from the date of grant.

In 2024, the Company granted options that vest quarterly over three years. Non-employee awards, including options granted to directors and certain third-party service providers, are granted similar to the Company’s employee awards.

In 2023, the Company granted options to executives and non-employee directors under various vesting schedules, including a four-year vesting period with 25% vesting per year and a one-year cliff vesting for the CEO.

The fair value of the options issued are estimated using the Black-Scholes option-pricing model. For 2024, the following assumptions were used: a dividend yield of 0%; an expected life of 10 years; volatility ranging from 79%-95%; and risk-free interest rate based on the grant date ranging from of 3.79% - 4.52%. For 2023, the following assumptions were used: a dividend yield of 0%; an expected life of 10 years; volatility ranging from 90%-95%; and risk-free interest rate based on the grant date ranging from of 3.89% to 4.01%. Each option grant made during 2024 and 2023, will be expensed ratably over the option vesting periods, with prorated adjustments made as needed to align with grant dates and applicable service periods.

As of December 31, 2024, the Company has recorded issued and outstanding options to purchase a total of 121,186 shares of Class A common stock pursuant to the 2021 Incentive Plan, at a weighted average exercise price of $15.09 per share. Also, as of December 31, 2023, the Company has recorded issued and outstanding options to purchase a total of 43,786 shares of Class A common stock pursuant to the 2021 Incentive Plan, at a weighted average exercise price of $4.96 per share.

For the years ended December 31, 2024 and 2023, the equity-based compensation expense amounted to approximately $2.3 million and $2.0 million, respectively, which is included in the research and development and general and administrative expenses in the statements of operations for the years ended December 31, 2024 and 2023.

As of December 31, 2024, the remaining unrecognized RSUs compensation of approximately $1.6 million will be recognized over approximately 2.08 years. The remaining unrecognized stock options compensation of approximately $0.3 million will be recognized over approximately 1.94 years.