LEXICON PHARMACEUTICALS, INC.LXRX
LEXICON PHARMACEUTICALS, INC. Stock Compensation Disclosure
Equity Incentive Awards
The Company has stockholder-approved equity incentive plans further described below that permit the grant of stock options, restricted stock unit awards, and other stock-based awards to employees, directors, and consultants of the Company.
2017 Equity Incentive Plan. The Company’s 2017 Equity Incentive Plan permits the grant of incentive stock options to employees and nonstatutory stock options to employees, directors and consultants of the Company. The plan also permits the grant of stock bonus awards, restricted stock awards, restricted stock unit awards, stock appreciation rights and performance stock awards. Incentive and nonstatutory stock options have an exercise price of 100% or more of the fair market value of the Company’s common stock on the date of grant. Most stock options granted under the 2017 Equity Incentive Plan become vested and exercisable over a period of four years. Stock options granted under the Equity Incentive Plan have a term of 10 years from the date of grant. Vesting of restricted stock units issued under this plan generally vest in three annual installments.
2017 Non-Employee Directors’ Equity Incentive Plan (the “Directors’ Plan”). Under the Company’s Directors’ Plan, non-employee directors may be granted awards under the plan with an aggregate grant date fair value of no more than $500,000 during any calendar year, taken together with any cash fees paid to such non-employee director in compensation for service on Lexicon’s board of directors during such calendar year. Stock options granted under the Directors’ Plan have an exercise price equal to the fair market value of the Company’s common stock on the date of grant and a term of 10 years from the date of grant. Vesting of restricted stock units granted under this plan occurs on the first anniversary of the grant date.
The total number of shares of common stock that may be issued pursuant to stock awards under the Equity Incentive Plan and the Directors’ Plan shall not exceed in the aggregate 75,000,000 and 4,000,000 shares at December 31, 2025, respectively. Under the combined plans, as of December 31, 2025, an aggregate of 36,206,865 shares of common stock were reserved for issuance upon exercise of outstanding stock options and vesting of outstanding restricted stock units and 28,711,561 additional shares were available for future grants. The Company has a policy of using either authorized and unissued shares or treasury shares, including shares acquired by purchase in the open market or in private transactions, to satisfy equity award exercises. As of December 31, 2025, options to purchase 20,738,093 shares and 15,468,772 restricted stock units were outstanding, 2,403,766 shares had been issued upon the exercise of stock options, 11,460,660 shares had been issued pursuant to restricted stock units and 217,148 shares had been issued pursuant to stock bonus awards or restricted stock awards granted under the aggregate of both plans.
For the years ended December 2025, 2024, and 2023 stock-based compensation costs was $12.5 million, $13.5 million, and $14.3 million, respectively. As of December 31, 2025, future stock-based compensation cost for all outstanding unvested stock options and restricted stock units was $17.3 million, which is expected to be recognized over a weighted-average period of 1.1 years.
Stock Options. The following is a summary of stock option activity under Lexicon’s equity incentive plans:
| Options | Weighted Average Exercise Price | |||||||||||||
| (in thousands, except exercise price data) | ||||||||||||||
| Outstanding at December 31, 2024 | 15,389 | $ | 3.20 | |||||||||||
| Granted | 10,594 | 0.69 | ||||||||||||
| Exercised | (67) | 1.08 | ||||||||||||
| Expired | (310) | 6.41 | ||||||||||||
| Forfeited | (4,868) | 2.84 | ||||||||||||
| Outstanding at December 31, 2025 | 20,738 | 1.96 | ||||||||||||
| Exercisable at December 31, 2025 | 7,716 | $ | 3.57 | |||||||||||
The weighted average estimated grant date fair value of stock options granted during the years ended December 31, 2025, 2024 and 2023 was $0.60, $1.54 and $1.78, respectively. The weighted average remaining contractual term of stock options outstanding and exercisable was 7.8 and 6.1 years, respectively, as of December 31, 2025. At December 31, 2025, the aggregate intrinsic value of the outstanding stock options was $4.6 million. At December 31, 2025, the intrinsic value of exercisable stock options was $0.04 million.
The fair value of stock options is estimated at the date of grant using the Black-Scholes method requiring the input of subjective assumptions. For purposes of determining the fair value of stock options, the Company segregates its options into two homogeneous groups, based on exercise and post-vesting employment termination behaviors, resulting in different assumptions used for expected option lives. Historical data is used to estimate the expected option life for each group. Expected volatility is based on the historical volatility in the Company’s stock price. The following weighted-average assumptions were used for stock options granted in the years ended December 31, 2025, 2024 and 2023, respectively:
| Expected Volatility | Risk-free Interest Rate | Expected Term | Dividend Rate | ||||||||||||||||||||
| December 31, 2025: | |||||||||||||||||||||||
| Employees | 105% | 3.9% | 4 | 0 | % | ||||||||||||||||||
| Officers and non-employee directors | 115% | 4.3% | 6 | 0 | % | ||||||||||||||||||
| December 31, 2024: | |||||||||||||||||||||||
| Employees | 96% | 4.4% | 4 | 0 | % | ||||||||||||||||||
| Officers and non-employee directors | 104% | 4.2% | 6 | 0 | % | ||||||||||||||||||
| December 31, 2023: | |||||||||||||||||||||||
| Employees | 110% | 3.9% | 4 | 0 | % | ||||||||||||||||||
| Officers and non-employee directors | 98% | 4% | 6 | 0 | % | ||||||||||||||||||
Restricted Stock Units. During the years ended December 31, 2025, 2024 and 2023, Lexicon granted its employees restricted stock units in lieu of or in addition to annual stock option awards. The total fair value of shares vested in 2025, 2024 and 2023 was $1.9 million, $5.1 million and $2.9 million, respectively.
During the years ended December 31, 2025, 2024 and 2023, Lexicon granted its non-employee directors 625,184, 257,670 and 64,256 restricted stock units, respectively. The restricted stock granted in 2025, 2024 and 2023 had weighted average grant date fair values of $0.62, $1.79 and $2.36 per share, respectively.
The following is a summary of restricted stock units activity under Lexicon’s stock-based compensation plans:
| Shares | Weighted Average Grant Date Fair Value | |||||||||||||
| (in thousands) | ||||||||||||||
| Outstanding at December 31, 2024 | 6,300 | $ | 2.27 | |||||||||||
| Granted | 14,323 | 0.69 | ||||||||||||
| Vested | (2,761) | 2.35 | ||||||||||||
| Forfeited | (2,393) | 1.18 | ||||||||||||
| Outstanding at December 31, 2025 | 15,469 | $ | 0.96 | |||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 5, 2026 | Showing above |
| 2024 | Mar 7, 2025 | |
| 2023 | Mar 25, 2024 | |
| 2022 | Mar 3, 2023 | |
| 2021 | Mar 10, 2022 | |
| 2020 | Mar 12, 2021 | |
| 2019 | Mar 12, 2020 | |
| 2018 | Mar 15, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Mar 6, 2017 | |
| 2015 | Mar 11, 2016 | |
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.