MANNKIND CORP Stock Compensation Disclosure

15. Stock Award Plans

In May 2023, the Company’s stockholders, upon recommendation of the Company’s board of directors, approved an amendment to the Company’s 2018 Equity Incentive Plan (the "2018 Plan") to increase the number of shares of common stock that may be issued under the 2018 Plan by 25,000,000 shares.

Effective upon the approval of the 2018 Plan by the Company’s stockholders in May 2018, no additional awards have been or may be granted under the 2013 Equity Incentive Plan (the "2013 Plan"). Any Prior Plans’ (as defined below) returning shares will increase the number of shares issuable under the 2018 Plan. The Prior Plans’ returning shares are shares subject to outstanding stock awards granted under the 2013 Plan or the 2004 Equity Incentive Plan (collectively, “Prior Plans”) that, from and after the effective date of the 2018 Plan, (i) expire or terminate for any reason prior to exercise or settlement, (ii) are forfeited, cancelled or otherwise returned to the Company because of the failure to meet a contingency or condition required for the vesting of such shares, or (iii) other than with respect to outstanding stock options and stock appreciation rights granted under the Prior Plans with an exercise or strike price of at least 100% of the fair market value of the underlying common stock on the date of grant, are reacquired or withheld (or not issued) by the Company to satisfy a tax withholding obligation in connection with a stock award.

The 2018 Plan provides for the granting of stock awards including stock options and RSU's to employees, directors and consultants.

The Company’s board of directors or its compensation committee determines eligibility, vesting schedules and criteria, and exercise prices for stock awards granted under the 2018 Plan. Options and RSU awards under the 2018 Plan, or the Prior Plans expire not more than ten years from the date of the grant and are exercisable upon vesting. Stock options that vest over time generally vest over four years. Current time-based vesting stock option grants vest and become exercisable at the rate of 25% after one year and ratably on a monthly basis over a period of 36 months thereafter. The Company also issues PNQ awards with performance conditions. For PNQs, the Company evaluates the probability that the performance conditions will be met and estimates the service period for recognition of the associated expense. RSUs with time-based vesting generally vest at a rate of 25% per year over four years with consideration satisfied by service to the Company. Certain RSUs issued to non-employee directors vest immediately upon grant, but the underlying shares of common stock will not be delivered until there is a separation of service such as resignation, retirement or death. The Company also issues Market RSUs. The grant date fair value and the effect of the market conditions are estimated using a Monte Carlo valuation.

Market RSUs issued during the year ended December 31, 2025 had a grant date fair value of $10.84 per share and will vest on July 15, 2028. The fair value of the Market RSUs was determined using a share price of $4.72, risk-free interest rate of 3.96%, volatility of 52.12%, and a dividend yield of 0%. The number of shares delivered on the vesting date is determined by the percentile ranking of MannKind total shareholder return ("TSR") over the period from July 1, 2025 until June 30, 2028 relative to the TSR of the Russell 3000 Pharmaceutical & Biotechnology Index over the same period, as follows: less than 25th percentile=0% of target, 25th percentile=50% of target, 50th percentile=100% of target, 75th percentile=200% of target, 90th percentile or higher=300% maximum. Payout values will be interpolated between the percentile rankings above. The resulting stock-based compensation expense will be recognized over the service period regardless of whether the market conditions are achieved, as long as the service condition is satisfied.

Share-based payment transactions are recognized as compensation cost based on the fair value of the instrument on the date of grant. The Company uses the Black-Scholes option valuation model to estimate the grant date fair value of employee stock options. The expected term of an option granted is based on combining historical exercise data with expected weighted time outstanding. Expected weighted time outstanding is calculated by assuming the settlement of outstanding awards is at the midpoint between the remaining weighted average vesting date and the expiration date. The Company recognizes forfeitures as they occur. During the years ended December 31, 2025, 2024 and 2023, the Company recorded RSU and option-based stock compensation expense of $23.6 million, $20.6 million and $17.0 million, respectively, and ESPP compensation of $0.6 million, $0.7 million and $0.6 million, respectively.

There were no options granted in the years ended December 31, 2025 and 2024. There were no stock options that vested during the year ended December 31, 2025. Total fair value of stock options vested during the year ended December 31, 2024 and 2023 was de minimis and $2.8 million, respectively. The total intrinsic value of options exercised during the years ended December 31, 2025, 2024 and 2023 was $4.7 million, $3.5 million and $1.3 million, respectively. Intrinsic value is measured using the fair market value at the date of exercise for options exercised or as of December 31 for outstanding options, less the applicable exercise price.

Cash received from the exercise of options during the years ended December 31, 2025, 2024 and 2023 was approximately $6.4 million, $2.9 million and $1.2 million, respectively.

The Company recognized a de minimis amount of compensation costs related to PNQs for the years ended December 31, 2025 and 2024, respectively, and $0.3 million for the year ended December 31, 2023. As of December 31, 2025 and 2024, there were no unrecognized compensation costs related to PNQs subject to performance conditions.

Total fair value of RSUs vested during the years ended December 31, 2025, 2024 and 2023 was $21.8 million, $23.0 million and $20.6 million, respectively. The total grant date fair value of RSUs outstanding as of December 31, 2025, 2024 and 2023 was $95.9 million, $77.6 million and $57.0 million, respectively.

As of December 31, 2025, there was no unrecognized compensation expense related to options and PNQs and $56.5 million of unrecognized compensation expense related to RSUs, Market RSUs and Performance RSUs, which are expected to be recognized over the weighted average period of 2.12 years. The Company evaluates stock awards with performance conditions as to the probability that the performance conditions will be met and uses that information to estimate the date at which those performance conditions will be met in order to properly recognize stock-based compensation expense over the requisite service period.

Employee Stock Purchase Plan



The Company provides all employees, including executive officers, the ability to purchase common stock at a discount under the ESPP. The ESPP is designed to comply with Section 423 of the Internal Revenue Code and provides all employees with the opportunity to purchase up to $25,000 worth of common stock (based on the undiscounted fair market value at the commencement of the offering period) each year at a purchase price that is the lower of 85% of the fair market value of the common stock on either the date of purchase or the commencement of the offering period. An employee may not purchase more than 5,000 shares of common stock on any purchase date. The executives’ rights under the ESPP are the same as those of all other employees.

In May 2023, the Company’s stockholders, upon recommendation of the Company’s board of directors, approved an amendment to the Company’s ESPP to increase the number of shares of common stock authorized for issuance under the ESPP by an additional 3,000,000 shares.

The Company issued 0.5 million, 0.5 million and 0.5 million shares of common stock pursuant to the ESPP for the years ended December 31, 2025, 2024 and 2023, respectively. There were approximately 1.9 million shares of common stock available for issuance under the ESPP as of December 31, 2025.