NOVAGOLD RESOURCES INC Stock Compensation Disclosure

NOTE 14 – SHARE-BASED COMPENSATION

 

Share incentive awards include a stock option plan for directors, executives, employees and eligible consultants, a PSU plan for executives, employees, and eligible consultants and a DSU plan for non-executive directors of the Company. As of November 30, 2025, 36,785,540 common shares were available for future share incentive plan awards under all three plans.

 

The following table shows the recognized share-based compensation expense, a component of General and Administrative Expense (Note 13), by award type:

 

		Years ended November 30,
		2025				2024				2023
Stock options		$	3,767			$	4,236			$	4,594
Performance share unit plan			2,651				2,727				3,910
Deferred share unit plan			278				274				227
		$	6,696			$	7,237			$	8,731

 

Stock options

 

Stock options granted under the Company’s share-based incentive plans generally expire five years after the date of grant and vest in one-third annual increments beginning on the first-year anniversary of the date of grant. The value of each option award is estimated at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires the input of subjective assumptions, including the expected term of the option award and share price volatility. The expected term of options granted is derived from historical data on employee exercise and post-vesting employment termination experience. The expected volatility is based on the historical volatility of the Company’s shares at the date of grant over the same length of term. These estimates involve inherent uncertainties and the application of management’s judgment.

 

A summary of stock options outstanding and activity during the year ended November 30, 2025 are as follows:

 

		Number of stock options				Weighted- average exercise price per share				Weighted- average remaining contractual term (years)				Aggregate intrinsic value
November 30, 2024			8,849,535			$	6.12
Granted			3,088,700				4.40
Exercised			(86,967	)			9.60
Expired			(2,032,735	)			7.27
Forfeited			(154,766	)			4.48
November 30, 2025			9,663,767			$	5.32				2.74			$	47,063
Vested and exercisable as of November 30, 2025			4,355,113			$	6.41				1.55			$	16,484

 

The following table summarizes key stock option valuation inputs:

 

		Years ended November 30,
		2025				2024				2023
Weighted-average assumptions used to value stock option awards:
Expected volatility			52.9	%			48.7	%			48.4	%
Risk-free interest rate			3.64	%			4.29	%			3.85	%
Expected forfeiture rate			3.3	%			3.0	%			2.8	%
Expected dividend rate			—	%			—	%			—	%
Expected term of options (years)			4				4				4
Weighted-average grant-date fair value		$	1.96			$	1.76			$	2.40
Intrinsic value of options exercised		$	51			$	471			$	2,339
Cash received from options exercised		$	—			$	—			$	—

 

As of November 30, 2025, the Company had $4,350 of unrecognized compensation cost related to 5,308,654 non-vested stock options expected to be expensed and vest over a period of approximately 2.7 years.

 

Performance share units

 

The Company has a PSU plan that provides for the issuance of PSUs in amounts as approved by the Company’s Compensation Committee. Each PSU award entitles the participant to receive one common share of the Company at the end of a specified period. The Compensation Committee may adjust the number of common shares for the achievement of certain performance and vesting criteria established at the time of grant. The actual performance against each of these criteria generates a multiplier that varies from 0% to 150%. Thus, the common shares that may be issued varies between 0% and 150% of the number of PSUs granted, reduced by the amounts granted to participants no longer with the Company on the vesting date.

 

The value of each PSU granted is estimated at the grant date using a Monte Carlo simulation model. The Monte Carlo simulation model requires the input of subjective assumptions, including the share price volatility of the Company’s stock, as well as a comparator index and the correlation of returns between the comparator index and the Company’s shares. Expected volatility is based on the historical volatility of the Company’s shares and the comparator index at the grant date. As new PSUs and stock options are generally granted on the same date, many of the key valuation input assumptions are the same for both share incentive award types.

 

A summary of PSU awards outstanding and activity during the year ended November 30, 2025 are as follows:

 

		Number of PSU awards				Weighted- average grant day fair value per award				Aggregate intrinsic value
November 30, 2024			1,633,500			$	5.32
Vested and paid out/released			(102,100	)			6.70
Performance adjustment			(306,300	)			6.70
Granted			849,200				4.35
November 30, 2025			2,074,300			$	4.65			$	18,407

 

The following table summarizes key PSU valuation inputs:

 

		Years ended November 30,
		2025				2024				2023
Weighted-average assumptions used to value PSU awards:
Expected volatility of Company shares			54.8	%			42.5	%			53.9	%
Expected volatility of TSX index			29.7	%			29.2	%			37.5	%
Expected correlation between Company shares and TSX			63.2	%			78.3	%			80.6	%
Canadian risk-free interest rate			2.60	%			4.22	%			3.52	%
Expected term of PSUs (years)			3				3				3
Number of PSUs granted			849,200				886,800				605,500
Weighted-average grant-date fair value		$	4.41			$	4.20			$	5.77

 

As of November 30, 2025, the Company had 2,074,300 non-vested PSU awards outstanding of which 495,500 were fully expensed and vested in December 2025 without meeting the performance payout criteria. The remaining 1,578,800 non-vested PSU awards with $4,012 of unrecognized compensation cost will be expensed over a period of approximately 2.4 years.

 

The following table summarizes other PSU-related vesting information:

 

		Years ended November 30,
		2025				2024				2023
Performance multiplier on PSUs vested			25	%			100	%			—	%
Common shares issued			79,384				149,559				—
Total fair value of common shares issued		$	2,129			$	800			$	—
Withholding tax paid on PSUs vested		$	609			$	174			$	—

 

Deferred share units

 

The Company has a DSU plan that provides for the issuance of DSUs in amounts where the directors receive half of their annual retainer in DSUs and have the option to elect to receive all or a portion of the other half of their annual retainer in DSUs. Each DSU entitles the directors to receive one common share or the market value thereof in cash, at the Company’s option, when they retire from the Company. The Company granted 72,595, 76,781, and 43,658 DSUs to directors with a weighted-average grant day fair value of $3.84, $4.62, and $5.04 per DSU during 2025, 2024, and 2023, respectively. The Company issued 79,065, 46,405, and 48,446 common shares under the DSU plan to directors that retired from the Company in 2025, 2024, and 2023, respectively. As of November 30, 2025, there were 308,245 DSUs outstanding.