Relay Therapeutics, Inc. Stock Compensation Disclosure

8. Stock Compensation

In 2016, the Company adopted the 2016 Stock Option and Grant Plan (the "2016 Stock Plan"). Subsequent to July 2020, no further awards have been granted under the 2016 Stock Plan and all equity-based awards have been and will continue to be granted under the 2020 Stock Option and Incentive Plan (the "2020 Stock Plan"). To the extent outstanding options granted under the 2016 Stock Plan are cancelled, forfeited, or otherwise terminated without being exercised and would otherwise have been returned to the share reserve under the 2016 Stock Plan, the number of shares underlying such awards will be available for future grant under the 2020 Stock Plan.

In 2020, the Company’s stockholders approved the 2020 Stock Plan. All of the Company’s employees, officers, directors, and consultants are eligible to be granted options, restricted stock units, and other stock-based awards under the terms of the 2020 Stock Plan, which originally provided for the issuance of up to 8,376,080 of stock-based awards. The 2020 Stock Plan is also subject to annual increases to be added on the first day of each fiscal year, commencing on January 1, 2021, equal to 5% of the number of outstanding shares on the immediately preceding December 31 or such lesser number of shares approved by the Company’s board of directors or compensation committee of the board of directors. On January 1, 2025, the number of shares available for issuance under the 2020 Stock Plan was increased by 8,387,785 shares of common stock. There were 12,009,179 stock-based awards available for issuance at December 31, 2025 under the 2020 Stock Plan.

In 2020, the Company adopted an Employee Stock Purchase Plan ("ESPP") that permits eligible employees to enroll in six-month offering periods. Participants may purchase shares of the Company’s common stock, through after-tax payroll deductions, at a price equal to 85% of the fair market value of the common stock on the first or last day of the applicable six-month offering period, whichever is lower. Purchase dates under the ESPP occur on or about June 30 and December 31 each year. The Company’s stockholders originally authorized 1,092,532 shares for issuance pursuant to the ESPP, which is subject to annual increases to be added on the first day of each fiscal year, commencing on January 1, 2021, equal to the lesser of 2,185,064 shares of the Company’s common stock, 1% of the number of outstanding shares on the immediately preceding December 31, or an amount determined by the Company’s board of directors. On January 1, 2025, the number of shares available for issuance under the ESPP was increased by 1,677,557 shares of common stock. There were 6,157,661 shares available for issuance at December 31, 2025 under the ESPP.

Time-Based Stock Options

The Company has historically granted stock options to employees, directors, and consultants with vesting subject to continued service over time. Accordingly, stock compensation expense for such awards is recognized using a straight-line attribution model over the vesting term.

The total intrinsic value of time-based stock options exercised was $0.3 million, $6.7 million, and $4.4 million for the years ended December 31, 2025, 2024, and 2023, respectively.

The fair value of each time-based stock option granted is estimated on the grant date using the Black-Scholes option pricing model, pursuant to which the weighted-average grant date fair values were $3.09, $4.87, and $12.83 during the years ended December 31, 2025, 2024, and 2023, respectively.

The Company uses the simplified method to calculate the expected term, as it does not have sufficient historical exercise data as a public company to provide a reasonable basis upon which to estimate the expected term for time-based stock options granted. The expected term is applied to the group of time-based stock option grants as a whole, as the Company does not expect substantially different exercise or post-vesting termination behavior amongst the Company’s employees, directors, and consultants. The risk-free interest rate is based on a U.S. treasury instrument, whose term is consistent with the expected term of the time-based stock options. The Company’s assumption for volatility is based on historical volatility of (a) the Company's stock price on the Nasdaq Global Market and (b) a group of peer companies with similar characteristics to the Company and who have similar risk profiles and positions within the industry. The Company has not historically issued dividends and, therefore, estimates none in calculating the grant date fair value of time-based stock options.

As of December 31, 2025, the total unrecognized stock compensation related to unvested time-based stock options was $27.6 million, which the Company expects to recognize over a weighted-average period of approximately 1.27 years.

Performance-Based Stock Options

In prior years, the Company granted options to certain employees with vesting subject to achievement of certain performance conditions, as well as continued service over time. Specifically, commencement of vesting was contingent on achievement of various goals over specified periods, subject to approval by either the Company’s Board of Directors or President and Chief Executive Officer.

For the performance-based stock options, the Company applied variable accounting until the performance criteria were determined to be achieved, at which time vesting commenced over contractual service periods. Furthermore, because (a) the awards were authorized prior to the accounting grant date pursuant to ASC Topic 718, Stock Compensation ("ASC 718"), (b) the recipients were providing service prior to the accounting grant date, and (c) there were performance conditions that, if not met by the accounting grant date, would have resulted in the forfeiture of the award, the service inception dates preceded the accounting grant dates. Ultimately, the stock compensation expense for the options was determined based on the fair value of the awards on the accounting grant dates, which was then recognized using an accelerated attribution model over the vesting term commencing upon the actual or expected accounting grant dates.

For the performance-based stock options granted in prior years, all performance conditions were resolved in prior years and the grant dates were set prior to December 31, 2025.

The total intrinsic value of performance-based stock options exercised was $0.1 million, $0.1 million, and $0.3 million for the years ended December 31, 2025, 2024, and 2023, respectively.

The fair value of each performance-based stock option granted in prior years was estimated on the accounting grant date, or at the end of each reporting period if variable accounting was applied, using the Black-Scholes option-pricing model. There were no performance-based stock options granted during the years ended December 31, 2025, 2024, and 2023.

As of December 31, 2025, the total unrecognized stock compensation related to unvested performance-based stock options was $0.

Time-Based RSUs

The Company has historically granted RSUs to employees, directors, and consultants with vesting subject to continued service over time. Accordingly, stock compensation expense for such awards is recognized using a straight-line attribution model over the vesting term. The fair value of each time-based RSU is based on the closing price of the Company’s common stock on the date of grant.

The fair value of time-based RSUs vested during the year ended December 31, 2025 was $18.1 million.

As of December 31, 2025, the total unrecognized compensation related to unvested time-based RSUs granted was $13.3 million, which the Company expects to recognize over a weighted-average period of approximately 1.03 years.

Performance-Based RSUs

Besides the 2023 Market-Based Awards, as defined below, the Company had only granted time-based RSUs to employees, directors, and consultants, as summarized above, prior to the year ended December 31, 2024. During the year ended December 31, 2024, the Company granted RSUs to certain employees with vesting subject to achievement of certain performance conditions, as well as continued service over time. Specifically, commencement of vesting was contingent on achievement of various goals over specified periods, subject to approval by either the Company's Board of Directors or Compensation Committee of the Board of Directors.

There were no other grants of similar awards during the year ended December 31, 2025.

For the performance-based RSUs, the Company applied variable accounting until the performance criteria were determined to be achieved, at which time vesting commenced over contractual service periods. Furthermore, because (a) the awards were authorized prior to the accounting grant date pursuant to ASC 718, (b) the recipients were providing service prior to the accounting grant date, and (c) there were performance conditions that, if not met by the accounting grant date, would have resulted in the forfeiture of the award, the service inception dates preceded the accounting grant dates. Ultimately, the stock compensation expense for the RSUs was determined based on the fair value of the awards on the accounting grant dates, which is then being recognized using an accelerated attribution model over the vesting term commencing upon the actual or expected accounting grant dates.

For the performance-based RSUs granted during the year ended December 31, 2024, the performance conditions were resolved during the year ended December 31, 2025 and, therefore, the accounting grant dates were set prior to December 31, 2025.

The fair value of performance-based RSUs vested during the year ended December 31, 2025 was $5.7 million.

As of December 31, 2025, the total unrecognized compensation related to unvested performance-based RSUs granted was $0.1 million, which the Company expects to recognize during the three months ending March 31, 2026.

Market-Based Awards

During the year ended December 31, 2023, the Company granted 1,512,820 stock options and 405,770 RSUs to certain employees, with vesting over three years of continued service and contingent upon achievement of certain market conditions ("2023 Market-Based Awards"). The Company measured the fair value of the 2023 Market-Based Awards on the grant date using a Monte Carlo Simulation, incorporating various option pricing inputs. Ultimately, the fair value of the 2023 Market-Based Awards was estimated as $12.53 per share for the stock options and $16.11 per share for the RSUs, yielding a total of $25.5 million. The total compensation expense, or $25.5 million, is being recognized pursuant to the accelerated attribution method over the requisite service period of three years, regardless of whether the market conditions have been achieved. The impact of forfeitures, if any, will be recognized upon occurrence.

There were no other grants of similar awards during the years ended December 31, 2025 and 2024.

As of December 31, 2025, the market conditions underlying the 2023 Market-Based Awards had not been achieved and, therefore, none had vested. In connection therewith, none of the options were exercised and none of the RSUs were released through December 31, 2025. As of December 31, 2025, 211,420 options and 105,910 RSUs from the Market-Based Awards had been cancelled.

As of December 31, 2025, the total unrecognized compensation related to unvested market-based awards granted was $0.1 million, which the Company expects to recognize during the three months ending March 31, 2026.

Employee Stock Purchase Plan

As of December 31, 2025, there was no unrecognized stock compensation expense related to ESPP, since the purchase for the offering period between July 1, 2025 and December 31, 2025 was transacted on December 31, 2025.