Roivant Sciences Ltd. Stock Compensation Disclosure

Note 9—Share-Based Compensation and Other Compensation Plans

(A) RSL Equity Incentive Plans

RSL has three equity incentive plans: the Roivant Sciences Ltd. 2021 Equity Incentive Plan (the “RSL 2021 EIP”), the Roivant Sciences Ltd. Amended and Restated 2015 Equity Incentive Plan (the “RSL 2015 EIP”) and the Roivant Sciences Ltd. Amended and Restated 2015 Restricted Stock Unit Plan (the “2015R Plan”) (collectively, the “RSL Equity Plans”). The RSL 2021 EIP was approved and adopted in connection with the Business Combination and became effective immediately prior to closing. Since the effective date of the RSL 2021 EIP, no further stock awards have been or will be made under the RSL 2015 EIP. Additionally, no further stock awards will be made under the 2015R Plan. As of March 31, 2025, 182,389,866 of the Company’s common shares were reserved for issuance under the RSL 2021 EIP. The number of common shares reserved for issuance under the RSL 2021 EIP will automatically increase on April 1 of each year by an amount equal to the lesser of (i) 5% of the common shares outstanding as of the last day of the immediately preceding fiscal year and (ii) such number of common shares as determined by the board of directors in its discretion. Prior to April 1, 2025, the Company’s board of directors resolved not to increase the number of common shares reserved for issuance under the RSL 2021 EIP on April 1, 2025, but instead to defer until later during the year ending March 31, 2026 the decision as to whether to increase the reserve by up to 5% of the common shares outstanding as of March 31, 2025. The RSL 2021 EIP has a ten-year term. The Company’s employees, directors and consultants are eligible to receive incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, RSUs and other stock awards under the RSL 2021 EIP. At March 31, 2025, a total of 41,801,628 common shares were available for future grants under the RSL 2021 EIP.

Stock Options and Performance Stock Options

Activity for stock options and performance stock options under the RSL Equity Plans for the year ended March 31, 2025 was as follows:

The aggregate intrinsic value is calculated as the difference between the exercise price of all outstanding and exercisable options and the fair value of the Company’s common stock at March 31, 2025. At March 31, 2025, total unrecognized compensation expense related to non-vested stock options was approximately $95.4 million and is expected to be recognized over a weighted-average period of approximately 1.40 years. All performance stock options have been fully expensed as of December 2023.

The Company estimated the fair value of each stock option on the date of grant using the Black-Scholes closed form option-pricing model applying the weighted average assumptions in the following table. No performance stock options were granted during the years ended March 31, 2025, 2024 and 2023.

		Years Ended March 31,
Assumptions		2025				2024				2023
Expected stock price volatility			70.52	%			72.22	%			85.95	%
Expected risk free interest rate			4.52	%			3.72	%			2.89	%
Expected term, in years			6.21				6.21				6.25
Expected dividend yield			—	%			—	%			—	%

Additional information regarding stock options and performance stock options is set forth below (in thousands, except per share data).

Restricted Stock Units

Activity for RSUs under the RSL Equity Plans for the year ended March 31, 2025 was as follows:

The total fair value of RSUs vested during the years ended March 31, 2025, 2024 and 2023 was $49.3 million, $49.1 million and $67.6 million, respectively. RSUs vest upon the achievement of time-based service requirements.

At March 31, 2025, total unrecognized compensation expense related to non-vested RSUs was approximately $115.4 million. Unrecognized compensation expense relating to RSUs is expected to be recognized over a weighted-average period of approximately 3.27 years.

Performance Restricted Stock Units

Activity for PSUs under the RSL Equity Plans for the year ended March 31, 2025 was as follows:

During the years ended March 31, 2025, 2024 and 2023, no PSUs vested. The vesting of PSUs requires that certain performance or market conditions be achieved during the performance period.

At March 31, 2025, total unrecognized compensation expense related to non-vested PSUs was approximately $259.7 million. Unrecognized compensation expense relating to PSUs, excluding those deemed improbable of vesting as of March 31, 2025, is expected to be recognized over a weighted-average period of approximately 2.21 years.

2024 Senior Executive Compensation Program

In July 2024, the Compensation Committee of the board of directors approved a multi-year incentive compensation program for each of Matthew Gline, Chief Executive Officer; Mayukh Sukhatme, President and Chief Investment Officer; and Eric Venker, President and Chief Operating Officer (the “2024 Senior Executive Compensation Program”). The program primarily consists of two key components: (i) one-time cash retention awards (refer below for further details regarding the one-time cash retention awards) and (ii) long-term equity incentive awards granted in the form of PSUs with both a performance- and a time-vesting component, time-vesting restricted stock units and time-vesting stock options.

A summary of the long-term equity incentive awards approved is as follows:

* The Company entered into a letter agreement pursuant to which Dr. Venker may be granted up to 11,900,000 PSUs in the future, in the sole discretion of the Compensation Committee of the board of directors.

The stock options and performance stock options table above includes the stock options granted to Dr. Venker pursuant to the 2024 Senior Executive Compensation Program with a total grant date fair value of $2.9 million. The Restricted Stock Units and Performance Restricted Stock Units tables above include the RSUs granted to Mr. Gline, Dr. Sukhatme and Dr. Venker and the PSUs granted to Mr. Gline and Dr. Sukhatme pursuant to the 2024 Senior Executive Compensation Program with total grant date fair values of $51.8 million and $278.2 million, respectively.

Tranche		% of PSUs				Share Price
First Tranche			14.71	%		$	15.00
Second Tranche			7.35	%		$	17.50
Third Tranche			8.82	%		$	20.00
Fourth Tranche			11.77	%		$	22.50
Fifth Tranche			22.06	%		$	25.00
Sixth Tranche			35.29	%		$	30.00

The “Service Condition” with respect to each tranche will be deemed satisfied on the first anniversary of the date on which the Performance Condition is first satisfied with respect to such tranche, subject to the executive’s continuous service through such anniversary. Following the achievement of the Service Condition and the vesting of any tranche of the PSUs, the common shares underlying the applicable vested tranche of PSUs are subject to a further two-year holding period before such common shares may be sold by the executive (subject to certain exceptions).

The Company estimated the fair value of the PSUs on the date of grant using a Monte Carlo simulation applying the assumptions in the following table:

As the PSUs are subject to the market performance of the Company’s stock price, share-based compensation expense is recognized over the requisite service period regardless of whether the market condition is ultimately satisfied, subject to continued service over the period. The Company has not recognized share-based compensation expense for potential PSU awards to Dr. Venker as these PSUs have not been granted by the Compensation Committee of the board of directors.

The grant date fair value of the PSUs is sensitive to the expected stock price volatility of the Company’s shares. The Company selected a volatility estimate of 70.0% based on the observed historical volatility of the Company’s shares. If a higher volatility estimate of 80.0% were selected, the total grant date fair value of the PSUs would be approximately $292.9 million. If a lower volatility estimate based on the implied volatility of the Company’s shares of 41.6% were selected, the total grant date fair value of the PSUs would be approximately $202.4 million. If a volatility estimate based on an average of the historical and implied volatility of 55.8% were selected, the total grant date fair value of the PSUs would be approximately $247.3 million.

Capped Value Appreciation Rights

March 2020 CVAR Grants

The CVARs granted in March 2020 settle into a number of common shares equal to the excess of (a) the lesser of (i) the fair market value of a common share as of the settlement date or (ii) the cap of $12.68, over (b) the hurdle price of either $6.40 or $11.50, as applicable to each grant. CVARs with the lower hurdle price of $6.40 were subject to a condition (the “Knock-In Condition”) pursuant to which in the event the fair market value of a common share was greater than $6.40 per share but less than $9.20 per share as of the relevant date of determination, the award of CVARs remained outstanding unless and until the Knock-In Condition was satisfied as of any applicable monthly measurement date before the expiration date of the CVARs. As of March 31, 2025 and 2024, all of the CVARs with the lower hurdle price of $6.40 have satisfied the hurdle price and Knock-In Condition.

During the year ended March 31, 2025, no service-vested CVARs satisfied their applicable hurdle price on the applicable measurement date. During the year ended March 31, 2024, 14,482,570 service-vested CVARs satisfied their applicable hurdle price and the Knock-In Condition, if relevant, on the applicable measurement date, and as a result, 5,366,815 common shares were issued upon their settlement. As of March 31, 2025, 17,548,368 CVARs granted in March 2020 remain outstanding. These CVARs have met the service vesting condition but have not satisfied the $11.50 hurdle price on an applicable hurdle measurement date. The total fair value of CVARs that service-vested during the years ended March 31, 2024 and 2023 was $2.1 million and $16.7 million, respectively. All March 2020 CVARs have been fully expensed since December 2023.

In November 2021, the Company made one-time grants of 6,317,350 CVARs in the aggregate under the RSL 2021 EIP to eligible participants. The CVARs are eligible to vest based on the satisfaction of service-based and performance-based vesting requirements. The performance-based vesting requirement was achieved in December 2021. Vested CVARs will be settled in common shares, up to a specified cap price.

Activity for CVARs under the RSL 2021 EIP for the year ended March 31, 2025 was as follows:

The total fair value of CVARs that vested during the years ended March 31, 2025, 2024 and 2023 was $5.9 million, $6.2 million and $13.0 million, respectively. During the year ended March 31, 2025, 1,186,418 common shares were issued upon their settlement.

At March 31, 2025, total unrecognized compensation expense related to non-vested CVARs was approximately $44 thousand and is expected to be recognized over a weighted-average period of approximately 0.12 years.

Separation Agreement with former Chairman

In February 2023, the Company entered into a Separation and Mutual Release Agreement with its former Chairman. Pursuant to the terms of this agreement,  all non-vested performance stock options were accelerated and deemed fully vested, and the time-based service requirement for all non-vested CVARs was accelerated and deemed satisfied, in each case as of the separation date. Share-based compensation expense included in G&A expense for the year ended March 31, 2023 includes a reversal of expense of $20.8 million related to the modification of these awards.

(B) Employee Stock Purchase Plan

In September 2021, the Company adopted the Roivant Sciences Ltd. Employee Stock Purchase Plan (the “RSL ESPP”), which provides eligible employees, as defined by the RSL ESPP, the opportunity to purchase stock under the RSL ESPP at a price equal to 85% of the lower of the closing price on (i) the first trading day, or (ii) the last trading day of each offering period. Contributions under the RSL ESPP are limited to a maximum of 15% of an employee’s base salary during the offering period and an annual maximum of $25 thousand. The Company opened enrollment in August 2022 for a three-month initial offering period, beginning October 2022, with additional six-month offering periods following thereafter.

During the years ended March 31, 2025, 2024 and 2023, 118,640, 140,227 and 111,519 common shares were purchased and issued under the RSL ESPP, respectively. Share-based compensation expense recorded was approximately $0.5 million, $0.5 million and $0.3 million for the years ended March 31, 2025, 2024 and 2023, respectively.

(C) Subsidiary Equity Incentive Plans

Certain subsidiaries of RSL adopt their own equity incentive plan (“EIP”). Each EIP is generally structured so that the applicable subsidiary and its affiliates’ employees, directors, officers and consultants are eligible to receive non-qualified and incentive stock options, stock appreciation rights, restricted share awards, restricted stock unit awards, and other share awards under their respective EIP. The Company recorded share-based compensation expense of $56.1 million, $54.9 million and $36.5 million for the years ended March 31, 2025, 2024 and 2023, respectively, related to subsidiary EIPs. At March 31, 2025, total unrecognized compensation expense related to subsidiary equity was approximately $109.1 million.

During the year ended March 31, 2024, the Company approved a special one-time cash retention bonus award to its employees in the aggregate amount of $79.7 million (the “Cash Bonus Program”). During the years ended March 31, 2025 and 2024, the Company recognized general and administrative expense of $21.2 million and $35.6 million, respectively, and research and development expense of $5.8 million and $9.9 million, respectively, relating to the Cash Bonus Program.

(E) 2024 Senior Executive Compensation Program Cash Awards

Pursuant to the 2024 Senior Executive Compensation Program, the Compensation Committee of the board of directors approved the following one-time cash retention awards in July 2024:

Mr. Gline and Dr. Venker received 75% of their respective cash retention awards as of March 31, 2025. The remaining 25% of the award will vest and become payable on or about September 19, 2025, in each case subject to the executive’s continuous service through the applicable vesting date.

The cash retention award provided to Dr. Sukhatme was paid in full as of March 31, 2025. If a Recoupment Event (as defined below) occurs on or prior to September 30, 2025, Dr. Sukhatme will be required to repay to the Company $15.0 million of the retention award. A “Recoupment Event” will be deemed to occur if (x) Dr. Sukhatme’s employment in good standing is terminated or otherwise ceases for any reason (except as provided in the following sentence) or (y) Dr. Sukhatme breaches any of his restrictive covenant obligations. In the event Dr. Sukhatme’s employment is terminated by the Company without “cause” (as defined in Dr. Sukhatme’s employment agreement) or due to death or disability, no portion of the cash retention award will be subject to repayment, provided that Dr. Sukhatme executes and does not revoke a release of claims. No Recoupment Event had occurred as of March 31, 2025.

As a result of the cash retention rewards, the Company recognized general and administrative expense of $86.4 million during the year ended March 31, 2025. The remaining portion of $7.3 million as of March 31, 2025 will be recognized over the applicable service periods.