RAPID MICRO BIOSYSTEMS, INC.RPID
RAPID MICRO BIOSYSTEMS, INC. Stock Compensation Disclosure
Stock-based compensation
2010 Stock Option and Grant Plan
The Company’s 2010 Stock Option and Grant Plan (the “2010 Plan”) provides for the Company to grant incentive stock options or nonqualified stock options, restricted stock awards and other stock-based awards to employees, officers, directors and consultants of the Company.
Following the effectiveness of the IPO in July 2021, no additional awards are being granted under the 2010 Plan and shares of existing outstanding options that are forfeited or cancelled under the 2010 Plan will be available for grant under the 2021 Incentive Award Plan.
2021 Incentive Award Plan
In July 2021, the Board of Directors adopted, and the Company’s stockholders approved, the 2021 Incentive Award Plan (the “2021 Plan”), which became effective in connection with the IPO of Class A common stock. The 2021 Plan provides for the grant of stock options, including incentive stock options and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based and cash-based awards. The 2021 Plan has a term of ten years. The aggregate number of shares of Class A common stock available for issuance under the 2021 Plan is equal to (i) 4,200,000 shares; (ii) any shares which are subject to the 2010 Plan awards that become available for issuance under the 2021 Plan; and (iii) an annual increase for ten years on the first day of each calendar year beginning on January 1, 2022, equal to the lesser of (A) 5% of the aggregate number of shares of Class A common stock outstanding on the last day of the immediately preceding calendar year and (B) such smaller amount of shares as determined by the Board of Directors. No more than 33,900,000 shares of Class A common stock may be issued under the 2021 Plan upon the exercise of incentive stock options. As of December 31, 2024, there were 5,073,051 shares available for issuance under the 2021 Plan.
The 2021 Plan is administered by the board of directors or, at the discretion of the board of directors, by a committee of the board of directors. The exercise prices, vesting and other restrictions are determined at the discretion of the board of directors, or its committee or management if so delegated, except that the exercise price per share of stock options may not be less than 100% of the fair market value of a share of common stock on the date of grant and the term of the stock option may not be greater than ten years. Stock options granted to employees, officers, and consultants typically vest over a four-year period, and stock options granted to members of the board of directors typically vest over a three-year period.
2023 Inducement Plan
In May 2023, the Company's board of directors adopted the 2023 Inducement Plan (the “Inducement Plan”) pursuant to which the Company reserved 330,000 shares of Class A common stock to be used exclusively for grants of equity-based awards to individuals who were not previously employees or directors of the Company as an inducement material to the individual’s entry into employment with the Company within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules. The Inducement Plan provides for the grant of equity-based awards in the form of nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, and dividend equivalent rights. The Inducement Plan was adopted by the board of directors without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules. In February 2024, the Company amended its Inducement Plan to reserve an additional 225,000 shares of its Class A common stock. The amendment was adopted by the compensation committee of the board of directors, without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules. As of December 31, 2024, 217,013 shares were available for future issuance under the Inducement Plan. In February 2025, the Company amended its Inducement Plan to reserve an additional 476,000 shares of its Class A common stock. The amendment was adopted by the board of directors, without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules.
Stock options
The following table summarizes the Company’s stock option activity since December 31, 2023:
| Number of shares | Weighted average exercise price | Weighted average remaining contractual term | Aggregate intrinsic value | ||||||||||||||||||||
| (in years) | (in thousands) | ||||||||||||||||||||||
| Outstanding as of December 31, 2023 | 6,530,511 | $ | 2.59 | 7.12 | $ | — | |||||||||||||||||
| Granted | 952,470 | 0.93 | |||||||||||||||||||||
| Exercised | (9,570) | 0.75 | |||||||||||||||||||||
| Expired | (587,552) | 3.26 | |||||||||||||||||||||
| Forfeited | (589,354) | 1.38 | |||||||||||||||||||||
| Outstanding as of December 31, 2024 | 6,296,505 | $ | 2.39 | 6.18 | $ | 135 | |||||||||||||||||
| Options vested and expected to vest as of December 31, 2024 | 6,296,505 | $ | 2.39 | 6.18 | $ | 135 | |||||||||||||||||
| Options exercisable as of December 31, 2024 | 4,597,682 | $ | 2.64 | 5.36 | $ | 121 | |||||||||||||||||
During the years ended December 31, 2024 and 2023, the Company granted to employees, officers and directors options to purchase 952,470 shares and 2,039,155 shares, respectively, of common stock. The Company recorded stock-based compensation expense for options granted to employees, officers, and directors of $2.3 million and $3.1 million during the years ended December 31, 2024 and 2023, respectively.
The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option- pricing model to determine the grant-date fair value of stock options granted to employees and directors:
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Risk-free interest rate | 4.31 | % | 3.90 | % | |||||||
| Expected term (in years) | 5.9 | 6.0 | |||||||||
| Expected volatility | 49.8 | % | 47.1 | % | |||||||
| Expected dividend yield | 0 | % | 0 | % | |||||||
The aggregate intrinsic value of options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those options that had exercise prices lower than the fair value of the Company’s common stock.
The intrinsic value of stock options exercised during both of the years ended December 31, 2024 and 2023 was less than $0.1 million.
The weighted average grant-date fair value per share of stock options granted during the years ended December 31, 2024 and 2023 was $0.48 and $0.59, respectively.
In March 2023, the board of directors approved a one-time repricing of certain outstanding stock options held by non-executive employees. As a result of the repricing, the exercise prices of eligible vested and unvested stock options were adjusted to reflect the fair market value of Class A common stock on the date of the repricing. The effect of the repricing is included within the table above in the weighted average exercise price of the options outstanding as of December 31, 2023. The repricing was immaterial to the Company's consolidated statements of operations.
Restricted stock units
Restricted stock unit grants to employees have a three-year vesting term in which vesting occurs annually on the anniversary of the grant date. During the year ended December 31, 2024, the Company granted restricted stock units with service-based vesting conditions as well as restricted stock units with a combination of service-based and Company
performance-based vesting conditions. The Company expenses the fair value of the restricted stock units over the vesting period and accounts for forfeitures prospectively as they occur. The Company recorded stock-based compensation expense for restricted stock units granted to employees and officers of $1.6 million and $1.5 million during the years ended December 31, 2024 and 2023, respectively.
The following table summarizes restricted stock units granted to Company employees during the year ended December 31, 2024:
| Number of shares | Weighted average grant date fair value | ||||||||||
| Unvested as of December 31, 2023 | 1,681,760 | $ | 2.28 | ||||||||
| Granted | 1,194,965 | $ | 0.94 | ||||||||
| Vested | (477,386) | $ | 3.05 | ||||||||
| Forfeited | (457,651) | $ | 1.45 | ||||||||
| Unvested as of December 31, 2024 | 1,941,688 | $ | 1.46 | ||||||||
The weighted average grant-date fair value per share of restricted stock units granted during the years ended December 31, 2024 and 2023 was $0.94 and $1.22, respectively. The total fair value of shares vested during the years ended December 31, 2024 and 2023 was $0.4 million and $0.2 million, respectively.
2021 Employee Stock Purchase Plan
In July 2021, the board of directors adopted, and the Company’s stockholders approved, the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which became effective in connection with the IPO of Class A common stock. The aggregate number of shares of Class A common stock available for issuance under the 2021 ESPP is equal to (i) 400,000 shares and (ii) an annual increase for ten years on the first day of each calendar year beginning on January 1, 2022, equal to the lesser of (A) 1% of the aggregate number of shares of Class A common stock outstanding on the last day of the immediately preceding calendar year and (B) such smaller amount of shares as determined by the board of directors. No more than 6,300,000 shares of Class A common stock may be issued under the 2021 ESPP.
Under the 2021 ESPP, eligible employees may purchase shares of the Company’s common stock through payroll deductions of up to 15% of eligible compensation during an offering period. Generally, each offering period will be for 6 months as determined by the Company's board of directors. In no event may an employee purchase more than 100,000 shares per offering period based on the closing price on the first trading date of an offering period or the last trading date of an offering period, or more than $25,000 worth of stock during any calendar year. The purchase price for shares to be purchased under the 2021 ESPP is 85% of the lesser of the market price of the Company's common stock on the first trading date of an offering period or on any purchase date during an offering period (March 14 or September 14).
During the years ended December 31, 2024 and 2023, there were 287,217 and 186,037, respectively, shares of Class A common stock purchased under the 2021 ESPP. The Company recognized less than $0.1 million of expense related to the 2021 ESPP for both of the years ended December 31, 2024 and 2023. As of December 31, 2024, 956,940 shares were available for future issuance under the 2021 ESPP.
The Company estimates the fair value of shares issued to employees under the 2021 ESPP using the Black-Scholes option-pricing model. At the grant date, the following weighted average assumptions were used in the calculation of fair value of shares under the 2021 ESPP:
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Risk-free interest rate | 4.98 | % | 5.32 | % | |||||||
| Expected term (in years) | 0.5 | 0.5 | |||||||||
| Expected volatility | 45.9 | % | 47.8 | % | |||||||
| Expected dividend yield | 0 | % | 0 | % | |||||||
Stock-based compensation
Stock-based compensation expense was classified in the consolidated statements of operations as follows (in thousands):
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Cost of revenue | $ | 517 | $ | 642 | |||||||
| General and administrative | 2,429 | 3,085 | |||||||||
| Sales and marketing | 417 | 494 | |||||||||
| Research and development | 511 | 529 | |||||||||
| Total stock-based compensation expense | $ | 3,874 | $ | 4,750 | |||||||
As of December 31, 2024, total unrecognized compensation expense related to unvested stock options held by employees and directors was $1.7 million, which is expected to be recognized over weighted-average period of 1.4 years. Additionally, unrecognized compensation expense related to unvested restricted stock units held by employees and directors was $1.4 million, which is expected to be recognized over a weighted-average period of 1.8 years.
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.