Surrozen, Inc./DE Stock Compensation Disclosure
Note 12. Stock-Based Compensation Plans
The Company maintains the 2021 Equity Incentive Plan, or the 2021 Plan, which provides for the granting of stock awards to employees, directors and consultants. Options granted under the 2021 Plan may be either incentive stock options or nonqualified stock options. Options granted under the 2021 Plan expire no later than 10 years from the date of grant. Options and restricted stock awards, or RSAs, under the 2021 Plan generally vest over four years. Restricted stock units, or RSUs, granted under the 2021 Plan generally vest in two years. As of December 31, 2024, there were 0.1 million shares of common stock available for issuance under the 2021 Plan.
The Company maintains the 2021 Employee Stock Purchase Plan, or the ESPP, which allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to plan limitations. An offering period under the ESPP consists of four six-month purchase periods, unless otherwise determined by the Company. The eligible employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the purchase day. As of December 31, 2024, there were approximately 20,000 shares of common stock available for issuance under the ESPP.
Stock Options
A summary of stock option activity is set forth below (shares in thousands):
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Options Outstanding |
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Weighted |
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Average |
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Aggregate |
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Average |
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Remaining |
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Intrinsic |
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Number of |
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Exercise |
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Contractual Life |
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Value |
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Options |
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Price |
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(In years) |
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(In thousands) |
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Outstanding – December 31, 2023 |
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311 |
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$ |
27.70 |
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7.99 |
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Granted |
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258 |
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9.64 |
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Exercised |
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(4 |
) |
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9.20 |
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Forfeited |
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(19 |
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18.76 |
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Expired |
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(10 |
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29.16 |
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Outstanding – December 31, 2024 |
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536 |
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19.45 |
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8.00 |
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$ |
1,514 |
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Exercisable – December 31, 2024 |
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262 |
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25.33 |
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7.01 |
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487 |
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The aggregate intrinsic value of options outstanding and exercisable are the difference between the exercise price of the options and the fair value of the Company’s common stock at December 31, 2024.
The intrinsic value of options exercised during the years ended December 31, 2024 and 2023 was de minimis in both periods.
During the years ended December 31, 2024 and 2023, the Company granted options with a weighted-average grant-date fair value of $7.45 per share and $9.47 per share, respectively.
Fair Value of Options
The fair value of options is estimated at the grant date using the Black-Scholes option-pricing model with the following weighted-average assumptions:
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Year Ended December 31, |
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2024 |
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2023 |
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Expected term (in years) |
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6.00 |
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5.85 |
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Expected volatility |
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91.59 |
% |
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85.86 |
% |
Risk-free rate |
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4.63 |
% |
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3.89 |
% |
Dividend yield |
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— |
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— |
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Restricted Stock Units
The following table summarizes the Company’s RSUs activity (shares in thousands):
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Weighted |
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Average |
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Number of |
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Grant Date |
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Shares |
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Fair Value |
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RSUs, unvested at December 31, 2023 |
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90 |
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$ |
7.73 |
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Granted |
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40 |
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9.17 |
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Vested |
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(88 |
) |
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7.73 |
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Canceled |
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(4 |
) |
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8.43 |
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RSUs, unvested at December 31, 2024 |
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38 |
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9.16 |
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The fair value of RSUs vested during the years ended December 31, 2024 and 2023 was $0.7 million and zero, respectively.
Stock-Based Compensation
Total stock-based compensation expense recorded in the consolidated statements of operations and comprehensive loss was as follows (in thousands):
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Year Ended December 31, |
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2024 |
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2023 |
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Research and development |
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$ |
1,165 |
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$ |
1,272 |
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General and administrative |
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2,949 |
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3,100 |
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Total stock-based compensation expense |
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$ |
4,114 |
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$ |
4,372 |
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As of December 31, 2024, there was approximately $3.4 million of stock-based compensation expense to be recognized over a weighted-average period of approximately 2.04 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.