Tectonic Therapeutic, Inc. Stock Compensation Disclosure
8. EQUITY INCENTIVE PLANS
2019 Equity Incentive Plan
The Legacy Tectonic 2019 Equity Incentive Plan (the “2019 Plan”) provides employees, consultants and advisors and non-employee members of the Board of Directors with the opportunity to receive grants of stock options, stock awards and equity awards. Following the effectiveness of the 2024 Equity Incentive Plan as described below, no further grants are to be made under the 2019 Plan; however, outstanding equity awards granted under the 2019 Plan continue to be governed by the terms of the 2019 Plan.
2024 Equity Incentive Plan
On June 20, 2024, the Company adopted the 2024 Equity Incentive Plan (the “2024 Plan”) which became effective upon completion of the Merger. The 2024 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other forms of awards to employees, consultants, and non-employee directors of the Company. The number of shares of common stock available for issuance under the 2024 Plan will automatically increase on January 1st of each year through January 1, 2034, in an amount equal to the lesser of (a) 5% of the total number of shares of common stock issued and outstanding determined as of the day prior to such increase, or (b) an amount determined by the Board of Directors. On January 1, 2026, the number of shares of common stock available for issuance under the 2024 Plan automatically increased by 936,912 shares.
2024 Employee Stock Purchase Plan
On June 20, 2024, the Company adopted the 2024 Employee Stock Purchase Plan (the “ESPP”), which became effective upon completion of the Merger. The number of shares of our common stock available for issuance under the ESPP will automatically increase on January 1st of each year through 2034, in an amount equal to the lesser of (a) 1% of the total number of shares of common stock issued and outstanding determined as of the day prior to such increase, (b) a number of shares qual to three times the initial share reserve , or (c) an amount determined by the Board of Directors. On January 1, 2026, the number of shares of common stock available for issuance under the ESPP increased by 187,382 shares. No offering periods under the ESPP have been initiated as of December 31, 2025.
Stock Options
Stock options granted to employees generally vest over a four-year period in multiple tranches and have a contractual term of ten years. Options granted to the Board of Directors generally vest over a one-year period.
The following table summarizes the stock option activity under the 2019 Plan and 2024 Plan for the year ended December 31, 2025:
|
|
Outstanding Options |
|
|||||||||||||
|
|
Number of Shares Underlying Outstanding Options |
|
|
Weighted- |
|
|
Weighted- |
|
|
Aggregate |
|
||||
Outstanding as of January 1, 2025 |
|
|
1,534,361 |
|
|
$ |
12.49 |
|
|
|
|
|
|
|
||
Options granted |
|
|
559,873 |
|
|
|
35.21 |
|
|
|
|
|
|
|
||
Options exercised |
|
|
(114,558 |
) |
|
|
2.91 |
|
|
|
|
|
$ |
3,240 |
|
|
Options forfeited and expired |
|
|
(28,259 |
) |
|
|
14.27 |
|
|
|
|
|
|
|
||
Outstanding as of December 31, 2025 |
|
|
1,951,417 |
|
|
$ |
19.55 |
|
|
|
8.2 |
|
|
$ |
12,532 |
|
Options vested and exercisable as of December 31, 2025 |
|
|
792,535 |
|
|
$ |
13.45 |
|
|
|
7.5 |
|
|
$ |
8,004 |
|
Options vested and expected to vest as of December 31, 2025 |
|
|
1,951,417 |
|
|
$ |
19.55 |
|
|
|
8.2 |
|
|
$ |
12,532 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
During the years ended December 31, 2025 and 2024, the Company granted options with a weighted-average grant-date fair value of $29.04 and $14.90 per share, respectively. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2025 and 2024 was $3.2 million and $5.6 million, respectively.
The following table summarizes the stock option activity for the options that were assumed from AVROBIO upon the Merger closing for the year ended December 31, 2025:
|
|
Outstanding Options |
|
|||||||||
|
|
Number of Shares Underlying Outstanding Options |
|
|
Weighted- |
|
|
Aggregate |
|
|||
Outstanding as of January 1, 2025 |
|
|
92,480 |
|
|
$ |
22.69 |
|
|
|
|
|
Options exercised |
|
|
(71,215 |
) |
|
|
12.61 |
|
|
$ |
2,099 |
|
Options forfeited and expired |
|
|
(21,265 |
) |
|
|
56.44 |
|
|
|
|
|
Outstanding as of December 31, 2025 |
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
Options vested and exercisable as of December 31, 2025 |
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
Options vested and expected to vest as of December 31, 2025 |
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
As of December 31, 2025, no unexercised or outstanding stock options related to the Merger remain.
Fair Value of Stock Options Granted
The Company utilizes the BSM option-pricing model to determine the fair value of stock options granted.
The following table summarizes the assumptions used for estimating the fair value of stock options granted under the BSM option-pricing model:
|
|
Year Ended December 31, |
||
|
|
2025 |
|
2024 |
Expected term (in years) |
|
5.50 - 6.25 |
|
6.00 - 6.25 |
Expected volatility |
|
102.6% - 103.7% |
|
100.0% - 104.0% |
Risk-free interest rate |
|
3.76% - 4.43% |
|
4.10% - 4.26% |
Expected dividend yield |
|
0% |
|
0% |
Restricted Stock Units
Restricted stock units (“RSUs”), which are granted to employees, generally vest over a three-year period. The value of an RSU award is based on the quoted market price of the Company's stock on the grant date. The shares underlying the RSUs are not issued until the RSUs vest. The following table summarizes the RSU activity for the year ended December 31, 2025:
|
|
Outstanding RSUs |
|
|||||
|
|
Number of Shares Underlying Outstanding Units |
|
|
Weighted- |
|
||
Outstanding as of January 1, 2025 |
|
|
25,612 |
|
|
$ |
44.90 |
|
Restricted stock units granted |
|
|
246,262 |
|
|
|
36.13 |
|
Restricted stock units vested |
|
|
(7,561 |
) |
|
|
44.08 |
|
Restricted stock units forfeited |
|
|
(2,129 |
) |
|
|
48.01 |
|
Outstanding as of December 31, 2025 |
|
|
262,184 |
|
|
$ |
36.66 |
|
Unvested and expected to vest as of December 31, 2025 |
|
|
262,184 |
|
|
$ |
36.66 |
|
|
|
|
|
|
|
|
||
During the years ended December 31, 2025 and 2024, the Company granted RSUs with a weighted-average grant date fair value of $36.13 and $44.62 per unit, respectively. The total fair value of RSUs vested during the year ended December 31, 2025 was $0.1 million. No RSUs vested during the year ended December 31, 2024.
Upon vesting of RSUs, the Company withholds shares with a fair value equal to the minimum statutory tax withholding requirements. During the year ended December 31, 2025, 859 shares were withheld for tax purposes. Shares withheld are accounted for as a reduction of additional paid-in capital within stockholders’ equity.
Stock-Based Compensation Expense
The following table is a summary of stock-based compensation expense recognized by function:
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
General and administrative |
|
$ |
6,003 |
|
|
$ |
2,309 |
|
Research and development |
|
|
4,494 |
|
|
|
1,182 |
|
Total stock-based compensation expense |
|
$ |
10,497 |
|
|
$ |
3,491 |
|
The following table summarizes the unrecognized compensation expense and the weighted-average remaining period over which it is expected to be recognized, by type of award:
|
|
As of December 31, 2025 |
|
|||||
|
|
Unamortized Expense |
|
|
Weighted Average Remaining Recognition Period (Years) |
|
||
Stock options |
|
|
21,445 |
|
|
|
2.5 |
|
RSUs |
|
|
7,163 |
|
|
|
2.3 |
|
Modification of Certain Stock Options
In July 2024, the Company entered into a separation agreement with the Company’s Chief Operating Officer (the “Former Executive”). As part of the termination of employment, the Former Executive served as an advisor to the Company through March 31, 2025 (“Consulting Period”) on an as needed basis. Pursuant to the separation agreement, certain modifications to the Former Executive’s vested and non-vested stock option awards were executed including continued vesting of options during the Consulting Period and the extension of the post-termination exercise period of certain stock option awards. The services performed during the Consulting Period do not qualify as substantive services under ASC 718, Compensation—Stock Compensation; therefore, the continued vesting of these awards represents a modification to the original award. During the year ended December 31, 2024, the Company recorded the incremental stock-based compensation expense of $0.4 million for the modification of the stock options of the Former Executive. This amount is included in general and administrative expenses on the Consolidated Statement of Operations and Comprehensive Loss.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Mar 20, 2025 | |
| 2023 | Mar 14, 2024 | |
| 2022 | Mar 23, 2023 | |
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.