Verastem, Inc. Stock Compensation Disclosure

11. Stock-based compensation

Stock-based compensation expense as reflected in the Company’s consolidated statements of operations and comprehensive loss was as follows (in thousands):

​

All of the $9.4 million, $7.3 million, and $5.9 million of stock-based compensation expense recorded during the years ended December 31, 2025, 2024 and 2023, respectively, was recorded to additional paid-in capital.

The Company has awards outstanding under two equity compensation plans, the Amended and Restated 2021 Equity Incentive Plan (the “2021 Plan”), and the Amended and Restated 2012 Incentive Plan (the “2012 Plan”), as well as the inducement award program. Terms of stock award agreements, including vesting requirements, are determined by the board of directors, subject to the provisions of the individual plans.

2021 Plan

During 2021, the Company’s stockholders approved the 2021 Equity Incentive Plan (the “Original 2021 Plan”). Upon effectiveness of the Original 2021 Plan, the Company ceased making awards under the 2012 Plan. At the Company’s 2024 Annual General Meeting of Shareholders in May 2024, the Company’s shareholders approved the Amended 2021 Plan. The Amended 2021 Plan together with the Original 2021 Plan is referred to as the 2021 Plan. The 2021 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, RSUs and other stock-based awards. The number of shares of common stock initially reserved for issuance under the Original 2021 Plan was (i) 1,991,666 plus (ii) the number of shares of the Company’s common stock underlying awards under the 2012 Plan and the 2010 Equity Incentive Plan (the “2010 Plan”) that expire, terminate or are surrendered without delivery of shares, are forfeited to or repurchased by the Company, or otherwise become available again for grant under the terms of the 2012 Plan or the 2010 Plan, as applicable. The Amended 2021 Plan increased the maximum number of shares available for issuance by 3,200,000 shares.

As of December 31, 2025, under the 2021 Plan, the Company has granted stock options for 2,590,423 shares of common stock, of which 418,541 have been forfeited and 34,402 have been exercised, and granted RSUs for 2,268,761 shares of common stock, of which 105,361 have been forfeited and 852,679 have vested. As of December 31, 2025, 1,567,799 shares remain available for future issuance under the 2021 Plan. The exercise price of each option has been equal to the closing price of a share of the Company’s common stock on the grant date.

2012 Plan

The 2012 Plan became effective immediately upon the closing of the Company’s initial public offering in February 2012. Upon effectiveness of the 2012 Plan, the Company ceased making awards under the 2010 Plan. The 2012 Plan initially allowed the Company to grant awards for up to 285,714 shares of common stock, plus the number of shares of common stock available for grant under the 2010 Plan as of the effectiveness of the 2012 Plan (which was an additional 2,508 shares), plus that number of shares of common stock related to awards outstanding under the 2010 Plan which terminate by expiration, forfeiture, cancellation or otherwise. The 2012 Plan included an “evergreen provision” that allowed for an annual increase in the number of shares of common stock available for issuance under the 2012 Plan. The annual increase was added on the first day of each year from 2013 through 2018 and was equal to the lesser of 107,412 shares of common stock and 4.0% of the number of shares of common stock outstanding, or a lesser amount as determined by the board of directors. On each of January 1, 2018, January 1, 2017 and January 1, 2016, the number of shares available for issuance under the 2012 Plan increased by 107,412 under this provision. On December 18, 2018, the shareholders of the Company approved the Amended and Restated 2012 Incentive Plan which increased the maximum number of shares available for issuance under the 2012 Plan to 1,385,702 and eliminated the evergreen provision. On May 19, 2020, the shareholders of the Company approved the Amended and Restated 2012 Incentive Plan which increased the maximum number of shares available for issuance by 1,083,333 shares.

Awards under the 2012 Plan may include the following award types: incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, RSUs, other stock-based or cash-based awards and any combination of the foregoing. As of December 31, 2025, under the 2012 Plan, the Company has granted stock options for 1,841,188 shares of common stock, of which 1,201,898 have been forfeited, 238,203 have expired, and 191,342 have been exercised, and granted RSUs for 556,432 shares of common stock, of which 87,547 have been forfeited and 468,885 have vested. The exercise price of each stock option has been equal to the closing price of a share of the Company’s common stock on the grant date. Upon adoption of the Original 2021 Plan, the Company ceased issuing awards from the 2012 Plan.

Inducement Award Program

In December 2014, the Company established an inducement award program (in accordance with Nasdaq Listing Rule 5635(c)(4)) under which it may grant non-statutory stock options to purchase, and RSUs in respect of up to an aggregate of 62,500 shares of common stock to new or prospective employees as inducement to enter into employment with the Company. In December 2016, the Board of Directors authorized and reserved 48,333 additional shares of common stock under this program. In December 2017, the Board of Directors authorized and reserved 208,333 additional shares of common stock under this program. In June and December 2018, the Board of Directors authorized and reserved 141,666 and 104,166 additional shares of common stock under this program, respectively. In February 2020, the Board of Directors authorized the reduction of 169,447 shares available for issuance under this program. In September 2023, the Board of Directors authorized and reserved 500,000 additional shares of common stock under this program. In September 2025, the Board of Directors authorized and reserved 400,000 additional shares of common stock under this program. The program is governed by the terms of the 2021 Plan, but shares issued pursuant to the program are not issued under the 2021 Plan. As of December 31, 2025, the Company had granted options for 1,459,605 shares of common stock under the program, of which 725,488 have been forfeited, 1,997 have expired and 48,913 have been exercised, and granted RSUs for 164,137 shares, of which 45,658 have been forfeited and 115,302 have vested. As of December 31, 2025, 508,330 shares remain available for future issuance.

​

Stock Options

​

Most options granted by the Company vest twenty-five percent (25%) one year from vesting start date and six and a quarter percent (6.25%) for each successive three-month period, thereafter (subject to acceleration of vesting in the event of certain change of control transactions) subject to the employee’s continued employment with, or service to, the Company on such vesting date and are exercisable for a period of ten years from the date of grant.

Option Exchange Program

On January 17, 2024, the Company’s stockholders, upon recommendation of the board of directors, approved a one-time stock option exchange program (the “Option Exchange Program”) for certain employees, executive officers and non-employee directors of the Company who held certain underwater options and remained employed or otherwise engaged by the Company through the completion of the Exchange Offer. The Company’s offer to participate in the Option Exchange Program commenced on February 8, 2024, and expired on March 8, 2024 (the “Exchange Offer”). Pursuant to the Exchange Offer, 42 eligible holders elected to exchange, and the Company accepted for cancellation, eligible options to purchase an aggregate of 603,330 shares of the Company’s common stock (the “Exchanged Options”). On March 11, 2024, promptly following the expiration of the Exchange Offer, the Company granted new options to purchase 603,330 shares of common stock (the “New Options”), pursuant to the terms of the Exchange Offer and the Amended 2021 Plan. The exercise price of the New Options granted was $11.44 per share, which was the closing price of the Company’s common stock on the Nasdaq Capital Market on the grant date of the New Options.

The exchange of stock options was treated as a modification for accounting purposes. As a result of the Option Exchange Program, the Company will recognize incremental stock-based compensation expense of $1.7 million over the requisite service period of the New Options, which is two or four years depending on whether the Exchanged Options were vested at the time of exchange. Since the Exchanged Options were not at-the-money on the modification date, the Company was precluded from utilizing the simplified method as described in SEC Staff Accounting Bulletin Topic 14.D.2 to calculate the expected term as a key assumption in the Black-Scholes pricing model. Therefore, the Company utilized the binomial lattice model to calculate the fair value of the Exchanged Options immediately prior to the exchange. The Company utilized the Black-Scholes option-pricing model to calculate the fair value of the New Options on the modification date. The Company is recognizing the remaining unamortized stock compensation expense for the Exchanged Options on the modification date over the original requisite service period of the Exchanged Options. At December 31, 2025, there was no unrecognized compensation cost related to Exchanged Options.

​

A summary of the Company’s stock option activity and related information for the year ended December 31, 2025, is as follows:

​

​

The fair value of each stock option was estimated using a Black-Scholes option-pricing model with the following weighted-average assumptions:

​

​

The Company recorded stock-based compensation expense associated with employee and non-employee stock options of $4.5 million, $4.6 million, and $4.2 million, for the years ended December 31, 2025, 2024, and 2023, respectively. The weighted-average grant date fair value of stock options granted in the years ended December 31, 2025, 2024, and 2023 was $5.48, $3.35 and $6.16 per stock option, respectively. The fair value of stock options that vested during the years ended December 31, 2025, 2024, and 2023 was $3.7 million, $3.5 million, and $3.1 million, respectively. The aggregate intrinsic value of options exercised (i.e., the difference between the market price at exercise and the price paid by employees to exercise the option) during the years ended December 31, 2025, 2024, and 2023 was $0.1 million, $0.1 million, and $0.0 million, respectively.

At December 31, 2025 there was $5.4 million of total unrecognized compensation cost related to unvested stock options and the Company expects to recognize this cost over a remaining weighted-average period of 2.2 years.

Restricted Stock Units (“RSUs”)

Each RSU entitles the holder to receive one share of the Company’s common stock when the RSU vests. The RSUs generally vest (i) twenty-five percent (25%) one year from vesting start date and six and a quarter percent (6.25%) for each successive three-month period, thereafter, (ii) two tranches for 50% of the award with the second and final vesting date on the one year anniversary of the vesting commencement date, (iii) 100 percent within two years of the vesting commencement date and (iv) 33.3% of the RSUs on the first three anniversaries of the grant date. The RSUs are subject to acceleration of vesting in the event of certain change of control transactions and subject to the employee’s continued employment with, or service to, the Company on such vesting date. Compensation expense is recognized on a straight-line basis.

A summary of RSU activity during the year ended December 31, 2025, is as follows:

​

​

The Company recorded stock-based compensation expense associated with employee and non-employee RSUs of $4.9 million, $2.7 million, and $1.6 million, for the years ended December 31, 2025, 2024, and 2023, respectively. The total fair value of restricted stock units that vested during the years ended December 31, 2025, 2024, and 2023 was approximately $4.4 million, $1.7 million, and $1.7 million, respectively.

At December 31, 2025, there was $4.6 million of total unrecognized compensation cost related to unvested RSUs and the Company expects to recognize this cost over a remaining weighted-average period of 1.9 years.

Employee stock purchase plan

At the special meeting of stockholders, held on December 18, 2018, the stockholders approved the 2018 Employee Stock Purchase Plan (“2018 ESPP”). On June 21, 2019, the board of directors of the Company amended and restated the 2018 ESPP, to account for certain non-material changes to the plan’s administration (the “Amended and Restated 2018 ESPP”). The Amended and Restated 2018 ESPP provides eligible employees with the opportunity, through regular payroll deductions, to purchase shares of the Company’s common stock at 85% of the lesser of the fair market value of the common stock (a) on the date the option is granted, which is the first day of the purchase period, and (b) on the exercise date, which is the last business day of the purchase period. The Amended and Restated 2018 ESPP generally allows for two six-month purchase periods per year beginning in January and July, or such other periods as determined by the compensation committee of the Company’s board of directors. The Company has reserved 166,666 shares of common stock for the administration of the Amended and Restated 2018 ESPP. The fair value of shares expected to be purchased under the Amended and Restated 2018 ESPP was calculated using the Black-Scholes model with the following weighted-average assumptions:

​

​

For the years ended December 31, 2025, 2024, and 2023, the Company has recognized less than $0.1 million of stock-based compensation expense each year under the Amended and Restated 2018 ESPP. During the years ended December 31, 2025, 2024, and 2023, the Company issued 16,341 shares, 15,231 shares and 14,270 shares, respectively, of common stock for proceeds of $0.1 million in each year under the Amended and Restated 2018 ESPP.