Share-Based Compensation |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Compensation | Share-Based Compensation We record share-based compensation expense on a straight-line basis over the corresponding service-based vesting periods within General and administrative expenses in the condensed consolidated statements of operations. We have elected to account for forfeitures as they occur. In the second quarter and first six months of 2024, we did not recognize material share-based compensation expense. Our share-based compensation expense for the second quarter and first six months of 2025 is comprised of the following (in thousands):
RP Holdings Class E Interests In connection with the Internalization, approximately 22.8 million RP Holdings Class E Interests with an aggregate fair value of approximately $755.4 million will be expensed generally over vesting periods ranging from to nine years. In the second quarter and first six months of 2025, we recorded $44.0 million of share-based compensation expense related to the RP Holdings Class E Interests. As of June 30, 2025, we had $711.4 million of unrecognized compensation expense related to 21.5 million RP Holdings Class E Interests that is expected to vest over a weighted average period of 6.0 years. Employee EPAs In accordance with ASC 718, we accounted for the Employee EPAs as liability-classified share-based compensation arrangements. The Employee EPAs are subject to a service-based vesting period, generally four years, commencing at the start of each respective Portfolio (as defined in Note 5–Shareholders’ Equity). As a result of the Internalization, the fair value of approximately $422.5 million of the Employee EPAs is attributable to service rendered pre-Internalization and recognized as a liability within Accrued compensation liabilities on the condensed consolidated balance sheet. The fair value of the remaining Employee EPAs is recognized as share-based compensation expense over the remaining vesting period. We remeasure the fair value of the Employee EPAs at each reporting date with changes in the fair value recognized as part of share-based compensation expense. In the second quarter and first six months of 2025, we recorded $45.7 million of share-based compensation expense related to the Employee EPAs. As of June 30, 2025, we had $103.5 million of unrecognized expense related to the Employee EPAs which is expected to vest over a weighted average period of 2.1 years. 2025 Equity Incentive Plan On May 16, 2025, in connection with the Internalization, the Royalty Pharma plc 2025 Equity Incentive Plan became effective and 2 million Class A ordinary shares were authorized for issuance to employees and consultants. RSUs granted under the plan generally vest over a period of up to four years. In the second quarter and first six months of 2025, we did not recognize material share-based compensation expense related to the RSUs. 2020 Independent Directors Equity Incentive Plan On June 15, 2020, our 2020 Independent Director Equity Incentive Plan was approved and became effective, whereby 800 thousand Class A ordinary shares were authorized for issuance in the form of RSUs to our independent directors. RSUs granted under the plan generally vest over one year. In the second quarter and first six months of 2025 and 2024, we did not recognize material share-based compensation expense related to the RSUs.
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