10. Stock-Based Compensation

Equity Incentive Plans

The Vivani Medical, Inc. 2022 Omnibus Incentive Plan (the “2022 Plan”) became effective on August 30, 2022. Under the 2022 Plan, 10,033,333 shares were authorized for issuance at its effective date. The maximum number of shares with respect to which stock awards could be granted is offset and reduced by stock awards previously granted under the Plan. As of December 31, 2025 503,839 shares of common stock were available for future issuance under the 2022 Plan pursuant to stock awards that had not previously been granted.

For stock option grants, the option price is determined by the Board of Directors but cannot be less than the fair value of the shares at the grant date. Generally, the options vest ratably over four years and expire ten years from the grant date. The 2022 plan provides for accelerated vesting if there is a change of control, as defined in the 2022 Plan.

Stock Options

The estimated aggregate intrinsic value of stock options exercisable as of December 31, 2025 was $0.4 million. 

Restricted Stock Units (RSUs)

During the years ended December 31, 2025 and 2024, the Company granted 292,500 and 292,500 RSUs, respectively, subject to market conditions which required our stock price to exceed $3.15 per share for three consecutive days in the four years from grant date for the RSUs to vest. Upon achievement of the market condition, one-third of the award will vest, and thereafter, one-third of the award will vest on the first and second anniversary of the achievement date, subject to the recipient’s continued service through each applicable vesting date.

Stock-Based Compensation Expense

As of December 31, 2025, there was $2.0 million of total unrecognized stock-based compensation expense related to outstanding stock options that will be recognized over a weighted average period of 1.5 years. As of December 31, 2025, there was $0.2 million of total unrecognized compensation expense related to outstanding RSUs that will be recognized over a weighted average period of 1.4 years.

Fair Value Assumptions

Stock Options (Service Vesting)

The steps involved in utilizing the Monte Carlo simulation in order to value the performance-based RSUs included the following:

1. Projection of the Company’s Common Stock Value. The performance-based RSUs were measured based on the Company’s underlying common stock value over the performance period (four years following the Valuation Date). 

Additionally, the Company considered the two-year vesting period following achievement of the performance condition. Accordingly, the Company’s common stock value was simulated over a six-year period to capture iterations through which the performance condition was satisfied on the Performance Period End Date. The analysis involved projecting the Company’s common stock value starting with its current common stock value. The forecasted stock price was based on the Geometric Brownian motion (“GBM”), and the Monte Carlo simulation generated random variables using the GBM to forecast our stock price on a daily basis over the specified period assuming 252 trading days per year. The Monte Carlo simulation for the PSO utilized the following assumptions:

2. Consideration of the Performance-Vesting Schedule. As previously discussed, the Company's publicly traded common share price must equal or exceed the Stock Price Hurdle amount of $3.15 over a three-consecutive-trading-day rolling period on or before the Performance Period End Date. If such performance condition is achieved, one-third of the award shall vest on the Hurdle Achievement Date, one-third of the award shall vest one year following the Hurdle Achievement Date, and one-third of the award shall vest two years following the Hurdle Achievement Date.

3. Performance-Based RSU Value Conclusion.  The proceeds from the vesting of common shares were then discounted to the Valuation Date using the applicable risk-free rate, which is consistent with the assumption utilized to project stock prices in the Monte Carlo simulation. For the purposes of calculating the weighted service period associated with the Subject Interest, a separate simulation was performed using the Company’s cost of equity as the drift rate. The service period was then determined based on the median Hurdle Achievement Date.