Company: PTHS
Filing Date: 2025-05-27
Form Type: DEFM14C
Source: 0001140361-25-020509
Chunk: 594

Company: Pelthos Therapeutics Inc.
Filing Date: 2025-05-27
Form: DEFM14C
Chunk 594
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 non-statutory stock options, incentive stock options, restricted stock units (RSUs), performance stock units (PSUs) and other cash-based or share-based awards. Awards granted to Parent employees under the incentive plans typically vest 1/8 on the six month anniversary of the date of grant, and 1/48 each month thereafter for forty-two months. Successor's share-based compensation expense is recognized based on the fair value on a straight-line basis over the requisite service periods of the awards, taking into consideration of forfeitures as they occur. Predecessor Plan Certain Predecessor employees participated in Novan's equity-based incentive plans. For the period from January 1, 2023 to September 27, 2023, Novan continued to administer and grant awards under the 2016 Incentive Award Plan, as amended (the “2016 Plan”), Novan’s only active equity incentive plan. The 2016 Plan provides for the grant of the various awards, including incentive stock options, nonstatutory stock options, restricted stock units and other stock awards. Eligible plan participants include employees, directors, and consultants. The terms of the RSUs, including the vesting provisions, are determined by the board of directors. Each RSU represents the contingent right to receive one share of common stock of the Company. The RSUs granted typically cliff vest after a one-year period for grants to directors and a two-year period for grants to employees, provided that the grantee remains a director, employee or consultant of the Company as of such vesting date. Predecessor's share-based compensation expense is recognized based on the fair value on a straight-line basis over the requisite service periods of the awards, net of estimated forfeitures. General The Company measures share-based compensation for all share-based incentive awards at fair value on the grant date. The Black-Scholes option-pricing model is used to estimate the fair value of stock options granted. The model

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assumptions include expected volatility, term, dividends, and the risk-free interest rate. Management looks to historical and implied volatility of the underlying stock to determine the expected volatility. The expected term of an award is based on historical forfeiture experience, exercise activity, and on the terms and conditions of the stock awards. The expected dividend yield is determined to be 0% given that the Parent Company currently does not expect to pay cash dividends or make any other distributions on common stock in the future. The risk-free interest rate is based