Form 4: Ginkgo Bioworks Executive Reshma Shetty Granted 10 Million Stock Options with Performance-Based Vesting

Reshma Shetty, a Director, Officer, and 10% Owner of Ginkgo Bioworks Holdings, was granted 10 million stock options tied to performance-based vesting criteria.

Summary

• Reshma Shetty, a Director, Officer, and 10% Owner of Ginkgo Bioworks Holdings, was granted 10 million stock options on April 25, 2024.
• These options are divided into two tranches of 5,000,000 each, one held directly and one held indirectly through a spouse.
• The exercise price for each option is $2.50.
• The options expire on April 25, 2034.
• The options are subject to both time-based and performance-based vesting criteria, referred to as 'Founder Options'.
• The performance-based vesting is tied to achieving specific stock price hurdles within a five-year period.
• 10% of the Founder Options vest if the 90-calendar-day average stock price reaches $5.00.
• Another 10% vest if the 90-calendar-day average stock price reaches $7.50.
• 20% vest if the 90-calendar-day average stock price reaches $10.00.
• The remaining 60% vest if the 90-calendar-day average stock price reaches $12.50.
• If any of these performance-based criteria are met during the five-year period, the awards will vest on the five-year anniversary of the grant date, contingent on continued employment with Ginkgo.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive as it reflects confidence in the company's future growth potential, as indicated by the ambitious stock price targets tied to the vesting of the options. However, the high targets also introduce an element of risk.

Positives

• The performance-based vesting aligns executive compensation with shareholder value creation.
• The long-term vesting schedule encourages continued commitment to the company's success.
• The structure of the options incentivizes significant stock price appreciation.

Negatives

• The high stock price targets for vesting may be difficult to achieve.
• A significant portion of the options (60%) is contingent on reaching a $12.50 stock price, which may be perceived as overly ambitious.
• The vesting is contingent on continued employment, which could be a risk if the executive leaves the company.

Risks

• Failure to meet the stock price targets would result in the forfeiture of unvested options.
• Changes in market conditions or company performance could impact the likelihood of achieving the stock price targets.
• Executive departure could lead to the loss of unvested options, potentially impacting company leadership.

Future Outlook

The vesting of these options is contingent on future stock price performance and continued employment, indicating an expectation of growth and stability within Ginkgo Bioworks.

Industry Context

Stock options are a common form of executive compensation in the biotechnology industry, often used to align management interests with shareholder value and incentivize long-term growth. The performance-based vesting adds an extra layer of accountability and focus on achieving specific milestones.

Comparison to Industry Standards

• Performance-based stock options are a common practice in the biotech industry, used by companies like Amgen, Biogen, and Regeneron to incentivize executives.
• The specific stock price targets and vesting schedules vary widely depending on the company's stage of development and growth expectations.
• The $2.50 exercise price is relevant to the current trading price of Ginkgo Bioworks stock, and the $12.50 target represents a significant premium, indicating high growth expectations.

Stakeholder Impact

• Shareholders may view the performance-based options positively, as they align executive interests with stock price appreciation.
• Employees may be motivated by the potential for company growth and the achievement of stock price targets.
• The options do not directly impact customers, suppliers, or creditors.

Key Dates