As an incentive to the senior management, other employees, members of the Board and select consultants, Ascendis Pharma A/S has established warrant programs, a RSU program (adopted in December 2021), and a PSU program (adopted in February 2023), which are all classified as equity-settled share-based payment transactions.

RSUs are granted by the Board in accordance with authorizations given to it by the shareholders of Ascendis Pharma A/S to members of senior management, certain other employees and certain members of the Board (“RSU-holders”) in accordance with the Company’s RSU Program adopted in December 2021. Further, RSUs may be granted to select consultants. One RSU represents a right for the RSU-holder to receive one ADS of Ascendis Pharma A/S upon vesting if the vesting conditions are met or waived by the Board at its discretion.

PSUs are granted by the Board in accordance with authorizations given to it by the shareholders of Ascendis Pharma A/S to certain members of senior management (the “PSU-holders”). In addition, PSUs may be granted to other employees, select consultants and members of the Board. PSUs were granted for the first time in March 2023. One PSU represents a right for the PSU-holder to receive one ADS of Ascendis Pharma A/S upon vesting if the vesting conditions are met or waived by the Board at its discretion.

RSUs granted vest over a predetermined service period, and accordingly require RSU-holders to be employed, or provide a specified period of service (“service conditions”). RSUs vest over three years with 1/3 of the RSUs vesting on each anniversary date from the date of grant. RSUs generally cease to vest from the date of termination of employment, or for the Board, termination of board membership, whereas unvested RSUs will lapse.

One PSU represents a right for the PSU-holder to receive one ADS representing ordinary shares of Ascendis Pharma A/S upon vesting. PSUs vest in a manner similar to the service conditions of the RSUs. For the March 2023 PSU grant, in addition to service conditions, vesting is also contingent upon achievement of performance-based targets as determined by the Board, provided that no more than 10% of each tranche may be directly attributable to accomplishment of financial results achieved in the financial year prior to the vesting date. For the March 2024 PSU grant, in addition to service conditions, vesting is also contingent upon achievement of long-term strategic goals as evaluated by the Board no later than two weeks prior to each vesting date. Exceeding performance targets will not result in vesting of more PSUs than 100%, nor will it result in additional grants.

RSUs and PSUs generally cease to vest from the date of termination of employment or board membership, as applicable, whereas unvested RSUs or PSUs will be forfeited. The Board may at its discretion and on an individual basis decide to deviate from the vesting conditions, including deciding to accelerate vesting in the event of termination of employment or board membership, as applicable.

All RSUs and PSUs are settled at the time of vesting by transfer of treasury shares that are ADSs repurchased in the market. In jurisdictions where the Company is required to withhold and settle tax with the tax authority on behalf of the RSU/PSU-holders, the Company withholds the number of RSUs or PSUs that are equal to the estimated monetary value of the RSU/PSU-holders tax obligation from the total number of RSUs or PSUs that otherwise would have been transferred to the RSU/PSU holder upon vesting. These settlements are presented as “Net settlement under stock incentive programs” in the consolidated statement of equity. The Company may at its sole discretion choose to make a cash settlement instead of delivering ADSs.

RSU-holders and PSU-holders are entitled to an adjustment of the number of RSUs or PSUs granted, in the event of certain corporate changes, including among other events, increases or decreases to the share capital at a price below or above market value, the issuance of bonus shares, and changes in the nominal value of each share. In addition, the RSU and PSU Programs contain provisions to accelerate vesting, or compensate with grant of new equity instruments, in the event of restructuring events including change in control events.

The following table specifies the number of RSUs and PSUs granted and outstanding:


	Restricted Stock Units			Performance Stock Units			Total
	(Number)
Outstanding at January 1, 2022		148,148			—			148,148
Transferred during the year		(41,685	)		—			(41,685	)
Forfeited during the year		(23,971	)		—			(23,971	)
Outstanding at December 31, 2022		82,492			—			82,492
Granted during the year (1)		609,860			112,268			722,128
Settled during the year		(18,132	)		—			(18,132	)
Transferred during the year		(20,098	)		—			(20,098	)
Forfeited during the year		(77,497	)		(7,245	)		(84,742	)
Outstanding at December 31, 2023		576,625			105,023			681,648
Granted during the year (1)		717,980			92,655			810,635
Transferred during the year		(212,160	)		(35,007	)		(247,167	)
Forfeited during the year		(88,638	)		(6,004	)		(94,642	)
Outstanding at December 31, 2024		993,807			156,667			1,150,474
Specified by vesting date
2025		384,098			62,304			446,402
2026		384,438			63,478			447,916
2027		225,271			30,885			256,156
Outstanding at December 31, 2024		993,807			156,667			1,150,474

(1)

The fair value of RSUs and PSUs is determined on the basis of the closing ADS price on the grant date. The fair value of one RSU and one PSU at the date of grant was €141.01 and €105.96 for the years ended December 31, 2024 and December 31, 2023, respectively.

Warrants are granted by the Board in accordance with authorizations given to it by the shareholders of Ascendis Pharma A/S to all employees, members of the Board and select consultants (“warrant-holders”). Each warrant carries the right to subscribe for one ordinary share of a nominal value of DKK 1. The exercise price is equal to the fair market value of the Company’s ordinary shares at the time of grant as determined by the Board. Apart from exercise prices, exercise periods and vesting conditions for board members, the programs are similar.

Warrants granted vest over a predetermined service period and require warrant-holders provide a specified period of service. Warrants generally cease to vest from the date of termination. For warrants granted until November 2021, special vesting conditions apply in the event of termination. In relation to board members, the vesting shall cease on the termination date of the board membership regardless of the reason. In relation to consultants, the vesting shall cease on the termination date of the consultancy relationship. The warrant-holder will, however, be entitled to exercise vested warrants in the exercise periods after termination.

In the event that the employment contract is terminated, and the employee has not given the Company good reason to do so, the warrant-holder may keep the right to continued vesting and exercise of warrants as if the employment was still in effect. In such case, any expense not yet recognized for the outstanding warrants is recognized immediately.

Warrants granted from 2012 until November 2021, generally vest over 48 months with 1/48 of the warrants vesting per month from the date of grant. However, effective from January 2015, certain warrants granted to board members vest over 24 months with 1/24 of the warrants vesting per month from the date of grant.

For warrants granted to employees and consultants, 25% of the warrants vest one year after the date of grant, and the remaining 75% of the warrants granted vest over 36 months, with 1/36 of the warrants vesting per month, from one year after the date of grant.

For warrants granted to board members upon the board members accession, 25% of the warrants granted vest one year after the date of grant, and the remaining 75% of the warrants granted shall vest over 36 months, with 1/36 per month from one year after the date of grant. Regarding subsequent grants of warrants to board members, 50% of the warrants vest one year after the date of grant, and the remaining 50% of the warrants vest over 12 months, with 1/12 per month from one year after the date of grant.

Vested warrants may be exercised during certain exercise periods each year, within certain periods after publication of earnings data of a fiscal quarter, interim and annual reports, as per each program’s terms and conditions.

Warrants expire ten years after the grant date. Warrants not exercised by the warrant-holder during the last exercise period shall become null and void without further notice or compensation or payment of any kind to the warrant-holder. If the warrant-holder is a consultant, advisor or board member, the exercise of warrants is conditional upon the warrant-holder’s continued service to the Company at the time the warrants are exercised. If the consultant’s, advisor’s or board member’s relationship with the Company should cease without this being attributable to the warrant-holder’s actions or omissions, the warrant-holder shall be entitled to exercise vested warrants in the pre-defined exercise periods.

Warrant-holders are entitled to an adjustment of the number of warrants issued and/or the exercise price applicable in the event of certain corporate changes.

Events giving rise to an adjustment include, among other things, increases or decreases to the share capital at a price below or above market value, the issuance of bonus shares, changes in the nominal value of each share, and payment of dividends in excess of 10% of the Company’s equity.

The following table specifies the number and weighted average exercise prices of, and movements, in warrants:


	Warrants (number)			Weighted Average Exercise Price (EUR)
Outstanding at January 1, 2022		7,085,073			80.30
Granted during the year		357,092			100.40
Exercised during the year (1)		(214,613	)		21.83
Forfeited during the year		(363,541	)		123.62
Outstanding at December 31, 2022		6,864,011			81.30
Vested at the reporting date		4,972,026			66.34
Granted during the year		395,275			91.07
Exercised during the year (1)		(555,144	)		17.76
Forfeited during the year		(180,358	)		115.79
Outstanding at December 31, 2023		6,523,784			86.38
Vested at the reporting date		5,273,056			80.02
Granted during the year		504,105			122.48
Exercised during the year (1)		(682,048	)		43.35
Forfeited during the year		(141,719	)		107.85
Outstanding at December 31, 2024		6,204,122			93.25
Vested at the reporting date		5,226,643			89.33

(1)

The weighted average share price (listed in $) at the date of exercise was €135.86, €98.10 and €113.60 for the years ended December 31, 2024, 2023 and 2022, respectively.

At December 31, 2024, the Board was authorized to grant up to 2,060,116 additional warrants to employees, board members and select consultants without preemptive subscription rights for the shareholders of Ascendis Pharma A/S.

The following table specifies the weighted average exercise prices and weighted average remaining contractual life for outstanding warrants at December 31, 2024 per grant year.


	Outstanding Warrants (number)		Weighted Average Exercise Price (EUR)		Weighted Average Remaining Life (months)
Granted before January 1, 2022		5,185,556		89.67		57
Granted in 2022		235,408		100.71		90
Granted in 2023		292,648		90.66		101
Granted in 2024		490,510		122.34		114
Outstanding at December 31, 2024		6,204,122		93.25		65

At December 31, 2024, the exercise prices of outstanding warrants under the Company’s warrant programs range from €11.98 to €145.50 depending on the grant dates.

The range of exercise prices for outstanding warrants was €11.98 to €145.50 and €6.48 to €145.50 for the years ended December 31, 2023 and 2022, respectively. The weighted average remaining life for outstanding warrants was 71 months and 77 months, for the years ended December 31, 2023 and 2022, respectively.

Warrant compensation costs are recognized in the consolidated statements of profit or loss over the vesting period of the warrants granted.

Warrant compensation costs are determined with basis in the grant date fair value of the warrants granted and recognized over the vesting period. Fair value of the warrants is calculated at the grant dates by use of the Black-Scholes option-pricing model with the following assumptions: (1) an exercise price equal to the estimated market price of the Company’s shares at the date of grant; (2) an expected lifetime of the warrants determined as a weighted average of the time from grant date to date of becoming exercisable and from grant date to expiry of the warrants; (3) a risk-free interest rate equaling the effective interest rate on a Danish government bond with the same lifetime as the warrants; (4) no payment of dividends; and (5) an expected volatility using the Company’s own share price (from 2021).

The following table summarizes the input to the Black-Scholes option-pricing model and the calculated fair values for warrant grants in 2024, 2023 and 2022:


		2024			2023			2022
Expected volatility		50	%		49-51	%		48-49	%
Risk-free interest rate		1.71 - 2.57	%		2.40 - 2.97	%		(0.08) - 2.54	%
Expected life of warrants (years)		6.0			6.0			6.0
Weighted average exercise price	€	122.48		€	91.07		€	100.40
Fair value of warrants granted in the year	€	50.86 - 70.39		€	37.34 - 52.03		€	36.55 - 60.85