Equity Plans

6 Months Ended

Jun. 30, 2022

12. EQUITY PLANS

2013 Equity Incentive Plan

In 2013, the Company adopted the 2013 Plan which provides for the grant of qualified incentive stock options (“ISO”) and nonqualified stock options (“NSO”), restricted stock, restricted stock units (“RSU”) or other awards to the Company’s employees, officers, directors, advisors, and outside consultants. After the Closing Date and consummation of the Business Combination effective March 2, 2022, no additional awards are being made pursuant to the 2013 Plan. Awards outstanding under the 2013 Plan will continue to be governed by such plan; however, the Company will not grant any further awards under the 2013 Plan.

2022 Equity Incentive Plan

In connection with the Business Combination (Note 3), the shareholders approved the Rigetti Computing, Inc. 2022 Equity Incentive Plan (the “2022 Plan”) in February, 2022, which became effective immediately upon the Closing Date. The 2022 Plan provides for the grant of ISOs, NSOs, stock appreciation rights, restricted stock awards (“RSA”), restricted stock unit awards, performance awards and other forms of awards to employees, directors and consultants, including employees and consultants of Company’s affiliates. The aggregate number of shares of common stock reserved for future issuance under the 2022 Plan is 18,332,215 shares. The number of shares reserved for issuance under the 2022 Plan will automatically increase on January 1st of each year for a period of nine years commencing on January 1, 2023 and ending on (and including) January 1, 2032, in an amount equal to 5% of the common stock of all classes outstanding on December 31 of the preceding year; provided, however, that the board of directors of the Company may act prior to January 1st of a given year to provide that the increase for such year will be a lesser number of shares of Common Stock.

Stock Options

A summary of activity related to stock option is summarized as below (in thousands, except for share and per share data):


	Number of Options			Weighted-Average Exercise Price		Weighted-average contractual life (in years)		Aggregate Intrinsic value
Outstanding – December 31, 2021		11,468,275		$	0.36		8.1	$	46,839
Granted		—
Exercised		(1,353,145	)	$	0.27				7,104
Forfeited and expired		(632,419	)	$	0.27

Outstanding - June 30, 2022		9,482,711		$	0.35		7.7	$	31,454

Exercisable - June 30, 2022		5,874,426		$	0.39		7.7	$	19,258

The weighted-average grant date fair value of options granted during the six months ended June 30, 2021 was $0.09 per share. No new option grants were issued during the six months ended June 30, 2022. The total intrinsic value of options exercised during the six months ended June 30, 2022 and June 30, 2021 is $7.1 million and $0.5 million, respectively.

As of June 30, 2022, there was $1.9 million of unrecognized compensation cost related to

non-vested

stock options granted under the Plan, which is expected to be recognized over a weighted-average period of approximately 1.7 years.

Restricted Stock Units

A summary of activity related to RSUs is summarized as below:


	RSUs			Weighted Average Fair Value Per Share
Balance at December 31, 2021		5,388,455
Granted		9,885,413		$	4.89
Vested		(2,630,699	)
Forfeited		(792,643	)

Balance at June 30, 2022		11,850,526

On March 2, 2022, the performance condition of all outstanding RSUs was met due to the closing of the Business Combination. As a result, the Company recorded a cumulative

catch-up

compensation expense for the vesting period that has been satisfied as of March 2, 2022 and continues amortizing compensation expenses for unvested RSUs over their remaining vesting period.

Total fair value of the RSUs vested during the six months ending June 30, 2022 and 2021 was $12.9 million and $0 respectively.

Stock-based compensation expense related to RSUs granted to employees was $10.7 million and $21.9 million for the three and six months ended June 30, 2022, respectively. Stock-based compensation expense was $0 for the three and six months ended June 30, 2021. As of June 30, 2022, the unrecognized compensation expense related to unvested RSUs was approximately $49.1 million which is expected to be recognized over a weighted- average period of approximately 2.24 years.

Restricted Stock Awards

During the first six months ended June 30, 2022, 120,000 restricted stock awards (“RSAs”) were issued and vested immediately on the grant date as part of transaction bonuses in recognition of efforts in connection with the Business Combination. The total compensation expense related to RSAs was $623 thousand for the three and six months ended June 30, 2022, respectively. The compensation expense was $0 for the three and six months ended June 30, 2021.

The table below summarizes the total stock compensation expenses for the three and six months ended June 30, 2022 and 2021 (in thousands):


	3 Months Ended		6 Months Ended
	June 30,		June 30,
	2022		2022
Research and development	$	2,209	$	4,598
Sales and marketing expenses		256		697
General and administrative expenses		8,576		17,227

Total Stock Compensation Expenses	$	11,041	$	22,522


	3 Months Ended		6 Months Ended
	June 30,		June 30,
	2021		2021
Research and development	$	299	$	638
Sales and marketing expenses		29		61
General and administrative expenses		193		419

Total Stock Compensation Expenses	$	521	$	1,118

Fair Value of Common Stock and Options

The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model that uses the assumptions noted in the table below. Expected volatility for the Company’s common stock was determined based on an average of the historical volatility of a peer group of similar public companies. The expected term of options granted was calculated using the simplified method, which represents the average of the contractual term of the option and the weighted-average vesting period of the option. The Company uses the simplified method because it does not have sufficient historical option exercise data to provide a reasonable basis upon which to estimate expected term. The assumed dividend yield is based upon the Company’s expectation of not paying dividends in the foreseeable future. The risk-free rate is based upon the U.S. Treasury yield curve in effect at the time of grant for the period equivalent to the expected life of the option.

In determining the exercise prices for options granted, the Company’s board of directors has considered the fair value of the common stock as of the grant date. The fair value of the common stock has been determined by the board of directors at each award grant date based upon a variety of factors, including the results obtained from an independent third-party valuation, the Company’s financial position and historical financial performance, the status of technological developments within the Company’s products, the composition and ability of the current engineering and management team, an evaluation or benchmark of the Company’s competition, the current business climate in the marketplace, the illiquid nature of the common stock,

arm’s-length

sales of the Company’s capital stock (including redeemable convertible preferred stock), the effect of the rights and preferences of the preferred shareholders, and the prospects of a liquidity event, among others.

The Company did not grant any stock option awards during the six months ended June 30, 2022. The range of assumptions used in the Black-Scholes option-pricing model for options issued to employees during the six months ended June 30, 2021, are as follows:


	June 30,
	2021
Expected volatility		46.8	%
Weighted-average risk-free interest rate		1.07	%
Expected dividend yield		0	%
Expected term (in years)		6.1 years
Exercise price	$	0.21