Twist Bioscience Corporation, a publicly traded biotechnology company recognized for its combination of growth-oriented innovation and value-driven operations, has announced the issuance of a significant number of equity awards to newly hired employees, in compliance with the listing requirements of the Nasdaq Stock Market. The announcement underscores the company’s ongoing efforts to attract and retain top talent in a competitive biotechnology labor market, while adhering to established corporate governance and regulatory standards.
According to the company’s disclosure, a total of 114,869 equity awards will be granted to 52 recently hired individuals as a material inducement to their acceptance of employment with Twist Bioscience. These awards consist of 107,742 restricted stock units (RSUs) and up to 7,127 performance stock units (PSUs). All awards are being issued under Twist’s Amended and Restated Inducement Equity Incentive Plan, along with the related form of restricted stock unit award agreement, in accordance with Nasdaq Listing Rule 5635(c)(4).
Purpose and Regulatory Framework of the Inducement Awards
Nasdaq Listing Rule 5635(c)(4) allows publicly listed companies to grant equity awards to newly hired employees without obtaining prior shareholder approval, provided that the awards are a material inducement to employment and are made under a dedicated inducement plan. Twist Bioscience’s inducement equity plan has been structured specifically to comply with this rule and is used exclusively for individuals who were not previously employed by the company or who are returning following a bona fide period of non-employment.
By using this inducement plan, Twist ensures that these equity grants are clearly distinguished from awards made under its broader equity compensation programs, which typically require shareholder approval. This approach provides the company with flexibility in recruiting experienced professionals while maintaining transparency with investors and regulators.
The company emphasized that each of the equity awards granted under this inducement plan is directly tied to the recipient’s decision to join Twist Bioscience. In other words, the awards were considered a material component of the compensation packages offered to these individuals and played a meaningful role in their acceptance of employment.
Breakdown of Restricted Stock Units (RSUs)
The majority of the equity awards—107,742 RSUs—are structured to vest over a multi-year period, reinforcing long-term employee retention and alignment with the company’s strategic objectives. RSUs are a common form of equity compensation in which employees receive shares of company stock upon satisfaction of certain vesting conditions, typically tied to continued employment.
Under Twist’s inducement plan, the RSUs are divided into portions that vest according to two different schedules, both spanning 48 months from the applicable vesting commencement date (referred to as the “Vesting Commencement Date”).
For one portion of the RSUs, the vesting schedule follows a traditional “cliff-plus-graded” structure:
- 25% of the RSUs vest on the one-year anniversary of the Vesting Commencement Date.
- The remaining RSUs vest in equal installments of 1/16 on each quarterly anniversary of the Vesting Commencement Date thereafter.
- If a quarterly anniversary does not fall on a calendar date in a given month, vesting occurs on the last day of that month.
- Vesting is contingent upon the employee’s continued service with the company through each applicable vesting date.
This structure ensures that employees must remain with Twist for at least one year before receiving any vested equity, thereby encouraging early retention, while the quarterly vesting thereafter provides ongoing incentives for longer-term employment.
Another portion of the RSUs granted under the inducement plan follows a fully graded vesting approach:
- 1/16 of the RSUs vest on each quarterly anniversary of the Vesting Commencement Date over the full 48-month period.
- As with the other RSU grants, vesting is subject to the employee’s continued service through each vesting date.
This alternative structure allows employees to begin vesting earlier, albeit in smaller increments, which can be particularly attractive in competitive hiring situations where companies seek to balance immediate incentives with long-term commitment.
Performance Stock Units (PSUs) and Incentive Alignment
In addition to RSUs, Twist Bioscience will grant up to 7,127 performance stock units (PSUs) to certain newly hired employees. Unlike RSUs, which vest based primarily on time and continued service, PSUs are tied to the achievement of specific performance goals.
The performance metrics applicable to these PSUs will be established by the Compensation Committee of the Company’s Board of Directors. These metrics are designed to align employee rewards with the company’s operational, financial, or strategic performance objectives, although the specific criteria have not been publicly disclosed.
The PSUs are structured to be earned based on performance outcomes achieved no later than the end of the company’s 2027 fiscal year. Depending on the level of performance attained, the PSUs may be earned at a rate ranging from 50% to 150% of the target award. This means that employees could receive fewer shares than the target amount if performance falls short of expectations, or more shares if performance significantly exceeds the established goals.
As with the RSUs, the vesting and earning of PSUs are subject to the employee’s continued service with Twist Bioscience through the applicable vesting dates. This dual requirement—performance achievement and ongoing employment—further strengthens the alignment between employee incentives and the company’s long-term success.
Strategic Implications for Twist Bioscience
The announcement of these inducement equity awards highlights Twist Bioscience’s strategic focus on building and retaining a skilled workforce capable of supporting its growth initiatives. As a mid-cap biotechnology company operating in a rapidly evolving sector, Twist faces intense competition for talent, particularly in areas such as synthetic biology, DNA synthesis, research and development, and commercialization.
Equity-based compensation plays a critical role in attracting experienced professionals who are willing to commit to the company’s long-term vision. By offering a mix of time-based RSUs and performance-based PSUs, Twist aims to balance stability, motivation, and accountability across its workforce.
From an investor perspective, inducement awards granted under Nasdaq Listing Rule 5635(c)(4) are generally viewed as a standard and acceptable practice, provided they are used judiciously and transparently. Twist’s disclosure of the number of awards, the vesting schedules, and the performance parameters reflects its commitment to clear communication with shareholders.
Governance and Compliance Considerations
Twist Bioscience’s inducement equity awards are governed by its Amended and Restated Inducement Equity Incentive Plan, which was designed specifically to comply with Nasdaq requirements. By limiting the use of this plan exclusively to new hires and individuals returning after a bona fide period of non-employment, the company ensures that it does not circumvent shareholder approval requirements for broader equity compensation programs.
The involvement of the Compensation Committee in setting performance metrics for PSUs further reinforces sound corporate governance practices. Compensation committees are typically composed of independent directors and are tasked with overseeing executive and employee compensation to ensure alignment with shareholder interests.
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