5E Advanced Materials, Inc.

2022 Equity Compensation Plan

In March 2022, the Board adopted the 5E Advanced Materials, Inc. 2022 Equity Compensation Plan (the “5E Incentive Plan”), which was approved by our shareholders in April 2023, which reserved approximately 109 thousand shares of Common Stock for issuance under the 5E Incentive Plan. In October 2024, the Board adopted an amendment to the 5E Incentive Plan, which was approved by our shareholders in January 2025, which reserved approximately 217 thousand additional shares for issuance under the 5E Incentive Plan. Finally, in January 2025, the Board adopted an Amended and Restated 5E Incentive Plan (the “Restated Incentive Plan”), which was approved by our shareholders in March 2025, which reserved approximately 609 thousand additional shares for issuance under the Restated Incentive Plan, for an aggregate of approximately 935 thousand shares reserved for issuance under the Restated Incentive Plan. The Restated Incentive Plan authorizes the grant of stock options, restricted share units (“RSUs”), performance share units (“PSUs”), performance cash units and other equity-based awards. The Company’s Compensation Committee determines the exercise price for stock options and other equity-based awards, which may not be less than the fair market value of the Company’s common stock on the date of grant. As of June 30, 2025, approximately 198 thousand shares remain available for issuance under the Restated Incentive Plan. It is the Company’s policy to issue new shares of Common Stock to satisfy stock option exercises. Approval for awards issued to directors under the Restated Incentive Plan during the year ended June 30, 2025 was obtained under ASX Listing Rule 10.14.

Share-Based Compensation Expense

Share-based compensation expense is included in general and administrative expense and represents costs associated with RSUs, PSUs and options granted to directors, employees and consultants of the Company. Share-based compensation expense consisted of the following for the periods presented.

As of June 30, 2025, the Company had approximately $2.1 million of total unrecognized stock-based compensation expense related to unvested stock-based compensation awards that is expected to be recognized over a weighted average period of approximately 1.8 years.

Stock Options

All stock options outstanding prior to September 30, 2022 were granted under the predecessor parent company's employee share option plan (the “ABR Employee Share Option Plan”). New option grants are made under the Restated Incentive Plan and vest ratably over the vesting period, which is generally three years or less. The fair value of stock option awards granted to directors, officers, employees and/or consultants is estimated on the grant date using the Black-Scholes option valuation model. Volatility is determined using the Company's historical stock price information. The significant assumptions used to estimate the fair value of stock option awards granted during the years ended June 30, 2025 and 2024, respectively, using the Black-Scholes option valuation model are as follows.

The following table summarizes stock option activity for each of the periods presented.

The weighted average remaining life of vested options as of June 30, 2025 and 2024, was approximately 5.0 years and 1.4 years, respectively. As of June 30, 2025 and 2024, the maximum expiration date for vested options was approximately 7.8 and 8.8 years, respectively.

As of June 30, 2025, there was approximately $1.8 million of unrecognized compensation cost related to 619 thousand unvested stock options. This cost is expected to be recognized over a weighted-average remaining period of approximately 1.9 years. As of June 30, 2025 and 2024, the maximum expiration date for unvested options was approximately 3.9 and 3.1 years, respectively.

During the year ended June 30, 2024, approximately 12 thousand options with a remaining term of approximately 1.9 years and an exercise price of $589.26, granted toone grantee, were cancelled and concurrently replaced with approximately 2 thousand RSUs that vest overtwo years. The modification did not result in any incremental compensation expense.

The following table summarizes the activity for unvested options for each of the periods presented.

As of June 30, 2025 and 2024, all outstanding stock options and vested stock options hadno intrinsic value as the exercise prices of the respective options exceeded the Company's stock price on such dates. There wereno options exercised during the years ended June 30, 2025 and 2024.

Full Value Awards (Restricted Share Units and Performance Share Units)

The fair value of service-based and performance-based restricted stock units granted to directors, officers, employees and/or consultants is determined on the grant date by reference to the Company’s stock price on the grant date.

The following table summarizes RSU and PSU activity for each of the periods presented.

(1)

During the year ended June 30, 2024, approximately 5.3 thousand PSUs were granted, which based on the achievement of certain financial and operational targets, could vest within a range of 0% to 100%. The targets are 1) construction of the proposed commercial-scale facility commencing prior to September 1, 2026; 2) the budget for the proposed commercial-scale facility within a range of $342-418 million; and 3) an approved final investment decision in the proposed commercial-scale facility at a modeled internal rate of return of 20%. The determination of the percentage of shares that ultimately vest will be made at the three-year anniversary of the grant date based upon achievement of the performance targets over the period.

(1)

During the year ended June 30, 2025, approximately 19.8 thousand PSUs were granted, which based on the achievement of certain financial and operational targets, could vest within a range of 0% to 100%. The targets are 1) construction of the proposed commercial-scale facility commencing prior to September 1, 2026; 2) an approved final investment decision in the proposed commercial-scale facility at a modeled internal rate of return of 20%, 3) achievement of an enterprise value in excess of $200 million, and 4) achievement of an enterprise value in excess of $300 million. The determination of the percentage of shares that ultimately vest will be made at the three-year anniversary of the grant date based upon achievement of the performance targets over the period.