5E Advanced Materials, Inc.

2022 Equity Compensation Plan

The Company maintains the Amended and Restated 5E Advanced Materials, Inc. 2022 Equity Compensation Plan (the “Incentive Plan”), which has been amended from time to time with Board and stockholder approval. As of June 30, 2026, the aggregate number of shares of Common Stock reserved for issuance under the Incentive Plan was approximately 1.4 million shares. As of June 30, 2026, approximately 390 thousand shares remained available for future grants.

The Incentive Plan authorizes the grant of stock options, restricted share units (“RSUs”), performance share units (“PSUs”), performance cash units and other equity-based awards to employees, directors and consultants. The Compensation Committee of the Board administers the Incentive Plan and determines the terms and conditions of each award, including exercise prices for stock options, which may not be less than the fair market value of the Company’s common stock on the date of grant. The Company issues new shares of Common Stock to satisfy stock option exercises.

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, 2026, the Company had approximately $1.3 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 0.9 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 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 a Black-Scholes option valuation model. Volatility is determined using the Company’s historical stock price information. No stock option awards were granted during the year ended June 30, 2026.

The significant assumptions used to estimate the fair value of stock option awards granted during the year ended 2025, using a 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, 2026 and 2025, was approximately 3.7 years and 5.0 years, respectively. As of June 30, 2026 and 2025, the maximum expiration date for vested options was approximately 6.8 and 7.8 years, respectively.

As of June 30, 2026, there was approximately $0.9 million of unrecognized compensation cost related to 472 thousand unvested stock options. This cost is expected to be recognized over a weighted-average remaining period of approximately 0.9 years. As of June 30, 2026 and 2025, the maximum expiration date for unvested options was approximately 2.9 and 3.9 years, respectively.

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

As of June 30, 2026 and 2025, 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, 2026 and 2025.

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, 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 large-scale commercial facility commencing prior to September 1, 2026; 2) an approved final investment decision in the large-scale commercial 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 on the three-year anniversary of the grant date based upon achievement of the performance targets over the period.

(2)

During the year ended June 30, 2026, approximately 216.1 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 large-scale commercial facility commencing prior to June 30, 2027; 2) an approved final investment decision in the large-scale commercial facility at a modeled internal rate of return of 18%; and 3) the Company’s share price exceeding $8.80 per share. The determination of the percentage of shares that ultimately vest will be made on the three-year anniversary of the grant date based upon achievement of the performance targets over the period.