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STOCK-BASED COMPENSATION | 3 Months Ended
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Mar. 31, 2023
Share-Based Payment Arrangement [Abstract] |
STOCK-BASED COMPENSATION | 18. STOCK-BASED COMPENSATION The Company adopted the 2006 Incentive Stock Plan on January 18, 2007. This plan was intended to provide incentives to attract and retain highly competent persons at all levels as employees of the Company, as well as independent contractors providing consulting or advisory services to the Company, by providing them opportunities to acquire the Company’s common stock. While the plan terminated 10 years after the adoption date, issued awards have their own schedule of terminations. The Company is no longer granting awards under this plan and there are no unvested awards as of March 31, 2023. The Company adopted the 2015 Plan on April 30, 2015. The 2015 Plan is intended to provide incentives which will attract and retain highly competent persons at all levels as employees of the Company, as well as independent contractors providing consulting or advisory services to the Company, by providing them opportunities to acquire the Company’s common stock or to receive monetary payments based on the value of such shares pursuant to awards issued. The 2015 Plan permits the grant of options and shares for up to 5 million shares. In addition, there is a provision in the 2015 Plan for an annual increase to the maximum number of shares authorized under the 2015 Plan. The increase shall be added on the first day of the calendar year beginning January 1, 2016, equal to 15% of the number of shares outstanding as of such date. As of March 31, 2023, approximately 6.0 million shares are available for issuance under the 2015 Plan. See Note 15. Stockholders' Equity for more information. For the three months ended March 31, 2023 and 2022, the Company recognized an expense of approximately $5.5 million and $4.3 million, respectively, of non-cash compensation expense (included in selling, general and administrative expense in the accompanying consolidated statements of operations and comprehensive income). Stock Options The Company used straight-line amortization of compensation expense over the two to three-year requisite service or vesting period of the grant. The maximum contractual term of the Company's stock options is 10 years. The Company recognizes forfeitures as they occur. There were options to purchase approximately 1.9 million shares that have vested as of March 31, 2023 and December 31, 2022. Upon exercise, shares of new common stock are issued by the Company. No options were issued during the three months ended March 31, 2023 and December 31, 2022. The Company determines the fair value of restricted stock-based awards based on the market price on the date of grant. The Company uses the Black-Scholes option-pricing model to estimate the fair value of its stock option awards and warrant issuances and recognizes forfeitures as they occur. The calculation of the fair value of the awards using the Black-Scholes option-pricing model is affected by the Company’s stock price on the date of grant as well as assumptions regarding the following:
|  | March 31,
|  | 2023 (1) |  | 2022 (1) |  | 2021
Expected volatility |  | NA |  | NA |  | 69.18 - 81.11%
Expected term |  | NA |  | NA |  | 4.49 - 5.00 Years
Risk-free interest rate |  | NA |  | NA |  | 0.32% - 1.39%
Forfeiture Rate |  | NA |  | NA |  | 0.0%
(1) No stock options were issued for the three months ended March 31, 2023 and the year ended December 31, 2022. A summary of the status of the Company’s outstanding stock options as of March 31, 2023 and changes during the periods ending on that date is as follows:
|  |  |  |  | Weighted Average |  |  | Aggregate |  |  | Weighted |
|  | Shares |  |  | Exercise |  |  | Grant Date Fair |  |  | Intrinsic Value |  |  | Average Remaining |
|  | (000’s) |  |  | Price |  |  | Value |  |  | (000’s) |  |  | Term (Yrs) |
Options |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
At December 31, 2022 |  |  | 2,266 |  |  | $ | 9.66 |  |  |  |  |  | $ | 213,914 |  |  |  | 5.43 |
Granted |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Exercised |  |  | (249 | ) |  |  | 5.11 |  |  |  | 97.26 |  |  |  | 22,992 |  |  |  |
Forfeiture and cancelled |  |  | (1 | ) |  |  | 14.53 |  |  |  |  |  |  |  |  |  |
At March 31, 2023 |  |  | 2,016 |  |  | $ | 10.22 |  |  |  |  |  | $ | 166,829 |  |  |  | 5.52 |
Exercisable at March 31, 2023 |  |  | 1,888 |  |  | $ | 8.42 |  |  |  |  |  | $ | 159,544 |  |  |  | 5.37 |
The following table summarizes information about employee stock options outstanding at March 31, 2023:
|  | Outstanding Options |  |  | Vested Options |
Range of Exercise Price |  | Number Outstanding at March 31, 2023 (000's) |  |  | Weighted Average Remaining Life |  |  | Weighted Average Exercise Price |  |  | Number Exercisable at March 31, 2023 (000's) |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Life |
$0.34 - $1.05 |  |  | 30 |  |  |  | 0.58 |  |  | $ | 1.19 |  |  |  | 30 |  |  | $ | 0.58 |  |  |  | 1.19 |
$1.97 - $2.95 |  |  | 5 |  |  |  | 1.97 |  |  |  | 2.77 |  |  |  | 5 |  |  |  | 1.97 |  |  |  | 2.77 |
$3.23 - $4.85 |  |  | 1,389 |  |  |  | 3.81 |  |  |  | 5.07 |  |  |  | 1,389 |  |  |  | 3.81 |  |  |  | 5.07 |
$5.59 - $8.38 |  |  | 214 |  |  |  | 5.76 |  |  |  | 5.23 |  |  |  | 214 |  |  |  | 5.76 |  |  |  | 5.23 |
$14.53 - $21.79 |  |  | 61 |  |  |  | 14.53 |  |  |  | 7.34 |  |  |  | 40 |  |  |  | 14.53 |  |  |  | 7.34 |
$21.80 - $32.70 |  |  | 16 |  |  |  | 21.80 |  |  |  | 7.59 |  |  |  | 10 |  |  |  | 21.80 |  |  |  | 7.59 |
$42.64 - $63.96 |  |  | 301 |  |  |  | 42.67 |  |  |  | 7.76 |  |  |  | 200 |  |  |  | 42.67 |  |  |  | 7.76 |
Outstanding options |  |  | 2,016 |  |  |  | 10.22 |  |  | $ | 5.52 |  |  |  | 1,888 |  |  | $ | 8.42 |  |  |  | 5.37 |
As of March 31, 2023 and 2022, the Company had approximately $2.4 million and $6.6 million, respectively, of unrecognized pre-tax non-cash compensation expense related to options to purchase shares, which the Company expects to recognize, based on a weighted-average period of 0.7 years. Restricted Stock Awards Restricted stock awards are awards of common stock that are subject to restrictions on transfer and to a risk of forfeiture if the holder leaves the Company before the restrictions lapse. The holders of a restricted stock award are generally entitled after the release to transact and obtain the same rights as the rights of a shareholder of the Company, including the right to vote the shares. The holders of unvested restricted stock awards do not have the same rights as shareholders including but not limited to any dividends which may be declared by the Company, and do not have the right to vote. The value of restricted stock awards that vest over time is established by the market price on the date of its grant. A summary of the Company’s restricted stock award activity for the three months ended March 31, 2023 and 2022 is presented in the following table:
|  | Three Months Ended |
|  | March 31, 2023 |  |  | March 31, 2022 |
|  |  |  |  | Weighted |  |  |  |  |  | Weighted |
|  |  |  |  | Average |  |  |  |  |  | Average |
|  |  |  |  | Grant Date |  |  |  |  |  | Grant Date |
|  | Shares |  |  | Fair Value |  |  | Shares |  |  | Fair Value |
Unvested at beginning of period |  |  | — |  |  | $ | — |  |  |  | 0.2 |  |  | $ | 14.72 |
Transfers to restricted stock units |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Granted |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Vested |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Forfeited and cancelled |  |  | — |  |  |  | — |  |  |  |  |  |  |
Unvested at end of period |  |  | — |  |  | $ | — |  |  |  | 0.2 |  |  | $ | 14.72 |
There were no restricted stock awards granted, vested or outstanding during the three months ended March 31, 2023. Fair value of shares vested during the three months ended March 31, 2023 and 2022 was immaterial. There was no unrecognized compensation expense related to outstanding restricted stock awards for the three months ended March 31, 2023. Unrecognized compensation expense related to outstanding restricted stock awards to employees and directors as of March 31, 2022 was approximately $0.0 million and was expensed over 0.3 years. Restricted Stock Units Restricted stock units are awards that give the holder the right to receive one share of common stock for each restricted stock unit upon meeting service-based vesting conditions (typically annual vesting in three equal annual installments, with a requirement that the holder remains in the continuous employment of the Company). The holders of unvested units do not have the same rights as stockholders including but not limited to any dividends which may be declared by the Company, and do not have the right to vote. The value of restricted stock units that vest over time is established by the market price on the date of its grant. A summary of the Company’s restricted stock unit activity for the three months ended March 31, 2023 and 2022 is presented in the following table:
|  | Three Months Ended |
|  | March 31, 2023 | March 31, 2022 |
|  |  |  |  | Weighted |  |  |  |  |  | Weighted |
|  |  |  |  | Average |  |  |  |  |  | Average |
|  |  |  |  | Grant Date |  |  |  |  |  | Grant Date |
|  | Shares (000's) |  |  | Fair Value |  |  | Shares (000's) |  |  | Fair Value |
Unvested at beginning of period |  |  | 539 |  |  | $ | 60.73 |  |  |  | 566 |  |  | $ | 52.66 |
Transfers to restricted stock awards |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Granted |  |  | 124 |  |  |  | 103.17 |  |  |  | 189 |  |  |  | 74.57 |
Vested |  |  | (157 | ) |  |  | 57.46 |  |  |  | (111 | ) |  |  | 51.10 |
Forfeited and cancelled |  |  | (31 | ) |  |  | 63.63 |  |  |  | (18 | ) |  |  | 54.88 |
Unvested at end of period |  |  | 475 |  |  | $ | 72.67 |  |  |  | 626 |  |  | $ | 59.50 |
The total fair value of shares vested during the three months ended March 31, 2023 and 2022 was approximately $16.2 million and $5.6 million, respectively. Un recognized compensation expense related to outstanding restricted stock units to employees and directors as of March 31, 2023 and 2022 was $27.5 million and $29.7 million, respectively, and is expected to be expensed over the next 2.2 years. Performance-based Stock Awards The Company issued stock-based awards to third-party consultants for providing marketing, sales, and general business development services related to Celsius products. The stock-based awards are in the form of restricted stock units with performance vesting conditions (“performance stock units” or “PSUs”). The holders of unvested PSUs do not have the same rights as stockholders including but not limited to any dividends which may be declared by the Company, and do not have the right to vote. Some of the PSU performance vesting conditions are linked to the consultants obtaining specified incremental earnings for the Company in a given year over the performance vesting period (typically five years) and some of the awards are linked to employees of the Company and have specific performance-based metrics to be met in year one and year two of the issuance. The fair value of PSUs is based on the market price of the underlying stock on the grant date. The Company recognizes compensation cost for performance stock awards issued to non-employees in the same manner and periods as though cash had been paid for services received. In the third quarter of 2022, the Human Resources and Compensation Committee of the Board of Directors approved the issuance of “Performance-based RSUs” to certain employees which represented restricted share units with performance-based vesting. The aggregate grant date fair value of $7.5 million included an immediate vesting of 20% of the shares as well as specific performance-based metrics to be met in year one and year two of the issuance. The Company believes the performance-based metrics are probable of being a chieved and will recognize expense each tranche of the awards separately using the accelerated attribution method according to ASC 718. A summary of the Company’s PSU activity for the three months ended March 31, 2023 and 2022 is presented in the following table:
|  | Three Months Ended |
|  | March 31, 2023 | March 31, 2022 |
|  |  |  |  | Weighted |  |  |  |  |  | Weighted |
|  |  |  |  | Average |  |  |  |  |  | Average |
|  |  |  |  | Grant Date |  |  |  |  |  | Grant Date |
|  | Shares (000's) |  |  | Fair Value |  |  | Shares (000's) |  |  | Fair Value |
Unvested at beginning of period |  |  | 76 |  |  | $ | 91.48 |  |  |  | 15 |  |  | $ | 64.65 |
Granted |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Vested |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Forfeited and cancelled |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Unvested at end of period |  |  | 76 |  |  | $ | 91.48 |  |  |  | 15 |  |  | $ | 64.65 |
Unrecognized compensation expense related to outstanding PSUs issued to employees and non-employee consultants as of March 31, 2023 and 2022 was approximately $3.2 million and $0.9 million, respectively, and is expected to be expensed over the nex t 1.4 y ears.

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