STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

On April 30, 2015, the Company adopted the 2015 Stock Incentive Plan (the "2015 Plan"), with the objective of attracting and retaining highly competent personnel through opportunities to acquire the Company’s common stock.

There are currently 20.8 million shares available for issuance under the 2015 Plan. The 2015 Plan expires in 2025, and the Company intends to seek stockholder approval of a new plan at the Company's 2025 annual meeting of stockholders.

The 2006 Incentive Stock Plan ("the 2006 Plan"), which was adopted on January 18, 2007 and expired in 2017, similarly had the objective of attracting and retaining highly competent employees, directors, and independent consultants through opportunities to

acquire the Company’s common stock. No further awards can be granted under the 2006 Plan. As of March 31, 2024, there were no unvested awards under the 2006 plan and certain vested but unexercised awards remained outstanding.

For the three months ended March 31, 2024 and 2023, the Company recognized stock-based compensation expense of approximately $3.6 million and $5.5 million, respectively, which is included in selling, general and administrative expenses.

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 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.

A summary of the status of the Company’s outstanding stock options as of March 31, 2024 and changes during the three months ending on that date is as follows:


	Shares (000’s)	Weighted Average Exercise Price	Aggregate Intrinsic Value (000’s)(1)	Weighted Average Remaining Term (Yrs)
At December 31, 2023	4,918	$3.81	$249,541	4.45

Exercised	(767)	1.26	48,750
Forfeiture and cancelled	—	—
At March 31, 2024	4,151	$4.28	$326,444	4.80
Exercisable at March 31, 2024	4,151	$4.28	$326,444	4.80

(1) The intrinsic value represents the amount by which the fair value of the Company's common stock exceeds the option exercise price as of March 31, 2024.

The total intrinsic value of the stock options exercised was $23.0 million during the three months ended March 31, 2023. The total number of stock options exercised was 0.7 million during the three months ended March 31, 2023.

As of March 31, 2024, the Company did not have any unrecognized pre-tax non-cash compensation expense related to options to purchase shares.

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 Company determines the fair value of restricted stock-based awards based on the market price of the common stock on the date of grant. The holders of unvested units do not have the same rights as stockholders and do not have the right to receive any dividends or 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, 2024 and 2023 is presented in the following table:


	Three Months Ended
	March 31, 2024			March 31, 2023
	Shares (000's)	Weighted Average Grant Date Fair Value		Shares (000's)(1)	Weighted Average Grant Date Fair Value
Unvested at beginning of period	1,218	$	26.13	1,617	$	20.24

Granted	210	78.51		372	34.39
Vested	(510)	22.89		(471)	19.15
Forfeited and cancelled	(12)	23.23		(93)	21.21
Unvested at end of period	906	$	40.30	1,425	$	24.22

(1) Retrospectively adjusted for the Forward Stock Split.

The total fair value of shares vested during the three months ended March 31, 2024 and 2023 was approximately $27.8 million and $16.2 million, respectively. Unrecognized compensation expense related to outstanding restricted stock units to employees and directors as of March 31, 2024 and 2023 was $31.0 million and $27.5 million, respectively, and is expected to be expensed over the next 2.3 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 share 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 stockholder voting rights. Some of the PSU performance vesting conditions are linked to the attainment of 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 PSUs 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 PSUs to certain employees. 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 achieved and will recognize expense for each tranche of the awards separately using the accelerated attribution method according to ASC 718.

In March 2024, the Human Resource and Compensation Committee approved PSUs under the 2015 Plan with an aggregate award of approximately 65,000 shares of our common stock for certain Company Officers. Each PSU is initially equivalent in value to one share of Celsius's common stock. The PSUs vest three years from the grant date based on continuous service, with the number of shares earned (50% to 200% of the target award) depending upon the extent to which we achieve certain financial and market performance targets measured over the period from January 1, 2024 through December 31, 2026. About half of the PSUs were valued at $79.27 per PSU based on our common stock price on the grant date as the financial targets are based on our achievement of revenue metrics. We recognize the grant-date fair value of these PSUs, as stock-based compensation expense ratably over the vesting period based on the number of awards expected to vest at each reporting date. The other half of the PSUs were valued at $134.75 per PSU using a Monte Carlo simulation model as the performance target is based on total shareholder return ("TSR") relative to our peer group. This model incorporates assumptions such as the risk-free interest rate based on zero-coupon yields implied by U.S. Treasury issuances, expected volatility derived from historical data of the Company and certain indices. We recognize the grant-date fair value of these awards, as stock-based compensation expense ratably over the vesting period.

A summary of the Company’s PSU activity for the three months ended March 31, 2024 and 2023 is presented in the following table:


	Three Months Ended
	March 31, 2024			March 31, 2023
	Shares (000's)	Weighted Average Grant Date Fair Value		Shares (000's)(1)	Weighted Average Grant Date Fair Value
Unvested at beginning of period	123	$	29.43	228	$	30.49
Granted	65	77.31		—	—
Vested	—	—		—	—
Forfeited and cancelled	—	—		—	—
Unvested at end of period	188	$	45.60	228	$	30.49

(1) Retrospectively adjusted for the Forward Stock Split.

Unrecognized compensation expense related to outstanding PSUs issued to employees and non-employee consultants as of March 31, 2024 and 2023 was approximately $5.5 million and $3.2 million, respectively, and is expected to be expensed over the next 2.7 years.

Issuance of common stock pursuant to exercise of stock options and other awards

During the three months ended March 31, 2024, the Company issued an aggregate of 1.3 million shares of common stock under the 2015 Plan and received aggregate proceeds of approximately $1.0 million.

During the three months ended March 31, 2023, the Company issued an aggregate of 1.2 million shares of its common stock under the 2015 Plan and 2006 Plan and received aggregate proceeds of approximately $0.5 million.