Stock-Based Compensation

6 Months Ended

Jul. 03, 2020

Share-based Payment Arrangement [Abstract]

We allocated the stock-based compensation expense for our equity incentive plans and our 2000 Employee Stock Purchase Plan (ESPP) as follows (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Research and development	$	6,112	$	5,138	$	11,198	$	9,444
Selling, general and administrative	10,042		9,941		18,938		18,164
Total stock-based compensation	$	16,154	$	15,079	$	30,136	$	27,608

As of June 30, 2020, 25,749,356 shares were available for grant under the Exelixis, Inc. 2017 Equity Incentive Plan (as amended and restated, the 2017 Plan). The share reserve is reduced by 1 share for each share issued pursuant to a stock option or stock appreciation award and 1.5 shares for full value awards granted in the form of restricted stock units (RSUs). On May 20, 2020, at our 2020 Annual Meeting of Stockholders, our stockholders approved the amendment and restatement of the 2017 Plan. The amendment and restatement increased the share reserve under the 2017 Plan by 21,000,000 shares (the Additional Shares), subject to adjustment for certain changes in our capitalization, which became effective immediately upon stockholder approval. The Additional Shares will be registered on a Form S-8 prior to grant.

During the six months ended June 30, 2020, we granted 839,318 stock options with a weighted average exercise price of $21.40 per share and a weighted average grant date fair value of $9.74 per share. As of June 30, 2020, there were 16,655,274 stock options outstanding and $30.3 million unrecognized compensation expense.

During the six months ended June 30, 2020, we granted 889,023 RSUs with a weighted average grant date fair value of $21.43 per share. As of June 30, 2020, there were 4,774,852 RSUs outstanding and $75.1 million unrecognized compensation expense.

Stock options and RSUs granted to employees during the six months ended June 30, 2020 have vesting conditions and contractual lives of a similar nature to those described in “Note 8. Employee Benefit Plans” of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

During the year ended December 31, 2018, in connection with our long-term incentive compensation program, we granted 308,365 performance-based stock options (PSOs) to our President and Chief Executive Officer. In addition to the standard service-based vesting conditions included in our other stock options, these PSOs contain a market vesting condition such that they may not be exercised until, at any time after the grant date, the closing market price of our Common Stock is equal to or greater than 125% of the per share exercise price of the PSOs over a period of at least 30 consecutive calendar days. This market vesting condition was achieved during the three months ended June 30, 2020. The stock-based compensation expense for the PSOs is being recognized on an accelerated basis over the service period of the award, which commenced on the date of grant. The achievement of the market vesting condition did not impact the compensation expense recognized during the period.

As of June 30, 2020, there were 4,343,852 performance-based restricted stock units (PSUs) outstanding with $79.7 million in related unrecognized compensation expense. Expense recognition for PSUs commences when it is determined that achievement of the performance target is probable. Of the outstanding PSUs, 237,945 relate to awards for which we achieved the performance target during 2019 or had determined during 2019 that it was probable that we would achieve the performance target during 2020. During the three months ended June 30, 2020, we determined that it had become probable that we would achieve an additional performance target for 98,653 additional PSUs granted during 2018 resulting in $0.9 million in compensation expense during the period. For more information about our PSUs, see “Note 8. Employee Benefit Plans” of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.