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Stock-Based Compensation | 6 Months Ended
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Jul. 02, 2021
Share-based Payment Arrangement [Abstract] |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION We allocated the stock-based compensation expense for our equity incentive plans and our Employee Stock Purchase Plan (ESPP) as follows (in thousands):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2021 |  | 2020 |  | 2021 |  | 2020 |  |
Research and development | $ | 13,667 |  |  | $ | 6,112 |  |  | $ | 26,063 |  |  | $ | 11,198 |  |  |
Selling, general and administrative | 14,368 |  |  | 10,042 |  |  | 36,625 |  |  | 18,938 |  |  |
Total stock-based compensation expense | $ | 28,035 |  |  | $ | 16,154 |  |  | $ | 62,688 |  |  | $ | 30,136 |  |  |
Stock-based compensation for each type of award under our equity incentive plans and ESPP were as follows (in thousands):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Stock options | $ | 5,902 |  |  | $ | 5,301 |  |  | $ | 10,596 |  |  | $ | 10,295 |
Restricted stock units | 15,412 |  |  | 8,599 |  |  | 27,081 |  |  | 16,396 |
Performance stock units | 4,698 |  |  | 1,429 |  |  | 22,645 |  |  | 1,925 |
ESPP | 2,023 |  |  | 825 |  |  | 2,366 |  |  | 1,520 |
Total stock-based compensation expense | $ | 28,035 |  |  | $ | 16,154 |  |  | $ | 62,688 |  |  | $ | 30,136 |
As of June 30, 2021, 8,254,455 sh ares 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 and 1.5 shares for full value awards granted in the form of restricted stock units (RSUs). During the six months ended June 30, 2021, we granted 1,733,554 stock options with a weighted average exercise price of $22.50 per share and a weighted average grant date fair value of $9.70 per s hare. As of June 30, 2021, there were 15,443,578 stock options outstanding and $32.2 million of related unrecognized compensation expense. During the six months ended June 30, 2021, we granted 3,575,190 service-based RSUs with a weighted average grant date fair value of $21.76 per share. As of June 30, 2021, there were 8,314,774 RSUs outstanding and $149.0 million of related unrecognized compensation expense. Stock options and RSUs granted to employees during the six months ended June 30, 2021 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, 2020. In March 2021, we awarded 1,027,650 (the target amount) performance-based (PSUs), subject to a performance and a market condition (the 2021 PSUs). Pursuant to the terms of 2021 PSUs, the holders of the awards may earn up to 200% of the target amount of shares, depending on the level of achievement of the performance condition related to certain net product revenues and a total shareholder return (TSR) market condition. The TSR market condition is based on our relative TSR percentile rank compared to companies in the NASDAQ Biotechnology Index during the performance period, which is January 2, 2021 through December 29, 2023. Fifty percent of the shares earned subject to the performance and market conditions will vest at the end of the performance period and the remainder will vest approximately one year later subject to employee’s continuous service. The 2021 PSUs will be forfeited if the performance condition at or above a threshold level is not achieved by December 29, 2023. A Monte Carlo simulation model was used to determine the grant date fair value of $24.54 for the 2021 PSUs based on the following assumptions:
Fair value of the Company’s common stock on grant date | $ | 21.31 |
Expected volatility | 49 | %
Risk-free interest rate | 0.29 | %
Dividend yield | — | %
The Monte Carlo simulation model also assumed correlations of returns of the stock prices of the Company’s common stock and the common stock of a peer group of companies and historical stock price volatility of the peer group of companies. The valuation model also used terms based on the length of the performance period and compound annual growth rate goals for total stockholder return based on the provisions of the award. As of June 30, 2021, there were 8,709,765 PSUs outstanding and $155.7 million of related unrecognized compensation expense. Expense recognition for PSUs commences when it is determined that achievement of the performance target is probable. 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, 2020.

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