SHARE-BASED COMPENSATION

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATION Our share-based compensation awards are issued under the 2020 Equity Incentive Plan (“2020 Plan”) and predecessor plan, the 2015 Equity Incentive Plan (“2015 Plan”). Any awards that expire or are forfeited under the 2015 Plan become available for issuance under the 2020 Plan. We account for forfeitures as they occur when calculating share-based compensation expense. The aforementioned plans provide for the issuance of previously unissued common stock in connection with the exercise of stock options and conversion of other share-based awards. As of December 31, 2022, 3.9 million shares of common stock

remained available for future issuance under all plans, subject to adjustment for future stock splits, stock dividends, and similar changes in capitalization.

The majority of share-based compensation expense is reported in our consolidated statements of operations as ‘Selling, general and administrative expenses’ with an insignificant amount recorded within ‘Cost of sales.’

Stock Option Activity

Stock option activity during the year ended December 31, 2022 was:


	Number of Options	Weighted Average Exercise Price		Weighted Average Contractual Life (Years)	Aggregate Intrinsic Value
	(in thousands, except exercise price and years)
Outstanding as of December 31, 2021	217	$	7.78	5.14	$	26,076
Granted	—	—
Exercised	(7)	18.62
Forfeited or expired	—	—
Outstanding as of December 31, 2022	210	$	7.44	4.28	$	21,208
Exercisable at December 31, 2022	210	$	7.44	4.28	$	21,208
Vested at December 31, 2022	210	$	7.44	4.28	$	21,208

No stock options were granted during 2022, 2021, or 2020. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2022, 2021, and 2020 was $0.4 million, $0.8 million, and $0.8 million, respectively. During the years ended December 31, 2022, 2021, and 2020, we received $0.1 million, $0.2 million, and $1.4 million cash, respectively, in connection with the exercise of stock options. As of December 31, 2022, we did not have any unrecognized share-based compensation expense related to unvested options.

Stock options under our equity incentive plans generally vest ratably over four years with the first vesting occurring one year from the date of grant, followed by monthly vesting for the remaining three years, and expire ten years after the date of grant.

Restricted Stock Awards and Restricted Stock Units Activity

From time to time, we grant RSAs and RSUs. RSAs and RSUs generally vest over three years, depending on the terms of the grant. Holders of unvested RSAs have the same rights as those of common stockholders including voting rights and non-forfeitable dividend rights. However, ownership of unvested RSAs cannot be transferred until vested. Holders of unvested RSUs have a contractual right to receive shares of common stock upon vesting. RSUs have dividend equivalent rights, which accrue over the term of the award and are paid if and when the RSUs vest, but RSU holders have no voting rights. We grant service-condition RSUs, performance-condition RSUs, and market-condition RSUs.

Service-condition RSUs are typically granted on an annual basis and vest over time in three equal annual installments, beginning one year after the grant date. During the years ended December 31, 2022, 2021, and 2020, we granted 0.2 million, 0.2 million, and 0.6 million service-condition RSUs, respectively.

Performance-condition RSUs are typically granted on an annual basis and consist of a performance-based and service-based component. The performance targets and vesting conditions for performance-condition RSUs are based on achievement of multiple weighted performance goals. The number of performance-condition RSUs ultimately awarded may be between 0% and 200%, based on performance. These RSUs vest in three equal annual installments beginning one year after the grant date, pending certification of performance achievement by the Compensation Committee of our Board of Directors and continued service. The fair value of performance-condition awards is based on the closing market price of our common stock on the grant date. Compensation expense, net of forfeitures, is updated for our probable expected performance level against performance goals at the end of each reporting period. We also periodically grant market-condition RSUs to certain executives. The grant date fair value and derived service period for market-condition RSUs are estimated using a Monte Carlo simulation model. During the years ended December 31, 2022, 2021, and 2020, we granted 0.3 million, 0.5 million, and 0.5 million performance- and market-condition RSUs, respectively.

RSA and RSU activity during the year ended December 31, 2022 was:


	Restricted Stock Awards			Restricted Stock Units
	Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value
	(in thousands, except fair value data)
Unvested at December 31, 2021	2	$	105.18	1,455	$	49.70
Granted	9	51.13		516	76.06
Vested	(6)	62.55		(688)	43.12
Forfeited	—	—		(102)	64.57
Unvested at December 31, 2022	5	$	51.13	1,181	$	62.93

The weighted average grant date fair value of RSAs granted during the years ended December 31, 2022, 2021, and 2020 was $51.13, $88.68, and $38.10 per share, respectively. RSAs vested during the years ended December 31, 2022, 2021, and 2020 consisted entirely of service-condition awards. The total grant date fair value of RSAs vested in the years ended December 31, 2022, 2021, and 2020 was $0.3 million, $0.4 million and $0.2 million, respectively.

As of December 31, 2022, unrecognized share-based compensation expense for RSAs was $0.2 million, which is expected to amortize over a remaining weighted average period of 0.5 years.

The weighted average grant date fair value of RSUs granted during the years ended December 31, 2022, 2021, and 2020 was $76.06, $76.28, and $29.14 per share, respectively. RSUs vested during the year ended December 31, 2022 consisted of 0.3 million service-condition awards and 0.4 million performance- and market-condition awards. RSUs vested during the year ended December 31, 2021 consisted of 0.4 million service-condition awards and 0.5 million performance- and market-condition awards. RSUs vested during the year ended December 31, 2020 consisted of 0.5 million service-condition awards and 0.4 million performance- and market-condition awards. The total grant date fair value of RSUs vested during the years ended December 31, 2022, 2021, and 2020 was $29.7 million, $24.9 million and $11.9 million, respectively.

As of December 31, 2022, unrecognized share-based compensation expenses for service-condition RSUs were $20.1 million and for performance- and market-condition RSUs were $10.1 million, and are expected to amortize over remaining weighted average periods of 1.5 years and 1.6 years, respectively.