The Company has issued stock-based awards to employees and members of its Board of Directors (the “Board”) consisting of stock options and restricted stock and restricted stock unit awards. The Company accounts for all stock-based awards to employees and members of the Board as compensation costs in the consolidated financial statements based on their fair values measured as of the date of grant. These costs are recognized over the requisite service period. Stock-based compensation costs recognized, excluding the Company’s matching contributions of $3.0 million to the Plug Power Inc. 401(k) Savings & Retirement Plan and quarterly Board compensation, were $42.4 million and $44.2 million for the three months ended September 30, 2023 and September 30, 2022, respectively. Stock-based compensation costs recognized, excluding the Company’s matching contributions of $9.0 million to the Plug Power Inc. 401(k) Savings & Retirement Plan and quarterly Board compensation, were $119.5 million and $127.7 million for the nine months ended September 30, 2023 and September 30, 2022, respectively. The methods and assumptions used in the determination of the fair value of stock-based awards are consistent with those described in our 2022 Form 10-K.

The components and classification of stock-based compensation expense, excluding the Company’s matching contributions to the Plug Power Inc. 401(k) Savings & Retirement Plan and quarterly Board compensation, were as follows (in thousands):

The Company issues options that are time and performance-based awards. All option awards are determined to be classified as equity awards.

The following table reflects the service stock option activity for the nine months ended September 30, 2023:

The weighted average grant date fair value of the service stock options granted during the nine months ended September 30, 2023 and 2022 was $8.44 and $15.31, respectively. The total intrinsic fair value of service stock options exercised during the nine months ended September 30, 2023 and 2022 was $4.2 million and $14.8 million, respectively. The total fair value of the service stock options that vested during the nine months ended September 30, 2023 and 2022 was approximately $24.4 million and $21.7 million, respectively.

Compensation cost associated with service stock options represented approximately $8.6 million and $6.8 million of the total share-based payment expense recorded for the three months ended September 30, 2023 and 2022, respectively. Compensation cost associated with service stock options represented approximately $23.8 million and $19.2 million of the total share-based payment expense recorded for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, there was approximately $51.4 million of unrecognized compensation cost related to service stock option awards to be recognized over the weighted average remaining period of 2.10 years.

In May 2023, the Compensation Committee approved the grant of performance stock options to the Company’s Chief Executive Officer and certain other executive officers. These performance stock options are subject to both performance based conditions, tied to the achievement of stock price hurdles, and time-based vesting; therefore, a Monte Carlo Simulation was utilized to determine the grant date fair value with the associated expense recognized over the requisite service period. Up to one third (1/3) the performance stock options will vest and become exercisable on each of the first three anniversaries of the grant date, provided that the volume weighted average price of the Company’s common stock during any 30 consecutive trading day period in the three year performance period following the grant date of the stock options (“VWAP”) equals or exceeds certain levels.

There will be no interpolation for the performance stock option granted on May 18, 2023 if the VWAP falls between any two stock price hurdles, unless in the event of a change in control. For the Chief Executive Officer and executive officers, 33.33% of the performance stock options will be deemed to have satisfied the performance-based condition and will be eligible to be exercised if the VWAP equals $9.84; an additional 33.33% of the options will be deemed to have satisfied the performance-based condition and will be eligible to be exercised if the VWAP equals $11.81; and the remaining 33.34% of the options will be deemed to have satisfied the performance-based condition and will be eligible to be exercised if the VWAP equals or exceeds $13.77.

Failure to achieve any of the stock price hurdles applicable to a performance stock option during the three-year performance period will result in the applicable options not becoming exercisable. The performance-based stock options have a maximum term of seven years from the grant date.

Key inputs and assumptions used to estimate the fair value of performance stock options include the grant price of the awards, the expected option term, VWAP hurdle rates, volatility of the Company’s stock, an appropriate risk-free rate, and the Company’s dividend yield. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company.

The following table presents key assumptions used to estimate the fair value of the performance stock option awards granted in 2023:


		Nine Months Ended
		September 30, 2023
Remaining VWAP performance period (years)		3
Risk-free interest rate		3.60%
Expected volatility		75.00%
Closing stock price on grant date		$ 7.87

The following table reflects the performance stock option award activity for the nine months ended September 30, 2023. Solely for the purposes of this table, the number of performance options is based on participants earning the maximum number of performance options (i.e. 200% of the target number of performance options):

The weighted average grant-date fair value of the performance stock options granted during the nine months ended September 30, 2023 and 2022 was $4.32 and $12.78, respectively. There were no performance stock options exercised during the nine months ended September 30, 2023 or 2022. The total fair value of the performance stock options that vested during the nine months ended September 30, 2023 and 2022 was each $20.8 million.

As of September 30, 2023, there were 1,391,000 unvested performance stock options for which the employee requisite service period had not been rendered but were expected to vest. The aggregate intrinsic value of these unvested performance stock options was $0 as of September 30, 2023. The weighted average exercise price of these unvested performance stock options was $26.92 and the weighted average remaining contractual term was 4.98 years as of September 30, 2023.

Compensation cost associated with performance stock options represented approximately $18.4 million and $26.1 million of the total share-based payment expense recorded for the three months ended September 30, 2023 and 2022, respectively. Compensation costs associated with performance stock options represented approximately $53.6 million and $76.5 million of the total share-based payment expense recorded for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, there was approximately $44.5 million of unrecognized compensation cost related to performance stock option awards to be recognized over the weighted average remaining period of 1.85 years.

The following table reflects the restricted stock and restricted stock unit activity for the nine months ended September 30, 2023 (in thousands except share amounts):

The weighted average grant-date fair value of the restricted common stock and restricted stock unit awards granted during the nine months ended September 30, 2023 and 2022 was $12.57 and $23.60, respectively. The total fair value of restricted shares of common stock and restricted stock unit awards that vested for the nine months ended September 30, 2023 and 2022 was $41.0 million and $34.3 million, respectively.

The Company recorded expense associated with its restricted common stock and restricted stock unit awards of approximately $15.0 million and $11.3 million for the three months ended September 30, 2023 and 2022, respectively. The Company recorded expense associated with its restricted common stock and restricted stock unit awards of approximately $42.1 million and $32.0 million for the nine months ended September 30, 2023 and 2022, respectively. Additionally, as of September 30, 2023, there was $98.3 million of unrecognized compensation cost related to restricted stock and restricted common stock unit awards to be recognized over the weighted average period of 2.16 years.

Included in the total unvested restricted common stock and restricted stock units as of September 30, 2023, there were 375,000 restricted common stock units outstanding with a performance target. The Company recorded expense associated with the restricted common stock units with a performance target of $0.4 million for the three and nine months ended September 30, 2023, respectively. Additionally, as of September 30, 2023 there was $3.8 million of unrecognized compensation cost related to the restricted common stock units outstanding with a performance target to be recognized over the weighted average period of 2.83 years.

The Company issued 872,026 shares of common stock and 310,159 shares of common stock pursuant to the Plug Power Inc. 401(k) Savings & Retirement Plan during the nine months ended September 30, 2023 and 2022, respectively.

The Company’s expense for this plan was approximately $3.0 million and $2.5 million for the three months ended September 30, 2023 and 2022, respectively. The Company’s expense for this plan was approximately $9.0 million and $6.7 million for the nine months ended September 30, 2023 and 2022, respectively.

The Company granted 13,662 shares of common stock and 4,342 shares of common stock to non-employee directors as compensation for the three months ended September 30, 2023 and 2022, respectively. The Company granted 35,444 shares of common stock and 14,282 shares of common stock to non-employee directors as compensation for the nine months ended September 30, 2023 and 2022, respectively. All common stock issued is fully vested at the time of issuance and is valued at fair value on the date of issuance. The Company’s share-based compensation expense in connection with non-employee director compensation was approximately $0.1 million and $0.1 million for the three months ended September 30, 2023 and 2022, respectively. The Company’s share-based compensation expense in connection with non-employee director compensation was approximately $0.3 million and $0.3 million for each of the nine months ended September 30, 2023 and 2022, respectively.