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STOCK-BASED COMPENSATION | 12 Months Ended
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Dec. 31, 2023
Share-Based Payment Arrangement [Abstract] |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Employee Stock Purchase Plan In July 2016, the Company commenced administration of the ANI Pharmaceuticals, Inc. 2016 ESPP. As of December 31, 2023 there are 0.1 million shares of common stock available for issuance under the ESPP. Under the ESPP, participants can purchase shares of common stock at a 15% discount. The Company issued 38 thousand, 29 thousand, and 14 thousand shares in the years ended December 31, 2023, 2022, and 2021, respectively. The following table summarizes ESPP expense incurred under the 2016 Employee Stock Purchase Plan and included in the consolidated statements of operations:
(in thousands) | Years Ended December 31,
| 2023 |  | 2022 |  | 2021
Selling, general, and administrative | $ | 360 |  | $ | 222 |  | $ | 87
Cost of sales | 60 |  | 50 |  | 15
Research and development | 47 |  | 41 |  | 21
| $ | 467 |  | $ | 313 |  | $ | 123
Stock Incentive Plan Equity-based service awards are granted under the ANI Pharmaceuticals, Inc. Amended and Restated 2022 Stock Incentive Plan (the “2022 Plan”), which was approved by the Company's stockholders at the 2022 Annual Meeting of Stockholders (the “Annual Meeting”) held on April 27, 2022. Prior to this approval, the Company granted equity-based incentive awards under the Sixth Amended and Restated 2008 Stock Incentive Plan (the “2008 Plan”), which was renamed, amended and restated to the 2022 Plan. The 2022 Plan, among other things, increased the number of shares reserved for issuance thereunder by 1,150,000 shares. As of December 31, 2023, 1.1 million shares of common stock were available for issuance under the 2022 Plan. On May 23, 2023, the Company’s stockholders approved an amendment to the 2022 Plan (such amendment, the “2023 Stock Plan Amendment”). Subject to adjustment, the 2023 Stock Plan Amendment increased the number of shares reserved for issuance under the 2022 Plan by 750,000 shares. From time to time, the Company may grant stock options to employees through an inducement grant outside of the 2022 Plan to induce prospective employees to accept employment with us (the “Inducement Grants”). The options are granted at an exercise price equal to the fair market value of a share of the common stock on the respective grant date and are generally exercisable in four equal annual installments beginning on the first anniversary of the respective grant date. The grants are made pursuant to inducement grants outside of the stockholder approved equity plan as permitted under the Nasdaq Stock Market listing rules. The cost of equity-based service awards are measured based on the grant-date fair value of the award. The cost is recognized ratably over the period during which an employee is required to provide service in exchange for the award or the requisite service period. Stock-based compensation expense is recognized ratably over the vesting periods of the awards. The following table summarizes stock-based compensation expense incurred for stock options, restricted stock awards, performance-based restricted stock units, and Inducement Grants and included in the consolidated statements of operations:
(in thousands) | Years Ended December 31,
| 2023 |  | 2022 |  | 2021
Selling, general, and administrative | $ | 18,676 |  | $ | 13,094 |  | $ | 9,818
Research and development | 863 |  | 710 |  | 543
Cost of sales | 646 |  | 482 |  | 5
| $ | 20,185 |  | $ | 14,286 |  | $ | 10,366
Income tax benefits of approximately $3.3 million, $1.7 million, and $1.0 million were recognized for stock-based compensation-related tax deductions in the 2023, 2022, and 2021 consolidated statements of operations, respectively. Stock Options Outstanding stock options granted to employees and consultants generally vest over a period of four years and have 10-year contractual terms. Outstanding stock options granted to non-employee directors generally vest over a period of one to four years and have 10-year contractual terms. For 2023, 2022, and 2021, the fair value of each option grant was estimated using the Black-Scholes option-pricing model, using the following assumptions:
| Years Ended December 31,
| 2023 |  | 2022 |  | 2021
Expected option life (years) | 6.25 |  | 5.50 - 6.25 |  | 5.50 - 6.25
Risk-free interest rate | 4.1% |  | 1.71% - 2.83% |  | 0.68% - 1.39%
Expected stock price volatility | 49.0% |  | 48.4% - 50.0% |  | 48.2% - 49.5%
Dividend yield | — |  | — |  | —
The Company uses the simplified method to estimate the expected option life of options. The risk-free interest rate used is the yield on a U.S. Treasury note as of the grant date with a maturity equal to the estimated life of the option. The calculated estimated volatility rate is based on ANI's historical stock price. The Company has not issued a cash dividend on the common shares in the past nor does the Company have any current plans to do so in the future; therefore, an expected dividend yield of zero was used. A summary of stock option activity under the 2022 Plan and Inducement Grants during the years ended December 31, 2023, 2022, and 2021 is presented below:
(in thousands, except per share and remaining term data) |  | Option Shares |  | Weighted Average Exercise Price |  | Fair Value |  | Weighted Average Remaining Term (years) |  | Aggregate Intrinsic Value
Outstanding December 31, 2020 |  | 936 |  |  | $ | 48.44 |  |  |  |  | 7.1 |  | $ | 372 |
Granted |  | 168 |  |  | 33.09 |  |  | $ | 15.71 |  |  |  |  |
Exercised |  | (42) |  |  | 40.25 |  |  |  |  |  |  | 552 |
Forfeited |  | (19) |  |  | 59.84 |  |  |  |  |  |  |
Expired |  | (55) |  |  | 55.59 |  |  |  |  |  |  |
Outstanding December 31, 2021 |  | 988 |  |  | $ | 45.56 |  |  |  |  | 6.6 |  | $ | 6,786 |
Granted |  | 36 |  |  | 34.52 |  |  | $ | 16.82 |  |  |  |  |
Exercised |  | (23) |  |  | 30.03 |  |  |  |  |  |  | 153 |
Forfeited |  | (47) |  |  | 36.91 |  |  |  |  |  |  |
Expired |  | (47) |  |  | 55.07 |  |  |  |  |  |  |
Outstanding at December 31, 2022 |  | 907 |  |  | $ | 45.47 |  |  |  |  | 5.6 |  | $ | 3,868 |
Granted |  | 3 |  |  | 41.84 |  |  | $ | 22.12 |  |  |  |  |
Exercised |  | (189) |  |  | 44.09 |  |  |  |  |  |  | 2,894 |
Forfeited |  | (21) |  |  | 33.45 |  |  |  |  |  |  |
Expired |  | (11) |  |  | 55.15 |  |  |  |  |  |  |
Outstanding at December 31, 2023 |  | 689 |  |  | $ | 46.05 |  |  |  |  | 4.9 |  | $ | 8,370 |
Exercisable at December 31, 2023 |  | 580 |  |  | $ | 48.75 |  |  |  |  | 4.5 |  | $ | 5,815 |
As of December 31, 2023, there was $1.6 million of total unrecognized compensation cost related to non-vested stock options granted under the 2022 Plan and Inducement Grant. The cost is expected to be recognized over a weighted-average period of 1.1 years. During the year ended December 31, 2023, ANI received $8.3 million in cash from the exercise of stock options and recorded approximately $0.2 million tax provision related to these exercises. During the year ended December 31, 2022, ANI received $0.7 million in cash from the exercise of stock options and recorded a $0.1 million tax provision related to these exercises. During the year ended December 31, 2021, ANI received $1.7 million in cash from the exercise of stock options and recorded a $0.1 million tax provision related to these exercises. Restricted Stock Awards Restricted stock awards (“RSAs”) granted to employees generally vest over a period of four years. RSAs granted to non-officer directors generally vest over a period of one year. Shares of common stock delivered to employees and directors will be unrestricted upon vesting. During the vesting period, the recipient of the restricted stock has full voting rights as a stockholder and would receive dividends, if declared, even though the restricted stock remains subject to transfer restrictions and will generally be forfeited upon termination of the officer prior to vesting. The fair value of each RSA is based on the market value of the Company's stock on the date of grant. A summary of RSA activity under the Plan during the years ended December 31, 2023, 2022, and 2021 is presented below:
(in thousands, except per share and remaining term data) |  | Shares |  | Weighted Average Grant Date Fair Value |  | Weighted Average Remaining Term (years)
Unvested at December 31, 2020 |  | 352 |  |  | $ | 48.14 |  |  | 2.7
Granted |  | 541 |  |  | 33.02 |  |  |
Vested |  | (125) |  |  | 48.32 |  |  |
Forfeited |  | (61) |  |  | 48.16 |  |  |
Unvested at December 31, 2021 |  | 707 |  |  | $ | 36.52 |  |  | 2.8
Granted |  | 748 |  |  | 32.76 |  |  |
Vested |  | (245) |  |  | 36.99 |  |  |
Forfeited |  | (69) |  |  | 38.08 |  |  |
Unvested at December 31, 2022 |  | 1,141 |  |  | $ | 33.86 |  |  | 2.6
Granted |  | 674 |  |  | 43.30 |  |  |
Vested |  | (383) |  |  | 34.59 |  |  |
Forfeited |  | (81) |  |  | 38.10 |  |  |
Unvested at December 31, 2023 |  | 1,351 |  |  | $ | 38.11 |  |  | 2.4
As of December 31, 2023, there was $41.5 million of total unrecognized compensation cost related to non-vested RSAs granted under the Plan, which is expected to be recognized over a weighted-average period of 2.4 years. Performance-Based Restricted Stock Units Awards may also be issued in the form of PSUs. PSUs represent the right to receive a number of shares of Company common stock, contingent upon the achievement of specified performance objectives during a specified performance period. PSUs granted to date vest over a three-year performance period. On February 28, 2023, as part of the Company's equity compensation program, PSUs were granted to certain executives. Of these PSUs, 50% were market performance-based restricted stock units (“MPRSUs”), vesting of which is contingent upon the Company meeting certain total shareholder return (“TSR”) levels as compared to a select peer group over the over three years starting January 1, 2023. The MPRSUs are also subject to the recipient’s continued employment or service through December 31, 2025. The MPRSUs cliff vest at the end of the three-year period and have a maximum potential to vest at 200% (85,099 shares) based on TSR performance. The related share-based compensation expense is determined based on the estimated fair value of the underlying shares on the date of grant and is recognized straight-line over the vesting term. The estimated grant date fair value per share of the MPRSUs was $68.65 and was calculated using a Monte Carlo simulation model. These MPRSUs are included at 100% of the estimate number of shares at the end of the three-year performance period and are reflected under “Granted” in the table below. The other 50% of the PSUs were performance based restricted stock units (“PRSUs”), vesting of which is contingent upon the Company meeting certain adjusted non-GAAP year-on-year EBITDA growth rates over the over three years starting January 1, 2023. The PRSUs are also subject to the recipient’s continued employment or service through December 31, 2025. The PRSUs cliff vest at the end of the three-year period and have a maximum potential to vest at 200% (85,099 shares) based on adjusted non-GAAP year-on-year EBITDA growth rates. The related share-based compensation expense is determined based on the estimated fair value of the underlying shares on the date of grant and is recognized straight-line over the vesting term. The Company analyzed progress on the performance goals to assess the likelihood of achievement. The estimated grant date fair value per share of the PRSUs was $41.84 based on the closing price of the stock on the date of grant. These PRSUs are included at 100% of the estimated number of shares at the end of the three-year performance period and are reflected under “Granted” in the table below. A summary of PSU activity under the Plan during the years ended December 31, 2023 and 2022 is presented below:
(in thousands, except per share and remaining term data) |  | Shares |  | Weighted Average Grant Date Fair Value |  | Weighted Average Remaining Term (years)
Unvested at December 31, 2022 |  | — |  |  | $ | — |  |  | — |
Granted |  | 85 |  |  | 41.84 |  |  |
Vested |  | — |  |  | — |  |  |
Forfeited |  | (1) |  |  | 41.84 |  |  |
Unvested at December 31, 2023 |  | 84 |  |  | $ | 41.84 |  |  | 2.0
As of December 31, 2023, there was $2.5 million of total unrecognized compensation cost related to non-vested PSUs granted under the Plan, which is expected to be recognized over a weighted-average period of 2.0 years.

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