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SHARE-BASED COMPENSATION | 3 Months Ended
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Mar. 31, 2022
Share-based Payment Arrangement [Abstract] |
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION We maintain an equity incentive plan for the issuance and grant of equity awards (restricted stock, restricted stock units, or RSUs, and incentive and nonqualified stock options) to our officers, directors, employees and certain advisors. As of March 31, 2022, we had 43.9 million common shares authorized and available for issuance under the plan. Warrants In October 2021, we issued Carvana eight tranches of warrants, comprised of three tranches of “short-term warrants” and five tranches of “long-term warrants.” However, the exercisability of certain tranches are subject to Carvana’s decision to exercise certain other tranches. If Carvana exercises short-term tranches, then long-term tranche 1 warrants are cancelled and the remaining long-term tranches would be reduced such that Carvana will have the opportunity to purchase a maximum of 129.1 million shares of Class A common stock. As of March 31, 2022, we determined that all short-term warrants were probable of vesting. Under that scenario, it is not a possible outcome for the long-term warrants to also vest, so they are considered not probable of vesting. We recognized $5.3 million and zero of warrant compensation expense related to these equity-classified warrants based on progress toward completing the integrated automobile insurance solution for Carvana’s car buying platform, or Integrated Platform, for the three months ended March 31, 2022 and 2021, respectively. This expense is included in sales and marketing of our condensed consolidated statements of operations and comprehensive loss. All of these warrants are out-of-the-money and therefore have no intrinsic value as of March 31, 2022. As of March 31, 2022, there was $30.3 million of unrecognized compensation cost related to warrants. The remaining costs are expected to be recognized over a period of approximately two years. Employee Share-Based Compensation The following table displays share-based compensation expense recorded in the condensed consolidated statements of operations and comprehensive loss:
|  |  | Three Months Ended March 31,
|  |  |  |  | 2022 |  | 2021
|  |  |  |  | (dollars in millions)
Share-based compensation expense: |  |  |  |  |  |  |
Loss and loss adjustment expenses |  |  |  |  | $ | 0.2 |  |  | $ | 0.1 |
Sales and marketing |  |  |  |  | 0.1 |  |  | — |
Other insurance expense |  |  |  |  | 0.2 |  |  | 0.1 |
Technology and development |  |  |  |  | 0.7 |  |  | 0.3 |
General and administrative |  |  |  |  | 5.4 |  |  | 1.8 |
Total share-based compensation expense |  |  |  |  | $ | 6.6 |  |  | $ | 2.3 |
The following table provides total share-based compensation expense by type of award:
|  |  | Three Months Ended March 31,
|  |  |  |  | 2022 |  | 2021
|  |  |  |  | (dollars in millions)
Share-based compensation expense: |  |  |  |  |  |  |
Restricted stock unit expense |  |  |  |  | $ | 6.1 |  |  | $ | 0.6 |
Stock option expense |  |  |  |  | 0.5 |  |  | 1.7 |
Total share-based compensation expense |  |  |  |  | $ | 6.6 |  |  | $ | 2.3 |
As part of the January 2022 organizational realignment discussed in Note 9 “Restructuring Costs,” we modified certain share-based awards which resulted in $2.1 million of share-based compensation expense recognized in general and administrative expenses during the three months ended March 31, 2022. As of March 31, 2022, there was $4.1 million and $46.4 million of unrecognized compensation cost related to unvested stock options and RSUs, respectively. The remaining costs are expected to be recognized over a period of approximately four years for unvested stock options and four years for RSUs. Restricted Stock Units A summary of RSU activity for the three months ended March 31, 2022 is as follows:
|  | Three Months Ended March 31, 2022
Restricted Stock Units |  | Number of Shares |  | Weighted-Average Grant Date Fair Value per Share |  | Aggregate Intrinsic Value
|  | (in millions, except per share amounts)
Nonvested at January 1, 2022 |  | 8.9 |  |  | $ | 9.02 |  |  | $ | 27.4 |
Granted |  | 2.4 |  |  | 1.68 |  |  |
Vested |  | (0.9) |  |  | 10.48 |  |  | 2.0 |
Forfeited, expired or canceled |  | (1.8) |  |  | 8.68 |  |  |
Nonvested at March 31, 2022 |  | 8.6 |  |  | $ | 6.29 |  |  | $ | 16.8 |
Stock Options A summary of option activity for the three months ended March 31, 2022 is as follows:
| Three Months Ended March 31, 2022
Options | Number of Shares |  | Weighted-Average Exercise Price |  | Weighted-Average Remaining Contractual Term (in Years) |  | Aggregate Intrinsic Value
| (in millions, except exercise price and term amounts)
Outstanding and exercisable at January 1, 2022 | 6.5 |  |  | $ | 2.36 |  |  | 6.12 |  | $ | 9.5 |
Granted | — |  |  | — |  |  |  |  |
Exercised | (1.0) |  |  | 0.35 |  |  |  |  | 1.8 |
Forfeited, expired or canceled | (0.3) |  |  | 6.04 |  |  |  |  |
Outstanding and exercisable at March 31, 2022 | 5.2 |  |  | $ | 2.56 |  |  | 5.89 |  | $ | 2.9 |

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