In January 2018, the Board of Directors adopted the Company’s 2018 Stock Option Plan as amended, (the "2018 Stock Option Plan") which provided for the issuance of options to purchase up to 3,048,490 shares of the Company’s common stock to officers, directors, employees, and consultants. The option exercise price per share is determined by the Board of Directors based on the estimated fair value of the Company’s common stock.

In June 2019, the Board of Directors adopted the Company’s 2019 Stock Option and Incentive Plan (the "2019 Plan"), which replaced the 2018 Stock Option Plan upon the completion of the IPO. The 2019 Plan allows the Compensation Committee of the Board of Directors (the "Compensation Committee") to make equity-based incentive awards including stock options, RSUs and PSUs to the Company’s officers, employees, directors, and consultants. The initial reserve for the issuance of awards under this plan was 2,139,683 shares of common stock. The initial number of shares reserved and available for issuance automatically increased on February 1, 2020 and automatically increases each February 1 thereafter by 5% of the number of shares of common stock outstanding on the immediately preceding January 31 (or such lesser number of shares determined by the Compensation Committee). As the 2018 Stock Option Plan was replaced by the 2019 Plan, all grants of stock options, RSUs and PSUs during the years ended January 31, 2023, 2022 and 2021 were made pursuant to the 2019 plan, respectively.
In June 2019, the Board of Directors also adopted the ESPP, which became effective immediately prior to the

In August 2021, the Company amended its fiscal 2022 incentive bonus to allow eligible employees to elect to receive all or a portion of their fiscal 2022 year end incentive compensation in the form of immediately vested restricted stock units instead of cash. The Company's fiscal 2023 incentive bonus allows eligible employees to elect to receive all or a portion of their fiscal 2023 incentive compensation in the form of immediately vested restricted stock units instead of cash.

As of January 31, 2023, there are 3,408,720 shares available for future grant pursuant to the 2019 Plan after factoring in the automatic increase which occurs on February 1 of each fiscal year, as well as an additional 576,304 shares available for future grant pursuant to the ESPP. During fiscal 2022, the Company activated its ESPP. The ESPP has two six-month offering periods each calendar year beginning in January and July. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a 15% discount through payroll deductions.


	For the fiscal years ended January 31,
	2023		2022		2021
RSUs	$	42,214	$	24,222	$	10,693
Liability awards	7,641		7,055		—
PSUs	7,282		2,389		93
Stock options	1,489		2,294		2,703
ESPP	1,521		763		—
Total stock-based compensation	$	60,147	$	36,723	$	13,489


	For the fiscal years ended January 31,
	2023		2022		2021
Stock-based compensation expense recorded to additional paid-in capital(1)	$	52,506	$	29,668	$	13,489
Stock-based compensation expense recorded to accrued expenses	7,641		7,055		—
Total stock-based compensation	60,147		36,723		13,489
Less stock-based compensation expense capitalized as internal-use software	(1,372)		(489)		—
Stock-based compensation expense per consolidated statements of operations(2)	$	58,775	$	36,234	$	13,489

(1) Stock-based compensation included in the Company's consolidated statements of stockholders' equity is consistent with these amounts.
(2) Non-cash stock-based compensation expense included in the Company's consolidated statement of cash flows for the fiscal year ended January 31, 2022 was $36,144, and excluded $90 of cash-settled stock-based compensation expense included in the Company's statements of operations.

(c) Restricted stock units

The Company has issued restricted stock units to employees and independent directors that vest based on a time-based condition. For RSUs granted to employees prior to January 2021, pursuant to a time-based condition, 10% of the restricted stock units vest after one year, 20% vest after two years, 30% vest after three years and 40% vest after four years. The restricted stock units expire seven years from the grant date.

During the year ended January 31, 2022, the Company modified the vesting of RSUs granted subsequent to January 1, 2021 for employees other than its named executive officers listed in its 2022 proxy statement ("2022 NEOs") and other members of its executive management team. Pursuant to the modified vesting schedule, RSUs granted after January 1, 2021 for employees other than 2022 NEOs and other members of its executive management team, vest 6.25% each quarter over four years based on continued service. For 2022 NEOs and other members of the Company's executive management team, RSUs granted from January 1, 2022 through December 31, 2022 vest 6.25% each quarter over four years based on continued service. Beginning January 2023, all RSUs granted vest 25% each year over four years based on continued service.

Additionally, the Company provides certain employees the option to settle their incentive bonus in immediately vested RSUs. RSUs granted to settle bonus awards are included in RSUs granted and vested in the table below. See section (g) Liability awards below for additional information regarding share-settled bonus awards.


			Restricted stock units
Unvested, January 31, 2020			1,447,418
Granted during year			972,271
Vested			(242,049)
Forfeited and expired			(124,602)
Unvested, January 31, 2021			2,053,038
Granted during year			1,836,534
Vested			(559,767)
Forfeited and expired			(195,966)
Unvested, January 31, 2022			3,133,839
Granted during year			2,907,838
Vested			(1,626,679)
Forfeited and expired			(497,245)
Unvested, January 31, 2023			3,917,753

Options granted under the equity award plans have a maximum term of ten years and vest over a period determined by the Board of Directors (generally four years from the date of grant or the commencement of the grantee’s employment with the Company). Options generally vest 25% at the one-year anniversary of the grant date, after which point they generally vest pro rata on a monthly basis.

Stock option activity for the fiscal years ended January 31, 2023, 2022 and 2021 is as follows:


	Number of options	Weighted- average exercise price		Weighted- average remaining contractual life (in years)	Aggregate Intrinsic value
Outstanding—January 31, 2020	5,516,452	$	3.80
Granted during the year	—	$	—
Exercised	(2,216,368)	$	2.39
Forfeited	(88,730)	$	7.45
Outstanding and expected to vest — January 31, 2021	3,211,354	$	4.67	5.99	$	194,676
Outstanding—January 31, 2021	3,211,354	$	4.67
Granted during the year	—	$	—
Exercised	(1,439,186)	$	2.88
Forfeited and expired	(67,018)	$	9.02
Outstanding and expected to vest — January 31, 2022	1,705,150	$	6.01	5.94	$	42,938
Outstanding—January 31, 2022	1,705,150	$	6.01
Granted during the year	—	$	—
Exercised	(311,743)	$	4.92
Forfeited and expired	(8,214)	$	4.68
Outstanding and expected to vest — January 31, 2023	1,385,193	$	6.26	5.06	$	43,341
Exercisable — January 31, 2023	1,362,903	$	6.12	5.03	$	42,750
Amount vested during year ended January 31, 2023	258,735	$	8.27

The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company’s estimated stock price at the time of exercise and the exercise price, multiplied by the number of related in-the-money options) that would have been received by the option holders had they exercised their options at the end of the period. This amount changes based on the market value of the Company’s common stock. The total intrinsic value of options exercised for the years ended January 31, 2023, 2022 and 2021 (based on the difference between the Company’s estimated stock price on the exercise date and the respective exercise price, multiplied by the number of options exercised), was $6,970, $73,624 and $33,575, respectively.

The Company grants PSUs to certain members of its management team. PSUs vest over approximately three years from the grant date upon satisfaction of both time-based requirements and market targets based on Phreesia's TSR relative to the TSR of each member of the Peer Group. Depending on the percentage level at which the market-based condition is satisfied, the number of shares vesting could be between 0% and 220% of the number of PSUs originally granted. PSUs granted during the years ended January 31, 2023, 2022 and 2021 vest in a maximum of 220%, 200% and 200% of the number of PSUs originally granted, respectively. To earn the target number of PSUs (which represents 100% of the number of PSUs granted), the Company must perform at the 60th percentile, with the maximum number of PSUs earned if the Company performed at least at the 90th percentile. If Phreesia's TSR for the performance period is negative, the maximum number of PSUs that can be earned will be capped at 100%.

The Company estimated the fair value of the PSUs using a Monte Carlo Simulation model which projected TSR for Phreesia and each member of the Peer Group over the performance period. The Company recognizes the grant date fair value of PSUs as compensation expense over the vesting period.


	Fiscal years ended January 31,
	2023			2022			2021
Correlation coefficient	0.4957			0.3878			0.4230
Valuation date stock price	$	35.41		$	36.03		$	62.96
Simulation term	3.00 Years			2.99 Years			3.00 Years
Volatility	64.98		%	44.32		%	43.71		%
Risk-free rate	3.84		%	1.23		%	0.20		%
Dividend yield	—		%	—		%	—		%
Weighted average fair value of grants	$	56.52		$	48.47		$	84.38

Market based PSU activity for the years ended January 31, 2023, 2022 and 2021 are as follows:


			Performance stock units
Outstanding February 1, 2020			—
Granted during the year ended January 31, 2021			70,806
Outstanding, February 1, 2021			70,806
Granted during the year ended January 31, 2022			325,410
Vested			—
Forfeited and expired			—
Outstanding, February 1, 2022			396,216
Granted during the year ended January 31, 2023			255,572
Vested			—
Forfeited and expired			(3,555)
Outstanding, January 31, 2023			648,233

The ESPP is a compensatory plan because it provides participants with terms that are more favorable than those offered to other holders of the Company's common stock. Employees purchase shares at the lesser of (1) 85% of the closing stock price on the first day of the offering period or (2) 85% of the closing stock price on the last day of the offering period. The ESPP is structured as a qualified employee stock purchase plan under Section 423 of the U.S. Internal Revenue Code of 1986.

The fair value of shares granted under the ESPP during the year ended January 31, 2023 was estimated using a Black-Scholes pricing model with the following assumptions:

During the fiscal years ended January 31, 2023 and 2022, the Company issued 162,154 and 42,530 shares of common stock, respectively, for the ESPP. In connection with these issuances, during the years ended January 31, 2023 and 2022, the Company recorded increases of $3,470 and $1,506, respectively, to additional paid-in capital

The Company's amended fiscal 2022 incentive bonus and the Company's fiscal 2023 incentive bonus allow eligible employees to elect to receive all or a portion of their incentive compensation in the form of immediately vested restricted stock units instead of cash. Restricted stock units issued to settle liability awards are covered by the 2019 Plan. Share-settled bonus awards will be settled at a value equal to 115% of the bonuses converted. These share-settled bonus awards vest based on the achievement of the Company’s predefined performance targets. As share-settled bonus awards will be settled in a variable number of shares, the Company classifies share-settled bonus awards as liabilities, within accrued expenses in the accompanying consolidated balance sheets until they are settled in shares and included in stockholders' equity. During the year-ended January 31, 2023, the Company settled $8,812 of share-settled bonus awards by issuing 302,931 immediately vested RSUs. See (c) Restricted Stock Units above for additional discussion regarding RSUs.