A summary of our aggregate share-based compensation expense is set forth below. Stock-based compensation expense is included in corporate, general and administrative expenses on our consolidated statements of operations.

(a)

The amount for 2021 relates to stock-based compensation expense recognized as a result of the Cancellation Agreement transaction, as defined and described below.

2016 Equity Incentive Plan

The Company maintained the 2016 Equity Incentive Plan pursuant to which various stock-based awards may be granted to employees, directors, consultants, and advisers. The total number of shares of the Company’s common stock

that was authorized under the 2016 Equity Incentive Plan was 17,836,636, of which a total of 16,994,976 awards were granted. The 2016 Equity Incentive Plan provided for the following general vesting terms:

Half vested over time (“Time Vesting Awards”). Time Vesting Awards vested on the first anniversary of the grant date in the range of 25% to 62.5%, and the remaining Time Vesting Awards vest ratably on a semiannual basis thereafter through the fourth anniversary of the grant date.

Half vested upon the attainment of certain performance-based criteria measured at the time the Company experiences a liquidity event, as defined by the 2016 Equity Incentive Plan (“Contingent Performance-Based Awards”).

Stock options were exercisable over a period of time not to exceed 10 years from the date of grant.

Cancellation of Stock Option Awards Under 2016 Equity Incentive Plan

On July 27, 2020, the Company, Ignite Aggregator LP, and the equity holders of the Company entered into a Securities Purchase Agreement, and in conjunction therewith, the Company amended and restated the 2016 Credit Agreement. A portion of the proceeds from the 2016 Credit Agreement were used by the Company to repurchase 16,095,819 shares of its common stock from the certain members of management, the Board of Directors, and members of our equity partner. Additionally, as part of the 2016 Credit Agreement, the Company executed the Cancellation Agreement, as defined in Note 3, with each of the 2016 Equity Incentive Plan option holders, pursuant to which the Company’s 16,994,976 common stock options which were granted under the 2016 Equity Incentive Plan, were cancelled. The Cancellation Agreement resulted in the option holders receiving the same amount of cash that they would have received had they exercised their options, participated in the repurchase described above and sold their remaining shares. The 2016 Equity Plan was cancelled and replaced with the 2020 Equity Incentive Plan, as described below.

The Company utilized the Black-Scholes option-pricing model to determine the fair value of stock options on the date of grant. This model derives the fair value of stock options based on certain assumptions related to expected stock price volatility, expected option life, risk-free interest rate, and dividend yield. The Company’s expected volatility was based on the historical volatility of similar publicly traded companies deemed by the Company to be its peers. The risk-free interest rate assumption was based upon the Federal Reserve Board’s Treasury Constant Maturities for the expected term of the Company’s stock option awards, and the selected dividend yield assumption was determined in view of the Company’s historical and estimated dividend payout. The Company has no reason to believe that the expected volatility of its stock price would differ significantly from the historical volatility of its peers. The Company used the simplified method to calculate the expected term for the time vesting awards. The expected term for the contingent performance-based awards was the contractual term.

The Company estimated the fair value of stock options granted using the following weighted-average assumptions:


	2020
Expected volatility		34.9% - 39.3	%
Expected life (years)		5.8 - 6.2
Interest rate		0.51% - 1.8	%
Dividend yield		—	%
Weighted-average fair value	$	0.48
Fair value of underlying stock	$	4.82

A summary of the stock option activity for the year ended June 30, 2021 was as follows:


			Weighted		Average
	Number of	Option	average		remaining
Time-based option awards	options	price range	exercise price		term (in years)

Outstanding balance, June 30, 2020	8,497,488	$1.00 - $2.35	$	1.26	6.76
Canceled	(8,497,488)	$1.00 - $2.35	$	1.26	6.76
Outstanding balance, June 30, 2021	—


		Weighted		Average
	Number of	average		remaining
Performance-based option awards	options	exercise price		term (in years)

Outstanding balance, June 30, 2020	8,497,488	$	0.78	6.76
Canceled	(8,497,488)	$	0.78	6.76
Outstanding balance, June 30, 2021	—

2020 Equity Incentive Plan

Profits Interests

The LP maintains the 2020 Equity Incentive Plan pursuant to which interests in the LP in the form of Class B Units (profits interests) may be granted to employees, directors, consultants, and advisers. A maximum number of 16,162,177 Class B Units are authorized for grant under the 2020 Equity Incentive Plan. As of June 30, 2021, a total of 13,009,137 profits interests units have been granted under the 2020 Equity Incentive Plan.

These profits interests represented profits interest ownership in the LP tied solely to the accretion, if any, in the value of the LP following the date of issuance of such profits interests. Profits interests participated in any increase of LP value related to their profits interests after the hurdle value had been achieved and the LP profits interests received the agreed-upon return on their invested capital. The hurdle value per unit is $5.49 for both the performance-based and time-based units.

Each profits interests unit contains the following material terms:

(i)

The profits interests receive distributions (other than tax distributions) only upon a liquidity event, as defined, that exceed a threshold equivalent to the fair value of the LP, as determined by the Company’s Board of Directors, at the grant date.

(ii)

A portion of the units vest over a period of continuous employment or service (service-vesting units) while the other portion of the units only vest based on the level of aggregate multiple of invested capital and internal rate of return achieved by Ignite Aggregator LP, one of the limited partners of the LP, upon a change of control of the Company (performance-vesting units).

The performance-vesting units are subject to a market condition, which the Company incorporated as part of its determination of the grant date fair value of the units.

The Company used the Monte Carlo option model to determine the fair value of the granted profits interests units. As these awards were granted prior to our IPO, the stock price was based on the price realized in the equity owner transaction. Expected stock price volatility was based on consideration of indications observed from several publicly traded peer companies. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the unit. The dividend yield percentage is zero because the Company neither currently pays dividends nor intends to do so during the expected term. The expected term of the units represents the time the units are expected to be outstanding. The

assumptions under the Monte Carlo model related to the profits interests units, presented on a weighted-average basis, are provided below:


	2021
Expected volatility		44	%
Expected life (years) - time vesting units		1.8
Interest rate		0.16	%
Dividend yield		—	%
Weighted-average fair value	$	1.28
Fair value of underlying stock	$	5.49

A summary of profits interests activity for the year ended June 30, 2021 was as follows:



	Number of	Weighted average
Time-based unit awards	units	grant date fair value

Outstanding balance, June 30, 2020	—	$	—
Granted	6,686,568	$	1.28
Forfeited	(99,307)	$	1.17
Outstanding balance, June 30, 2021	6,587,261	$	1.28


	Number of	Weighted average
Performance-based unit awards	units	grant date fair value

Outstanding balance, June 30, 2020	—	$	—
Granted	6,322,569	$	0.57
Forfeited	(99,307)	$	0.44
Outstanding balance, June 30, 2021	6,223,262	$	0.57

The total unrecognized compensation cost related to profits interests units outstanding as of June 30, 2021 was $10.3 million, comprised (i) $6.8 million related to time-based unit awards expected to be recognized over a weighted-average period of 1.2 years and (ii) $3.5 million related to performance-based unit awards, which will be recorded when it is probable that the performance-based criteria will be met.

2021 Omnibus Incentive Plan

In March 2021, the compensation committee of our Board of Directors approved the InnovAge Holding Corp. 2021 Omnibus Incentive Plan (“2021 Omnibus Incentive Plan”), pursuant to which various stock-based awards may be granted to employees, directors, consultants, and advisers. The total number of shares of the Company’s common stock authorized under the 2021 Omnibus Incentive Plan is 14,700,000. The Company has issued time-based restricted stock units under this plan to its employees which generally vest (i) on March 4, 2023, the second anniversary of the grant date, or (ii) over a three-year period with one-third vesting on each anniversary of the date of grant. Certain other vesting periods have also

been used. The grant date fair value of restricted stock units are based on the closing market price of our common stock on the date of grant.

A summary of restricted stock units activity for the year ended June 30, 2021 was as follows:


			Weighted
			average
	Number of		grant-date fair
Restricted stock units	awards		value per share

Outstanding balance, June 30, 2020	—	$	—
Granted	48,470	$	22.87
Outstanding balance, June 30, 2021	48,470	$	22.87

The total unrecognized compensation cost related to restricted stock units outstanding as of June 30, 2021 was $1.1 million and is expected to be recognized over a weighted-average period of 2.2 years.