At the time of separation, Zimmer Biomet had share-based compensation plans under which it granted stock options, restricted stock units ("RSUs") and performance-based RSUs ("PRSUs"). In connection with the distribution, ZimVie employees with outstanding Zimmer Biomet share-based awards received replacement share-based awards. The ratio used to convert the Zimmer Biomet share-based awards was designed to preserve the aggregate intrinsic value of the award immediately after the distribution when compared to the aggregate intrinsic value of the award immediately prior to the distribution. Outstanding RSUs and PRSUs were converted into 0.3 million ZimVie RSUs at a weighted average fair value of $31.55, and outstanding stock options were converted into 2.1 million ZimVie stock options at a weighted average fair value of $14.76. Due to the conversion, ZimVie incurred $21.3 million of incremental share-based compensation expense. Of this amount, $10.3 million was related to unvested and/or unexercised share-based awards and was recognized at the distribution date. The remaining $11.0 million is being recognized over the remainder of the share-based awards' weighted average vesting period of 2.5 years from the date of the distribution.

The ZimVie Inc. 2022 Stock Incentive Plan was established effective as of March 1, 2022, and was amended effective May 12, 2023 (as amended, the "2022 Plan"). A total of 6.0 million shares of common stock are authorized for issuance under the 2022 Plan. Shares issued pursuant to converted Zimmer Biomet share-based awards do not count against this limit. At December 31, 2024, 3.7 million shares were available for future grants and awards under the 2022 Plan. The 2022 Plan provides for the grant of various types of awards including stock options, stock appreciation rights, performance shares, PRSUs, restricted stock and RSUs. Generally, awards have a three-year vesting period and stock options have a term of ten years. Vesting may accelerate upon retirement after the first anniversary date of the award if certain criteria are met. Additionally, in cases of special circumstances as determined by the Compensation Committee of the Board of Directors, the Compensation Committee may, in its sole discretion, accelerate vesting. We recognize expense on a straight-line basis over the requisite service period, less awards expected to be forfeited using estimated forfeiture rates. Stock options are granted with an exercise price equal to the market price of our common stock on the date of grant, except in limited circumstances where local law may dictate otherwise.

Share-based compensation expense was as follows (in thousands):


	For the Years Ended December 31,
	2024			2023			2022
Share-based compensation expense recognized in:
Cost of products sold, excluding intangible asset amortization	$	557		$	1,230		$	2,437
Research and development		1,312			1,886			3,441
Selling, general and administrative		14,723			23,904			24,411
		16,592			27,020			30,289
Tax benefit related to awards		(4,148	)		(6,836	)		(7,254	)
Total expense, net of tax	$	12,444		$	20,184		$	23,035

Share-based compensation expense related to discontinued operations is included in the table above and is disclosed in Note 3. For periods prior to the distribution, we specifically identified employees who were associated with our historical operations and calculated expense based upon the awards received under the Zimmer Biomet plans, as well as expense related to corporate or shared employees allocated to us on a proportional cost allocation method, primarily based on revenue.

Stock option activity was as follows:


	Year Ended December 31, 2024
				Weighted		Weighted Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
	Stock Options			Price		Life (Years)		Value (in Millions)
Outstanding at December 31, 2023		2,303,143		$	26.83
Exercised		(1,117	)		18.58
Forfeited		(582,663	)		26.12
Outstanding at December 31, 2024		1,719,363		$	27.08		5.2	$	—
Exercisable at December 31, 2024		1,447,558		$	26.91		4.9	$	—

We used a Black-Scholes option-pricing model to determine the fair value of our stock options. For awards granted shortly after the distribution: expected volatility of 52.29% was derived from a peer group's combined historical volatility that was de-levered and re-levered for ZimVie as ZimVie did not have sufficient historical volatility based on the expected term of the underlying options; the expected term of the stock options of 6.0 years was determined using the simplified method; and the risk-free interest rate of 1.94% was determined using the implied yield then available for zero-coupon U.S. government issues with a remaining term approximating the expected life of the options. The dividend yield was zero as ZimVie has no plans to pay a dividend for the foreseeable future.

Aggregate intrinsic value was negligible at December 31, 2024. At December 31, 2024, we had unrecognized share-based compensation cost related to unvested stock options of $1.0 million, which is expected to be amortized over the remaining weighted average vesting period of less than one year.

RSU and PRSU activity was as follows:


	Year Ended December 31, 2024
				Weighted
				Average
	Number of			Grant Date
	RSUs			Fair Value
Outstanding at December 31, 2023		1,942,210		$	15.13
Granted		797,869			17.52
Vested		(578,129	)		19.98
Forfeited		(458,154	)		13.46
Outstanding at December 31, 2024		1,703,796		$	15.75

PRSUs declined to zero at September 30, 2024. In September 2024, the Compensation Committee of the Board of Directors approved a modification of all 289,310 outstanding PRSUs. Prior to the modification, the PRSUs could have vested from 0-150% of target based on the level of cumulative achievement of pre-defined performance metrics based on the consolidated results of the dental and spine segments. The PRSUs were payable in common shares and did not have the right to vote until settled. Compensation expense related to the PRSUs was being recognized over a 36-month cliff vesting period, and adjusted as needed for changes in the projected level of achievement of the performance metrics. During the quarter ended September 30, 2024, the Compensation Committee approved a conversion of all outstanding PRSUs into time-based RSUs on a one-for-one basis. The converted awards will cliff-vest on the award's original vesting date. For PRSUs outstanding prior to the conversion that were expected to vest, we determined that there was no change in their fair value immediately after the conversion. For PRSUs outstanding prior to the conversion that were not expected to vest, the fair value of the awards immediately after the conversion increased due to becoming probable of vesting, resulting in $1.2 million of incremental compensation expense to be recognized over the remaining vesting period of approximately 1.7 years.

At December 31, 2024, we had unrecognized share-based compensation cost related to unvested RSUs of $12.6 million, which is expected to be amortized into earnings over the remaining weighted average vesting period of less than one year. The total fair value of RSUs granted during the years ended December 31, 2024 and 2023 was $14.0 million and $15.8 million, respectively. The total fair value of RSUs that vested during the years ended December 31, 2024 and 2023 was $11.6 million and $19.8 million, respectively.