Compensation Related Costs, Share Based Payments

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Equity Incentive Awards

Stock-Based Compensation: The Company recognizes compensation expense in its condensed consolidated statements of comprehensive loss for share-based payments, including stock options and restricted stock units (RSUs) granted to employees, based on their fair values on the date of the grant, with the compensation expense recognized on a straight-line basis over the period in which an employee is required to provide service in exchange for the stock award.

The fair value of stock options is estimated at the date of grant using the Black-Scholes method requiring the input of subjective assumptions. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. For purposes of determining the fair value of stock options, the Company segregates its options into two homogeneous groups, based on exercise and post-vesting employment termination behaviors, resulting in a change in the assumptions used for expected option lives. Historical data is used to estimate the expected option life for each group. Expected volatility is based on the historical volatility in the Company’s stock price.

The Company utilized the Black-Scholes valuation model for estimating the fair value of the stock option compensation granted, with the following weighted-average assumptions for stock options granted in the six months ended June 30, 2023 and 2022:


	Expected Volatility		Risk-free Interest Rate		Expected Term	Dividend Rate
June 30, 2023
Employees	113	%	3.8	%	4	—	%
Officers and non-employee directors	99	%	3.9	%	6	—	%
June 30, 2022
Employees	106	%	2.1	%	4	—	%
Officers and non-employee directors	91	%	1.9	%	7	—	%

The following is a summary of stock option activity under Lexicon’s stock-based compensation plans for the six months ended June 30, 2023:


	Stock Options	Weighted Average Exercise Price
	(in thousands)
Outstanding at December 31, 2022	12,349	$	5.10
Granted	6,825	2.46

Expired	(152)	14.68
Forfeited	(522)	3.78
Outstanding at June 30, 2023	18,500	4.08
Exercisable at June 30, 2023	7,357	$	5.94

The following is a summary of restricted stock unit activity under Lexicon’s stock-based compensation plans for the six months ended June 30, 2023:


	RSU’s	Weighted Average Grant Date Fair Value
	(in thousands)
Outstanding at December 31, 2022	2,748	$	3.78
Granted	4,199	2.41
Vested	(1,290)	3.80
Forfeited	(230)	2.70
Outstanding at June 30, 2023	5,427	$	2.76