Stock-Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

(17) Stock-Based Compensation

Stock Incentive Plans

2015 Incentive Plan

The Company is authorized to grant shares of restricted stock, restricted stock units (“RSUs”), stock appreciation rights, cash incentive awards and options to purchase shares of common stock to employees and non-employees inclusive of directors pursuant to its 2015 Incentive Plan (the “2015 Plan”). The 2015 Plan also designates that shares may be used for performance-based awards and market-based awards. The vesting period for awards granted under the 2015 Plan is generally determined by the Board of Directors at the date of the grant. Generally, the awards vest one third each year, over 3 years. The total number of shares of common stock reserved and available for distribution under the 2015 Plan and the total number of shares of common stock that can be issued pursuant to stock options is 25,235 shares. Stock-based compensation expense is generally included in selling, general and administrative expenses in the consolidated statements of operations.

Systemic Bio Phantom Unit Plan

During the year ended December 31, 2023, we granted phantom unit awards ("Phantom Units") under a new compensation plan designed for employees and non-employees performing services for Systemic Bio, a wholly-owned subsidiary of 3D Systems Corporation. All awards granted under the plan are subsidiary-level awards.

The Phantom Units granted under the plan include both a time-based vesting condition (generally 4 years, subject to acceleration in connection with specified liquidity events) and a market condition that is met if (1) the value of Systemic Bio exceeds a specified multiple of the capital invested in this subsidiary (the "hurdle") and (2) the business achieves a specified minimum internal rate of return. The market condition will be assessed upon (A) a trigger event (e.g., change-in-control, IPO, or plan expiration of December 31, 2030) and/or (B) an interim liquidity event (defined as January 1, 2028) that occurs prior to a trigger event. All awards granted under the plan are liability-classified due to our intention to settle these awards with cash; although, we have discretion to partially or fully settle these awards in equity upon vesting. Liability classification of the awards requires them to be remeasured at their estimated fair value at the end of each reporting period. Due to the presence of the market-condition and the fact that Systemic Bio does not have a readily available share price, the awards are valued using a Monte Carlo simulation with the assistance of a third-party valuation firm.

Other Compensation Arrangements that Include Share Settlement

Regenerative Medicine Earnout Payments and Performance-Based Stock Units

On December 1, 2021, the Company acquired Volumetric. Pursuant to the terms of the related acquisition agreement, the Company could be required to pay milestone-based payments of up to $355,000 in the aggregate, all of which would be incremental to the acquisition purchase price, upon (1) the achievement of seven discrete non-financial milestones that require attainment prior to either December 31, 2030 or December 31, 2035 and (2) the continued employment of certain key individuals from Volumetric. Each potential milestone-based payment is considered compensation expense, which the Company is required to recognize ratably from the point in time when a milestone is deemed probable of achievement through the estimated date of achievement. Each milestone payment, if earned, will be settled approximately half in cash and half in shares of the Company’s common stock and, accordingly, the portion of the Company’s accrued liability (see Note 12) that would ultimately be settled with the Company’s common stock is reflected in the disclosure of stock-based compensation expense included herein.

In addition, the Company has granted performance-based stock units (“PSUs”), with vesting terms that are based upon four individually-measured, non-financial milestones, to other employees who work on advancements in regenerative medicine related to human organs and non-organ human tissue. The PSUs associated with each individual milestone are required to be recognized as compensation expense over the period commencing on the date that the respective milestone is deemed probable of being met through the anticipated date of achievement.

Prior to the year ended December 31, 2023, the Company recognized compensation expense related to (1) one Volumetric milestone-based payment, for which the potential amount due to the sellers would be $65,000, and (2) one PSU milestone (“the RegMed Awards”), for which the aggregate grant date fair value of the outstanding and unvested awards was $4,536 as of December 31, 2022, as the related milestone was deemed probable of achievement. During the year ended December 31, 2023, the Company decided to reduce its budgeted funding for the R&D related to the Volumetric and RegMed Award milestones for which compensation expense was previously being recognized, which resulted in the Company concluding that it is no longer probable that the respective milestones would be achieved by the end of the term of the Volumetric earnout arrangement and prior to the expiration of the RegMed Awards. In concluding that the Volumetric and RegMed Award milestones would no longer be achieved, the Company reversed all of the previously accrued compensation expense, a portion of which was to be settled with common stock, which reduced selling, general and administrative expense, as well as the Company's reported loss, by $18,392 for the year ended December 31, 2023. The reversal of such accrued expense reduced our reported net loss per basic and diluted share of common stock by $0.14 for the year ended December 31, 2023.

Subsequent to December 31, 2023, events have occurred that have resulted in the Company fully cancelling the former Volumetric Shareholders' eligibility to earn any portion of the $355,000 attributable to the milestone-based payments outlined in the Volumetric acquisition agreement. Refer to Note 26 for additional details.

dp polar Earnout

On October 4, 2022, the Company acquired dp polar. The acquisition agreement included an earnout arrangement for $2,229 incremental to the acquisition purchase price, which would be settled via the issuance of 250 shares of the Company’s common stock. The issuance and vesting of these shares is contingent on certain service conditions of a key individual from dp polar through December 31, 2024. Management concluded that this potential obligation for the issuance of 250 shares of common stock should be accounted for as compensation expense recognized over the individual's service period and, accordingly, the related expense is reflected in the disclosure of stock-based compensation included herein. In April 2024, due to a change in the key individual's employment arrangement, all service conditions were met based on the terms of the initial earnout. All remaining cost related to the unvested shares was recorded in operating expense in the three months ended June 30, 2024.

Stock-Based Compensation Activity and Expense

The following table shows the stock-based compensation expense recognized during the years ended December 31, 2023, 2022, and 2021:


(in thousands)	2023		2022		2021
Stock-based compensation expense	$	23,504	$	42,415	$	55,153
Tax benefit	$	—	$	—	$	—

Included in the above expenses for the years ended December 31, 2023, 2022, and 2021 are $0, $4,030, and $22,057 of expense, respectively, pertaining to annual incentive compensation which is paid in Company shares of common stock that are vested upon grant. Also, included in the above expenses for the years ended December 31, 2023, 2022, and 2021 are $(8,640), $7,959, and $683, respectively, of expense related to the Volumetric earnout arrangement discussed above and in Note 3. Finally, the above expenses for the years ended December 31, 2023, 2022, and 2021 include $1,015, $268 and $0, respectively, of expense related to the dp polar earnout arrangement discussed above and in Note 3.

Restricted Stock and Restricted Stock Units

A summary of our restricted stock and RSU activity for the year ended December 31, 2023 is as follows:


(in thousands, except per share amounts)	Number of Shares/Units	Weighted Average Grant Date Fair Value
Outstanding at beginning of year — unvested	5,015	$	18.19
Granted	4,439	$	10.26
Canceled	(1,118)	$	15.45
Vested	(2,154)	$	13.09
Outstanding at end of year — unvested	6,182	$	14.77

Included in the above outstanding balance as of December 31, 2023 are 1,106 shares of restricted stock that vest under specified market conditions and 966 shares of restricted stock that remain subject to specified performance conditions in order to vest. Awards with specified market conditions were awarded to certain employees in 2023, 2022, and 2021.

Systemic Bio Phantom Unit Plan

During the year ended December 31, 2023, we granted 597 units under the Systemic Bio Phantom Unit Plan, 596 of which remained outstanding as of December 31, 2023. Compensation expense attributable to these awards is being recognized over 40.5 months or 48 months, based upon the recipient. As the awards include graded, time-based vesting and a market condition, compensation expense is being recognized under the graded vesting (accelerated attribution) method. Compensation expense and the associated liability recognized during the year ended December 31, 2023 was $544. Systemic Bio Phantom Units are excluded from the restricted stock and RSU summary table above.

At December 31, 2023, there was $41,161 of unrecognized stock-based compensation expense related to all unvested equity awards, which we expect to recognize over a weighted-average period of 1.9 years.

Stock Options

During the year ended December 31, 2016, we awarded certain employees market condition stock options under the 2015 Plan that vest under specified market conditions. Each employee was generally awarded two equal tranches of market condition stock options that immediately vest when our common stock trades at either $30 or $40 per share for ninety consecutive calendar days.

We recognize compensation expense related to stock options on a straight-line basis over the derived term of the awards. The fair value of stock options with market conditions is estimated using a binomial lattice Monte Carlo simulation model. Expense for awards with a market condition is not reversed if the market condition is not met.

Stock option activity for the year ended December 31, 2023 was as follows:


	Year Ended December 31, 2023
(in thousands, except per share amounts)	Number of Shares	Weighted Average Exercise		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Stock option activity:
Outstanding at beginning of year	420	$	13.26	3.7	$	—
Granted	—	—		—	—
Exercised	—	—		—	—
Forfeited and expired	—	—		—	—
Outstanding at end of year	420	$	13.26	2.7	$	—

As of December 31, 2023 and 2022, none of the 420 outstanding stock options were exercisable, and there was no unrecognized stock-based compensation expense related to stock options.