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Stock-Based Compensation

12 Months Ended

Dec. 31, 2021

10. Stock-Based Compensation

2019 Plan

On April 29, 2019, the Aemetis 2019 Stock Plan (the “2019 Stock Plan”) was approved by stockholders of the Company. This plan permits the grant of Incentive Stock Options, Non-Statutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares and other stock or cash awards as the Administrator may determine in its discretion. The 2019 Stock Plan’s term is 10 years and supersedes all prior plans. The 2019 Stock Plan authorized the issuance of 200,000 shares of common stock for the 2019 calendar year, in addition to permitting transferring and granting any available and unissued or expired options under the Amended and Restated 2007 Stock Plan in an amount up to 177,246 options.

With the approval of the 2019 Stock Plan, the Zymetis 2006 Stock Plan, and Amended and Restated 2007 Stock Plan are terminated for granting any options under either plan. However, any options granted before the 2019 Stock Plan approved will remain outstanding and can be exercised, and any expired options will be available to grant under the 2019 Stock Plan.

During the year ended December 31, 2019, 1,116,000 stock option grants were issued and approved by the Board for employees, consultants, and directors under the 2019 Stock Plan with 10-year terms and vesting terms from immediately to 3 years.

During the year ended December 31, 2020, 2,320,000 stock option grants were issued and approved by the Board for employees and directors under the 2019 Stock Plan with 10-year terms and vesting terms from immediately to 3 years.

On January 7, 2021, 945,000 incentive stock option grants were issued for employees and directors under the 2019 Stock Plan. In addition, 5,200 restricted stock award grants, with a fair value of $3.09 per award, were issued to the Company’s board of directors (“Board”) with the restriction that this grant would satisfy board compensation fees.

On April 8, 2021, 34,114 restricted stock award grants, with a fair value of $26.19 per award, were issued to the Board with the restriction that this grant would pay off outstanding accounts payable owed to the Board members and was included in the summary of awards granted.

On June 3, 2021, 30,000 stock option grants were approved by the Board for new employees under the 2019 Stock Plan with 10-year term and 3-year vesting.

On November 18, 2021, 165,800 incentive stock option grants were issued for employees and directors under the 2019 Stock Plan. In addition, 80,588 restricted stock award grants, with an average fair value of $18.53 per award, were issued to the Company’s board of directors (“Board”).

Inducement Equity Plan Options

In March 2016, the Board of Directors of the Company (the “Board”) approved an Inducement Equity Plan authorizing the issuance of 100,000 non-statutory stock options to purchase common stock. As of December 31, 2021, no options were outstanding under the Inducement Equity Plan.

Common Stock Reserved for Issuance

The following is a summary of awards granted under the above Plans:

	Shares Available for Grant			Number of Shares Outstanding			Weighted-Average Exercise Price
Balance as of December 31, 2018		149			2,889		$	1.80
Authorized		855			-			-
Granted		(1,116	)		1,116			0.78
Forfeited/expired		259			(259	)		3.53
Balance as of December 31, 2019		147			3,746		$	1.38
Authorized		2,342			-			-
Granted		(2,320	)		2,320			0.69
Exercised		-			(528	)		0.96
Forfeited/expired		211			(211	)		0.89
Balance as of December 31, 2020		380			5,327		$	1.14
Authorized		816			-			-
Options Granted		(1,141	)		1,141			5.60
RSAs Granted		(154	)					-
Exercised		-			(2,498	)		1.39
Forfeited/expired		241			(207	)		1.84
Balance as of December 31, 2021		289			7,509		$	2.29

The following is a summary of vested and unvested awards outstanding as of December 31, 2021, 2020, and 2019:

	Number of Shares		Weighted Average Exercise Price		Remaining Contractual Term (In Years)		Aggregate Intrinsic Value¹
2021
Vested and Exercisable		2,346	$	1.32		7.68	$	25,771
Unvested		1,417		3.89		8.64		12,961
Total		3,763	$	2.29		8.04	$	38,732

2020
Vested and Exercisable		3,718	$	1.30		7.42	$	4,592
Unvested		1,609		0.77		8.82		2,771
Total		5,327	$	-		7.84	$	7,363

2019
Vested and Exercisable		2,659	$	1.56		7.45	$	145
Unvested		1,087		0.93		8.78		77
Total		3,746	$	1.38		7.84	$	222

(11) Intrinsic value based on the $12.30, $2.49, and $0.83 closing price of Aemetis stock on December 31, 2021, 2020, and 2019 respectively, as reported on the NASDAQ Exchange.

Stock-based compensation for employees

Stock-based compensation is accounted for in accordance with the provisions of ASC 718, Compensation-Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. We estimate the fair value of stock-based awards on the date of grant using the Black-Scholes option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method.

For the years ended December 31, 2021, 2020, and 2019 the Company recorded option expense in the amount of $3.9 million, $1.0 million and $0.8 million, respectively.

Valuation and Expense Information

All issuances of stock options or other issuances of equity instruments to employees as the consideration for services received by us are accounted for based on the fair value of the equity instrument issued. The fair value of options granted to employees is estimated on the grant date using the Black-Scholes option valuation model. This valuation model for stock based compensation expense requires us to make assumptions and judgments about the variables used in the calculation, including the fair value of our common stock, the expected term (the period of time that the options granted are expected to be outstanding), the volatility of our common stock, a risk-free interest rate, and expected dividends. We also estimate forfeitures of unvested stock options. To the extent actual forfeitures differ from our estimates, the difference will be recorded as a cumulative adjustment in the period estimates are revised. Compensation cost is recorded only for vested options. We use the simplified calculation of expected life described in the SEC’s Staff Accounting Bulletin No. 107, Share-Based Payment, and volatility is based on an average of the historical volatilities of the common stock of four entities with characteristics similar to those of the Company. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. We use an expected dividend yield of zero, as we do not anticipate paying any dividends in the foreseeable future. Expected forfeitures are assumed to be zero due to the small number of plan participants and the plan.

The weighted average fair value calculations for options granted during the year ended 2021, 2020, and 2019 are based on the following assumptions:

Description	For the year ended December 31,
	2021			2020			2019
Dividend-yield		0	%		0	%		0	%
Risk-free interest rate		0.83	%		0.94	%		2.38	%
Expected volatility		100.47	%		87.37	%		88.54	%
Expected life (years)		6.59			6.55			6.55
Market value per share on grant date	$	5.60		$	0.69		$	0.78
Fair value per share on grant date	$	4.68		$	0.51		$	0.59

As of December 31, 2021, the Company had $4.4 million of total unrecognized compensation expense for employees which the Company will amortize over the weighted remaining term of 2.5 years.