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STOCK-BASED COMPENSATION | 12 Months Ended
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Dec. 31, 2022
Share-Based Payment Arrangement [Abstract] |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Under both the Stem, Inc. 2009 Equity Incentive Plan (the “2009 Plan”) and the Stem Inc. 2021 Equity Incentive Plan (the “2021 Plan,” and together with the 2009 Plan, the “Plans”), the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”) and other awards that are settled in shares of the Company’s common stock. The Company does not intend to grant new awards under the 2009 Plan. All shares that remain available for future grants are under the 2021 Plan. Stock Options Under the Plans, the exercise price of an option cannot be less than 100% of the fair value of one share of common stock for incentive or non-qualified stock options, and not less than 110% of the fair value for stockholders owning greater than 10% of all classes of stock, as determined by the Company’s Board of Directors (the “Board”). Options under the Plans generally expire after 10 years. Under the Plans, the Compensation Committee of the Board determines when the options granted will become exercisable. Options granted under the Plans generally vest 1/4 one year from the grant date and then 1/48 each month over the following three years and are exercisable for 10 years from the date of the grant. The Plans allow for exercise of unvested options with repurchase rights over the restricted common stock issued at the original exercise price. The repurchase rights lapse at the same rate as the options vest. The following table summarizes the stock option activity for the year ended December 31, 2022:
| Number of Options Outstanding |  | Weighted- Average Exercise Price Per Share |  | Weighted- Average Remaining Contractual Life (years) |  | Aggregate Intrinsic Value (in thousands)
Balances as of December 31, 2021 | 8,766,466 |  |  | $ | 6.01 |  |  | 7.1 |  | 123,562 |
Options granted | 1,255,490 |  |  | 9.27 |  |  |  |  |
Options exercised | (1,512,719) |  |  | 2.32 |  |  |  |  |
Options forfeited | (265,600) |  |  | 15.45 |  |  |  |  |
Options expired | — |  | — |  |  |  |
Balances as of December 31, 2022 | 8,243,637 |  |  | $ | 6.88 |  |  | 6.6 |  | $ | 35,566 |
Options vested and exercisable — December 31, 2022 | 5,694,795 |  |  | $ | 3.93 |  |  | 5.7 |  | $ | 33,203 |
The weighted-average grant date fair value of stock options granted to employees was $5.82, $18.84 and $3.79 during the years ended December 31, 2022, 2021, and 2020, respectively. The intrinsic value of options exercised was $12.7 million, $56.1 million and $1.1 million during the years ended December 31, 2022, 2021, and 2020, respectively. Significant Assumptions in Estimating Option Fair Value The Company uses the Black-Scholes model for estimating the fair value of options granted. The weighted-average assumptions used in the Black-Scholes are as follows:
| December 31,
| 2022 |  | 2021 |  | 2020
Expected volatility | 68.28 | % |  | 74.00 | % |  | 71.41 | %
Risk-free interest rate | 1.73 | % |  | 1.06 | % |  | 0.49 | %
Expected term (years) | 6.25 |  | 6.23 |  | 5.82
Dividend yield | — |  | — |  | —
Restricted Stock Units RSUs represent a right to receive one share of the Company’s common stock that is both non-transferable and forfeitable unless and until certain conditions are satisfied. RSUs generally, either cliff vest on the third anniversary of the award grant date, or vest 1/4 per year over a four-year period, subject to continued employment through each anniversary. The fair value of restricted stock units is determined on the grant date and is amortized over the vesting period on a straight-line basis. The following table summarizes the RSU activity for the period ended December 31, 2022:
| Number of RSUs Outstanding |  | Weighted- Average Grant Date Fair Value Per Share
Balances as of December 31, 2021 | 1,799,677 |  | $ | 36.01 |
RSUs granted | 5,708,586 |  | 9.19 |
RSUs vested | (206,910) |  | 26.78 |
RSUs forfeited | (581,863) |  | 14.91 |
Balances as of December 31, 2022 | 6,719,490 |  | $ | 15.34 |
Stock-Based Compensation Expense The following table summarizes stock-based compensation expense recorded in each component of operating expenses in the Company’s consolidated statements of operations and comprehensive loss (in thousands):
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Sales and marketing | $ | 4,251 |  |  | $ | 1,723 |  |  | $ | 396 |
Research and development | 4,634 |  |  | 2,367 |  |  | 1,211 |
General and administrative | 19,776 |  |  | 9,456 |  |  | 2,935 |
Total stock-based compensation expense | $ | 28,661 |  |  | $ | 13,546 |  |  | $ | 4,542 |
As of December 31, 2022, the Company had approximately $18.3 million of remaining unrecognized stock-based compensation expense for stock options, which is expected to be recognized over a weighted average period of 1.7 years. As of December 31, 2022, the Company had approximately $76.1 million of remaining unrecognized stock-based compensation expense for RSUs, which is expected to be recognized over a weighted average period of 2.3 years. Research and development expenses of $3.0 million corresponding to i nternal-use software, were capitalized during the year ended December 31, 2022.

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