Stockholders' Equity and Stock-Based Compensation

Preferred Stock

We have authorized 5.0 million shares of preferred stock, par value $0.0001, none of which is issued and outstanding.

Common Stock

Each share of common stock has the right to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the Board of Directors, subject to the prior rights of holders of all classes of stock outstanding having priority rights as to dividends. No dividends have been declared or paid as of December 31, 2019.

Immediately prior to the closing of the Company's initial public offering on April 30, 2018, all shares of the outstanding convertible preferred stock automatically converted on a 1-for-1 basis into an aggregate of 24.6 million shares of common stock. There were no outstanding shares of convertible preferred stock as of December 31, 2018.

Common Stock Repurchase Plan

On November 14, 2019, the Company's Board of Directors authorized the repurchase of up to $10.0 million of its outstanding shares of common stock. This program is intended to offset the potentially dilutive effects of restricted stock grants awarded in connection with the acquisition of Nutronics, Inc. (See Note 2, Acquisition, for additional information.) The repurchases will be made from time to time on the open market at prevailing market prices or in negotiated transactions off the market and are expected to comply with Rule 10b-18 under the Securities Exchange Act of 1934, as amended. Repurchased shares are retired and returned to unissued authorized shares upon settlement of the related transactions with the excess of cost over par value charged to additional paid in capital. As of December 31, 2019, no repurchases had been executed under the program.

Equity Incentive Plans

The Company maintains two stock-based compensation plans: the 2018 Equity Incentive Plan (the 2018 Plan), and the 2001 Stock Option Plan (the 2001 Plan). The Board of Directors adopted, and stockholders approved, the 2018 Plan in April 2018. The 2018 Plan became effective on April 24, 2018, and serves as the successor to the 2001 Plan. There are no shares reserved for future awards under the 2001 Plan. Outstanding awards under the 2001 Plan continue to be subject to the terms and conditions of the 2001 Plan.

Equity-based awards are granted under the 2018 Plan. Restricted stock and restricted stock units granted under the 2018 Plan will generally vest over four years in equal annual tranches. The 2018 Plan also provides for grants of incentive stock options, nonstatutory stock options and stock appreciation rights. The incentive stock options may be granted only to employees, and the nonqualified stock options and all other awards other than incentive stock options, may be granted to employees, directors and consultants. The exercise price of incentive stock options generally must be at least equal to the fair market value of common stock on the date of grant. Stock options and stock appreciation rights granted under the 2018 Plan will generally have a term of ten years and vest over a period as determined by the Compensation Committee of the Board of Directors. The Company has not granted any stock options or stock appreciation rights during fiscal years 2019 and 2018.

As of December 31, 2019, there were approximately 2.6 million shares available for grant under the 2018 Plan.

Restricted Stock Awards and Units

Restricted stock award (RSA) and restricted stock unit (RSU) activity under our equity incentive plan was as follows (in thousands, except weighted average grant date fair values):



		Number of Restricted Stock Awards		Weighted-Average Grant Date Fair Value
RSAs at December 31, 2018		115		$	37.15
	Awards granted	403		18.17
	Awards vested	(11	)	37.15
	Awards forfeited and modified	(48	)	37.15
RSAs at December 31, 2019		459		$	20.49



		Number of Restricted Stock Units		Weighted-Average Grant Date Fair Value
RSUs at December 31, 2018		557		$	30.31
	Awards granted	2,107		17.86
	Awards vested	(117	)	26.94
	Awards forfeited & modified	(140	)	32.19
RSUs at December 31, 2019		2,407		$	19.47

On November 14, 2019, pursuant to the Stock Purchase Agreement between nLIGHT, Inc. and the former stockholders of Nutronics, the Company granted approximately 1.0 million time-based RSUs as part of ongoing employment agreements with the sellers. The RSUs vest in equal annual amounts over 4 years, and had a total grant date fair value of approximately $15.8 million, of which expense will be recognized on a straight-line basis over the requisite service period of the awards. The grant date fair value of the sellers' RSUs was based on the average closing price of the Company's stock for a certain number of days before the acquisition date. See Note 2 for additional information.

The total fair value of RSAs and RSUs vested during the year ended December 31, 2019 was $0.4 million and $3.1 million, respectively. Awards outstanding as of December 31, 2019 include 0.5 million performance-based awards that will vest upon meeting certain performance criteria. The weighted-average grant date fair value per share of awards granted during the period includes changes in the fair value of performance-based RSAs and RSUs granted in prior periods.

Stock Options

The following table summarizes the Company’s stock option activity during the year ended December 31, 2019 (in thousands, except weighted average exercise prices):



	Number of Options		Weighted Average Exercise Price	Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding, December 31, 2018	5,171		$1.60	7.2	$83,700
Options exercised	(867	)	$1.80
Options canceled	(65	)	$2.52
Outstanding, December 31, 2019	4,239		$1.54	6.1	$79,443
Options exercisable at December 31, 2019	3,047		$1.03	5.7	$58,654
Options vested as of December 31, 2019 and expected to vest after December 31, 2019	4,239		$1.54	6.1	$79,443

Total intrinsic value of options exercised for the year ended December 31, 2019 and 2018 was $15.8 million and $6.7 million, respectively. The Company received proceeds of $1.6 million and $0.4 million from the exercise of options for the year ended December 31, 2019 and 2018, respectively.

Employee Stock Purchase Plan

During the year ended December 31, 2018, the Company's Board of Directors approved the terms of the 2018 Employee Stock Purchase Plan (the 2018 ESPP). The 2018 ESPP became effective on April 24, 2018. Subject to any limitations therein, the 2018 ESPP allows eligible employees to contribute up to 10% of their earnings for the purchase of common stock at a discounted price per share. The 2018 ESPP provides for separate six-month offering periods commencing on the first trading day on or after May 15 and November 15 of each calendar year. The initial offering period occurred from November 15, 2018 through May 15, 2019.

Information related to activity under the 2018 ESPP was as follows (in thousands, except weighted average per share prices):



	Year Ended December 31,
	2019
Shares issued	83
Weighted average per share purchase price	$	17.72
Weighted average per share discount from the fair value of our common stock on date of issuance	$	3.13

As of December 31, 2019, there were 1.5 million shares available for grant under the 2018 ESPP.

Stock-Based Compensation

Total stock-based compensation expense was included in our consolidated statements of operations as follows (in thousands):



	Year Ended December 31,
	2019		2018		2017
Cost of revenues	$	1,201	$	456	$	46
Research and development	3,299		1,293		66
Sales, general and administrative	5,230		3,056		257
	$	9,730	$	4,805	$	369

Changes in metrics and estimated achievement related to 0.2 million performance-based awards in September 2019 resulted in a $2.1 million credit to previously recognized stock-based compensation expense.

Unrecognized Compensation Costs

As of December 31, 2019, total unrecognized stock-based compensation related to outstanding, but unvested stock awards was $49.0 million, which will be recognized over the next five years as follows (in thousands):



2020	$	17,427
2021	14,800
2022	11,076
2023	5,719
	$	49,022