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Stockholders' Equity and Stock-based Compensation Expense
 9 Months Ended
Sep. 30, 2023
Share-Based Payment Arrangement [Abstract]  
Stockholders' Equity and Stock-based Compensation Expense Stockholders’ Equity and Stock-based Compensation Expense
The Company’s equity incentive plans are broad-based, long-term programs intended to attract and retain talented employees and align stockholder and employee interests. The 2019 Equity Incentive Plan (the "2019 Plan") and the 2023 Inducement Equity Plan (the "2023 Plan") provide for the grant of incentive stock options, non-statutory stock options, restricted stock units (“RSUs”), performance stock units ("PSUs"), and other stock or cash awards.
The 2023 Plan was approved by the Board of Directors of Cutera, Inc. on July 17, 2023, and reserves 2,500,000 shares of the Company’s common stock for issuance. The 2023 Plan provides for the grant of equity-based awards, restricted stock units, restricted stock, stock appreciation rights, and performance awards to individuals not previously employees of the Company as an inducement material to the individuals’ entry into employment with the Company.
New Hire Grants to the Chief Executive Officer
On August 18, 2023, the Board of Directors approved a grant of $4 million of restricted stock units and a grant of $4 million of market-based stock options to Taylor Harris, who joined as the Company’s Chief Executive Officer on August 7, 2023. The restricted stock grant of 249,336 shares vests over four years, subject to the continued employment of Mr. Harris. The vesting of the market-based stock option is dependent upon price targets of the Company’s common stock. One quarter of the 735,295 grant quantity will become eligible for time-based vesting at each of the following prices of the Company’s common stock: $20.00, $25.00, $30.00, and $35.00, if these prices are reached within four years of the grant date. The Monte Carlo Simulation valuation model was used to determine the fair value of the market-based stock options granted.
Activity under the Company's equity incentive plans is summarized as follows:
Shares
Available
for Grant
Balance, December 31, 20221,070,925 
Additional shares reserved3,800,000 
Options and stock awards granted
(2,048,037)
Stock awards canceled / forfeited / expired378,128 
Options canceled / forfeited / expired189,705 
Balance, September 30, 20233,390,721 
The equity plans deduct the shares available for issuance by the gross number of shares for which an award is exercised or vests, not the net number of shares actually issued upon exercise, in the event the exercise price is paid in shares of the Company's common stock or shares are withheld to satisfy tax withholding obligations. Any RSU or PSU shares granted on or after July 13, 2023 are counted against the shares available for grant at a ratio of 1.65 shares for every one share granted.
Options Outstanding
Number of
Stock Options
Outstanding		Weighted-
Average
Exercise
Price		Weighted Average Remaining Term
 (in Years)
Balance, December 31, 2022513,935 $34.41 6.63
Options granted1,099,075 $13.27 
Options exercised(42,234)$14.50 
Options canceled / forfeited / expired(189,705)$30.26 
Balance, September 30, 20231,381,071 $18.77 8.44
Stock Awards Outstanding
Number of Awards OutstandingWeighted Average Grant Date Fair Value per Share
Balance, December 31, 2022906,211$40.39 
Stock awards granted
752,492$15.72 
Awards released(284,231)$35.54 
Stock awards canceled / forfeited / expired(378,128)$39.38 
Balance, September 30, 2023996,344$23.50 
Stock-based Compensation Expense
Stock-based compensation expense by financial statement line item recognized during the three and nine months ended September 30, 2023 and 2022 was as follows (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Cost of revenue$(19)$471 $706 $1,430 
Sales and marketing593 1,641 3,024 3,855 
Research and development(178)466 930 2,513 
General and administrative1,220 1,667 1,892 5,223 
Total stock-based compensation expense$1,616 $4,245 $6,552 $13,021 
In the three months ended September 30, 2023, stock-based compensation expense was impacted by the Company reducing its estimate of the probability of certain performance stock unit grants fully vesting. The nine-month comparison also reflects the reversal of previously reported stock-based compensation expense related to a significant number of executives and directors that left the Company in the three months ended June 30, 2023.