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Stock-Based Compensation
 3 Months Ended
Mar. 31, 2020
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
Stock-based compensation expense for options granted, RSAs, PSAs, RSUs and SARs is reflected in the condensed consolidated statements of operations and comprehensive loss as follows:
 THREE MONTHS ENDED 
MARCH 31,
(in thousands)20202019
Cost of goods sold$497  $—  
Selling, general and administrative6,908  9,121  
Pre-approval commercial manufacturing294  849  
Research and development2,830  2,650  
Total$10,529  $12,620  
Equity Plans
The Company maintains three equity compensation plans, the 2005 Aerie Pharmaceutical Stock Plan (the “2005 Plan”), the 2013 Omnibus Incentive Plan (the “2013 Equity Plan”), which was amended and restated as the Aerie Pharmaceuticals, Inc. Second Amended and Restated Omnibus Incentive Plan (the “Second Amended and Restated Equity Plan”), as described below, and the Aerie Pharmaceuticals, Inc. Inducement Award Plan (the “Inducement Award Plan”), as described below. The 2005 Plan, the Second Amended and Restated Equity Plan and the Inducement Award Plan are referred to collectively as the “Plans.” The 2005 Plan was frozen in 2013 and no additional awards have been or will be made under the 2005 Plan.
On June 7, 2018, Aerie’s stockholders approved the adoption of the Second Amended and Restated Equity Plan to increase the number of shares issuable under the plan by 4,500,000. The Second Amended and Restated Equity Plan provides for the granting of up to 10,229,068 equity awards in respect of Aerie common stock.
On December 7, 2016, Aerie’s Board of Directors approved the Inducement Award Plan which provides for the granting of up to 418,000 equity awards in respect of common stock of Aerie and was subsequently amended during 2017 to increase the equity awards that may be issued by an additional 874,500 shares. On December 5, 2019, the Inducement Award Plan was further amended by the Company’s Board of Directors to increase the number of shares issuable under the plan by 100,000 shares. Awards granted under the Inducement Award Plan are intended to qualify as employment inducement awards under NASDAQ Listing Rule 5635(c)(4).
Options to Purchase Common Stock
The following table summarizes the stock option activity under the Plans:
NUMBER OF
SHARES		WEIGHTED AVERAGE
EXERCISE PRICE		WEIGHTED
AVERAGE
REMAINING
CONTRACTUAL
LIFE (YEARS)		AGGREGATE
INTRINSIC
VALUE
(000’s)
Options outstanding at December 31, 20198,425,551  $29.06  
Granted412,417  20.94  
Exercised(11,684) 14.06  
Canceled(125,121) 41.16  
Options outstanding at March 31, 20208,701,163  $28.52  6.6$15,408  
Options exercisable at March 31, 20205,750,958  $25.00  5.4$15,408  
As of March 31, 2020, the Company had $67.6 million of unrecognized compensation expense related to options granted under its equity plans. This expense is expected to be recognized over a weighted average period of 2.5 years as of March 31, 2020.
Restricted Stock Awards
The following table summarizes the RSAs, including PSAs, activity under the Plans:
NUMBER OF
SHARES		WEIGHTED AVERAGE
FAIR VALUE PER SHARE
Non-vested RSAs at December 31, 2019754,415  $43.07  
Granted82,492  21.13  
Vested(184,436) 44.27  
Canceled(18,606) 43.36  
Non-vested RSAs at March 31, 2020633,865  $39.86  
As of March 31, 2020, the Company had $21.2 million of unrecognized compensation expense related to unvested RSAs, including PSAs. This expense is expected to be recognized over the weighted average period of 2.6 years as of March 31, 2020.
The vesting of the RSAs is time and service based with terms of one to four years. During the year ended December 31, 2017, the Company granted 98,817 PSAs with non-market performance conditions that vest upon the satisfaction of certain performance conditions and service conditions. As of March 31, 2020, 69,171 PSAs were vested and 29,646 PSAs will vest during the second quarter of 2020.
In 2019, 43,071 non-vested RSAs were cancelled and replaced with a corresponding number of RSUs. The RSUs were issued with the same vesting provisions as the cancelled RSAs. The total number of RSUs outstanding at March 31, 2020 was 30,938. As of March 31, 2020, the weighted average fair value per RSU was $19.26, and the associated unrecognized compensation expense totaled $1.4 million. This expense is expected to be recognized over the weighted average period of 2.5 years as of March 31, 2020.
Stock Appreciation Rights
The following table summarizes the SARs activity under the Plans:
NUMBER OF
SHARES		WEIGHTED AVERAGE
EXERCISE PRICE		WEIGHTED
AVERAGE
REMAINING
CONTRACTUAL
LIFE (YEARS)		AGGREGATE
INTRINSIC
VALUE
(000’s)
SARs outstanding at December 31, 2019163,016  $41.70  
Granted12,000  18.51  
Canceled(15,619) 41.70  
SARs outstanding at March 31, 2020159,397  $18.51  3.8$1  
SARs exercisable at March 31, 202032,610  $52.03  3.2$—  
Holders of the SARs are entitled under the terms of the Plans to receive cash payments calculated based on the excess of the Company’s common stock price over the exercise price in their award; consequently, these awards are accounted for as liability-classified awards and the Company measures compensation cost based on their estimated fair value at each reporting date, net of actual forfeitures, if any.