The following costs related to the Company’s stock compensation plans were included in the consolidated statements of income:


	For the Years Ended December 31,
	2023		2022		2021
Cost of revenues (exclusive of depreciation and amortization)	$	68,797	$	47,470	$	51,580
Selling, general and administrative expenses	78,933		52,439		60,075
Total	$	147,730	$	99,909	$	111,655

The Company has long-term incentive plans under which 2.962 million shares of common stock are available for issuance to Company personnel and 509 thousand shares of common stock are available for issuance to non-employee directors as of December 31, 2023. All of the awards issued pursuant to the long-term incentive plans expire 10 years from the date of grant.

In addition, the Company maintains an Employee Stock Purchase Plan (“ESPP”) to enable eligible employees to purchase shares of EPAM’s common stock at a discount through payroll deductions of up to 10% of their eligible compensation at the end of each designated offering period, which occurs every six months ending April 30th and October 31st. The purchase price is equal to 85% of the fair market value of a share of EPAM’s common stock on the first date of an offering or the date of purchase, whichever is lower. As of December 31, 2023, 607 thousand shares of common stock remained available for issuance under the ESPP.

Stock option activity under the Company’s long-term incentive plans is set forth below:


	Number of Options	Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Term (in years)
Options outstanding as of January 1, 2021	2,772	$	61.71	$	822,152
Options granted	94	$	410.03
Options exercised	(536)	$	49.13
Options forfeited	(12)	$	248.74
Options outstanding as of December 31, 2021	2,318	$	77.79	$	1,369,132
Options granted	133	$	277.85
Options exercised	(514)	$	44.02
Options forfeited	(11)	$	350.19
Options expired	(3)	$	128.11
Options outstanding as of December 31, 2022	1,923	$	98.92	$	447,503
Options granted	114	$	295.73
Options exercised	(397)	$	39.01
Options forfeited	(6)	$	316.91
Options expired	(5)	$	340.13
Options outstanding as of December 31, 2023	1,629	$	125.88	$	289,552	3.4

Options vested and exercisable as of December 31, 2023	1,348	$	91.33	$	282,764	2.4
Options expected to vest as of December 31, 2023	268	$	291.21	$	6,609	8.3

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. The model incorporated the following weighted average assumptions:


	For the Years Ended December 31,
	2023		2022		2021
Expected volatility	50.2	%	46.7	%	35.3	%
Expected term (in years)	6.23		6.24		6.24
Risk-free interest rate	3.6	%	2.6	%	1.2	%
Expected dividends	—	%	—	%	—	%

Expected volatility is based on the historical volatility of the Company’s stock price. The expected term represents the period of time that options granted are expected to be outstanding. The risk-free rate is based on the U.S. Treasury yield curve for the periods equal to the expected term of the options in effect at the time of grant. The Company has not declared or paid any dividends on its common stock and does not anticipate paying any dividends in the foreseeable future.

The weighted average grant-date fair value of stock options granted during the years ended December 31, 2023, 2022 and 2021 was $156.11, $134.29 and $149.26, respectively. The total intrinsic value of options exercised during the years ended December 31, 2023, 2022 and 2021 was $89.8 million, $154.4 million and $251.9 million, respectively.

The Company recognizes the fair value of each option as compensation expense on a straight-line basis over the requisite service period, which is generally the vesting period. The options are typically scheduled to vest over four years from the time of grant, subject to the terms of the applicable plan and stock option agreement. The Company records share-based compensation expense only for those awards that are expected to vest and as such, the Company applies an estimated forfeiture rate at the time of grant and adjusts the forfeiture rate estimate quarterly to reflect actual forfeiture activity. In general, in the event of a participant’s voluntary termination of service, unvested options are forfeited as of the date of such termination without any payment to the participant and the cumulative amount of previously recognized expense related to the forfeited options is reversed.

The Company grants restricted stock units (“RSUs”) to Company personnel and non-employee directors. In addition, the Company has issued in the past, and may issue in the future, equity awards to compensate employees of acquired businesses for future services. Equity settled awards granted in connection with acquisitions of businesses may be issued in the form of service-based awards requiring continuing employment with the Company, restricted stock subject to trading restrictions, and performance-based awards, which would vest only if certain specified performance and service conditions are met. The awards issued in connection with acquisitions of businesses are subject to the terms and conditions contained in the applicable award agreements and acquisition documents.

The table below summarizes activity related to the Company’s equity-classified and liability-classified service-based awards for the years ended December 31, 2023, 2022 and 2021:


	Equity-Classified Restricted Stock			Equity-Classified Equity-Settled Restricted Stock Units			Liability-Classified Cash-Settled Restricted Stock Units
	Number of Shares	Weighted Average Grant Date Fair Value Per Share		Number of Shares	Weighted Average Grant Date Fair Value Per Share		Number of Shares	Weighted Average Grant Date Fair Value Per Share
Unvested service-based awards outstanding as of January 1, 2021	9	$	167.18	686	$	162.15	175	$	141.16
Awards granted	—	$	—	238	$	429.41	27	$	394.24
Awards modified	—	$	—	—	$	—	—	$	—
Awards vested	—	$	—	(308)	$	139.83	(86)	$	118.05
Awards forfeited	—	$	—	(40)	$	264.48	(4)	$	210.26
Unvested service-based awards outstanding as of December 31, 2021	9	$	167.18	576	$	277.38	112	$	217.28
Awards granted	—	$	—	655	$	287.13	51	$	269.60
Awards modified	—	$	—	(3)	$	387.74	3	$	220.00
Awards vested	(9)	$	167.18	(244)	$	235.96	(56)	$	184.96
Awards forfeited	—	$	—	(68)	$	328.81	(11)	$	260.59
Unvested service-based awards outstanding as of December 31, 2022	—	$	—	916	$	291.19	99	$	257.74
Awards granted	—	$	—	607	$	288.49	36	$	298.81
Awards modified	—	$	—	(15)	$	278.52	15	$	305.59
Awards vested	—	$	—	(329)	$	278.25	(46)	$	242.07
Awards forfeited	—	$	—	(105)	$	304.91	(6)	$	254.82
Unvested service-based awards outstanding as of December 31, 2023	—	$	—	1,074	$	292.45	98	$	287.36


	For the Years Ended December 31,
	2023		2022		2021
Equity-classified equity-settled
Restricted stock	$	—	$	3,990	$	—
Restricted stock units	94,418		69,510		129,527
Liability-classified cash-settled
Restricted stock units	13,229		16,238		33,947
Total fair value of vested service-based awards	$	107,647	$	89,738	$	163,474

The table below summarizes activity related to the Company’s performance-based awards for the years ended December 31, 2023, 2022 and 2021:


	Equity-Classified Equity-Settled Restricted Stock			Equity-Classified Equity-Settled Restricted Stock Units
	Number of Shares	Weighted Average Grant Date Fair Value Per Share		Number of Shares	Weighted Average Grant Date Fair Value Per Share
Unvested performance-based awards outstanding as of January 1, 2021	9	$	165.87	21	$	227.16
Awards granted	—	$	—	8	$	574.98
Awards vested	—	$	—	(4)	$	177.81
Awards forfeited	—	$	—	(2)	$	334.78
Unvested performance-based awards outstanding as of December 31, 2021	9	$	165.87	23	$	339.69
Awards granted	—	$	—	6	$	418.26
Awards vested	—	$	—	(9)	$	238.96
Awards forfeited	—	$	—	(5)	$	377.87
Unvested performance-based awards outstanding as of December 31, 2022	9	$	165.87	15	$	412.60
Awards granted	—	$	—	6	$	258.19
Awards vested	(9)	$	165.87	(7)	$	229.98
Awards forfeited	—	$	—	(1)	$	363.93
Unvested performance-based awards outstanding as of December 31, 2023	—	$	—	13	$	441.87

The fair value of vested performance-based awards (measured at the vesting date) for the years ended December 31, 2023, 2022 and 2021 was as follows:


	For the Years Ended December 31,
	2023		2022		2021
Equity-classified equity-settled
Restricted stock	$	2,237	$	—	$	—
Restricted stock units	$	1,581	$	2,914	$	2,215
Total fair value of vested performance-based awards	$	3,818	$	2,914	$	2,215

The ESPP enables eligible employees to purchase shares of EPAM’s common stock at a discount at the end of each designated offering period, which occurs every six months in April and November. The Company recognizes compensation expense related to shares issued pursuant to the ESPP on a straight-line basis over the six-months offering period. The Company uses the Black-Scholes option pricing model to calculate the fair value of shares issued under the ESPP. The Black-Scholes model relies on a number of key assumptions to calculate estimated fair values. The model incorporated the following weighted average assumptions for the years ended December 31, 2023, 2022 and 2021:


	For the Years Ended December 31,
	2023		2022		2021
Expected volatility	48.0	%	86.8	%	23.1	%
Expected term (in years)	0.50		0.50		0.50
Risk-free interest rate	5.3	%	3.0	%	0.1	%
Expected dividends	—	%	—	%	—	%

Expected volatility is based on the historical volatility of the Company’s stock price. The expected term represents the purchase period for the ESPP. The risk-free rate is based on the U.S. Treasury yield curve for the period equal to the expected term in effect at the time of grant. The Company has not declared or paid any dividends on its common stock and does not anticipate paying any dividends in the foreseeable future.

During the year ended December 31, 2023, the weighted average price per share was $248.23 and the weighted average grant-date fair value per share was $69.74. During the year ended December 31, 2023, the ESPP participants purchased 173 thousand shares of common stock under the ESPP and the Company recognized $12.6 million of stock-based compensation expense related to the ESPP. As of December 31, 2023, total unrecognized stock-based compensation cost related to the ESPP was $3.7 million, which is expected to be recognized over a period of 0.33 years.

During the year ended December 31, 2022, the weighted average price per share was $315.60 and the weighted average grant-date fair value per share was $119.76. During the year ended December 31, 2022, the ESPP participants purchased 120 thousand shares of common stock under the ESPP and the Company recognized $13.9 million of stock-based compensation expense related to the ESPP.

During the year ended December 31, 2021, the weighted average price per share was $659.65 and the weighted average grant-date fair value per share was $141.86. As of December 31, 2021, no purchases were made under the ESPP. For the year ended December 31, 2021, the Company recognized $1.2 million of stock-based compensation expense related to the ESPP.

In connection with the Company’s acquisitions of businesses as discussed in Note 3 “Acquisitions”, EPAM enters into agreements that contractually commit it to granting equity awards at future dates. The agreements are unique to each acquisition and terms vary, including specifying either the number of future awards to be issued or a monetary value that will be settled with equity awards valued at future stock prices.

As of December 31, 2023, the Company has commitments to grant up to $15.5 million of equity awards with the number of awards to be determined based on future stock prices. There is a service-based vesting requirement associated with these awards and certain of these awards contain performance criteria that will determine the amount of future awards to be issued. These awards are considered granted for accounting purposes. In determining the expense, the Company adjusts the expected settlement based on the probability of achievement of such performance criteria. Related to these awards, the amount of stock-based compensation expense recorded in the consolidated statements of income for the years ended December 31, 2023, 2022 and 2021 was not material.

On February 13, 2023, the Board of Directors authorized a share repurchase program for up to $500.0 million of the Company's outstanding common stock. EPAM may repurchase shares of its common stock on a discretionary basis from time to time through open market purchases, privately negotiated transactions or other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The timing and total amount of stock repurchases will depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations. The share repurchase program has a term of 24 months, may be suspended or discontinued at any time, and does not obligate the company to acquire any amount of common stock.

During the year ended December 31, 2023, the Company repurchased 686 thousand shares of its common stock for $164.9 million in cash. All of the repurchased shares have been retired. As of December 31, 2023, a remaining balance of $335.1 million was available for purchases of the Company’s common stock under the share repurchase program authorized by the Company’s Board of Directors.