Stock Purchase Plan (as amended and restated, the “ESPP”), respectively. All new equity compensation grants are issued under these two plans; however, outstanding awards previously issued under inactive plans will continue to vest and remain exercisable in accordance with the terms of the respective plans. At the recommendation of the Company’s board of directors, the shareholders approved an amendment to the 2015 Plan on June 10, 2022, which increased the number of shares available for issuance under the 2015 Plan by 6,300,000 shares of Common Stock.

The Company's board of directors determined the 2018 Inducement Program (“2018 Plan”) was no longer required under ViewRay’s compensation program and terminated it effective April 19, 2022. No further awards will be granted under this plan and no such awards have been granted since August 16, 2021. As a result, all 1,501,304 shares previously available for issuance under the 2018 Plan have been restored to the Company’s general authorized but unissued share reserve, and are no longer set aside for grants under the 2018 Plan.

The 2015 Plan provides for the grant of stock and stock-based awards including stock options, restricted stock units (including deferred stock units), performance-based stock units, and stock appreciation rights. Additionally, stock units may be issued as performance-based stock units to align stock compensation awards to the attainment of annual or long-term performance goals. As of December 31, 2022, there were 5.9 million shares available for grant under the 2015 Plan.


	Year Ended December 31,
	2022		2021		2020
Cost of revenue	$	668	$	1,018	$	965
Research and development	2,858		2,538		2,288
Selling and marketing	2,936		1,615		1,091
General and administrative	15,146		18,700		18,461
Total stock-based compensation expense	$	21,608	$	23,871	$	22,805

Our stock-based compensation expense is based on the value of the portion of share-based payment awards that are ultimately expected to vest, assuming estimated forfeitures at the time of grant. Stock-based compensation relating to stock-based awards granted to consultants was insignificant for the years ended December 31, 2022, 2021 and 2020.

Restricted Stock Units ("RSUs") are granted to the Company's board of directors and employees for their services. Deferred Stock Units ("DSUs") are granted to the Company's board of directors at their election in lieu of retainer and committee service fees. The DSUs granted to board members are either fully vested upon issuance or vest over a period of time from the grant date and will be released and settled upon termination of the board member’s services, the occurrence of a change in control event, or the tenth anniversary of the grant date. The RSUs and DSUs granted to employees and/or board members vest in equal annual or monthly installments over one to three years from the grant date and are subject to the participants continuing service to the Company over that period.

In March 2021, the Company introduced a performance share plan (the “2021 PSU Plan”) as a component of its equity grants for 2021. The 2021 PSU Plan provides for the award of performance share units (“PSUs”) to employees which vest upon on the achievement of performance targets related to the Company’s compound annual revenue growth rate over a three-year period are achieved. All PSU awards also include a time-based vesting component. If minimum performance thresholds are achieved, each PSU award will convert into shares at a defined ratio depending on the degree of achievement of the performance target designated by each individual award. If minimum performance thresholds are not achieved, then no shares will be issued. Based upon the expected levels of achievement, stock-based compensation is recognized on a straight-line basis over the PSU awards’ requisite service periods. The expected levels of achievement are reassessed over the requisite service periods and, to the extent that the expected levels of achievement change, stock-based compensation is adjusted and recorded on the consolidated statement of operation and the remaining unrecognized stock-based compensation is recognized over the remaining requisite service period.


	RSUs and DSUs			PSUs
	Number of Shares	Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Unvested at December 31, 2021	5,536,925	$	4.04	707,088		$	4.66
Granted	2,534,144	$	3.86	1,249,383		$	4.14
Incremental awards	—	$	—	1,638,775	(1)	$	4.66
Vested	(2,767,524)	$	3.62	—		$	—
Cancelled or forfeited	(280,516)	$	4.19	(44,391)		$	4.34
Unvested at December 31, 2022	5,023,029	$	4.16	3,550,855		$	4.33
Vested and unreleased	248,978			—
Outstanding at December 31, 2022	5,272,007			3,550,855

The total grant date fair value of ISUs awarded was $15.0 million, $16.8 million and $17.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. The total fair value of ISUs vested was $10.9 million, $27.5 million and $5.1 million for the years ended December 31, 2022, 2021 and 2020, respectively.

At December 31, 2022, total unrecognized stock-based compensation cost related to ISUs, net of estimated forfeitures, was $17.3 million, which is expected to be recognized over a weighted-average period of 1.4 years. As of December 31, 2022, 6.7 million shares of ISUs are expected to vest.


	Number of Stock Options Outstanding	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
					(In thousands)
Options outstanding at December 31, 2021	7,195,398	$	6.97	6.1	$	5,203
Options granted	—	—
Options exercised	(28,812)	2.76
Options cancelled or forfeited	(418,006)	7.75
Options outstanding at December 31, 2022	6,748,580	$	6.95	5.0	$	3,307
Options exercisable at December 31, 2022	6,480,492	$	7.11	4.9	$	2,745
Options vested and expected to vest at December 31, 2022	6,769,006	$	6.97	5.0	$	3,256

Aggregate intrinsic value represents the difference between the estimated fair value of the underlying common stock and the exercise price of outstanding, in-the-money options. The aggregate intrinsic value of options exercised was nominal for the years ended December 31, 2022, 2021, and 2020.

The determination of the fair value of stock options on the date of grant using an option-pricing model is affected by the estimated fair value of the Company’s common stock, as well as assumptions regarding a number of complex and subjective variables. The variables used to calculate the fair value of stock options using the Black-Scholes option-pricing

model include actual and projected employee stock option exercise behaviors, expected price volatility of the Company’s common stock, the risk-free interest rate and expected dividends. Each of these inputs is subjective and generally requires significant judgment to determine.

The risk-free interest rate is based on the zero-coupon U.S. Treasury notes, with maturities similar to the expected term of the options. The Company has not paid and does not anticipate paying cash dividends on its common stock; therefore, the expected dividend yield is assumed to be zero.

During the fourth quarter of 2020, the Company began to determine volatility by solely using the Company’s own historical volatility measurements, since more than four years of historical data became available in the public market. Prior to the fourth quarter of 2020, the Company determined the volatility for stock options granted based on the average historical price volatility for the Company and industry peers over a period equivalent to the expected term of the stock options grants.

The forfeiture rate of stock options is estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures have been estimated by the Company based upon historical and expected forfeiture experience.

In July 2015, the Company adopted the Employee Stock Purchase Plan ("ESPP"). Certain employees, as defined by the ESPP, are eligible to participate in the ESPP if employed by the Company for at least 20 hours per week during at least five months per calendar year. Participating employees may contribute up to the lesser of 15% of their eligible earnings or $30,000 during each offering period, provided that in no event shall a participating employee be permitted to purchase more than 3,000 shares of common stock during each offering period.

The purchase price of common stock purchased under the ESPP is currently equal to 85% of the lesser of the fair market value of a share of common stock on: 1) the first trading day of an offering period and 2) the last trading of each offering period. At December 31, 2022, 3.5 million shares were reserved for issuance under the ESPP, respectively. No more than 3.5 million shares of common stock may be issued under the ESPP. As of December 31, 2022, 0.6 million shares have been issued under the ESPP and 2.9 million shares remained available for future issuance under the ESPP.

Purchase rights granted under the ESPP are valued using the Black-Scholes pricing model. During 2022, the grant date for the two offering periods was January 1, 2022 and July 1, 2022. Starting in 2021, the Company determines volatility by solely using the Company’s own historical volatility measurements, since more than four years of historical data became available in the public market. Before this, the Company estimated the volatility rate by taking the average historic price volatility of the Company industry peers based on daily price observations over a period equivalent to the expected term of the offering period. The expected term represents the period of time the ESPP purchase rights are expected to be outstanding and approximates the offering period. The latest offering period and related purchase was completed on December 31, 2022. As such, there was no unrecognized compensation cost related to the ESPP as of December 31, 2022. Total compensation expense was $0.4 million, $0.3 million and $0.1 million for the years ended December 31, 2022, 2021, and 2020.


	Year Ended December 31,
	2022	2021	2020
Expected term (in years)	0.50	0.50	0.3 - 0.5
Expected volatility (%)	83.2% - 83.8%	84.2% - 86.0%	83.0%
Risk-free interest rate (%)	0.22% - 2.52%	0.05% - 0.09%	0.09% - 0.17%
Expected dividend yield (%)	—%	—%	—%