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Stock-Based Compensation
 12 Months Ended
Dec. 31, 2024
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
Effective March 20, 2015, the Company adopted the ACV Auctions Inc. 2015 Long-Term Incentive Plan (the “2015 Plan”). Employees, outside directors, consultants and advisors of the Company were eligible to participate in the Plan. The 2015 Plan allowed for the grant of incentive or nonqualified common stock options to purchase shares of the Company’s common stock and also to issue restricted shares of the common stock. Each common stock option or restricted stock agreement stipulates the terms of the grant, including vesting, contractual life, exercise price, and other provisions.
Effective March 23, 2021, the Company adopted the ACV Auctions Inc. 2021 Equity Incentive Plan (the "2021 Plan"). The 2021 Plan became effective on the date of the underwriting agreement related to the IPO, and no further grants were made under the 2015 Plan. All shares that remained available for issuance under the 2015 Plan at that time were transferred to the 2021 Plan. Employees, outside directors, consultants and advisors of the Company are eligible to participate in the 2021 Plan. The 2021 Plan allows the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units ("RSUs"), performance awards, and other forms of awards.
Common stock options generally vest and become exercisable over a four-year service period with 25% vesting one year from the date of grant or service-inception date and ratably vesting monthly over the remaining three-year period. RSUs generally vest and become exercisable over a three or four-year service period. There were 27,568,628 shares available for future grants under the 2021 Plan at December 31, 2024.
Effective March 23, 2021, the Company adopted the ACV Auctions Inc. 2021 Employee Stock Purchase Plan (the "2021 ESPP"), which became effective on the date of the underwriting agreement related to the IPO. The 2021 ESPP authorizes the issuance of shares of the Company's Class A common stock pursuant to purchase rights granted to employees ("employee stock purchase rights"). As of December 31, 2024, 5,096,479 shares of the Company's Class A common stock have been reserved for future issuance under the 2021 ESPP. The price at which Class A common stock is purchased under the 2021 ESPP is equal to 85% of the fair market value of the Company's Class A common stock on the first or last day of the offering period, whichever is lower. During the year ended December 31, 2024, 265,729 shares were issued under the 2021 ESPP. As of December 31, 2024, unrecognized compensation expense related to the 2021 ESPP was $0.8 million and is expected to be recognized over the remaining term of the current offering period.
During the second quarter of 2024, the Company's Board of Directors approved long-term incentive awards to certain of the Company's executive officers which comprised performance share units (“PSUs”), which may only be settled in shares of the Company’s Class A Common Stock. The PSUs are subject to both service-based vesting conditions and a requirement that the average closing price of the Company’s Class A Common Stock, as measured over a period of 30 trading days commencing at the grant date and ending July 1, 2027, equal or exceed a designated level (the “Stock Price Condition”). The PSUs will vest in one-third installments on each of July 1, 2025, 2026 and 2027, provided that the Stock Price Condition has been satisfied prior to the relevant date. If the Stock Price Condition has not yet been satisfied prior to the relevant date, then the PSUs that otherwise would have vested on such date will remain unvested unless and until the Stock Price Condition has been satisfied. If the Stock Price Condition has not been satisfied by July 1, 2027, then the PSUs will be forfeited on that date. In each circumstance, vesting is subject to the executive’s continued service with the Company until the time of vesting.
The following table summarizes the stock option activity for the year ended December 31, 2024 (in thousands, except for share data):
Number of Options
Weighted-
Average
Exercise
Price Per
Share
Intrinsic
Value
Weighted-
Average
Remaining
Contractual
Term (in years)
Outstanding, December 31, 20236,296,350$2.49 $79,728 4.83
Exercised(2,383,715)3.97 
Forfeited(4,628)5.63 
Expired(25,653)5.06 
Outstanding, December 31, 20243,882,354$1.55 $77,824 3.21
Exercisable, December 31, 20243,859,793$1.52 $77,493 3.19
Expected to Vest, December 31, 202422,561$6.68 $331 6.63
Stock options exercised during the years ended December 31, 2023 and 2022 were 1,369,588 and 664,643, respectively.
The following table summarizes the RSU activity for the year ended December 31, 2024 (in thousands, except for share data):
Number of RSUs
Weighted-
Average
Grant-Date
Fair Value
Outstanding, December 31, 20237,237,920$14.37 
Granted5,006,85317.56 
Vested(3,643,816)14.91 
Forfeited(523,395)15.06 
Outstanding, December 31, 20248,077,562$16.04 
The weighted-average grant-date fair value of RSU's granted during the years ended December 31, 2023 and 2022 was $14.04 and $10.49, respectively.
The fair value of stock awards vested and the intrinsic value from the exercise of options for the years ended December 31, 2024, 2023 and 2022 are as follows (in thousands):
202420232022
Fair value of awards vested$58,438 $47,736 $32,965 
Intrinsic value of options exercised$33,651 $15,688 $6,355 
Total stock-based compensation expense recognized for restricted stock units and common stock options has been reported in the Consolidated Statements of Operations as follows (in thousands):
202420232022
Marketplace and service cost of revenue (excluding depreciation & amortization)$1,065 $938 $673 
Operations and technology16,595 10,875 9,342 
Selling, general, and administrative50,350 37,835 29,309 
Stock-based compensation, net of amount capitalized68,010 49,648 39,324 
Capitalized stock-based compensation5,516 3,383 2,013 
Stock-based compensation expense$73,526 $53,031 $41,337 
The compensation expense related to the unvested portion of common stock options and restricted stock units was approximately $110.2 million at December 31, 2024. The unvested portion of compensation expense for common stock options and restricted stock units is expected to be recognized over a weighted-average period of 0.6 and 2.4 years, respectively.
During the first quarter of 2024, the Company entered into two contingently returnable share agreements (the "2024 Agreements") for certain compensatory share-based service awards. The 2024 Agreements authorized 773,099 shares of common stock to be issued. Shares will be released and distributed to the employee award recipients with the final vesting date during the first quarter of 2028. At December 31, 2024, there was approximately $9.0 million of compensation expense related to the unvested portion of the contingently returnable shares that will be recognized over 3.1 years.