Stock-Based Incentive Plans

9 Months Ended

Sep. 30, 2024

Share-Based Payment Arrangement [Abstract]

Stock-Based Incentive Plans

Note 8. Stock-Based Incentive Plans

Stock-Based Plans

During the nine months ended September 30, 2024, LivaNova issued stock-based compensatory awards with terms approved by the Compensation and Human Capital Management Committee of LivaNova’s Board of Directors. The awards with service conditions generally vest ratably over four years and are subject to forfeiture unless service conditions are met. The market performance-based awards that were issued cliff vest after three years, subject to the rank of LivaNova’s total shareholder return for the three-year period ending December 31, 2026, relative to the total shareholder returns of the S&P Healthcare Equipment Select Constituents index. The adjusted free cash flow and return on invested capital operating performance-based awards that were issued cliff vest after three years, subject to the achievement of certain thresholds of cumulative results for the three-year period ending December 31, 2026. Compensation expense related to awards granted during 2024 for the three and nine months ended September 30, 2024 was $3.4 million and $6.0 million, respectively.

Stock-based awards may be granted under the 2015 Plan and the A&R 2022 Plan in the form of stock options, SARs, RSUs, and other stock-based and cash-based awards. As of September 30, 2024, under the 2015 Plan, there were 90,081 shares available for future grants to LivaNova’s non-executive directors and under the A&R 2022 Plan, there were 1,496,770 shares pursuant to stock options or SARs and 948,029 shares pursuant to other types of awards available for future grants to LivaNova’s employees. In June 2024, the Company’s shareholders approved amendments to the 2015 Plan and the A&R 2022 Plan. The 2015 Plan Amendment increased the number of shares that can be issued from 50,000 to 150,000. The A&R 2022 Plan Amendment increased the number of shares that can be issued pursuant to options or SARs from 2,250,000 to 2,950,000, and the number of shares that can be issued pursuant to other types of awards from 1,500,000 to 2,000,000.

Stock-Based Compensation

Stock-based incentive plan compensation expense is as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Service-based RSUs	$	4,288	$	5,690	$	13,662	$	16,103
Service-based SARs	3,480		3,886		10,003		10,713
Market performance-based RSUs	257		1,071		1,303		392
Operating performance-based RSUs	255		866		1,119		7
Employee share purchase plan	279		266		897		854
	$	8,559	$	11,779	$	26,984	$	28,069

Stock-based compensation agreements issued during the nine months ended September 30, 2024, representing potential shares and their weighted average grant date fair values by type, is as follows (shares in thousands, fair value in dollars):

	Nine Months Ended September 30, 2024
	Shares	Weighted Average Grant Date Fair Value
Service-based SARs	729,482	$	26.28
Service-based RSUs	411,799	$	55.15
Market performance-based RSUs	69,797	$	74.32
Operating performance-based RSUs	69,790	$	55.33