In December 2020, the Company's amended and restated certificate of incorporation became effective, which authorizes the issuance of 700,000,000 shares of common stock with a par value of $0.0001 per share. Shares of common stock reserved for issuance, on an as-converted basis, are as follows:


	December 31,	December 31,
	2021	2022
Options issued and outstanding	12,785,176	12,547,010
RSUs outstanding	1,508,615	6,046,796
PRSUs outstanding	—	687,500
Shares available for future issuance under 2020 plan	9,979,700	5,842,057
Shares available for issuance under ESPP	1,869,302	2,543,089
Total	26,142,793	27,666,452

In February 2022, the Board of Directors authorized the Company to purchase up to $400.0 million of common stock of the Company. The Company may repurchase shares from time to time through open market purchases, in privately negotiated transactions or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1. The repurchase program does not obligate the Company to acquire any particular amount of its common stock, and may be suspended or terminated by the Company at any time at its discretion without prior notice.

The Company records share repurchases on the settlement date. Repurchased shares are subsequently retired and returned to the status of authorized but unissued. The Company’s policy for share retirements is to allocate the excess between par value and the repurchase price, including costs and fees, to additional paid-in capital. During the year ended December 31, 2022, the Company repurchased, and subsequently retired, 5.9 million shares for $177.9 million at an average cost of $30.24 per share. As of December 31, 2022, $222.1 million remains available for future purchases of our common stock under the share repurchase program.

Under the 2012 Equity Incentive Plan, the exercise price of an ISO and NSO shall not be less than 100% of the estimated fair value of the shares on the date of grant, as determined by the Board of Directors. The exercise price of an ISO granted to a 10% stockholder shall not be less than 110% of the estimated fair value of the shares on the date of grant, as determined by the Board of Directors. Options generally vest over four years and are exercisable for up to 10 years after the date of grant if the employee provides service to the Company for at least three years.

In October 2020, our Board of Directors adopted, and in November 2020 our Board of Directors amended and our stockholders approved, our 2020 Equity Incentive Plan which was effective on December 14, 2020. The Company terminated the 2012 Equity Incentive Plan immediately prior to effectiveness of the 2020 Equity Incentive Plan with respect to the grant of future awards. However, our 2012 Equity Incentive Plan continues to govern the terms and conditions of the outstanding awards granted under our 2012 Equity Incentive Plan.

The 2020 Equity Incentive Plan authorizes granting of ISOs, NSOs, stock appreciation rights, restricted stock, restricted stock units, or RSUs, and performance awards. In addition, the 2020 Equity Incentive Plan also includes any shares subject to awards granted under our 2012 Equity Incentive Plan that, on or after December 15, 2020, expire or otherwise terminate without having been exercised or issued in full, are tendered to or withheld by us for payment of an exercise price or for satisfying tax withholding obligations, or are forfeited to or repurchased by us due to failure to vest. The maximum number of shares that may be added to the 2020 Equity Incentive Plan pursuant to outstanding awards under the 2012 Equity Incentive Plan is 15,000,000 shares. The number of shares available for issuance under our 2020 Equity Incentive Plan also includes an annual increase on the first day of each fiscal year beginning with 2021 in an amount equal to the lesser of 15,000,000 shares or 5% of the outstanding shares of our common stock on the last day of our immediately preceding fiscal year.

In connection with the Company’s acquisition of Prodigy, the Company assumed the Prodigy Software, Inc. 2015 Stock Incentive Plan (the “Prodigy Plan”), under which certain unvested options under the Prodigy Plan were assumed by the Company. The assumed options are subject to the same terms and conditions that were applicable to them under the Prodigy Plan, except that (i) the assumed options relate to shares of Upstart’s common stock, and (ii) the number of shares of Upstart’s common stock was the result of an adjustment based upon a ratio as described further in the Registration Statement on Form S-8 filed with the SEC on April 16, 2021.


	Number of Options	Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Life (years)	Aggregate Intrinsic Value
Balances at December 31, 2021	12,785,176	$	10.23	6.8	$	1,803,812

Options granted	2,816,559	30.61
Options exercised	(2,464,572)	5.03
Options cancelled and forfeited	(590,153)	35.33
Balances at December 31, 2022	12,547,010	14.65		6.6	77,289
Options exercisable – December 31, 2022	7,935,324	5.66		5.2	70,278
Options vested and expected to vest – December 31, 2022	12,473,914	$	14.57	6.5	$	77,265

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the fair value of the Company’s stock as of December 31, 2022. The aggregate intrinsic value of options exercised for the year ended December 31, 2020, 2021 and 2022 was $50.0 million, $1,391.7 million, and

$157.3 million respectively. The weighted-average grant date fair value of options granted during the year ended December 31, 2020, 2021 and 2022 was $11.04, $62.06, and $15.60 per share, respectively. The total fair value of options vested for the year ended December 31, 2020, 2021 and 2022 was $7.9 million, $23.5 million, and $23.2 million respectively.

In May 2021, the Company amended an employee stock option agreement which resulted in a modification of the vesting of a certain number of option shares. The Company valued the amended stock options as of the modification date. Based on the Black-Scholes option pricing model, incremental stock-based compensation expense of $4.4 million resulting from the modification was recognized during the year ended December 31, 2021.


	Number of Shares	Weighted-Average Grant Date Fair Value Per Share
Unvested at December 31, 2021	1,508,615	$	140.10
RSUs granted	5,876,225	37.19
RSUs vested	(866,717)	82.32
RSUs cancelled and forfeited	(471,327)	102.87
Unvested at December 31, 2022	6,046,796	$	51.28

In connection with the Prodigy acquisition in April 2021, 82,201 shares of the Company’s restricted stock were issued to certain Prodigy employees. The restricted stock is subject to restrictions which lapse on a quarterly basis over two years. Refer to “Note 5. Acquisitions” for further information.

On February 18, 2022, the Compensation Committee of the Board of Directors, after extensive consultation with its independent compensation consultants, approved the grant of a PRSU award to an executive for 687,500 shares that will generally vest at the end of a period of seven years based on the achievement of certain stock price targets for the Company’s common stock.

Except as otherwise provided in the Performance Award Agreement, the PRSU award will vest only if the executive is employed on a full-time basis through January 1, 2029 (the “Final Measurement Date”) and only to the extent that the company stock price targets are met. The first time that performance will be measured is on January 1, 2027 and achievement will be determined based on the average closing price of the Company’s stock on the 60 consecutive trading days ending immediately prior to that date. If any company stock price target is met at that time, up to 40% of the cumulative PRSUs possible for such company stock price target will become eligible to vest. One year later on January 1, 2028, the same procedure will be followed and if any higher company stock price target is met, up to 80% of the cumulative PRSUs possible for such company stock price target, less any PRSUs that previously vested, will vest. On the Final Measurement Date, the same procedure will be followed and the cumulative PRSUs possible for the highest company stock price target met at such time, less any PRSUs that previously became eligible to vest, will become eligible to vest. All PRSUs which did not meet the Company stock price targets on the Final Measurement Date will be forfeited.

The ability to become eligible to vest only in up to 40% of the cumulative PRSUs possible after five years and only up to 80% of the cumulative PRSUs possible after six years was intentionally structured to ensure that sustained long-term stock price performance must be achieved. The 40% and 80% limitations do not apply in the case of a change in control prior to the Final Measurement Date.

Compensation expense associated with the PRSUs is recognized using the straight-line attribution method for each of the nine vesting tranches over the respective derived service period. The weighted-average grant date fair value using the Monte Carlo simulation was $68.76 per share. The Company recognizes stock-based compensation expense for awards subject to market-based vesting conditions regardless of whether these conditions will be achieved or not, and stock-based compensation expense for any such awards is not reversed if the market condition is not met. As of December 31, 2022, total unrecognized stock-based compensation expense related to outstanding

Our ESPP provides for consecutive six-month offering periods. The offering periods are scheduled to start on the first trading day on or after February 15 and August 15 of each year. The ESPP permits participants to purchase shares in the amount of 85% of the lower of the fair market value of our shares of common stock on the first trading day of the offering period or on the exercise date. During the year ended December 31, 2022, 162,796 shares of common stock were purchased under the ESPP.

In determining the fair value of stock-based awards, the Company uses a Black-Scholes option-pricing model for its options granted and ESPP purchase rights and a Monte Carlo simulation model for its PRSUs. The inputs used for estimating the fair values of options granted, ESPP purchase rights and PRSUs granted during the period include:

Expected Term–The expected term represents the period that the Company’s stock options and ESPP purchase rights are expected to be outstanding. We estimate the expected term based on the simplified method, which is the weighted-average time to vesting and the contractual maturity. The expected term for PRSUs is the simulation term, the time period from the valuation date to the end of the performance measurement period.

Volatility–Because the Company has not had an active trading market for its common stock for a sufficient period of time, the expected volatility is estimated based on the average volatility for comparable publicly-traded companies, over a period equal to the expected term of the stock option grants.

Year Ended December 31,

2020

2021

2022

Expected term (in years)

5.3 – 10.0

5.3 – 6.9

5.1 – 7.0

Expected volatility

53.23% – 72.02%

45.98% – 65.01%

47.58% – 52.96%

Risk-free interest rate

0.33% – 1.50%

0.62% – 1.34%

1.70% – 4.23%

Dividend yield

—%


	Year Ended December 31,
		2020		2021		2022
Sales and marketing		$	1,562	$	6,059	$	11,354
Customer operations		898		6,251		9,355
Engineering and product development		4,844		39,191		72,169
General, administrative, and other		4,209		21,685		33,067
Total		$	11,513	$	73,186	$	125,945