Our Board of Directors adopted the 2018 Equity and Cash Incentive Plan (“2018 Plan”). The 2018 Plan was amended and restated in 2020 to increase the shares of common stock reserved for issuance under the 2018 Plan to 18.2 million, and in 2021 to increase the shares of common stock reserved for issuance to 31.4 million, in each case subject to customary adjustments arising from stock splits and other similar changes, along with other amendments.

The 2018 Plan authorizes the grant of stock options, stock-settled stock appreciation rights (“SARs”), restricted stock awards, restricted stock units, performance share awards, cash performance awards, directors’ shares and deferred stock units. The ChampionX Compensation Committee determines the exercise price for options and the base price of SARs, which may not be less than the fair value of ChampionX common stock on the date of grant. Generally, stock options or SARs vest after 3 years of service and expire at the end of 10 years. Performance share awards vest if ChampionX achieves certain pre-established performance targets based on specified performance criteria over a performance period of not less than 3 years.

In connection with the Merger, the Company entered into the Employee Matters Agreement dated December 18, 2019, which provided the terms in which certain Ecolab share-based awards held by legacy ChampionX employees were replaced with share-based awards of the Company on the merger date. The fair value of the replacement awards has been allocated between each employee’s pre-combination and post-combination services. Amounts allocated to pre-combination services have been included as consideration transferred as part of the Merger. See Note 3—Merger Transaction, Acquisitions, and Dispositions for a summary of consideration transferred. Compensation costs of $15.8 million allocated to post-combination services will be recorded as stock-based compensation expense over each employees’ remaining service period of approximately two years.

Stock-based compensation expense is reported within selling, general and administrative expense in the consolidated statements of income (loss). Stock-based compensation expense relating to all stock-based incentive plans was as follows:


	Years Ended December 31,
	2021		2020		2019
Stock-based compensation expense	$	23,178	$	19,536	$	10,250
Tax benefit	(5,257)		(4,478)		(2,153)
Stock-based compensation expense, net of tax	$	17,921	$	15,058	$	8,097


	SARs
	Shares	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2021	415,331	$	29.67


Forfeited / expired	(2,134)	25.27
Exercised	(19,674)	24.73
Outstanding at December 31, 2021	393,523	$	29.94	4.2	$	—

Exercisable at December 31, 2021	393,523	$	29.94	4.2	$	—

We granted 166,519, 121,261, and 46,459 performance share awards subject to market vesting conditions during 2021, 2020, and 2019, respectively, under the 2018 Plan. These awards vest if ChampionX achieves certain pre-established performance targets based on specified performance criteria over a performance period of not less than 3 years. The performance targets for these awards are classified as a market vesting condition, therefore the compensation cost was calculated using the grant date fair value, as estimated using a Monte Carlo simulation, and is not subject to change based on future events. The fair value used in determining stock-based compensation expense of the performance share awards issued in 2021, 2020, and 2019, is as follows:

We granted 166,519 and 46,460 performance share awards subject to performance vesting conditions during 2021 and 2019, respectively, under the 2018 Plan. We did not grant any of this type of award in 2020. These awards are considered performance condition awards as attainment is based on ChampionX’s performance relative to established internal metrics. The fair value of these awards was determined using ChampionX’s closing stock price on the date of grant.


	Shares	Weighted-Average Grant-Date Fair Value
Unvested at January 1, 2021	278,763	$	35.95
Granted	333,037	21.97
Forfeited	(5,678)	21.97
Vested	(148,341)	50.50
Performance adjustment (1)	47,728	56.32
Unvested at December 31, 2021	505,509	$	24.26

_______________________

(1) Represents the additional shares that were issued to participants upon vesting of the awards due to the performance factor being exceeded for the three-year performance period.

Unrecognized compensation expense related to unvested performance share awards as of December 31, 2021, was $6.0 million, which will be recognized over a weighted average period of 2.0 years.


	Shares	Weighted-Average Grant-Date Fair Value
Unvested at January 1, 2021	2,669,779	$	14.04
Granted	901,485	18.10
Forfeited	(126,077)	13.70
Vested	(1,103,080)	15.28
Unvested at December 31, 2021	2,342,107	$	14.49

Unrecognized compensation expense relating to unvested restricted stock units as of December 31, 2021, was $16.8 million, which will be recognized over a weighted average period of 0.9 years.

We did not grant non-qualified stock options in 2021. All outstanding non-qualified stock options were issued to legacy ChampionX employees upon the closing of the Merger as replacement awards for options originally granted to them by Ecolab. A summary of activity for non-qualified stock options for the year ended December 31, 2021 is as follows:


	Non-Qualified Stock Options
	Shares	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2021	7,175,040	$	6.01
Granted	—	—
Forfeited / expired	(39,990)	7.54
Exercised	(1,646,397)	5.38
Outstanding at December 31, 2021	5,488,653	$	6.18	5.0	$	75,984

Exercisable at December 31, 2021	5,487,875	$	6.18	5.0	$	75,975

During the year ended December 31, 2021, the total intrinsic value of stock options exercised was approximately $29.6 million and cash received from stock options exercised was approximately $8.8 million. The cash tax benefit from stock options exercised during the year ended December 31, 2021 was approximately $1.9 million.