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Stock-based Compensation
 9 Months Ended
Sep. 30, 2024
Share-Based Payment Arrangement [Abstract]  
Stock-based Compensation Stock-based Compensation
Prior to becoming a publicly traded entity, the Company issued incentive stock options, non-qualified stock options, and restricted stock to employees and non-employee consultants under its 2015 Stock Plan (the “2015 Plan”). Since the closing of the business combination between Gores Metropoulos, Inc. and Luminar Technologies, Inc. on December 2, 2020 (the “Business Combination”), the Company has not issued any new stock-based awards under the 2015 Plan.
In December 2020, the Board adopted, and the Company’s stockholders approved the 2020 Equity Incentive Plan (the “2020 Plan”). The 2020 Plan became effective upon the closing of the Business Combination. Under the 2020 Plan, the Company was originally authorized to issue a maximum number of 36,588,278 shares of Class A common stock.
In June 2022, the Company’s stockholders approved an amendment and restatement of the Company’s 2020 Plan (the “Amended 2020 Plan”) to increase the number of shares of Class A common stock authorized for issuance by 36,000,000 additional shares and added an evergreen provision under which the number of shares of Class A common stock available for issuance under the Amended 2020 Plan will be increased on the first day of each fiscal year of the Company beginning with the 2023 fiscal year and ending on (and including) the first day of the 2030 fiscal year, in an amount equal to the lesser of (i) 5% of the outstanding shares of common stock on the last day of the immediately preceding fiscal year, (ii) 40,000,000 shares or (iii) such number of shares determined by the Board. Pursuant to the evergreen provision, 20,991,566 additional shares of Class A common stock were added to the Amended 2020 Plan on January 1, 2024.
In June 2024, the Company’s stockholders approved an amendment and restatement of the Company’s Amended 2020 Plan (the “Amended and Restated EIP”) to increase the number of shares of Class A common stock authorized for issuance by 20,000,000 additional shares of Class A common stock.
In May 2024, the Company announced the suspension of the employer match to the 401k plan. As of June 14, 2024, the Company will no longer match the 401k plan contributions made by the employee. This is part of the cost reduction initiatives undertaken by management.
Stock Options
Under the terms of the 2015 Plan, incentive stock options had an exercise price at or above the fair market value of the stock on the date of the grant, while non-qualified stock options were permitted to be granted below fair market value of the stock on the date of grant. Stock options granted have service-based vesting conditions only. The service-based vesting conditions vary, though typically, stock options vest over four years with 25% of stock options vesting on the first anniversary of the grant and the remaining 75% vesting monthly over the remaining 36 months. Option holders have a 10-year period to exercise their options before they expire. Forfeitures are recognized in the period of occurrence.
As part of the restructuring severance package in connection with the May 2024 Plan, the Company granted 1,003,765 options under the Amended and Restated EIP. These options are fully vested at the time of grant and have a 6-year exercise period before expiration, but they may not be exercised prior to May 5, 2028.
The Company’s stock option activity for the nine months ended September 30, 2024 was as follows:
Number of
Common
Stock Options		Weighted-
Average
Exercise
Price		Weighted-
Average
Remaining
Contractual
Life (Years)		Aggregate
Intrinsic Value
(In Thousands)
Outstanding as of December 31, 20236,199,453 $1.76 
Granted981,462 1.50 
Exercised(327,499)1.67 
Cancelled/Forfeited(410,127)2.79 
Outstanding as of September 30, 20246,443,289 1.66 4.80$185 
The aggregate intrinsic value of stock options exercised during the nine months ended September 30, 2024 was $0.2 million. The intrinsic value is calculated as the difference between the exercise price and the fair value of the common
stock on the exercise date. The total grant date fair value of stock options vested during the nine months ended September 30, 2024 was $1.6 million.
Restricted Stock units
Since the closing of the Business Combination, the Company has granted restricted stock units (“RSUs”) under the 2020 Plan, the Amended 2020 Plan and the Amended and Restated EIP (together, the “EIP”). Each RSU granted under the EIP represents a right to receive one share of the Company’s Class A common stock when the RSU vests. RSUs generally vest over a period up to six years. The Company has granted certain performance-based equity awards that vest upon achievement of certain performance milestones. The fair value of RSUs is equal to the fair value of the Company’s common stock on the date of grant.
The Company’s Time-Based RSUs and Performance-Based and Other RSUs activity for the nine months ended September 30, 2024 was as follows:
Time-Based RSUsPerformance-Based and Other RSUs
SharesWeighted Average
Grant Date Fair
Value per Share		SharesWeighted Average
Grant Date Fair
Value per Share
Outstanding as of December 31, 202331,251,698 $8.60 266,921 $8.91 
Granted30,288,936 1.60 179,452 1.92 
Forfeited(11,833,368)5.12 (30,770)8.58 
Vested(23,341,709)5.02 (343,071)5.10 
Change in units based on performance— — 2,220 8.58 
Outstanding as of September 30, 202426,365,557 5.29 74,752 9.77 
Fixed Value Equity Awards
The Company issues fixed value equity awards to certain employees as a part of their compensation package. These awards are issued as RSUs under the EIP and are accounted for as liability classified awards under ASC 718 — Stock Compensation. Fixed value equity awards granted have service-based conditions only and vest quarterly over a period of up to six years. These awards represent a fixed dollar amount settled in a variable number of shares determined at each vesting period. Stock-based compensation expense related to these awards was $3.6 million and $11.5 million for the three and nine months ended September 30, 2024, respectively, and $4.2 million and $10.1 million for the three and nine months ended September 30, 2023, respectively.
Freedom Photonics Awards
As part of the acquisition of Freedom Photonics LLC (“Freedom Photonics”) in April 2022, the Company owed up to $29.8 million of post combination compensation related to certain service and performance conditions including achievement of certain technical and financial milestones. In March 2024, the Company issued 2,651,085 shares of Class A common stock for $5.4 million of the post combination compensation due to achievement of the service and performance conditions. In May 2024, the Company issued 3,098,974 shares of Class A common stock for $5.5 million of the post combination compensation due to achievement of the service and performance conditions. In June 2024, the Company issued 1,689,400 shares of Class A common stock for $2.5 million of the post combination compensation due to achievement of the certain milestones. As of September 30, 2024, it is probable that the remaining conditions will be met for an amount equal to approximately $4.5 million of post combination compensation.
Management Awards
On May 2, 2022, the Board granted an award of 10.8 million RSUs to Austin Russell, the Company’s Chief Executive Officer. The grant date fair value per share of the award granted to Mr. Russell was $8.70 per share. On August 19, 2022, the Board granted 500,000 RSUs to each of Thomas Fennimore, the Company’s Chief Financial Officer, and Alan Prescott, the Company’s Chief Legal Officer. The grant date fair value per share of the awards granted to Mr. Fennimore and Mr. Prescott was $6.12 per share.
These awards to Mr. Russell, Mr. Fennimore and Mr. Prescott are subject to all of the following vesting conditions:
•Public Market condition: Achievement of three stock price milestones: $50 or more, $60 or more, and $70 or more. The stock price will be measured based on the volume-weighted average price per share for 90 consecutive trading days;
•Service condition: Approximately 7-years of vesting; and
•Performance condition: Start of production for at least one series production program.
On June 4, 2024, the Board granted 687,499 RSUs to an executive, contingent upon market-based performance conditions. The grant date fair value of the award was $1.15 per share.
The Company measured the compensation cost for the management awards outlined above using a Monte Carlo simulation model and recorded $5.8 million and $17.2 million in stock-based compensation expense related to these awards in the three and nine months ended September 30, 2024, respectively.
The Company’s management awards activity for the nine months ended September 30, 2024 was as follows:
SharesWeighted Average
Grant Date Fair
Value per Share
Outstanding as of December 31, 202311,800,000 $8.48 
Granted687,499 1.15 
Outstanding as of September 30, 202412,487,499 8.07 
On November 8, 2023, the Board approved a formula for RSU grants to Messrs. Fennimore and Prescott for each year from 2024 through 2029 for Mr. Fennimore and through 2026 for Mr. Prescott based on achievement of annual performance goals with respect to the immediately preceding year (“Annual Performance Award”). The number of RSUs to be awarded in a year will be determined at the sole discretion of the Human Resources and Compensation Committee of the Board (the “Compensation Committee”) based on actual achievement of the annual performance goals established by the Board based on the Company’s approved operating plan in respect of the immediately preceding year, with such awards ranging from 137,500 RSUs at the threshold level, 550,000 RSUs at the target level, and 825,000 RSUs at the maximum level for extraordinary performance (interpolated linearly between target levels, as applicable). For a potential award to be made in 2024, the Compensation Committee had determined that annual performance goals will be weighted 50% based on revenue and 50% based on free cash flow, with target performance for the revenue performance goal equal to $81.4 million and target performance for the 2023 fourth quarter free cash flow goal equal to $(37) million. In March 2024, the Compensation Committee determined that the achievement of the 2023 performance goals was below the threshold level. Accordingly, no 2023 Annual Performance Award was granted to Messrs. Fennimore and Prescott in March 2024.
Compensation expense
Stock-based compensation expense by function was as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Cost of sales$1,204 $2,255 $4,897 $6,842 
Research and development10,862 12,886 41,724 50,898 
Sales and marketing4,171 6,536 12,951 22,156 
General and administrative15,531 23,205 53,740 80,135 
Stock-based compensation related to restructuring1,068 — 2,480 — 
Total$32,836 $44,882 $115,792 $160,031 
Stock-based compensation expense by type of award was as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Equity Classified Awards:
Stock options$69 $491 $437 $1,752 
RSAs— — — 61 
RSUs21,377 33,593 78,356 106,631 
Management awards5,814 5,560 17,229 17,059 
ESPP168 402 667 1,150 
Stock-based compensation related to restructuring1,068 — 2,480 — 
Liability Classified Awards:
Equity-settled fixed value3,552 4,150 11,466 10,066 
Optogration— 495 — 6,154 
Freedom Photonics563 687 2,650 10,219 
Other225 (496)2,507 6,939 
Total$32,836 $44,882 $115,792 $160,031