Share-Based Compensation Expense

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Share-based compensation expense for stock options and restricted stock units for the three months ended March 31, 2023 and 2022 was $0.8 million and $0.4 million, respectively. As of March 31, 2023, there was $5.5 million of unrecognized compensation cost related to stock options which is expected to be recognized over the remaining vesting periods, with a weighted-average period of 3.4 years.

Stock Options

The Company grants stock options to certain employees that will vest over a period of one to four years. A summary of stock option award activity for the three months ended March 31, 2023 was as follows:


Options	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term

Outstanding at December 31, 2022	6,091,271	$	1.39	2.7
Granted	—	—
Exercised	(1,081,679)	0.25
Cancelled or forfeited	(528,176)	6.94
Outstanding at March 31, 2023	4,481,416	$	1.02	2.6
Exercisable at March 31, 2023	4,318,930	$	0.95	2.6

The aggregate intrinsic value of stock options outstanding as of March 31, 2023 was $2.2 million. The aggregate intrinsic value of stock options exercisable as of March 31, 2023 was $2.2 million. Cash received from options exercised for the three months ended March 31, 2023 and 2022 was $0.3 million and $0.3 million, respectively.

Restricted Stock Units

The Company grants restricted stock units to certain employees that will generally vest over a period of four years. The fair value of restricted stock unit awards is estimated by the fair value of the Company’s Common Stock at the date of grant. Restricted stock units activity during the three months ended March 31, 2023 was as follows:


	Number of Shares	Weighted Average Grant Date Fair Value Per Share

Non-vested, at December 31, 2022	9,832,707	$	1.30
Granted	—	—
Vested	(2,731,919)	2.03
Cancelled or forfeited	(766,815)	1.36
Non-vested, at March 31, 2023	6,333,973	$	1.28

CEO's Ladder Restricted Stock Unit Award

On September 9, 2022, in connection with the acquisition of Legacy Spruce Power and his appointment as President of XL Fleet, the Company granted to CEO a restricted stock unit award (the "Ladder RSUs") of 1,666,666 shares of common stock. The Ladder RSUs vest in 10% increments on the dates the Plan administrator certifies the applicable milestone stock prices have been achieved or exceeded, provided that CEO remains employed on the date of certification and such achievement occurs within ten years of the date of the grant.

The Company used a Monte Carlo simulation valuation model to determine the fair value of the award which is presently accounted for as a liability. The following inputs were used in the simulation: grant date stock price of $1.17, annual volatility of 85.0%, risk-free interest rate of 3.3% and dividend yield of 0.0%. For each tranche, a fair value was calculated as well as a derived service period which represents the median number of years it is expected to take for the Ladder RSUs to meet their corresponding milestone stock price excluding the simulation paths that result in the Ladder RSUs not vesting within the 10 year term of the agreement. Each tranche's fair value will be amortized ratably over the respective derived service period.

The Company recognized approximately $0.1 million of expense related to the Ladder RSUs for the three months ended March 31, 2023