Stock-Based Compensation Expense

9 Months Ended

Sep. 30, 2022

Share-based Payment Arrangement [Abstract]

(11) Stock-based Compensation Expense

2013 Equity Incentive Plan

Effective January 28, 2022, the Company increased the aggregate number of shares reserved for issuance under the 2013 Incentive Stock Plan by 75,000 shares.

2022 Equity Incentive Plan

In June 2021, the Board of Directors adopted the Quanergy Systems, Inc. 2022 Plan (“the 2022 Plan”), which was subsequently approved by the Company’s stockholders. The 2022 Plan became effective on February 8, 2022 and 679,507 shares of common stock were reserved for issuance under the 2022 Plan. The 2022 Plan permits the granting of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, and other equity-based awards to employees, directors and consultants.

Employee Stock Purchase Plan

The Board of Directors and stockholders approved the Quanergy Systems, Inc. 2022 Employee Stock Purchase Plan, or the ESPP, in June 2021 and January 2022, respectively. The initial number of shares of common stock authorized for sale under the ESPP was 41,706. Unless the Board of Directors provides otherwise, beginning on January 1, 2023, and continuing through and including January 1, 2032, the maximum number of shares which shall be made available for sale under the ESPP will automatically increase on the first day in January of each calendar year by the lesser of:

(1)

one percent (1%) of fully diluted Common Stock on December 31st of the preceding calendar year

(2)

shares of Common Stock equal to 200% of the initial share reserve, or

(3)

such lesser number of shares of the Company as determined by our board of directors.

As of September 30, 2022, the Employee Stock Purchase Plan has not yet been activated. The Company is currently evaluating the timing of activation.

Option Activity

The stock option activity for the nine months ended September 30, 2022 has been retrospectively adjusted to reflect the reverse stock split and Exchange Ratio on the Legacy Quanergy stock options.

The following table summarizes the stock option activity for the nine months ended September 30, 2022:


	Options outstanding
	Number of shares			Weighted average exercise price per share		Weighted average contractual term (in years)		Aggregate intrinsic value (in thousands)
Outstanding - December 31, 2021		197,637		$	138.20	5.13		$	15,398
Options granted		—			—
Options exercised		(14,741	)		5.05
Options cancelled		(5,308	)		199.37
Options expired		—			—
Outstanding at September 30, 2022		177,588		$	147.56		4.53	$	9.12
Vested and exercisable - September 30, 2022		166,418		$	140.29		4.36	$	9.12
Vested and expected to vest - September 30, 2022		177,588		$	147.56		4.53	$	9.12

As of September 30, 2022, there was $0.8 million of unrecognized compensation costs related to non-vested stock option awards, which is expected to be recognized over a weighted-average period of approximately 1.09 years.

Restricted Stock Unit Activity

The restricted stock unit activity for the nine months ended September 30, 2022 has been retrospectively adjusted to reflect the reverse stock split and Exchange Ratio on the Legacy Quanergy restricted stock units.

The following table summarizes the restricted stock unit activity for the nine months ended September 30, 2022:


	Restricted Stock Units (“RSUs”)
	Number of shares			Weighted average grant date fair value
Unvested as of December 31, 2021		565,005		$	137.94
Granted		415,210			22.11
Vested		(437,106	)		126.41
Forfeited or cancelled		(44,054	)		75.75
Unvested as of September 30, 2022		499,055		$	56.85

Vesting of RSUs are subject to service and performance conditions. The Business Combination was a qualifying event that satisfied the performance condition for all RSUs. For the three and nine months ended September 30, 2022, $3.9 million and $58.8 million, respectively, of stock-based compensation expense has been recognized on these RSUs. As of September 30, 2022, there was $24.8 million unrecognized stock-based compensation expense related to outstanding unvested RSUs, which is expected to be recognized over a weighted-average period of approximately 2.32 years.

Stock-based Compensation Expense

The following table summarizes stock-based compensation expense and its allocation within the accompanying condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021, respectively (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Cost of goods sold	$	179	$	16	$	1,016	$	57
Research and development		1,321		415		10,462		1,311
Sales and marketing		1,012		211		6,854		653
General and administrative		2,196		2,706		43,188		8,633
Total stock-based compensation expense	$	4,708	$	3,348	$	61,520	$	10,654