Stock-Based Compensation Expense

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

Stock-based Compensation Expense

(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 1,500,000 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 13,590,156 shares of common stock were reserved for issuance under the 2022 Plan. The 2022 Plan permits the granting of incentive stock options, nonstatutory 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 834,123. 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 March 31, 2022, no enrollments have been initiated by the Company.

Option Activity

The stock option activity for the three months ended March 31, 2022 has been retrospectively adjusted to reflect the Exchange Ratio on the Legacy Quanergy stock options.

The following table summarizes the stock option activity for the three months ended March 31, 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		3,954,639		$	6.92			$	15,398
Options granted		—			—
Options exercised		(197,875	)		0.29
Options cancelled		(2,184	)		12.75
Options expired		—			—
Outstanding at March 31, 2022		3,754,580			6.91		4.89		1,977
Vested and exercisable - March 31, 2022		3,559,805		$	6.27		4.60	$	1,977
Vested and expected to vest - March 31, 2022		3,754,580		$	6.91		4.89	$	1,977

As of March 31, 2022, there was $1.2 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 1.5 years.

Restricted Stock Unit Activity

The restricted stock unit activity for the three months ended March 31, 2022 has been retrospectively adjusted to reflect the Exchange Ratio on the Legacy Quanergy restricted stock units.

The following table summarizes the restricted stock unit activity for the three months ended March 31, 2022:

	Restricted Stock Units (“RSUs”)
	Number of			Weighted average
	shares			grant date fair value
Outstanding as of December 31, 2021		11,302,697		$	6.88
Granted		273,954			9.32
Vested		(7,177,204	)		6.65
Forfeited or cancelled		(101,709	)		8.02
Outstanding as of March 31, 2022		4,297,738		$	7.39

Vesting of RSUs are subject to service and performance conditions. The Business Combination was a qualifying event that satisfied the performance condition. For the three months ended March 2022, $50.7 million has been recognized on these RSUs. As of March 31, 2022, there was $28.8 million unrecognized stock-based compensation expense related to outstanding unvested RSUs.

On February 25, 2022, the Board of Directors approved 3,784,842 RSUs to be issued to certain employees and consultants of the Company. Of this amount, 1,905,031 restricted stock units were awarded to five related parties and officers of the Company. These RSUs have not been granted at the date of issuance of the condensed consolidated financial statements.

Stock-based compensation expense

The following table summarizes stock-based compensation expense and its allocation within the accompanying condensed consolidated statements of operations (in thousands):

	Three months ended March 31,
	2022		2021
Cost of goods sold	$	683	$	20
Research and development		7,677		441
Sales and marketing		4,598		212
General and administrative		38,603		908
Total stock-based compensation expense	$	51,561	$	1,581