Stock-Based Compensation

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

2021 SI Plan

In July 2021, the Company adopted the 2021 Stock Incentive Plan (“2021 SI Plan”). The 2021 SI Plan allows the Board of Directors to grant up to 49,573,570 incentive and nonqualified stock options, restricted shares, unrestricted shares, restricted share units, and other stock-based awards for the Company’s Class A Common Stock to employees, directors, and non-employees. The number of shares of Class A Common Stock available under the 2021 SI Plan will increase annually on the first day of each calendar year, beginning with the calendar year ending December 31, 2022, and continuing until (and including) the calendar year ending December 31, 2031. Annual increases are equal to the lesser of (i) 5 percent of the number of shares of Class A Common Stock issued and outstanding on December 31 of the immediately preceding fiscal year and (ii) an amount determined by the Board of Directors. As of the effective date of the 2021 SI Plan, no further stock awards have been or will be granted under the EI Plan or STI Plan. As of September 30, 2021, there were no awards issued under the 2021 SI Plan.

As of September 30, 2021, the Company had 49,573,570 shares of Class A Common Stock available for future issuance under its 2021 SI Plan.

EI Plan

On February 1, 2018, the Board of Directors adopted the Equity Incentive Plan (“EI Plan”), under which the Board of Directors authorized the grant of up to 42,390,000 incentive and nonqualified stock options, restricted stock, unrestricted stock, restricted stock units, and other stock-based awards for Legacy FF’s Class A Ordinary Stock to employees, directors, and non-employees.

On the Closing Date and in connection with the Business Combination, each of the Legacy FF’s outstanding options under the EI Plan immediately prior to the closing of the Business Combination remained outstanding and converted into the right to purchase the Company’s Class A Common Stock based on the Exchange Ratio.

A summary of the Company’s stock option activity under the EI Plan is as follows:


	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2020	30,488,300	$	2.45	8.75	$	885
Granted	5,287,031	4.74
Exercised	(2,695,995)	2.30
Cancelled/forfeited	(941,576)	3.52
Outstanding as of September 30, 2021	32,137,760	$	2.82	8.01	$	213,995

The weighted-average assumptions used in the Black-Scholes option pricing model for awards granted during the nine months ended September 30, 2021 are as follows:



Risk-free interest rate:	0.79	%
Expected term (in years):	6.05
Expected volatility:	42.10	%
Dividend yield:	0.00	%

As of September 30, 2021, the total remaining stock-based compensation expense for unvested stock options was $14,970, which is expected to be recognized over a weighted average period of 3.09 years.

STI Plan

The Special Talent Incentive Plan (“STI Plan”) allows the Board of Directors to grant up to 14,130,000 incentive and nonqualified stock options, restricted shares, unrestricted shares, restricted share units, and other stock-based awards for Legacy FF’s Class A Ordinary Stock to employees, directors, and non-employees.

The STI Plan does not specify a limit on the number of stock options that can be issued under the plan. Per the terms of the STI Plan, the Company must reserve and keep available a sufficient number of shares to satisfy the requirements of the STI Plan.

On January 27, 2021, in conjunction with entering into a service agreement with its lessor of the facility located in Hanford, California, the Company issued 399,553 fully-vested options with an exercise price of $2.767 per share. In the event that the intrinsic value of the option is less than the accrued outstanding rent payments of $947 upon close of the Business Combination, the Company will pay the lessor the difference in a single cash payment, otherwise, the accrued outstanding rent will be deemed paid. Upon close of the Business Combination, the intrinsic value of the option was more than the accrued outstanding rent payments and therefore the accrued outstanding rent was deemed paid.

On the Closing Date and in connection with the Business Combination, each of the Company’s outstanding options under the STI Plan immediately prior to the closing of the Business Combination remained outstanding and converted into the right to purchase Class A Common Stock equal to the number of shares subject to such option multiplied by the Exchange Ratio at an exercise price per share equal to the current exercise price per share for such option divided by the Exchange Ratio.

A summary of the Company’s stock option activity under the STI Plan is as follows:


	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2020	6,490,208	$	2.49	9.26	$	1,174
Granted	5,516,399	7.82		—	—
Exercised	(1,630,925)	2.54		—	—
Cancelled/forfeited	(846,200)	2.67		—	—
Outstanding as of September 30, 2021	9,529,482	$	5.55	8.27	$	39,171

The Company has elected to use the contractual term of non-employee options awarded under the STI Plan as the expected term. The weighted-average assumptions used in the Black-Scholes option pricing model for awards granted during the nine months ended September 30, 2021 are as follows:


Risk-free interest rate:	1.39	%
Expected term (in years):	9.06
Expected volatility:	35.86	%
Dividend yield:	0.00	%

As of September 30, 2021, the total remaining stock-based compensation expense for unvested stock options was approximately $7,860, which is expected to be recognized over a weighted average period of approximately 4.07 years.

The following table presents stock-based compensation expense included in each respective expense category in the unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Loss for the three and nine months ended September 30, 2021:


	Three Months Ended September 30,
	2021		2020
Research and development	$	1,879	$	933
Sales and marketing	538		215
General and administrative	2,636		2,267
	$	5,053	$	3,415


	Nine Months Ended September 30,
	2021		2020
Research and development	$	2,873	$	2,493
Sales and marketing	847		633
General and administrative	4,801		3,940
	$	8,521	$	7,066

Restricted Stock Awards

On July 21, 2021, in connection with the Closing of the Business Combination, the Company issued 1,404,459 restricted stock awards with a grant date fair value of $13.78 per share as a bonus to employees and other service providers. The restricted stock awards vest 90 days from the grant date. As of September 30, 2021, 40,441 of these restricted stock awards had been forfeited.


Restricted stock awards for employee bonus, net	Three and Nine Months Ended September 30,
	2021		2020
Research and development	$	6,061	$	—
Sales and marketing	1,797		—
General and administrative	6,762		—
	$	14,620	$	—

As of September 30, 2021, the total remaining stock-based compensation expense for unvested restricted stock awards was $3,997, which is expected to be recognized during the fourth quarter of 2021.