Stock-Based Compensation

3 Months Ended

Mar. 31, 2023

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 allowed 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 date of issuance of the unaudited Condensed Consolidated Financial Statements, the Board of Directors is evaluating the timing and extent of such increases. 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 (defined below).

As of March 31, 2023 and December 31, 2022, the Company had 2,759,373 and 25,057,455 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.

STI Plan

Pursuant to the Special Talent Incentive Plan (“STI Plan”), the Board of Directors may 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.

A summary of the Company’s stock option activity is as follows (dollars in thousands except weighted average exercise price):


	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2022	35,687,240	$	3.37	7.3	$	22
Granted	4,000,000	1.08
Exercised	(49,456)	0.89			$	10
Cancelled/forfeited	(2,455,912)	3.37
Outstanding as of March 31, 2023	37,181,872	$	3.15	7.5	$	31

The weighted-average assumptions used in the Black-Scholes option pricing model are as follows:


	Three Months Ended March 31,
	2023		2022
Risk-free interest rate:	3.5	%	1.6	%
Expected term (in years):	8.6		7.0
Expected volatility:	90.2	%	43.5	%
Dividend yield:	0	%	0	%

As of March 31, 2023, the total remaining stock-based compensation expense for unvested stock options was $22.8 million, which is expected to be recognized over a weighted-average period of 2.98 years.

A summary of the Company’s RSU activity is as follows:


	Shares	Weighted Average Fair Value
Outstanding as of December 31, 2022	17,869,663	$	1.09
Granted	5,932,766	1.08
Released	(1,145,334)	1.24
Forfeitures	(2,525,984)	1.11
Outstanding as of March 31, 2023	20,131,111	$	1.08

The Company’s subsidiaries in China have employees who are citizens of People’s Republic of China (PRC). Pursuant to regulation Circular 78 and Circular 7 issued by the Central State Administration of Foreign Exchange of PRC (“SAFE”), the Company cannot release vested RSUs to it’s PRC citizen employees before they have completed the required SAFE registration with a dedicated account set up for each of them to repatriate proceeds back to China under the SAFE. As a result, the outstanding RSU’s for the period ended March 31, 2023 and December 31, 2022, include 1,614,088 and 1,448,697 RSUs of the

Company’s PRC citizens employees. These are unreleased RSUs as these employees have not completed the SAFE registration process.

As of March 31, 2023, the total remaining stock-based compensation expense for unvested RSU’s was $11.4 million, which is expected to be recognized over a weighted-average period of 4.22 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 (dollars in thousands):


	Three Months Ended March 31,
	2023		2022
Research and development	$	11,294	$	1,622
Sales and marketing	1,280		374
General and administrative	2,528		1,350
	$	15,102	$	3,346