In January 2021, the Company’s Board of Directors adopted and the stockholders approved the 2021 Stock Incentive Plan (the “2021 Plan”). The 2021 Plan replaced the Company’s 2014 Plan, adopted by the Board of Directors in May 2014 (the “2014 Plan”). The 10,526,235 shares reserved for future issuance under the 2014 Plan were removed and added to the share reserve under the 2021 Plan. The 2021 Plan provided for the grant of incentive stock options, non-statutory stock options, restricted shares, RSU, share appreciation rights, performance-based awards and cash-based awards to the Company’s employees, directors, and consultants.

In July 2021, the Company’s Board of Directors adopted and the stockholders approved the 2021 Incentive Plan (the “2021 Incentive Plan”), which includes an ESPP as an addendum. The 2021 Incentive Plan replaced the 2021 Plan. The 2021 Incentive Plan provides for the grant of restricted shares, non-qualified stock options, incentive stock options, unrestricted shares, stock appreciation rights, restricted stock units and cash awards. Shares of common stock underlying awards that are forfeited or cancelled generally are returned to the pool of shares available for issuance under the 2021 Incentive Plan.

The Company’s outstanding stock options generally expire between 7 years to 10 years from the date of grant and are exercisable when the options vest. Incentive stock options and non-statutory options generally vest over four years, the majority of which vest at a rate of 25% on the first anniversary of the grant date, with the remainder vesting ratably each month over the next three years. A summary of stock option activity for the year ended December 31, 2023 was as follows:


	Outstanding Options
	Number of Options	Weighted Average Exercise Price		Weighted-Average Remaining Contractual Term	Intrinsic Value (in thousands)
Balance as of December 31, 2022	39,011,116	$	1.19	6.5	$	224,721
Options granted	4,829,886	7.61
Options exercised	(9,003,642)	1.15
Options canceled	(1,926,225)	3.83
Balance as of December 31, 2023	32,911,135	$	1.99	5.5	$	91,785
Options vested and exercisable as of December 31, 2023	26,806,933	$	1.17	5.2	$	86,227

The weighted-average grant-date fair value for options granted for the year ended December 31, 2023 is $3.61. Aggregate intrinsic value represents the difference between the exercise price of the options and the fair value of common shares. The aggregate intrinsic value of options exercised was $50.1 million, $475.5 million and $206.7 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The total fair value of stock options granted during the years ended December 31, 2023 and 2021 was $17.4 million and $24.0 million, respectively, which is recognized over the respective vesting periods. No stock options were granted during the year ended December 31, 2022. The total fair value of stock options vested during the years ended December 31, 2023, 2022 and 2021, was $5.4 million, $5.5 million and $6.2 million, respectively.

The Company estimates the fair value of the options utilizing the Black-Scholes option pricing model, which is dependent upon several variables, including expected option term, expected volatility of the Company’s share price over the expected term, expected risk-free interest rate over the expected option term, and expected dividend yield rate over the expected option term, and actual forfeiture rates. A summary of the weighted-average assumptions the Company utilized to record compensation expense for stock options granted during the years ended December 31, 2023 and 2021 was as follows:


	Restricted Stock Units
	Time-Based Shares	Performance-Based Shares	Total Shares	Weighted-Average Grant-Date Fair Value
Balance as of December 31, 2022	38,570,298	2,090,140	40,660,438	$	19.38
Granted	44,809,648	7,896,791	52,706,439	6.66
Vested	(19,620,735)	—	(19,620,735)	15.62
Cancelled/Forfeited	(9,059,472)	(681,106)	(9,740,578)	13.89
Balance as of December 31, 2023	54,699,739	9,305,825	64,005,564	$	10.90

Time-based RSUs granted prior to the Closing of Merger are subject to both performance-based and service-based vesting conditions. The performance condition was satisfied upon the Closing of the Merger, and the service condition will be met generally over 4.0 years. The Company granted 13,834,748 shares of the time-based RSUs to the CEO that will vest in sixteen equal quarterly installments, beginning on December 5, 2021, and are subject to continuous employment. The service condition for 25% of the Company’s non-CEO RSUs granted prior to the Closing of Merger was satisfied 375 days after the Closing. The remaining RSUs will be satisfied in equal quarterly installments thereafter, subject to continuous employment. The Company recognizes compensation expense for these time-based RSUs on a graded vesting schedule over the requisite vesting period. Fair value of these time-based RSUs was measured using the fair value of the Company’s common stock on the date of the grant, as based on the market price of Churchill’s stock adjusted for the expected exchange ratio at the time, and discounted for lack of marketability.

Time-based RSUs granted subsequent to the Closing of Merger are only subject to service-based vesting conditions and the compensation expense is recognized on a straight-line basis over the requisite service period. The fair value of these time-based RSUs granted after the Closing of the Merger was measured using the fair value of the Company’s common stock on the date of the grant.

As of December 31, 2023, unrecognized stock-based compensation cost related to outstanding unvested time-based RSUs that are expected to vest was $444.3 million, which is expected to be recognized over a weighted-average period of 2.1 years. The total fair value of time-based RSUs vested during the years ended December 31, 2023, 2022, and 2021 was $121.1 million, $190.9 million, and $50.5 million, respectively.

In 2021, the Company granted performance-based RSUs to the CEO and they are subject to performance and market conditions. The performance condition was satisfied upon the closing of the Merger. The market conditions will be satisfied and vest in five tranches based on the achievement of market capitalization goals applicable to each tranche over a six-month period subject to the CEO’s continuous employment through the applicable vesting date. Any CEO performance-based RSUs that have not vested within five years after the Closing will be forfeited. The fair value of these performance-based RSUs was measured on the grant date, March 27, 2021, using a Monte Carlo simulation model, with the following assumptions:

The Company recognizes compensation expense using a graded vesting attribution method over the derived service period for the CEO performance-based awards. Stock-based compensation expense is recognized when the relevant performance condition is considered probable of achievement for the performance-based award. During the year ended December 31, 2022, the market condition was met for the CEO performance-based awards for four of the five tranches and certified by the Board of Directors, representing an aggregate of 13,934,271 performance RSUs. The Company recorded stock-based compensation expense of $85.4 million during the year ended December 31, 2022. The unamortized expense of $8.2 million as of December 31, 2022 for the fifth tranche, representing 2,090,140 RSUs, was fully recognized during the year ended December 31, 2023. There were no performance-based RSUs vested for the years ended December 31, 2023 and 2021. The total fair value of performance-based RSUs vested during the year ended December 31, 2022 was $315.3 million. For the years ended December 31, 2023 and 2022, the Company withheld 1.9 million and 9.4 million shares, respectively, of common stock by net settlement to meet the related tax withholding requirements related to the CEO time-based and performance-based RSUs, and nil for the year ended December 31, 2021.

During the year ended December 31, 2023, the Company granted performance-based RSUs to certain employees. Performance-based RSUs granted to certain employees are subject to (i) annual corporate performance conditions and individual performance and (ii) a service condition which will be met generally over 3 years. The number of awards granted represents 100% of the target goal. Under the terms of the awards, the recipient may earn between 0% to 150% of the original number of grants based on actual achievement of corporate performance goals and individual performance. Stock-based compensation expense is recognized when the relevant performance condition is considered probable of achievement for the performance-based award. During the year ended December 31, 2023, the Company recorded stock-based compensation expenses of $7.9 million related to these performance-based RSUs. As of December 31, 2023, the unamortized expense for the performance-based RSUs was $13.5 million, which will be recognized over a weighted-average period of 1.3 years contingent upon realization of the corporate performance conditions and individual performance.

The ESPP authorizes the issuance of shares of common stock pursuant to purchase rights granted to employees. The plan provides for 24-month offering periods beginning in December and June of each year, and each offering period will consist of four six-month purchase periods. The purchase price for each share purchased during an offering period will be the lesser of 85% of the fair market value of the share on the purchase date or 85% of the fair market value of the share on the offering date.

If the market value of our common stock on the purchase date is lower than the market value at the beginning of the offering period, the ongoing offering terminates immediately following the purchase of ESPP shares on the purchase date and participants in the terminated offering are automatically enrolled in the new offering resulting in a reset of the offering price and a modification charge to be recognized over the new offering period. During the years ended December 31, 2023 and 2022, there were two ESPP resets that resulted in modification charges of $23.2 million and $19.9 million, respectively, which are being recognized until the new offering period ending in November 2025.

The Company issued 4,748,875 and 2,106,158 shares at a weighted-average price of $5.02 and $11.66 for the years ended December 31, 2023 and 2022, respectively. No shares were issued during the year ended December 31, 2021. As of December 31, 2023, unrecognized stock-based compensation cost related to the ESPP was $37.5 million, which is expected to be recognized over a weighted-average period of 1.9 years.

For the year ended December 31, 2023, stock-based compensation expense capitalized as part of the cost of inventory was $43.3 million. Total stock-based compensation expense for the year ended December 31, 2021 included $383.2 million stock-based compensation expense related to the RSUs and $123.6 million stock-based compensation expense related to the Series E convertible preferred stock issuance in March 2021 and April 2021. Refer to Note 8 “Contingent Forward Contracts” and Note 11 “Convertible Preferred Stock” for more information.