Old SES established its initial share incentive plan in 2013 (the “2013 Plan”), which was subsequently replaced with a new share incentive plan in 2018 (the “2018 Plan”). Under the terms of the 2013 Plan and 2018 Plan certain shares were reserved for the issuance of incentive stock options (“ISOs”) and non-statutory stock options (“NSOs”) to employees, officers, directors, consultants and advisors. On March 30, 2021, the Company amended the 2018 Plan with the SES Holdings Pte. Ltd. 2021 Share Incentive Plan (the “2021 Plan”) and increased the

total shares reserved for future issuance by 486,975 shares. Upon approval of the 2021 Plan, any shares that, as of the date of stockholder approval, were reserved but not issued pursuant to any awards granted under the Company’s 2018 Plan were rolled into the 2021 Plan. In addition, any shares subject to stock options or similar awards granted under the 2018 Plan that expire or otherwise terminate without having been exercised in full and shares issued pursuant to awards granted under the 2018 Plan that are forfeited or repurchased by the Company would be rolled into the 2021 Plan. The 2021 Plan provided for the discretionary grant of ISOs, NSOs, and RSAs.

In connection with the Business Combination, the 2021 Plan was terminated and the remaining unallocated share reserve was cancelled and no new awards will be granted under the 2021 Plan. 20,748,976 options and 2,273,727 RSAs (as converted, due to retroactive application of reverse recapitalization) outstanding under the 2021 Plan at Closing were assumed by the Company under the SES AI Corporation 2021 Plan (defined below). The options and RSAs generally vest 25% upon completion of one year of service and 1/48 per month thereafter, however in certain instances options have been granted with immediate vesting. The assumed options generally expire 10 years from the date of grant.

In connection with the Business Combination, the Company adopted the SES AI Corporation 2021 Incentive Award Plan (the “SES AI Corporation 2021 Plan”) under which 36,862,002 shares of Class A Common Stock were initially reserved for issuance of ISOs, NSOs, stock appreciation rights, RSAs, RSUs, PSUs, other stock-based awards, other cash-based awards, and dividend equivalents. In addition and subject to certain limitations, any shares subject to awards granted under the 2021 Plan that expire or otherwise terminate without having been exercised in full and shares issued pursuant to awards granted under the 2021 Plan that are forfeited or repurchased by the Company shall roll into the SES AI Corporation 2021 Plan. The SES AI Corporation 2021 Plan allows for the maximum number of shares issuable to automatically increase on January 1st of each year for a period of ten years commencing on January 1, 2022 and ending on (and including) January 1, 2031, in an amount equal to two percent of the total number of shares of Class A Common Stock outstanding on December 31st of the preceding year.

During the nine months ended September 30, 2022, the Company granted 2,116,942 PSUs and 2,920,755 RSUs, net of forfeitures, respectively. As of September 30, 2022, the Company had 32,639,849 shares of Class A Common Stock reserved for future issuance of equity awards to employees, officers, directors, or consultants under the SES AI Corporation 2021 Plan.

The Earn-Out Restricted Shares has been measured at its estimated fair value as of the grant date using Level 3 inputs in a Monte Carlo simulation valuation model. The aggregate grant date fair value of the Earn-Out Restricted Shares is $15.8 million. Inherent in the valuation model are assumptions related to expected stock price volatility, risk-free interest rate, expected life, and dividend yield. The Company estimates the volatility of its common stock by using an average of historical volatilities of select peer companies’ common stock that matches the expected remaining term of the awards. The risk-free interest rate is based on the U.S. Treasury yield curve for zero-coupon U.S. Treasury notes with maturities corresponding to the expected remaining life of the awards, which is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.

The key inputs into the Monte Carlo simulation model for the Earn-Out Restricted Shares were as follows at the measurement date:

The Company’s stock-based compensation included in its condensed consolidated statements of operations and comprehensive loss was as follows:

(1)

^Includes^$2.2^{million and}^$5.8^{million of stock-based compensation expense recorded for the Earn-Out Restricted Shares during the three and nine months ended September 30, 2022, respectively. Additionally, includes}^$3.0^{million and}^$4.8^{million of stock-based compensation expense recorded for the RSUs and}^$1.4^{million and}^$2.4^{million of stock-based compensation expense recorded for the PSUs during the three and nine months ended September 30, 2022, respectively.}

No income tax benefit was recognized for this compensation expense in the condensed consolidated statements of operations and comprehensive loss, as the Company does not anticipate realizing any such benefit in the near future. As of September 30, 2022, there was $45.8 million of total unrecognized stock-based compensation cost, of which $20.1 million is related to unvested RSUs, $10.2 million is related to unvested PSUs, $7.5 million is related to unvested RSAs, $7.0 million is related to unvested Earn-Out Restricted shares, and $1.0 million is related to unvested stock options, respectively, which the Company expects to recognize over an estimated weighted-average period of 2.5 years, 2.1 years, 2.5 years, 0.8 years, and 2.4 years, respectively.