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Stock-Based Compensation
 9 Months Ended
Sep. 30, 2021
Share-based Payment Arrangement, Noncash Expense [Abstract]  
Stock-Based Compensation Stock-Based Compensation
2017 Share Plan
In April 2017, the Company adopted the 2017 Share Plan (the "2017 Plan") under which employees, directors, and consultants could be granted various forms of equity incentive compensation at the discretion of the board of directors, including stock options, restricted shares, RSUs, and SVAs.
Stock options granted under the 2017 Plan have a contractual term of ten years and have varying vesting terms, but generally vest over a requisite service period of four years. The exercise price of the stock options granted may not be less than the par value of the common stock on the grant date for non-U.S. tax residents and may not be less than the fair market value of the common stock on the grant date for U.S. tax residents. Certain share options contain a performance condition and are only exercisable subject to the grantee's continuous service and the completion of an IPO. Options which contain a performance condition and for which the service condition has been satisfied are forfeited should employment terminate before the Company’s IPO.
In March 2021, the Company’s board of directors approved an amendment to the 2017 Plan to increase the number of shares of common stock reserved for issuance by 2,300,000 shares, for a total of 24,267,694 shares reserved.
The 2017 Plan was terminated in connection with the Company’s IPO in April 2021, and the Company will not grant any additional awards under the 2017 Plan. However, the 2017 Plan will continue to govern the terms and conditions of the outstanding awards previously granted under the 2017 Plan.
2021 Equity Incentive Plan
In March 2021, the board of directors adopted the 2021 Equity Incentive Plan (the "2021 Plan"), which became effective upon its approval by the board of directors, but for which no awards were eligible to be granted prior to the Company’s IPO in April 2021. The 2021 Plan provides for the grant of stock options, stock appreciation rights (“SARs”), restricted stock, and RSUs to the Company’s employees, directors, and consultants. The number of shares of the Company’s Class A common stock reserved for issuance under the 2021 Plan is 20,134,146 plus up to 19,892,067 shares of Class A common stock subject to awards under the Company’s 2017 Plan. In the event that the aggregate number of shares of Class A common stock that are available for issuance under the 2021 Plan as of the last day of a fiscal year is less than 5% of the Company's fully-diluted capitalization, then for the duration of the 2021 Plan, on the first day of each fiscal year of the Company thereafter, the number of shares of Class A common stock available for issuance under the 2021 Plan will automatically increase by either (i) 2.5% of the Company’s fully-diluted capitalization as of the last day of the immediately preceding fiscal year or (ii) such other amount as determined by the board of directors.
2021 Employee Stock Purchase Plan
In March 2021, the board of directors adopted the 2021 Employee Stock Purchase Plan (the "2021 ESPP"), which became effective upon the Company's IPO in April 2021. The 2021 ESPP authorizes the issuance of shares of Class A common stock pursuant to purchase rights granted to employees. A total of 2,013,414 shares of the Company's Class A common stock have been reserved for future issuance under the 2021 ESPP, subject to annual increases authorized by the board of directors; however, the aggregate number of shares of Class A common stock that may be approved for issuance under the 2021 ESPP in any given fiscal year may not exceed 1% of the total number of shares of common stock issued and outstanding on the last business day of the prior fiscal year.
The stock-based compensation expense recognized for the 2021 ESPP was $0.2 million during the three and nine months ended September 30, 2021. During the periods ended December 31, 2020 and September 30, 2021, no shares were purchased under the 2021 ESPP.
As of September 30, 2021, unrecognized stock-based compensation expense related to the 2021 ESPP was $0.8 million, which is expected to be recognized over a weighted-average period of 0.4 years.
The estimated grant-date fair value of the ESPP purchase rights was calculated using the Black-Scholes option-pricing model, based on the following assumptions:
Three Months Ended September 30, 2021Nine Months Ended September 30, 2021
Risk-free interest rate0.06%0.06%
Expected volatility97.10%97.10%
Expected term (in years)0.500.50
Fair value of common stock$44.39$44.39
Stock Options
A summary of the stock option activity, including the CEO Performance Award, for the nine months ended September 30, 2021 is as follows (in thousands, except share amounts, per share amounts, and years):
 
Options
Outstanding
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Life (Years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 2020
13,295,497$1.29 7.99$97,986 
Granted3,717,968$22.22 
Exercised(244,264)$3.20 
Cancelled/Forfeited(749,962)$1.11 
Outstanding at September 30, 2021
16,019,239$6.13 7.66$507,736 
 Vested and exercisable at September 30, 2021
9,514,873$0.55 6.50$348,041 
As of September 30, 2021, there was $97.9 million of unrecognized stock-based compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average service period of 3.41 years.
Upon the closing of the Company’s IPO, the Company recognized $18.8 million of stock-based compensation expense relating to stock options for which the time-based vesting condition has been satisfied or partially satisfied on that date and for which the performance condition was satisfied upon the occurrence of the IPO.
The estimated grant-date fair value of the Company’s stock-based option awards was calculated using the Black-Scholes option-pricing model, based on the following assumptions:
Three Months Ended September 30,Nine Months Ended September 30,
2020202120202021
Risk-free interest rate
0.21% - 0.31%
0.86% - 0.95%
0.21% - 0.44%
0.33% - 1.04%
Expected volatility60.00%50.00%60.00%50.00%
Expected term (in years)
5.00 - 6.06
6.16
5.00 - 6.06
4.05 - 6.22
CEO Performance Award
In March 2021, included in the stock options discussed above, the Company granted 1,150,000 stock option awards to its CEO with an exercise price of $14.14 per share and a contractual life of ten years that vest upon the attainment of both operational milestones (performance conditions) and market conditions, assuming continued employment as CEO through the vesting date (the “CEO Performance Award”). The options will vest upon certification by the Board of Directors that all the following milestones have been attained: (i) the average market capitalization of the Company during any consecutive 180-day period is no less than $25.0 billion, (ii) the average number of L4 autonomous semi-trucks operating on the Company’s Autonomous Freight Network in any 90-day period is no less than 1,500, and (iii) the Company’s revenues from its Autonomous Freight Network for any 12-month period exceed $200.0 million.
As of September 30, 2021, there was a total of $27.2 million unrecognized stock-based compensation expense for the operational milestones that were considered probable to achieve which will be recognized over a period of 3.17 years. For the three and nine months ended September 30, 2021, the Company recorded stock-based compensation expense of $2.2 million and $5.0 million, respectively, related to the CEO Performance Award.
RSUs
The following table summarizes the activity related to RSUs for the nine months ended September 30, 2021:
 
RSUs
Outstanding
Weighted-Average
Grant Date Fair
Value per Share
Unvested and outstanding at December 31, 2020
1,100,000 $14.14 
Granted4,905,295 $50.77 
Vested(931,588)$19.44 
Cancelled(11,928)$45.43 
Unvested and outstanding at September 30, 2021
5,061,779 $48.58 
Vested and outstanding at September 30, 2021
142,153 $38.19 
SVAs
The following table summarizes the activity related to SVAs for the nine months ended September 30, 2021:
 
SVAs
Outstanding
Weighted-Average
Grant Date Fair
Value per Share
Unvested and outstanding at December 31, 2020
3,653,146 $3.20 
Vested(2,981,349)$3.08 
Cancelled(260,718)$5.84 
Unvested and outstanding at September 30, 2021
411,079 $4.75 
Vested and outstanding at September 30, 2021
— $— 
As of September 30, 2021, there was $225.4 million of unrecognized stock-based compensation expense related to RSUs and SVAs, which is expected to be recognized over a weighted-average service period of 3.18 years.
Upon the Company’s IPO, the Company recognized $23.8 million of stock-based compensation expense relating to RSUs and SVAs for which the time-based vesting condition has been satisfied or partially satisfied on that date and for which the performance condition was satisfied upon the occurrence of the IPO.
Early Exercise of Common Stock Options
The Company’s board of directors authorized certain stock option holders to exercise unvested options to purchase shares of Class A common stock. Shares of Class A common stock issued upon early exercises of unvested options are not deemed, for accounting purposes, to be issued until those shares vest according to their respective vesting schedules and accordingly, the consideration received for early exercises is initially recorded as a liability and reclassified to common stock and additional paid-in capital as the underlying awards vest. Stock options that are early exercised are subject to repurchase in the event of the optionee’s termination of service, at the original issuance price, until the options are fully vested. As of September 30, 2021, 45,000 shares of Class A common stock were subject to repurchase at a weighted-average price of $4.20 per share. The cash proceeds received for unvested shares of common stock recorded within accrued expenses and other current liabilities in the condensed consolidated balance sheets were $0.2 million as of September 30, 2021.
Stock-based Compensation Expense
Total stock-based compensation expense was as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2020202120202021
Research and development$402 $22,382 $547 $49,520 
Sales and marketing2 101 2 652 
General and administrative7,241 9,599 8,776 40,708 
Total stock-based compensation expense$7,645 $32,082 $9,325 $90,880 
Upon the Company’s IPO, a one-time stock-based compensation expense of $42.6 million was incurred for the nine months ended September 30, 2021, relating to awards for which the time-based vesting condition has been satisfied or partially satisfied on that date and for which the performance condition was satisfied upon the occurrence of the IPO.