Stock-Based Compensation Expense

9 Months Ended

Sep. 30, 2024

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

14. Stock-Based Compensation Expense

The Company granted the following awards (in shares):


	Three Months Ended March 31,			Three Months Ended June 30,			Three Months Ended September 30,			Nine Months Ended September 30,
	2024			2024			2024			2024
Employee awards:
RSUs		267,990	(1)		3,205,910	(2)		241,253	(5)		3,715,153
Market RSUs		—			2,144,000	(3)		—			2,144,000
Non-employee director RSUs		—			280,376	(4)		—			280,376
Total awards issued		267,990			5,630,286			241,253			6,139,529

_________________________

(1)

RSUs had a weighted average grant date fair value of $3.28 per share, of which 211,895 RSUs had a vesting period of 33.3% annually over the second, third, and fourth anniversary of the vesting determination date, 53,720 RSUs had a cliff vesting period of three years, and 2,375 RSUs had a vesting period of 25% annually over four years.

(2)

RSUs had a weighted average grant date fair value of $4.45 per share, of which 3,033,680 RSUs had a vesting period of 25% annually over four years, 145,980 RSUs had a vesting period of 33.3% annually over the second, third, and fourth anniversary of the vesting determination date, and 26,250 RSUs had a cliff vesting period of two years.

(3)

Market RSUs had a grant date fair value of $10.30 per share and will vest on July 15, 2027. The number of shares delivered on the vesting date is determined by the percentile ranking of MannKind total shareholder return ("TSR") over the period from July 1, 2024 until June 30, 2027 relative to the TSR of the Russell 3000 Pharmaceutical & Biotechnology Index over the same three-year period, as follows: less than 25th percentile=0% of target, 25th percentile=50% of target, 50th percentile=100% of target, 75th percentile=200% of target, 90th percentile or higher=300% maximum. Payout values will be interpolated between the percentile rankings above.

(4)

RSUs had a weighted average grant date fair value of $4.45 per share and vested immediately upon the grant date; however, the underlying shares of common stock will not be delivered until there is a separation of service such as resignation, retirement or death.

(5)

RSUs had a weighted average grant date fair value of $5.34 per share, of which 219,285 RSUs had a vesting period of 33.3% annually over the second, third, and fourth anniversary of the vesting determination date, and 21,968 RSUs had a vesting period of 40% on the first anniversary and 60% on the second anniversary of the vesting determination date.

As of September 30, 2024, there was $26.2 million and $27.4 million of unrecognized stock-based compensation expense related to RSUs and Market RSUs, respectively, which is expected to be recognized over a weighted average period of approximately 2.84 and 1.98 years, respectively.

Total stock-based compensation expense recognized in the condensed consolidated statements of operations as cost of goods sold, cost of revenue – collaborations and services, R&D and selling, general and administrative expense was as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
RSUs and options	$	5,047	$	4,442	$	14,994	$	13,324
Employee stock purchase plan		180		159		546		512
Total	$	5,227	$	4,601	$	15,540	$	13,836

Employee Stock Purchase Plan

The Company provides all employees, including executive officers, the ability to purchase common stock at a discount under the ESPP. The ESPP is designed to comply with Section 423 of the Internal Revenue Code and provides all employees with the opportunity to purchase up to $25,000 worth of common stock (based on the undiscounted fair market value at the commencement of the offering period) each year at a purchase price that is the lower of 85% of the fair market value of the common stock on either the date of purchase or the commencement of the offering period. An employee may not purchase more than 5,000 shares of common stock on any purchase date. The executives’ rights under the ESPP are the same as those of all other employees.

There were approximately 2.6 million shares of common stock available for issuance under the ESPP as of September 30, 2024.