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Stock-Based Compensation Expense

6 Months Ended

Jun. 30, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

11. Stock-Based Compensation Expense

During the six months ended June 30, 2021, the Company granted the following awards:

	Three Months Ended			Three Months Ended			Six Months Ended
	March 31, 2021			June 30, 2021			June 30, 2021
Employee awards:
RSUs		370,137	⁽¹⁾		1,476,059	⁽²⁾		1,846,196
Market RSUs		—			918,775	⁽³⁾		918,775
Non-employee director RSUs		—			316,232	⁽⁴⁾		316,232
Total awards		370,137			2,711,066			3,081,203

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(1)	RSUs had a weighted average grant date fair value of $5.53 per share, of which 202,237 RSUs had a vesting period of 1 year and 167,900 RSUs had a vesting period of four years.

(2)	RSUs had a weighted average grant date fair value of $4.26 per share and a vesting period of 4 years.

(3)

Market RSUs had a grant date fair value of $9.30 per share and will vest on May 17, 2024 provided the closing price of the Company’s common stock on such vesting date is not less than the closing price on May 17, 2021. 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 May 18, 2021 until May 17, 2024 relative to the TSR of the Russell 3000 Pharmaceutical & Biotechnology Index over the same three-year period, as follows: less than 25^th percentile=0% of target, 25^th percentile=50% of target, 50^th percentile=100% of target, 75^th percentile=200% of target, 90^th 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 $4.31 per share and vested immediately upon grant, but the underlying shares of common stock will not be delivered until there is a separation of service, such as resignation, retirement or death.

As of June 30, 2021, there was $3.4 million of unrecognized stock-based compensation expense related to options and PNQs, which is expected to be recognized over a weighted average period of approximately 1.6 years, and $12.6 million and $12.5 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 3.4 and 2.6 years, respectively.

Total stock-based compensation expense recognized in the condensed consolidated statements of operations for the three months ended June 30, 2021 and 2020 was as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
RSUs and options	$	3,819	$	2,122	$	5,625	$	3,188
Employee stock purchase plan		107		63		236		125
Total stock compensation expense	$	3,926	$	2,185	$	5,861	$	3,313

Employee Stock Purchase Plan

The Company provides all employees, including executive officers, the ability to purchase our common stock at a discount under our 2004 employee stock purchase plan (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 our 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 identical to those of all other employees.

The Company issued 292,981 and 333,727 shares of common stock pursuant to the ESPP for the six months ended June 30, 2021 and 2020, respectively. There were approximately 1.3 million shares of common stock available for issuance under the ESPP as of June 30, 2021.