The Company has stockholder-approved equity incentive plans further described below that permit the grant of stock options, restricted stock unit awards, and other stock-based awards to employees, directors, and consultants of the Company.

2017 Equity Incentive Plan. The Company’s 2017 Equity Incentive Plan permits the grant of incentive stock options to employees and nonstatutory stock options to employees, directors and consultants of the Company. The plan also permits the grant of stock bonus awards, restricted stock awards, restricted stock unit awards, stock appreciation rights and performance stock awards. Incentive and nonstatutory stock options have an exercise price of 100% or more of the fair market value of the Company’s common stock on the date of grant. Most stock options granted under the 2017 Equity Incentive Plan become vested and exercisable over a period of four years. Stock options granted under the Equity Incentive Plan have a term of 10 years from the date of grant. Vesting of restricted stock units issued under this plan generally vest in three annual installments.

2017 Non-Employee Directors’ Equity Incentive Plan (the “Directors’ Plan”). Under the Company’s Directors’ Plan, non-employee directors may be granted awards under the plan with an aggregate grant date fair value of no more than $500,000 during any calendar year, taken together with any cash fees paid to such non-employee director in compensation for service on Lexicon’s board of directors during such calendar year. Stock options granted under the Directors’ Plan have an exercise price equal to the fair market value of the Company’s common stock on the date of grant and a term of 10 years from the date of grant. Vesting of restricted stock units granted under this plan occurs on the first anniversary of the grant date.

The total number of shares of common stock that may be issued pursuant to stock awards under the Equity Incentive Plan and the Directors’ Plan shall not exceed in the aggregate 55,000,000 and 2,000,000 shares at December 31, 2023, respectively. Under the combined plans, as of December 31, 2023, an aggregate of 23,719,712 shares of common stock were reserved for issuance upon exercise of outstanding stock options and vesting of outstanding restricted stock units and 24,047,212 additional shares were available for future grants. The Company has a policy of using either authorized and unissued shares or treasury shares, including shares acquired by purchase in the open market or in private transactions, to satisfy equity award exercises. As of December 31, 2023, options to purchase 18,705,022 shares and 5,014,690 restricted stock

units were outstanding, 2,285,702 shares had been issued upon the exercise of stock options, 6,730,226 shares had been issued pursuant to restricted stock units and 217,148 shares had been issued pursuant to stock bonus awards or restricted stock awards granted under the aggregate of both plans.

For the years ended December 2023, 2022, and 2021 stock-based compensation costs was $14.3 million, $11.5 million, and $10.6 million, respectively. As of December 31, 2023, future stock-based compensation cost for all outstanding unvested stock options and restricted stock units was $26.8 million, which is expected to be recognized over a weighted-average period of 1.2 years.


	As of December 31, 2023
(in thousands, except exercise price data)	Options	Weighted Average Exercise Price
Outstanding at beginning of year	12,349	$	5.10
Granted	8,091	2.29
Exercised	—	—
Expired	(152)	14.68
Forfeited	(1,583)	3.66
Outstanding at end of year	18,705	3.93
Exercisable at end of year	8,280	$	5.58

The weighted average estimated grant date fair value of stock options granted during the years ended December 31, 2023, 2022 and 2021 were $1.78, $2.30 and $4.85, respectively. The weighted average remaining contractual term of stock options outstanding and exercisable was 7.5 and 5.6 years, respectively, as of December 31, 2023. At December 31, 2023, the aggregate intrinsic value of the outstanding stock options was $0.4 million. At December 31, 2023, the intrinsic value of exercisable stock options was $0.

The fair value of stock options is estimated at the date of grant using the Black-Scholes method requiring the input of subjective assumptions. For purposes of determining the fair value of stock options, the Company segregates its options into two homogeneous groups, based on exercise and post-vesting employment termination behaviors, resulting in different assumptions used for expected option lives. Historical data is used to estimate the expected option life for each group. Expected volatility is based on the historical volatility in the Company’s stock price. The following weighted-average assumptions were used for stock options granted in the years ended December 31, 2023, 2022 and 2021, respectively:


	Expected Volatility	Risk-free Interest Rate	Expected Term	Dividend Rate
December 31, 2023:
Employees	110%	3.9%	4	0	%
Officers and non-employee directors	98%	4.0%	6	0	%
December 31, 2022:
Employees	109%	2.8%	4	0	%
Officers and non-employee directors	91%	1.9%	7	0	%
December 31, 2021:
Employees	104%	0.7%	4	0	%
Officers and non-employee directors	90%	1%	6	0	%

Restricted Stock Units. During the years ended December 31, 2023, 2022 and 2021, Lexicon granted its employees restricted stock units in lieu of or in addition to annual stock option awards. The total fair value of shares vested in 2023, 2022 and 2021 was $2.9 million, $2.9 million and $8.7 million, respectively.

During the years ended December 31, 2023, 2022 and 2021, Lexicon granted its non-employee directors 64,256, 74,416 and 32,192 restricted stock units, respectively. The restricted stock granted in 2023, 2022 and 2021 had weighted average grant date fair values of $2.36, $1.77 and $5.04 per share, respectively.


	Shares	Weighted Average Grant Date Fair Value
	(in thousands)
Outstanding at December 31, 2022	2,748	$	3.78
Granted	4,199	2.43
Vested	(1,291)	3.80
Forfeited	(641)	2.72
Outstanding at December 31, 2023	5,015	$	2.78

During the year ended December 31, 2022, the Company issued $6.3 million of Treasury shares in lieu of issuing additional authorized common shares in order to satisfy the annual vesting of restricted stock units for its employees and officers.