Stock Based Compensation

9 Months Ended

Sep. 30, 2021

The Company recorded approximately $5.2 million and $2.7 million in stock-based compensation expense for the three months ended September 30, 2021 and 2020, respectively, and approximately $12.4 million and $7.5 million in stock-based compensation expense for the nine months ended September 30, 2021 and 2020, respectively.

Stock Options

A summary of the stock option activity under the Company’s plans for the nine months ended September 30, 2021 is as follows:


	Number of Shares	Weighted Average Exercise Price
Options outstanding at December 31, 2020	3,785,941	$	15.21
Options granted	887,332	$	48.19
Less:
Options exercised	931,954	$	10.85
Options forfeited	226,411	$	31.73
Options outstanding at September 30, 2021	3,514,908	$	23.63
Exercisable at September 30, 2021	1,758,830	$	12.07

The fair value of each stock option award granted during the nine months ended September 30, 2021 was estimated as of the grant date using a Black-Scholes model with the following weighted average assumptions:


			Nine Months Ended September 30, 2021
Expected term (in years)			3.5 - 5.5
Risk-free interest rate (%)			0.7%
Expected volatility (%)			39% - 49%
Dividend yield (%)			—
Weighted average fair value/share at grant date			$18.19

As of September 30, 2021, there was approximately $14 million of unrecognized stock-based compensation expense related to stock options that will be recognized over a weighted-average period of approximately 2.2 years.

Restricted Stock Awards

A summary of the restricted stock activity under the Company’s plans for the nine months ended September 30, 2021 is as follows:


	Number of Restricted Shares	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2020	291,891	$	23.82
Granted	345,416	$	47.92
Vested	(111,646)	$	23.28
Forfeited	(32,885)	$	35.23
Nonvested at September 30, 2021	492,776	$	40.08

As of September 30, 2021, there was approximately $12 million of unrecognized stock-based compensation expense related to restricted stock that will be recognized over a weighted-average period of approximately 1.8 years.

Performance-based Stock Awards

During the third quarter of 2021, the Company granted certain senior-level executives performance stock units (“PSUs”) which vest upon the achievement of time-based service conditions with vesting through June 30, 2024, and certain performance goals, including financial performance targets and operational milestones. For the three months ended September 30, 2021, the Company assessed the PSUs and no stock-based compensation expense was recorded as it is not probable that the performance targets will be satisfied. The following table summarizes the performance-based stock awards as of September 30, 2021:


	Number of Performance Shares	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2020	—	$	—
Granted	356,548	$	44.87
Vested	—	$	—
Forfeited	—	$	—
Nonvested at September 30, 2021	356,548	$	44.87

Employee Stock Purchase Plan (“ESPP”)

The Company offers an ESPP through which eligible employees may purchase shares of the Company’s common stock at a discount of 15% of the fair market value of the Company’s common stock.

During the three months ended September 30, 2021 and 2020, employees purchased 27,210 and 29,853 shares, respectively, under the ESPP. The expense recorded for these periods was approximately $0.2 million and $0.2 million, respectively. During the nine months ended September 30, 2021 and 2020, employees purchased 82,966 and 105,241 shares, respectively, under the ESPP. The expense recorded for these periods was approximately $0.8 million and $0.6 million, respectively.