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Stock-Based Compensation
 12 Months Ended
Mar. 31, 2022
Equity [Abstract]  
Stock-Based Compensation STOCK-BASED COMPENSATION
2015 Long-Term Incentive Plan
Our 2015 Long-Term Incentive Plan (the “2015 Plan”) is administered by the Compensation Committee of our Board of Directors and authorizes us to grant various types of stock-based awards including: stock options, stock appreciation rights, RSAs, RSUs, and PSUs. Stock options granted under the 2015 Plan shall not have an exercise price less than the fair market value of our common stock on the date of the grant. The exercise price of a stock option or stock appreciation right may not be reduced without shareholder approval. Stock options generally vest over periods of three or four years of continuous service, commencing on the date of grant. Stock options granted under the 2015 Plan have a seven-year contractual term.

Upon adoption, there were approximately 4.8 million shares available for issuance under the 2015 Plan. The number of shares available for issuance upon adoption of the 2015 Plan included new shares approved, plus any shares of common stock which were previously reserved for issuance under our preceding plan that were not subject to grant as of April 28, 2015, or as to which the stock-based compensation award is forfeited on or after April 28, 2015. The number of shares available for issuance is reduced by (i) two shares for each share delivered in settlement of any stock appreciation rights, RSA, RSU or PSU awards, and (ii) one share for each share delivered in settlement of a stock option award. In no event shall more than 1.0 million aggregate shares of common stock subject to stock options, stock appreciation rights, RSA, RSU or PSU awards be granted to any one participant in any one year under the 2015 Plan.

2015 Long-Term Incentive Plan, As Amended
On May 1, 2020, Nautilus shareholders approved the amendment and restatement of our 2015 Plan (the "Amended 2015 Plan"). Prior to the amendment, there were approximately 4.8 million shares available for issuance under the
2015 Plan, 3.5 million shares originally reserved under the previous Long Term Incentive Plan and 1.3 million shares of common stock authorized under the 2015 Plan. The Amended 2015 Plan added an additional 2.0 million shares to be reserved for issuance. Upon adoption, there were approximately 6.8 million shares available for issuance under the Amended 2015 Plan.

The maximum aggregate number of shares of common stock subject to stock options, stock appreciation rights, restricted stock or stock unit awards which may be granted to any one participant in any one year under the Amended 2015 Plan is 1.0 million.
The aggregate number of shares available for issuance under the Amended 2015 Plan will be reduced by one and half (1.5) shares for each share delivered in settlement of any stock appreciation rights, restricted stock, restricted stock unit or performance unit award, and one (1) share for each share delivered in settlement of a stock option award.

At March 31, 2022, we had 0.7 million shares available for future grant under our Amended 2015 Plan, and a total of 3.5 million shares of our common stock are reserved for future issuance pursuant to awards currently outstanding under the Amended 2015 Plan and our previous plan combined.

Stock Option Activity
Stock option activity was as follows (shares in thousands):
Options OutstandingWeighted-
Average
Exercise
Price
Outstanding at December 31, 2020740 $2.20 
Forfeited, canceled or expired(22)8.22
Exercised(9)11.5
Outstanding at March 31, 2021710 1.89
Forfeited, canceled or expired(1)2.72 
Exercised(238)2.01 
Outstanding at March 31, 2022471 1.82 

Certain information regarding options outstanding at March 31, 2022 was as follows:
Options Outstanding Options ExercisableOptions Vested and Expected to Vest
Number (in thousands)471 244 471 
Weighted-average exercise price$1.82 $1.85 $1.82 
Aggregate intrinsic value (in thousands)$1,101 $1,101 $571 
Weighted average remaining contractual term (in years)5.45.55.4
RSA Activity
Compensation expense for RSAs is recognized over the estimated vesting period. Following is a summary of RSA activity (shares in thousands):
RSAs Outstanding Weighted-
Average
Grant Date Fair Value per Share
Outstanding at December 31, 2020117  $8.90 
Outstanding at March 31, 2021117 8.90 
Granted26 16 
Vested(88) 6.64 
Outstanding at March 31, 202255 15.88 

RSU Activity
Compensation expense for RSUs is recognized over the estimated vesting period. Following is a summary of RSU activity (shares in thousands):
RSUs Outstanding Weighted-
Average
Grant Date Fair Value per Share
Outstanding at December 31, 20201,722 $4.91 
Granted52 27.58 
Vested(331)5.83 
Outstanding at March 31, 20211,443 5.52 
Granted602 12.11 
Forfeited, canceled or expired(102)9.12 
Vested(592)5.05 
Outstanding at March 31, 20221,351  8.39 

PSU Activity
Compensation expense for PSUs is recognized over the estimated requisite service period based on the number of PSUs ultimately expected to vest.

In February 2018, we granted PSU awards to certain of our executive officers and management team covering a total of 119,351 shares of our common stock. The PSUs vest based on achievement of goals established for growth in operating income as a percentage of net revenue and return on invested capital over the three-year performance period ended December 31, 2020. The number of shares vesting could range from 60% of the PSU awards if minimum thresholds are achieved to a maximum of 150%. The performance criteria were not met and all 119,351 shares were forfeited.

In May 2020, we granted PSU awards to certain of our executive officers and management team covering a total of 262,999 shares of our common stock. The PSUs vest based on achievement of the goal that measures our relative total shareholder return against pre-approved peers over a three-year performance period ending May 5, 2023. The number of shares that ultimately vest following conclusion of the performance period will be determined based on the level at which the financial goals are achieved. The number of shares vesting can range from 60% of the PSU awards if minimum thresholds are achieved to a maximum of 150%. These awards are expected to vest at 100% achievement. As of March 31, 2022, approximately 212,000 PSU shares remained, net of actual forfeitures to date.

In May and September 2021, we granted PSU awards to certain of our executive officers and management team covering a total of 510,404 shares of our common stock. The PSUs vest based on achievement of our goal regarding paid subscribers, cumulative revenue and cumulative adjusted operating income over a three-year performance period ending May 14, 2024. The number of shares that ultimately vest following conclusion of the performance period will be determined based on the level at which the financial goals are achieved. The number of
shares that vest can range from 30% of the PSU awards if minimum thresholds are achieved to a maximum of 200%. These awards are expected to vest at 100% achievement. As of March 31, 2022, 498,137 PSU shares remained, net of actual forfeitures to date.

In February 2022, we granted PSU awards to certain of our management team covering a total of 271,938 shares of our common stock. The PSUs vest based on achievement of the goal of the closing price for our common stock reaching $10 and having a volume weighted average price of at least $10 for 60 consecutive trading days at any time thereafter during the three-year period ending February 23, 2025. The number of shares that ultimately vest following conclusion of the performance period will be determined based on the level at which the financial goals are achieved. The number of shares vesting can range from 50% of the PSU awards if minimum thresholds are achieved to a maximum of 100%. These awards are expected to vest at 100% achievement. As of March 31, 2022, 271,938 PSU shares remained, net of actual forfeitures to date.

Following is a summary of PSU activity (shares in thousands):
PSUs Outstanding Weighted-
Average
Grant Date Fair Value per Share
Outstanding at December 31, 2020323 $7.62 
Forfeited, canceled or expired(60)11.90 
Outstanding at March 31, 2021263 6.64 
Granted and additional goal shares awarded782 9.61 
Forfeited, canceled or expired(63)8.74 
Outstanding at March 31, 2022982 8.87 

Stock-Based Compensation
Stock-based compensation expense, primarily included in general and administrative expense, was as follows (in thousands):
Year Ended March 31,Three-Months Ended March 31, (transition period)Year Ended December 31,
2022202120202019
Stock options$177 $45 $182 $61 
RSAs393 143 478 289 
RSUs4,053 785 2,533 609 
PSUs1,432 143 383 (410)
ESPP207 56 158 70 
$6,262 $1,172 $3,734 $619 

Certain other information regarding our stock-based compensation was as follows (in thousands):
Year Ended March 31,Three-Months Ended March 31, (transition period)Year Ended December 31,
2022202120202019
Total intrinsic value of stock options exercised$2,273 $81 $66 $84 
Fair value of RSUs vested8,288 7,623 6,662 354 

As of March 31, 2022, unrecognized compensation expense for outstanding, but unvested stock-based awards was $14.4 million, which is expected to be recognized over a weighted average period of 0.2 to 1.7 years.
Employee Stock Purchase Plan
Our Employee Stock Purchase Plan (the “ESPP”) is administered by the Compensation Committee of our Board of Directors and provides eligible employees with an opportunity to purchase shares of our common stock at a discount using payroll deductions. The ESPP authorizes the issuance of up to 0.5 million shares of our common stock, subject to adjustment as provided in the ESPP for stock splits, stock dividends, recapitalizations and other similar events.

Pursuant to the ESPP, and subject to certain limitations specified therein, eligible employees may elect to purchase shares of our common stock in one or more of a series of offerings conducted pursuant to the procedures set forth in the ESPP at a purchase price equal to 90% of the lower of the fair market value of the common stock on the first trading day of the offering period or on the last day of the offering period. Offering periods commence on May 15 and November 15 of each year and are six-months in duration. Purchases under the ESPP may be made exclusively through payroll deductions.
Persons eligible to participate in the ESPP generally include employees who have been employed for at least three months prior to the applicable offering date and who, immediately upon purchasing shares under the ESPP, would own directly or indirectly, an aggregate of less than 5% of the total combined voting power or value of all outstanding shares of our common stock.

Compensation expense for the ESPP is recognized over the six-month offering period based on the total estimated participant contributions and number of shares expected to be purchased.

ESPP activity was as follows (shares in thousands):
Shares Available for IssuanceWeighted-
Average
Purchase Price		Weighted-Average Discount per Share
Balance at December 31, 2020199 
Balance at March 31, 2021199 
Employee shares purchased(46)$10.65 $1.18 
Balance at March 31, 2022153 

Assumptions used in calculating the fair value of stock option grants and employee stock purchases were as follows:
Year Ended March 31,Three-Months Ended March 31, (transition period)Year Ended December 31,
 2022202120202019
ESPPESPPESPPOptionsESPPOptions
Dividend yield—%—%—%—%—%—%
Risk-free interest rate—%0.1%0.9%1.5%2.3%1.8%
Expected life (years)N/AN/AN/AN/AN/AN/A
Expected volatility67%88%132%64%64%55%

Dividend yield is based on our current expectation that no dividend payments will be made in future periods.

Risk-free interest rate is the U.S. Treasury zero-coupon rate, as of the grant date, for issues having a term approximately equal to the expected life of the stock option. For the ESPP, it is the U.S. Treasury six-month constant maturities rate, as of the offering date.

Expected life is the period of time over which stock options are expected to remain outstanding. We calculate expected term based on the average of the sum of the vesting periods and the full contractual term.
Expected volatility is the percentage amount by which the price of our common stock is expected to fluctuate annually during the estimated expected life for stock options. Expected price volatility is calculated using historical daily closing prices over a period matching the weighted-average expected life for stock options, as management believes such changes are the best indicator of future volatility. For the ESPP, expected volatility is the percentage amount by which the price of our common stock is expected to fluctuate semi-annually during the offering period.