In May 2012, we adopted the 2012 Equity Incentive Plan (the “2012 Plan”). The 2012 Plan provides for the grant of incentive stock options, nonstatutory stock options, RSAs, RSUs and Stock Appreciation Rights to employees, non-employee directors and consultants. As of December 31, 2023, total shares remaining available for issuance under the 2012 Plan were 2,924,185.

Under the 2004 Employee Stock Purchase Plan (the “2004 ESPP”), our employees may purchase common stock through payroll deductions at a price equal to 85% of the lower of the fair market value of the stock at the beginning of the offering period or at the end of each applicable purchase period. The 2004 ESPP provided for consecutive and overlapping offering periods of 24 months in duration, with each offering period composed of four consecutive six-month purchase periods. The purchase periods ended on either May 15 or November 15. The 2004 ESPP contributions were limited to a maximum of 15% of an employee’s eligible compensation. The maximum number of shares that an employee may purchase in any purchase period was 2,500. An employee may not purchase shares with a value greater than $25,000 in any calendar year.

On April 13, 2023, the Board of Directors adopted the 2023 ESPP (the “2023 ESPP”). The 2023 ESPP, which supersedes the 2004 ESPP, was approved by the Company’s stockholders on May 22, 2023. Under the 2023 ESPP, eligible employees may purchase common stock through payroll deductions at a price equal to 85% of the lower of the fair market value of the stock at the beginning or end of each applicable purchase period. The 2023 ESPP provides for offering periods of six months, which ends on either May 15 or November 15. The 2023 ESPP contributions are limited to a maximum of 15% of an employee’s eligible compensation. The maximum number of shares that an employee may purchase in any purchase period is 2,500. An employee may not purchase shares with a value greater than $25,000 in any calendar year. A total of 2.5 million shares of our common stock was reserved and available for issuance under the 2023 ESPP.

As of December 31, 2023, total shares remaining available for issuance under the 2023 ESPP were 2,500,000.

Our non-employee directors receive compensation for services provided as a director. Each member of our board of directors who is not an employee receives both cash and equity compensation for services as a director, member of a committee of the board of directors, lead independent director and chairman, as applicable. In October 2017, both the cash and equity components of the compensation program were amended, effective immediately (the “October 2017 Amendments”).

Each of our independent directors receives periodic automatic grants of equity awards under a program implemented under the 2012 Plan. These grants are non‑discretionary. Only our independent directors or affiliates of such directors are eligible to receive automatic grants under the 2012 Plan. Under the program, each individual who first became a non-employee director will, on the date such individual joins the board of directors, automatically be granted a one‑time grant of RSUs covering a number of shares of our common stock calculated as $125,000 ($250,000 prior to the October 2017 Amendments) divided by our common stock closing share price on the date of grant as reported on The Nasdaq Global Select Market, rounded down to the nearest whole share (the “Initial RSUs”), plus a one‑time grant of RSUs covering a number of shares of our common stock calculated as $225,000 ($250,000 prior to the October 2017 Amendments) divided by our common stock closing share price on the date of grant as reported on The Nasdaq Global Select Market, which would be pro-rated for the number of whole months remaining until the anniversary of the prior year’s stockholders’ meeting, rounded down to the nearest whole share (the “Pro Rata RSUs”). The Initial RSUs vest in two equal annual installments, while Pro Rata RSUs vest in a single installment at the sooner of the next annual stockholder meeting or the one-year grant anniversary, in each case subject to the non-employee director’s continuous service through the applicable vesting date.

Annually, upon his or her re‑election to the board of directors at the Annual Meeting of Stockholders, each non-employee director is automatically granted an RSU covering a number of shares of our common stock calculated as $225,000 ($250,000 prior to the October 2017 Amendments) divided by our common stock closing share price on the date of grant as reported on The Nasdaq Global Select Market, rounded down to the nearest whole share. These RSUs will vest at the sooner of the next annual stockholder meeting or the one-year anniversary of grant, subject to the non-employee director’s continuous service through the applicable vesting date. Following the amendment to our non-employee director compensation program, both the annual RSUs and Initial RSUs described above remained unchanged with the exception that the number of shares of our common stock subject to each award has been reduced.

These RSUs will vest in full upon the director’s death, the occurrence of a change in control or, with respect to awards made after the October 2017 Amendments, the director’s disability before the director’s service terminates. Director RSUs carry dividend equivalent rights to be credited with an amount equal to all cash dividends paid on the underlying shares of common stock while unvested. Dividend equivalents are subject to the same terms and conditions, including vesting, as the RSUs to which they attach and are paid in cash upon vesting.

Stock‑based compensation expense is included in the consolidated statements of income as follows:


	Year Ended December 31,
(In thousands)	2023		2022		2021
Selling, general and administrative	$	4,645	$	5,305	$	2,017
Research and development		1,192		2,042		—
Total	$	5,837	$	7,347	$	2,017

Stock‑based compensation expense included in the consolidated statements of income by award type is as follows:


	Year Ended December 31,
(In thousands)	2023		2022		2021
Stock options	$	1,980	$	3,057	$	490
RSUs		3,663		4,053		1,280
RSAs		168		194		200
ESPP		26		43		47
Total stock-based compensation expense	$	5,837	$	7,347	$	2,017

As of December 31, 2023, the unrecognized stock-based compensation cost and the estimated weighted-average amortization period were as follows:


(In thousands)	Unrecognized Compensation Cost		Weighted-Average Amortization Period (Years)
Stock options	$	4,861		2.9
RSUs		4,430		2.4
RSAs		220		1.9
Total unrecognized compensation expense	$	9,511

The following table summarizes equity award activity under the 2012 Plan and prior plans and related information:


(In thousands, except per share data)	Number of outstanding options			Weighted-Average Exercise Price of Outstanding Options		Number of outstanding RSUs			Weighted-Average Fair Value per Share at Grant		Number of outstanding RSAs			Weighted-Average Fair Value per Share at Grant
Balance as of December 31, 2022		948		$	15.56		518		$	12.16		30		$	14.97
Granted		828		$	12.77		389		$	12.85		—		$	—
Exercised		(2	)	$	12.98		—		$	—		—		$	—
Released RSUs and RSAs		—		$	—		(284	)	$	12.42		(14	)	$	15.02
Forfeited		(275	)	$	15.22		(141	)	$	11.98		—		$	—
Balance as of December 31, 2023		1,499		$	14.09		482		$	12.62		16		$	14.93
Vested and expected to vest as of December 31, 2023		1,499		$	14.09		482		$	12.62		—		$	—

As of December 31, 2023, the aggregate intrinsic value of options outstanding and options exercisable was $3.6 million and $0.8 million, respectively. As of December 31, 2022, the aggregate intrinsic value of options outstanding and options exercisable was not material. As of December 31, 2023, 519,165 options were exercisable. The weighted average remaining contractual term of options outstanding was 7.96 years and 8.01 years as of December 31, 2023 and 2022, respectively.

The total intrinsic value of the options exercised was not material for the year ended December 31, 2023, 2022 and 2021. The total estimated fair value of options vested was $1.9 million and $0.6 million for the years ended December 31, 2023 and 2021, respectively. The total estimated fair value of options vested was not material for the year ended December 31, 2022.

The total estimated fair value of RSUs vested was $3.9 million, $2.3 million and $1.1 million for the years December 31, 2023, 2022 and 2021.

The total estimated fair value of RSAs vested was not material for the year ended December 31, 2023, 2022, and 2021.

Black-Scholes-Merton assumptions used in calculating the estimated value of stock options granted by Innoviva on the date of grant were as follows:


	Year Ended December 31,
	2023			2022			2021
Risk-free interest rate		4.0	%		3.6	%		1.1	%
Expected term (in years)		6.09			6.04			6.11
Volatility		37.8	%		38.6	%		44.9	%
Dividend yield		0.0	%		0.0	%		0.0	%

Weighted-average estimated fair value of stock options granted	$	5.57		$	6.43		$	5.84