Employee Benefit Plans

3 Months Ended

Mar. 31, 2021

Employee Benefit Plans

Employee Benefit Plans

21. Employee Benefit Plans

2011 Stock Option and Incentive Plan

On May 12, 2011, the Company’s stockholders approved the 2011 Stock Option and Incentive Plan (the “2011 Plan”). The 2011 Plan provided for the issuance of up to a maximum number of shares of common stock equal to the sum of (i) 1,000,000, plus (ii) the number of shares of common stock underlying any grants pursuant to the 2011 Plan or the Plug Power Inc. 1999 Stock Option and Incentive Plan that are forfeited, canceled, repurchased or are terminated (other than by exercise). The shares may be issued pursuant to stock options, stock appreciation rights, restricted stock awards and certain other equity-based awards granted to employees, directors and consultants of the Company. No further grants may be made under the 2011 Plan after May 12, 2021. Through various amendments to the 2011 Plan approved by the Company’s stockholders, the number of shares of the Company’s common stock authorized for issuance under the 2011 Plan has been increased to 42.4 million. The Company recorded expense of approximately $8.5 million and $2.5 million, for the three months ended March 31, 2021 and 2020, respectively, in connection with the 2011 Plan.

At March 31, 2021, there were outstanding options to purchase approximately 9.0 million shares of common stock. Options for employees issued under this plan generally vest in equal annual installments over three years and expire ten years after issuance. Options granted to members of the Board generally vest one year after issuance. To date, options granted under the 2011 Plan have vesting provisions ranging from one to three years in duration and expire ten years after issuance.

Compensation cost associated with employee stock options represented approximately $3.3 million and $1.4 million of the total share-based payment expense recorded for the three months ended March 31, 2021 and March 31, 2020, respectively. The Company estimates the fair value of stock options using a Black-Scholes valuation model, and the resulting fair value is recorded as compensation cost on a straight-line basis over the option vesting period. Key inputs and assumptions used to estimate the fair value of stock options include the grant price of the award, the expected option term, volatility of the Company’s stock, an appropriate risk-free rate, and the Company’s dividend yield. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company. The assumptions made for purposes of estimating fair value under the Black-Scholes model for the 581,000 and 85,000 options granted during the three months ended March 31, 2021 and 2020, respectively, were as follows:

	March 31,	March 31,
	2021	2020
Expected term of options (years)	6	6
Risk free interest rate	0.61% - 0.73%	0.69% - 1.37%
Volatility	72.46%	64.19%

There was no expected dividend yield for the employee stock options granted.

The Company used the simplified method in determining its expected term of all its stock option grants in all periods presented. The simplified method was used because the Company does not believe historical exercise data provides a reasonable basis for the expected term of its grants, primarily as a result of the limited number of stock option exercises that have historically occurred. The Company expects to cease using the simplified method to determine its expected term for stock option grants in the second quarter of  2021.  The estimated stock price volatility was derived from the Company’s actual historic stock prices over the past six years, which represents the Company’s best estimate of expected volatility.

A summary of stock option activity for the quarter ended March 31, 2021 is as follows (in thousands except share amounts):

				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
		Exercise		Contractual	Intrinsic
	Shares	Price		Terms	Value
Options outstanding at December 31, 2020	10,284,498	$	5.78	7.8	$	289,316
Granted	581,000		65.72	—		—
Exercised	(1,811,274)		2.65	—		—
Forfeited	(33,333)		1.74	—		—
Expired	—		—	—		—
Options outstanding at March 31, 2021	9,020,891	$	15.18	8.1	$	247,964
Options exercisable at March 31, 2021	2,284,519		2.07	5.7		77,143
Options unvested at March 31, 2021	6,736,372	$	11.73	8.9	$	170,820

The weighted average grant-date fair value of options granted during the three months ended March 31, 2021 and 2020 was $31.78 and $2.80, respectively. As of March 31, 2021, there was approximately $40.5 million of unrecognized compensation cost related to stock option awards to be recognized over the next three years. The total fair value of stock options that vested during the three months ended March 31, 2021 and 2020 was approximately $2.9 million and $1.2 million, respectively.

Restricted stock awards generally vest in equal installments over a period of one to three years. Restricted stock awards are valued based on the closing price of the Company’s common stock on the date of grant, and compensation cost is recorded on a straight-line basis over the share vesting period. The Company recorded expense associated with its restricted stock awards of approximately $5.2 million and $1.0 million, for the three months ended March 31, 2021 and 2020, respectively. Additionally, for the three months ended March 31, 2021 and 2020, there was $64.1 million and $7.4 million respectively, of unrecognized compensation cost related to restricted stock awards to be recognized over the next three years.

A summary of restricted stock activity for the year ended March 31, 2021 is as follows (in thousands except share amounts):

		Aggregate
		Intrinsic
	Shares	Value
Unvested restricted stock at December 31, 2020	5,874,642	$	—
Granted	555,000		—
Vested	(10,001)		—
Forfeited	(3,333)		—
Unvested restricted stock at March 31, 2021	6,416,308	$	229,960

401(k) Savings & Retirement Plan

The Company offers a 401(k) Savings & Retirement Plan to eligible employees meeting certain age and service requirements. This plan permits participants to contribute 100% of their salary, up to the maximum allowable by the Internal Revenue Service regulations. Participants are immediately vested in their voluntary contributions plus actual earnings or less actual losses thereon. Participants are vested in the Company’s matching contribution based on years of service completed. Participants are fully vested upon completion of three years of service. During 2018, the Company began funding its matching contribution in a combination of cash and common stock. The Company issued 12,513 shares of common stock and 133,250 shares of common stock pursuant to the Plug Power Inc. 401(k) Savings & Retirement Plan during the three months ended March 31, 2021 and 2020, respectively.

The Company’s expense for this plan was approximately $1.3 million, and $529 thousand for the three months ended March 31, 2021 and 2020, respectively.

Non-Employee Director Compensation

Each non-employee director is paid an annual retainer for their services, in the form of either cash or stock compensation. The Company granted 2,653 shares of common stock and 14,833 shares of common stock to non-employee directors as compensation for the three months ended March 31, 2021 and 2020, respectively. All common stock issued is fully vested at the time of issuance and is valued at fair value on the date of issuance. The Company’s share-based compensation expense in connection with non-employee director compensation was approximately $85 thousand and $56 thousand for the three months ended March 31, 2021 and 2020, respectively.