Employee Benefit Plans

12 Months Ended

Dec. 31, 2021

Employee Benefit Plans

Employee Benefit Plans

20. Employee Benefit Plans

2011 and 2021 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 were 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 had been increased to 42.4 million. In July 2021, the 2021 Stock Option Incentive Plan (the “2021 Plan”) was approved by the Company’s stockholders.  The 2021 Plan provides for the issuance of up to a maximum number of shares of common stock equal to the sum of (i) 22,500,000 shares, plus 473,491 shares remaining under the 2011 Plan that were rolled into the 2021 Plan, plus (iii) shares underlying any awards under the 2011 Plan that are forfeited, canceled, cash-settled or otherwise terminated, other than by exercise.  The Company recorded expenses of approximately $72.4 million, $14.4 million and $8.8 million for the years ended December 31, 2021, 2020 and 2019, respectively, in connection with the 2011 and 2021 Plans.

Option Awards

The Company issues options that become exerciseable based on time and/or market conditions, and are classified as equity awards.

Service Stock Options Awards

To date, Service Stock Option Awards (“Service Stock Options”) granted under the 2011 and 2021 Plans have vesting provisions ranging from one to three years in duration and expire ten years after issuance. Service Stock Options for employees issued under this plan generally vest in equal annual installments over three years and expire ten years after issuance. Service Stock Options granted to members of the Board generally vest one year after issuance. The Company estimates the fair value of the Service 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 the Service 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 1,942,335, 3,509,549, and 3,221,892 Service Stock Options granted during years ended December 31, 2021, 2020 and 2019, respectively were as follows:

	2021	2020	2019
Expected term of options (years)	3 - 5	6	6
Risk free interest rate	0.61% - 1.23%	0.37% - 1.37%	1.52% - 2.53%
Volatility	72.46% - 76.60%	64.19% - 68.18%	69.32% - 87.94%

There was no expected dividend yield for the Service Stock Options granted.

Beginning in the second quarter of 2021, the expected term is based on the Company’s historical experience with employee early exercise behavior. The estimated stock price volatility is derived from the Company’s actual historic stock prices over the expected term, which represents the Company’s best estimate of expected volatility. Prior to this, the Company used the simplified method in determining its expected term of all its Service Stock Option grants in all periods presented. The simplified method was used because the Company did not believe historical exercise data provided a reasonable basis for the expected term of its grants, primarily as a result of the limited number of Service Stock Option exercises that had historically occurred.

The following table reflects the Service Stock Option activity for the year ended December 31, 2021:

				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	1,942,335		32.52
Exercised	(2,331,656)		3.23
Forfeited	(104,168)		10.63
Expired	(4,100)		6.10
Options outstanding at December 31, 2021	9,786,909	$	11.65	7.7	$	172,412
Options exercisable at December 31, 2021	4,724,624	$	4.37	6.5	$	112,715
Options unvested at December 31, 2021	5,062,285	$	18.44	8.8	$	59,697

The weighted average grant-date fair value of the Service Stock Options granted during for the years ended December 31, 2021, 2020 and 2019 was $19.80, $7.22 and $1.67, respectively. The total intrinsic fair value of Service Stock Options exercised during the years ended December 31, 2021, 2020, and 2019, was approximately $115.5 million, $145.0 million, and $2.0 million. The fair value of Service Stock Options vested during the years ended December 31, 2021, 2020, and 2019  were $11.0 million,  $5.9 million, and $6.1 million.

Compensation cost associated with Service Stock Options represented approximately $17.4 million, $41.5 million, and $8.4 million of the total share-based payment expense recorded for the years ended December 31, 2021, 2020 and 2019, respectively. As of December 31, 2021 and 2020, there was approximately $46.2 million and $41.5 million of unrecognized compensation cost related to Service Stock Options to be recognized over a weighted average remaining period of 1.49 years.

Performance Stock Option Awards

In September 2021, the Compensation Committee approved the grant of Performance Stock Option Awards (“Performance Stock Options”) to the Company’s Chief Executive Officer and certain other executive officers.  These Performance Stock Options are subject to both market conditions tied to the achievement of stock price hurdles and time-based vesting; therefore, a Monte Carlo Simulation was utilized to determine the grant date fair value with the associated expense recognized over the requisite service period. Up to one-third (1/3) the Performance Stock Options will vest and become exercisable on each of the first three anniversaries of the grant date, provided that the volume weighted average price of the Company’s common stock during any 30 consecutive trading day period in the three year performance period following the grant date of the stock options (“VWAP”) equals or exceeds certain levels. For the Company’s Chief Executive Officer, 25% of his Performance Stock Options will be deemed to have satisfied the performance-based conditions and will be eligible to be exercised over time if the VWAP equals or exceeds $35; an additional 25% of his options will be deemed to have satisfied the performance-based condition and will be eligible to be exercised if the VWAP equals or exceeds $50; an additional 16.675% of the options will be deemed to have satisfied the performance-based condition and will be eligible to be exercised if the VWAP equals or exceeds $65; an additional 16.65% of the options will be deemed to have satisfied the performance-based condition and will be eligible to be exercised if the VWAP equals or exceeds $80; and the remaining 16.675% of the options will be deemed to have satisfied the performance-based condition and will be eligible to be exercised if the VWAP equals or exceeds $100. There will be no interpolation for the Chief Executive Officer’s performance stock option if the VWAP falls between any two stock price hurdles, unless in the event of a change in control.  For executive officers other than the Chief Executive Officer, 25% of the Performance Stock Options will be deemed to have satisfied the performance-based condition and will be eligible to be exercised if the VWAP equals $35; an additional 25% of the options will be deemed to have satisfied the performance-based condition and will be eligible to be exercised if the VWAP equals $50; and the remaining 50% of the options will be deemed to have satisfied the performance-based condition and will be eligible to be exercised if the VWAP equals or exceeds $100.  If the VWAP falls between two of the stock price hurdles, an incremental number of options will become exercisable based on linear interpolation in $1 increments. Failure to achieve any of the stock price hurdles applicable to a performance stock option

during the three-year performance period will result in the applicable options not becoming exercisable. The performance-based stock options have a maximum term of seven years from the grant date.

Key inputs and assumptions used to estimate the fair value of Performance Stock Options include the grant price of the awards, the expected option term, VWAP hurdle rates, 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 following table presents key assumptions used to estimate the fair value of the performance stock option awards granted in 2021:

	December 31,
	2021
Remaining VWAP performance period (years)	3
Risk- free interest rate	1.12%
Expected volatility	70.00%
Closing stock price on grant date	$ 26.92

The expected term was determined based on term features within the grants that decreases the overall grant pool if options are exercised early (0-3 years) reducing the maximum future payout and the Company’s historical experience with employee early exercise behavior. The estimated stock price volatility was derived from the Company’s actual historic stock prices over the past five years, which represents the Company’s best estimate of expected volatility.

The following table reflects the Performance Stock Option activity for the year ended December 31, 2021. Solely for the purposes of this table, the number of performance options is based on participants earning the maximum number of performance options (i.e., 200% of the target number of performance options).

				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
		Exercise		Contractual	Intrinsic
	Shares	Price		Terms	Value
Options outstanding at December 31, 2020	—	$	—	—	$	—
Granted	14,560,000		26.92	—		—
Exercised	—		—	—		—
Forfeited	(540,000)		26.92	—		—
Expired	—		—	—		—
Options outstanding at December 31, 2021	14,020,000	$	26.92	6.7	$	18,366
Options exercisable at December 31, 2021	—		—	—		—
Options unvested at December 31, 2021	14,020,000	$	26.92	6.7	$	18,366

The weighted average grant-date fair value of performance stock options granted during the year ended December 31, 2021 was $12.70. There were no Performance Stock Options exercised during the year ended December 31, 2021.

Compensation cost associated with performance stock options represented approximately $27.8 million of the total share-based payment expense recorded for the year ended December 31, 2021. As of December 31, 2021, there was approximately $150.2 million of unrecognized compensation cost related to Performance Stock Options to be recognized over a weighted average remaining period of 2.73 years.

Restricted Stock Awards

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 $27.2 million, $7.6 million, and $2.8 million, for the years ended December 31, 2021, 2020 and 2019, respectively. Additionally, for the years ended December 31, 2021, 2020 and 2019, there was $74.5 million, $41.5 million, and $8.4 million, respectively, of unrecognized compensation cost related to restricted stock awards to be recognized over a weighted average remaining period of 2.3 years.

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

		Weighted		Aggregate
		Average Grant Date		Intrinsic
	Shares	Fair Value		Value
Unvested restricted stock at December 31, 2020	5,874,642	$	7.88	$	—
Granted	1,894,356		32.35		—
Vested	(2,807,124)		6.19		—
Forfeited	(110,001)		11.23		—
Unvested restricted stock at December 31, 2021	4,851,873	$	21.59	$	136,968

The weighted average grant-date fair value of the restricted stock units granted during the years ended December 31, 2021, 2020 and 2019, was $32.35, $12.61, and $2.30, respectively. The total fair value of restricted stock units vested for the years ended December 31, 2021, 2020, and 2019 were $76.0 million, $23.3 million, and $2.0 million, respectively.

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 90,580 shares of common stock, 403,474 shares of common stock and 841,539 shares of common stock pursuant to the Plug Power Inc. 401(k) Savings & Retirement Plan during the years ended December 31, 2021, 2020, and 2019, respectively.

The Company’s expense for this plan was approximately $4.3 million, $2.6 million, and $1.9 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Non-Employee Director Compensation

Each non-employee director is paid an annual retainer for his or her service, in the form of either cash or stock compensation. The Company granted 12,258, 36,175, and 114,285 shares of common stock to non-employee directors as compensation for the years ended December 31, 2021, 2020 and 2019, 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 $372 thousand, $228 thousand and $243 thousand for the years ended December 31, 2021, 2020 and 2019, respectively.