Employee Benefit Plans

12 Months Ended

Dec. 31, 2022

Employee Benefit Plans

Employee Benefit Plans

19. 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 the 473,491 shares remaining under the 2011 Plan as of the effective date of that the 2021 Plan, plus (iii) shares underlying any awards under the 2021 Plan and the 2011 Plan that are forfeited, canceled, cash-settled or otherwise terminated, other than by exercise. In June 2022, the Company’s stockholders approved an increase in the number of shares of the Company’s common stock authorized for issuance under the 2021 Plan to 40,030,000. Stock-based compensation costs recognized, excluding the Company’s matching contributions to the Plug Power Inc. 401(k) Savings & Retirement Plan and quarterly Board compensation, were approximately $169.8 million, $72.4 million and $14.4 million for the years ended December 31, 2022, 2021, and 2020, respectively, in connection with the 2011 and 2021 Plans.

The components and classification of stock-based compensation expense, excluding the Company’s matching contributions to the Plug Power Inc. 401(k) Savings & Retirement Plan and quarterly Board compensation, were as follows (in thousands):

	Year ended December 31,
	2022		2021		2020
Cost of sales	$	7,259	$	1,965	$	324
Research and development		6,369		5,983		1,624
Selling, general and administrative		156,127		64,443		12,444
	$	169,755	$	72,391	$	14,392

Option Awards

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

Service Stock Options Awards

To date, service-based 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 these plans 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 3,261,724, 1,942,335, and 3,509,549 Service Stock Options granted during years ended December 31, 2022, 2021, and 2020, respectively were as follows:

	December 31,	December 31,	December 31,
	2022	2021	2020
Expected term of options (years)	5	3-5	6
Risk free interest rate	1.26% - 4.34%	0.61% - 1.23%	0.37% - 1.37%
Volatility	73.38% - 85.97%	72.46% - 76.60%	64.19% - 68.18%

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, 2022:

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
			Exercise		Contractual		Intrinsic
	Shares		Price		Terms		Value
Options outstanding at December 31, 2021	$	9,786,909	$	11.65		7.70	$	172,412
Options exercisable at December 31, 2021		4,724,624		4.37		6.50		112,715
Options unvested at December 31, 2021		5,062,285		18.44		8.80		59,697
Granted		3,261,724		20.25		—		—
Exercised		(757,424)		2.96		—		—
Forfeited		(212,940)		24.25		—		—
Options outstanding at December 31, 2022	$	12,078,269	$	14.34		7.57	$	42,835
Options exercisable at December 31, 2022		6,661,969		8.41		6.40		42,182
Options unvested at December 31, 2022	$	5,416,300	$	21.63		9.01	$	653

The weighted average grant-date fair value of the Service Stock Options granted during for the years ended December 31, 2022, 2021 and 2020 was $13.39, $19.80, and $7.22 per share, respectively. The total intrinsic fair value of Service Stock Options exercised during the years ended December 31, 2022, 2021, and 2020, was approximately $15.1 million, $115.5 million, and $145.0 million. The fair value of Service Stock Options vested during the years ended December 31, 2022, 2021, and 2020 was $22.6 million,  $11.0 million, and $5.9 million, respectively.

Compensation cost associated with Service Stock Options represented approximately $27.5 million, $17.4 million, and $41.5 million of the total share-based payment expense recorded for the years ended December 31, 2022, 2021 and 2020, respectively. As of December 31, 2022 and 2021, there was approximately $59.8 million and $46.2 million of unrecognized compensation cost related to Service Stock Options to be recognized over a weighted average remaining period of 2.11 years.

Performance Stock Option Awards

The Company grants performance-based 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. The Performance Stock Options performance-based conditions will be satisfied as the volume weighted average price of the Company’s common stock during any 30 consecutive trading day period in the relevant performance period following the grant date of the stock options (“VWAP”) equals or exceeds certain levels. These levels range between $35 and $100. The Performance Stock Options granted have a required service periods ranging between 2 and 3 years. The Performance Stock Options will vest and become exercisable ratably over the service period. There will be no interpolation for the Chief Executive Officer’s Performance Stock Option if the VWAP falls between any two stock price hurdles, except in the event of a change in control. For awards granted to other executives if the VWAP falls between two of the stock price hurdles, an incremental number of shares will be earned based on linear interpolation in $1 increments. Failure to achieve any of the stock price hurdles applicable to a Performance Stock Option during the required performance period will result in the applicable shares not becoming exercisable and being forfeited. The Performance 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 2022 and 2021:

	December 31,		December 31,
	2022		2021
Remaining VWAP performance period (years)		3		3
Risk- free interest rate		3.10%		1.12%
Expected volatility		75.00%		70.00%
Closing stock price on grant date	$	26.38	$	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, 2022. Solely for the purposes of this table, the number of shares is based on participants earning the maximum number of shares underlying the Performance Stock Options (i.e., 200% of the target number of shares).

				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
		Exercise		Contractual	Intrinsic
	Shares	Price		Terms	Value
Options outstanding at December 31, 2021	14,020,000	$	26.92	6.70	$	18,336
Options exercisable at December 31, 2021	—		—	—		—
Options unvested at December 31, 2021	14,020,000		26.92	6.70		18,336
Granted	1,500,000		26.38	6.64		—
Exercised	—		—	—		—
Forfeited	—		—	—		—
Options outstanding at December 31, 2022	15,520,000	$	26.87	5.81	$	—
Options exercisable at December 31, 2022	1,391,000		26.92	5.73		—
Options unvested at December 31, 2022	14,129,000	$	26.86	5.82	$	—

The weighted average grant-date fair value of Performance Stock Options granted during the years ended December 31, 2022 and 2021 was $9.73 and $12.70, respectively. There were no Performance Stock Options exercised during the years ended December 31, 2022 and 2021.

As of December 31, 2022, there were 2,782,000 unvested shares underlying Performance Stock Options for which the employee requisite service period has not been rendered but are expected to vest. The aggregate intrinsic value of these unvested Performance Stock Options is $0 as of December 31, 2022. The weighted average remaining contractual term of these unvested Performance Stock Options was 5.73 years as of December 31, 2022.

Compensation cost associated with Performance Stock Options represented approximately $95.7 and $27.8 million of the total share-based payment expense recorded for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, there was approximately $70.4 million of unrecognized compensation cost related to Performance Stock Options to be recognized over a weighted average remaining period of 1.88 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 vesting period. The Company recorded expense associated with its restricted stock awards of approximately $46.5 million, $27.2 million, and $7.6 million, for the years ended December 31, 2022, 2021, and 2020, respectively. Additionally, for the years ended December 31, 2022, 2021, and 2020, there was $110.3 million, $74.5 million, and $41.5 million, respectively, of unrecognized compensation cost related to restricted stock awards to be recognized over a weighted average remaining period of 2.16 years.

A summary of restricted stock award activity for the year ended December 31, 2022 is as follows (in thousands except share amounts):

		Weighted		Aggregate
		Average Grant Date		Intrinsic
	Shares	Fair Value		Value
Unvested restricted stock at December 31, 2021	4,851,873	$	21.59	$	136,968
Granted	4,289,682		20.28		—
Vested	(2,628,397)		(13.96)		—
Forfeited	(236,782)		23.84		—
Unvested restricted stock at December 31, 2022	6,276,376	$	21.56	$	77,639

The weighted average grant-date fair value of the restricted stock awards granted during the years ended December 31, 2022, 2021, and 2020, was $20.28, $32.35, and $12.61, respectively. The total fair value of restricted stock awards vested for the years ended December 31, 2022, 2021, and 2020 was $36.7 million, $76.0 million, and $23.3 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 442,056 shares of common stock, 90,580 shares of common stock, and 403,474 shares of common stock pursuant to the Plug Power Inc. 401(k) Savings & Retirement Plan during the years ended December 31, 2022, 2021, and 2020, respectively.

The Company’s expense for this plan was approximately $9.2 million, $4.3 million, and $2.6 million for the years ended December 31, 2022, 2021, and 2020, 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. This annual retainer is paid in four quarterly installments. The Company granted 21,886, 12,258, and 36,175 shares of common stock to non-employee directors as quarterly compensation for the years ended December 31, 2022, 2021 and 2020, respectively. All common stock issued related to this annual retainer that is paid quarterly, 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 quarterly compensation was approximately $390 thousand, $372 thousand and $228 thousand for the years ended December 31, 2022, 2021, and 2020, respectively.