In 2016 the Company adopted its 2016 Equity Incentive Plan (the “2016 Plan”), which replaced the Company’s 2005 Employee, Director and Consultant Stock Plan. The 2016 Plan allows for the grant of options, restricted stock, restricted stock unit awards and performance unit awards to employees, directors, and consultants of the Company. The Board of Directors determines the terms of the grants made under the 2016 Plan. Options granted under the 2016 Plan expire no later than ten years from the date of grant (five years for incentive stock options granted to holders of more than 10% of the Company’s voting stock). Options generally vest over a four-year period and may be immediately exercisable upon a change of control of the Company. The exercise price of incentive stock options may not be less than 100% of the fair value of the Company’s common stock on the date of grant. The exercise price of any option granted to a 10% stockholder may be no less than 110% of the fair value of the Company’s common stock on the date of grant. Restricted stock unit awards and performance unit awards generally vest over a three or four year period and vest immediately upon a change in control of the Company. On June 14, 2023, the Company’s shareholders approved an amendment to the 2016 Plan which increased the shares of common stock available for issuance under the 2016 Plan by 9,300,000 shares, resulting in total common stock reserved for issuance under the 2016 Plan of 26,383,333 shares. As of December 31, 2023, approximately 7,097,000 shares of common stock remained available for issuance under the 2016 Plan. The 2016 Plan expires in May 2026.

On October 4, 2016, the Company’s Board of Directors adopted the 2016 Employment Inducement Award Plan (the “Inducement Plan”). The Inducement Plan allows for the grant of options, restricted stock, restricted stock unit awards and performance unit awards to new employees of the Company by granting an award to such new employee as an inducement for the employee to begin employment with the Company. On October 25, 2023, the Company’s Board of Directors approved an amendment to the Company’s Inducement Plan which increased the shares of common stock available for issuance under the Inducement Plan by 600,000 shares, resulting in total common stock available for issuance under the plan of 4,150,000 shares. As of December 31, 2023 the Inducement Plan had approximately 567,000 shares of common stock reserved for issuance, which may only be granted to an employee who has not previously been an employee or member of the board of directors of the Company. The terms of the Inducement Plan are substantially similar to the terms of the Company’s 2016 Plan with two principal exceptions: (i) incentive stock options may not be granted under the Inducement Plan; and (ii) the annual compensation paid by the Company to specified executives will be deductible only to the extent that it does not exceed $1.0 million.

Under the 2019 Management Objective Strategic Incentive Plan, the Company is authorized to grant up to 500,000 shares of common stock to third-party individuals or entities that do not qualify under the Company’s other existing equity plans. As of December 31, 2023, approximately 476,000 restricted shares and approximately 12,500 common stock warrants have been granted under the 2019 Management Objective Strategic Incentive Plan.

Under the 2017 Distributor Inducement Plan, the Company is authorized to grant up to 1,000,000 shares of common stock to independent third-party sales agents whereby, upon the achievement of certain Company sales and/or distribution milestones the Company may grant to an independent sales agent shares of common stock or warrants to purchase shares of common stock. The warrants and restricted stock units issued under the plan are subject to time based or net sales-based vesting conditions. On October 26, 2023, the Company’s Board of Directors approved an amendment to the Company’s Distributor Inducement Plan which increased the shares of common stock available for issuance under the Distributor Inducement Plan by 500,000 shares, resulting in total common stock available for issuance under the plan of 1,500,000 shares. As of December 31, 2023, approximately 345,000 warrants and approximately 595,000 shares of restricted common stock were granted under the 2017 Distributor Inducement Plan. As of December 31, 2023, approximately 338,000 warrants and approximately 579,000 shares of common stock were earned or issued.

Under the 2017 Development Services Plan, the Company is authorized to issue up to 8,000,000 shares of common stock to third-parties upon the achievement of certain revenue milestones associated with certain developed products. Future payments for product and/or intellectual property development work may be paid in either cash or restricted shares of the Company’s common stock at the election of the developer, depending on the terms of the agreement. Each common stock issuance is contingent on net sales-based criteria and other provisions, including the satisfaction of applicable laws regarding the issuance of restricted shares to such developers. The Company has entered into Development Services Agreements for development of a wide variety of potential products and intellectual property, with the possibility of issuing shares of common stock. On October 26, 2023, the Company’s Board of Directors approved an amendment to the Company’s Development Services Plan which increased the shares of common stock available for issuance under the Development Services Plan by 2,000,000 shares, resulting in total common stock available for issuance under the plan of 10,000,000 shares. As of December 31, 2023, 2,362,000 shares have been earned or issued under the Development Services Plan. The Company recognizes stock-based compensation once the achievement of the performance criteria and vesting conditions are deemed probable.

The compensation cost that has been included in the Company’s consolidated statements of operations for all stock-based compensation arrangements is detailed as follows (in thousands):


	Year Ended December 31,
	2023		2022		2021
Cost of sales	$	25,082	$	2,597	$	737
Research and development		18,741		5,016		4,056
Sales, general and administrative		37,421		32,943		31,657
Total	$	81,244	$	40,556	$	36,450

A summary of the Company’s stock option activity under the equity plans and related information is as follows (in thousands, except as indicated and per share data):


	Shares			Weighted average exercise price		Weighted average remaining contractual term (in years)		Aggregate intrinsic value
Outstanding at December 31, 2022		2,916		$	3.38
Exercised		(399	)		2.40
Forfeited		(48	)		20.46
Outstanding at December 31, 2023		2,469		$	3.20		4.22	$	29,446
Options vested and expected to vest at December 31, 2023		2,469		$	3.20		4.22	$	29,466
Options exercisable at December 31, 2023		2,444		$	3.11		4.19	$	29,371

The weighted-average grant-date fair value per share of stock options granted during the year ended December 31, 2021 was $9.88. There were no stock options granted during the years ended December 31, 2023 and 2022. The total intrinsic value of stock options exercised was $5.2 million, $3.4 million and $6.8 million for the years ended December 31, 2023, 2022 and 2021, respectively. The aggregate intrinsic value of options at December 31, 2023 is based on the Company’s closing stock price on the last business day of 2023 of $15.11 per share.

The weighted average assumptions used to compute the stock-based compensation costs for the stock options granted during the year ended December 31, 2021 are as follows:


	Year Ended December 31,
	2021
Risk-free interest rate		0.84	%
Expected dividend yield		—
Weighted average expected life (years)		6.07
Volatility		87.38	%

As of December 31, 2023, there was $0.2 million of unrecognized compensation expense for stock options which is expected to be recognized on a straight-line basis over a weighted average period of approximately 1.18 years.

The following table summarizes information about the restricted stock units and performance-based restricted units activity (in thousands, except as indicated and per share data):


	Shares			Weighted average grant date fair value		Weighted average remaining recognition period (in years)
Unvested at December 31, 2022		8,533		$	6.63
Awarded		6,162			15.39
Vested		(6,724	)		10.72
Forfeited		(258	)		11.30
Unvested at December 31, 2023		7,713		$	13.56		1.01

The weighted-average grant-date fair value per share of awards granted during the years ended December 31, 2023, 2022 and 2021 was $15.39, $8.13 and $12.79, respectively. The total fair value of RSUs that vested during the years ended December 31, 2023, 2022 and 2021 was $104.3 million, $35.2 million and $43.9 million, respectively.

As of December 31, 2023, there was $58.9 million of unrecognized compensation expense for restricted stock awards, restricted stock units, and performance-based restricted units which is expected to be recognized on a straight-line basis over a weighted average period of approximately 1.52 years.

In 2007, the Company adopted the ESPP. On June 14, 2023, the Company’s shareholders approved a third amendment to the ESPP which increased the number of shares of common stock available for purchase under the ESPP by 1,500,000 shares, resulting in total common stock reserved for issuance under the ESPP of 3,637,449 shares. As of December 31, 2023, approximately 1,243,000 shares were available under the ESPP for future issuance.

The ESPP provides eligible employees with a means of acquiring equity in the Company at a discounted purchase price using their own accumulated payroll deductions. Under the terms of the ESPP, employees can elect to have up to 20% of their annual compensation, up to a maximum of $21,250 per year, withheld to purchase shares of Company common stock for a purchase price equal to 85% of the lower of the fair market value per share (at closing) of Company common stock on (i) the commencement date of the six-month offering period or (ii) the respective purchase date.

During the years ended December 31, 2023, 2022 and 2021 there were approximately 375,000, 429,000 and 227,000 shares of common stock, issued under the ESPP, respectively. The Company recognized $1.7 million, $1.6 million and $1.1 million in expense related to the ESPP for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company estimates the fair value of shares issued to employees under the ESPP using the Black-Scholes option-pricing model. The assumptions used to estimate the fair value of stock purchase rights under the ESPP are as follows:


	Year Ended December 31,
	2023		2022		2021
Risk-free interest rate	4.54% - 5.41%		0.07% - 4.54%		0.04% - 0.12%
Expected dividend yield		—		—		—
Expected term (years)	0.41 - 0.60		0.50 - 0.60			0.50
Volatility	40.87% - 62.77%		50.29% - 64.53%		49.98% - 78.37%

Common stock reserved for future issuance consists of the following (in thousands):


	December 31, 2023
Stock options outstanding		2,469
Unvested restricted stock units		7,713
Employee stock purchase plan		1,243
Senior convertible notes		17,246
Warrants outstanding		8,219
Authorized for future grant under the Distributor and Development Services plans		560
Authorized for future grant under the Management Objective Strategic Incentive Plan		11
Authorized for future grant under the Company Equity plans		7,665
		45,126