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STOCK-BASED COMPENSATION
 12 Months Ended
Dec. 31, 2021
Share-based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION STOCK-BASED COMPENSATION
The following costs related to the Company’s stock compensation plans were included in the consolidated statements of income:
For the Years Ended December 31,
202120202019
Cost of revenues (exclusive of depreciation and amortization)$51,580 $32,785 $37,580 
Selling, general and administrative expenses
60,075 42,453 34,456 
Total$111,655 $75,238 $72,036 
Equity Plans
2015 Long-Term Incentive Plan — On June 11, 2015, the Company’s stockholders approved the 2015 Long-Term Incentive Plan (“2015 Plan”) to be used to issue equity awards to Company personnel. As of December 31, 2021, 4,266 thousand shares of common stock remained available for issuance under the 2015 Plan. All of the awards issued pursuant to the 2015 Plan expire 10 years from the date of grant.
2012 Non-Employee Directors Compensation Plan — On January 11, 2012, the Company approved the 2012 Non-Employee Directors Compensation Plan (“2012 Directors Plan”) to be used to issue equity grants to its non-employee directors. The Company authorized 600 thousand shares of common stock to be reserved for issuance under the 2012 Directors Plan. As of December 31, 2021, 522 thousand shares of common stock remained available for issuance under the 2012 Directors Plan. The 2012 Directors Plan will expire after 10 years and is administered by the Company’s Board of Directors.
2012 Long-Term Incentive Plan — On January 11, 2012, the Company approved the 2012 Long-Term Incentive Plan (“2012 Plan”) to be used to issue equity grants to Company personnel. In June 2015, the 2012 Plan was discontinued; however, outstanding awards remain subject to the terms of the 2012 Plan and any shares that are subject to an award that was previously granted under the 2012 Plan and that expire or terminate for any reason prior to exercise will become available for issuance under the 2015 Plan. All of the awards issued pursuant to the 2012 Plan expire 10 years from the date of grant.
2021 Employee Stock Purchase Plan - Effective April 7, 2021, the Board of Directors of the Company adopted the 2021 Employee Stock Purchase Plan ("ESPP"), and effective June 8, 2021, the Company’s stockholders approved the ESPP . The purpose of the ESPP is to enable eligible employees to purchase shares of EPAM’s common stock at a discount through payroll deductions of up to 10% of their eligible compensation at the end of each designated offering period, which occurs every six months in April and November. The purchase price is equal to 85% of the fair market value of a share of EPAM’s common stock on the first date of an offering or the date of purchase, whichever is lower. There are 900 thousand shares authorized for issuance in connection with the ESPP.
Stock Options
Stock option activity under the Company’s plans is set forth below:
 Number of
Options		Weighted Average
Exercise Price 		Aggregate
Intrinsic Value 		Weighted Average
Remaining Contractual Term (in years)
Options outstanding as of January 1, 20194,083 $44.54 $291,846 
Options granted132 $169.13 
Options modified18 $163.55 
Options exercised(899)$41.21 
Options forfeited/cancelled(11)$97.83 
Options outstanding as of December 31, 20193,323 $50.85 $536,015 
Options granted158 $187.76 
Options modified— $— 
Options exercised(700)$37.79 
Options forfeited/cancelled(9)$119.30 
Options outstanding as of December 31, 20202,772 $61.71 $822,152 
Options granted94 $410.03 
Options exercised(536)$49.13 
Options forfeited/cancelled(12)$248.74 
Options outstanding as of December 31, 20212,318 $77.79 $1,369,132 3.7
Options vested and exercisable as of December 31, 20212,018 $53.27 $1,241,261 3.0
Options expected to vest as of December 31, 2021284 $240.03 $121,544 8.1
The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. The model incorporated the following weighted-average assumptions:
For the Years Ended December 31,
202120202019
Expected volatility35.3 %36.9 %33.5 %
Expected term (in years)6.246.256.25
Risk-free interest rate1.2 %0.5 %2.3 %
Expected dividends— %— %— %
Expected volatility is based on the historical volatility of the Company’s stock price. The expected term represents the period of time that options granted are expected to be outstanding. The risk-free rate is based on the U.S. Treasury yield curve for the periods equal to the expected term of the options in effect at the time of grant. The Company has not declared or paid any dividends on its common stock. The Company intends to retain any earnings to fund operations and future growth of its business and, therefore, does not anticipate paying any cash dividends in the foreseeable future.
The weighted-average grant-date fair value of stock options granted during the years ended December 31, 2021, 2020 and 2019 was $149.26, $68.53 and $63.12, respectively. The total intrinsic value of options exercised during the years ended December 31, 2021, 2020 and 2019 was $251.9 million, $151.3 million and $121.1 million, respectively.
The Company recognizes the fair value of each option as compensation expense on a straight-line basis over the requisite service period, which is generally the vesting period. The options are typically scheduled to vest over four years from the time of grant, subject to the terms of the applicable plan and stock option agreement. The Company records share-based compensation expense only for those awards that are expected to vest and as such, the Company applies an estimated forfeiture rate at the time of grant and adjusts the forfeiture rate estimate quarterly to reflect actual forfeiture activity. In general, in the event of a participant’s voluntary termination of service, unvested options are forfeited as of the date of such termination without any payment to the participant and the cumulative amount of previously recognized expense related to the forfeited options is reversed.
As of December 31, 2021, $18.7 million of total remaining unrecognized compensation cost related to unvested stock options, net of estimated forfeitures, is expected to be recognized over a weighted-average period of 2.7 years.
Restricted Stock and Restricted Stock Units
The Company grants restricted stock units (“RSUs”) to Company personnel and non-employee directors under the Company’s 2015 Plan (and prior to its approval, under the 2012 Plan) and 2012 Directors Plan, respectively. In addition, the Company has issued in the past, and may issue in the future, its equity securities to compensate employees of acquired businesses for future services. Equity-based awards granted in connection with acquisitions of businesses may be issued in the form of service-based awards requiring continuing employment with the Company, restricted stock subject to trading restrictions, and performance-based awards, which would vest only if certain specified performance and service conditions are met. The awards issued in connection with acquisitions of businesses are subject to the terms and conditions contained in the applicable award agreements and acquisition documents.
Service-Based Awards
The table below summarizes activity related to the Company’s equity-classified and liability-classified service-based awards for the years ended December 31, 2021, 2020 and 2019:
Equity-Classified
Restricted Stock
Equity-Classified
Equity-Settled
Restricted Stock Units
Liability-Classified
Cash-Settled
Restricted Stock Units
 Number of
Shares		Weighted Average Grant Date
Fair Value Per Share 		Number of
Shares		Weighted Average Grant Date
Fair Value Per Share 		Number of
Shares		Weighted Average Grant Date
Fair Value Per Share 
Unvested service-based awards outstanding as of January 1, 20191 $63.10 798 $92.13 303 $83.99 
Awards granted9 $167.18 284 $170.29 56 $170.13 
Awards modified— $— 7 $170.74 1 $168.36 
Awards vested— $— (287)$87.79 (111)$80.51 
Awards forfeited/cancelled— $— (43)$114.45 (7)$94.77 
Unvested service-based awards outstanding as of December 31, 201910 $162.96 759 $122.48 242 $105.40 
Awards granted— $— 294 $204.57 60 $181.77 
Awards modified— $— (1)$122.55 — $— 
Awards vested(1)$63.10 (317)$108.87 (122)$91.39 
Awards forfeited/cancelled— $— (49)$148.11 (5)$113.94 
Unvested service-based awards outstanding as of December 31, 20209 $167.18 686 $162.15 175 $141.16 
Awards granted— $— 238 $429.41 27 $394.24 
Awards vested— $— (308)$139.83 (86)$118.05 
Awards forfeited/cancelled— $— (40)$264.48 (4)$210.26 
Unvested service-based awards outstanding as of December 31, 20219 $167.18 576 $277.38 112 $217.28 
The fair value of vested service-based awards (measured at the vesting date) for the years ended December 31, 2021, 2020 and 2019 was as follows:
 For the Years Ended December 31,
 202120202019
Equity-classified equity-settled
Restricted stock$— $101 $73 
Restricted stock units129,527 60,042 48,111 
Liability-classified cash-settled
Restricted stock units33,947 22,014 18,449 
Total fair value of vested service-based awards$163,474 $82,157 $66,633 
As of December 31, 2021, $0.3 million of total remaining unrecognized stock-based compensation costs related to service-based equity-classified restricted stock is expected to be recognized over the weighted-average remaining requisite service period of 0.7 years.
As of December 31, 2021, $112.0 million of total remaining unrecognized stock-based compensation costs related to service-based equity-classified RSUs, net of estimated forfeitures, is expected to be recognized over the weighted-average remaining requisite service period of 2.7 years.
As of December 31, 2021, $38.6 million of total remaining unrecognized stock-based compensation costs related to service-based liability-classified RSUs, net of estimated forfeitures, is expected to be recognized over the weighted-average remaining requisite service period of 2.3 years.
The liability associated with the Company’s service-based liability-classified RSUs as of December 31, 2021 and 2020 was $31.5 million and $26.8 million, respectively, and is classified as Accrued compensation and benefits expenses in the consolidated balance sheets.
Performance-Based Awards
The table below summarizes activity related to the Company’s performance-based awards for the years ended December 31, 2021, 2020 and 2019:
Equity-Classified
Equity-Settled
Restricted Stock
Equity-Classified
Equity-Settled
Restricted Stock Units
 Number of
Shares		Weighted Average Grant Date
Fair Value Per Share 		Number of
Shares		Weighted Average Grant Date
Fair Value Per Share 
Unvested performance-based awards outstanding as of January 1, 2019— $— 30 $121.75 
Awards granted9 $165.87 — $— 
Awards modified— $— (30)$121.75 
Unvested performance-based awards outstanding as of December 31, 20199 $165.87 — $— 
Awards granted— $— 31 $210.44 
Awards vested— $— (10)$177.81 
Unvested performance-based awards outstanding as of December 31, 20209 $165.87 21 $227.16 
Awards granted— $— 8 $574.98 
Awards vested— $— (4)$177.81 
Awards forfeited— $— (2)$334.78 
Unvested performance-based awards outstanding as of December 31, 20219 $165.87 23 $339.69 
As of December 31, 2021, $0.6 million of total remaining unrecognized stock-based compensation costs related to performance-based equity-classified restricted stock is expected to be recognized over the weighted-average remaining requisite service period of 1.7 years.
As of December 31, 2021, $5.0 million of total remaining unrecognized stock-based compensation cost related to performance-based equity-classified RSUs is expected to be recognized over the weighted-average remaining requisite service period of 3.1 years.
The fair value of vested performance-based awards (measured at the vesting date) for the years ended December 31, 2021, 2020 and 2019 was as follows:
 For the Years Ended December 31,
 202120202019
Equity-classified equity-settled
Restricted stock units$2,215 3,282 $— 
Total fair value of vested performance-based awards$2,215 $3,282 $— 

2021 Employee Stock Purchase Plan
On November 1, 2021, the first offering period of the ESPP commenced. The Company recognizes compensation expense related to shares issued pursuant to the ESPP on a straight-line basis over the six-month offering period. The Company uses the Black-Scholes option pricing model to calculate the fair value of shares issued under the ESPP. The Black-Scholes model relies on a number of key assumptions to calculate estimated fair values. The model incorporated the following weighted-average assumptions for the year ended December 31, 2021:
Expected volatility23.1 %
Expected term (in years)0.50
Risk-free interest rate0.1 %
Expected dividends— %
Expected volatility is based on the historical volatility of the Company’s stock price. The expected term represents the purchase period for the ESPP. The risk-free rate is based on the U.S. Treasury yield curve for the period equal to the expected term in effect at the time of grant. The Company has not declared or paid any dividends on its common stock. The Company intends to retain any earnings to fund its operations and the future growth of its business and, therefore, does not anticipate paying any cash dividends in the foreseeable future.
As of December 31, 2021, the weighted average price per share was $659.65 and the weighted average grant-date fair value per share was $141.86. As of December 31, 2021, no purchases have been made under the ESPP as the first anticipated purchase date will be on April 29, 2022. As of December 31, 2021, total unrecognized stock-based compensation cost related to the ESPP was $2.3 million, which is expected to be recognized over a period of 0.33 years.

Commitments for Future Equity Awards
In connection with the Company’s acquisitions of businesses as discussed in Note 2 “Acquisitions”, EPAM enters into agreements that contractually commit it to granting equity awards at future dates. The agreements are unique to each acquisition and terms vary to specify the number of future awards to be issued or a monetary value that will be settled with equity awards valued at future stock prices.
As of December 31, 2021, the Company has commitments to grant up to $43.6 million of equity awards based on future stock prices. There is a service-based vesting requirement after the grant date associated with these awards and certain of these awards contain performance criteria that will determine the amount of future awards to be issued. These awards are considered granted for accounting purposes. In determining the expense, the Company adjusts the expected settlement based on the probability of achievement of such performance criteria. Related to these awards, the Company recorded $5.5 million, $0.2 million and $0.0 million of stock-based compensation expense in the consolidated statements of income for the years ended December 31, 2021, 2020 and 2019, respectively.
As of December 31, 2021, the Company has commitments to grant 8 thousand RSUs and $2.7 million of equity awards based on future stock prices, which are not considered granted for accounting purposes as the grantee has not yet been
determined. In addition, as of December 31, 2021, the Company has issued 7 thousand PSUs which are not considered granted for accounting purposes as the future vesting conditions have not yet been determined.