In January 2018, the Board of Directors adopted the Company’s 2018 Stock Option Plan (as amended, the "2018 Stock Option Plan") which provided for the issuance of options to purchase up to 3,048,490 shares of the Company’s common stock to officers, directors, employees, and consultants. The option exercise price per share is determined by the Board of Directors based on the estimated fair value of the Company’s common stock.

In June 2019, the Board of Directors adopted the Company’s 2019 Stock Option and Incentive Plan (the "2019 Plan"), which replaced the 2018 Stock Option Plan upon the completion of the IPO. The 2019 Plan allows the Compensation Committee of the Board of Directors (the "Compensation Committee") to make equity-based incentive awards including stock options, RSUs and PSUs to the Company’s officers, employees, directors, and consultants. The initial reserve for the issuance of awards under this plan was 2,139,683 shares of common stock. The initial number of shares reserved and available for issuance automatically increased on February 1, 2020 and automatically increases each February 1 thereafter by 5% of the number of shares of common stock outstanding on the immediately preceding January 31 (or such lesser number of shares determined by the Compensation Committee). As the 2018 Stock Option Plan was replaced by the 2019 Plan, all grants of stock options, RSUs and PSUs during the nine months ended October 31, 2023 were made pursuant to the 2019 plan, respectively.

In June 2019, the Board of Directors also adopted the Company’s 2019 Employee Stock Purchase Plan (the "ESPP"), which became effective immediately prior to the effectiveness of the registration statement for the Company’s initial public offering. The total shares of common stock initially reserved under the ESPP was limited to 855,873 shares.

The Company's fiscal 2023 and fiscal 2024 incentive bonuses allow eligible employees to elect to receive all or a portion of their fiscal 2023 and fiscal 2024 incentive compensation in the form of immediately vested restricted stock units instead of cash.

In July 2023, the Board of Directors also adopted the Company’s 2023 Inducement Award Plan (the "Inducement Plan"). The Inducement Plan allows the Compensation Committee of the Board of Directors (the "Compensation Committee") or its delegates to make equity-based incentive awards including stock options, RSUs and PSUs to employees of acquired companies to induce them to join the Company. The total shares of common stock initially reserved under the Inducement Plan was 500,000 shares.

As of October 31, 2023, there are 4,865,943 shares available for future grant pursuant to the 2019 Plan after factoring in the automatic increase which occurs on February 1 of each fiscal year, as well as an additional 514,045 shares available for future grant pursuant to the ESPP. The ESPP has two six-month offering periods each calendar year beginning in January and July. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a 15% discount through payroll deductions. As of October 31, 2023, there were 24,258 outstanding restricted stock units and 475,742 shares available for future grant under the Inducement Plan.


	Three months ended October 31,				Nine months ended October 31,
	2023		2022		2023		2022
RSUs	$	13,402	$	10,632	$	40,004	$	31,333
Liability awards	1,820		1,994		6,623		5,568
PSUs	2,751		1,807		7,146		5,253
ESPP	299		357		954		1,166
Stock options	—		333		45		1,207
Total stock based compensation	$	18,272	$	15,123	$	54,772	$	44,527


	Three months ended October 31,				Nine months ended October 31,
	2023		2022		2023		2022
Stock-based compensation expense recorded to additional paid-in capital	$	16,452	$	13,129	$	48,149	$	38,959
Stock-based compensation expense recorded to accrued expenses	1,820		1,994		6,623		5,568
Total stock-based compensation	$	18,272	$	15,123	$	54,772	$	44,527
Less stock-based compensation expense capitalized as internal-use software	(309)		(341)		(1,023)		(1,036)
Stock-based compensation expense per consolidated statements of operations	$	17,963	$	14,782	$	53,749	$	43,491

The Company has issued restricted stock units to employees and independent directors that vest based on a time-based condition. For RSUs granted to employees prior to January 2021, pursuant to a time-based condition, 10% of the restricted stock units vest after one year, 20% vest after two years, 30% vest after three years and 40% vest after four years. The restricted stock units expire seven years from the grant date. During the year ended January 31, 2023, the Company modified the vesting of RSUs granted subsequent to January 1, 2021 for employees other than its named executive officers listed in its 2022 proxy statement ("2022 NEOs") and other members of its executive management team. Pursuant to the modified vesting schedule, RSUs granted after January 1, 2021 for employees other than 2022 NEOs and other members of its executive management team vest 6.25% each quarter over four years based on continued service. For 2022 NEOs and other members of the Company's executive management team, RSUs granted from January 1, 2022 vest 6.25% each quarter over four years based on continued service. Beginning January 2023, all new RSUs granted generally vest 25% each year over four years based on continued service.

Additionally, at the beginning of each fiscal year, the Company provides certain employees the option to settle their incentive bonus in immediately vested RSUs. During the nine months ended October 31, 2023, the Company issued 339,352 immediately vested RSUs to settle full-year fiscal 2023 share-settled bonus awards. The RSUs granted to settle bonus awards are included in RSUs granted and vested in the table below. See section (g) Liability awards below for additional information regarding share-settled bonus awards.


			Restricted stock units
Unvested, January 31, 2023			3,917,753
Granted in nine months ended October 31, 2023(1)			2,135,772
Vested			(1,239,562)
Forfeited and expired			(450,626)
Unvested, October 31, 2023			4,363,337
(1) Includes 24,258 awards granted pursuant to the 2023 Inducement Award Plan.

Options granted under the equity award plans have a maximum term of ten years and vest over a period determined by the Board of Directors (generally four years from the date of grant or the commencement of the grantee’s employment with the Company). Options generally vest 25% at the one-year anniversary of the grant date, after which point they generally vest pro rata on a monthly basis.

Stock option activity for the nine months ended October 31, 2023 is as follows:


	Number of options	Weighted- average exercise price		Weighted- average remaining contractual life (in years)	Aggregate Intrinsic value
Outstanding — January 31, 2023	1,385,193	$	6.26
Granted in nine months ended October 31, 2023	—	$	—
Exercised	(246,480)	$	3.34
Forfeited and expired	(12,474)	$	5.87
Outstanding and expected to vest — October 31, 2023	1,126,239	$	6.90	4.79	$	7,613
Exercisable — October 31, 2023	1,126,239	$	6.90	4.79	$	7,613
Amount vested in nine months ended October 31, 2023	24,565	$	13.41

The aggregate intrinsic value represents the total pre-tax intrinsic value (the difference between the Company’s estimated stock price at the time of exercise and the exercise price, multiplied by the number of related in-the-money options) that would have been received by the option holders had they exercised their options at the end of the period. This amount changes based on the market value of the Company’s common stock. The total intrinsic value of options exercised for the nine months ended October 31, 2023 and 2022 (based on the difference between the Company’s estimated stock price on the exercise date and the respective exercise price, multiplied by the number of options exercised), was $6,034 and $4,661, respectively.

The Company grants PSUs to certain members of its management team. PSUs vest over approximately three years from the grant date upon satisfaction of both time-based requirements and market targets based on Phreesia's TSR relative to the TSR of each member of the Russell 3000 Index (the "Peer Group"). Depending on the percentage level at which the market-based condition is satisfied, the number of shares vesting could be between 0% and 220% of the number of PSUs originally granted. To earn the target number of PSUs (which represents 100% of the number of PSUs granted), the Company must perform at the 60th percentile, with the maximum number of PSUs earned if the Company performed at least at the 90th percentile. If Phreesia's TSR for the performance period is negative, the maximum number of PSUs that can be earned will be capped at 100%.

The Company estimated the fair value of the PSUs using a Monte Carlo Simulation model which projected TSR for Phreesia and each member of the Peer Group over the performance period. The Company recognizes the grant date fair value of PSUs as compensation expense over the vesting period.

Market-based PSU activity for the nine months ended October 31, 2023 are as follows:


			Performance stock units
Outstanding, January 31, 2023			648,233
Granted in nine months ended October 31, 2023			13,492
Vested			—
Forfeited and expired			(74,472)
Outstanding, October 31, 2023			587,253

The ESPP is a compensatory plan because it provides participants with terms that are more favorable than those offered to other holders of the Company's common stock. Employees purchase shares at the lesser of (1) 85% of the closing stock price on the first day of the offering period or (2) 85% of the closing stock price on the last day of the offering period. In the U.S., the ESPP is structured as a qualified employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986.

During the three and nine months ended October 31, 2023, the Company issued 70,123 shares of common stock under the ESPP. In connection with these issuances, the Company recorded increases of $1,838 to common stock and additional paid-in capital within stockholders' equity. As of October 31, 2023, unrecognized compensation cost related to the ESPP was $186, to be recognized over the next two months.

At the beginning of each year, the Company provides eligible employees the option to elect to receive all or a portion of their incentive compensation in the form of immediately vested restricted stock units instead of cash. Restricted stock units issued to settle liability awards are covered by the 2019 Plan. Share-settled bonus awards will be settled at a value equal to 115% of the bonuses converted. These share-settled bonus awards vest based on the achievement of the Company’s predefined performance targets. As share-settled bonus awards will be settled in a variable number of shares, the Company classifies share-settled bonus awards as liabilities within accrued expenses in the accompanying consolidated balance sheets until they are settled in shares and included in stockholders' equity. During the nine months ended October 31, 2023, the Company settled $8,803 of share-settled bonus awards by issuing 339,352 immediately vested RSUs. See (c) Restricted Stock Units above for additional discussion regarding RSUs.