The Company issues stock-based awards, including stock options, restricted stock and restricted stock units, to certain officers, employees and non-employee directors under the Acadia Healthcare Company, Inc. Incentive Compensation Plan (the “Equity Incentive Plan”). At September 30, 2021, a maximum of 12,700,000 shares of the Company’s common stock were authorized for issuance as stock options, restricted stock and restricted stock units or other share-based compensation under the Equity Incentive Plan, of which 4,484,084 were available for future grant. Stock options may be granted for terms of up to 10 years. The Company recognizes expense on all share-based awards on a straight-line basis over the requisite service period of the entire award. Grants to employees generally vest in annual increments of 25% each year, commencing one year after the date of grant. The exercise prices of stock options are equal to the most recent closing price of the Company’s common stock on the most recent trading date prior to the date of grant.

The Company recognized $8.9 million and $5.5 million in equity-based compensation expense for the three months ended September 30, 2021 and 2020, respectively, and $25.0 million and $16.3 million for the nine months ended September 30, 2021 and 2020, respectively. At September 30, 2021, there was $48.5 million of unrecognized compensation expense related to unvested

options, restricted stock and restricted stock units, which is expected to be recognized over the remaining weighted average vesting period of 1.2 years.

The Company recognized a deferred income tax benefit of $2.3 million and $1.4 million for the three months ended September 30, 2021 and 2020, respectively, related to equity-based compensation expense. The Company recognized a deferred income tax benefit of $6.4 million and $4.2 million for the nine months ended September 30, 2021 and 2020, respectively, related to equity-based compensation expense.

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Options outstanding at January 1, 2020		1,360,068		$	39.40		7.57	$	1,650
Options granted		507,600			33.13		9.18		157
Options exercised		(68,700	)		29.15	N/A			854
Options cancelled		(288,662	)		39.67	N/A		N/A
Options outstanding at December 31, 2020		1,510,306			37.56		7.35		1,414
Options granted		306,520			57.58		7.66		823
Options exercised		(547,522	)		39.48	N/A			10,846
Options cancelled		(143,165	)		39.97	N/A		N/A
Options outstanding at September 30, 2021		1,126,139		$	41.77		7.39	$	20,808
Options exercisable at December 31, 2020		596,606		$	45.37		5.55	$	543
Options exercisable at September 30, 2021		332,934		$	43.20		6.00	$	5,767

Fair values are estimated using the Black-Scholes option pricing model. The following table summarizes the grant-date fair value of options and the assumptions used to develop the fair value estimates for options granted during the nine months ended September 30, 2021 and year ended December 31, 2020:

	September 30, 2021			December 31, 2020
Weighted average grant-date fair value of options	$	20.67		$	12.37
Risk-free interest rate		0.9	%		1.6	%
Expected volatility		40	%		41	%
Expected life (in years)		5.0			5.0

The Company’s estimate of expected volatility for stock options is based upon the volatility of our stock price over the expected life of the award. The risk-free interest rate is the approximate yield on U.S. Treasury Strips having a life equal to the expected option life on the date of grant. The expected life is an estimate of the number of years an option will be held before it is exercised.

	Number of Shares			Weighted Average Grant-Date Fair Value
Unvested at January 1, 2020		805,136		$	34.14
Granted		637,312			25.82
Cancelled		(129,683	)		34.56
Vested		(289,769	)		35.88
Unvested at December 31, 2020		1,022,996		$	28.41
Granted		324,530			58.48
Cancelled		(66,801	)		38.56
Vested		(352,184	)		30.63
Unvested at September 30, 2021		928,541		$	37.35

	Number of Units			Weighted Average Grant-Date Fair Value
Unvested at January 1, 2020		447,357		$	38.89
Granted		583,680			10.60
Performance adjustment		117,772			13.50
Cancelled		(63,056	)		43.35
Vested		(12,691	)		42.09
Unvested at December 31, 2020		1,073,062		$	20.15
Granted		149,416			61.52
Performance adjustment		345,731			24.10
Cancelled		—			—
Vested		(184,051	)		42.30
Unvested at September 30, 2021		1,384,158		$	22.66

Restricted stock awards are time-based vesting awards that vest over a period of three or four years and are subject to continuing service of the employee or non-employee director over the ratable vesting periods. The fair values of the restricted stock awards were determined based on the closing price of the Company’s common stock on the trading date immediately prior to the grant date.

Restricted stock units are granted to employees and are subject to Company performance compared to pre-established targets and Company performance compared to peers. In addition to Company performance, these performance-based restricted stock units are subject to the continuing service of the employee during the two- or three-year period covered by the awards. The performance condition for the restricted stock units is based on the Company’s achievement of annually established targets for diluted earnings per share. Additionally, the number of shares issuable pursuant to restricted stock units granted during 2020 are subject to adjustment based on the Company’s three-year annualized total stockholder return relative to a peer group consisting of S&P 1500 companies within the Healthcare Providers & Services 6 digit GICS industry group and selected other companies deemed to be peers. The number of shares issuable at the end of the applicable vesting period of restricted stock units ranges from 0% to 200% of the targeted units based on the Company’s actual performance compared to the targets and, for 2021 and 2020 awards, performance compared to peers.

The fair values of restricted stock units were determined based on the closing price of the Company’s common stock on the trading date immediately prior to the grant date for units subject to performance conditions, or at its Monte-Carlo simulation value for units subject to market conditions.