Authorized Capital Stock—The Company was authorized to issue 190,000,000 shares of common stock, with a par value of $0.000004 per share as of December 31, 2021 and 2020.

Warrants—In May 2015, the Company issued warrants to acquire 116,350 shares of Common Stock at a price of approximately $17.19 per share to the placement agent as consideration for backstopping the financing completed in May 2015. These warrants were exercised in full as a cashless transaction during the first quarter of 2021. As a result of this cashless transaction, the resulting number of shares issued was 67,713 shares.

Common Stock Issuances, Cancellations and Repurchases—During the years ended December 31, the Company issued, cancelled and repurchased the following shares of common stock:

	2021						2020							2019
	Shares		Average Price per Share		Total		Shares			Average Price per Share		Total		Shares		Average Price per Share		Total
Common stock issued in connection with initial public offering		—	$	—	$	—		11,500,000		$	15.00		172,500		—	$	—	$	—
Common stock issued in connection with follow-on offering		2,875,000		59.05		169,783		—			—		—		—		—		—
Acquisitions		178,721		46.55		8,320		791,139			31.60		25,000		150,439		26.90		4,047
Redemption of series A-1 preferred stock		—		—		—		1,786,739			15.00		26,801		—		—		—
Exercise of warrant options		67,713		17.19		—		2,534,239			0.01		25		—		—		—
Exercise of options		959,890		7.54		7,237		47,600			8.05		383		27,350		6.16		168
Shares sold		—		—		—		—			—		—		42,415		31.60		1,340
Restricted shares, net		42,263		30.69		—		20,488			24.00		—		12,132		18.82		—
Payment of earn-out liability		539,607		46.33		25,000		—			—		—		—		—		—
Payment of purchase price true up		24,200		44.81		1,084		—			—		—		—		—		—
Cancellation of shares		—		—		—		(117,785	)		17.15		—		—		—		—
Total		4,687,394	$	45.63	$	211,424		16,562,420		$	13.64	$	224,709		232,336	$	24.89	$	5,555

Furthermore, during 2019, certain shares of common stock were repurchased from an investor. This repurchase transaction was accounted for as treasury stock by the Company and recorded as a reduction to additional paid in capital. The treasury stock is carried at cost at the purchase price of $9.80 per share. There are no commitments to repurchase capital stock nor any restrictions imposed by state law related to this transaction. Amounts paid to repurchase these shares were funded through the issuance of the Redeemable Series A-1 Preferred Stock.

Employee Equity Incentive Plans—The Company has two plans under which stock-based awards have been issued: (i) the Montrose 2017 Stock Incentive Plan (“2017 Plan”) and (ii) the Montrose Amended & Restated 2013 Stock Option Plan (“2013 Plan”) (collectively the “Plans”).

As of December 31, 2021, there was $170.1 million of total unrecognized stock compensation expense related to unvested options, restricted stock and stock appreciation rights granted under the Plans. Such unrecognized expense is expected to be recognized over a weighted-average five year period. The following number of shares were authorized to be issued and available for grant as of December 31:

(1) In January 2022 the Board of Directors ratified the addition of 1,185,112 shares of common stock to the number of shares available for issuance under the 2017 Plan pursuant to the annual increase provision of such plan (Note 24). Unless the Board of Directors determines otherwise, additional annual increases will be effective on each January 1, through January 1, 2027. The 2017 Plan permits the company to settle awards, if and when vested, in cash at its discretion. Pursuant to the terms of the 2017 Plan, the number of shares authorized for issuance thereunder will only be reduced with respect to shares of common stock actually issued upon exercise or settlement of an award. Shares of common stock subject to awards that have been canceled, expired, forfeited or otherwise not issued under an award and shares of common stock subject to awards settled in cash do not count as shares of common stock issued under the 2017 Plan. Shares available for grant exclude awards of stock appreciation rights approved in December 2021 that are subject to vesting based on the achievement of certain market conditions, which have not yet been, and may not be, achieved. At maximum level of achievement these awards would represent the right to receive an aggregate of 3,000,000 shares of common stock.

	2021
	2017 plan						2013 plan
	Options		Restricted Stock		SARs		Options		Total
Cost of revenue	$	1,482	$	—	$	—	$	10	$	1,492
Selling, general and administrative expense		6,552		1,959		307		11		8,829
Total	$	8,034	$	1,959	$	307	$	21	$	10,321

	2020
	2017 plan						2013 plan
	Options		Restricted Stock		SARs		Options		Total
Cost of revenue	$	1,441	$	—	$	—	$	136	$	1,577
Selling, general and administrative expense		1,793		1,279		—		200		3,272
Total	$	3,234	$	1,279	$	—	$	336	$	4,849

	2019
	2017 plan						2013 plan
	Options		Restricted Stock		SARs		Options		Total
Cost of revenue	$	963	$	—	$	—	$	449	$	1,412
Selling, general and administrative expense		652		433		—		1,848		2,933
Total	$	1,615	$	433	$	—	$	2,297	$	4,345

Restricted Stock—The Company issues restricted stock to certain 2017 Plan participants as Director’s compensation. These shares of restricted stock granted during the years ended December 31, 2021 and 2020 vest one year from the date of grant, or, in each case, in full upon a change in control, subject to the participant’s continued service as a Director throughout such date, or upon retirement. Members of the Board of Directors that receive stock-based compensation are treated as employees for accounting purposes.

During the year ended December 31, 2021, the Board of Directors approved the grant of 1,671,391 restricted stock units (“RSUs”) to certain executives and selected employees of the Company under the 2017 Plan. These RSUs represent the right to receive one share of the Company’s common stock upon vesting. These incentives were designed by the Board, in coordination with the Company’s compensation advisors, to (i) retain selected employees of the Company for a minimum of 5 years, (ii) reward selected employees for the Company’s significant outperformance and stockholder value creation in 2021, and (iii) provide incentives to selected employees of the Company to accelerate value creation for stockholders and other stakeholders over the next five-year period. With respect to 1,355,182 RSUs, 50.0% will vest on each of the 4th and 5th anniversaries of the date of grant, subject to continued service through each such date. With respect to the remaining 316,209 RSUs (“The Performance-Vested RSUs”), 50.0% will vest on each of the 4th and 5th anniversaries of the date of grant, subject to continued service through each such date and further subject to Company achieving $90.0 million in adjusted EBITDA (as reported) for any trailing twelve-month period from and after December 31, 2022. If the Performance Criteria is not met prior to the 4th anniversary of the date of grant, none of the Performance-Vested RSUs will vest at such time, and if the Performance Criteria is subsequently met prior to the 5th anniversary of the date of grant, all of the Performance-Vested RSUs will vest at such time, subject to continued service through such date. If the Performance Criteria is not met by the 5th anniversary of the date of grant, all of the Performance-Vested RSUs will be forfeited.

During the year ended December 31, 2021, the Board of Directors approved the creation of two supplemental incentive plans (“SI Plans”) for selected employees to reward exceptional performance. These SI Plans provide supplemental bonus opportunities payable in RSUs under the 2017 Plan upon meeting certain financial performance targets. No RSUs have been granted under these SI Plans during the year ended December 31, 2021.

On December 16, 2021, the Board approved and reserved for future issuance an aggregate of 135,517 RSUs (the “Future RSU Pool”) to be granted under the 2017 Plan to certain of its executives and selected employees. Final determination and allocation of the awards under the Future RSU Pool will be determined on December 16, 2025 based on individual performance and continued service through such date. Any RSUs granted under the Future RSU Pool will vest on December 16, 2026, subject to continued service through such date.

There were 42,263, 22,155 and 12,132 shares of restricted stock that became fully vested and were released as unrestricted shares of common stock during the years ended December 31, 2021, 2020, and 2019, respectively.

There were zero shares of restricted stock that were forfeited during the years ended December 31, 2021 and 2019. There were 1,667 forfeitures of restricted shares during the year ended December 31, 2020. There were an aggregate of 1,957,873, 267,173, and 239,893, restricted shares outstanding as of December 31, 2021, 2020, and 2019, respectively.

Stock Appreciation Rights— During the year ended December 31, 2021, the Board of Directors approved the grant of 3,000,000 units of stock appreciation rights (“SARs”) to certain executives and selected employees under the 2017 Plan. These SARs represent the right to receive, upon exercise, a payment equal to the excess of (a) the fair market value of one share of the Company’s common stock, over (b) an exercise price of $66.79, payable, at the Company’s election, in cash or shares of common stock. These SARs vest on the 5th anniversary of the date of grant based on achievement of performance hurdles over a five year period, subject to continued service on the vesting date. The performance hurdles shall be deemed achieved if the average trading price per share of the Company’s common stock equals or exceeds the following stock prices:

The performance hurdles shall be deemed achieved if the average trading price per share of the Company’s common stock equals or exceeds the applicable stock price performance hurdle set forth above for the trading days falling in a consecutive 20-day period prior to the vesting date. The SARs expire 10 years after the grant date. The fair value of these SARs at the grant date was $46.0 million.

Options—Options issued to all optionees under the 2017 Plan vest over four years from the date of issuance (or earlier vesting start date, as determined by the Board of Directors) as follows: one half on the second anniversary of date of grant and the remaining half on the fourth anniversary of the date of grant, with the exception of certain

annual grants to certain executive officers, which vest annually over a 3-year period. The following summarizes the options activity of the 2017 Plan for the years ended December 31, 2021, 2020 and 2019:

	Options to Purchase Common Stock			Weighted-Average Exercise Price per Share		Weighted Average Grant Date Fair Value per Share		Weighted Average Remaining Contract Life (in Years)		Aggregate Intrinsic Value of In-The-Money Options (in Thousands)
Outstanding January 1, 2019		257,762		$	20	$	10		—	$	1,151
Granted		380,820			27		14		—		—
Forfeited/cancelled		(20,730	)		20		—		—		—
Outstanding at December 31, 2019		617,852		$	24	$	12		7.82	$	4,696
Granted		1,243,027			22		12		—		—
Forfeited/cancelled		(17,225	)		22		—		—		—
Expired		(2,500	)		18		—		—		—
Exercised		(925	)		14		—		—		8
Outstanding at December 31, 2020		1,840,229		$	23	$	12		9.09	$	15,598
Granted		300,620			44		23		—		—
Forfeited/cancelled		(33,875	)		28		—		—		—
Expired		(1,550	)		19		—		—		—
Exercised		(68,695	)		22		—		—		2,169
Outstanding at December 31, 2021		2,036,729		$	26	$	14		8.30	$	91,030
Exercisable at December 31, 2021		349,316			28		—		7.33		15,022
Options vested and expected to vest		2,036,729			26		—		8.30		91,030

The following weighted-average assumptions were used in the Black-Sholes option-pricing model calculation for the years ended December 31:

Montrose Amended & Restated 2013 Stock Option Plan—The following summarizes the activity of the 2013 Plan for the years ended December 31, 2021, 2020 and 2019:

										Aggregate
				Weighted-		Weighted		Weighted		Intrinsic Value
	Options to Purchase			Average Exercise		Average Grant Date		Average Remaining		of In-The- Money
	Common			Price per		Fair Value		Contract Life		Options
	Stock			Share		per Share		(in Years)		(in Thousands)
Outstanding January 1, 2019		1,900,404		$	6	$	1		7.30	$	33,290
Forfeited/cancelled		(10,635	)		8		—		—		—
Expired		(6,950	)		8		—		—		—
Exercised		(27,350	)		6		—		—		—
Outstanding at December 31, 2019		1,855,469		$	6	$	1		6.40	$	46,617
Forfeited/cancelled		(7,500	)		10		—		—		—
Expired		(11,300	)		6		—		—		—
Exercised		(48,800	)		8		—		—		908
Outstanding at December 31, 2020		1,787,869		$	6	$	1		5.40	$	43,867
Expired		(625	)		6		—		—		—
Exercised		(889,570	)		6		—		—		45,161
Outstanding at December 31, 2021		897,674		$	6	$	2		4.37	$	57,529
Exercisable at December 31, 2021		897,674			6		—		4.37		57,529
Options vested and expected to vest		897,674			6		—		4.37		57,529

Total shares outstanding from exercised options were 1,209,090 shares, 249,200 shares and 201,600 shares as of December 31, 2021, 2020 and 2019.

Common Stock Reserved for Future Issuances—At December 31, the Company has reserved certain stock of its authorized but unissued common stock for possible future issuance in connection with the following:

(1) In January 2022, the Board of Directors ratified the addition of 1,185,112 shares of common stock to the number of shares available for issuance under the 2017 Plan pursuant to the annual increase provision of such plan (Note 24). Unless the Board of Directors determines otherwise, additional annual increases will be effective on each January 1, through January 1, 2027. The 2017 Plan permits the company to settle awards, if and when vested, in cash at its discretion. Pursuant to the terms of the 2017 Plan, the number of shares authorized for issuance thereunder will only be reduced with respect to shares of common stock actually issued upon exercise or settlement of an award. Shares of common stock subject to awards that have been canceled, expired, forfeited or otherwise not issued under an award and shares of common stock subject to awards settled in cash do not count as shares of common stock issued under the 2017 Plan. The Company expects to have sufficient shares available under the 2017 Plan to satisfy the future settlement of outstanding awards. Shares reserved for future issuance include an assumed 3,000,000 shares with respect to the stock appreciation rights units grant made in December 2021 at maximum level of achievement, but that are subject to vesting based on the achievement of certain market conditions, which have not yet been, and may not be, achieved.