STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

Stock Incentive Plans

In March 2021, our Board adopted, in connection with the Redomiciliation, the Piedmont Lithium Inc. Stock Incentive Plan (“Incentive Plan”). The Incentive Plan authorized the grant of stock options, stock appreciation rights, restricted stock units and restricted stock, any of which may be performance-based. Our Compensation Committee determines the exercise price for stock options and the base price of stock appreciation rights, which may not be less than the fair market value of our common stock on the date of grant. Generally, stock options or stock appreciation rights vest after three years of service and expire at the end of ten years. Performance rights awards (“PRAs”) vest upon achievement of certain pre-established performance targets that are based on specified performance criteria over a performance period. As of March 31, 2022, 2,362,161 shares of common stock were available for issuance under our Incentive Plan.

We include the expense related to stock-based compensation in the same financial statement line item as cash compensation paid to the same employee. Additionally, and if applicable, we capitalize personnel expenses attributable to the development of our mine and construction of our plants, including stock-based compensation expenses. We recognize share-based award forfeitures as they occur.

Stock-based compensation related to all stock-based incentive plans is presented in the following table:


	Three Months Ended March 31,
	2022		2021
Components of stock-based compensation:
Stock-based compensation	$	764,855	$	406,488
Stock-based compensation forfeitures	(850,763)		—
Stock-based compensation, net of forfeitures	$	(85,908)	$	406,488

Presentation of stock-based compensation in the consolidated financial statements:
Exploration and mine development costs	$	(217,939)	$	131,147
General and administrative expenses	90,173		275,341
Stock-based compensation expense, net of forfeitures(1)	(127,766)		406,488
Capitalized stock-based compensation(2)	41,858		—
Stock-based compensation, net of forfeitures	$	(85,908)	$	406,488

__________________________

(1)For the three months ended March 31, 2022 and 2021, we did not reflect a tax benefit associated with stock-based compensation expense in the consolidated statements of operations because we had a full tax valuation allowance during these periods. As such, the table above does not reflect the tax impacts of stock-based compensation expense.

(2)These costs relate to direct labor costs related to our Carolina Lithium Project and are included in “Property, plant and mine development, net” in our consolidated balance sheets.

Stock Option Awards

Stock options may be granted to employees, officers, non-employee directors and other service providers. Stock options granted are equal to the market value of the underlying common stock on the date of grant. We use the Black-Scholes valuation model to measure stock-based compensation expense associated with stock options as of each respective grant date. As of March 31, 2022, we had remaining unvested stock-based compensation expense of $6.8 million to be recognized through December 2024.

Stock option award activity is presented in the following table:


	Three Months Ended March 31,
	2022			2021
	Shares	Weighted- Average Exercise Price (per share)		Shares	Weighted- Average Exercise Price (per share)
Outstanding at beginning of period	272,504	$	24.34	443,694	$	14.14
Options granted	135,957	55.00		50,000	30.94
Options exercised or surrendered	(15,000)	30.94		(18,906)	12.38
Options forfeited	(19,458)	38.74		—	—

Outstanding at end of period	374,003	34.47		474,788	15.98

Assumptions used to estimate the fair value of stock options granted are presented in the following table:


	Three Months Ended March 31,
	2022	2021
Expected life of options (in years)	5.4 - 6.4	3.0
Risk-free interest rate	1.1% - 1.8%	0.1%
Assumed volatility	50.0%	90.0%
Expected dividend rate	—	—

Restricted Stock Unit Awards

Restricted stock units (“RSUs”) are granted to employees and non-employee directors based on the market price of our common stock on the grant date and recognized as stock-based compensation expense over the vesting period, subject to the passage of time and continued service during the vesting period. In some instances, awards may vest concurrently with or following an employee’s termination.

RSUs were first granted to employees and non-employee directors in May 2021. RSU activity is presented in the following table:


	Three Months Ended March 31, 2022
	Shares	Weighted-Average Grant-Date Fair Value (per share)
Unvested at beginning of period	51,277	$	62.69
RSUs granted	17,437	56.34
RSUs exercised	(14,285)	58.14
RSUs forfeited	(17,209)	67.23
Unvested at end of period	37,220	59.36

Performance Rights Awards

The fair value of PRAs is based on the market price of our common stock on the grant date. PRAs are subject to performance conditions, which must be satisfied in order for PRAs to vest. Each performance right automatically converts into one share of common stock upon vesting of the performance right. Upon vesting of PRAs, common stock is immediately issued for no consideration. The performance right will expire if a performance condition of a performance right is not achieved by the expiry date.

PRA activity is presented in the following table:


	Three Months Ended March 31,
	2022			2021
	Shares	Weighted-Average Grant-Date Fair Value (per share)		Shares	Weighted-Average Grant-Date Fair Value (per share)
Unvested at beginning of period	30,000	$	5.42	65,000	$	5.50
PRAs granted	29,120	52.60		—	—


Unvested at end of period	59,120	28.66		65,000	5.50

As of March 31, 2022, there were 59,120 unvested PRAs, which expire over the next three years. The unvested PRAs are subject to certain milestones related to construction, feasibility studies and supply agreements.