Legacy Nikola's 2017 Stock Option Plan (the “2017 Plan”) provides for the grant of incentive and nonqualified options to purchase Legacy Nikola common stock to officers, employees, directors, and consultants of Legacy Nikola. Options are granted at a price not less than the fair market value on the date of grant and generally become exercisable between one and four years after the date of grant. Options generally expire ten years from the date of grant. Outstanding awards under the 2017 Plan continue to be subject to the terms and conditions of the 2017 Plan.

Each Legacy Nikola option from the 2017 Plan that was outstanding immediately prior to the Business Combination, whether vested or unvested, was converted into an option to purchase a number of shares of common stock (each such option, an "Exchanged Option") equal to the product (rounded down to the nearest whole number) of (i) the number of shares of Legacy Nikola common stock subject to such Legacy Nikola option immediately prior to the Business Combination and (ii) the Exchange Ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of such Legacy Nikola option immediately prior to the consummation of the Business Combination, divided by (B) the Exchange Ratio. Except as specifically provided in the Business Combination Agreement, following the Business Combination, each Exchanged Option will continue to be governed by the same terms and conditions (including vesting and exercisability terms) as were applicable to the corresponding former Legacy Nikola option immediately prior to the consummation of the Business Combination. All stock option activity was retroactively restated to reflect the Exchanged Options.

At the Company's special meeting of stockholders held on June 2, 2020, the stockholders approved the Nikola Corporation 2020 Stock Incentive Plan (the "2020 Plan") and the Nikola Corporation 2020 Employee Stock Purchase Plan (the "2020 ESPP"). The 2020 Plan and the 2020 ESPP were previously approved, subject to stockholder approval, by the Company's board of directors on May 6, 2020. The aggregate number of shares authorized for issuance under the 2020 Plan will not exceed 42,802,865, plus the number of shares subject to outstanding awards as of the closing of the Business Combination under the 2017 Plan that are subsequently forfeited or terminated. In addition, the shares authorized for the 2020 Plan may be increased on an annual basis for a period of up to ten years, beginning with the fiscal year that begins January 1, 2021, in an amount equal up to 2.5% of the outstanding shares of common stock on the last day of the immediately preceding fiscal year. The aggregate number of shares available for issuance under the 2020 ESPP is 4,000,000, which may be increased on an annual basis of up to 1.0% of the outstanding shares of common stock as of the first day of each such fiscal year.

The 2020 Plan provides for the grant of incentive and nonqualified stock option, restricted stock units ("RSUs"), restricted share awards, stock appreciation awards, and cash-based awards to employees, outside directors, and consultants of the Company. The 2020 Plan and the 2020 ESPP became effective immediately upon the closing of the Business Combination. No offerings have been authorized to date by the Company's board of directors under the ESPP.

Prior to the completion of the Business Combination the fair value of Legacy Nikola common stock that underlies the stock options was determined by Legacy Nikola's board of directors based upon information available at the time of grant. Because such grants occurred prior to the exchange of Legacy Nikola common stock into the Company's common stock, Legacy Nikola's board of directors determined the fair value of Legacy Nikola common stock with assistance of periodic valuation studies from an independent third-party valuation firm. The valuations were consistent with the guidance and methods outlined in the AICPA Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, or AICPA Practice Aid.


	As of
	September 30, 2020	December 31, 2019
Exercise price	$3.58 - $9.66	$1.05 – $3.58
Risk-free interest rate	0.2% - 1.7%	1.4% – 2.7%
Expected term (in years)	0.5 – 6.3	5.0 – 6.3
Expected dividend yield	—	—
Expected volatility	83.6% - 85.8%	70.0% – 85.1%

As of September 30, 2020 and December 31, 2019, the outstanding performance-based options issued by the Company were 5,153,485. No performance-based options were granted during the nine months ended September 30, 2020. The performance-based provision, related to specified amount of equity capital raised, was achieved for all of the outstanding performance-based awards in 2018 and the Company began recognizing expense related to these awards in 2018.

The 5,153,485 outstanding performance-based options as of September 30, 2020 do not include the performance-based options issued by a related party. See Note 7, “Related Party Transactions” for additional information regarding the related party performance-based options issued.


	Options	Weighted Average Exercise Price Per share		Weighted Average Remaining Contractual Term (Years)
Outstanding at December 31, 2019	40,012,825	$	1.08	8.78
Granted	1,582,496	$	5.30
Exercised	2,081,577	$	1.06
Cancelled	177,504	$	1.44
Outstanding at September 30, 2020	39,336,240	$	1.26	8.09
Vested and exercisable as of September 30, 2020	36,542,071	$	1.20	8.06

The weighted-average grant date fair value of stock options issued for the nine months ended September 30, 2020 were $6.92. There were 2,081,577 stock options exercised during the nine months ended September 30, 2020 and Company received $2.2 million in cash proceeds from the exercise of options.

As a result of the Business Combination, vesting of certain stock options and performance-based options accelerated in accordance with terms of the related award agreements, resulting in additional stock-based compensation expense of $8.1 million in June 2020.

In December 2018, the former Executive Chairman issued 6,005,139 performance-based awards to certain early-stage employees and advisors. An additional award of 180,153 Legacy Nikola options was made under the Founder Stock Option Plan in May 2020, to replace a forfeited grant. As of September 30, 2020 the weighted average exercise price per share was $1.39, the weighted-average grant date fair value was $1.20 per share, and the weighted average remaining contractual term of these awards is 8.26 years. As a result of the Business Combination, the performance conditions were met and awards were fully vested and the Company recorded stock-based compensation expense of $7.2 million in the second quarter of 2020.

In June 2020, in connection with the closing of the Business Combination, the Company granted 2,163,000 time-based RSUs to several executive officers and directors of the Company. The RSUs have a vesting cliff of one year for directors and three years for executive officers after the grant date. In August 2020, the Company granted 1,230,970 time-based RSUs to various employees that vest semi-annually over a three year period or cliff vest over a three or six month period. In addition, for certain technical engineering employees the awards cliff vest after a three year period or vest on the achievement of certain operational milestones. Changes in RSUs are as follows:

During the third quarter of 2020, the Company entered into a separation agreement with its former Executive Chairman which resulted in a modification of his time-based RSUs. Prior to the modification, the RSUs were not likely to vest and as a result $0.5 million of previously recorded stock-based compensation expense was reversed during the three months ended September 30, 2020. Subsequent to modification, the RSUs were considered fully vested and the Company recorded stock-based compensation of $16.5 million during the three months ended September 30, 2020.

The fair value of RSUs is based on the closing price of the Company’s common stock on the grant date. The unrecognized compensation cost of the RSUs as of September 30, 2020 was $111.7 million, which is expected to be recognized over the weighted average remaining service period of 2.58 years.

In June 2020, in connection with the closing of the Business Combination, the Company granted 16,356,000 market based RSUs ("Market Based RSUs") to several executive officers of the Company. The Market Based RSUs contain a stock price index as a benchmark for vesting. These awards have three milestones that each vest depending upon a consecutive 20-trading day stock price target of the Company’s common stock. The shares vested are transferred to the award holders upon the completion of the requisite service period of three years, and upon achievement certification by the Company's board of directors. If the target price for the tranche is not achieved by the end of third anniversary of the grant date, the Market Based RSUs are forfeited.

The grant date fair value of the Market Based RSUs was determined using a Monte Carlo simulation model that utilizes significant assumptions, including volatility, that determine the probability of satisfying the market condition stipulated in the award to calculate the fair value of the award. The expected volatility in the model of 70% was estimated on the basis of historical volatility of a group of peers, given the limited trading history of the Company. The risk-free interest rate of 0.26% was based on the United States Treasury rate for a term commensurate with the expected life of the grant. The total grant date fair value of the Market Based RSUs was determined to be $466.7 million and will be recognized over the requisite service period of 3 years.

During the three months ended September 30, 2020, 4,859,000 Market Based RSUs originally issued to the Company's former Executive Chairman were cancelled as a part of the former Executive Chairman's separation agreement and $3.5 million of previously recorded stock-based compensation was reversed. As of September 30, 2020, there are 11,497,000 non-vested Market Based RSUs with unrecognized compensation cost of $292.4 million and will be recognized over the remaining weighted average remaining service period of 2.75 years.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Research and development	$	4,612	$	157	$	7,850	$	462
Selling, general, and administrative	47,584		1,028		83,886		3,310
Total stock-based compensation expense	$	52,196	$	1,185	$	91,736	$	3,772