STOCK BASED COMPENSATION EXPENSE

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

STOCK BASED COMPENSATION EXPENSE

STOCK BASED COMPENSATION EXPENSE

2017 and 2020 Stock Plans

The 2017 Stock Option Plan (the “2017 Plan”) provides for the grant of incentive and nonqualified options to purchase common stock to officers, employees, directors, and consultants. Options were granted at a price not less than the fair market value on the date of grant and generally became 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.

The Nikola Corporation 2020 Stock Incentive Plan ("2020 Plan") provides for the grant of incentive and nonqualified stock options, 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 Nikola Corporation 2020 Employee Stock Purchase Plan ("2020 ESPP") became effective immediately upon the closing of the business combination with VectoIQ. No offerings have been authorized to date by the Company's board of directors under the ESPP.

Stock Options

A summary of changes in stock options are as follows:

	Options	Weighted Average Exercise Price Per share		Weighted Average Remaining Contractual Term (Years)
Outstanding at December 31, 2023	501,362	$	40.74	3.64
Granted	—	—
Exercised	—	—
Cancelled	(1,299)	52.38
Outstanding at June 30, 2024	500,063			3.11
Vested and exercisable as of June 30, 2024	500,063	$	41.15	3.11

Restricted Stock Units

A summary of changes in RSUs are as follows:

	Number of RSUs
Balance at December 31, 2023	851,228
Granted	479,010
Released	(257,540)
Cancelled	(79,417)
Balance at June 30, 2024	993,281

Market Based RSUs

The Company grants market based RSUs to its executive officers, which entitle them to receive a specified number of shares of the Company's common stock upon vesting. The number of shares earned could range between 0% and 200% of the target award depending upon the Company's performance at the conclusion of the performance period. The performance condition of the awards is based on total shareholder return ("TSR") of the Company's common stock relative to a broad group of green energy companies.

During the first quarter of 2024, the Company granted 20,000 TSR awards to a new executive officer, with a performance period end date of December 31, 2025. During the second quarter of 2024, the Company granted 328,400 TSR awards to its executive officers with a performance period end date of December 31, 2026. The fair value of the TSR awards on the grant date was determined using a Monte Carlo simulation model, which utilizes significant assumptions including stock volatility and risk free rates, and does not change throughout the vesting period. The grant date fair value of the TSR awards was determined to be $10.5 million and is recognized over the vesting period. The following represents the range of significant assumptions used to determine the grant date fair value for the TSR awards:

	Six Months Ended June 30, 2024
Stock price	$18.00 - $20.88
Term (years)	1.82 - 2.68
Risk-free interest rate	4.7% - 4.9%
Expected volatility	115.2% - 118.5%
Expected dividend yield	—%

A summary of changes in market based RSUs are as follows:

	Number of Market Based RSUs
Balance at December 31, 2023	100,003
Granted	348,400
Released	—
Cancelled	—
Balance at June 30, 2024	448,403

Stock Compensation Expense

The following table presents the impact of stock-based compensation expense on the condensed consolidated statements of operations for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Cost of revenues	$	352	$	668	$	680	$	1,399
Research and development	2,493		6,574		5,352		15,660
Selling, general, and administrative	5,105		18,467		10,704		33,198
Total stock-based compensation expense	$	7,950	$	25,709	$	16,736	$	50,257

As of June 30, 2024, total unrecognized compensation expense was as follows:

	Unrecognized Compensation Expense
Market based RSUs	$	15,085
RSUs	31,543
Total unrecognized compensation expense at June 30, 2024	$	46,628