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STOCK-BASED COMPENSATION
12 Months Ended
Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]  
SHARE-BASED COMPENSATION SHARE-BASED COMPENSATION
Share Incentive Plans
2015 Plan
On December 31, 2015, the Company adopted the Stanley Brothers, Inc. 2015 Stock Option Plan (the “2015 Plan”), which provides for grants of incentive stock options and nonqualified stock options to employees (including officers), consultants and directors. The 2015 Plan, and grants made under the 2015 Plan, are designed to align shareholder and participant interests. The Company’s board of directors establishes the terms and conditions of any grants under the 2015 Plan. Incentive stock options may be granted only to employees.
2018 Plan
On August 31, 2018, the Company adopted the Charlotte’s Web Holdings, Inc. 2018 Long-Term Incentive Plan (the “2018 Plan”), which provides for grants of stock options, stock appreciation rights, share awards, share units, performance shares, performance units, and other share-based awards (collectively the “Awards”) to eligible individuals on the terms and subject to conditions set forth in the 2018 Plan. The 2018 Plan is designed to attract and retain key personnel and service providers. The Company’s board of directors, or appointed administrators, establish the terms and conditions of any grants under the 2018 Plan.
The aggregate number of common shares of the Company as to which share incentive awards may be granted from time to time under both the 2015 Plan and 2018 Plan shall not exceed 13,500,000 shares. The maximum exercise period of any option grant shall not exceed ten years from the date of grant. The share incentive awards vest over a time-based service period, generally a period of one to four years, and are settled in equity. The number of available awards at December 31, 2022, was 8,009,248.
Stock options
Stock options vest over a prescribed service period and are approved by the board of directors on an award-by-award basis. Options have a prescribed service period generally lasting up to four years, with certain options vesting immediately upon issuance. Upon the exercise of any stock options, the Company issues shares to the award holder from the pool of authorized but unissued common shares.
The fair values of options granted during the period were determined using a Black-Scholes model. The following principal inputs were used in the valuation of awards issued for the years ended December 31, 2022 and 2021:
Year Ended December 31,
 20222021
Expected volatility
83.0% - 86.0%
82.0% - 86.5%
Expected term (years)
5.5 – 7.5
5.0 – 7.0
Risk-free interest rate
1.8% - 3.3%
1.3% - 1.7%
Expected dividend yield
0%0%
Value of underlying share
$0.44 - $1.56
$1.02 - $4.70
Detail of the number of stock options outstanding for the years ended December 31, 2022 and 2021 under the 2015 and 2018 plans is as follows:
 
Number of Options
 
Weighted-
Average
Exercise
Price
per Option
 
Weighted-
Average
Remaining
Contract
Term

(in years)
Aggregate
Intrinsic Value
 
Outstanding as of December 31, 20213,343,883$3.167.54$1,039
Granted
3,813,5791.11
Exercised
Forfeited (and expired)
(3,200,435)2.75
Outstanding as of December 31, 20223,957,027$1.528.37$47
Exercisable/vested as of December 31, 20221,669,287$1.556.29$
For the options outstanding at December 31, 2022, the weighted average remaining contractual life is 8.37 years. The weighted average grant-date fair value of options granted during the year ended December 31, 2022 was $1.11.
For the options outstanding at December 31, 2021, weighted average remaining contractual life is 7.54 years. The weighted average grant-date fair value of options granted during the year ended December 31, 2021 was $3.56.
The weighted average share price at the date of exercise of options exercised during the years ending December 31, 2022 and 2021 was $— and $4.85, respectively.
Vesting of awards under these plans were generally time based over a period of one to four years. For the 458,102 option awards vested during the year ended December 31, 2022, the weighted average grant date fair value was $1.60. For the 720,261 option awards vested during the year ended December 31, 2021, the weighted average grant date fair value was $5.93.
Of the 3,957,027 options outstanding at December 31, 2022, 985,012 options have an exercise price of $0.56, and the remaining 2,972,015 options have an exercise price ranging between $0.44 and $21.10.
Restricted share units
The Company has issued time-based restricted share units to certain employees as permitted under the 2018 Plan. The restricted share units granted vest in accordance with the board-approved agreement, typically over equal installments over one to four years. Upon vesting, one share of the Company’s common shares is issued for each restricted share awarded. The fair value of each restricted share unit granted is equal to the market price of the Company’s shares at the date of the grant. The fair value of shares vested during the year ended December 31, 2022 and 2021was $1,462 and $751, respectively.
Details of the number of restricted share units outstanding under the 2018 Plan is as follows:
 
Number of Shares
 
Weighted-
Average
Grant Date Fair Value
 
Outstanding as of December 31, 20211,816,851$2.28
Granted
3,823,2670.87
Forfeited
(1,797,430)4.04
Vested
(1,273,114)1.54
Outstanding as of December 31, 20222,569,574$0.98
Share-based Compensation Expense
Share-based compensation expense for all equity arrangements for the years ended December 31, 2022 and 2021 was $3,567 and $5,483, respectively, included in selling, general and administrative expense in the consolidated statements of operations.
As of December 31, 2022, and 2021, there was approximately $3,239 and $4,638 of total unrecognized share-based compensation expense, related to unvested options granted to employees under the Company’s share option plan that is expected to be recognized over a weighted average period of 2.27 years as of each year ended.