Share-Based Compensation Expense

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Share-Based Compensation Expense

Stock-Based Compensation Expense

Stock-based compensation expense for stock options and restricted stock units for the three and six months ended June 30, 2023 were $0.8 million and $1.6 million, respectively, and for three and six months ended June 30, 2022 were $1.1 million and $1.5 million, respectively. As of June 30, 2023, there was $9.2 million of unrecognized compensation cost related to stock options which is expected to be recognized over the remaining vesting periods, with a weighted-average period of 3.4 years.

Stock Options

The Company grants stock options to certain employees that will vest over a period of one to four years. A summary of stock option award activity for the six months ended June 30, 2023 was as follows:

Options	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Outstanding at December 31, 2022	6,091,271	$	1.39	2.7
Granted	—	—
Exercised	(1,974,772)	0.24
Cancelled or forfeited	(630,382)	6.44
Outstanding at June 30, 2023	3,486,117	$	1.14	3.2
Exercisable at June 30, 2023	3,422,297	$	1.10	3.2

The aggregate intrinsic value of stock options outstanding as of June 30, 2023 was $1.6 million.

Restricted Stock Units

The Company grants restricted stock units to certain employees that will generally vest over a period of four years. The fair value of restricted stock unit awards is estimated by the fair value of the Company’s common stock at the date of grant. Restricted stock units activity during the six months ended June 30, 2023 was as follows:

	Number of Shares	Weighted Average Grant Date Fair Value Per Share
Non-vested, at December 31, 2022	9,832,707	$	1.30
Granted	5,227,402	0.81
Vested	(3,587,346)	1.57
Cancelled or forfeited	(1,624,916)	1.38
Non-vested, at June 30, 2023	9,847,847	$	1.00

CEO's Ladder Restricted Stock Unit Award

On September 9, 2022, in connection with the acquisition of Legacy Spruce Power and his appointment as the Company's President, the Company granted to its Chief Executive Officer ("CEO") a restricted stock unit award (the "Ladder RSUs") of 1,666,666 shares of common stock. The Ladder RSUs vest in 10% increments on the dates the Plan administrator certifies the applicable milestone stock prices have been achieved or exceeded, provided that the CEO remains employed on the date of certification and such achievement occurs within ten years of the date of the grant.

The Company used a Monte Carlo simulation valuation model to determine the fair value of the award as of the Acquisition Date which is presently accounted for as a liability. The following inputs were used in the simulation: grant date stock price of $1.17 per share, annual volatility of 85.0%, risk-free interest rate of 3.3% and dividend yield of 0.0%. For each tranche, a fair value was calculated as well as a derived service period which represents the median number of years it is expected to take for the Ladder RSUs to meet their corresponding milestone stock price excluding the simulation paths that result in the Ladder RSUs not vesting within the 10-year term of the agreement. Each tranche's fair value will be amortized ratably over the respective derived service period.

The Company recognized expense related to the Ladder RSUs of approximately $0.1 million and $0.2 million, respectively, for the three and six months ended June 30, 2023 and $0 for the three and six months ended June 30, 2022.