In April 2022, Excelerate adopted the Excelerate Long-Term Incentive Plan (the “LTI Plan”). The LTI Plan was adopted to promote and closely align the interests of Excelerate's employees, officers, non-employee directors and other service providers and its stockholders by providing stock-based compensation and other performance-based compensation. The LTI Plan allows for the grant of up to 10.8 million shares, stock options, stock appreciation rights, alone or in conjunction with other awards; restricted stock and restricted stock units; incentive bonuses, which may be paid in cash, stock or a combination thereof; and other stock-based awards. The share pool will be increased on January 1st of each calendar year beginning in 2023 by a number of shares equal to 4% of the outstanding shares of Class A Common Stock on the preceding December 31st. The LTI Plan is administered by the Compensation Committee or such other committee designated by the board of directors of Excelerate to administer the LTI Plan.

The Company’s stock option and restricted stock unit awards both qualify as equity awards and are amortized into “Selling, general and administrative expense” and “Cost of revenue and vessel operating expenses” on the Consolidated Statements of Income on a straight-line basis. Stock options were granted to certain employees of Excelerate and vest over five years and expire ten years from the date of grant. The Company also issued restricted stock units to directors that vest ratably over either one or three years.

For the three and nine months ended September 30, 2022, the Company recognized $0.3 million and $0.6 million, respectively, in long-term incentive compensation expense for both its stock options and restricted stock unit awards.

The fair value of stock options is estimated on the date of the grant using a Black-Scholes valuation model that uses the weighted average assumptions noted in the following table. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield is based on the expected dividend payout as a portion of total share value. Expected volatility

is based on the median of the historical volatility of fifteen of the Company’s peers over the expected life of the granted options. The Company uses estimates of forfeitures to estimate the expected term of the options granted.


	2022
Risk-free interest rate		2.7	%
Expected dividend yield		0.4	%
Expected volatility		58.5	%
Expected term	6.5 years

The following table summarizes stock option activity for the nine months ended September 30, 2022 and provides information for outstanding and exercisable options as of September 30, 2022:


	Number of Options		Weighted Average Exercise Price
			(per share)
Outstanding at January 1, 2022		—	$	—
Granted		338,935		24.00
Exercised		—		—
Forfeited or expired		15,912		24.00
Outstanding at September 30, 2022		323,023	$	24.00
Exercisable at September 30, 2022		—	$	—

As of September 30, 2022, the Company had $4.0 million in unrecognized compensation costs related to its stock options that it expects to recognize over a weighted average period of 4.5 years.

The following table summarizes restricted stock unit activity for the nine months ended September 30, 2022 and provides information for unvested shares as of September 30, 2022:


	Number of Shares		Weighted Average Fair Value
			(per share)
Unvested at January 1, 2022		—	$	—
Granted		31,630		22.81
Vested		—		—
Forfeited		—		—
Unvested at September 30, 2022		31,630	$	22.81

As of September 30, 2022 the Company had $0.5 million in unrecognized compensation costs related to its restricted stock unit awards that it expects to recognize over a weighted average period of 1.8 years.