The company's Common Shares have a $0.25 stated value. The Common Shares and the Class B Common Shares generally have identical rights, terms and conditions and vote together as a single class on most issues, except that the Class B Common Shares have ten votes per share and, in general, can only be transferred to family members or for estate planning purposes. Holders of Class B Common Shares are entitled to convert their shares into Common Shares at any time on a share-for-share basis. When Class B Common Shares are transferred out of a familial relationship, they automatically convert to Common Shares.

As of December 31, 2021, 3,667 Class B Common Shares remained outstanding. Prior conversions of Class B Common Shares have virtually eliminated the company's dual class voting structure. As of December 31, 2021, the holders of the Common Shares represented approximately 99.9% of the company's total outstanding voting power.

Equity Compensation Plan

On May 17, 2018, the shareholders of the company approved the Invacare Corporation 2018 Equity Compensation Plan (the “2018 Plan”), which was adopted on March 27, 2018 by the company's Board of Directors (the “Board”). The company's Board adopted the 2018 Plan in order to authorize additional Common Shares for grant as equity compensation, and to reflect changes to Section 162(m) of the Internal Revenue Code (the “Code”) resulting from the U.S. Tax Cuts and Jobs Act of 2017.

Following shareholder approval of the 2018 Plan, all of the Common Shares then-remaining available for issuance under the Invacare Corporation 2013 Equity Compensation Plan (the “2013 Plan”) and all of the Common Shares that were forfeited or remained unpurchased or undistributed upon termination or expiration of awards under the 2013 Plan and under the Invacare Corporation 2003 Performance Plan (the “2003 Plan”), become available for issuance under the 2018 Plan. Awards granted previously under the 2013 Plan and 2003 Plan will remain in effect under their original terms.

The 2018 Plan uses a fungible share-counting method, under which each Common Share underlying an award of stock options or stock appreciation rights ("SAR") will count against the number of total shares available under the 2018 Plan as one share; and each Common Share underlying any award other than a stock option or a SAR will count against the number of total shares available under the 2018 Plan as two shares. Shares underlying awards made under the 2003 Plan or 2013 Plan that are forfeited or remain unpurchased or undistributed upon

termination or expiration of the awards will become available under the 2018 Plan for use in future awards. Any Common Shares that are added back to the 2018 Plan as the result of forfeiture, termination or expiration of an award granted under the 2018 Plan or the 2013 Plan will be added back in the same manner such shares were originally counted against the total number of shares available under the 2018 Plan or 2013 Plan, as applicable. Each Common Share that is added back to the 2018 Plan due to a forfeiture, termination or expiration of an award granted under the 2003 Plan will be added back as one Common Share.

The Compensation and Management Development Committee of the Board (the “Compensation Committee”), in its discretion, may grant an award under the 2018 Plan to any director or employee of the company or an affiliate. As of December 31, 2021, 3,475,496 Common Shares were available for future issuance under the 2018 Plan in connection with the following types of awards with respect to the company's Common Shares: incentive stock options, nonqualified stock options, SARs, restricted stock, restricted stock units, unrestricted stock and performance shares. The Compensation Committee also may grant performance units that are payable in cash. The Compensation Committee has the authority to determine which participants will receive awards, the amount of the awards and the other terms and conditions of the awards. The Common Shares available for further issuance under the 2018 Plan as of December 31, 2021 includes an additional 2,500,000 Common Shares that were added pursuant to an amendment approved by shareholders at the company’s 2021 annual shareholders meeting on May 20, 2021.

The 2018 Plan provides that shares granted come from the company's authorized but unissued Common Shares or treasury shares. In addition, the company's stock-based compensation plans allow employee participants to exchange shares for minimum withholding taxes, which results in the company acquiring treasury shares. Under these provisions, the company acquired approximately 213,000 treasury shares for $1,754,000 in 2021, 231,000 shares for $1,707,000 in 2020 and 112,000 shares for $894,000 in 2019.

The amounts of equity-based compensation expense recognized as part of SG&A expenses in All Other in business segment reporting were as follows (in thousands):


	2021		2020		2019
Non-qualified and performance stock options	$	—	$	—	$	1,939
Restricted stock / units	5,450		5,332		4,772
Performance shares / units	(1,127)		3,313		4,399
Total stock-based compensation expense	$	4,323	$	8,645	$	11,110

As of December 31, 2021, unrecognized compensation expense related to equity-based compensation arrangements granted under the company's 2018 Plan and previous plans, which is related to non-vested options and shares, was as follows (in thousands):


	2021		2020		2019

Restricted stock and restricted stock units	6,866		7,489		8,453
Performance shares and performance share units	1,746		7,260		8,269
Total unrecognized stock-based compensation expense	$	8,612	$	14,749	$	16,722

Total unrecognized compensation cost will be adjusted for future changes in actual and estimated forfeitures and for updated vesting assumptions for the performance share awards (refer to "Stock Options" and "Performance Shares and Performance Share Units" below). No tax benefits for stock compensation were realized during 2021, 2020 and 2019 due to a valuation allowance against deferred tax assets. In accordance with ASC 718, any tax benefits resulting from tax deductions in excess of the compensation expense recognized is classified as a component of financing cash flows.

Stock Options

Generally, non-qualified stock option awards have a term of ten years and were granted with an exercise price per share equal to the fair market value of the company's Common Shares on the date of grant. Stock option awards granted in 2017 were performance-based awards which became exercisable based upon achievement of the performance goals established by the Compensation Committee as achieved over a 3-year period ending in 2019 which were subject to the Compensation Committee's exercise of negative discretion to reduce the number of options vested based on the progress towards other initiatives.

The following table summarizes information about stock option activity for the three years ended 2021, 2020 and 2019:


	2021		Weighted Average Exercise Price		2020		Weighted Average Exercise Price		2019		Weighted Average Exercise Price
Options outstanding at January 1	1,081,804		$	16.07	1,441,202		$	18.26	1,885,262		$	18.78


Forfeited	(331,645)		23.71		(359,398)		24.84		(444,060)		20.49
Options outstanding at December 31	750,159		$	12.69	1,081,804		$	16.07	1,441,202		$	18.26
Options exercise price range at December 31	$	12.15			$ 12.15				$ 12.15
	to				to				to
	$	17.47			$	33.36			$	33.36
Options exercisable at December 31	750,159				1,081,804				910,267
Shares available for grant at December 31*	3,475,496				3,540,534				3,851,945

________________________

* Shares available for grant under the 2018 Plan as of December 31, 2021 reduced by net restricted stock and restricted stock unit and performance share and performance share unit award activity of 1,816,618 shares and 2,671,108 shares, respectively. At December 31, 2021, an aggregate of 802,637 Common Shares underlie awards which were forfeited or expired unexercised under the 2003 and 2013 Plans and thus are available for future issuance under the 2018 Plan.

The following table summarizes information about stock options outstanding at December 31, 2021:


	Options Outstanding				Options Exercisable
Exercise Prices	Number Outstanding At 12/31/21	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price		Number Exercisable At 12/31/21	Weighted Average Exercise Price
$12.15 – $20.00	750,159	4.0	$	12.69	750,159	$	12.69

The 2018 Plan provides for a one-year minimum vesting period for stock options and, generally, options must be exercised within ten years from the date granted. No stock options were issued in 2021, 2020 or 2019.

Restricted Stock and Restricted Stock Units

The following table summarizes information about restricted stock and restricted stock units (primarily for non-U.S. recipients):


	2021	Weighted Average Fair Value		2020	Weighted Average Fair Value		2019	Weighted Average Fair Value
Stock / Units unvested at January 1	1,145,058	$	8.62	965,085	$	11.32	637,663	$	15.04
Granted	652,743	8.42		764,012	7.11		828,484	9.86
Vested	(558,424)	9.33		(475,113)	11.39		(309,150)	14.26
Forfeited	(78,530)	8.44		(108,926)	9.90		(191,912)	12.60
Stock / Units unvested at December 31	1,160,847	$	8.17	1,145,058	$	8.62	965,085	$	11.32

The restricted stock awards generally vest ratably over the three years after the award date. Unearned restricted stock compensation, determined as the market value of the shares at the date of grant, is being amortized on a straight-line basis over the vesting period.

Performance Shares and Performance Share Units

The following table summarizes information about performance shares and performance share units (primarily for non-U.S. recipients):


	2021	Weighted Average Fair Value		2020	Weighted Average Fair Value		2019	Weighted Average Fair Value
Shares / Units unvested at January 1	1,026,785	$	8.55	753,272	$	11.82	448,294	$	14.39
Granted	471,819	8.49		523,329	7.82		576,737	9.93
Vested	—	—		(183,840)	17.48		(255,259)	12.02
Forfeited	(526,316)	9.25		(65,976)	9.48		(16,500)	11.99
Shares / Units unvested at December 31	972,288	$	7.76	1,026,785	$	8.55	753,272	$	11.82

During 2021, 2020 and 2019, the performance shares and performance share units (for non-U.S. recipients) were granted as performance awards with a three-year performance period with payouts based on achievement of certain performance goals. The awards are classified as equity awards as they will be settled in common shares upon vesting. The number of shares earned will be determined at the end of the three-year performance period

based on achievement of performance criteria for January 1, 2019 through December 31 2021, January 1, 2020 through December 31 2022 and January 1, 2021 through December 31, 2023 established by the Compensation Committee at the time of grant. Recipients will be entitled to receive a number of common shares equal to the number of performance shares that vest based upon the levels of achievement which may range between 0% and 150% of

the target number of shares with the target being 100% of the initial grant.

The fair value of the performance awards is based on the stock price on the date of grant discounted for the estimated value of dividends foregone as the awards are not eligible for dividends except to the extent vested. The grant fair value is further updated each reporting period while variable accounting applies. The company assesses the probability that the performance targets will be met with expense recognized whenever it is probable that at least the minimum performance criteria will be achieved. Depending upon the company's assessment of the probability of achievement of the goals, the company may not recognize any expense associated with performance awards in a given period, may reverse prior expense recorded or record additional expense to recognize the cumulative estimated achievement level of proportionate term of the award. Performance award compensation expense is generally expected to be recognized over three years. The company continues to recognize expense (benefit) related to the awards granted in 2019, 2020 and 2021 based on probability of performance goals for those awards being met.

In the fourth quarter of 2020 the Compensation Committee considered the adverse impacts of the pandemic and approved the modification of the performance shares and performance share unit awards for the 2019-2021 performance period (the "modification"). Due to the adverse impacts of the pandemic, the previous performance targets which were established prior to the pandemic were deemed to be no longer reasonable or achievable, and accordingly, the vesting of the performance awards were no longer probable. The modification aligned updated performance targets such that vesting of at least a portion of the awards became probable. The modification of the performance awards for the 2019-2021 performance period impacted seven grantees. Incremental stock compensation expense resulting from the modification was $605,000 in the fourth quarter of 2020.