Benefit Plans

12 Months Ended

Oct. 31, 2021

Benefit Plans

Benefit Plans

Note 18. Benefit Plans

We have stockholder approved equity incentive plans, a stockholder approved Employee Stock Purchase Plan and an employee tax-deferred savings plan, which are described in more detail below.

2018 Omnibus Incentive Plan

The Company’s 2018 Omnibus Incentive Plan (as amended and restated from time to time, the “2018 Incentive Plan”) authorizes grants of stock options, stock appreciation rights (“SARs”), restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance shares, performance units and incentive awards to key employees, directors, consultants and advisors. Stock options, RSAs and SARs have restrictions as to transferability. Stock option exercise prices are fixed by the Company’s Board of Directors but shall not be less than the fair market value of our common stock on the date of the grant. SARs may be granted in conjunction with stock options.

At the May 8, 2020 reconvened 2020 Annual Meeting of Stockholders, the Company’s stockholders approved the amendment and restatement of the original 2018 Incentive Plan, which authorizes the Company to issue up to 4,000,000 additional shares of the Company’s common stock pursuant to awards granted under the 2018 Incentive Plan and provides for an increase in the annual limit on the grant-date fair value of awards to any non-employee director of the Company from $200,000 to $250,000.

Following the approval of the amended and restated 2018 Incentive Plan by the Company’s stockholders in May of 2020, the 2018 Incentive Plan provided the Company with the authority to issue a total of 4,333,333 shares of the Company’s common stock, 1,000,000 shares of which have been reserved for settlement of RSUs granted pursuant to an employment agreement, effective as of August 26, 2019, between the Company and Jason Few, our President and Chief Executive Officer (the “Sign-On Award”). The Sign-On Award was contingent upon obtaining stockholder approval of a sufficient number of additional shares under the 2018 Incentive Plan. The Company previously recorded the grants as a liability and, after obtaining such stockholder approval, reclassified the liability to additional paid-in capital.

On August 24, 2020, the Company’s Board of Directors approved a Long Term Incentive Plan (the “FY 2020 LTI Plan”) as a sub-plan consisting of awards made under the 2018 Incentive Plan. The participants in the FY 2020 LTI Plan are members of senior management and include the Company’s named executive officers for fiscal year 2020 (as identified in the definitive proxy statement filed by the Company on February 19, 2021). The FY 2020 LTI Plan consists of three award components: (1) relative total shareholder return (“TSR”) performance shares, (2) absolute TSR performance shares, and (3) time-vesting restricted stock units. The performance shares granted in fiscal year 2020 will be earned over the performance period ending on October 31, 2022, but will remain subject to a continued service-based vesting requirement until the third anniversary of the date of grant. The performance goal for the relative TSR performance shares is the TSR of the Company relative to the TSR of the Russell 2000 from May 8, 2020 through October 31, 2022. The performance goal for the absolute TSR performance shares is an increase in the Company’s stock price from May 8, 2020 through October 31, 2022. The time-vesting RSUs granted in fiscal year 2020 will vest at a rate of one-third of the total number of RSUs on each of the first three anniversaries of the date of grant. None of the awards granted as part of the FY 2020 LTI Plan include any dividend equivalent or other stockholder rights. To the extent the awards are earned, they may be settled in shares or cash of an equivalent value at the Company’s option.

On November 24, 2020, the Company’s Board of Directors approved a Long Term Incentive Plan (the “FY 2021 LTI Plan”) as a sub-plan consisting of awards made under the 2018 Incentive Plan. The participants in the FY 2021 LTI Plan are members of senior management and include the Company’s named executive officers for fiscal year 2020 (as identified in the definitive proxy statement filed by the Company on February 19, 2021). The FY 2021 LTI Plan consists of three award components: (1) relative TSR performance units, (2) absolute TSR performance units, and (3) time-vesting restricted stock units. The performance units granted during the three months ended January 31, 2021 will be earned over the performance period ending on October 31, 2023, but will remain subject to a continued service-based vesting

requirement until the third anniversary of the date of grant. The performance measure for the relative TSR performance units is the TSR of the Company relative to the TSR of the Russell 2000 from November 1, 2020 through October 31, 2023. The performance measure for the absolute TSR performance units is an increase in the Company’s stock price during the performance period of November 1, 2020 through October 31, 2023. The time-vesting RSUs granted during the three months ended January 31, 2021 will vest at a rate of one-third of the total number of RSUs on each of the first three anniversaries of the date of grant. None of the awards granted as part of the FY 2021 LTI Plan include any dividend equivalent or other stockholder rights. To the extent the awards are earned, they may be settled in shares or cash of an equivalent value at the Company’s option.

On April 8, 2021, the Company’s stockholders approved an amendment and restatement of the 2018 Incentive Plan to authorize the Company to issue up to 8,000,000 additional shares of the Company’s common stock pursuant to awards under the 2018 Incentive Plan.  Following the approval of the amendment and restatement, the Company has the authority to issue a total of 12,333,333 shares of the Company’s common stock under the 2018 Incentive Plan. Of the 12,333,333 shares of the Company’s common stock authorized to be issued under the 2018 Incentive Plan, 8,400,709 remained available for grant as of October 31, 2021.

Other Equity Incentive Plans

The Company’s 2006 and 2010 Equity Incentive Plans remain in effect only to the extent of awards outstanding under the plans as of October 31, 2021.

Share-based compensation was reflected in the Consolidated Statements of Operations and Comprehensive Loss as follows (in thousands):

	2021		2020		2019
Cost of revenues	$	493	$	344	$	593
General and administrative expense		3,593		1,424		1,865
Research and development expense		111		54		272
	$	4,197	$	1,822	$	2,730

Stock Options

We account for stock options awarded to non-employee directors under the fair value method.  There were no options granted in fiscal years 2021, 2020 or 2019.

The following table summarizes our stock option activity for the year ended October 31, 2021:

	Weighted- Average
Options	Option Shares	Price
Outstanding as of October 31, 2020	23,891	$	91.23
Cancelled and forfeited	(1,503)	$	285.12
Outstanding as of October 31, 2021	22,388	$	78.21

There were no options exercised in fiscal years 2021, 2020 or 2019.

The following table summarizes information about stock options outstanding and exercisable as of October 31, 2021:

	Options Outstanding				Options Exercisable
		Weighted
		Average	Weighted			Weighted
		Remaining	Average			Average
Range of	Number	Contractual	Exercise		Number	Exercise
Exercise Prices	outstanding	Life	Price		exercisable	Price
$0.00 - $38.76	13,192	5.8	$	19.16	13,192	$	19.16
$38.77 - $416.16	9,196	2.4	$	162.92	9,196	$	162.92
	22,388	4.4	$	78.21	22,388	$

There was no intrinsic value for options outstanding and exercisable at October 31, 2021.

Restricted Stock Awards and Units Including Performance Based Awards

The following table summarizes our RSA and RSU activity for the year ended October 31, 2021:

Restricted Stock Awards and Units	Shares	Weighted-Average Fair Value
Outstanding as of October 31, 2020	2,067,140	$	5.06
Granted - performance units	551,252		14.89
Granted - time-vesting restricted stock units	373,030		4.50
Vested	(133,725)		9.42
Forfeited	(314,156)		7.82
Outstanding as of October 31, 2021	2,543,541	$	5.08

Outstanding restricted stock awards and units as of October 31, 2021 included 1,000,000 RSUs granted as the Sign-On Award to Jason Few, the Company’s President and Chief Executive Officer (the “CEO”), pursuant to the August 26, 2019 employment agreement between the Company and the CEO. Pursuant to the terms of such Sign-On Award, 500,000 RSUs vest on August 26, 2022. The remaining 500,000 RSUs (“Additional RSUs”) will vest if, during the 30 days prior to the vesting date of August 26, 2022, the weighted average price of the Company’s common stock exceeds $1.00. The number of Additional RSUs will range from zero for a weighted average price of $1.00 to a maximum of 500,000 RSUs for a weighted average price of $6.00, with linear interpolation for stock prices between $1.00 and $6.00. The vesting of all RSUs is subject to the individual’s continuous employment with the Company through the vesting date.

The outstanding restricted stock awards and units also include awards made on August 24, 2020, under the FY 2020 LTI Plan, totaling 835,038 RSUs which include 668,030 performance awards and 167,008 time-based awards. Performance awards were issued assuming participants achieve 100% target performance. Should participants achieve the 200% performance level, they will receive up to 545,209 additional RSUs. The performance awards were valued based upon a Monte Carlo Simulation, and the 334,015 relative TSR performance shares were valued at $4.62 per share and the 334,015 absolute performance shares were valued at $5.17 per share.

On November 24, 2020, 848,078 RSUs were awarded under the FY 2021 LTI Plan, which include 551,252 performance units and 296,826 time-based units. Should the Company’s share price achieve the 200% performance level, awardees will receive up to 446,158 additional RSUs. The performance units were valued based on a Monte-Carlo Simulation, and the estimated fair value of the 275,626 relative TSR performance units was $14.41 per share and the estimated fair value of the 275,626 absolute TSR performance units was $15.36 per share. The performance units and time-based units are expensed over the three-year service period.

RSU expense is based on the fair value of the award at the date of grant and is amortized over the vesting period, which is generally over 3 or 4 years.

As of October 31, 2021, total unrecognized compensation cost related to RSUs was $8.4 million which is expected to be recognized over approximately the next two years on a weighted-average basis.

Stock Awards

During the years ended October 31, 2021, 2020 and 2019, we awarded 31,889, 58,303 and 29,454 shares, respectively, of fully vested, unrestricted common stock to the independent members of our Board of Directors as a component of Board of Director compensation which resulted in recognizing $0.3 million, $0.1 million and $0.1 million of expense for the years ended October 31, 2021, 2020 and 2019, respectively.

Employee Stock Purchase Plan

The 2018 Employee Stock Purchase Plan (the “ESPP”) was approved by the Company’s stockholders at the 2018 Annual Meeting of Stockholders. The adoption of the ESPP allows the Company to provide eligible employees of FuelCell Energy, Inc. and certain of its designated subsidiaries with the opportunity to voluntarily participate in the ESPP, enabling such participants to purchase shares of the Company’s common stock at a discount to market price at the time of such

purchase. The maximum number of the Company’s shares of common stock that may be issued under the ESPP is 30,248 shares.

Under the ESPP, eligible employees have the right to purchase shares of common stock at the lesser of (i) 85% of the last reported sale price of our common stock on the first business day of the offering period, or (ii) 85% of the last reported sale price of the common stock on the last business day of the offering period, in either case rounded up to avoid impermissible trading fractions. Shares issued pursuant to the ESPP contain a legend restricting the transfer or sale of such common stock for a period of 0.5 year after the date of purchase.

The ESPP activity for the years ended October 31, 2021, 2020 and 2019 was de minimis.

Employee Tax-Deferred Savings Plans

We offer a 401(k) plan (the “401(k) Plan”) to all full time employees that provides for tax-deferred salary deductions for eligible employees (beginning the first month following an employee’s hire date). Employees may choose to make voluntary contributions of their annual compensation to the 401(k) Plan, limited to an annual maximum amount as set periodically by the IRS. Employee contributions are fully vested when made. Under the 401(k) Plan, there is no option available to the employee to receive or purchase our common stock. Matching contributions of 2% under the 401(k) Plan aggregated $0.4 million, $0.3 million and $0.5 million for the years ended October 31, 2021, 2020, and 2019, respectively.