Our 2017 Performance Incentive Plan (2017 Plan) provides for the issuance of our common stock to members of the Board of Directors, officers or employees, certain consultants and advisors and our subsidiaries. Our 2017 Plan has been amended and restated such that an aggregate 51,200,000 shares have been authorized for issuance as of December 31, 2023, including 12,000,000 shares that were approved on June 8, 2023. Under the 2017 Plan, we may issue stock options, restricted stock, performance stock, stock units, stock appreciation rights and other similar types of awards. When the 2017 Plan was approved on June 14, 2017, any shares of our common stock that were available for issuance under our 2012 Performance Incentive Plan (the 2012 Plan) ceased to be available for future grants. However, options and RSUs granted under the 2012 Plan remained outstanding, and any options or RSUs that were cancelled or forfeited became available for issuance under the 2017 Plan. Shares issued for RSUs, PSUs or any other “full-value award” are counted against the share limit as 1.5 shares for every one share granted in connection with the award.

We have granted non-qualified stock options, RSUs and PSUs to employees, officers, and non-employee directors. For our employees, the requisite service period is generally three to four years for stock options, and three years for RSUs and PSUs. For our directors, the requisite service is generally one year for stock options and RSUs. The maximum term of a stock option is eight years from the date of grant. The per share exercise price of an option generally may not be less than the fair market value of a share of our common stock on the NASDAQ Stock Market on the date of grant.

Under our Change in Control Plan (the CIC Plan), in the event of a change of control of Nektar and a subsequent termination of employment initiated by us or a successor company other than for Cause (as defined in the CIC Plan) within twelve months following a change of control, our employees are entitled to full acceleration of their unvested equity awards. Our Chief Executive Officer, Senior Vice Presidents and Vice Presidents (including Principal Fellows) are also entitled to full acceleration of unvested equity awards if the termination is initiated by the employee for a Good Reason Resignation (as defined in the CIC Plan) within twelve months following a change of control. Additionally, non-employee directors would also be entitled to full acceleration of vesting of all outstanding stock awards in the event of a change of control transaction.

Under the terms of our Employee Stock Purchase Plan (ESPP), employees may purchase shares of our common stock based on a percentage of their compensation subject to certain limits. Shares are purchased at 85% of the lower of the closing price on either the first day or last day of each six-month offering period. An aggregate 3,500,000 shares have been authorized for issuance under our ESPP.

We recognize total stock-based compensation expense in our Consolidated Statements of Operations as follows (in thousands):


	Year Ended December 31,
	2023		2022		2021
Cost of goods sold	$	3,177	$	2,824	$	2,779
Research and development		13,890		27,727		54,821
General and administrative		16,321		24,488		37,074
Restructuring, impairment and costs of terminated program		—		2,281		—
Total stock-based compensation	$	33,388	$	57,320	$	94,674

Stock-based compensation expense resulting from PSUs and our ESPP was not significant in the years ended December 31, 2023, 2022, and 2021.

As of December 31, 2023, total unrecognized compensation costs of $33.1 million related to unvested stock-based compensation awards are expected to be recognized as expense over a weighted-average period of 2.3 years.

The following table lists the Black-Scholes option-pricing model assumptions used to calculate the fair value of employee and director stock options, as well as the resulting grant-date fair value:


	Year Ended December 31,
	2023			2022			2021
Average risk-free interest rate		4.0	%		2.9	%		1.2	%
Dividend yield		0.0	%		0.0	%		0.0	%
Average volatility factor		88.4	%		77.9	%		63.8	%
Weighted-average expected life	5.1 years			5.6 years			5.5 years
Weighted-average grant-date fair value of options granted	$	0.37		$	3.18		$	8.07

The average risk-free interest rate is based on the U.S. treasury yield curve in effect at the time of grant for periods commensurate with the expected life of the stock-based award. We have never paid dividends, nor do we expect to pay dividends in the foreseeable future; therefore, we used a dividend yield of zero. Our estimate of expected volatility is based on the daily historical trading data of our common stock at the time of grant over a historical period commensurate with the expected life of the stock-based award. We estimated the weighted-average expected life based on the contractual and vesting terms of the stock options, as well as historical cancellation and exercise data.

The table below presents a summary of stock option activity under our equity incentive plans (in thousands, except for price per share and contractual life information):


						Weighted-
				Weighted-		Average
				Average		Remaining
	Number			Exercise		Contractual		Aggregate
	of			Price		Life		Intrinsic
	Shares			per Share		(in Years)		Value(1)
Outstanding at December 31, 2022		14,088		$	16.40
Options granted		11,854			0.51
Options exercised		—			—
Options forfeited & canceled		(2,926	)		16.07
Outstanding at December 31, 2023		23,016		$	8.26		6.42	$	—

Exercisable at December 31, 2023		6,425			22.99		3.68	$	—

(1)

Aggregate intrinsic value represents the difference between the exercise price of the option and the closing market price of our common stock on December 31, 2023.

The intrinsic value of options exercised during the years ended December 31, 2022 and 2023 was not significant and totaled $17.3 million during the year ended December 31, 2021.

A summary of RSU award activity is as follows (in thousands except for per share amounts):


				Weighted-
				Average
				Grant
				Date Fair
	Units Issued			Value
Unvested at December 31, 2022		9,312		$	6.81
Granted		126			1.10
Vested and released		(2,759	)		7.93
Forfeited and canceled		(2,449	)		6.11
Unvested at December 31, 2023		4,230		$	6.14

The weighted-average grant-date fair values of RSUs granted during the years ended December 31, 2023, 2022 and 2021 were $1.10, $4.14 and $14.68, respectively. The fair value of RSU's that vested in the years ended December 31, 2023, 2022 and 2021 totaled $3.6 million, $17.5 million and $45.3 million, respectively.

We sponsor a 401(k) retirement plan whereby eligible employees may elect to contribute up to the lesser of 60% of their annual compensation or the statutorily prescribed annual limit allowable under Internal Revenue Service regulations. The 401(k) plan permits us to make matching contributions on behalf of all participants, up to a maximum of $12,000 per participant for the years ended December 31, 2022 and 2023, and up to a maximum of $6,000 per participant for the year ended December 31, 2021. For the years ended December 31, 2023, 2022, and 2021, we recognized $1.5 million, $2.5 million and $3.6 million, respectively, of compensation expense in connection with our 401(k) retirement plan.