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Stockholders’ Equity
9 Months Ended
Sep. 29, 2023
Share-Based Payment Arrangement [Abstract]  
STOCKHOLDERS’ EQUITY STOCKHOLDERS’ EQUITY
Stock-based Compensation
We have several equity incentive plans under which we granted stock options and restricted stock units (RSUs), including performance-based restricted stock units (PSUs), to employees and directors. As of September 30, 2023, 28,107,770 shares were available for grant under the Exelixis, Inc. 2017 Equity Incentive Plan (as amended and restated, the 2017 Plan). The share reserve is reduced by 1 share for each share issued pursuant to a stock option and 2 shares for full value awards, including RSUs and PSUs.
We allocated the stock-based compensation expense for our equity incentive plans and our Employee Stock Purchase Plan (ESPP) as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Research and development$12,438 $16,438 $25,279 $34,886 
Selling, general and administrative28,040 20,899 56,760 46,832 
Total stock-based compensation expense$40,478 $37,337 $82,039 $81,718 
Stock-based compensation expense for each type of award under our equity incentive plans and ESPP were as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Stock options$1,882 $3,299 $5,966 $10,470 
RSUs18,440 22,233 50,804 54,234 
PSUs19,463 11,331 22,129 14,621 
ESPP693 474 3,140 2,393 
Total stock-based compensation expense$40,478 $37,337 $82,039 $81,718 
During the nine months ended September 30, 2023, we granted 357,233 stock options with a weighted average exercise price of $20.41 per share and a weighted average grant date fair value of $9.45 per share. Stock options granted during the nine months ended September 30, 2023 have vesting conditions and contractual lives of a similar nature to those described in “Note 8. Employee Benefit Plans” of the “Notes to Consolidated Financial Statements” included in Part II, Item 8 of our Fiscal 2022 Form 10-K. As of September 30, 2023, there were 8,537,173 stock options outstanding and $11.8 million of related unrecognized compensation expense.
In April 2023, we awarded to certain employees an aggregate of 849,866 RSUs (the target amount) that are subject to a total shareholder return (TSR) market condition (the 2023 TSR-based RSUs). The TSR market condition is based on our relative TSR percentile rank compared to companies in the NASDAQ Biotechnology Index during the performance period, which is December 31, 2022 through January 2, 2026. Depending on the results relative to the TSR market condition, the holders of the 2023 TSR-based RSUs may earn up to 175% of the target amount of shares. 50% of the shares earned pursuant to the 2023 TSR-based RSU awards will vest at the end of the performance period, and the remainder will vest approximately one year later, subject to an employee’s continuous service. These 2023 TSR-based RSUs will be forfeited if the market condition at or above a threshold level is not achieved at the end of the performance period on January 2, 2026.
We used a Monte Carlo simulation model and the following assumptions to determine the grant date fair value of $26.05 per share for the 2023 TSR-based RSUs:
Fair value of Exelixis common stock on grant date
$19.48 
Expected volatility
40.26 %
Risk-free interest rate
3.75 %
Dividend yield
— %
The Monte Carlo simulation model assumed correlations of returns of the stock prices of the Company’s common stock and the common stock of a peer group of companies and historical stock price volatility of the peer group of companies. The valuation model also used terms based on the length of the performance period and compound annual growth rate goals for TSR based on the provisions of the award.
During the nine months ended September 30, 2023, we granted 2,879,109 service-based RSUs with a weighted average grant date fair value of $19.41 per share. As of September 30, 2023, there were 12,229,658 RSUs outstanding, including RSUs that are subject to a TSR market condition, and $181.7 million of related unrecognized compensation expense. Service-based RSUs granted to employees during the nine months ended September 30, 2023 have vesting conditions and contractual lives of a similar nature to those described in “Note 8. Employee Benefit Plans” of the “Notes to Consolidated Financial Statements” included in Part II, Item 8 of our Fiscal 2022 Form 10-K.
As of September 30, 2023, there were 3,931,231 PSUs outstanding, of which 1,489,209 PSUs relate to awards that we either achieved the performance goal or determined that attainment of the performance goal was probable. Expense recognition for PSUs commences when it is determined that attainment of the performance goal is probable. During the three months ended September 30, 2023, we achieved certain performance conditions for 912,881 PSUs granted during 2020 (the 2020 PSUs) and recognized $18.1 million of stock-based compensation expense related to the 2020 PSUs. As of September 30, 2023, the remaining unrecognized stock-based compensation expense for the PSUs that were either achieved or deemed probable of achievement was $8.1 million. The total unrecognized compensation expense for the PSUs for which we have not yet determined that attainment of the performance goal is probable was $54.0 million. For more information about our PSUs, see “Note 8. Employee Benefit Plans” of the “Notes to Consolidated Financial Statements” included in Part II, Item 8 of our Fiscal 2022 Form 10-K.
Common Stock Repurchases
In March 2023, our Board of Directors authorized a stock repurchase program to acquire up to $550 million of our outstanding common stock before the end of 2023. During the nine months ended September 30, 2023, we repurchased 16,943,230 shares of common stock under our stock repurchase program for an aggregate purchase price of $344.8 million. As of September 30, 2023, approximately $205.2 million remained available for future stock repurchases before the end of 2023, pursuant to our stock repurchase program.
The timing and amount of any stock repurchases under the stock repurchase program will be based on a variety of factors, including ongoing assessments of the capital needs of the business, alternative investment opportunities, the market price of our common stock and general market conditions. Stock repurchases under the program may be made from time to time through a variety of methods, which may include open market purchases, in block trades, accelerated stock repurchase transactions, 10b5-1 trading plans, exchange transactions, or any combination of such methods. The program does not obligate us to acquire any particular amount of our common stock, and the stock repurchase program may be modified, suspended or discontinued at any time without prior notice.