|9 Months Ended|
Sep. 30, 2023
|Share-Based Payment Arrangement [Abstract]|
|Stock-Based Compensation||Stock-Based Compensation
Stock option activity under the Company’s incentive plan is as follows (in thousands, except share and per share amounts):
No options were granted during the nine months ended September 30, 2023 and 2022. The total grant date fair value of options that vested during nine months ended September 30, 2023 and 2022 was $0.2 million and $10.2 million, respectively. The aggregate intrinsic value of options exercised during the nine months ended September 30, 2023 and 2022 was nominal and $1.0 million, respectively. The aggregate intrinsic value is the difference between the current fair value of the underlying common stock and the exercise price for in-the-money stock options.
Market-Based Stock Options
In February 2021, the Company granted 203,434 stock options with market and liquidity event-related performance-based vesting criteria with an exercise price of $18.85 per share. 100% of the stock options vest upon valuation of the Company’s stock at a stated price upon occurrence of specified transactions. Fair value was determined using the probability weighted expected term method (“PWERM”), which involves the estimation of future potential outcomes as well as values and probabilities associated with each potential outcome. Two potential scenarios were used in the PWERM that utilized 1) the value of the Company’s common equity, and 2) a Monte Carlo simulation to specifically value the award. The total grant date fair value of the award was determined to be $5.5
million. Since a liquidity event is not deemed probable until such event occurs, no compensation cost related to the performance condition was recognized prior to the Business Combination on June 16, 2022. Subsequently, the Company recorded stock-based compensation expense of $4.6 million for service periods completed prior to the Business Combination. As of September 30, 2023, the market-based vesting criteria had not been met.
Restricted Stock Units (RSUs)
The following table summarizes the activity for all RSUs under all of the Company’s equity incentive plans for the nine months ended September 30, 2023:
On August 16, 2023, the Company’s Board of Directors granted its Chief Executive Officer an aggregate of 850,000 Class A common stock RSUs (the “CEO Award”) separate from the Grove Collaborative Holdings, Inc. 2022 Equity and Incentive Plan. A portion of the CEO Award contains market based vesting requirements consisting of four tranches that vest separately upon the Company’s public stock price meeting certain price thresholds. Additionally, the CEO Award also contains a service requirement with 25% of the shares vesting each year from the grant date for four years. The CEO Award has a total aggregate value of $2.0 million. During the three months ended September 30, 2023, the Company recorded $0.1 million of stock-based compensation expense related to the CEO Award.
Employee Stock Purchase Plan
In May 2022, the Company’s board of directors adopted the 2022 Employee Stock Purchase Plan (the “ESPP”), which was subsequently approved by the Company’s stockholders. The ESPP went into effect on November 16, 2022. Subject to certain limitations contained therein, the ESPP allows eligible employees to contribute, through payroll deductions, up to 20% of their eligible compensation to purchase the Company’s Class A common stock at a discounted price per share.
Stock-Based Compensation Expense
The Company recognized a total of $2.1 million and $9.8 million of stock-based compensation expense for the three months ended September 30, 2023 and 2022, respectively, and $11.9 million and $34.3 million of stock-based compensation expense for the nine months ended September 30, 2023 and 2022, respectively, related to stock options and RSUs granted to employees and non-employees. Stock-based compensation expense was predominately recorded in selling, general and administrative expenses in the statements of operations for each period presented. As of September 30, 2023, the total unrecognized compensation expense related to unvested options and RSUs was $21.6 million, which the Company expects to recognize over an estimated weighted average period of 2.1 years.
The entire disclosure for an entity's employee compensation and benefit plans, including, but not limited to, postemployment and postretirement benefit plans, defined benefit pension plans, defined contribution plans, non-qualified and supplemental benefit plans, deferred compensation, share-based compensation, life insurance, severance, health care, unemployment and other benefit plans.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef