Stock-Based Compensation

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

During the quarter ended March 31, 2021, the Company updated the equity award agreements with respect to the 2013 Equity Incentive Plan (the 2013 Plan) to enhance the vesting terms for retirement eligible employees and directors for awards granted in 2021 and future awards. Where awards are granted with non-substantive vesting periods (for instance, where all or a portion of the award continues to vest upon retirement eligibility), the Company recognizes expense based on the period from the grant date to the date the employee becomes retirement eligible.

The Company recognized stock-based compensation expense related to the 2003 Stock Option and Restricted Stock Plan (the 2003 Plan), the 2013 Plan, and the 2013 Employee Stock Purchase Plan (the 2013 ESPP) in the condensed consolidated statements of operations and comprehensive loss during the three and six months ended June 30, 2021 and 2020, respectively, as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Research and development	$	5,876	$	3,259	$	14,032	$	6,400
Selling, general and administrative	7,603		3,881		15,073		7,419
	$	13,479	$	7,140	$	29,105	$	13,819

Stock Options

The following table summarizes the stock option activity under the Company’s stock option plans during the six months ended June 30, 2021 (in thousands, except per share amounts and years):


	Number of Shares	Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (1)
Outstanding at December 31, 2020	3,378	$	49.78	7.35	$	264,046
Granted	672	$	118.71
Exercised	(250)	$	39.77
Canceled or forfeited	(61)	$	77.50
Outstanding at June 30, 2021	3,739	$	62.39	7.43	$	236,601
Exercisable at June 30, 2021	1,863	$	42.57	6.21	$	154,466

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the estimated fair value of the common stock for the options that were in the money at June 30, 2021.

The aggregate intrinsic value of options exercised during the six months ended June 30, 2021 was $22.3 million.

As of June 30, 2021, there was approximately $70.0 million of unrecognized compensation expense related to unvested stock options that is expected to be recognized over a remaining weighted-average period of 2.61 years.

Restricted Stock Units

The following table summarizes the restricted stock unit (RSU) activity under the 2013 Plan during the six months ended June 30, 2021 (in thousands, except per share amounts):


	Number of Stock Units	Weighted- Average Grant Date Fair Value Per Share
Unvested balance at December 31, 2020	494	$	59.16
Granted	197	$	117.45
Vested	(169)	$	46.05
Forfeited	(15)	$	77.45
Unvested balance at June 30, 2021	507	$	85.65

As of June 30, 2021, there was approximately $33.1 million of unrecognized compensation expense related to RSUs that is expected to be recognized over a remaining weighted-average period of 1.86 years.

Performance-Based Restricted Stock Units

On January 22, 2020, the Company granted performance-based restricted stock units (PSU) whereby vesting depends upon the occurrence of certain milestone events by December 31, 2022 (the 2020 PSUs). When achievement of a milestone event becomes probable, compensation cost will be recognized from the grant date over the requisite service period and a cumulative catch-up adjustment will be recorded to reflect the portion of the employees' requisite service that has been provided to date. During the three months ended June 30, 2021, stock-based compensation expense of $1.9 million related to the 2020 PSUs was recognized for one of the milestone events deemed probable of achievement. The expense associated with these PSUs will continue to be recognized through December 31, 2022. For the remaining two milestone events which were not deemed probable of achievement, no stock-based compensation expense was recognized.

On January 29, 2021, the Company granted performance-based restricted stock units (PSU) whereby vesting depends upon the occurrence of certain milestone events by December 31, 2023 (the 2021 PSUs). When achievement of a milestone event becomes probable, compensation cost will be recognized from the grant date over the requisite service period and a cumulative catch-up adjustment will be recorded to reflect the portion of the employees' requisite service that has been provided to date. As of June 30, 2021, none of the milestone events related to the 2021 PSUs had been deemed probable of being achieved.

The following table summarizes PSU activity under the 2013 Plan during the six months ended June 30, 2021 (in thousands, except per share amounts):


	Number of Stock Units	Weighted- Average Grant Date Fair Value Per Share
Unvested balance at December 31, 2020	75	$	52.99
Granted (1)	83	$	115.53
Vested	—	$	—
Forfeited	(2)	$	52.99
Unvested balance at June 30, 2021	156	$	86.01

(1)Pursuant to the terms of the awards granted, the actual number of awards earned could range between 0% and 200% of the number of awards granted.

As of June 30, 2021, there was approximately $11.5 million of related unrecognized compensation cost. Depending on the actual number of milestone events achieved, the actual expense recognized could range between 0% and 200% of the total target value awarded on the grant date.

ACCELERON PHARMA INC 10-Q