Annual report pursuant to Section 13 and 15(d)

Stock-Based Compensation

v3.19.3.a.u2
Stock-Based Compensation
12 Months Ended
Dec. 31, 2019
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stock-Based Compensation

6. STOCK-BASED COMPENSATION

We use broad-based stock plans to attract and retain highly qualified officers and employees and to help ensure that management’s interests are aligned with those of our shareholders. We have also granted equity-based awards to directors, nonemployees and certain employees of Cellectis.

In December 2014, we adopted the Calyxt, Inc. Equity Incentive Plan (2014 Plan), which allowed for the grant of stock options, and in June 2017, we adopted the 2017 Omnibus Plan (2017 Plan), which allowed for the grant of stock options, performance shares and other types of equity awards.

As of December 31, 2019, 1,977,594 shares were registered and available for grant under approved registration statements, while 2,544,107 shares were available for grant in the form of stock options, restricted stock, restricted stock units and performance stock units under the 2017 Plan. Stock-based awards now outstanding also include some granted under the 2014 Plan, under which no further awards will be granted.

Stock Options

The estimated fair values of stock options granted and the assumptions used for the Black-Scholes option pricing model were as follows:

 

 

2019

 

 

2018

 

 

2017

 

Estimated fair values of stock options granted

 

$

10.18

 

 

$

9.09

 

 

$

2.42

 

Assumptions:

 

 

 

 

 

 

 

 

 

 

 

 

Risk-free interest rate

 

1.7% - 2.5%

 

 

2.2% - 3.0%

 

 

1.3% - 2.4%

 

Expected volatility

 

52.6% - 78.9%

 

 

40.9% - 57.2%

 

 

27.4% - 45.1%

 

Expected term (in years)

 

6.8 - 10

 

 

5.6 - 10

 

 

1.2 - 10

 

 

We estimate the fair value of each option on the grant date or other measurement dates if applicable using a Black-Scholes option-pricing model, which requires us to make predictive assumptions regarding future stock price volatility, employee exercise behavior and dividend yield. The risk-free interest rate for periods during the expected term of the options is based on the United States Treasury zero-coupon yield curve in effect at the date of grant. We estimate our future stock price volatility using the historical volatility of comparable public companies over the expected term of the option. Our expected term represents the period that options granted are expected to be outstanding determined using the simplified method. We have not paid dividends on our common stock and we do not currently plan to pay any cash dividends in the foreseeable future.

Options may be priced at 100 percent or more of the fair market value on the date of grant and generally vest over six years after the date of grant. Options generally expire within 10 years after the date of grant.

Information on stock option activity follows:

 

 

Options

Exercisable

 

 

Weighted-

Average

Exercise

Price Per

Share

 

 

Options

Outstanding

 

 

Weighted-

Average

Exercise

Price Per

Share

 

Balance as of December 31, 2018

 

 

1,278,038

 

 

$

7.45

 

 

 

3,201,887

 

 

$

10.67

 

Granted

 

 

 

 

 

 

 

 

 

 

1,590,000

 

 

 

13.80

 

Exercised

 

 

 

 

 

 

 

 

 

 

(95,327

)

 

 

3.61

 

Forfeited or expired

 

 

 

 

 

 

 

 

 

 

(227,696

)

 

 

14.68

 

Other activity

 

 

 

 

 

 

 

 

 

 

12,495

 

 

 

13.29

 

Balance as of December 31, 2019

 

 

1,789,567

 

 

$

8.73

 

 

 

4,481,359

 

 

$

11.73

 

 

Stock-based compensation expense related to stock option awards was as follows:

 

 

Year ended December 31,

 

In Thousands

 

2019

 

 

2018

 

 

2017

 

Stock-based compensation expenses

 

$

6,035

 

 

$

3,609

 

 

$

9,291

 

 

The aggregate intrinsic value of options exercisable at December 31, 2019 was $3.3 million and the weighted average remaining contractual term was 6.8 years as of that date.

Net cash proceeds from the exercise of stock options less shares used for minimum withholding taxes and the intrinsic value of options exercised were as follows:

 

 

Year ended December 31,

 

In Thousands

 

2019

 

 

2018

 

 

2017

 

Net cash proceeds

 

$

344

 

 

$

2,622

 

 

$

265

 

Intrinsic value of options exercised

 

$

905

 

 

$

7,569

 

 

$

1,347

 

 

As of December 31, 2019, unrecognized compensation expense related to non-vested stock options was $13.1 million. This expense will be recognized over 56 months on average.

Restricted Stock Units

Units settled in stock subject to a restricted period may be granted to key employees under the 2017 Plan. Restricted stock units generally vest and become unrestricted over five years after the date of grant.

Information on restricted stock unit activity follows:

 

 

Number of

Restricted Stock

Units Outstanding

 

 

Weighted-

Average

Grant Date Fair

Value

 

Unvested balance at December 31, 2018

 

 

1,051,414

 

 

$

10.15

 

Granted

 

 

100,000

 

 

 

12.48

 

Vested

 

 

(324,043

)

 

 

9.69

 

Cancelled

 

 

(13,845

)

 

 

12.72

 

Unvested balance at December 31, 2019

 

 

813,526

 

 

 

10.31

 

 

The total grant-date fair value of restricted stock unit awards that vested was as follows:

 

 

Year ended December 31,

 

In Thousands

 

2019

 

 

2018

 

 

2017

 

Grant-date fair value

 

$

3,141

 

 

$

2,691

 

 

$

314

 

 

Information on the weighted average grant date fair value of restricted stock units issued was as follows:

 

 

 

Year ended December 31,

 

In Thousands

 

 

2019

 

 

2018

 

 

2017

 

Weighted average grant date fair value

 

 

$

12.48

 

 

 

16.76

 

 

$

8.00

 

 

Stock-based compensation expense related to restricted stock units was as follows:

 

 

Year ended December 31,

 

In Thousands

 

2019

 

 

2018

 

 

2017

 

Stock-based compensation expenses

 

$

2,910

 

 

$

776

 

 

$

2,429

 

 

We treat stock-based compensation awards granted to employees of Cellectis as deemed dividends.  We recorded deemed dividends as follows.

 

 

Year ended December 31,

 

In Thousands

 

2019

 

 

2018

 

 

2017

 

Deemed dividends from grants to Cellectis employees

 

$

1,358

 

 

$

2,253

 

 

$

3,574

 

 

As of December 31, 2019, unrecognized compensation expense related to restricted stock units was $3.0 million. This expense will be recognized over 45 months on average.

Performance Stock Units

In June 2019, we granted 311,667 performance stock units under the 2017 Plan to three executive officers. The performance stock units will vest at 50%, 100% or 120% of the shares under the award at the end of a three-year performance period based upon increases in the value of our common stock from the grant price of $12.48. The performance stock units will be settled in restricted stock upon vesting, with restrictions on transfer lapsing on the second anniversary of the restricted stock issuance date.

The estimated fair values of performance stock units granted and the assumptions used for the Monte Carlo simulation pricing model were as follows:

 

 

Year ended

December 31, 2019

 

Estimated fair values of performance stock units granted

 

$

7.06

 

Assumptions:

 

 

 

 

Risk-free interest rate

 

 

1.71

%

Expected volatility

 

 

75.0

%

Expected term (in years)

 

3.0

 

 

Stock-based compensation expense related to performance stock unit awards was $225,000 for the year ended December 31, 2019.

As of December 31, 2019, unrecognized compensation expense related to performance stock units was $2.0 million and will be recognized over 54 months.

Cellectis Equity Incentive Plan

Prior to 2018, Cellectis granted stock options to our employees. Compensation costs related to these grants have been recognized in the statements of operations with a corresponding credit to stockholders’ equity, representing the Cellectis’ capital contribution to us. The fair value of each stock option was estimated at the grant date using the Black-Scholes option pricing model.

We recognized stock-based compensation expense related to our Cellectis’ grants of $100,000 in 2018 and $400,000 in 2017. Expenses in 2019 were immaterial and as of December 31, 2019, all expenses related to these awards had been recognized.