Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.22.1
Stock-Based Compensation
3 Months Ended
Mar. 31, 2022
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation
6. STOCK-BASED COMPENSATION
The Company uses 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 its shareholders. The Company has also granted equity-based awards to directors, nonemployees, and certain employees of Cellectis.
In December 2014, the Company adopted the Calyxt, Inc. Equity Incentive Plan (2014 Plan), which allowed for the grant of stock options, and in June 2017, it adopted the 2017 Omnibus Plan (2017 Plan), which allowed for the grant of stock options, restricted stock units, performance stock units and other types of equity awards. In July 2021, the Company also adopted the Calyxt, Inc. Employee Inducement Incentive Plan (the Inducement Plan), from which PSUs were granted to Michael A. Carr.
On February 19, 2021, James Blome ceased serving as the Company’s Chief Executive Officer. In the three-month period ended March 31, 2021, the Company recorded a benefit to earnings from a $2.5 million recapture of
non-cash
stock compensation expense from the forfeiture of Mr. Blome’s unvested stock options, RSUs, and PSUs.
As of March 31, 2022, 2,818,058 shares were registered and available for grant under effective registration statements, while 3,013,121 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 currently outstanding also include awards granted under the 2014 Plan and the Inducement Plan. No further awards will be granted under either the 2014 Plan or the Inducement Plan.
Stock Options
The estimated fair values of stock options granted, and the assumptions used for the Black-Scholes option pricing model were as follows:

 
 
  
Three Months Ended March 31,
 
 
  
2022
 
 
2021
 
Estimated fair values of stock options granted
  
$
0.97
 
  $ 5.85  
Assumptions:
                
Risk-free interest rate
  
 
1.9% - 2.4
   
0.6% - 1.1
Expected volatility
  
 
89.7% - 91.8
   
85.0% - 87.6
Expected term (in years)
    
5.75 -
 
6.89
      5.7 - 6.2  
    
 
 
   
 
 
 
The Company estimates the fair value of each stock option on the grant date, or other measurement date if applicable, using a Black-Scholes option pricing model, which requires it to make predictive assumptions regarding employee exercise behavior, future stock price volatility, and dividend yield. The Company estimates the risk-free interest rate based on the United States Treasury
zero-coupon
yield curve at the date of grant for the expected term of the option. The Company estimates its future stock price volatility using the weighted-average historical volatility calculated from a group of comparable public companies over the expected term of the option. The expected term of stock options is estimated using the average of the vesting tranches and the contractual life of each grant for employee options, or the simplified method, as the Company has limited historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. The use of the simplified method is dependent upon the type of equity award granted and the term of the award. The Company does not pay dividends and does not expect to pay dividends in the foreseeable future.
Option strike prices are set at 100 percent or more of the closing share price on the date of grant and generally vest over three to six years following the grant date. Options generally expire 10 years after the date of grant.
Information on stock option activity is as follows:

 

 
  
Options

Exercisable
 
  
Weighted-
Average

Exercise

Price Per

Share
 
  
Options

Outstanding
 
 
Weighted-

Average

Exercise

Price Per

Share
 
Balance as of December 31, 2021
     2,789,110      $ 10.23        4,658,405     $ 9.47  
Granted
                       1,346,000       1.27  
Exercised
                       —         —    
Forfeited or expired
                       (234,061     7.30  
    
 
 
    
 
 
    
 
 
   
 
 
 
Balance as of March 31, 2022
  
 
2,948,076
 
  
$
10.26
 
  
 
5,770,344
 
 
$
7.65
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Stock-based compensation expense related to stock option awards is as follows:
 
 
  
Three Months Ended March 31,
 
In Thousands
  
2022
 
  
2021
 
Stock-based compensation expense
  
$
180
 
   $ (396
    
 
 
    
 
 
 
As of March 31, 2022, options outstanding and exercisable had no aggregate intrinsic value and the weighted average remaining contractual term was 5.5 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:
 
  
Three Months Ended March 31,
 
In Thousands
  
2022
 
  
2021
 
Net cash proceeds
   $ —       
$
208
 
    
 
 
    
 
 
 
Intrinsic value of options exercised
   $ —       
$
331
 
    
 
 
    
 
 
 
As of March 31, 2022, unrecognized compensation expense related to
non-vested
stock options was $5.2 million. This expense will be recognized over 27 months on average.
Restricted Stock Units
The Company grants restricted stock units which generally vest over three to five years after the date of grant. Information on restricted stock unit activity is as follows:

 
 
  
Number of

Restricted Stock

Units Outstanding
 
 
Weighted-

Average Grant

Date Fair Value
 
Unvested balance as of December 31, 2021
     571,303      $ 6.15  
Granted
     1,048,800        1.27  
Vested
     (87,472      7.06  
Forfeited
     (61,613      5.55  
    
 
 
    
 
 
 
Unvested balance as of March 31, 2022
  
 
1,471,018
 
  
$
2.64
 
    
 
 
    
 
 
 
The total grant-date fair value of restricted stock unit awards that vested is as follows:

 
 
  
Three Months Ended March 31,
 
In Thousands
  
2022
 
  
2021
 
Grant-date fair value
  
$
617
     $ 251
 
    
 
 
    
 
 
 
Stock-based compensation expense related to restricted stock units is as follows:

 
 
  
Three Months Ended March 31,
 
In Thousands
  
2022
 
  
2021
 
Stock-based compensation expense
  
$
205
    
$
(749 )
 
    
 
 
    
 
 
 
As of March 31, 2022, unrecognized compensation expense related to restricted stock units was $2.5 million. This expense will be recognized over 29 months on average.
The Company accounts for stock-based compensation awards granted to employees of Cellectis as deemed dividends. The Company recorded deemed dividends as follows:

 
 
  
Three Months Ended March 31,
 
In Thousands
  
2022
 
  
2021
 
Deemed dividends from grants to Cellectis employees
  
$
37
     $ 79
 
    
 
 
    
 
 
 
Performance Stock Units
In March 2022, the Company granted 530,000 PSUs under the 2017 Plan to five employees including four executive officers. The PSUs include three annual performance periods (2022, 2023, and 2024) and target performance levels for each of those periods linked to the achievement of Company objectives as determined annually for the respective period by the Compensation Committee of the Company’s Board of Directors (the Compensation Committee). Earned awards will be settled in shares of Company stock no later than March 15 of the following year. The grant date for the tranche of awards linked to 2022 performance, which triggers the determination of the aggregate amount of expense for each tranche of PSUs awarded,
is May 4, 2022
. Once the objectives are approved, the associated expense will be recognized on a straight-line basis over the period from the date of grant through the March 15 determination date. Determination of expense for the 2023 and 2024 tranches of PSUs will be made when the associated business objectives are determined.
In July 2021, the Company granted 600,000 PSUs under the Inducement Plan to Mr. Carr. The PSUs will vest if the Company’s stock remains above three specified price levels for thirty calendar days over the three-year performance period. The PSUs will be settled in unrestricted shares of the Company’s common stock on the vesting date.
Stock-based compensation expense related to PSUs is as follows:

 
 
  
Three Months Ended
March 31,
 
In Thousands
  
2022
 
  
2021
 
Stock-based compensation expense
  
$
146
 
   $ (305
    
 
 
    
 
 
 
As of March 31, 2022, unrecognized compensation expense related to PSUs was $1.4 million. This expense will be recognized over 28 months on average.