Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.21.2
Stock-Based Compensation
9 Months Ended
Sep. 30, 2021
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stock-Based Compensation

5. 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.

On February 19, 2021, James Blome ceased serving as the Company's Chief Executive Officer. 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, restricted stock units, and performance stock units.

 

On July 16, 2021, the Company filed a Registration Statement on Form S-8 with the SEC which registered an additional 4,299,904 shares of common stock that may be issued or delivered and sold pursuant to the 2017 Plan and 600,000 shares of common stock that may be issued or delivered and sold pursuant to the Calyxt, Inc. Employee Inducement Incentive Plan (the Inducement Plan). Shares of common stock are issuable under the Inducement Plan upon the settlement of performance stock units which were granted to Mr. Michael A. Carr in July 2021 as a material inducement to accept employment as the Company's President and Chief Executive Officer.

 

As of September 30, 2021, 5,613,334 shares were registered and available for grant under effective registration statements, while 5,710,787 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:

 

 

Nine Months Ended September 30,

 

 

2021

 

 

2020

 

Estimated fair values of stock options granted

$

3.93

 

 

$

3.32

 

Assumptions:

 

 

 

 

 

Risk-free interest rate

0.6%-1.1%

 

 

0.3%-1.7%

 

Expected volatility

80.1%-82.0%

 

 

77.4%-81.2%

 

Expected term (in years)

5.5-6.5

 

 

6.0-10.0

 

The Company estimates 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 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 historical volatility of comparable public companies over the expected term of the option. The Company's expected term represents the period that options granted are expected to be outstanding determined using the simplified method. The Company does not, nor does it expect to, pay dividends.

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, 2020

 

2,347,663

 

 

$

10.15

 

 

 

4,621,173

 

 

$

10.30

 

Granted

 

 

 

 

 

 

 

656,959

 

 

 

5.70

 

Exercised

 

 

 

 

 

 

 

(61,372

)

 

 

3.70

 

Forfeited or expired

 

 

 

 

 

 

 

(602,892

)

 

 

10.84

 

Balance as of September 30, 2021

 

2,685,450

 

 

$

10.18

 

 

 

4,613,868

 

 

$

9.66

 

 

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

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

In Thousands

2021

 

 

2020

 

 

2021

 

 

2020

 

Stock-based compensation expense

$

698

 

 

$

187

 

 

$

1,103

 

 

$

2,439

 

 

As of September 30, 2021, options outstanding and exercisable had no aggregate intrinsic value and the weighted average remaining contractual term was 5.8 years.

 

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 September 30,

 

 

Nine Months Ended September 30,

 

In Thousands

2021

 

 

2020

 

 

2021

 

 

2020

 

Net cash proceeds

$

 

 

$

211

 

 

$

227

 

 

$

211

 

Intrinsic value of options exercised

$

 

 

$

179

 

 

$

344

 

 

$

179

 

 

As of September 30, 2021, unrecognized compensation expense related to non-vested stock options was $5.9 million. This expense will be recognized over 26 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 at December 31, 2020

 

547,807

 

 

$

9.49

 

Granted

 

346,981

 

 

 

4.99

 

Vested

 

(165,137

)

 

 

7.40

 

Forfeited

 

(153,631

)

 

 

11.85

 

Unvested balance at September 30, 2021

 

576,020

 

 

$

6.75

 

 

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

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

In Thousands

2021

 

 

2020

 

 

2021

 

 

2020

 

Grant-date fair value

$

581

 

 

$

1,079

 

 

$

1,223

 

 

$

2,270

 

 

 

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

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

In Thousands

2021

 

 

2020

 

 

2021

 

 

2020

 

Stock-based compensation expense

$

416

 

 

$

269

 

 

$

(105

)

 

$

865

 

 

As of September 30, 2021, unrecognized compensation expense related to restricted stock units was $2.0 million. This expense will be recognized over 23 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 September 30,

 

 

Nine Months Ended September 30,

 

In Thousands

2021

 

 

2020

 

 

2021

 

 

2020

 

Deemed dividends from grants to Cellectis employees

$

(84

)

 

$

581

 

 

$

(55

)

 

$

1,003

 

 

Performance Stock Units

In June 2019, the Company granted 311,667 performance stock units under the 2017 Plan to three executive officers. The performance stock units will vest at 50 percent, 100 percent or 120 percent of the shares under the award at the end of a three-year performance period based upon increases in the value of the Company's 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. During the nine months ended September 30, 2021, the Company recognized a benefit from the forfeiture of 166,667 performance stock units held by Mr. Blome, its former chief executive officer.

In July 2021, the Company granted 600,000 performance stock units under the Inducement Plan to Mr. Carr, its President and Chief Executive Officer. The performance stock units will vest if the Company’s stock remains above three specified price levels for 30 calendar days over the three-year performance period. The performance stock units will be settled in unrestricted shares of the Company's common stock on the vesting date.


The estimated fair values of performance stock units granted in 2021, and the assumptions used for the Monte Carlo simulation pricing model were as follows:

 

 

Three Months Ended September 30,

 

2021

Estimated fair values of performance stock units granted:

 

At least $12 per share

$2.16

At least $15 per share

$1.89

At least $20 per share

$1.55

Assumptions:

 

Risk-free interest rate

0.4%

Expected volatility

90.0%

Expected term (in years)

3.0

 

The Company estimated the fair value of each tranche of the performance stock units on the grant date using the Monte Carlo simulation pricing model, which required it to make predictive assumptions as to the expected term of the grant, 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. Expected volatility was based on the historical volatility of the Company’s common stock over the expected term. The expected term represents the expected service period of the performance stock units granted.

Stock-based compensation expense related to performance stock units is as follows:

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

In Thousands

2021

 

 

2020

 

 

2021

 

 

2020

 

Stock-based compensation expense

$

122

 

 

$

114

 

 

$

(133

)

 

$

334

 

 

As of September 30, 2021, unrecognized compensation expense related to performance stock units was $1.7 million. This expense will be recognized over 34 months on average