Joby Aviation, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Stock-Based Compensation

Stock-Based Compensation

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-based Compensation

Equity Compensation Plans

In November 2016, the Company’s Board of Directors adopted the 2016 Stock Option and Grant Plan (“2016 Plan”) under which officers, employees, directors, consultants and other key persons of the Company or its affiliates may be granted incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock and restricted stock units. On August 10, 2021, the Company’s Board of Directors amended the 2016 Plan to provide that no new awards could be granted under the 2016 Plan.

Under the 2016 Plan, stock options are generally granted with an exercise price equal to the estimated fair value of the Company’s common stock, as determined by the Company’s Board of Directors on the date of grant. Options generally have contractual terms of ten years. Incentive stock options (ISO) may only be granted to employees, whereas all other stock awards may be granted to employees, directors, consultants and other key persons.

Outstanding options generally vest over six years, contain a one year cliff, are exercisable immediately and, upon early exercise, are subject to repurchase by the Company at the original exercise price. If an ISO is granted to an optionee who, at the time of grant, owns more than 10% of the voting power of all classes of capital stock, the term of the ISO is five years. Options issued under the 2016 Plan must be priced at no less than the fair value of the shares on the date of the grant provided, however, that the exercise price of an option granted to a 10% stockholder is not less than 110% of the fair value of the shares on the date of grant. The Board of Directors determines the exercisability provisions of a stock option agreement at its sole discretion.

The fair value of the RSU’s granted under the 2016 Plan is determined by the Company’s Board of Directors on the date of grant. Generally, RSUs have six years vesting period and contractual terms of ten years.

On August 10, 2021, the Company adopted the 2021 Equity Incentive Plan (“2021 Plan”). Under the 2021 Plan, the Company can grant incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units and performance awards to employees, directors and consultants. Upon the effectiveness of the Company's 2021 Plan, the Company ceased to grant awards under the 2016 Plan. However, all outstanding awards under the 2016 Plan continue to be governed by their existing terms under the 2016 Plan. The number of shares available for issuance under the 2021 Plan will be increased on the first day of each fiscal year, beginning on January 1, 2022, in an amount equal to the lesser of (i) a number of shares equal to four percent (4%) of the total number of shares of all classes of common stock of the Company outstanding on the last day of the immediately preceding fiscal year, or (ii) such number of shares determined by the Company’s Board of Directors. On December 31, 2022, the number of shares available for issuance under 2021 Plan

was 69,365,590. On January 1, 2023, the number of shares available for issuance under 2021 plan increased by 24,904,113 shares.

Stock Options Activity

A summary of stock option activity for the year ended December 31, 2022 is as follows:



Stock Option Activity	Number of Options	Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Balances—December 31, 2021	21,252,552	$	0.66	7.95	$	141,137
Additional shares authorized
Options canceled and forfeited	(1,369,505)	$	0.68
Repurchases	—
Options granted	—
Options exercised	(2,789,600)	$	0.57
Balances—December 31, 2022	17,093,447	$	0.68	6.97	$	45,689
Vested and expected to vest	17,093,447	$	0.68	6.97	$	45,689
Shares exercisable (vested and unvested)	7,457,584	$	0.53	6.65	$	21,030

The weighted-average grant date fair value of options granted in the years ended December 31, 2022, 2021 and 2020 was nil, $9.16 and $4.14, respectively. The total intrinsic value of options exercised was $12.0 million, $20.1 million and $3.1 million respectively, during the years ended December 31, 2022, 2021 and 2020.

The assumptions in the Black-Scholes option-pricing models used to determine the fair value of stock options granted during the years ended 2020 were as follows:


	Year Ended December 31,
	2020
Expected volatility	49.9% - 73.5%
Expected dividend yield	—	%
Expected term (in years)	5.0 - 6.6
Risk-free interest rate	1.3% - 1.4%

Expected volatility - As the Company was not publicly traded in 2020, the expected volatility for the Company’s stock options was determined by using an average of historical volatilities of selected industry peers deemed to be comparable to the Company’s business corresponding to the expected term of the awards.

Risk-free interest rate - The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities corresponding to the expected term of the awards.

Expected dividend yield - The expected dividend rate is zero as the Company currently has no history or expectation of declaring dividends on its common stock.

Expected term - The expected term represents the period these stock awards are expected to remain outstanding and is based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules, and expectations of future employee behavior.

RSU Activity

The following table summarizes the activity related to our RSUs for the year ended December 31, 2022:


	Number of Shares	Weighted-Average Grant Date Fair Value Per Share		Aggregate Intrinsic Value (in thousands)
Balances—December 31, 2021	10,032,871	$	8.60	$	73,240
Granted	25,050,952	$	5.00
Vested	(4,850,245)	$	7.42
Forfeited	(1,696,451)	$	6.76
Balances—December 31, 2022	28,537,127	$	5.75	$	95,599

The total fair value of RSUs vested for the years ended December 31, 2022, 2021 and 2020 was $36.0 million, $0.2 million and nil, respectively.

On December 16, 2021, the Company’s Board of Directors approved a performance-based bonus program under which RSUs were awarded in connection with the achievement of specified goals to be achieved in 2022 (“2022 Bonus Plan”). The RSU awards were granted when the achievement of each goal was approved by the Company’s Board of Directors or Compensation Committee, and the RSUs vested on January 1, 2023 provided the employee or consultant continued to be a service provider on that date. The target bonus opportunity was equal to 30% of the employee’s base salary as of the applicable grant date unless otherwise established by the Company’s Compensation Committee, with stretch bonus goals that were one-third higher than the target amounts.

The Company recorded stock-based compensation expense of $18.0 million for the year ended December 31, 2022, in relation to 2022 Bonus Plan. The Company considered the probability of achieving of each of the performance goals at the end of each reporting period and recognized expense over the requisite period when achievement of the goal was determined to be probable, and adjusted the expense if the probability of achieving the goal later changed. In accordance with ASC 718 Compensation - Stock Compensation, awards under 2022 Bonus Plan were classified as a liability until such time that the respective milestones were met, at which point the liability was reclassified to equity. If it was determined that the milestone could not be met, the liability was reversed.

Employee Stock Purchase Plan

On August 10, 2021, the Company adopted the 2021 Employee Stock Purchase Plan (“2021 ESPP”). Under the 2021 ESPP, participating employees may be offered the option to purchase shares of the Company’s Common Stock at a purchase price which equals 85% of the fair market value of the Company’s common stock on the enrollment date or on the exercise date, whichever is lower. The number of shares of common stock available for issuance under the 2021 ESPP will be increased on the first day of each fiscal year beginning on January 1, 2022, in an amount equal to the lesser of (i) a number of shares of common stock equal to half percent (0.5%) of the total number of shares of all classes of common stock of the Company on the last day of the immediately preceding fiscal year, or (ii) such number of shares determined by the Company’s Board of Directors. On December 31, 2022, the number of shares available for issuance under 2021 ESPP was 9,674,430. On January 1, 2023, the number of shares available for issuance under 2021 ESPP increased by 3,113,014 shares. The 2021 ESPP’s first offering and purchase periods began in November 2022 with the first purchase period ending in May 2023. Accordingly, as of December 31, 2022, no shares have been issued under the 2021 ESPP. The stock-based compensation expense recognized for the 2021 ESPP was $0.4 million for the year ended December 31, 2022.

The assumptions in the Black-Scholes option-pricing models used to determine the fair value of 2021 ESPP awards granted during the year ended December 31, 2022, were as follows:


	Year Ended December 31,
	2022
Expected volatility	69.1% - 83.9%
Expected dividend yield	—	%
Expected term (in years)	0.5 - 1.0
Risk-free interest rate	4.5% - 4.6%

Expected volatility - We estimate the expected volatility of our common stock on the date of grant based on the historical stock price volatility of our own common shares within the same length of period as the expected term.

Expected dividend yield - The expected dividend rate is zero as the Company currently has no history or expectation of declaring dividends on its common stock.

Stock-based compensation expense

The following sets forth the total stock-based compensation expense for the Company’s stock options included in the Company’s consolidated statements of operations (in thousands):


	Year Ended December 31,
	2022		2021		2020
Research and development expenses	$	49,713	$	19,426	$	6,130
Selling, general and administrative expenses	19,357		7,506		1,055
Total stock-based compensation expense	$	69,070	$	26,932	$	7,185

As of December 31, 2022, total unrecognized compensation cost related to stock awards was $185.8 million to be recognized over a weighted average remaining requisite service period of approximately 4.0 years.

Shares subject to repurchase

The Company also allows certain option holders to exercise unvested options and holders of stock purchase rights to purchase shares of unvested common stock. Common shares received from such early exercises are subject to a right of repurchase at the original issuance price. The Company’s repurchase right with respect to these shares typically lapse over six years as the shares become vested. As of December 31, 2022 and 2021, 3,923,509 and 6,918,483 shares, respectively, were subject to repurchase at a weighted average price of $0.10 per share and $0.10 per share, respectively, and $0.4 million and $0.7 million, respectively, was recorded as a stock repurchase liability in early exercised stock option liabilities on the consolidated balance sheets.

In addition, upon completion of the Reverse Recapitalization 2,677,200 Series C Preferred shares which were subject to time-based vesting conditions were converted to restricted common shares. As of December 31, 2022, the number of such shares that were subject to repurchase was 2,007,595.