Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.21.1
Stock-Based Compensation
3 Months Ended
Mar. 31, 2021
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation

Note 7 — Stock-Based Compensation

 

PAVmed Inc. 2014 Long-Term Incentive Equity Plan

 

The PAVmed Inc. 2014 Long-Term Incentive Equity Plan (the “PAVmed Inc. 2014 Equity Plan”), provides for the granting, subject to approval by the compensation committee of the PAVmed Inc. board of directors, of stock options, stock appreciation rights, restricted stock, and other stock-based awards subject to limitations under applicable law. As of March 31, 2021, the PAVmed Inc. 2014 Equity Plan has 1,679,239 shares available-for-grant of stock-based awards, with such shares available for grant, not diminished by 500,854 PAVmed Inc. stock options previously granted outside the PAVmed Inc. 2014 Equity Plan.

 

PAVmed Inc. 2014 Long-Term Incentive Equity Plan - Stock Options

 

Stock options issued and outstanding under the PAVmed Inc. 2014 Equity Plan is as follows:

 

    Number
Stock
Options
    Weighted
Average
Exercise
Price
    Remaining
Contractual
Term
(Years)
    Intrinsic Value(2)  
Outstanding stock options at December 31, 2020     6,798,529     $ 2.55                  
Granted(1)     350,000     $ 2.96                  
Exercised     (80,000 )   $ 1.00                  
Forfeited     (25,833 )   $ 2.44                  
Outstanding stock options at March 31, 2021     7,042,696     $ 2.59       7.2     $ 14,425  
Vested and exercisable stock options at March 31, 2021     5,216,860     $ 2.80       6.6     $ 9,938  

 

  (1) Stock options granted under the PAVmed Inc. 2014 Equity Plan generally vest ratably over twelve quarters, with the vesting commencing with the grant date quarter, and have a ten-year contractual term from date-of-grant.

 

  (2) The intrinsic value is computed as the difference between the quoted price of the PAVmed Inc. common stock on each of March 31, 2021 and December 31, 2020 and the exercise price of the underlying PAVmed Inc. stock options, to the extent such quoted price is greater than the exercise price.

 

Subsequent to March 31, 2021, as of May 14, 2021, a total of 1,170,000 stock options with a weighted average exercise price of $4.49 per share of common stock of the Company were granted under the PAVmed Inc. 2014 Equity Plan, each vesting and having a contractual term as described above.

 

PAVmed Inc. 2014 Long-Term Incentive Equity Plan - Restricted Stock Awards

 

On May 1, 2020, a total of 950,000 restricted stock awards were granted under the PAVmed Inc. 2014 Equity Plan, vesting as follows: 450,000 restricted stock awards vesting ratably on an annual basis over a three year period with an initial annual vesting date of May 1, 2021; and 500,000 restricted stock awards vesting on May 1, 2023. The fair value of the restricted stock awards of approximately $1,938, measured using the grant date quoted closing price per share of PAVmed Inc. common stock, is being recognized as stock-based compensation expense ratably on a straight-line basis over the vesting period, which is commensurate with the service period. The restricted stock awards are subject to forfeiture if the requisite service period is not completed.

 

On March 15, 2019, a total of 700,000 restricted stock awards were granted under the PAVmed Inc. 2014 Equity Plan, vesting as follows: 233,334 restricted stock awards vested on March 15, 2020; and 466,666 restricted awards vesting on March 15, 2022. The fair value of the restricted stock awards of approximately $742, measured using the grant date quoted closing price per share of PAVmed Inc. common stock, is being recognized as stock-based compensation expense ratably on a straight-line basis over the vesting period, which is commensurate with the service period. The restricted stock awards are subject to forfeiture if the requisite service period is not completed.

 

Subsequent to March 31, 2021, on April 1, 2021, a total of 300,000 restricted stock awards were granted to employees under the PAVmed Inc. 2014 Equity Plan, with such restricted stock awards having a single vesting date of April 1, 2024. The restricted stock awards are subject to forfeiture if the requisite service period is not completed.

 

Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan

 

The Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan (the “Lucid Diagnostics Inc. 2018 Equity Plan”), provides for the granting, subject to approval by the Lucid Diagnostics Inc. board of directors, of stock options, stock appreciation rights, restricted stock, and other stock-based awards subject to limitations under applicable law. As of March 31, 2021, the Lucid Diagnostics Inc. 2018 Equity Plan has 2,265,000 shares of common stock of Lucid Diagnostics Inc. available-for-grant of stock-based awards.

 

Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan - Stock Options

 

Stock options issued and outstanding under the Lucid Diagnostics Inc. 2018 Equity Plan is as follows:

 

    Number
Stock
Options
    Weighted
Average
Exercise
Price
    Remaining
Contractual
Term
(Years)
 
Outstanding stock options at December 31, 2020     991,667     $ 0.86       8.0  
Granted(1)         $          
Exercised         $          
Forfeited         $          
Outstanding stock options at March 31, 2021     991,667     $ 0.86       7.7  
Vested and exercisable stock options at March 31, 2021     838,749     $ 0.83       7.7  

 

  (1) Stock options granted under the Lucid Diagnostics Inc. 2018 Equity Plan generally vest ratably over twelve quarters, with the vesting commencing with the grant date quarter, and have a ten-year contractual term from date-of-grant.

 

During the three months ended March 31, 2020, 3,333 stock options issued under the Lucid Diagnostics Inc. 2018 Equity Plan were exercised for cash proceeds of $5, resulting in the issue of a corresponding number of shares of common stock of Lucid Diagnostics Inc.

 

Lucid Diagnostics Inc. 2018 Long-Term Incentive Equity Plan – Restricted Stock Awards

 

On March 1, 2021, a total of 1,040,000 restricted stock awards were granted under the Lucid Diagnostics Inc. 2018 Equity Plan to employees of PAVmed Inc., a member of the board of directors of Lucid Diagnostics Inc. (who is also a member of the board of directors of PAVmed Inc.), and to each of the three physician inventors of the intellectual property licensed under the CWRU License Agreement, with such restricted stock awards having a single vesting date of March 1, 2023, and an aggregate grant date fair value of approximately $18.9 million, measured as discussed below, with such aggregate estimated fair value recognized as stock-based compensation expense ratably on a straight-line basis over the vesting period, which is commensurate with the service period. The restricted stock awards are subject to forfeiture if the requisite service period is not completed. Subsequent to March 31, 2021, as of May 14, 2021, a total of 65,000 restricted stock awards were granted under the Lucid Diagnostics Inc 2018 Equity Plan.

 

The estimated fair value of the restricted stock awards granted under the Lucid Diagnostics Inc. 2018 Equity Plan, as discussed above, was determined using a probability-weighted average expected return methodology (“PWERM”), which involves the determination of equity value under various exit scenarios and an estimation of the return to the common stockholders under each scenario. In this regard, the Lucid Diagnostics Inc. common stock grant-date estimated fair value was based upon an analysis of future values, assuming various outcomes, based upon the probability-weighted present value of expected future investment returns, considering each of the possible future outcomes available to Lucid Diagnostics Inc.

 

The PWERM principally involved (i) the identification of scenarios and related probabilities; (ii) determine the equity value under each scenario; and (iii) determine the common stock shareholders’ return in each scenario. The two scenarios identified were an initial public offering (“IPO”) of Lucid Diagnostics Inc. common stock (“IPO scenario”); and, to continue on as a private company (“stay private scenario”). With respect to the IPO scenario, the valuation of the Lucid Diagnostics Inc. common stock was computed using assumptions, including dates of the IPO, to calculate an estimated pre-money valuation; and, with respect to the stay private scenario, an income approach was used, wherein a risk-adjusted discount rate is applied to projected future cash flows. A relative weighting of 75% was applied to the IPO scenario and 25% was assigned to the stay private scenario.

 

Stock-Based Compensation Expense

 

The consolidated stock-based compensation expense recognized for both the PAVmed Inc. 2014 Equity Plan and the Lucid Diagnostics Inc. 2018 Equity Plan, with respect to stock options and restricted stock awards as discussed above, for the periods indicated, was as follows:

 

    For the Three Months Ended
March 31,
 
    2021     2020  
Sales and marketing expenses   $ 202     $ 34  
General and administrative expenses     1,124       243  
Research and development expenses     110       67  
Total   $ 1,436     $ 344  

 

The consolidated stock-based compensation expense presented above includes $805 and $16 in the three months ended March 31, 2021 and 2020, respectively, recognized by Lucid Diagnostics Inc., with respect to each of: stock options and restricted stock awards granted under the Lucid Diagnostics Inc. 2018 Equity Plan to employees of PAVmed Inc. and to non-employee consultants, with each providing services to Lucid Diagnostics Inc.; and, stock options granted under the PAVmed Inc. 2014 Equity Plan to non-employee consultants providing services to Lucid Diagnostics Inc., summarized as follows for the periods noted:

 

    Three Months Ended  
    March 31,  
    2021     2020  
Lucid Diagnostics Inc 2018 Equity Plan – general and administrative expense   $ 789     $  
Lucid Diagnostics Inc 2018 Equity Plan – research and development expenses   $ 13     $ 13  
PAVmed Inc 2014 Equity Plan - research and development expenses     3       3  

Total stock-based compensation expense –

recognized by Lucid Diagnostics Inc

  $ 805     $ 16  

 

As of March 31, 2021, unrecognized stock-based compensation expense and weighted average remaining requisite service period with respect to stock options and restricted stock awards issued under each of the PAVmed Inc. 2014 Equity Plan and the Lucid Diagnostics Inc. 2018 Equity Plan, as discussed above, is as follows:

 

    Unrecognized
Expense
    Weighted Average
Remaining
Service Period
 
PAVmed Inc. 2014 Equity Plan                
Stock Options   $ 2,419       0.8 years  
Restricted Stock Awards   $ 1,573       1.9 years  
                 
Lucid Diagnostics Inc. 2018 Equity Plan                
Stock Options   $ 36       0.7 years  
Restricted Stock Awards   $ 18,139       1.9 years  

 

Stock-based compensation expense recognized with respect to stock options granted under the PAVmed Inc. 2014 Equity Plan was based on a weighted average estimated fair value of such stock options of $2.79 per share and $1.34 per share during the three months ended March 31, 2021 and 2020, respectively, calculated using the following weighted average Black-Scholes valuation model assumptions:

 

    Three Months Ended March 31,  
    2021     2020  
Expected term of stock options (in years)     5.7       5.8  
Expected stock price volatility     75 %     59 %
Risk free interest rate     0.96 %     1.3 %
Expected dividend yield     0 %     0 %

 

The restricted stock awards granted under the PAVmed Inc. 2014 Equity Plan resulted in stock-based compensation expense recognized of $185 and $62 in general and administrative expense, in the three months ended March 31, 2021 and 2020, respectively, and $38 in research and development expense in the three months ended March 31, 2021 (there was no such research and development expense in the corresponding period of the prior year).

 

PAVmed Inc. Employee Stock Purchase Plan (“ESPP”)

 

The PAVmed Inc. Employee Stock Purchase Plan (“PAVmed Inc. ESPP”), adopted by the Company’s board of directors effective April 1, 2019, provides eligible employees the opportunity to purchase shares of PAVmed Inc. common stock through payroll deductions during six month periods, wherein the purchase price per share of common stock is the lower of 85% of the quoted closing price per share of PAVmed Inc. common stock at the beginning or end of each six month share purchase period.

 

The PAVmed Inc. ESPP share purchase dates are March 31 and September 30. A total of 203,480 and 154,266 shares of common stock of the Company were purchased for proceeds of approximately $304 and $126, on the ESPP purchase dates of March 31, 2021 and 2020, respectively.

 

As of March 31, 2021, the PAVmed Inc. ESPP has a total reservation of 750,000 shares of common stock of PAVmed Inc., with 157,153 shares available-for-issue remaining after the March 31, 2021 ESPP purchase noted above.