Equity-based compensation is recognized based on amortizing the grant-date fair value on a straight-line basis over the requisite service period, which is generally the vesting period of the award, less actual forfeitures. A summary of equity-based compensation recognized during the years ended December 31, 2022, 2021, and 2020 is as follows:


	For the Years Ended December 31,
	2022		2021		2020

	(in millions)
Class B Units	$	—	$	—	$	1
Restricted Stock Units and Awards excluding those granted in relation to the CEO Milestone Gift	41		35		21
Restricted Stock Units granted in relation to the CEO Milestone Gift	39		—		—
Options	13		11		7
Class A Units	—		1		2
Total equity-based compensation	93		47		31
Equity-based compensation capitalized to property and equipment	(8)		(7)		(6)
Equity-based compensation capitalized to inventory	(16)		(1)		—
Equity-based compensation, net of capitalized amounts	$	69	$	39	$	25

During the years ended December 31, 2022, 2021, and 2020, the Company capitalized $8 million, $7 million, and $6 million, respectively, of equity-based compensation to property and equipment related to software development and real estate projects and $16 million, $1 million, and less than $1 million, respectively, to inventory related to reconditioning and inbound transportation of vehicles. All other equity-based compensation is included in selling, general, and administrative expenses in the accompanying consolidated statements of operations.

As of December 31, 2022, unrecognized equity-based compensation related to outstanding awards and the related weighted-average period over which it is expected to be recognized subsequent to December 31, 2022 is presented in the table below. Total unrecognized equity-based compensation will be adjusted for actual forfeitures.

In connection with the IPO, the Company adopted the 2017 Omnibus Incentive Plan (the "2017 Incentive Plan"). Under the 2017 Incentive Plan 14 million shares of Class A common stock are available for issuance, which the Company may grant as stock options, stock appreciation rights, restricted stock, restricted stock units and other equity-based awards to employees, directors, officers, and consultants. The majority of equity granted by the Company vests over four-year periods based on continued employment with the Company. As of December 31, 2022, approximately 7 million shares remain available for future equity-based award grants under this plan. In addition, the number of shares authorized for issuance under the 2017 Incentive Plan is subject to an automatic annual increase of the lesser of two percent of our outstanding common stock or an amount determined by the Compensation and Nominating Committee of our Board. While the Compensation and Nominating Committee determined not to increase the number of shares authorized for issuance in prior years, the automatic annual increase on January 1, 2023 was approved. After taking into account the automatic annual increase on January 1, 2023 there were approximately 9 million shares remaining available for future equity-based award grants under the 2017 Incentive Plan.

Restricted stock awards ("RSAs") entitle recipients to vote and to receive all dividends declared with respect to such shares, payable upon vesting. RSAs vest over a period of two to five years, subject to the recipient's continued employment or service. During the year ended December 31, 2022, the Company issued certain employees an aggregate of approximately 0.1 million RSAs pursuant to the terms of the 2017 Incentive Plan with a weighted-average grant-date fair value of $34.21. The Company determined the grant-date fair value of the RSAs based on the closing price of the Company's Class A common stock on the grant date. The Company did not grant any RSAs during the years ended December 31, 2021 and 2020.

Restricted stock units ("RSUs") do not entitle recipients to vote or receive dividends. RSUs generally vest over a period of four years, subject to the recipient's continued employment. During the years ended December 31, 2022, 2021, and 2020, the Company issued certain employees an aggregate of approximately 3.5 million, 0.3 million, and 0.3 million RSUs, respectively, pursuant to the terms of the 2017 Incentive Plan with a weighted-average grant-date fair value of $65.26, $288.27, and $110.00, respectively. The Company determined the grant-date fair value of the RSUs based on the closing price of the Company's Class A common stock on the grant date. RSUs are settled in shares of Class A common stock on a one-to-one basis within thirty days of vesting. As discussed in Note 7 — Related Party Transactions, the RSUs granted during the year ended December 31, 2022 include approximately 0.5 million RSUs granted in connection with the CEO Milestone Gift for which the Company recognized approximately $39 million of equity-based compensation, a portion of which related to the production of the Company's used vehicle inventory and was therefore capitalized to inventory.

RSA and RSU activity during the years ended December 31, 2022, 2021, and 2020 was as follows:


	Number of RSAs/RSUs (in thousands)	Weighted-Average Grant-Date Fair Value
Outstanding at January 1, 2020	928	$	48.04
Granted	342	$	110.00
Settled	(475)	$	45.80
Forfeited	(57)	$	70.89
Outstanding and nonvested at December 31, 2020	738	$	76.43

Granted	258	$	288.27
Settled	(385)	$	86.57
Forfeited	(58)	$	132.88
Outstanding and nonvested at December 31, 2021	553	$	162.32

Granted	3,482	$	65.26
Settled	(432)	$	113.96
Forfeited	(951)	$	134.83
Outstanding and nonvested at December 31, 2022	2,652	$	52.62

In May 2021, the Company adopted an employee stock purchase plan (the "ESPP"). On July 1, 2021, the ESPP went into effect. The ESPP allows substantially all employees, excluding members of senior management, to acquire shares of the Company's Class A common stock through payroll deductions over six-month offering periods, commencing on January 1 and July 1 of each year. The per share purchase price is equal to 90% of the fair market value of a share of the Company's Class A common stock on the last day of the offering period. Participant purchases are limited to maximums that may vary between $10,000 and $25,000 of stock per calendar year. The Company is authorized to grant up to 0.5 million shares of Class A common stock under the ESPP.

Non-qualified stock options allow recipients to purchase shares of Class A common stock at a fixed exercise price. The fixed exercise price is equal to the price of a share of Class A common stock at the time of grant. The options typically vest 25% on the anniversary of the grant date and in equal monthly installments thereafter for a total vesting period of four years and expire ten years after the grant date.


	Number of Options (in thousands)	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in millions)
Outstanding at January 1, 2020	1,147	$	30.07	8.3	$	71
Options granted	179	$	88.56		n/a
Options exercised	(195)	$	27.82		$	24
Options forfeited or expired	(59)	$	16.52		n/a
Outstanding at December 31, 2020	1,072	$	41.01	7.7	$	213

Options granted	97	$	178.42		n/a
Options exercised	(75)	$	24.32		$	20
Options forfeited or expired	(28)	$	27.62		n/a
Outstanding at December 31, 2021	1,066	$	39.74	6.7	$	183

Options granted	297	$	119.53		n/a
Options exercised	(89)	$	37.89		$	7
Options forfeited or expired	(9)	$	30.97		n/a
Outstanding at December 31, 2022	1,265	$	80.26	6.4	$	—

Vested and exercisable as of December 31, 2022	823	$	52.04	5.5	$	—
Expected to vest as of December 31, 2022	442	$	132.91	8.1	$	—


	Years Ended December 31,
	2022		2021		2020
Expected volatility(1)	69.2	%	67.1	%	70.1	%
Expected dividend yield	—	%	—	%	—	%
Expected term (in years)(2)	6.28		6.14		6.14
Risk-free interest rate	2.0	%	0.7	%	1.4	%
Weighted-average grant-date fair value per option	$74.85		$178.41		$53.62

(1) Measured using the Company's historical data, market option volatility and selected high-growth guideline companies and considering the risk factors that would influence the range of expected volatility because the Company does not have sufficient historical data to provide a reasonable basis upon which to estimate the expected volatility for the entirety of the term.

(2) Expected term represents the estimated period of time until an option is exercised and was determined using the simplified method because the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term.

During 2018, the Company granted certain employees Class A Units with service-based vesting over two- to four-year periods and a grant-date fair value of $18.58 per Class A Unit. The grantees entered into the Exchange Agreement under which each LLC Unitholder (and certain permitted transferees thereof) may receive shares of the Company's Class A common stock in exchange for their LLC Units on a four-to-five conversion ratio, or cash at the option of the Company, subject to conversion ratio adjustments for stock splits, stock dividends, reclassifications, and similar transactions and subject to vesting.


	Class A Units
	Number of Class A Units (in thousands)	Weighted-Average Grant Date Fair Value
Outstanding at January 1, 2020	221
Granted	—	n/a
Exchanged	(100)	$	18.58
Forfeited	—	n/a
Outstanding at December 31, 2020	121

Granted	—	n/a
Exchanged	(36)	$	18.58
Forfeited	—	n/a
Outstanding at December 31, 2021	85

Granted	—	n/a
Exchanged	—	n/a
Forfeited	(6)	$	18.58
Outstanding at December 31, 2022	79

Vested as of December 31, 2022	79	$	18.58
Expected to vest as of December 31, 2022	—	n/a

In March 2015, Carvana Group adopted the LLC Equity Incentive Plan. Under the LLC Equity Incentive Plan, Carvana Group could grant Class B Units to eligible employees, non-employee officers, consultants and directors with service-based vesting, typically four to five years. In connection with the completion of the IPO, Carvana Group discontinued the grant of new awards under the LLC Equity Incentive Plan, however the LLC Equity Incentive Plan will continue in connection with administration of existing awards that remain outstanding. Grantees may receive shares of the Company's Class A common stock in exchange for Class B Units on a four-to-five conversion ratio, or cash at the option of the Company, subject to conversion ratio adjustments for stock splits, stock dividends, reclassifications, and similar transactions and subject to vesting and the respective participation threshold for Class B Units. Class B Units do not expire. There were no Class B Units issued during the years ended December 31, 2022, 2021, and 2020. As of December 31, 2022, outstanding Class B Units had participation thresholds between $0.00 to $12.00.


	Class B Units
	Number of Class B Units (in thousands)	Weighted-Average Participation Threshold per Class B Unit
Outstanding at January 1, 2020	5,168	$	3.51
Granted	—	n/a
Exchanged	(1,991)	$	1.22
Forfeited	(14)	$	5.81
Outstanding at December 31, 2020	3,163	$	4.94

Granted	—	n/a
Exchanged	(535)	$	1.70
Forfeited	(1)	$	12.00
Outstanding at December 31, 2021	2,627	$	5.60

Granted	—	n/a
Exchanged	(61)	$	5.75
Forfeited	—	n/a
Outstanding at December 31, 2022	2,566	$	5.60

Vested as of December 31, 2022	2,566	$	5.60
Expected to vest as of December 31, 2022	—	n/a