13. Stock option and grant plan

2017 stock option and grant plan

In June 2017, the Company’s board of directors adopted the Beam Therapeutics Inc. 2017 Stock Option and Grant Plan, or the 2017 Plan, which provided for the grant of qualified incentive stock options and nonqualified stock options, restricted stock or other awards to the Company’s employees, officers, directors, advisors, and outside consultants for the issuance or purchase of shares of the Company’s common stock.

The 2017 Plan is administered by the board of directors. Stock options awarded under the 2017 Plan expire 10 years after the grant date. Vesting periods for awards under the 2017 Plan are determined at the discretion of the board of directors. Incentive stock options granted to employees and shares of restricted stock granted to officers, founders and consultants of the Company typically vest over four years. Certain options provide for accelerated vesting if there is a change in control, as defined in the 2017 Plan. Non-statutory options granted to employees, officers, members of the board of directors and consultants of the Company typically vest over four years.

2019 incentive plan

In October 2019, the Company’s board of directors adopted the Beam Therapeutics Inc. 2019 Equity Incentive Plan, or the 2019 Plan, and, following the IPO, all equity-based awards are granted under the 2019 Plan. The 2019 Plan provides for the grant of qualified and nonqualified stock options, stock appreciation rights, restricted and unrestricted stock and stock units, performance awards, and other share-based awards to the Company’s employees, officers, directors, advisors, and outside consultants.

The maximum number of shares of the Company’s common stock that may be issued under the 2019 Plan was initially 3,700,000 shares, or the Share Pool, plus the number of shares of the Company’s common stock underlying awards under the 2017 Plan, not to exceed 5,639,818 shares, that become available again for grant under the 2017 Plan in accordance with its terms. The Share Pool will automatically increase on January 1st of each year from 2021 to 2029 by the lesser of (i) four percent of the number of shares of the Company’s common stock outstanding as of the close of business on the immediately preceding December 31st and (ii) the number of shares determined by the Company’s board of directors on or prior to such date for such year.

As of December 31, 2023, the Company had 12,376,374 shares reserved and 1,173,189 shares available for future issuance under the 2019 Plan.

Stock options

The Company has granted stock options to certain employees to purchase shares of common stock that contain certain performance-based vesting criteria, primarily related to the achievement of certain development milestones related to editing applications, and the closing price of the Company’s common stock following an IPO. Recognition of stock-based compensation expense associated with these performance-based stock options commences when the performance condition is considered probable of achievement, using management’s best estimates, which consider the inherent risk and uncertainty regarding the future outcomes of the milestones. There was no expense related to performance-based stock options for the year ended December 31, 2023. The expense related to performance-based options was immaterial for the years ended December 31, 2022 and 2021.

The weighted-average grant date fair value per share of stock options granted during the years ended December 31, 2023, 2022 and 2021, was $27.88, $40.86 and $58.56, respectively. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2023, 2022 and 2021 was $20.0 million, $23.4 million and $85.1 million, respectively. The weighted-average exercise price of stock options exercised for the years ended December 31, 2023, 2022 and 2021 was $7.69, $5.64 and $9.88, respectively.

As of December 31, 2023, there was $111.5 million of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of approximately 2.3 years.

Restricted stock

The Company issued shares of restricted common stock during the years ended December 31, 2023, 2022 and 2021, which consisted only of restricted stock units. Restricted common stock issued generally vests over a period of two to four years.

Generally, if the holders of restricted stock units cease to have a business relationship with the Company, any unvested restricted stock units will be cancelled.

The aggregate fair value of restricted shares that vested during the years ended December 31, 2023, 2022 and 2021 was $13.8 million, $53.1 million and $6.4 million, respectively.

At December 31, 2023, there was approximately $72.8 million of unrecognized stock-based compensation expense related to restricted stock that is expected to vest. These costs are expected to be recognized over a weighted-average remaining vesting period of approximately 2.2 years.

2019 Employee Stock Purchase Plan

In February 2020, the Company’s board of directors adopted the Beam Therapeutics Inc. 2019 Employee Stock Purchase Plan, or ESPP, which was approved by the Company’s stockholders. Pursuant to the ESPP, certain employees of the Company, excluding consultants and non-employee directors, are eligible to purchase common stock of the Company at a reduced rate during offering periods. The ESPP permits participants to purchase common stock using funds contributed through payroll deductions, subject to a calendar year limit of $25,000 and at a purchase price of 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the applicable purchase date, which will be the final trading day of the applicable purchase period.

The Company used the Black-Scholes option valuation model to estimate the fair value of the purchase right under the ESPP on the date of grant. The expected volatility is based on the historical volatility of the Company's common stock for a period of years corresponding with the expected life of the option. The risk-free interest rate is based on the U.S. Treasury yield curve at the time of grant for securities with a maturity period similar to the expected life of the option. The expected life is based on the term of the purchase period for the grants made under the ESPP.

The Company uses the straight-line attribution approach to record the expense over the offering period. Stock-based compensation expense related to the ESPP for the years ended December 31, 2023, 2022 and 2021 was $1.3 million, $1.5 million, $0.3 million, respectively.

The Company issued 130,403 and 70,073 shares under the ESPP during the years ended December 31, 2023 and 2022, respectively. There were no shares issued under the ESPP during the year ended December 31, 2021. As of December 31, 2023, the Company had 2,247,569 shares available for issuance under the ESPP.