12. Stock-Based Awards

Equity Incentive Plan Awards

On September 13, 2021, the shareholders of Lineage approved the 2021 Equity Incentive Plan (the “2021 Plan”), and the plan became effective. The 2021 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units awards (“RSUs”), and other stock awards. All of our employees (including our affiliates’), non-employee directors and consultants are eligible to participate in the 2021 Plan.

Subject to adjustment for certain changes in our capitalization, the aggregate number of our common shares that may be issued under the 2021 Plan will not exceed the sum of (i) 15,000,000 shares and (ii) the Prior Plan Returning Shares (“Prior Plan Returning Shares”). The Prior Plan Returning Shares are defined as an award granted under the Lineage Cell Therapeutics Inc. 2012 Equity Incentive Plan (the “2012 Plan”), which were outstanding when the 2021 Plan became effective, and are not issued because such Prior Plan Award or any option thereof expires or otherwise terminates without all of the shares covered by such Prior Plan Award having been issued. Given the approval of the 2021 Plan, no additional awards will be granted from the 2012 Plan or the Asterias 2013 Equity Incentive Award (the “Asterias Equity Plan”). As of December 31, 2021, there were no outstanding equity awards issued under the 2021 Plan. As of December 31, 2021, there were 16,382,385 shares available for grant under the 2021 Plan.

On February 11, 2022, the Board of Directors at Lineage, approved restricted stock unit awards for an aggregate amount of 694,424. The awards were issued under the 2021 Plan, which defines restricted stock units as a full value award, which reduce the Plan’s common shares available for grant by 1.50 shares for each share issued.

A summary of Lineage’s 2012 Plan activity and other stock option awards granted outside of the 2012 Plan related information is as follows (in thousands, except per share amounts):

As of December 31, 2021, options outstanding and options exercisable under the 2012 Plan have a weighted-average remaining contractual term of 7.3 years and 5.3 years, respectively, and intrinsic value of $9.6 million and $5.2 million, respectively.

In connection with the vested RSUs during the year ended December 31, 2021, Lineage paid $54,000 in minimum employee withholding taxes in exchange for 21,000 vested Lineage common shares issuable to the employees and immediately retired those shares. For the year ended December 31, 2021, Lineage recorded a noncash stock-based compensation expense of $0.1 million, in connection with the vested RSUs, included in consolidated stock-based compensation expense.

In connection with the vested RSUs during the year ended December 31, 2020, Lineage paid $27,000 in minimum employee withholding taxes in exchange for 26,000 vested Lineage common shares issuable to the employees and immediately retired those shares. For the year ended December 31, 2020, Lineage recorded a noncash stock-based compensation expense of $0.1 million, in connection with the vested RSUs, included in consolidated stock-based compensation expense.

A summary of activity under the Asterias Equity Plan from the closing date of the Asterias Merger through December 31, 2021 is as follows (in thousands, except per share amounts):

As of December 31, 2021, options outstanding and options exercisable under the Asterias Equity Plan both have a weighted-average remaining contractual term of 0.3 years and intrinsic value of $212,000 and $212,000, respectively.

Stock-based compensation expense

The fair value of each option award is estimated on the date of grant using a Black-Scholes option pricing model applying the weighted-average assumptions noted in the following table:

The weighted-average estimated fair value of stock options granted under the 2012 Plan and other stock option awards granted outside of the 2012 Plan, during the years ended December 31, 2021 and 2020 was $1.62 and $0.43 per share, respectively.

Operating expenses include stock-based compensation expense as follows (in thousands):

As of December 31, 2021, total unrecognized compensation costs related to unvested stock options under Lineage’s 2012 Plan and the Asterias Equity Plan was $8.5 million, which is expected to be recognized as expense over a weighted average period of approximately 2.5 years.