Equity granted

[Table of Contents](exhibit311q32022.htm)Performance-Based AwardsThe table below summarizes activity related to the Company’s equity-classified performance-based awards for the nine months ended September 30, 2022:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Equity-Classified Equity-SettledRestricted Stock |  | Equity-Classified Equity-SettledRestricted Stock Units |
|   | Number ofShares  |  | Weighted Average Grant DateFair Value Per Share  |  | Number ofShares  |  | Weighted Average Grant DateFair Value Per Share  |
| Unvested performance-based awards outstanding at January 1, 2022 | 9  |  |  | $ | 165.87  |  |  | 23  |  |  | $ | 339.69  |  |
| Awards granted | —  |  |  | $ | —  |  |  | 6  |  |  | $ | 418.26  |  |
| Awards vested | —  |  |  | —  |  |  | (2) |  |  | $ | 355.39  |  |
| Awards forfeited/cancelled | —  |  |  | —  |  |  | (5) |  |  | $ | 375.77  |  |
| Unvested performance-based awards outstanding at September 30, 2022 | 9  |  |  | $ | 165.87  |  |  | 22  |  |  | $ | 351.60  |  |

As of September 30, 2022, $0.4 million of total remaining unrecognized stock-based compensation cost related to performance-based equity-classified restricted stock is expected to be recognized over the weighted-average remaining requisite service period of 0.9 years. As of September 30, 2022, $4.2 million of total remaining unrecognized stock-based compensation cost related to performance-based equity-classified RSUs is expected to be recognized over the weighted-average remaining requisite service period of 2.5 years. 2021 Employee Stock Purchase Plan The 2021 Employee Stock Purchase Plan ("ESPP") enables eligible employees to purchase shares of EPAM’s common stock at a discount at the end of each designated offering period, which occurs every six months in April and November. The purchase price is equal to 85% of the fair market value of a share of EPAM’s common stock on the first date of an offering or the date of purchase, whichever is lower. During the nine months ended September 30, 2022, the ESPP participants purchased 55 thousand shares of common stock under the ESPP.The Company recognizes compensation expense related to share issuances pursuant to the ESPP on a straight-line basis over the six-month offering period. For the three and nine months ended September 30, 2022, the Company recognized $4.7 million and $10.0 million, respectively, of stock-based compensation expense related to the ESPP. As of September 30, 2022, total unrecognized stock-based compensation cost related to the ESPP was $1.6 million, which is expected to be recognized over a period of 0.1 years.Commitments for Future Equity Awards In connection with the Company’s acquisitions of businesses as discussed in Note 3 “Acquisitions,” EPAM enters into agreements that contractually commit it to granting equity awards at future dates. The agreements are unique to each acquisition and terms vary to specify the number of future awards to be issued or a monetary value that will be settled with equity awards valued at future stock prices. As of September 30, 2022, the Company has commitments to grant up to $29.2 million of equity awards with the number of awards to be determined based on future stock prices. There is a service-based vesting requirement after the grant date associated with these awards and certain of these awards contain performance criteria that will determine the amount of future awards to be issued. These awards are considered granted for accounting purposes. In determining the expense, the Company adjusts the expected settlement based on the probability of achievement of such performance criteria. Due to changes in the probability of payout related to these awards, the Company recorded net reversals of stock-based compensation expense in the condensed consolidated statements of income of $1.0 million and $0.7 million for the three and nine months ended September 30, 2022, respectively.As of September 30, 2022, the Company has issued 2 thousand performance-based equity-classified RSUs which are not considered granted for accounting purposes as the future vesting conditions have not yet been determined. 27
