Table of Contents WEWORK COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2018 The fair value of restricted stock that vested during the years ended December 31, 2016, 2017 and 2018 was $38.2 million, $18.5 million and $29.3 million, respectively. For the years ended December 31, 2016, 2017 and 2018, the Company recorded total stock-based compensation expense of $10.7 million, $7.6 million and $14.7 million, respectively, related to restricted stock and restricted stock units awarded to employees and non-employee directors. As of December 31, 2016, 2017 and 2018, there was $32.3 million, $24.3 million and $27.1 million, respectively, of total unrecognized stock-based compensation expense related to unvested restricted stock and restricted stock units awarded to employees and non-employee directors expected to be recognized over a weighted-average period of approximately 3.7 years, 3.1 years and 3.0 years, respectively. For the years ended December 31, 2016, 2017 and 2018, the Company recorded $0.9 million, $1.2 million and $1.6 million of general and administrative expenses, respectively, associated with restricted stock issued to non-employee contractors for services rendered. As of December 31, 2016, 2017 and 2018, there was $1.3 million, $1.3 million and none, respectively, of total unrecognized expense related to unvested restricted stock awarded to contractors expected to be recognized over a weighted-average period of approximately 1.9 years, 0.7 years and 0.0 years, respectively. Total Stock-Based Compensation Expense—The total of all stock-based compensation expense related to employees and non-employee directors are reported in the following financial statement line items: Year Ended December 31, (Amounts in thousands) 2016 2017 2018 Stock-based compensation included in: Location operating expenses $ 2,032 $ 18,718 $ 22,793 Other operating expenses — 355 4,522 Sales and marketing expenses 775 4,244 6,343 Growth and new market development expenses 2,486 11,383 17,723 General and administrative expenses 17,367 260,662 18,019 Total stock-based compensation expense $ 22,660 $ 295,362 $ 69,400 Stock-Based Awards to Non-Employees—From time to time, the Company issues common stock, restricted stock or stock options to acquire common stock to non-employee contractors for services rendered. The stock options and shares of the common stock granted, vested, exercised, forfeited/canceled during the year ended December 31, 2018 are included in the above tables together with the employee awards. Stock options granted in 2016 to non-employees included an option to purchase 500,000 shares of Class A Common Stock that will vest upon the achievement of certain member count and profitability-based targets that must be met during a four year vesting period and an option to purchase up to 120,000 shares of Class A Common Stock determined quarterly by a vesting schedule that evaluates the average price per usable square foot for accepted goods in comparison to a benchmark average price as set out in the option agreement. In February 2018, the non-employee with the option to purchase 500,000 shares of Class A Common Stock converted to an employee, and the vesting conditions of the option awards remained unchanged. The tables above do not include any grants of restricted shares in the Company’s consolidated subsidiaries. In April 2017, one of the Company’s consolidated subsidiaries, ChinaCo, granted a shareholder, in connection with services to be provided by a consultant affiliated with such shareholder, the right to subscribe to 10,000,000 of ChinaCo’s Class A ordinary shares which will vest annually over a five year period and had a grant date value of $3.51 per ChinaCo Class A ordinary share. The consultant is also a member of the Company’s and ChinaCo’s board of F-55