Table of Contents ENPHASE ENERGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Generally, all full-time employees in Australia, Brazil, Canada, China, France, Germany, India, Mexico, New Zealand, the Netherlands, and the United States, including executive officers, are eligible to participate in the ESPP. The ESPP permits eligible employees to purchase the Company’s common stock through payroll deductions, which may not exceed 15% of the employee’s total compensation subject to certain limits. Stock may be purchased under the plan at a price equal to 85% of the fair market value of the Company’s common stock on either the date of purchase or the first day of an offering period, whichever is lower. A two-year look-back feature in the Company’s ESPP causes an offering period to reset if the fair value of the Company’s common stock on a purchase date is less than that on the initial offering date for that offering period. The reset feature, when triggered, will be accounted for as a modification to the original offering, resulting in additional expense to be recognized over the 24-month period of the new offering. During any calendar year, participants may not purchase shares of the Company’s common stock having a value greater than $25,000, based on the fair market value per share of the Company’s common stock at the beginning of an offering period. Valuation of Equity Awards Stock Options The fair value of each option granted was estimated on the date of grant using the Black-Scholes option- pricing model with the following assumptions: • Expected term - The expected term of the option awards represents the period of time between the grant date of the option awards and the date the option awards are either exercised, converted or canceled, including an estimate for those option awards still outstanding. The Company used the simplified method, as permitted by the SEC for companies with a limited history of stock option exercise activity, to determine the expected term for its option grants. • Expected volatility - The expected volatility was calculated based on the Company’s historical stock prices, supplemented as necessary with historical volatility of the common stock of several peer companies with characteristics similar to those of the Company. • Risk-free interest rate - The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant and with a maturity that approximated the Company’s expected term. • Dividend yield - The dividend yield was based on the Company’s dividend history and the anticipated dividend payout over its expected term. No stock options were granted during the years ended December 31, 2023, 2022, and 2021. Restricted Stock Units The fair value of the Company’s RSU awards granted is based upon the closing price of the Company’s stock price on the date of grant. Performance Stock Units The fair value of the Company’s non-market PSU awards granted was based upon the closing price of the Company’s stock price on the date of grant. The fair value of awards of the Company’s PSU awards containing market conditions was determined using a Monte Carlo simulation model based upon the terms of the conditions, the expected volatility of the underlying security, and other relevant factors. Enphase Energy, Inc. | 2023 Form 10-K | 112