Equity Incentive Plans
|6 Months Ended|
Jun. 30, 2022
|Share-based Payment Arrangement [Abstract]|
|Equity Incentive Plans||Equity Incentive Plans
We maintain four equity compensation plans: the 2021 Equity Incentive Plan (the “Plan”), the 2017 Equity Incentive Plan (the “2017 Plan”), the Blackmore Sensors & Analytics, Inc. 2016 Equity Incentive Plan (the “Blackmore Plan”), and the OURS Technology Inc 2016 Stock Incentive Plan (the “OURS Plan”). The Company assumed stock options under the Blackmore Plan and the OURS Plan to the extent such employees continued as employees of the Company.
On November 2, 2021, the Company adopted the Plan. The Plan makes available for issuance Class A common shares equal to 120,900,000 shares plus any shares subject to awards assumed in the Merger that are forfeited or otherwise expire after the Closing. Additionally, the Plan includes an annual increase on the first day of each fiscal year beginning in fiscal 2022 and ending in fiscal 2031 equal to the lesser of (i) 120,900,000, (ii) 5% of total shares outstanding on the last day of the preceding fiscal year, and (iii) a lesser number of shares determined by the Plans’ administrator. Any stock options, restricted stock units (“RSU”s) or other awards from the 2017 Plan, the Blackmore Plan, or the OURS Plan that, on or after the Closing, expire or otherwise terminate without having been exercised or issued in full are added to the Plan up to a maximum of 120,692,205 shares. As of June 30, 2022, 106,439,376 shares were available for grant under the Plan.
Under the Plan, equity-based compensation in the form of RSUs, restricted stock awards, incentive stock options, nonqualified stock options, stock appreciation rights, and performance units may be granted to employees, officers, directors, consultants, and others.
The Company granted stock options under the 2017 Plan. No stock options have been granted under the Plan and the assumed stock option plans are immaterial.
Stock options under the 2017 Plan may be outstanding for periods of up to 10 years following the grant date. The exercise price of stock options for the purchase of shares of common stock under the 2017 Plan may not be less than 100% of the fair value of the Company’s common stock on the date of the grant, as determined by the board of directors. In the case of an incentive stock option granted to an employee who owns stock representing more than 10% of the voting shares, the price of each share will be at least 110% of the fair value on the date of grant. Stock options generally vest over four years starting on the vesting commencement date (with a -year cliff) and expire, if not exercised, 10 years from the date of grant or, if earlier, three months after the option holder ceases to be a service provider of the Company. Stock options granted to a stockholder that owns greater than 10% of the company expire, if not exercised, five years from the date of grant.
Stock option activity under the 2017 Plan in the six months ended June 30, 2022 is as follows:
The compensation expense recognized for options for the six months ended June 30, 2022 and 2021 was $8,786 and $12,458, respectively. The unrecognized deferred compensation expense was $24,588 as of June 30, 2022 and will be recognized over an estimated weighted average amortization period of approximately 1.75 years.
Restricted Stock Units
The Company has granted RSUs under the Plan and the 2017 Plan.
The vesting of most RSUs granted under the 2017 Plan is based on the satisfaction of two separate vesting requirements: (1) a time-based vesting requirement, and (2) a liquidity event. Generally, the time-based vesting requirement is quarterly over four years starting on the vesting commencement date (with a -year cliff). The liquidity event vesting requirement was satisfied with the closing of the Merger in November 2021.
RSUs granted under the Plan generally are subject to time-based vesting. Generally, the time-based vesting requirement is four years starting on the vesting commencement date (with a one-year cliff for new hire awards) except for retention grants which generally vest over to two years.
RSU activity under the Plan and the 2017 Plan is as follows:
Stock-based compensation related to RSUs granted to employees was $59,755 and $0 in six months ended June 30, 2022 and June 30, 2021, respectively. The unrecognized deferred compensation expense for future years’ compensation expense related to unvested RSUs was approximately $343,161 at June 30, 2022. Unrecognized deferred compensation will be recognized over an estimated weighted average amortization period of approximately 2.9 years.
Stock-based payments awarded by a related party
Prior to the ATG acquisition, employees of ATG received grants of RSUs in the former ultimate parent company of ATG, which became a related party of the Company after the closing of the transaction. These awards were modified after the transaction to allow the awards to continue to vest for the first year subsequent to the closing of the acquisition as long as personnel remain employees of the Company. These awards are compensation for services provided to the Company and accounted for as stock-based compensation.
Awards representing 2,928,854 shares were modified on the acquisition date and 538,140 shares were forfeited before the final vesting in January 2022. The fair value of these awards was equal to the market value of the related party’s common stock on the date of modification. Stock-based compensation of $6,200 was recognized in the six months ended June 30, 2022. No unrecognized deferred compensation expense remains as of June 30, 2022.
Stock-based Compensation Expense
Stock-based compensation is allocated on a departmental basis, based on the classification of the option holder or grant recipient. No income tax benefits have been recognized in the statement of operations for stock-based compensation arrangements and no stock-based compensation has been capitalized as of June 30, 2022.
Total stock-based compensation expense by function was as follows (in thousands):
The entire disclosure for share-based payment arrangement.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef