Derivative Liability

12 Months Ended

Dec. 31, 2019

Derivative Liability [Abstract]

Derivative Liability

17. Derivative Liability

The Company's 2018 Omnibus Incentive Plan (the "2018 Plan") was adopted by the Company's Board of Directors in September 2018 subject to approval by the Company's stockholders, which was obtained in May 2019. Initial awards covering an aggregate of 542,770 restricted stock units ("RSUs") were approved under the 2018 Plan with respect to fiscal 2018 to members of management and other participants with a three-year vesting schedule (i.e., one-third vesting on each of December 31, 2019, 2020 and 2021). These awards, which were subject to cancellation in the event stockholders did not approve the 2018 Plan during 2019, were initially classified as a derivative liability due to the grant terms containing a commitment by the Company to make a liquidated damages payment to the participants in cash (with respect to the value of one-third of the award) in the event stockholders did not approve the 2018 Plan by the first scheduled vesting date. Such obligation was eliminated upon stockholder approval of the 2018 Plan being obtained, which resulted in the liability being reclassified to additional paid in capital at the fair value amount of $0.8 million during the year ended December 31, 2019.

In addition, the awards of RSUs that were granted under the Company's Second Long-Term Incentive Plan ("Second Incentive Plan") prior to approval by the Company's stockholders, which was obtained in March 2018, were initially classified as a derivative liability due to the Company's obligation to settle those awards in cash in the event stockholders did not approve the plan. The awards under the Second Incentive Plan included RSUs approved at the time of the Merger and RSUs approved in December 2017 for the Company's Executive Chairman and Chief Strategy Officer in connection with the cancellation of awards of restricted stock they received under the Company's 2016 Long-Term Incentive Plan (the "First Incentive Plan"). The awards of RSUs to such executives under the Second Incentive Plan were considered a modification that resulted in the original classification of their awards as an equity instrument being switched to a liability instrument, and in $1.5 million of previously recognized compensation expense being reclassified from additional paid in capital to derivative liability. The derivative liability associated with awards under the Second Incentive Plan was eliminated upon stockholder approval, and the liability was reclassified to additional paid in capital at the fair value amount of $2.8 million during the year ended September 30, 2018.

See Note 14, "Derivatives and Hedging Activities," for a discussion of the Company's cross-currency swap.