Equity-Based Compensation

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Equity-Based Compensation

7. Equity-Based Compensation

In April 2023, Wayfair’s stockholders approved the 2023 Incentive Award Plan (the “2023 Plan”) to replace Wayfair’s 2014 Incentive Award Plan, as amended (the “2014 Plan” and, together with the 2023 Plan, the “Incentive Plans”). The Incentive Plans were adopted by the board of directors (the “Board”) to grant cash and equity incentive awards to eligible participants in order to attract, motivate and retain talent. The Incentive Plans are administered by the Board for awards to non-employee directors and by the compensation committee of the Board for other participants and provide for the issuance of equity-based awards including stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance awards and stock payments.

Under the 2023 Plan, 20,525,663 shares of Class A common stock initially were available for future award grants. As of March 31, 2024, 14,207,455 shares of Class A common stock remained available for future grant under the 2023 Plan.

The following table presents activity relating to RSUs for the three months ended March 31, 2024:

	Shares	Weighted-Average Grant Date Fair Value
Unvested at December 31, 2023	5,186,886	$	93.68
RSUs granted	1,321,993	$	65.40
RSUs vested	(2,279,438)	$	75.40
RSUs forfeited/canceled	(720,589)	$	99.23
Unvested at March 31, 2024	3,508,852	$	93.74

As of March 31, 2024, unrecognized equity-based compensation expense related to RSUs expected to vest over time is $209 million with a weighted-average remaining vesting term of 0.6 years.

The following table summarizes activity for the three months ended March 31, 2024 and 2023:

	Three Months Ended March 31,
	2024		2023
Weighted average grant date fair value of RSUs	$	65.40	$	41.63
Total fair value of vested RSUs (in millions)	$	172	$	171
Intrinsic value of RSUs vested (in millions)	$	129	$	117

As of March 31, 2024, the aggregate intrinsic value of unvested RSUs was $238 million.

Equity-based compensation was classified as follows in the condensed consolidated statements of operations:

		Three Months Ended March 31,
		2024		2023
	(in millions)
Cost of goods sold		$	2	$	3
Customer service and merchant fees		5		8
Selling, operations, technology, general and administrative		112		133
Total equity-based compensation expense		$	119	$	144

Equity-based compensation costs capitalized as site and software development costs were $11 million and $13 million for the three months ended March 31, 2024 and 2023, respectively.