Stock-Based Compensation

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

Note 7 – Stock-Based Compensation

Equity Incentive Plan

In October 2020, in connection with the Business Combination, the Company’s stockholders approved the Parts iD, Inc. 2020 Equity Incentive Plan (the “2020 EIP”). The 2020 EIP became effective immediately upon the closing of the Business Combination. As of December 31, 2021, of the 4,904,596 shares of Class A common stock reserved for issuance under the 2020 EIP in the aggregate, 4,112,248 shares remained available for issuance.

The 2020 EIP provides for the grant of stock options, restricted stock, restricted stock units, performance shares, performance units, stock appreciation rights, other stock-based awards and cash awards (collectively “awards”). The awards may be granted to employees, directors and consultants of the Company.

Beginning in January 2021, the Company has granted both restricted stock units (“RSUs”) and restricted performance-based stock units (“PSUs”) as described below.

Restricted Stock Units

The following table summarizes the activity related to RSUs during the year ended December 31, 2021:

	Year ended December 31, 2021
				Weighted
	Restricted			Average Grant
	Stock Units			Date Fair Value
Unvested balance at beginning of the period	-			$	-
Granted		2,358,381		$	6.54
Vested		(792,348	)	$	6.56
Forfeited		(15,000	)	$	8.02
Unvested balance at December 31, 2021		1,551,033		$	6.52

The Company has granted RSUs that vest over a specified period, generally up to three years from the date of grant. RSUs granted in 2021 included (a) 106,806 RSUs granted to directors, of which 49,994 vested on November 20, 2021 and the balance of 56,812 will vest on the earlier of June 8, 2022 or the date of the 2022 annual meeting of stockholders, and (b) 2,251,575 RSUs granted to various employees, contractors and consultants, of which (i) 742,354 vested on November 20, 2021, (ii) 15,000 were forfeited, and (iii) 1,494,221 will vest, subject to the participants’ continued service to the Company, as provided in the applicable award agreement.

The Company recognized $6,011,550 of stock-based compensation expense associated with RSUs for the year ended December 31, 2021. As of December 31, 2021, approximately $9.32 million of unamortized stock-based compensation expense was associated with outstanding RSUs, which is expected to be recognized over a remaining weighted average period of 1.8 years.

Performance Based Restricted Stock Units

The following tables summarize the activity related to PSUs during the year ended December 31, 2021:

PSU Type	Balance at January 1, 2021		Granted		Forfeited		Balance at December 31, 2021
Net revenue based		-		503,200		8,000		495,200
Weighted average grant date fair value	$	-	$	8.00	$	8.02	$	8.00
Cash flow based		-		125,800		2,000		123,800
Weighted average grant date fair value	$	-	$	2.44	$	2.44	$	2.44
Total		-		629,000		10,000		619,000

During the year ended December 31, 2021, the Company granted 629,000 PSUs to several employees, contractors and consultants that contain both service and performance-based vesting conditions, of which 10,000 PSUs were forfeited and the remaining were outstanding as of December 31, 2021. The PSUs will vest in March 2024 based upon the level of achievement of several Company-specific cumulative operational performance milestones for the three years ended December 31, 2023, as determined by the Compensation Committee of the Company.

Of the PSUs granted in 2021, 80% are based on net revenue performance-based vesting conditions that were established at the grant date and 20% are subject to cash flow performance-based vesting conditions, of which certain thresholds had not been established as of December 31, 2021. As a result, the service inception date of the cash-flow based PSUs precedes the grant date associated with these PSUs and the recognition of compensation expense is based upon the fair value of these PSUs as of December 31, 2021. See “Stock Compensation” in Note 2 for more information.

During the year ended December 31, 2021, the Company recognized stock-based compensation expense associated with PSUs of $962,100. As of December 31, 2021, approximately $3.3 million of unamortized stock-based compensation expense was associated with outstanding PSUs, which is expected to be recognized over a weighted average period of 2.0 years.

Employee Stock Purchase Plan

In October 2020, in connection with the Business Combination, the Company’s stockholders approved the Parts iD, Inc. 2020 Employee Stock Purchase Plan (the “2020 ESPP”). There are 2,043,582 shares of Class A common stock available for issuance under the 2020 ESPP. The 2020 ESPP became effective immediately upon the closing of the Business Combination, but it has not yet been implemented. As of December 31, 2021 and 2020, no shares had been issued under the 2020 ESPP.