XML 71 R19.htm IDEA: XBRL DOCUMENT v3.23.1
Stock-based Compensation
 12 Months Ended
Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]  
Stock-based Compensation Stock-based Compensation
Stock-based compensation expense reflects share awards issued under the Spark Networks 2018 virtual stock option plan ("2018 VSOP") and the LTIP.

2018 VSOP

In 2017, Spark Networks established the 2017 VSOP for selected executives and employees of the Company and its subsidiaries. In March 2018, the Company replaced the 2017 VSOP by establishing the 2018 VSOP for selected executives and employees of the Company and its subsidiaries if and to the extent that the plan participants under the 2017 VSOP have agreed to such replacement. All plan participants agreed to the replacement. Both plans, which were established following the merger between Affinitas GmbH ("Affinitas") and Spark, Inc. in 2017, replaced plans in effect under Affinitas prior to the merger.

Under the 2018 VSOP, the Company granted participants a certain number of virtual stock options in exchange for options granted under the 2017 VSOP and/or a certain number of new virtual stock options. Awards issued under the 2018 VSOP have a contractual term of 85 months and vest over a period of four years from the grant date, whereby one fourth of each option award vests upon the first anniversary of the grant with the remaining options vesting in six-month installments. The 2017 VSOP options which were exchanged for the 2018 VSOP vest over a period of three years from the grant date, whereby one third of each option award vest on the first-year anniversary of the grant and the remaining options vesting in six month installments. The Company will not grant any additional awards under the 2018 VSOP.

Vested awards under the 2018 VSOP may be settled for either equity shares or a cash amount equal to the market price of the Company's ADS minus the share price. The method of settlement is at the discretion of the Company. As a result, awards issued under the 2018 VSOP are treated as equity settled.
The following table summarizes the activity for the Company's options under the 2018 VSOP:

Number of OptionsWeighted Average Exercise PriceWeighted Average Remaining Contractual Term
(in years)
Outstanding as of December 31, 2021310,031$11.52 3.12
Outstanding as of December 31, 2022310,031$11.52 2.12
Options vested and exercisable as of December 31, 2022309,406$11.52 2.12

Number of OptionsWeighted Average Grant Date Fair Value
Unvested as of December 31, 20212,810 $7.07 
Vested(2,185)$6.99 
Unvested as of December 31, 2022625 $7.38 

The total grant date fair value of options that vested during 2022 and 2021 was insignificant.

As the options are subject to a graded vesting schedule, the grant date fair value of each tranche is expensed ratably over the related vesting period. Estimated forfeitures are revised if the number of options expected to vest differ from previous estimate, and if any differences between the actual and estimated forfeitures are accounted for in the period they occur.

There was no unrecognized compensation expense related to awards granted under the 2018 VSOP at December 31, 2022.

2020 Long Term Incentive Plan

In January 2020, the Administrative Board of the Company (the "Administrative Board") adopted the LTIP for applicable executives and employees of the Company and its subsidiaries as part of their remuneration for future services. The LTIP provides for the grant of virtual stock options, where each option represents the right to receive, upon exercise, a certain amount in cash determined based on the relevant ADS Stock Price of the option minus the strike price of such options; provided, however, that the Company may elect to settle options in ADSs or ordinary shares of the Company instead of cash. The LTIP provides that the strike price can be set at any amount determined by the Administrative Board, including zero. Under the LTIP, the "ADS Stock Price" is, as of the grant date, the average closing price of one ADS of Spark Networks trading on a U.S. stock exchange for the period of five trading days prior to such date. Spark Networks classifies awards under the LTIP as equity-settled.

Options granted under the LTIP have a contractual term of 85 months and vest, subject to the employee's continued service to the Company, as follows: (i) 25% of the total number of options granted to a participant vest 12 months after the grant date of such option, and (ii) an additional 6.25% of such options shall vest at the end of each additional three-month period thereafter until the end of the 48th month after the relevant grant date.

In connection with the adoption of the LTIP, the Administrative Board authorized the issuance of virtual options for up to 3.5 million ADSs, subject to limitations imposed by German law. As of December 31, 2022, 181,309 ADSs have been issued pursuant to previous exercises.

The fair value of the virtual stock options and zero-priced options are measured using a Black-Scholes option-pricing model for the years ended December 31, 2022 and 2021.
The inputs used in the measurement of the fair values at the date of grant for the options issued during the year ended December 31, 2022 are summarized below:

Virtual Stock OptionsZero-Priced Options
Long CallShort CallLong CallShort Call
OptionOption (Cap)OptionOption (Cap)
Stock price
$1.16 - $3.19
$1.16 - $3.19
$1.16 - $3.19
$1.16 - $3.19
Strike price
$1.07 - $3.37
$10.70 - $33.70
$—$50.00
Term (in years)4.654.654.654.65
Volatility
65.0% - 70.0%
65.0% - 70.0%
65.0% - 70.0%
65.0% - 70.0%
Dividend—%—%—%—%
Risk-free rate
2.4% - 4.1%
2.4% - 4.1%
2.4% - 4.1%
2.4% - 4.1%

The inputs used in the measurement of the fair values at the date of grant for the options issued during the year ended December 31, 2021 are summarized below:

Virtual Stock OptionsZero-Priced Options
Long CallShort CallLong CallShort Call
OptionOption (Cap)OptionOption (Cap)
Stock price
$3.21 - $5.42
$3.21 - $5.42
$3.21 - $5.42
$3.21 - $5.42
Strike price
$3.13 - $5.34
$31.30 - $53.40
$—$50.00
Term (in years)
4.65 - 4.67
4.65 - 4.67
4.65 - 4.67
4.65 - 4.67
Volatility
62.7% - 64.0%
62.7% - 64.0%
62.7% - 64.0%
62.7% - 64.0%
Dividend—%—%—%—%
Risk-free rate
0.7% - 0.9%
0.7% - 0.9%
0.7% - 0.9%
0.7% - 0.9%

The following table summarizes the activity for the Company's options under the 2020 LTIP during the year ended December 31, 2022:
Number of OptionsWeighted Average Exercise PriceWeighted Average Remaining Contractual TermAggregate Intrinsic Value
(in years)
Outstanding as of December 31, 20211,802,228$4.71 5.62$0.01 
Granted1,132,000$2.78 
Forfeited(778,230)$4.14 
Outstanding as of December 31, 20222,155,998$3.91 5.36$— 
Vested and exercisable at December 31, 20221,003,490$4.77 4.38$— 

Number of OptionsWeighted Average Grant Date Fair Value
Unvested as of December 31, 20211,190,967$2.53 
Granted1,132,000$1.07 
Vested(392,229)$2.66 
Forfeited(778,230)$2.22 
Unvested as of December 31, 20221,152,508$1.26 
The following table summarizes the activity for the Company's zero priced options under the 2020 LTIP:
Number of Options
Outstanding as of December 31, 2021584,068
Granted570,500
Exercised(110,664)
Forfeited(330,445)
Outstanding as of December 31, 2022713,459
Vested and exercisable at December 31, 2022139,244

Number of OptionsWeighted Average Grant Date Fair Value
Unvested as of December 31, 2021514,370$5.29 
Granted570,500$2.46 
Vested(180,210)$5.55 
Forfeited(330,445)$4.73 
Unvested as of December 31, 2022574,215 $2.72 

The total grant date fair value of options that vested during 2022 and 2021 related to awards granted under the 2020 LTIP was $2.0 million and $3.6 million, respectively. The total intrinsic value of options exercised during 2022 and 2021 was $0.3 million and $1.0 million, respectively.

The total unrecognized compensation expense related to awards granted under the 2020 LTIP at December 31, 2022 was $1.9 million, which will be recognized over a weighted-average period of 3.17 years.

For the years ended December 31, 2022 and 2021, the Company recognized total stock-based compensation expense for all the plans of $1.5 million and $2.7 million, respectively, which is included as a component of Other operating expenses in the Consolidated Statements of Operations and Comprehensive Loss.