Stock/Unit-Based Compensation

The Limited Liability Company Agreement for Charah Management provided for the issuance of up to 1,000 Series C profits interests (the “Charah Series C Profits Interests”). In 2017, Charah Management adopted the Charah Series C Profits Interest Plan and issued 650 of such units to employees. The Charah Series C Profits Interests participated in distributions to Charah members based on specified rates of return being realized on the Charah Management LLC Series A Membership Interests and the Charah Management LLC Series B Membership Interests. The Charah Series C Profits Interest Plan is no longer in place following our corporate reorganization and related IPO. The Charah Series C Profits Interests would have vested ratably in each of the first five anniversaries of their grant date with vesting accelerated upon a change of control. There were 540 Charah Series C Profits Interests unvested at June 18, 2018, which were canceled as a result of the corporate reorganization that occurred upon the closing of the IPO (see further discussion below).

The Limited Liability Company Agreement for Allied provided for the issuance of up to 1,000 Series C profits interests (the “Allied Series C Profits Interests”). In 2017, Allied adopted the Allied Series C Profits Interest Plan and issued 550 of such units to employees. The Allied Series C Profits Interests participated in distributions to Allied members based on specified rates of return being realized on the Allied Power Management, LLC Series A Membership Interests and the Allied Power Management, LLC Series B Membership Interests. The Allied Series C Profits Interest Plan is no longer in place following our corporate reorganization and related IPO. The Allied Series C Profits Interests vested immediately upon grant.

In connection with the corporate reorganization that occurred upon the closing of the IPO, the holders of the Charah Series C Profits Interests and the Allied Series C Profits Interests received 1,215,956 shares of common stock (the “Management Reorganization Consideration”) in exchange for the contribution to the Company of their Charah Series C Profits Interests and Allied Series C Profits Interests. Of these shares, 303,993 vested immediately and 911,963 are subject to time-based vesting conditions, as well as performance vesting conditions, based on specified EBITDA targets and achievement of certain safety metrics, which will be determined at a future date. In addition, 272,708 shares of common stock were issued under the Charah Solutions, Inc. 2018 Omnibus Incentive Plan (the “2018 Plan”). Of these shares, 68,176 vested immediately and 204,532 are subject to the same time-based vesting conditions and performance vesting conditions as the shares issued as part of the Management Reorganization Consideration. The fair value of the awards was calculated initially as $12 per share, and will be updated thereafter for changes at each reporting period until the performance targets are approved by the Company’s board of directors. The fair value of the awards is recognized over the required service period for each grant. As of June 30, 2019, 500,253 of the shares subject to time based and performance vesting conditions were vested.

Upon the closing of the IPO, the board of directors of the Company adopted the 2018 Plan, pursuant to which employees, consultants and directors of the Company and its affiliates, including named executive officers, are eligible to receive awards. The 2018 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, bonus stock, dividend equivalents, other stock-based awards, substitute awards, annual incentive awards and performance awards intended to align the interests of participants with those of Company stockholders. The Company has reserved 3,006,582 shares of common stock for issuance under the 2018 Plan, and all future equity awards described above will be issued pursuant to the 2018 Plan.

During the three months ended June 30, 2018, the Company issued 44,198 shares under the 2018 Plan that vested after one year. The fair value of the awards was calculated as $12 per share, which was recognized over the one year vesting period. As of June 30, 2019, 31,577 of the shares were vested and 12,621 had been forfeited. During the three months ended September 30, 2018, the Company issued 45,004 shares under the 2018 Plan that vest after one year. The fair value of the awards was calculated as $7.67 per share, which is being recognized over the one year vesting period. As of June 30, 2019, none of the shares were vested.

During the three months ended June 30, 2019, the Company granted 755,455 restricted stock units ("RSUs") under the 2018 Plan that are time-based. Of these RSUs, 116,381 vest after one year, 550,106 vest in equal installments over three years, and 88,968 vest in equal installments over four years. The fair value of these RSUs is based on the market price of the Company's shares on the grant date. As of June 30, 2019, none of the shares were vested. Additionally, we granted 330,628 performance share units ("PSUs") under the 2018 Plan that cliff vest after three years. The vesting of these PSUs is dependent upon the Company's achievement of a certain stock price metrics. The fair value of the PSUs was determined using a binomial lattice model based upon the grant date stock price, a risk-free interest rate of 2.29% based upon the U.S. Treasury yield curve in effect at the time of the grants, and an assumed volatility rate of 30% based upon a comparable public company analysis. As of June 30, 2019, none of the shares were vested.

A summary of the Company’s non-vested share activity for the six months ended June 30, 2019 is as follows:



	Shares		Weighted-Average Fair Value		Weighted-Average Remaining Contractual Terms (Years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2018	1,198,703		$	11.84	0.77	$	10,009
Granted	1,086,083		5.95
Forfeited	(187,327	)	11.21
Vested	(531,830	)	10.69
Outstanding as of June 30, 2019	1,565,629		$	7.13	1.73	$	8,611

Stock-based compensation expense related to the shares issued as part of the Management Reorganization Consideration and the 2018 Plan was $799 and $1,189 during the three months ended June 30, 2019 and 2018, respectively, and $1,007 and $1,189 during the six months ended June 30, 2019 and 2018, respectively.

As of June 30, 2019, total unrecognized stock-based compensation expense related to non-vested awards, net of estimated forfeitures, was $6,077, and is expected to be recognized over a weighted-average period of 1.97 years. The total fair value of awards vested for the three and six months ended June 30, 2019 was $379 and $5,685, respectively.