Equity Based Compensation

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

EQUITY BASED COMPENSATION

NOTE 10 – EQUITY BASED COMPENSATION

Equity based compensation was $3,627 thousand and $10,795 thousand for the years ended December 31, 2021 and 2020, respectively. The Company has incurred costs in the years ended December 31, 2021 and 2020 relating to four forms of equity based compensation: Class A units granted prior to and vested immediately upon the Atlas Business Combination and restricted share units, performance share units and price-vested stock options granted subsequent to the Atlas Business Combination. All discussed in further detail herein.

Class A Units

In December 2017, Atlas Intermediate’s Parent granted service-based Class A units to certain members of Atlas’ management. As of December 31, 2017, 1,000 units were authorized and reserved for issuance with 504 granted in December 2017. The Class A units granted provide for service-based vesting annually over 4 years from the grant date.

In April 2019, Atlas Intermediate’s Parent granted service-based Class A units to certain members of Atlas’ management. As of January 1, 2019, 1,666 units were authorized and reserved for issuance with 973.65 units granted as of December 31, 2019. The Class A units granted provide for service-based vesting annually over 4 years from the grant date. The grant date fair value was determined using assumptions about the current waterfall expected payout.

In connection with the Atlas Business Combination, the outstanding shares were vested under the change of control provisions within the agreements. The shares are currently reflected as Class B Common Shares and may be converted to Class A Common Shares as the lock-up agreements expire.

The following summarizes the activity of Class A unit awards during the year ended December 31, 2020:

	Number of unvested Class A units			Grant date fair value
Unvested Class A units as of December 31, 2019		1,226		$	9,845
Granted		-			-
Vested and converted to Class B Common Stock		(1,226	)		(9,845	)
Forfeited		-			-
Unvested Class A units as of December 31, 2020		-		$	-

The Company did not issue any further Class A units subsequent to the Atlas Business Combination.

Restricted and Performance Share Units

During the second quarters of 2021 and 2020, the Company awarded 378,353 and 510,136 restricted share units (“RSUs”) to approximately ninety employees at a grant day fair market value of $11.42 and $8.95 per share, respectively. The Company estimates the fair value of the RSUs as the closing price of the Company’s Class A common stock on the grant date of the award, which is expensed over the applicable vesting period. The fair market value on the date of issuance was $4.3 million and $4.6 million for the 2021 and 2020 grants, respectively. The vesting period for these RSUs is equal annual tranches, pro-ratably over three years, and there is no performance requirement attached to the RSUs other than continued service to the Company. During the three months ended July 2, 2021, 158,977 of the shares granted in 2020 vested and 11,602 shares were forfeited.

On January 29, 2021, the Company granted to a member of its executive team 75,000 RSUs of the Company’s Class A common stock, par value $0.0001, retroactive to December 31, 2020. The value of these RSUs approximated $0.5 million and is set to cliff vest on December 31, 2022.

On March 3, 2021, the Company granted to its Board of Directors 54,053 RSUs with a one-year vesting period and a grant date fair market value of $9.00 per share. There are no performance requirements to these RSUs other than continued service to the Company throughout the one-year vesting period. The value of this grant was $0.5 million.

During the second quarter of 2021, the Company also awarded 182,763 performance share units (“PSUs”) to its leadership team. The PSUs have both performance and market conditions that are required to be met for the shares to vest. The split between performance and market conditions is approximately 66.7% and 33.3%, respectively. If the conditions are met, the shares will cliff vest on the third anniversary of the award date. The Company has accounted for the portion of the award tied to the achievement of performance conditions based upon share price of $11.38 on the date of issuance and the probable number of shares anticipated to vest and accounted for the shares tied to market conditions based upon the fair market value as calculated in a Monte Carlo simulation. The Company will assess the probability of the performance conditions being achieved each quarter and adjust recorded stock compensation expense as appropriate. The fair market value as of the grant date was $1.4 million and $1.2 million for the performance and market based share units, respectively.

The Company estimates forfeitures of its stock awards. Actual forfeitures may differ from those estimates. The Company currently estimates its forfeitures as 3% of the RSUs awards granted each year but will continue to reassess its estimate on a quarterly basis.

A summary of our RSU and PSU activity is as follows:

	RSU					PSU
	Number of Shares (in thousands)			Weighted-Average Grant Date Fair Value Per Share		Number of Shares (in thousands)		Weighted-Average Grant Date Fair Value Per Share
Nonvested Balance ay December 31, 2019		-		$	-		-	$	-
Granted		585			8.70
Vested
Forfeited
Estimated Forfeiture
Nonvested Balance as of December 31, 2020		585			8.70		-		-
Granted		432			11.12		183		14.06
Vested		(159	)		8.95
Forfeited		(12	)		8.95
Estimated Forfeiture		(27	)		10.00
Nonvested Balance as of December 31, 2021		819		$	9.88		183	$	14.06

Price-Vested Stock Options

During the third quarter of 2021, the Company awarded 547,943 of price-vested stock options (the “options” or “stock options”) in aggregate to its Chief Executive, Chief Financial, and Chief Strategy Officers (collectively the “option awardees”). These options vested equally in four tranches on the second, third, fourth and fifth anniversary of the option grant date and is dependent upon the option awardees remaining employed by the Company and the stock price on the applicable tranche anniversary to be equal to or exceed a prescribed share price within the stock option agreement. The strike price of each options for each tranche is $10.50, which was the Company’s closing stock price on the option grant date. The Company has valued the options at fair market value based upon a Monte Carlo with Geometric Brown Motion simulation and will recognize the compensation cost for each tranche over a range of 5.17 to 5.93 years with values per option ranging from $2.29 to $3.55. The fair market value of the options as of the grant date was $1.6 million.