EQUITY-BASED COMPENSATION EXPENSE

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

Equity Incentive Plans

The Company adopted an incentive plan in November 2020 (the “2020 Plan”) which authorized the issuance of incentive common unit options and restricted common units (collectively, “Awards”). The maximum number of Awards to be issued under the 2020 Plan is 10,031 and any Awards that expire or are forfeited may be re-issued. A total of 9,994 Awards had been issued under the plan as of March 31, 2022. The Awards generally vest over two or three years. The estimated fair value of the Awards at issuance is recognized as compensation expense over the related vesting period.

In conjunction with the Conversion, the holders of the restricted common units issued under the 2020 Plan received one restricted share of Class A common stock (a “Restricted Common Share”) for each restricted common unit held immediately prior to the Conversion.

The following table summarizes the restricted common shares activity during the three months ended March 31, 2022:


			Restricted Common Shares



Unvested, December 31, 2021			1,653

Vested			(866)
Forfeited			(12)
Unvested, March 31, 2022			775

As of March 31, 2022, total unrecognized compensation cost related to the restricted common shares was $206, which is expected to be recognized over a weighted-average remaining vesting period of 0.5 years.

In July 2021, the Company adopted a new stock incentive plan (the “2021 Plan”), pursuant to which 17,000 shares of Class A common stock are reserved for issuance thereunder, subject to certain adjustments and other terms. Following the adoption of the 2021 Plan, no additional awards are expected to be issued under the 2020 Plan. The 2021 Plan authorized the issuance of stock options, stock appreciation rights (“SAR Awards”), restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and other stock-based awards (collectively the “2021 Plan Awards”). Any 2021 Plan Awards that expire or are forfeited may be re-issued. The estimated fair value of the 2021 Plan Awards at issuance is recognized as compensation expense over the related vesting, exercise, or service periods, as applicable. As of March 31, 2022, there were 6,546 shares of Class A common stock available for grant for future equity-based compensation awards under the 2021 Plan. Activity related to awards issued under the 2021 Plan is further described below. As of March 31, 2022, no SAR Awards and no RSAs have been granted under the 2021 Plan.

Stock Options

The following table summarizes stock option activity during the three months ended March 31, 2022:


	Options Outstanding
(in thousands, except per share amounts)	Number of Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (years)	Aggregate Intrinsic Value(1)
Outstanding, December 31, 2021	—	$	—	—	$	—
Granted	1,331	$	4.10


Outstanding, March 31, 2022	1,331	$	4.10	5.0	$	—
Exercisable at March 31, 2022	—	$	4.10	5.0	$	—

(1)Based on the amount by which the closing market price of our Class A common stock exceeds the exercise price on each date indicated.

No options were exercised during the three months ended March 31, 2022. As of March 31, 2022, total unrecognized stock-based compensation expense related to unvested options was $2,590, which is expected to be recognized over a weighted-average remaining vesting period of 2.5 years.

We determine the fair value of stock options on the grant date using a Black-Scholes option pricing model. The fair value of stock options granted during the three months ended March 31, 2022 was calculated on the date of grant using the following weighted-average assumptions:


	Three Months Ended March 31, 2022
Risk-free interest rate	2.6	%
Expected term (years)	3.75
Dividend yield	0	%
Expected volatility	70.0	%

Using the Black-Scholes option pricing model, the weighted-average fair value of stock options granted during the three months ended March 31, 2022 was $1.97 per share.

Restricted Stock Units

The following table summarizes the RSU activity during the three months ended March 31, 2022:


	Number of Shares (in thousands)	Weighted-Average Grant Date Fair Value per Share



Unvested, December 31, 2021	6,329	$	10.48
Granted	3,238	3.87
Vested(1)	(3,265)	6.28
Forfeited	(498)	6.09
Unvested, March 31, 2022	5,804	$	9.36

(1)Includes 1,260 vested shares that were withheld to cover tax obligations and were subsequently canceled.

As of March 31, 2022, total unrecognized compensation cost related to the RSUs was $51,392, which is expected to be recognized over a weighted-average remaining vesting period of 2.0 years.

Compensation Expense by Type of Award

The following table details the equity-based compensation expense by type of award for the periods presented:


	Three Months Ended March 31,
(in thousands)	2022		2021
RSUs(1)	$	5,533	$	—
Restricted Common Shares	155		2,487
Stock Options	27		—
Total equity-based compensation expense	$	5,715	$	2,487

(1)Includes RSUs issued for the 2021 annual performance bonus, which is included in “Accounts payable and accrued liabilities” on the unaudited Condensed Consolidated Balance Sheet at December 31, 2021. These RSUs vested at issuance with a value of $7,959, which reflects a change in estimate of $632 that is included as a reduction to equity-based compensation expense and is included within “General and administrative expenses” on the unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2022.

Of the total equity-based compensation expense, $3,211 was capitalized to inventory during the three months ended March 31, 2022 and $4,030 and $4,814 remains capitalized as of March 31, 2022 and December 31, 2021, respectively. No equity-based compensation expense was capitalized during the three months ended March 31, 2021. During the three months ended March 31, 2022 and 2021, we recognized $2,504 and $2,487, respectively, within “General and administrative expenses” and $3,995 and none, respectively, within “Cost of goods sold” on the unaudited Condensed Consolidated Statements of Operations.

Employee Stock Purchase Plan

In July 2021, the Company also adopted an employee stock purchase plan (the “2021 ESPP”), pursuant to which 4,000 shares of Class A common stock are reserved for issuance thereunder, subject to certain adjustments and other terms. No shares have been issued under the 2021 ESPP as of March 31, 2022.