Equity-Based Compensation

6 Months Ended

Jun. 30, 2020

Equity-based compensation [Abstract]

Share-based Payment Arrangement [Text Block]

EQUITY-BASED COMPENSATION EXPENSE

Equity-based compensation expense recognized in the Statements of Operations for the periods presented is as follows:

Equity-based compensation expense	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Equity-based compensation - Plan	$	11,302	$	15,674	$	25,781	$	34,555
Equity-based compensation - Plan (CGC Awards)	7,181		314		11,992		314
Equity-based compensation - other	1,704		4,705		17,151		4,801
Total equity-based compensation expense	$	20,187	$	20,693	$	54,924	$	39,670

Equity-based compensation - Plan (Acreage Holdings, Inc. Omnibus Incentive Plan)

In connection with the RTO transaction, the Company’s Board of Directors adopted an Omnibus Incentive Plan, as amended May 7, 2019 and June 19, 2019 (the “Plan”), which permits the issuance of stock options, stock appreciation rights, stock awards, share units, performance shares, performance units and other stock-based awards up to an amount equal to 15% of the issued and outstanding Subordinate Voting Shares of the Company.

Restricted Share Units (“RSUs”)

	Six Months Ended June 30, 2020
Restricted Share Units (Fair value information expressed in whole dollars)	RSUs		Weighted Average Grant Date Fair Value
Unvested, beginning of period (1)	7,843		$	15.10
Granted	4,926		3.60
Forfeited	(2,052	)	13.15
Vested	(2,736	)	11.60
Unvested, end of period	7,981		$	9.70
Vested and unreleased	1,368		$	15.73
Outstanding, end of period	9,349		$	10.58

RSUs of the Company generally vest over a period of two years. The fair value for RSUs is based on the Company’s share price on the date of the grant. The Company recorded $12,684 and $26,098 as compensation expense during the three and six months ended June 30, 2020, respectively. The fair value of RSUs vested during the three and six months ended June 30, 2020 was $3,748 and $7,251, respectively.

The total weighted average remaining contractual life and aggregate intrinsic value of unvested RSUs at June 30, 2020 was approximately 2 years and $20,112, respectively. Unrecognized compensation expense related to these awards at June 30, 2020 was $62,919 and is expected to be recognized over a weighted average period of approximately 2 years.

There were 1,368 and 3 vested RSUs that are pending delivery or deferred as of June 30, 2020 and 2019, respectively. On February 20, 2020, the Company issued 1,505 RSUs to certain executives with a weighted-average grant date fair value of $5.11 per share. 148 of the 1,505 RSUs vested immediately. Certain shares are subject to restriction thus a discount for lack of marketability was applied that correlates to the period of time. On March 13, 2020, the Company issued 630 RSUs to employees of the Company. All of these units vested immediately, with a fair market value of $2.15, which was the closing price of the Company’s subordinate voting shares on March 13, 2020.

(1) Equity-based compensation - Plan (CGC Awards)

Included within the RSUs during the three and six months ended June 30, 2020 are “CGC Awards” issued in connection with the RSUs which were granted in July 2019:

On June 27, 2019, pursuant to the Arrangement Agreement (as defined in Note 13), 4,909 RSUs were awarded in total to five executive employees under the Plan. These awards vest as follows: 25% in June 2020, 25% in June 2021 and 50% three months following the Acquisition (as defined in Note 13). The Company recorded $5,587 and $8,349 as compensation expense during the three and six months ended June 30, 2020 in connection with these awards. A discount for lack of marketability was applied that correlates to the period of time certain of these shares are subject to restriction.

On July 31, 2019, the Company issued 1,778 RSUs to employees with unvested RSUs and stock options ("make-whole awards") as at the date of the Option Premium payment (as defined in Note 13). The RSUs were issued to provide additional incentive for employees that were not eligible to receive the full Option Premium and were subject to the same vesting terms as the unvested options and RSUs held as of the grant date. The Company recorded $1,594 and $3,643 as compensation expense during the three and six months ended June 30, 2020, respectively, in connection with these awards.

Stock options

	Six Months Ended June 30, 2020
Stock Options (Exercise price expressed in whole dollars)	Options		Weighted Average Exercise Price
Options outstanding, beginning of period	5,607		$	21.56
Granted	191		5.75
Forfeited	(869	)	17.29
Exercised	—		—
Options outstanding, end of period	4,929		$	21.70
Options exercisable, end of period	2,125		$	24.50

Stock options of the Company generally vest over a period of three years and have an expiration period of 10 years. The weighted average contractual life remaining for options outstanding and exercisable as of June 30, 2020 was approximately 9 years. The Company recorded $5,799 and $11,675 as compensation expense during the three and six months ended June 30, 2020, respectively, in connection with these awards. As of June 30, 2020, unamortized expense related to stock options totaled $33,070 and is expected to be recognized over a weighted-average period of approximately 1 year. There was no aggregate intrinsic value for options outstanding or exercisable as of June 30, 2020.

Equity-based compensation - other

HSCP C-1 Profits Interests Units (“Profits Interests”)

These membership units qualify as profits interests for U.S. federal income tax purposes and were accounted for in accordance with ASC 718, Compensation - Stock Compensation. HSCP amortizes awards over service period and until awards are fully vested.

The following table summarizes the status of unvested Profits Interests for the six months ended June 30, 2020:

	Six Months Ended June 30, 2020
Profits Interests (Fair value information expressed in whole dollars)	Number of Units		Weighted Average Grant Date Fair Value
Unvested, beginning of period	1,000		$	0.43
Class C-1 units granted	—		—
Class C-1 units canceled	—		—
Class C-1 vested	(1,000	)	0.43
Unvested, end of period	—		$	—

The Company recorded $0 and $70 as compensation expense in connection with these awards during the three and six months ended June 30, 2020, respectively. The fair value of Profits Interests vested during the three and six months ended June 30, 2020 was $0 and $1,239, respectively.

As of June 30, 2020, all Profits Interests were fully vested.

Restricted Shares (“RSs”)

In connection with the Company’s acquisition of Form Factory during 2019, 1,369 restricted shares with a grant date fair value of $20.45 were issued to former employees of Form Factory subject to future service conditions, which fully vest 24 months from the acquisition date. The fair value for RSs is based on the Company’s share price on the date of the grant. The Company recorded compensation expense of $1,704 and $17,081 during the three and six months ended June 30, 2020, respectively, in connection with these awards. During the three months ended June 30, 2020, certain employees separated from the Company, resulting in 161 RSs accelerating vesting and $2,131 incurred in expenses. During the six months ended June 30, 2020, certain employees separated from the Company, resulting in 1,289 RSs accelerating vesting and $17,019 incurred in expenses. The total weighted average remaining contractual life and aggregate intrinsic value of RSs at June 30, 2020 was approximately 1 year and $184, respectively. As of June 30, 2020, unamortized expense related to RSs totaled $150 and is expected to be recognized over a weighted average period of approximately 1 year. The total weighted average remaining contractual life and aggregate intrinsic value of RSs at June 30, 2019 was approximately 2 years and $22,465, respectively. As of June 30, 2019, unamortized expense related to RSs totaled $24,946 and is expected to be recognized over a weighted average period of approximately 2 years.