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Stock-based Compensation
 9 Months Ended
Sep. 30, 2023
Share-Based Payment Arrangement [Abstract]  
Stock-based Compensation Stock-based Compensation
WM Holding Company, LLC Equity Incentive Plan
The Company accounted for the issuance of Class A-3 and Class B Units issued under the WM Holding Company, LLC Equity Incentive Plan in accordance with ASC 718 - Stock Based Compensation. The Company considered the limitation on the exercisability of the Class A-3 and Class B Units to be a performance condition and recorded compensation cost when it became probable that the performance condition would be met.
In connection with the Business Combination, each of the Class A-3 Units outstanding prior to the Business Combination were cancelled, and the holder thereof received a number of Class A units representing limited liability company interests of WMH LLC (the “Class A Units”) and an equivalent number of shares of Class V Common Stock, par value $0.0001 per share (together with the Class A Units, the “Paired Interests”), and each of the Class B Units outstanding prior to the Business Combination were cancelled and holders thereof received a number of Class P units representing limited liability company interests of WMH LLC (the “Class P Units” and together with the Class A Units, the “Units”), each in accordance with the Merger Agreement.
Concurrently with the closing of the Business Combination, the Unit holders entered into an exchange agreement (the “Exchange Agreement”). The terms of the Exchange Agreement, among other things, provide the Unit holders (or certain permitted transferees thereof) with the right from time to time at and after 180 days following the Business Combination to exchange their vested Paired Interests for shares of Class A Common Stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications, or Class P Units for shares of Class A Common Stock with a value equal to the value of such Class P Units less their participation threshold, or in each case, at the Company’s election, the cash equivalent of such shares of Class A Common Stock.
A summary of the Class P Unit activity for the nine months ended September 30, 2023 is as follows:
Number of Units
Outstanding Class P Units, December 31, 202215,125,429 
Cancellations(64,302)
Exchanged for Class A Common Stock(95,000)
Outstanding, Class P Units, September 30, 202314,966,127 
Vested, September 30, 202314,853,794
As of September 30, 2023, unrecognized stock-based compensation expense for non-vested Class P Units was $0.3 million, which is expected to be recognized over a weighted-average period of 1.2 years. For the three months ended September 30, 2023 and 2022, the Company recorded stock-based compensation expense for the Class P Units of $0.1 million and $0.6 million, respectively. For the nine months ended September 30, 2023 and 2022, the Company recorded stock-based compensation expense for the Class P Units of $0.5 million and $1.8 million, respectively.
WM Technology, Inc. Equity Incentive Plan
In connection with the Business Combination, the Company adopted the WM Technology, Inc. 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan permits the granting of incentive stock options to employees and for the grant of nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other forms of stock awards to employees, directors and consultants. As of September 30, 2023, 33,146,412 shares of Class A Common Stock were authorized for issuance pursuant to awards under the 2021 Plan. The number of shares of Class A Common stock reserved for issuance under the 2021 Plan will automatically increase on January 1 of each year for a period of ten years commencing on January 1, 2022 and ending on (and including) January 1, 2031, in an amount equal to five percent (5%) of the total number of shares of the Company’s capital stock outstanding on December 31 of the preceding year; provided, however that the Board may act prior to January 1st of a given year to provide that the increase for such year will be a lesser number of shares of Common Stock. As of September 30, 2023, 20,510,346 shares of Class A Common Stock were available for future issuance.
A summary of the restricted stock unit (“RSU”) activity for the nine months ended September 30, 2023 is as follows:
Number of RSUsWeighted-average Grant Date Fair Value
Non-vested at December 31, 2022
6,269,868 $7.07 
Granted5,242,710$0.96 
Vested(1,775,434)$6.98 
Forfeited(2,563,436)$4.52 
Non-vested at September 30, 2023
7,173,708$3.53 
As of September 30, 2023, unrecognized stock-based compensation expense for non-vested RSUs was $24.1 million, which is expected to be recognized over a weighted-average period of 2.1 years. For the three months ended September 30, 2023 and 2022, the Company recorded stock-based compensation expense for the RSUs of $2.7 million and $5.3 million, respectively. For the nine months ended September 30, 2023 and 2022, the Company recorded stock-based compensation expense for the RSUs of $10.1 million and $15.8 million, respectively.
On January 5, 2023, the compensation committee of the Company’s board of directors granted the Company’s Executive Chair, Douglas Francis, an award of 481,927 RSU with an approximate value of $800,000, based on the average closing price of the Company’s Class A common stock for the 90-day period prior to the grant date (the “RSU Grant”), in recognition of his leadership of the Company’s executive team since August 2022. On May 8, 2023, Mr. Francis declined the RSU Grant and the RSUs were forfeited.
The Company grants performance-based restricted stock units (“PRSUs”) with performance and service-based vesting conditions. The level of achievement of such goals may cause the actual number of units that ultimately vest to range from 0% to 200% of the original units granted. The Company recognizes expense ratably over the vesting period for the PRSUs when it is probable that the performance criteria specified will be achieved. The fair value is equal to the market price of the Company’s common stock on the date of grant.
A summary of the PRSU activity for the nine months ended September 30, 2023 is as follows:
Number of PRSUsWeighted-average Grant Date Fair Value
Non-vested at December 31, 2022
859,375 $6.40 
Granted— $— 
Vested— $— 
Forfeited(625,000)$6.40 
Non-vested at September 30, 2023
234,375$6.40 
Based on the probability of attainment as of September 30, 2023, the unrecognized stock-based compensation expense for non-vested PRSUs was less than $0.1 million, which is expected to be recognized over a period of 0.3 years. For the three months ended September 30, 2023 and 2022, the Company recorded stock-based compensation credits for the PRSUs of $0.5 million and $4.2 million, respectively. For the nine months ended September 30, 2023 and 2022, the Company recorded stock-based compensation credits for the PRSUs of $0.2 million and $0.4 million, respectively.
The Company recorded stock-based compensation cost related to the Class P Units, RSUs and PRSUs in the following expense categories on the accompanying condensed consolidated statements of operations (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Sales and marketing$587 $956 $2,180 $4,839 
Product development944 1,065 3,226 3,993 
General and administrative766 (382)4,983 8,418 
Total stock-based compensation expense2,297 1,639 10,389 17,250 
Amount capitalized to software development365 337 959 1,266 
Total stock-based compensation cost$2,662 $1,976 $11,348 $18,516