Share-Based Compensation

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

Class B Common Unit Incentive Plan (the “Class B Plan”)

Prior to the Business Combination, commencing in 2013, the Board of Managers of Open Lending, LLC approved the Class B Unit Incentive Plan (the “Class B Plan”), which was a form of long-term compensation that provided for the issuance of ownership shares to service providers for purposes of retaining them and enabling such individuals to participate in the long-term growth and financial success of Open Lending, LLC. As a result of the Business Combination, the Board of Managers approved an acceleration of the awards granted in connection with the Class B Plan, to allow accelerated vesting of the units at the consummation of the Business Combination. On the date of the Closing, the Class B common units were converted into shares of Company common stock utilizing the exchange ratio established in the Business Combination Agreement, and the accelerated vesting of 571,983 awards resulted in $2.2 million of non-cash share-based compensation expense recorded to general and administrative expense during the nine months ended September 30, 2020.

2020 Stock Option and Incentive Plan (the “2020 Plan”)

Prior to the Closing on June 9, 2020, Nebula’s stockholders approved the 2020 Plan. The 2020 Plan provides for the grant of stock options, stock appreciation rights, restricted stock units and other stock or cash-based awards. The Company initially reserved 9,693,750 shares, approximately 10% of its common stock outstanding upon the Closing, as the “Initial Limit” for the issuance of awards under the 2020 Plan. The 2020 Plan provides that the number of shares reserved and available for issuance under the plan will automatically increase each January 1, beginning on January 1, 2021, by 4% of the outstanding number of shares of the Company’s common stock on the immediately preceding December 31, or the “Annual Increase.” This limit is subject to adjustment in the event of a stock split, stock dividend or other change in the Company’s capitalization. As of September 30, 2021, the shares reserved and available for issuance under the 2020 Plan are 14,207,175, which includes the 4% annual increase in 2021 less restricted stock units and stock options granted under the 2020 Plan.

Share-based compensation expense recorded for each type of award is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands)
Time-Based Restricted Stock Units	$	638	$	—	$	1,329	$	—
Performance-Based Restricted Stock Units	277		—		830		—
Stock Options	183		—		567		—
Class B Common Units	—		—		—		2,676
Total share-based compensation expense	$	1,098	$	—	$	2,726	$	2,676

During the three and nine months ended September 30, 2021 and 2020, share-based compensation expense was allocated to cost of services, general and administrative, selling and marketing, and research and development, generally based on the functional

responsibilities of the awarded unit holders in the accompanying condensed consolidated statements of operations and comprehensive income as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands)
General and administrative	$	925	$	—	$	2,252	$	2,633
Selling and marketing	89		—		271		12
Cost of services	45		—		102		25
Research and development	39		—		101		6
Total	$	1,098	$	—	$	2,726	$	2,676

The following table provides information related to the Company’s share-based compensation award activity for the nine months ended September 30, 2021:


	Time-Based Restricted Stock Units			Stock Options			Performance-Based Restricted Stock Units
	Number of Awards	Weighted Average Fair Value at Grant Date		Number of Awards	Weighted Average Exercise Price		Number of Awards	Weighted Average Fair Value at Grant Date
Outstanding as of December 31, 2020	109,920	$	28.20	199,764	$	33.56	—	$	—
Granted	153,594	38.72		—	—		99,289	33.44
Vested/Exercised	—	—		—	—		—	—
Forfeited	—	—		(3,868)	33.56		—	—
Outstanding as of September 30, 2021	263,514	$	34.33	195,896	$	33.56	99,289	$	33.44

The unrecognized share-based compensation expense at September 30, 2021 was as follows:

Unrecognized Share-based Compensation Expense

Weighted Average Amortization Period

(in thousands)

Time-Based Restricted Stock Units

7,571

3.18 years

Stock Options

2,467

3.25 years

Performance-Based Restricted Stock Units

2,490

2.25 years

Total unrecognized share-based compensation expense

12,528

3.01 years