Share-Based Compensation Expense

3 Months Ended

Mar. 31, 2022

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Share-Based Compensation Expense

10. Share-Based Compensation Expense

Share-based payments consist of grants of restricted share units (“RSUs”) and performance-based restricted share units (“PRSUs”). The Company recognizes compensation expense on a straight-line basis over the requisite service period for awards expected to ultimately vest.

Predecessor Replacement Awards

In connection with the Business Combination, the holders of certain unvested awards under the Predecessor plans were granted replacement awards in the Successor company.

•Class B units: The unvested Class B units of Alight Holdings were granted replacement shares of unvested Class A, Class B-1 and Class B-2 Common Stock and ultimately vest on the third anniversary of the Closing Date, but could vest earlier based on the achievement of certain market-based conditions.

•Class A-1 units: The unvested Class A-1 units of Alight Holdings were granted replacement shares of unvested Class A, Class B-1 and Class B-2 Common Stock on an equivalent fair value basis. The service-based portion of the grant vests ratably over periods of two to five years and the remaining vests upon the achievement of certain market-based conditions.

The Class B and Class A-1 units that were replaced represent the unvested shares of Class A, Class B-1 and Class B-2 Common Stock subject to the forfeiture re-allocation provision per the Class Z instruments discussed in Note 9 “Stockholders’ and Members’ Equity”. These unvested shares are accounted for as restricted stock in accordance with Accounting Standards Codification Topic 718, Compensation - Stock Compensation.

Successor Awards

In connection with the Business Combination, the Company adopted the Alight, Inc. 2021 Omnibus Incentive Plan. Under this plan, for grants issued during the Successor three months ended March 31, 2022, approximately 55% of the units are subject to time-based vesting requirements and approximately 45% are subject to performance-based vesting requirements. The majority of the time-based RSUs vest ratably each March 10 over a three-year period with one-third vesting on each of March 10, 2023, 2024 and 2025. The majority of the PRSUs vest upon achievement of the Company’s performance goals, Total Revenue and Total BPaaS Revenue.

The Company begins to recognize expense associated with the PRSUs when the achievement of the performance condition is deemed probable. During the first quarter of 2022, based on management's analysis of the corresponding performance conditions, the Company increased expected achievement levels related to the PRSUs granted in 2021.

The fair value of each RSU and PRSU is based upon the grant date market price. The aggregate grant date fair value of RSUs and PRSUs granted during the Successor three months ended March 31, 2022 was $43 million and $87 million, respectively.

Restricted Share Units and Performance Based Restricted Share Units

The following tables summarizes the unit activity related to the RSUs and PRSUs during the three months ended March 31, 2022:

				Weighted					Weighted
				Average					Average
				Grant Date					Grant Date
				Fair Value					Fair Value
	RSUs(1)			Per Unit		PRSUs(1)			Per Unit
Balance as of December 31, 2021		7,148,416		$	12.27		16,743,113		$	11.20
Granted		4,705,544			9.12		7,905,475			10.99
Vested		(252,041	)		9.76		—			—
Forfeited		(323,181	)		12.64		(603,204	)		11.93
Balance as of March 31, 2022		11,278,738		$	10.98		24,045,384		$	11.05

(1) These share totals include both unvested shares and restricted stock units.

Share-based Compensation

The Company recorded share-based compensation costs related to the RSUs and PRSUs for the Successor three months ended March 31, 2022 and the Predecessor three months ended March 31, 2021 of $33 million and $2 million, respectively.

As of March 31, 2022, total future compensation expense related to unvested RSUs was $116 million, which will be recognized over a remaining weighted-average amortization period of approximately 1.6 years. As of March 31, 2022, total future compensation expense related to PRSUs was $222 million, which will be recognized over a remaining weighted-average amortization period of approximately 2.0 years.