Equity Based Compensation

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

Equity Based Compensation

(15) Equity Based Compensation

Unit Option Plan

In December 2011, the board of Inspirato LLC approved an equity-based compensation plan (the “Unit Option Plan”), which provided for the grant of options to purchase the Inspirato LLC’s common units, to Inspirato LLC’s employees, directors, and consultants. No issuances under the Unit Option Plan have been made since January 2021 and the Unit Option Plan was terminated in connection with the Business Combination and no new equity awards may be issued thereunder.

Options granted under the Unit Option Plan were issued unvested and vest based on the applicable optionee’s continued employment with Inspirato LLC through the applicable vesting dates. In general, the vesting start date for an option issued to a newly hired employee is the employee’s hire date, and the besting start date of an option issued to an existing employee is the options’s grant date. Once granted, the options vest over a period of three to five years. The term of each option is stated in the applicable option agreement, provided, however, that the term is no more than 10 years from each such option’s date of grant. Each option’s exercise price per common unit was no less than the fair market value per common unit established on the date of grant, as determined by Inspirato LLC’s board of managers.

The fair value of each option granted under the Unit Option Plan is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used. There were no grants made during the three months ended March 31, 2021:

	2021
Approximate risk-free rate		0.49	%
Average expected life		6 years
Volatility		47.6	%
Estimated per share fair value of options granted	$	12.89

As of March 31, 2022 option expense remaining to be recognized was $1.3 million and will be recognized over the next eight years. There were 8.4 million and 7.6 million options outstanding at March 31, 2021 and 2022, respectively, with 0 and 26 thousand options exercised during the three months ended March 31, 2021 and 2022, respectively.

Profits Interests

No profits interests were issued during the three months ended March 31, 2021 and 2022. Each award of profits interests vests over the time period defined set forth in each individual grant the applicable profits interest award agreement underlying the award or, subject to the applicable executive’s continued service. If an executive terminated service, any unvested profits interests held by such executive would be forfeited to Inspirato LLC. If Inspirato LLC experienced a “deemed liquidation event,” all of the then-outstanding and unvested profits interests would accelerate and fully vest upon a change of control event. Profits interests are non-voting profits interest incentive units pursuant to individual award agreements, which set forth such additional terms and conditions, including the vesting and forfeiture terms. The profits interests participate in the distributions upon vesting of the units. At both December 31, 2021 and March 31, 2022, there were 9.3 million, as converted, profits interests issued and outstanding, and $1.1 million in profits interest expense remained to be recognized as of March 31, 2022.

2021 Plan

In 2022, the board of directors and the stockholders of the Company approved the 2021 Equity Incentive Plan (the “2021 Plan”), which provides for the grant of stock options, restricted stock unit (“RSU”) awards, and other equity awards to the Company’s employees, directors, and consultants. No stock options, RSU awards or other equity awards were granted under the 2021 Plan as of March 31, 2022.