Equity-Based Compensation

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

Equity Incentive Plan

On October 14, 2020, the Company’s 2020 Plan became effective. The 2020 Plan authorized 6,683,919 new shares, subject to adjustments pursuant to the 2020 Plan.

In the nine months ended September 30, 2021, the Company granted an aggregate of 605,319 RSUs to employees and board of director members and 177,472 Performance Stock Units (PSUs) to certain executives. The PSUs cliff vest after three years and upon meeting certain revenue and adjusted EPS targets. The PSUs also contain a modifier based on the total stock return (TSR) compared to a certain Index which modifies the number of PSUs that vest.

Activity under the 2020 Plan was as follows:


	Number of Shares	Weighted Average Grant Date Fair Value
RSU
Unvested, December 31, 2020	500,006	$	22.00
Granted	605,319	$	23.77
Vested	—	—
Forfeited	(61,817)	$	26.33
Unvested, September 30, 2021	1,043,508	$	22.77
PSU	Number of Shares	Weighted Average Grant Date Fair Value
Unvested, December 31, 2020	—	$	—
Granted	177,472	$	28.25
Vested	—	—
Forfeited	(17,460)	$	30.74
Unvested, September 30, 2021	160,012	$	27.98

Class B Units

The Company accounted for equity grants to employees of Class B Units of Former Parent (the “Units”) as equity-based compensation under ASC 718, Compensation-Stock Compensation. The Units contained vesting provisions as defined in the agreement. Equity-based compensation cost was measured at the grant date fair value and recognized on a straight-line basis over the requisite service period, including those units with graded vesting with a corresponding credit to additional paid-in capital as a capital contribution from Former Parent; however, the amount of equity-based compensation at any date is equal to the portion of the grant date value of the award that is vested.

The Units issued to employees were measured at fair value on the grant date using an option pricing model. The Company utilizes the estimated weighted average of the Company’s expected fund life dependent on various exit scenarios to estimate the expected term of the awards. Expected volatility is based on the average of historical and implied volatility of a set of comparable companies, adjusted for size and leverage. The risk-free rates are based on the yields of U.S. Treasury instruments with comparable terms. Actual results may vary depending on the assumptions applied within the model.

On March 23, 2021, in connection with the closing of the 2021 Follow-on Offering, all of the outstanding Class B Units of Former Parent were immediately vested per the terms of the equity awards, resulting in the Company accelerating the recognition of expense of $8.9 million.

For the three and nine months ended September 30, 2021, the Company recognized $2.2 million and $14.3 million in equity-based compensation, respectively. For the three and nine months ended September 30, 2020, the Company recognized $0.9 million and $3.3 million in equity-based compensation, respectively. As of September 30, 2021, the Company had $18.4 million of unrecognized compensation costs which is expected to be recognized over a period of 2.3 years. There were 18,772 and 79,277 forfeitures during the three and nine months ended September 30, 2021 and no forfeitures during the three and nine month ended September 30, 2020.