In 2008, the Company adopted its 2008 Stock Option/Stock Issuance Plan and, in 2017, the Company adopted the Zeta Global Holdings Corp. 2017 Incentive Plan (collectively, the “Plans”).

The Plans permitted the issuance of stock options, restricted stock and restricted stock units to employees, directors and officers, consultants or advisors and non-employee directors of the Company. Options granted under the Plans expire no later than ten years from the grant date. Prior to the IPO, the restricted stock and restricted stock units granted under the Plans generally did not vest until a change in control. Upon a change in control, restricted stock and restricted stock units vest as to 25% of the shares with the balance of the shares vesting in equal quarterly installments following the change in control over the remainder of a five-year term from the original date of grant. The restricted stock and restricted stock units fully vest upon a change in control to the extent five years has passed from the original date of grant of the restricted stock or restricted stock units. Since the vesting of these awards was contingent upon the change of control event, which was not considered probable until it occurs, the Company did not record any stock-based compensation for such awards prior to the IPO, a change in control event. The stock-based compensation has been recognized following the vesting of restricted stock, restricted stock units and options as described below. In connection with our IPO, the Company adopted the Zeta Global Holdings Corp. 2021 Incentive Award Plan (the “2021 Plan”), which was effective as of the day prior to the first public trading date of our Class A common stock. All restricted stock, restricted stock units and options granted since the IPO have been granted under the 2021 Plan.

In the past, the Company has cancelled certain restricted stock and in connection with such cancellation has issued restricted stock units to the holders of that restricted stock, with the same vesting conditions as the cancelled restricted stock.

As noted above, the Company’s restricted stock and restricted stock units granted prior to the IPO did not vest until a change of control. On March 24, 2021, the Company’s board of directors approved a modification in the vesting terms of its restricted stock and restricted stock unit awards. This modification was accounted for under the guidance in ASC 718-20-35-3. Given the vesting of the modified awards contained a performance condition associated with the IPO, the Company had determined that the modification was considered improbable-to-improbable under ASC 718-20-55-118 through 119.

The restricted stock or restricted stock units that were tendered by the holders in the buy-back program for certain restricted stock and restricted stock units were liability classified and as such the expense related to these grants has been recognized based on the settlement price as of the date of IPO. In connection with the other holders, the Company will recognize compensation expense over the modified vesting terms, based on the fair value as of the date of modification. The portion of the awards subject to future service would remain classified as equity awards and expense would be recognized over the remaining future service period.

During the six months ended June 30, 2022, the Company's board of directors approved the modification of the vesting schedule of certain awards granted prior to the IPO. The modification will have an impact of accelerating the vesting of those grants such that certain grants that were scheduled to cliff vest in September and December of 2022, will now vest from July to December of 2022 in equal monthly instalments. The modification was accounted for in accordance with ASC 718-20-35-3. The impact of such modification did not have any material impact on the stock-based compensation during the six months ended June 30, 2022.

The following is the activity of restricted stock and restricted stock units granted by the Company:


	Shares			Weighted Average Grant Date Fair Value
Non-vested as of January 1, 2022		65,208,870		$	10.86
Granted (1)		6,901,773			10.57
Vested		(2,932,313	)		11.12
Forfeited (2)		(960,790	)		10.60
Non-vested as of June 30, 2022 (3)		68,217,540		$	10.82

(1)

During the six months ended June 30, 2022, the Company granted 6,730,505 restricted stock and 171,268 restricted stock units to its employees, advisors and non-employee directors.

(2)

During the six months ended June 30, 2022, 901,847 restricted stock and 58,943 restricted stock units were forfeited.

(3)

Includes 47,616,581 unvested Class A restricted stock, 19,261,835 unvested Class B restricted stock and 1,339,124 unvested restricted stock units as of June 30, 2022.

Following is the summary of transactions under the Company’s stock option plan:


	Number of options			Weighted average exercise price		Weighted average remaining contractual life (years)		Aggregate intrinsic value
Outstanding options as of January 1, 2021		1,150,893		$	3.61		5.31	$	3.89
Exercised		(31,985	)		3.29		—		—
Forfeited		(231,246	)		3.96		—		—
Outstanding options as of December 31, 2021		887,662		$	3.53		4.19	$	5.28
Granted		574,250			10.83
Exercised		(237,030	)		0.55
Forfeited		(18,500	)		10.83
Outstanding options as of June 30, 2022		1,206,382		$	7.48		6.88	$	(2.89	)

The Company engaged a third-party valuation firm to determine the estimated fair value of the options using the Black-Scholes-Merton method, which was determined as $7.46 for the options issued during the three months ended June 30, 2022 using the following assumptions:

On February 23, 2022, the Compensation Committee of the Board of Directors approved the grant of 1,979,500 PSUs under the Company’s 2021 Incentive Award Plan. Upon achievement of the conditions described below, the PSUs could result in the issuance of up to 7,438,500 shares of Class A common stock. Each PSU represents the right to receive shares of Class A common stock as set forth in the PSU grant agreement or, at the option of the Company, an equivalent amount of cash. Participants have no right to the distribution of any shares or payment of any cash until the time (if ever) the PSUs are earned and have vested. Each PSU provides for the right to receive a dividend equivalent to the value of any ordinary cash dividends paid on substantially all the outstanding shares of Class A common stock if the PSUs are earned and vested. The PSUs may be earned at the end of each fiscal quarter beginning with the three-month period ending on December 31, 2022 and ending with, and including, the three month period ending on December 31, 2026. Such number of shares of Class A common stock shall be earned as a percentage of the PSUs granted, as set forth in the table below, based on the 20-day volume-weighted average closing price per share (“VWAP”) for such quarter. The number of PSUs earned for such quarter shall be reduced by the number of PSUs, if any, earned in any prior quarter.


20 Day VWAP of Class A common stock	Below $13.84	$	13.84	$	16.34	$	18.84	$	22.34	$	25.34	$	38.09
Percentage of target PSUs	0%	25%		50%		100%		150%		200%		*

* The percentage of target PSUs earned at $38.09 for each participant ranges between 300% and 500%.

Earned PSUs vest in three equal annual installments, with the first installment vesting on the date the Company determines the number of PSUs that are eligible to vest for such quarter, and the second and third installments vesting on the first and second anniversaries of such determination date, subject to accelerated vesting in connection with certain qualifying terminations of employment or a change in control.

Following is the summary of PSUs under the Company’s 2021 Incentive Award Plan:


	Number of PSUs		Weighted Average Grant Date Fair Value
Outstanding as of January 1, 2022		1,500,000	$	1.95
Granted		1,979,500		9.10
Outstanding as of June 30, 2022		3,479,500	$	6.02

The Company engaged a third-party valuation firm to determine the estimated fair value of the PSUs using the Monte Carlo simulation method, which was determined as $9.10 per PSU issued during the six months ended June 30, 2022 using the following assumptions:

During the three and six months ended June 30, 2022, the Company recognized an expense of $1,107 and $1,663, respectively, related to the target PSUs.

On July 28, 2021, the Compensation Committee of the Board of Directors approved the Company’s first offering period under the ESPP, which commenced on August 1, 2021 and ended November 30, 2021. Following the end of the first offering period, the ESPP shall have consecutive offering periods of approximately six months in length commencing each year on December 1 and June 1 and ending on each May 31 and November 30 occurring six months later, as applicable.

During the three months ended June 30, 2022, the Company issued 196,385 shares of Class A common stock related to the ESPP offering that ended on May 31, 2022.

During the three and six months ended June 30, 2022, the Company recognized an expense of $414 and $790, respectively, related to the five months of offering that ended on May 31, 2022 and one month of the offering that commenced on June 1, 2022. The fair value of the offering that commenced on June 1, 2022 was estimated at $3.44 per share, and expected to result in an issuance of approximately 293,879 shares of Class A common stock under this offering that will end on November 30, 2022.

The Company has $467,831 of unrecognized compensation expense related to its 68,217,540 unvested restricted stock and restricted stock units, 3,479,500 performance stock units, 555,750 unvested options and 293,879 shares of Class A common stock to be issued under the ESPP. This unrecognized stock-based compensation will be recognized over a weighted average period of 1.17 years.