Equity-Based Compensation

12 Months Ended

Dec. 31, 2023

Equity-Based Compensation

Equity-Based Compensation

12. Equity-Based Compensation

NextNav 2021 Omnibus Incentive Plan

In October 2021, the Company adopted the NextNav 2021 Omnibus Incentive Plan (the “Omnibus Plan”). The Omnibus Plan became effective upon consummation of the Business Combination and succeeds the Incentive Plan. Upon adoption of the Omnibus Plan, a total of 12,818,902 shares were approved to be issued as stock options and restricted stock awards under the Omnibus Plan. In addition, the Omnibus Plan provides for annual increases in the number of shares available for issuance thereunder on the first day of each fiscal year beginning with the 2023 fiscal year, equal to the lesser of: (i) 5,636,259 shares; or (ii) a lesser number of shares as determined by the Company’s Board of Directors. (the “Board”). The vesting period of awards granted under the Omnibus Plan is determined by the Board, although, for service-based awards vesting has historically been generally ratably over a four-year period. As of December 31, 2023, a total of 8,231,360 shares were available for future issuance under the Omnibus Plan.  

Stock Options Valuation

The Black-Scholes option pricing model requires NextNav to make certain assumptions, including the fair value of the underlying units, the expected term, the expected volatility, the risk-free interest rate, and the dividend yield. The expected term of option awards is calculated as the midpoint between the vesting date and the end of the contractual term. Historical data is not sufficient to reasonably estimate the expected term of new grants. The expected dividend rate of zero is based on the fact that NextNav has not historically paid and does not expect to pay a dividend on its common stock. The risk-free interest rate was based on U.S. Treasury yields for securities with similar terms. Volatility was calculated based on the trading prices for a group of comparable public companies. 

Assumptions used in determining the fair value of Stock Options issued each year are as follows: 

	Year Ended December 31,
	2023			2022
Expected volatility		60 - 67.2	%		52.9	%
Expected term (years)		4.41 - 6.25			6.25
Expected dividends		—			—
Risk-free rate		3.58 - 4.23	%		1.83	%

The following table summarizes stock option activity under the Omnibus Plan:

	Number of Shares		Weighted Average Exercise Price per Unit		Weighted-Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
	(in thousands, except per share data)
Outstanding at December 31, 2022		2,293	$	2.22	$	8.04	$	4,464
Granted		1,989		3.01		—		—
Cancelled		379		3.46		—		—
Expired		2		0.28		—		—
Exercised		260		0.28		—		—
Options outstanding at December 31, 2023		3,641	$	2.66	$	8.13	$	8,388
Options exercisable at December 31, 2023		1,774	$	1.92	$	7.20	$	5,102
Options exercisable at December 31, 2022		1,296	$	0.44	$	7.64	$	3,357
Unvested at December 31, 2023		1,897	$	3.35	$	8.99	$	2,982
Unvested at December 31, 2022		997	$	4.52	$	8.56	$	1,107

The weighted average grant date fair value of options granted during the years ended December 31, 2023 and 2022 was $2.52 and $6.98, respectively. The intrinsic value of options exercised during the years ended December 31, 2023 and 2022 was $1.09 million and $0.29 million, respectively.

As of December 31, 2023, the total compensation cost related to nonvested awards not yet recognized was $3.28 million and the weighted-average period over which it is expected to be recognized was 2.6 years.

Equity-based compensation expense of $2.57 million and $1.4 million related to stock options equity awards was recognized during the years ended December 31, 2023 and 2022, respectively.

Restricted Stock Awards and Restricted Stock Units

The Company’s restricted stock awards are comprised of Restricted Stock Awards (“RSAs”) and Restricted Stock Units (“RSUs”). The following table summarizes RSA and RSU activity during the year ended December 31, 2023:

	Restricted Stock Units		Restricted Stock Awards		Total Restricted Awards		Weighted-Average Grant-Date Fair Value
	(in thousands, except per share data)
Units nonvested at January 1, 2023		2,380		208		2,588	$	7.61
Units granted in 2023		5,448		459		5,907		3.25
Units cancelled in 2023		294		—		294		1.54
Units vested in 2023		2,548		333		2,881		6.20
Units nonvested at December 31, 2023		4,986		334		5,320	$	3.79

Units granted in 2023 included 1,000,000 performance-based RSUs granted to Ms. Mariam Sorond in connection with her appointment as the Company’s President and CEO. These RSUs will vest in full upon achievement of certain regulatory milestones, to be approved by the Compensation and Human Capital Committee of the Board. The performance period is 4 years beginning from November 29, 2023. 

The grant date fair value of RSAs and RSUs granted during the year ended December 31, 2023 was $19.2 million. The total fair value of RSAs and RSUs vested upon grant and vested during the year ended December 31, 2023 was $17.9 million. 

As of December 31, 2023, the total compensation cost related to RSAs and RSUs not yet recognized was $17.9 million and the weighted-average period over which it is expected to be recognized was 2.98 years.

Equity-based compensation expense of $19.3 million related to the RSAs and RSUs was recognized during the year ended December 31, 2023.