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Equity Incentive and Employee Stock Purchase Plan
 12 Months Ended
Dec. 31, 2021
Share-based Payment Arrangement [Abstract]  
Equity Incentive and Employee Stock Purchase Plan Equity Incentive and Employee Stock Purchase Plan
Prior to the Separation from Ziff Davis, the Company recorded share-based compensation expense for share-based awards granted to its employees and non-employees for services provided based on expense that was allocated from the Former Parent to the Company for each relevant employee on a monthly basis. The Former Parents’ plans included their 2015 Stock Plan and the 2001 Employee Stock Purchase Plan.

In connection with the Separation, the Former Parent terminated awards that were held by Consensus employees. These were replaced with awards issued under the 2021 Equity Incentive Plan. Each award held by a Consensus employee under the Former Parent’s compensation plans was converted into 2.21 Consensus awards under the 2021 Equity Incentive Plan, which resulted in 86,460 Ziff Davis awards converted into 191,076 Consensus awards. This modification resulted in no incremental compensation cost.

In 2021, the Company recorded a reduction of share-based compensation expense, offset by APIC, of $3.2 million, net of federal income tax expense of $1.0 million, of which $3.0 million, net of federal income tax expense of $0.9 million, is deemed to be an out of period correction that is not deemed to be material to either the current or any prior periods.
Consensus Equity Incentive Plans

(a) The 2021 Equity Incentive Plan

In December 2021, Consensus’ Board of Directors adopted the Consensus Cloud Solutions, Inc. 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan provides for the grant of incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and share units, and other share-based awards. 4,000,000 shares of common stock are authorized to be used for 2021 Plan purposes.

Restricted Stock and Restricted Stock Units

Consensus has awarded restricted stock and restricted stock units to its Board of Directors and senior staff pursuant to the 2021 Plan. Compensation expense resulting from restricted stock and restricted unit grants is measured at fair value on the date of grant and is recognized as share-based compensation expense over the applicable vesting period. Vesting periods are approximately one year for awards to members of the Company’s Board of Directors, four years for senior staff (excluding market-based awards discussed below) and five years for the Chief Executive Officer and Chief Operating Officer. The Company issued 59,175 shares of restricted stock awards (excluding awards with market conditions below), all of which were exchanged in the Separation. The Company granted 510,128 shares of restricted stock units (excluding units with market conditions below), which includes 91,203 shares exchanged in the Separation, during the year ended December 31, 2021.

Restricted Stock and Restricted Stock Units with Market Conditions

Consensus has awarded certain key employees market-based restricted stock awards pursuant to the 2021 Plan. The market-based awards have vesting conditions that are based on specified stock price targets of the Company’s common stock. Market conditions were factored into the grant date fair value using a Monte Carlo valuation model, which utilized multiple input variables to determine the probability of the Company achieving the specified stock price targets with a 20-day and 30-day lookback (trading days). Stock-based compensation expense related to an award with a market condition will be recognized over the requisite service period using the graded-vesting method unless the market condition has been met and requisite service period has been completed, then the expense will be accelerated and recognized in period. During the year ended December 31, 2021, the Company issued 6,060 shares of market-based restricted stock awards, all of which were exchanged in the Separation. The Company granted 503,144 market-based restricted stock units, which includes 34,638 shares exchanged in the Separation, during the year ended December 31, 2021. The per share weighted-average grant-date fair values of the market-based restricted stock awards granted during the year ended December 31, 2021 was $57.67.

The weighted-average fair values of market-based restricted stock awards granted have been estimated utilizing the following assumptions:
December 31, 2021
Underlying stock price at valuation date$57.06 
Expected volatility35.1 %
Risk-free interest rate1.3 %
Restricted stock award activity for the year ended December 31, 2021 is set forth below: 
Number of SharesWeighted-Average
Grant-Date
Fair Value
Nonvested at January 1, 2021— $— 
Exchanged in Separation65,235 57.77 
Granted— — 
Vested— — 
Canceled— — 
Nonvested at December 31, 2021
65,235 $57.77 


Restricted stock unit activity for the year ended December 31, 2021 is set forth below:
Number of
Shares		Weighted-Average
Grant-Date
Fair Value		Weighted-Average
Remaining
Contractual
Life (in Years)		Aggregate
Intrinsic
Value
Outstanding at January 1, 2021— $—   
Exchanged in Separation125,841 63.69   
Granted887,431 27.78 
Vested— —   
Canceled(175)—   
Outstanding at December 31, 20211,013,097 $29.36 4.53$58,627,923 
Vested and expected to vest at December 31, 2021593,369 $38.28 3.68$34,338,282 

As of December 31, 2021, the Company had unrecognized share-based compensation cost of $48.6 million associated with these awards. This cost of $1.6 million and $47.0 million is expected to be recognized over a weighted-average period of 1.7 years for awards and 5.4 years for units, respectively. The Company recognized $0.2 million of tax benefits related to the restricted stock awards and restricted stock units for the periods ending December 31, 2021 related to the 2021 Plan.

(b) Employee Stock Purchase Plan (“ESPP”)
 
In October of 2021, Consensus established the Consensus Cloud Solutions, Inc. 2021 Employee Stock Purchase Plan (the “Purchase Plan”), which provides the issuance of a maximum of 1,000,000 shares of common stock. Under the Purchase Plan, eligible employees can have up to 15% of their earnings withheld, up to certain maximums, to be used to purchase shares of Consensus’ common stock at certain plan-defined dates. The purchase price for each offering period is 85% of the lesser of the fair market value of a share of common stock of the Company (a “Share”) on the beginning or the end of the offering period, with each offering period being six months.

Consensus performed an analysis of the Purchase Plan terms and determined that a plan provision exists which allows for the more favorable of two exercise prices, commonly referred to as a “look-back” feature. The purchase price discount and the look-back feature cause the Purchase Plan to be compensatory and the Company to recognize compensation expense. The compensation cost is recognized on a straight-line basis over the requisite service period. The Company recognized $0.1 million of compensation expense related to the Purchase Plan for the year ended December 31, 2021. The Company used the Black-Scholes option pricing model to calculate the estimated fair value of the purchase right issued under the Purchase Plan. The expected volatility is based on historical volatility of the Company’s common stock. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a term equal to the expected term of the option assumed at the date of grant. The Company uses an annualized dividend yield based upon the per share dividends declared by its Board of Directors. Estimated forfeiture rates was 10.34% as of December 31, 2021.

The compensation expense related to the Purchase Plan has been estimated utilizing the following assumptions:
December 31, 2021
Risk-free interest rate0.05%
Expected term (in years)0.5
Dividend yield0.00%
Expected volatility17.89%
Weighted average volatility17.89%
During 2021, 10,421 Consensus shares were purchased under the Purchase Plan at $49.67 per share. As of December 31, 2021, there are 989,579 shares available under the Purchase Plan for future issuance.