Stock-Based Compensation

9 Months Ended

Sep. 30, 2022

Stock-Based Compensation

Stock-Based Compensation

Note 9 Stock-Based Compensation

The Company recognized total stock compensation expense for the three and nine months ended September 30, 2022 of $0.8 million and $20.8 million, respectively.  No stock compensation expense was recognized in the comparative periods.

In connection with obligations to issue Class A common stock to former holders of Award Units under the Company’s former Change in Control Bonus Plan, the Company paid approximately $1.4 million of tax withholding obligations for federal and state payroll taxes. Of that amount, $917 thousand related to employee payroll tax withholdings and has accordingly been recorded as a reduction to additional paid-in capital. The Company’s stock compensation expense was recognized in the following captions within the consolidated statements of operations:

(in thousands)	Three Months Ended		Nine Months Ended
	September 30, 2022		September 30, 2022
Cost of revenues	$	406	$	1,100
General and administrative*		(1,478)		12,034
Sales and marketing		1,454		4,939
Technology and development		451		2,715
Total stock compensation expense	$	833	$	20,788

*Includes forfeitures of restricted stock primarily resulting from Chief Executive Officer transition in the three months ended September 30, 2022.

Total unrecognized stock compensation expense related to unvested restricted stock units (“RSUs”) and contingently issuable shares of Class A common stock that will vest within one year of the IPO contingent upon continued employment requirements (“Contingently Issuable Shares”) was $25.9 million as of September 30, 2022, which is expected to be recognized over a weighted-average period of 2 years from the date of grant.

In connection with the IPO, the Company adopted the 2021 Incentive Plan (the “Plan”). The Plan provides for grants of stock options, stock appreciation rights, restricted stock, restricted stock units, bonus stock, dividend equivalents, other stock-based awards, substitute awards, annual incentive awards and performance awards intended to align the interests of participants with those of the Company’s shareholders.

During the three months ended September 30, 2022, there were no stock options granted under the Plan.  For the nine months ended September 30, 2022, there were 84,000 options granted under the Plan, at a weighted average exercise

price of $9.86 per option.  During the three months ended September 30, 2022, 32,000 stock options were forfeited. As of September 30, 2022, there was approximately $296 thousand of unrecognized equity-based compensation expense related to the remaining stock options issued during 2022, which is expected to be recognized over a weighted-average period of approximately 3 years.  No stock options were granted prior to the quarter ended June 30, 2022.  The total fair value of the stock options that vested in the nine months ended September 30, 2022 was immaterial.

The assumptions used for the options granted under the Plan during the nine months ended September 30, 2022 were as follows:

Assumptions
Expected volatility	64.54%
Expected term of award	6.5 years
Risk-free rate	3.39%
Dividend yield	0.00%

In connection with the IPO, the Company also adopted the 2021 Employee Stock Purchase Plan (“2021 ESPP”). Under the 2021 ESPP, eligible employees may be granted options to purchase shares of Class A common stock at the lower of 85% of the fair market value of the stock at the time of grant or 85% of the fair market value at the time of exercise. As of September 30, 2022, no options were granted to employees under the 2021 ESPP.