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Equity Based Compensation
 12 Months Ended
Dec. 31, 2024
Share-Based Payment Arrangement [Abstract]  
Equity Based Compensation Equity Based Compensation
Prior to the Reorganization and pursuant to previously established equity award plans, certain employees were granted incentive units of LLC (“Incentive Units”) that vest over three to five years. All holders of the Incentive Units become fully vested in the event of a change in control, death or disability, as long as the holder of the unit is employed by the Company on the date of such event. Further, certain Incentive Unit holders who are terminated without cause will have their unvested units fully vest upon that event. In connection with the Reorganization, the Incentive Unit holders contributed their Incentive Units to Arhaus, Inc. in exchange for shares of Class A or Class B common stock for their vested Incentive Units and Class A or Class B restricted stock for their unvested Incentive Units. The vesting requirements for the exchanged Class A and Class B restricted stock (collectively the "Restricted Stock") did not change from the original Incentive Unit terms.
Activity of the Company’s Restricted Stock and their equity based compensation expense are summarized in the following tables (amounts in thousands, except share and per share data):
Restricted Stock
Class A
Amount
Weighted Average
Grant Date Fair Value
Unvested at December 31, 2023500,304 $15.47 
Granted— — 
Forfeited(48,628)18.61 
Vested(227,224)$11.70 
Unvested at December 31, 2024224,452 $18.61 
Year Ended
December 31,
202420232022
Equity based compensation expense - Restricted Stock(1)
$2,354 $2,697 $2,756 
(1) Total unrecognized compensation cost to be recognized in future periods is $2.9 million at December 31, 2024, and will be recognized over a weighted average period of 1.4 years. Equity based compensation is recorded within selling, general and administrative expenses on our consolidated statements of comprehensive income.
The total fair value of Restricted Stock vested during the years ended December 31, 2024, 2023 and 2022 was $3.4 million, $13.1 million and $11.8 million, respectively.
The Arhaus, Inc. 2021 Equity Incentive Plan (the “2021 Plan”), adopted on November 8, 2021, authorizes the Company the ability to grant stock options (either incentive or non-qualified), stock appreciation rights, restricted stock, restricted stock units
(“RSUs”), performance shares, performance share units (“PSUs”) and other stock-based awards with respect to our Class A common stock to our employees, officers, consultants, advisors and directors. The maximum number of Class A common stock that may be granted under the 2021 Plan is 11,205,100 shares. As of December 31, 2024, there were 8,625,752 shares of Class A common stock available to be granted.
Per the 2021 Plan, each RSU and PSU represents a contingent right to receive one share of the Company’s Class A common stock upon vesting. The RSUs granted to award recipients generally vest in one-third increments on each of the first, second and third anniversary of the date of grant, provided that the award recipient continues to serve the Company through the applicable vesting date (“Continuous Service”). If the award recipient’s Continuous Service terminates for any reason other than death, disability or in connection with a change in control (as such terms are defined in the 2021 Plan), unless the Compensation Committee of the Board of Directors determines otherwise, all RSUs that are unvested at the time of such termination shall be forfeited and cancelled immediately without consideration. RSU and PSU awards contain forfeitable rights to dividend equivalents. Dividend equivalents for outstanding awards are accrued when dividends are declared on the Company’s common stock but are not paid until the awards vest, and dividend equivalents accrued for awards that ultimately do not vest are forfeited. The RSUs issued to certain members of the Board of Directors will generally vest on the one-year anniversary of the grant date.
The number of PSUs earned will be based on the Company’s financial performance as measured against pre-established target goals for cumulative demand revenue and cumulative adjusted EBITDA (the “Performance Goals”) over the applicable performance period. PSUs will vest as of the end of the performance period subject to the award recipient’s Continuous Service, but will not settle and payout until the number of PSUs earned is determined by the Compensation Committee. The award recipient may earn between 0% and 200% of the PSU target award based on the Company’s achievement of the Performance Goals. The Company accounts for forfeitures as they occur.
Activity of the Company’s PSU and RSU awards and their equity based compensation expense are summarized in the following tables (amounts in thousands, except share and per share data):
PSU AwardsRSU Awards
AmountWeighted Average Grant Date Fair ValueAmountWeighted Average Grant Date Fair Value
Unvested at December 31, 2023700,229 $7.20 1,248,165 $7.79 
Granted254,923 15.83 356,405 15.75 
Forfeited(176,771)10.06 (110,074)11.13 
Vested(351,625)5.75 (533,948)7.55 
Unvested at December 31, 2024426,756 $12.37 960,548 $10.50 
Year Ended
December 31,
202420232022
Equity based compensation expense - PSUs(1)
$399 $2,274 $774 
Equity based compensation expense - RSUs(2)
$4,887 $2,938 $758 
(1) Total unrecognized equity based compensation for the PSUs to be recognized in future periods is $1.9 million at December 31, 2024, and will be recognized over a weighted average period of 1.5 years. Equity based compensation expense is recorded within selling, general and administrative expenses on our consolidated statements of comprehensive income.
(2) Total unrecognized equity based compensation for the RSUs to be recognized in future periods is $7.3 million at December 31, 2024, and will be recognized over a weighted average period of 1.8 years. Equity based compensation expense is recorded within selling, general and administrative expenses on our consolidated statements of comprehensive income.
The total fair value of PSUs vested during the years ended December 31, 2024 was $3.3 million. There were no PSUs that vested for the years ended December 31, 2023 and 2022.
The total fair value of RSUs vested during the years ended December 31, 2024 and 2023 was $7.1 million and $3.5 million. There were no RSUs that vested for the year ended December 31, 2022.