Note 11 – Stock-Based Compensation

During January 2021, the Company amended the 2016 LTIP increasing the total number of shares available for issuance to 9,400,000 from 4,500,000 and extended the term to September 30, 2030. Our 2016 LTIP provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock and dividend equivalent rights to our senior executives, directors, employees, and other service providers. Awards granted under the 2016 LTIP vest over the periods determined by the Board of Directors or the Compensation Committee of the Board of Directors, generally two to three years years and stock options granted under the 2016 LTIP expire no more than ten years after the date of grant. Approximately 6.2 million shares of our common stock were reserved for future grants as of March 31, 2021 under the 2016 LTIP.

Restrict Stock Awards and Restricted Stock Unit (collectively “RSU”) Activity

During the first quarter of 2021, a number of RSUs were granted to our senior executives, directors and employees.

Service-Based RSU Awards

A summary of the awards of Service-Based RSUs that vest upon the completion of a service requirement are presented below (in thousands, except per share amounts and contractual life years):

	Number of Shares			Weighted- Average Grant Date Fair Value (per share)		Weighted- Average Contractual Life (years)		Aggregate Intrinsic Value
Unvested Balance - December 31, 2020		59,521		$	0.18		2.4	$	2,000
Granted		2,674,863			36.56		–		–
Vested		–			–		–		–
Forfeited		(5,900	)		36.63		–		–
Unvested Balance - March 31, 2021		2,728,484		$	35.76		1.9	$	103,500

We recognized an expense of $7.7 million related to share-based compensation expense for Service-Based RSUs capable of being earned for completing a service requirement during the three months ended March 31, 2021. For comparative period ended March 31, 2020, we recorded immaterial share-based compensation expense. As of March 31, 2021, there was approximately $89.9 million of unrecognized stock-based compensation expense related to Service-Based RSUs, and this unrecognized expense is expected to be recognized over a weighted-average period of 1.9 years on a straight-line basis.

Performance-Based RSU Awards

A summary of the awards of Performance-Based RSUs that vest upon the attainment of certain price targets of the Company’s common stock are presented below (in thousands, except per share amounts and contractual life years):

Number of

Weighted-

Average Grant

Date Fair

Value

(per share)

Weighted-

Average

Contractual

Life (years)

Aggregate

Intrinsic

Value

Unvested Balance - December 31, 2020

–

Granted

438,403

30.84

–

Vested

–

Forfeited

–

Unvested Balance - March 31, 2021

438,403

30.84

0.2

16,600

On January 28, 2021 the Company granted certain senior executives awards of Performance-Based RSUs that could settle in 438,403 shares of our common stock. The awards will vest only if, during the three-year period from the date of grant, (a) the Company’s common stock, as listed on the Nasdaq Global Market, trades at or above $42.40 per share (the “Target Price”) for 20 of 30 consecutive trading days or (b) the weighted average of the per share price of the Company’s common stock over any 30 consecutive trading days is at least equal to the Target Price.

For these Performance-Based RSUs containing market conditions, the conditions are required to be considered when calculating the grant date fair value. In order to reflect the substantive characteristics of these awards, a Monte Carlo simulation valuation model was used to calculate the grant date fair value of such awards. Monte Carlo approaches are a class of computational algorithms that rely on repeated random sampling to compute their results. This approach allows the calculation of the value of such Performance-Based RSUs based on a large number of possible stock price path scenarios. Our key assumptions include a performance period of 2.92 years, expected volatility of 57.4%, and a risk-free rate of 0.18%. As the Company recently completed its IPO in November 2020, expected volatility was based on the average historical stock price volatility of comparable publicly-traded companies over the performance period. The risk-free rate is based on the U.S. treasury zero-coupon issues in effect at the time of grant over the performance period. Expense for these awards is recognized over the derived service period as determined through the Monte Carlo simulation model. The fair value at grant date and derived service periods calculated for these market condition Performance-Based RSUs were $30.84 and 0.38 years, respectively.

We recognized an expense of $6.0 million related to share-based compensation expense for these awards of Performance-Based RSUs during the three months ended March 31, 2021. As of March 31, 2021, there was approximately $7.5 million of unrecognized stock-based compensation expense related to these Performance-Based RSUs, and this unrecognized expense is expected to be recognized over a weighted-average period of 2.4 months on a straight-line basis.