Share-based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Merger Transaction

Prior to July 24, 2022, under its long-term stock incentive plan, the Company had several share-based compensation award types, including stock options, restricted stock units and performance share unit awards (collectively, the “Pre-Merger Awards”). In connection with the Merger, outstanding vested stock option awards were canceled and converted to the right to receive a fixed amount of cash equal to the intrinsic value of the awards and were paid in August 2022. Performance share unit awards (“PSUs”) granted to certain key employees in March 2021 were paid in cash in September 2022 with the applicable total stockholder return metric determined using a per share price equal to the Merger consideration and the EBITDA-based metric determined based on target performance.

Resulting from the Merger, unvested awards were cancelled and converted into a contingent contractual right to receive a payment in cash equal to the Merger consideration per award, subject to the same time-based vesting conditions as the original awards, which is typically three to five years. In the case of the PSUs that were granted in March 2020 to executives and certain key employees and in March 2021 to executives, the contingent contractual right to receive a cash payment from the Company will equal the product of the number of performance share units earned under the terms of the applicable award agreement, but with the applicable total stockholder return metric determined using a per share price equal to the Merger consideration and the EBITDA-based metric determined based on actual performance as of the end of the tree-year performance period applicable to such performance share unit. The Pre-Merger Awards are be accounted for under ASC Topic 710.

As of December 31, 2023, the Company had $27.6 million of employee-related liabilities and $1.2 million of other long-term liabilities on its Consolidated Balance Sheet related to the Pre-Merger Awards that will be settled in cash. For 2023, the Company paid out $97.5 million of cash to settle Pre-Merger Awards.

Incentive Units

Post the Merger in 2022 and pursuant to an incentive unit grant agreement, certain participants were granted incentive units in Camelot Return Ultimate, L.P. (the “Partnership”). Each incentive unit represents a conditional right to receive distributions from Camelot Parent in excess of the “participation threshold” of the incentive unit, as set forth in the grant documentation. In 2022, 0.8 million of incentive units were granted with no forfeitures. In 2023, 0.2 million of incentive units were granted with 0.1 million in forfeitures.

The Company will recognize compensation cost for the awards on a straight-line basis over a five-year vesting period based on the fair value of the award at the date of grant. The fair value of each option grant is estimated on the grant date using the Black-Scholes option-pricing model, and the following weighted average assumptions:


	Successor
	Year Ended December 31, 2023			July 25, 2022 through December 31, 2022
Underlying price	$	100.00		$	100.00
Volatility rate	45.2		%	45.5		%
Expected term (in years)	6.1			6.1
Risk-free interest rate	4.1		%	4.2		%

Upon a sale of the Partnership, vesting of incentive units will accelerate, subject to the participant’s continued employment through the consummation of such sale unless there is non-cash consideration and the incentive units are replaced with awards that have substantially equivalent or better rights.

Compensation Expense

For the year ended December 31, 2023, the amount of expense recognized from the Pre-Merger Awards was $16.6 million and from the incentive units was $8.3 million. For the period from July 25, 2022 through December 31, 2022, the amount of expense recognized from the Pre-Merger Awards was $21.9 million and from the incentive units was $2.3 million. As of December 31, 2023, the Company estimates that unrecognized expense is expected to be recognized over a weighted-average period of 3.5 years totaling $35.7 million, of which $3.5 million relates to Pre-Merger Awards and $32.2 relates to incentive units.