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Share-Based Compensation | 3 Months Ended
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Mar. 31, 2024
Share-Based Payment Arrangement [Abstract] |
Share-Based Compensation | Note 13. Share-Based Compensation
The 2021 Stock Option and Incentive Plan (the “2021 Plan”) allows for the issuance of stock options, stock appreciation rights, restricted stock, RSUs (including PSUs), dividend equivalents and other stock or cash based awards for issuance to its employees, non-employee directors and non-employee third parties. Shares associated with option exercises and RSU vesting are issued from the authorized pool. Effective January 1, 2023, we approved a plan to allow our non-employee directors to elect, on an annual basis, to defer their cash retainers into equity awards, and/or to defer their RSU grants, which vest in accordance with the grant terms (collectively referred to as DSUs). DSUs are equity awards that entitle the holder to shares of our common stock when the awards vest. Directors may choose to receive their deferred stock distributions in a lump sum or in installments over different time periods. DSUs are measured based on the fair value of our common stock on the date of grant. DSU activity is presented with RSUs in the disclosures below. Share-based compensation expense related to stock options, RSUs and PSUs is presented within the following line items in the condensed consolidated statements of operations and comprehensive income (loss):
|  |  | Three Months Ended March 31,
|  |  |  |  | 2024 |  | 2023
Technology and product development |  |  |  |  | $ | 19,279 |  |  | $ | 18,228 |
Sales and marketing |  |  |  |  | 4,962 |  |  | 6,587 |
Cost of operations |  |  |  |  | 2,918 |  |  | 1,500 |
General and administrative |  |  |  |  | 27,923 |  |  | 37,911 |
Total |  |  |  |  | $ | 55,082 |  |  | $ | 64,226 |
Total compensation and benefits, inclusive of share-based compensation expense, was $208,246 for the three months ended March 31, 2024 and $216,415 for the three months ended March 31, 2023. Compensation and benefits expenses are presented within the following categories of expenses within noninterest expense: (i) technology and product development, (ii) sales and marketing, (iii) cost of operations, and (iv) general and administrative in the condensed consolidated statements of operations and comprehensive income (loss). Stock Options The following is a summary of stock option activity:
| Number of Stock Options |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term (in years)
Outstanding as of January 1, 2024 | 17,896,732 |  |  | $ | 7.70 |  |  | 3.8
Exercised | (171,555) |  |  | 2.71 |  |  |
Expired | (3,267) |  |  | 6.23 |  |  |
Outstanding as of March 31, 2024 | 17,721,910 |  |  | $ | 7.75 |  |  | 3.5
Exercisable as of March 31, 2024 | 17,721,910 |  |  | $ | 7.75 |  |  | 3.5
Total compensation cost related to unvested stock options not yet recognized as of March 31, 2024 was immaterial. Restricted Stock Units RSUs, inclusive of DSUs, are equity awards granted to employees that entitle the holder to shares of our common stock when the awards vest. RSUs are measured based on the fair value of our common stock on the date of grant. The following table summarizes RSU activity:
| Number of RSUs |  | Weighted Average Grant Date Fair Value
Outstanding as of January 1, 2024 | 64,879,496 |  |  | $ | 7.95 |
Granted | 22,501,316 |  |  | 7.49 |
Vested(1) | (8,360,975) |  |  | 8.25 |
Forfeited | (5,878,073) |  |  | 8.36 |
Outstanding as of March 31, 2024 | 73,141,764 |  | $ | 7.74 |
________________________ (1)The total fair value, based on grant date fair value, of RSUs that vested during the three months ended March 31, 2024 was $69.0 million. As of March 31, 2024, there was $525.4 million of unrecognized compensation cost related to unvested RSUs, inclusive of DSUs, which will be recognized over a weighted average period of approximately 2.3 years. Performance Stock Units The following table summarizes PSU activity:
| Number of PSUs |  | Weighted Average Grant Date Fair Value
Outstanding as of January 1, 2024 | 16,240,181 |  |  | $ | 10.29 |
Granted | 726,217 |  |  | 9.17 |
Forfeited | (2,052,789) |  |  | 7.52 |
Outstanding as of March 31, 2024 | 14,913,609 |  |  | $ | 10.61 |
Compensation cost associated with PSUs is recognized using the accelerated attribution method for each of the three vesting tranches over the respective derived service period. We determined the grant-date fair value of PSUs utilizing a Monte Carlo simulation model. During 2024, we granted PSUs that will vest, if at all, in January 2027, subject to the achievement of specified performance goals, such as growth in total book value and maintaining a minimum total risk weighted capital ratio during a three-year measurement period commencing January 2024. We determined the grant-date fair value of PSUs utilizing a Monte Carlo simulation model. The following table summarizes the inputs used for estimating the fair value of PSUs granted:
Input |  | Three Months Ended March 31, 2024
Risk-free interest rate |  | 4.5%
Expected volatility |  | 73.0%
Fair value of common stock |  | $8.02
Dividend yield |  | —%
Our use of a Monte Carlo simulation model requires the use of subjective assumptions: •Risk-free interest rate — Based on the U.S. Treasury rate at the time of grant commensurate with the remaining term of the PSUs. •Expected volatility — Based on the implied volatility of our common stock from a set of comparable publicly-traded companies. •Fair value of common stock — Based on the closing stock price on the date of grant. •Dividend yield — We assumed no dividend yield because we have historically not paid out dividends to common stockholders. As of March 31, 2024, there was $8.8 million of unrecognized compensation cost related to unvested PSUs, which will be recognized over a weighted average period of approximately 2.2 years.

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