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Stockholders' Equity and Stock-Based Compensation Plans | 6 Months Ended
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Jun. 30, 2024
Share-Based Payment Arrangement [Abstract] |
Stockholders' Equity and Stock-Based Compensation Plans | Stockholders’ Equity and Stock-Based Compensation Plans The rights and privileges of the Company’s stockholders’ equity and LLC Interests are described in the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and there have been no changes to those rights and privileges during the six months ended June 30, 2024. Common Stock The following table details the movement in the Company’s outstanding shares of common stock during the period:
|  | Class A |  | Class B |  | Class C |  | Class D |  | Total
Balance at December 31, 2023 |  | 115,090,787 |  |  | 96,933,192 |  |  | 18,000,000 |  |  | 5,077,973 |  |  | 235,101,952 |
Issuance of common stock from equity incentive plans |  | 699,840 |  |  | — |  |  | — |  |  | — |  |  | 699,840 |
Issuance of common stock for business acquisition (1) |  | 374,601 |  |  | — |  |  | — |  |  | — |  |  | 374,601 |
Balance at March 31, 2024 |  | 116,165,228 |  |  | 96,933,192 |  |  | 18,000,000 |  |  | 5,077,973 |  |  | 236,176,393 |
Activities related to exchanges of LLC Interests |  | 1,000 |  |  | — |  |  | — |  |  | (1,000) |  |  | — |
Issuance of common stock from equity incentive plans |  | 116,377 |  |  | — |  |  | — |  |  | — |  |  | 116,377 |
Balance at June 30, 2024 |  | 116,282,605 |  |  | 96,933,192 |  |  | 18,000,000 |  |  | 5,076,973 |  |  | 236,292,770 |
(1)On January 19, 2024, the Corporation issued 374,601 unregistered shares of class A common stock as partial consideration for the r8fin Acquisition (the “r8fin Acquisition Shares”), in reliance on Section 4(a)(2) of the Securities Act. The r8fin Acquisition Shares are considered issued and outstanding subsequent to their January 19, 2024 issuance, but remain subject to a lock-up that restricts the sale, transfer or disposal of these shares for the two year period following the January 19, 2024 closing date of the r8fin Acquisition. See Note 4 – Acquisitions for additional details on this acquisition.
|  | Class A |  | Class B |  | Class C |  | Class D |  | Total
Balance at December 31, 2022 |  | 110,746,606 |  |  | 96,933,192 |  |  | 3,251,177 |  |  | 23,092,704 |  |  | 234,023,679 |
Activities related to exchanges of LLC Interests |  | 8,733 |  |  | — |  |  | — |  |  | (8,733) |  |  | — |
Issuance of common stock from equity incentive plans |  | 986,090 |  |  | — |  |  | — |  |  | — |  |  | 986,090 |
Share repurchases pursuant to share repurchase programs |  | (313,311) |  |  | — |  |  | — |  |  | — |  |  | (313,311) |
Balance at March 31, 2023 |  | 111,428,118 |  |  | 96,933,192 |  |  | 3,251,177 |  |  | 23,083,971 |  |  | 234,696,458 |
Activities related to exchanges of LLC Interests |  | 3,254,577 |  |  | — |  |  | (3,251,177) |  |  | (3,400) |  |  | — |
Issuance of common stock from equity incentive plans |  | 92,687 |  |  | — |  |  | — |  |  | — |  |  | 92,687 |
Share repurchases pursuant to share repurchase programs |  | (107,365) |  |  | — |  |  | — |  |  | — |  |  | (107,365) |
Balance at June 30, 2023 |  | 114,668,017 |  |  | 96,933,192 |  |  | — |  |  | 23,080,571 |  |  | 234,681,780 |
Stock-Based Compensation Plans Under the Tradeweb Markets Inc. 2019 Omnibus Equity Incentive Plan, the Company is authorized to issue up to 8,841,864 new shares of Class A common stock to employees, officers and non-employee directors. Under this plan, the Company may grant awards in respect of shares of Class A common stock, including restricted stock units with only time-based vesting conditions (“RSUs”), performance-based restricted stock units with both time and performance-based vesting conditions, stock options and dividend equivalent rights. The Company refers to performance-based restricted stock units that vest based on the financial performance of the Company as “PRSUs” and performance-based restricted stock units that vest based on market conditions, such as total shareholder return, as “PSUs”. RSUs, PRSUs and PSUs each represent promises to issue actual shares of Class A common stock at the end of a vesting period. Stock options have a maximum contractual term of 10 years. In connection with organizational changes, on June 17, 2024, the Company determined that the employment of Thomas Pluta, President of the Company, will terminate effective September 30, 2024. In connection with the termination of his employment, Mr. Pluta will also resign from the Board of Directors of the Company effective September 30, 2024. As of June 17, 2024, there was approximately $4.4 million in total unamortized stock-based compensation associated with equity awards previously granted to Mr. Pluta that will be accelerated and amortized into expense over a revised estimated service period ending on September 30, 2024. Of this amount, $1.7 million represents regularly scheduled amortization that would have been recognized from June 17, 2024 through September 30, 2024 if Mr. Pluta’s employment was not terminated and $2.7 million represents accelerated stock-based compensation expense. During the three months ended June 30, 2024, the Company incurred a total of $0.3 million in accelerated stock-based compensation expense relating to Mr. Pluta’s departure, with the remaining $2.4 million to be recorded during the three months ending September 30, 2024. During the three months ended June 30, 2024, the Company granted 12,526 RSUs at a weighted-average grant-date fair value of $112.82. No PRSUs or PSUs were granted during the three months ended June 30, 2024. During the six months ended June 30, 2024, the Company granted 457,978 RSUs, 201,546 PRSUs and 86,592 PSUs at a weighted-average grant-date fair value of $104.48, $104.66 and $149.00, respectively. RSU awards granted to employees will generally vest one-third each year over a three-year period, and RSU awards granted to non-employee directors will vest after one year. PRSUs generally cliff vest on January 1 of the third calendar year from the calendar year of the date of grant and the number of shares a participant will receive upon vesting is determined by a performance modifier, which is adjusted as a result of the financial performance of the Company. For PRSU awards granted during 2024, the financial performance of the Company will be determined based on the compound annual growth rate over a three-year performance period beginning on January 1 in the year of grant. For PRSU awards granted during 2023 and prior, the financial performance of the Company was determined based on the financial performance of the Company in the grant year, and any earned awards that remain outstanding are subject to time-based vesting conditions. The performance modifier for PRSUs can vary between 0% (minimum) and 250% (maximum) of the target (100%) award amount for PRSU awards granted during 2024 and 2023. PRSUs granted during 2022 and prior had a 200% maximum performance modifier. PSUs cliff vest on January 1 of the third calendar year from the calendar year of the date of grant and the number of shares a participant will receive upon vesting is determined by a performance modifier, which is adjusted as a result of the Company’s total shareholder return over a three-year performance period. The performance modifier for PSUs can vary between 0% (minimum) and 250% (maximum) of the target (100%) award amount. The grant date fair value of PSUs granted on March 15, 2024 and 2023 was estimated using the Monte Carlo simulation model and the significant valuation assumptions used in those models were as follows:
|  | March 15, 2024 PSU Grant |  | March 15, 2023 PSU Grant
Maturity (years) |  | 2.8 |  | 2.8
Annualized Volatility |  | 26.63 | % |  | 28.81 | %
Risk-Free Interest Rate |  | 4.44 | % |  | 3.77 | %
A summary of the Company’s total stock-based compensation expense is presented below:
|  | Three Months Ended |  | Six Months Ended
|  | June 30, |  | June 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
|  | (dollars in thousands)
Total stock-based compensation expense |  | $ | 23,715 |  |  | $ | 15,712 |  |  | $ | 40,117 |  |  | $ | 27,323 |
The stock-based compensation expense above excludes $0.6 million and $0.4 million of stock-based compensation expense capitalized to software development costs during the three months ended June 30, 2024 and 2023, respectively, and $1.2 million and $0.6 million during the six months ended June 30, 2024 and 2023, respectively. Share Repurchase Program On December 5, 2022, the Company announced that its board of directors authorized a new share repurchase program (the “2022 Share Repurchase Program”), after completing in October 2022, the $150.0 million of total repurchases of the Company’s Class A common stock previously authorized in February 2021 (the “2021 Share Repurchase Program”). The 2022 Share Repurchase Program was authorized to continue to offset annual dilution from stock-based compensation plans, as well as to opportunistically repurchase the Company’s Class A common stock. The 2022 Share Repurchase Program authorizes the purchase of up to $300.0 million of the Company’s Class A common stock at the Company’s discretion and has no termination date. The 2022 Share Repurchase Program can be effected through regular open-market purchases (which may include repurchase plans designed to comply with Rule 10b5-1), through privately negotiated transactions or through accelerated share repurchases, each in accordance with applicable securities laws and other restrictions. The amounts, timing and manner of the repurchases will be subject to general market conditions, the prevailing price and trading volumes of the Company’s Class A common stock and other factors. The 2022 Share Repurchase Program does not require the Company to acquire a specific number of shares and may be suspended, amended or discontinued at any time. There were no share repurchases during the three and six months ended June 30, 2024. During the three and six months ended June 30, 2023, the Company acquired a total of 107,365 and 420,676 shares of Class A common stock, at an average price of $70.81 and $72.05, for purchases totaling $7.6 million and $30.3 million, respectively. Each share of Class A common stock repurchased pursuant to the share repurchase programs was funded with the proceeds, on a dollar-for-dollar basis, from the repurchase by Tradeweb Markets LLC of an LLC Interest from the Corporation in order to maintain the one-to-one ratio between outstanding shares of the Class A common stock and Class B common stock and the LLC Interests owned by the Corporation. Subsequent to their repurchase, the shares of Class A common stock and the LLC Interests were all cancelled and retired. As of June 30, 2024, a total of $239.8 million remained available for repurchase pursuant to the 2022 Share Repurchase Program. For shares repurchased pursuant to share repurchase programs, the excess of the repurchase price paid over the par value of the Class A common stock is be recorded as a reduction to retained earnings. Other Share Repurchases During the three months ended June 30, 2024 and 2023, the Company withheld 2,505 and 26,259 shares, respectively, of Class A common stock from employee stock option, PRSU and RSU awards, at an average price per share of $107.57 and $71.23, respectively, and an aggregate value of $0.3 million and $1.9 million, respectively, based on the price of the Class A common stock on the date the relevant withholding occurred. During the six months ended June 30, 2024 and 2023, the Company withheld 455,326 and 601,083 shares, respectively, of Class A common stock from employee stock option, PRSU and RSU awards, at an average price per share of $97.24 and $69.42, respectively, and an aggregate value of $44.3 million and $41.7 million, respectively, based on the price of the Class A common stock on the date the relevant withholding occurred. These shares are withheld in order for the Company to cover the employee payroll tax withholding obligations upon the exercise of stock options and settlement of RSUs and PRSUs and such shares were not withheld in connection with the share repurchase programs discussed above.

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