Share-based compensation expense is recognized in cost of services, product and technology expense, and selling, general, and administrative expense, in the accompanying consolidated statements of operations and comprehensive income as follows (in thousands):


	Year Ended December 31,
	2023		2022		2021
Share-based compensation expense
Cost of services	$	1,279	$	1,103	$	163
Product and technology expense		2,246		1,351		459
Selling, general, and administrative expense		11,740		5,402		8,908
Total share-based compensation expense	$	15,265	$	7,856	$	9,530

Prior to the IPO, all share-based awards were issued by Fastball Holdco, L.P., the Company’s previous parent company, under individual grant agreements and the partnership agreement of such parent company under the 2020 Equity Plan. In connection with the IPO, the Company adopted the 2021 Equity Plan.

In May 2023, the Company’s Board of Directors approved a modification of the vesting terms of outstanding unvested and unearned performance-based options, restricted stock units, and restricted stock (collectively, “Performance Awards”) previously issued under its equity plans. The modification, effective May 10, 2023, allowed for unvested and unearned Performance Awards outstanding as of the date of the modification, to vest based on time on the fourth, fifth, and sixth anniversaries of the relevant vesting commencement date, as set forth in each grant agreement (the “Vesting Commencement Date”), while preserving the eligibility to vest upon the Company’s investors receiving a targeted money-on-money return, subject to continued service. As of the modification date, unrecognized pre-tax non-cash compensation expense related to the Performance Awards, after accounting for the modification, was $28.8 million. The Company is recognizing pre-tax non-cash compensation expense related to the modification of Performance Awards prospectively from the date of modification, on a straight-line basis.

The fair value of the modified restricted stock units and restricted stock was estimated using the closing stock price on the date of modification. The fair value of the modified stock options was estimated on the date of modification using the Black-Scholes option-pricing model with the following weighted average assumptions:

In connection with the Company’s declared one-time special cash dividend in August 2023, the exercise price of outstanding stock option awards and stock purchases under the Company’s employee stock purchase plan (“ESPP”) was reduced by $1.50, in accordance with the non-discretionary anti-dilution provisions of the equity and stock purchase plans. Historical exercise prices noted in the below tables have not been adjusted.

Awards issued under the 2020 Equity Plan consist of options and profits interests and vest based on two criteria: (1) Time — awards vest over five years at a rate of 20% per year; and (2) Performance — awards vest based upon a combination of the five-year time vesting, subject to the Company’s investors receiving a targeted money-on-money return. Options issued under the 2020 Equity Plan generally expire ten years after the grant date. No awards were issued under the plan during the years ended December 31, 2023, 2022, and 2021.

A summary of the profits interest unit activity under the 2020 Equity Plan for the year ended December 31, 2021 is as follows:


		Class C Units
December 31, 2020	Grants outstanding		3,858,048
	Exchanged for common stock in the Company		(411,720	)
	Exchanged for restricted stock in the Company		(3,446,328	)
December 31, 2021	Grants outstanding		—

A summary of the option unit activity under the 2020 Plan for the year ended December 31, 2021 is as follows:


		Options			Weighted Average Exercise Price
December 31, 2020	Grants outstanding		2,733,734		$	10.06
	Exercised		(24,112	)	$	10.00
	Forfeited		(107,168	)	$	10.00
	Exchanged for options in the Company		(2,602,454	)	$	10.07
December 31, 2021	Grants outstanding		—		$	—

In connection with the Company’s IPO, the Company’s parent was dissolved. Awards issued by the Company’s parent were converted in accordance with non-discretionary anti-dilution provisions of the 2020 Equity Plan grants as follows:

A summary of the option activity for the year ended December 31, 2023 is as follows:


		Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
December 31, 2022	Grants outstanding		2,843,342		$	6.66
	Grants exercised		(394,375	)	$	6.06
	Grants cancelled/forfeited		(533,715	)	$	6.68
December 31, 2023	Grants outstanding		1,915,252		$	5.15	6.2 Years	$21.9 million
December 31, 2023	Grants vested		518,455		$	5.13	6.1 Years	$5.9 million
December 31, 2023	Grants unvested		1,396,797		$	5.16

The total intrinsic value of options exercised during the years ended December 31, 2023, 2022, and 2021 was $3.0 million, $3.1 million, and $1.1 million, respectively.

A summary of changes in outstanding options and the related weighted-average exercise price per share for the years ended December 31, 2022 and 2021 is as follows:


	December 31,
	2022					2021
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Grants outstanding at the beginning of the year		3,519,563		$	6.66		—		$	—
Grants issued in exchange for options in the Company’s Parent		—		$	—		3,938,491		$	6.65
Grants exercised		(372,254	)	$	6.68		(58,552	)	$	6.61
Grants cancelled/forfeited		(303,967	)	$	6.61		(360,376	)	$	6.61
Grants outstanding at the end of the year		2,843,342		$	6.66		3,519,563		$	6.66
Grants vested		648,926		$	6.65		681,227		$	6.66
Grants unvested		2,194,416		$	6.67		2,838,336		$	6.66

The 2021 Equity Plan is intended to provide a means through which to attract and retain key personnel and to provide a means whereby our directors, officers, employees, consultants, and advisors can acquire and maintain an equity interest in us, or be paid incentive compensation, including incentive compensation measured by reference to the value of our common stock, thereby strengthening their commitment to our welfare and aligning their interests with those of our stockholders. The 2021 Equity Plan provides for the grant of awards of stock options, stock appreciation rights, restricted shares, restricted stock units, and other equity-based or cash-based awards as determined by the Company’s Compensation Committee. The 2021 Equity Plan initially had a total of 17,525,000 shares of common stock reserved. The number of reserved shares automatically increases on the first day of each calendar year commencing on January 1, 2022 and ending on January 1, 2030, in an amount equal to the lesser of (x) 2.5% of the total number of shares of common stock outstanding on the last day of the immediately preceding calendar year and (y) a number of shares as determined by the Board of Directors. As of December 31, 2023, 16,713,654 shares were available for issuance under the 2021 Equity Plan.

Stock options issued immediately prior to the IPO vest based on two criteria: (1) Time — awards vest annually over five years; and (2) Performance — awards vest based upon a combination of the five-year time vesting, subject to the Company’s investors receiving a targeted money-on-money return. Stock options issued after the IPO vest annually, generally over four or five years. Stock options generally expire ten years after the grant date.

The fair value for stock options granted for the years ended December 31, 2023, 2022, and 2021 was estimated at the date of grant using the Black-Scholes option-pricing model with the following weighed average assumptions:


	Year Ended December 31,
	2023			2022			2021
Expected stock price volatility		32.99	%		34.66	%		38.67	%
Risk-free interest rate		4.00	%		2.77	%		1.06	%
Expected term (in years)		6.78			6.23			5.91
Fair-value of the underlying unit	$	12.56		$	14.68		$	15.33

A summary of the option activity for the year ended December 31, 2023 is as follows:


		Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
December 31, 2022	Grants outstanding		4,311,662		$	15.24
	Grants issued		579,745		$	12.56
	Grants exercised		(22,402	)	$	12.55
	Grants cancelled/forfeited		(182,346	)	$	13.81
December 31, 2023	Grants outstanding		4,686,659		$	13.61	7.8 Years	$13.9 million
December 31, 2023	Grants vested		1,600,529		$	13.76	7.6 Years	$4.5 million
December 31, 2023	Grants unvested		3,086,130		$	13.53

The total intrinsic value of options exercised during the year ended December 31, 2023 was $0.1 million. No options were exercised during the years ended December 31, 2022 and 2021.

A summary of changes in outstanding options and the related weighted-average exercise price per share for the years ended December 31, 2022 and 2021 is as follows:


	December 31,
	2022					2021
	Options			Weighted Average Exercise Price		Options		Weighted Average Exercise Price
Grants outstanding at the beginning of the year		3,714,540		$	15.33		—	$	—
Grants issued		608,122		$	14.68		3,714,540	$	15.33
Grants cancelled/forfeited		(11,000	)	$	17.52		—	$	—
Grants outstanding at the end of the year		4,311,662		$	15.24		3,714,540	$	15.33
Grants vested		1,054,302		$	15.20		644,556	$	15.00
Grants unvested		3,257,360		$	15.25		3,069,984	$	15.40

Restricted stock units (“RSU”) generally vest annually over three to five years.

A summary of the RSU activity for the years ended December 31, 2023, 2022, and 2021 is as follows:


		Shares			Weighted Average Grant Date Fair Value
December 31, 2020	Nonvested RSUs		—		$	—
	Granted		340,875		$	17.19
December 31, 2021	Nonvested RSUs		340,875		$	17.19
	Granted		203,032		$	14.36
	Vested		(67,175	)	$	16.96
	Forfeited		(4,400	)	$	17.52
December 31, 2022	Nonvested RSUs		472,332		$	16.00
	Granted		235,903		$	13.46
	Vested		(150,724	)	$	15.42
	Forfeited		(50,368	)	$	14.90
December 31, 2023	Nonvested RSUs		507,143		$	15.10

The following table summarizes the restricted stock issued by the Company. These include grants of unvested 2020 Equity Plan profits interests grants that were converted into restricted stock as described above, as well as restricted stock issued to new recipients. The restricted stock granted as a result of the conversion of 2020 Equity Plan profits interests retain the vesting attributes (including original service period vesting start date) of the original award.

A summary of the restricted stock activity for the years ended December 31, 2023, 2022, and 2021 is as follows:


		Shares			Weighted Average Grant Date Fair Value
December 31, 2020	Nonvested restricted stock		—		$	—
	Grants issued in exchange for unvested profits interests in the Company’s Parent		2,918,084		$	3.85
	Vested		(304,725	)	$	3.85
December 31, 2021	Nonvested restricted stock		2,613,359		$	3.85
	Vested		(332,059	)	$	3.85
December 31, 2022	Nonvested restricted stock		2,281,300		$	3.85
	Vested		(326,670	)	$	3.85
December 31, 2023	Nonvested restricted stock		1,954,630		$	8.50

As of December 31, 2023, the Company had approximately $37.6 million of unrecognized pre-tax non-cash compensation expense, comprised of approximately $13.9 million related to restricted stock, $6.3 million related to RSUs, and approximately $17.4 million related to stock options, which the Company expects to recognize over a weighted average period of 1.2 years.

On June 25, 2021, in connection with the IPO, the Company adopted the First Advantage Corporation 2021 Employee Stock Purchase Plan (“ESPP”) that allows eligible employees to voluntarily make after-tax contributions of up to 15% of such employee’s cash compensation to acquire Company stock during designated offering periods. Each offering period consists of one six-month purchase period. During the holding period, ESPP purchased shares are not eligible for sale or broker transfer. The Company recorded an associated expense of approximately $0.8 million and $0.4 million for the years ended December 31, 2023 and 2022, respectively.