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Equity-Based Compensation | 6 Months Ended
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Jun. 30, 2023
Share-Based Payment Arrangement [Abstract] |
Equity-Based Compensation | 15. Equity-Based Compensation The DigitalBridge Group, Inc. 2014 Omnibus Stock Incentive Plan (the "Equity Incentive Plan") provides for the grant of restricted stock, performance stock units ("PSUs"), Long Term Incentive Plan ("LTIP") units, restricted stock units ("RSUs"), deferred stock units ("DSUs"), options, warrants or rights to purchase shares of the Company's common stock, cash incentives and other equity-based awards to the Company's officers, directors (including non-employee directors), employees, co-employees, consultants or advisors of the Company or of any parent or subsidiary who provides services to the Company, but excluding employees of portfolio companies. Shares reserved for the issuance of awards under the Equity Incentive Plan are subject to equitable adjustment upon the occurrence of certain corporate events, provided that this number automatically increases each January 1st by 2% of the outstanding number of shares of the Company’s class A common stock on the immediately preceding December 31st. At June 30, 2023, an aggregate 24.5 million shares of the Company's class A common stock were reserved for the issuance of awards under the Equity Incentive Plan. Restricted Stock—Restricted stock awards in the Company's class A common stock are granted to senior executives, directors and certain employees, generally subject to a service condition only, with annual time-based vesting in equal tranches over a three-year period. Restricted stock is entitled to dividends declared and paid on the Company's class A common stock and such dividends are not forfeitable prior to vesting of the award. Restricted stock awards are valued based on the Company's class A common stock price on grant date and equity-based compensation expense is recognized on a straight-line basis over the requisite service period. Restricted Stock Units—RSUs in the Company's class A common stock are subject to a performance condition. Vesting of performance-based RSUs occur upon achievement of certain Company-specific metrics over a performance measurement period that coincides with the recipients' term of service. Only vested RSUs are entitled to accrued dividends declared and paid on the Company's class A common stock during the time period the RSUs are outstanding. Fair value of RSUs are based on the Company's class A common stock price on grant date. Equity-based compensation expense is recognized when it becomes probable that the performance condition will be met. Performance Stock Units—PSUs are granted to senior executives and certain employees, and are subject to both a service condition and a market condition. Following the end of the measurement period, the recipients of PSUs who remain employed will vest in, and be issued a number of shares of the Company's class A common stock, generally ranging from 0% to 200% of the number of PSUs granted and determined based upon the performance of the Company's class A common stock relative to that of a specified peer group over a three-year measurement period (such measurement metric the "total shareholder return"). In addition, recipients of PSUs whose employment is terminated after the first anniversary of their PSU grant are eligible to vest in a portion of the PSU award following the end of the measurement period based upon achievement of the total shareholder return metric applicable to the award. PSUs also contain dividend equivalent rights which entitle the recipients to a payment equal to the amount of dividends that would have been paid on the shares that are ultimately issued at the end of the measurement period. Fair value of PSUs, including dividend equivalent rights, was determined using a Monte Carlo simulation under a risk-neutral premise, with the following assumptions:
|  | 2023 PSU Grants |  | 2022 PSU Grants |  | 2021 PSU Grants
Expected volatility of the Company's class A common stock (1) |  | 41.3% |  | 32.4% |  | 35.4%
Expected annual dividend yield (2) |  | 0.3% |  | —% |  | —%
Risk-free rate (per annum) (3) |  | 3.8% |  | 2.0% |  | 0.3%
__________ (1) Based upon the historical volatility of the Company's stock and those of a specified peer group. (2) Based upon the Company's expected annualized dividends. Expected dividend yield was zero for the March 2022 and 2021 PSU awards as common dividends were suspended beginning the second quarter of 2020 and reinstated in the third quarter 2022. (3) Based upon the continuously compounded zero-coupon U.S. Treasury yield for the term coinciding with the measurement period of the award as of valuation date. Fair value of PSU awards, excluding dividend equivalent rights, is recognized on a straight-line basis over their measurement period as compensation expense, and is not subject to reversal even if the market condition is not achieved. The dividend equivalent right is accounted for as a liability-classified award. The fair value of the dividend equivalent right is recognized as compensation expense on a straight-line basis over the measurement period, and is subject to adjustment to fair value at each reporting period. LTIP Units—LTIP units are units in the Operating Company that are designated as profits interests for federal income tax purposes. Unvested LTIP units that are subject to market conditions do not accrue distributions. Each vested LTIP unit is convertible, at the election of the holder (subject to capital account limitation), into one common OP Unit and upon conversion, subject to the redemption terms of OP Units (Note 9). LTIP units issued have either (1) a service condition only, valued based upon the Company's class A common stock price on grant date; or (2) both a service condition and a market condition based upon the Company's class A common stock achieving a target price over a predetermined measurement period, subject to continuous employment to the time of vesting, and valued using a Monte Carlo simulation. The following assumptions were applied in the Monte Carlo model under a risk-neutral premise:
|  | 2022 LTIP Grant |  | 2019 LTIP Grant (1)
Expected volatility of the Company's class A common stock (2) |  | 34.0% |  | 28.3%
Expected dividend yield (3) |  | 0.0% |  | 8.1%
Risk-free rate (per annum) (4) |  | 3.6% |  | 1.8%
__________ (1) Represents 2.5 million LTIP units granted to the Company's Chief Executive Officer, Marc Ganzi, in connection with the Company's acquisition of Digital Bridge Holdings, LLC in July 2019, with vesting based upon the Company's class A common stock price closing at or above $40 over any 90 consecutive trading days prior to the fifth anniversary of the grant date. (2) Based upon historical volatility of the Company's stock and those of a specified peer group. (3) Based upon the Company's most recently issued dividend prior to grant date and closing price of the Company's class A common stock on grant date. Expected dividend yield was zero for the June 2022 award as common dividends were suspended beginning the second quarter of 2020 and reinstated in the third quarter of 2022. (4) Based upon the continuously compounded zero-coupon US Treasury yield for the term coinciding with the measurement period of the award as of valuation date. Equity-based compensation cost on LTIP units is recognized on a straight-line basis either over (1) the service period for awards with a service condition only; or (2) the derived service period for awards with both a service condition and a market condition, irrespective of whether the market condition is satisfied. The derived service period is a service period that is inferred from the application of the simulation technique used in the valuation of the award, and represents the median of the terms in the simulation in which the market condition is satisfied. Deferred Stock Units—Certain non-employee directors may elect to defer the receipt of annual base fees and/or restricted stock awards, and in lieu, receive awards of DSUs. DSUs awarded in lieu of annual base fees are fully vested on their grant date, while DSUs awarded in lieu of restricted stock awards vest one year from their grant date. DSUs are entitled to a dividend equivalent, in the form of additional DSUs based on dividends declared and paid on the Company's class A common stock, subject to the same restrictions and vesting conditions, where applicable. Upon separation of service from the Company, vested DSUs will be settled in shares of the Company’s class A common stock. Fair value of DSUs are determined based on the price of the Company's class A common stock on grant date and recognized immediately if fully vested upon grant, or on a straight-line basis over the vesting period as equity based compensation expense and equity. Equity-based compensation cost pursuant to DBRG's Equity Incentive Plan is presented on the consolidated statement of operations, as follows.
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
(In thousands) |  | 2023 |  | 2022 |  | 2023 |  | 2022 |  |
Compensation expense (including $0, $176, $0 and $213 expense related to dividend equivalent rights) |  | $ | 20,691 |  |  | $ | 8,168 |  |  | $ | 31,461 |  |  | $ | 17,147 |  |  |
Administrative expense |  | — |  |  | 34 |  |  | 228 |  |  | 122 |  |  |
|  | $ | 20,691 |  |  | $ | 8,202 |  |  | $ | 31,689 |  |  | $ | 17,269 |  |  |
Changes in unvested equity awards pursuant to DBRG's Equity Incentive Plan are summarized below.
|  |  |  |  |  |  |  |  |  |  |  |  |  | Weighted Average Grant Date Fair Value
|  | Restricted Stock |  | LTIP Units (1) |  | DSUs |  | RSUs (2) |  | PSUs (3) |  | Total |  | PSUs |  | All Other Awards
Unvested shares and units at December 31, 2022 |  | 1,706,674 |  |  | 2,625,000 |  |  | 20,058 |  |  | 2,397,391 |  |  | 1,889,587 |  |  | 8,638,710 |  |  | $ | 17.84 |  |  | $ | 10.84 |
Granted |  | 2,118,060 |  |  | — |  |  | 70,642 |  |  | — |  |  | 397,262 |  |  | 2,585,964 |  |  | 11.63 |  |  | 11.64 |
Vested |  | (929,809) |  |  | — |  |  | (26,656) |  |  | (1,198,696) |  |  | (635,926) |  |  | (2,791,087) |  |  | 26.92 |  |  | 14.17 |
Forfeited |  | (9,479) |  |  | — |  |  | — |  |  | — |  |  | (424,065) |  |  | (433,544) |  |  | 26.92 |  |  | 12.99 |
Unvested shares and units at June 30, 2023 |  | 2,885,446 |  |  | 2,625,000 |  |  | 64,044 |  |  | 1,198,695 |  |  | 1,226,858 |  |  | 8,000,043 |  |  | 7.98 |  |  | 10.04 |
__________ (1) Represents the number of LTIP units granted subject to vesting upon achievement of market condition. LTIP units that do not meet the market condition within the measurement period will be forfeited. (2) Represents the number of RSUs granted subject to vesting upon achievement of performance condition. RSUs that do not meet the performance condition at the end of the measurement period will be forfeited. (3) Number of PSUs granted does not reflect potential increases or decreases that could result from the final outcome of the total shareholder return measured at the end of the performance period. PSUs for which the total shareholder return was not met at the end of the performance period are forfeited. Fair value of equity awards that vested, as shown above, determined based upon their respective fair values at vesting date, was $13.7 million and $15.7 million for the three months ended June 30, 2023 and 2022, respectively, and $34.6 million and $49.1 million for the six months ended June 30, 2023 and 2022, respectively. At June 30, 2023, aggregate unrecognized compensation cost for all unvested equity awards pursuant to DBRG's Equity Incentive Plan was $50.1 million, which is expected to be recognized over a weighted average period of 2.0 years. This excludes $6.3 million of unvested RSUs that are not currently probable of achieving their performance condition and have a remaining performance measurement period of approximately one year.

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