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STOCKHOLDER’S EQUITY AND EQUITY-BASED COMPENSATION | 9 Months Ended
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Sep. 30, 2022
Share-Based Payment Arrangement [Abstract] |
STOCKHOLDER’S EQUITY AND EQUITY-BASED COMPENSATION | STOCKHOLDERS’ EQUITY AND EQUITY-BASED COMPENSATION Pursuant to the Wheels Up Experience Inc. certificate of incorporation, we are authorized to issue 2,500,000,000 shares of Class A common stock, par value of $0.0001 per share, and 25,000,000 shares of preferred stock, par value $0.0001 per share. Holders of Class A common stock are entitled to one vote per share. As of September 30, 2022, we have the following nine equity-based compensation plans that were approved by the board of directors of WUP prior to the Business Combination: Wheels Up Partners Holdings LLC Equity Incentive Plan (“MIP Plan”); Wheels Up Partners Holdings LLC Equity Incentive Plan II (“MIP Plan II”); Wheels Up Partners Holdings LLC Equity Incentive Plan III (“MIP Plan III”); Wheels Up Partners Holdings LLC Equity Incentive Plan IV (“MIP Plan IV”); Wheels Up Partners Holdings LLC Equity Incentive Plan V (“MIP Plan V”); Wheels Up Partners Holdings LLC Equity Incentive Plan VI (“MIP Plan VI”); Wheels Up Partners Holdings LLC Equity Incentive Plan VII (“MIP Plan VII”); and Wheels Up Partners Holdings LLC Equity Incentive Plan VIII (“MIP Plan VIII”); which collectively constitute the management incentive plan and the Wheels Up Partners Holdings LLC Option Plan, which is the WUP stock option plan. Following the consummation of the Business Combination, no new grants can be made under the WUP management incentive plan or the WUP stock option plan. In connection with the Business Combination, the board of directors (the “Board”) and stockholders of Wheels Up adopted the Wheels Up Experience Inc. 2021 Long-Term Incentive Plan (the “2021 LTIP”), for employees, consultants and other qualified persons. On June 30, 2022, the Board adopted the Wheels Up Experience Inc. 2022 Inducement Grant Plan (the “2022 Inducement Plan”) to be used for a one-time employment inducement grant for our new Chief Financial Officer, Todd Smith, pursuant to New York Stock Exchange Rule 303A.08. The maximum number of awards that could be granted under the 2022 Inducement Plan were 2,051,282 shares of Class A common stock, which were all granted in the form of RSUs to Mr. Smith on July 1, 2022. The RSUs granted under the 2022 Inducement Plan are subject to time-based vesting and will vest ratably on December 30, 2022, December 30, 2023 and December 30, 2024, respectively, in each case subject to Mr. Smith’s continued employment with Wheels Up through the vesting date. WUP Management Incentive Plan WUP Profits Interests As of September 30, 2022, an aggregate of 31.3 million profits interests have been authorized and issued under the WUP management incentive plan. The following table summarizes the profits interests activity under the WUP management incentive plan as of September 30, 2022:
| Number of WUP Profits Interests |  | Weighted-Average Grant Date Fair Value
| (in thousands) |  |
Outstanding WUP profits interests as of January 1, 2022 | 28,819 |  |  | $ | 0.42 |
Granted | — |  |  | — |
Exchanged | — |  |  | — |
Expired/forfeited | (6) |  |  | 0.24 |
Outstanding WUP profits interests as of September 30, 2022 | 28,813 |  |  | $ | 0.42 |
The weighted-average remaining contractual term as of September 30, 2022, for WUP profits interests outstanding was approximately 8.8 years. The following table summarizes the status of non-vested WUP profits interests as of September 30, 2022:
| Number of WUP Profits Interests |  | Weighted-Average Grant Date Fair Value
| (in thousands) |  |
Non-vested WUP profits interests as of January 1, 2022 | 4,733 |  |  | $ | 0.35 |
Granted | — |  |  | — |
Vested | (3,029) |  |  | 0.31 |
Forfeited | (6) |  |  | 0.24 |
Non-vested WUP profits interests as of September 30, 2022 | 1,698 |  |  | $ | 0.42 |
The total unrecognized compensation cost related to non-vested WUP profits interests was $0.3 million as of September 30, 2022 and is expected to be recognized over a weighted-average period of 0.5 years. The total fair value for WUP profits interests that vested was approximated $1.0 million for the nine months ended September 30, 2022. WUP Restricted Interests As of September 30, 2022, under MIP Plan VII, 4.7 million WUP restricted interests have been authorized and issued to certain current and former Wheels Up employees. The following table summarizes the restricted interests activity under the WUP management incentive plan as of September 30, 2022:
| Number of WUP Restricted Interests |  | Weighted-Average Grant Date Fair Value
| (in thousands) |  |
Non-vested WUP restricted interests as of January 1, 2022 | 4,662 |  |  | $ | 3.98 |
Granted | — |  |  | — |
Vested | (4,662) |  |  | 3.98 |
Forfeited | — |  |  | — |
Non-vested WUP restricted interests as of September 30, 2022 | — |  |  | $ | — |
The weighted-average remaining contractual term as of September 30, 2022, for WUP restricted interests outstanding was approximately 7.5 years. The total unrecognized compensation cost related to non-vested WUP restricted interests was $0 as of September 30, 2022. WUP restricted interests are time and performance-based awards that vest with a change in control or initial public offering. As a result, we started recording compensation cost for WUP restricted interests on the Closing Date. The total fair value for WUP restricted interests that vested was approximated $18.6 million for the nine months ended September 30, 2022. The WUP restricted interests granted vest when both of the following conditions exist: (i) ratably over a four-year service period and (ii) upon the first to occur of (A) a change of control and (B) the later to occur of (1) six months after an initial public offering and (2) 30 days after the expiration of any applicable lock-up period in connection with an initial public offering. The WUP restricted interests lock-up period expired on February 8, 2022. As of such date, the holders of WUP restricted interests met the vesting conditions for the portion of their awards that did not require further service. The remainder of such eligible vestings occurred prior to filing this Form 10-Q/A. WUP Stock Option Plan As of September 30, 2022, the number of WUP stock options authorized and issued in aggregate under the WUP stock option plan was 17.5 million. Each outstanding stock option is exercisable for one share of Class A common stock. The following table summarizes the activity under the WUP stock option plan as of September 30, 2022:
| Number of WUP Stock Options |  | Weighted- Average Exercise Price |  | Weighted-Average Grant Date Fair Value
| (in thousands) |  |  |  |
Outstanding WUP stock options as of January 1, 2022 | 15,713 |  |  | $ | 7.52 |  |  | $ | 1.19 |
Granted | — |  |  | — |  |  | — |
Exercised | — |  |  | — |  |  | — |
Forfeited | (2,483) |  |  | 7.61 |  |  | 1.16 |
Expired | — |  |  | — |  |  | — |
Outstanding WUP stock options as of September 30, 2022 | 13,230 |  |  | $ | 7.50 |  |  | $ | 1.19 |
Exercisable WUP stock options as of September 30, 2022 | 12,139 |  |  | $ | 7.45 |  |  | $ | 1.12 |
The aggregate intrinsic value as of September 30, 2022, for WUP stock options that were outstanding and exercisable was $0. The weighted-average remaining contractual term as of September 30, 2022, for WUP stock options that were outstanding and exercisable was approximately 7.0 years and 6.9 years, respectively. The following table summarizes the status of non-vested WUP stock options as of September 30, 2022:
| Number of WUP Stock Options |  | Weighted-Average Grant Date Fair Value
| (in thousands) |  |
Non-vested WUP stock options as of January 1, 2022 | 3,971 |  |  | $ | 1.63 |
Granted | — |  |  | — |
Vested | (2,632) |  |  | 1.48 |
Expired | — |  |  | — |
Forfeited | (248) |  |  | 1.64 |
Non-vested WUP stock options as of September 30, 2022 | 1,091 |  |  | $ | 1.98 |
The total unrecognized compensation cost related to non-vested WUP stock options was $1.8 million as of September 30, 2022 and is expected to be recognized over a weighted-average period of 0.9 years. The total fair value for WUP stock options that vested was approximated $3.9 million for the nine months ended September 30, 2022. 2021 LTIP As of September 30, 2022, an aggregate of 27.3 million shares were authorized for issuance under the 2021 LTIP. Restricted Stock Units (“RSUs”) The following table summarizes the activity under the 2021 LTIP related to RSU s as of September 30, 2022:
| Number of RSUs |  | Weighted-Average Grant Date Fair Value
| (in thousands) |  |
Non-vested RSUs as of January 1, 2022 | 8,411 |  |  | $ | 7.32 |
Granted(1) | 17,880 |  |  | 3.01 |
Vested | (2,257) |  |  | 6.66 |
Forfeited | (2,627) |  |  | 6.13 |
Non-vested RSUs as of September 30, 2022 | 21,407 |  |  | $ | 3.96 |
(1) Includes 1,600 RSUs granted to our Chief Executive Officer (“CEO”). See “—2022 CEO Awards” for additional details regarding this grant. The total unrecognized compensation cost related to non-vested RSUs was $65.2 million as of September 30, 2022 and is expected to be recognized over a weighted-average period of 2.3 years. The total fair value for RSUs that vested was approximated $15.0 million for the nine months ended September 30, 2022. Performance-Based Restricted Stock Units (“PSUs”) Under the terms of the non-vested PSUs granted to certain employees, upon the achievement of certain pre-determined performance objectives, subject to the participant’s continued service (except as described under “—2022 CEO Awards”), each PSU may settle into shares of our Class A common stock. The PSUs will vest, if at all, upon the actual achievement of the related performance objective, subject to specified change of control exceptions. The following table summarizes the activity under the 2021 LTIP related to PSUs as of September 30, 2022:
| Number of PSUs |  | Weighted-Average Grant Date Fair Value
| (in thousands) |  |
Non-vested PSUs as of January 1, 2022 | — |  |  | $ | — |
Granted(1) | 1,149 |  |  | 2.13 |
Vested | — |  |  | — |
Forfeited | — |  |  | — |
Non-vested PSUs as of September 30, 2022(2) | 1,149 |  |  | $ | 2.13 |
(1) Includes 380 PSUs granted to our CEO. See “—2022 CEO Awards” for additional details regarding this grant. (2) Approximately 769 of the PSUs reflected in this table may settle into shares of our Class A common stock equal to 80-120% of the PSUs based on the level of performance. Equity-based compensation expense associated with PSUs is based on the fair value of our Class A common stock on the grant date, which equals the closing price of our Class A common stock on the grant date. We recognize compensation expense over the vesting period of the awards that are ultimately expected to vest when the achievement of the related performance objectives becomes probable. The total grant date fair value of unvested PSUs as of September 30, 2022 was $1.9 million. As of September 30, 2022, the achievement of the related performance objective was not probable of being achieved and, accordingly, no compensation cost for the PSUs has been recognized. 2022 CEO Awards During the second quarter of 2022, the Board approved certain grants under the 2021 LTIP to our CEO consisting of 1,600,000 RSUs that contain a service-based vesting condition (the “CEO Service-Based RSUs”), 380,000 PSUs that contain performance-based vesting conditions (the “CEO PSUs”) and 1,615,000 RSUs that contain market-based vesting conditions (the “CEO Market-Based RSUs”, together with the CEO Service-Based RSUs and CEO PSUs, the “2022 CEO Awards”). All of the 2022 CEO Awards require continued employment through the vesting date, subject to specified change in control and service termination exceptions. The CEO Service-Based RSUs vest annually over a three-year period from the grant date. The CEO Service-Based RSUs are included in the table under “—Restricted Stock Units (“RSUs”)” above as of September 30, 2022. The CEO PSUs will vest, if at all, with the achievement of certain separate performance conditions based on the achievement of pre-determined annual revenue and earnings before interest, taxes, depreciation and amortization thresholds. Any CEO PSUs that have not vested prior to the date the audited financial statements for the year ending December 31, 2026 are finalized will be forfeited. The CEO PSUs are included in the table under “—Performance-Based Restricted Stock Units (“PSUs”)” above as of September 30, 2022. The CEO Market-Based RSUs will vest, if at all, with the achievement of certain separate market-based vesting conditions based on the closing Class A common stock price over any 30 consecutive trading day-period that occurs prior to December 31, 2026. The CEO Market-Based RSUs are in addition to those described in the tables above under “—Restricted Stock Units (“RSUs”)” and “—Performance-Based Restricted Stock Units (“PSUs”)”. As of September 30, 2022, none of the CEO PSUs had vested and 133,333 CEO PSUs had a performance-based vesting condition deemed probable of being achieved. The total unrecognized compensation cost related to such CEO PSUs with a probable performance-based vesting condition was $0.3 million as of September 30, 2022 and is expected to be recognized over 0.6 years. The grant-date fair value of the CEO Market-Based RSUs, using a Monte Carlo simulation model, was $0.3 million. The derived service period for such CEO Market-Based RSUs began on June 8, 2022 and is a weighted-average period of 3.8 years. Based on the Class A common stock trading price, the market conditions for the CEO Market-Based RSUs were not met, and no shares vested as of September 30, 2022. The total unrecognized compensation cost related to such CEO Market-Based RSUs was $0.2 million as of September 30, 2022 and is expected to be recognized over 3.5 years. Wheels Up Stock Options The following table summarizes the activity under the 2021 LTIP related to Wheels Up stock options as of September 30, 2022:
| Number of Wheels Up Stock Options |  | Weighted- Average Exercise Price |  | Weighted-Average Grant Date Fair Value
| (in thousands) |  |  |  |
Outstanding Wheels Up stock options as of January 1, 2022 | 921 |  |  | $ | 10.00 |  |  | $ | 4.75 |
Granted | — |  |  | — |  |  | — |
Exercised | — |  |  | — |  |  | — |
Forfeited | — |  |  | — |  |  | — |
Expired | — |  |  | — |  |  | — |
Outstanding Wheels Up stock options as of September 30, 2022 | 921 |  |  | $ | 10.00 |  |  | $ | 4.75 |
Exercisable Wheels Up stock options as of September 30, 2022 | 384 |  |  | $ | 10.00 |  |  | $ | 4.75 |
The aggregate intrinsic value as of September 30, 2022, for Wheels Up stock options that were outstanding and exercisable was $0. The weighted-average remaining contractual term as of September 30, 2022, for Wheels Up stock options that were outstanding and exercisable was approximately 8.8 years and 8.8 years, respectively. The following table summarizes the status of non-vested Wheels Up stock options as of September 30, 2022:
| Number of Wheels Up Stock Options |  | Weighted-Average Grant Date Fair Value
| (in thousands) |  |
Non-vested Wheels Up stock options as of January 1, 2022 | 768 |  |  | $ | 4.75 |
Granted | — |  |  | — |
Vested | (230) |  |  | 4.75 |
Expired | — |  |  | — |
Forfeited | — |  |  | — |
Non-vested Wheels Up stock options as of September 30, 2022 | 538 |  |  | $ | 4.75 |
The total unrecognized compensation cost related to non-vested Wheels Up stock options was $2.3 million as of September 30, 2022 and is expected to be recognized over a weighted-average period of 1.6 years. The total fair value of Wheels Up stock options that vested was approximated $1.1 million for the nine months ended September 30, 2022. Equity-Based Compensation Expense Compensation expense for WUP profits interests recognized in the condensed consolidated statements of operations was $0.2 million and $1.1 million for the three and nine months ended September 30, 2022, respectively, and $1.0 million and $1.5 million for the three and nine months ended September 30, 2021, respectively. Compensation expense for WUP restricted interests recognized in the condensed consolidated statements of operations was $0 and $0.4 million for the three and nine months ended September 30, 2022, respectively, and $12.6 million for each of the three and nine months ended September 30, 2021. Compensation expense for WUP stock options and Wheels Up stock options recognized in the condensed consolidated statements of operations was $1.3 million and $5.5 million for the three and nine months ended September 30, 2022, respectively, and $5.4 million and $7.7 million for the three and nine months ended September 30, 2021, respectively. Compensation expense for RSUs recognized in the condensed consolidated statements of operations was $11.2 million and $29.9 million for the three and nine months ended September 30, 2022, respectively, and $0.6 million for each of the three and nine months ended September 30, 2021. The following table summarizes equity-based compensation expense recognized by condensed consolidated statement of operations line item (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Cost of revenue | $ | 3,581 |  |  | $ | 679 |  |  | $ | 11,320 |  |  | $ | 779 |
Technology and development | 751 |  |  | 619 |  |  | 2,047 |  |  | 806 |
Sales and marketing | 2,756 |  |  | 2,449 |  |  | 8,314 |  |  | 2,901 |
General and administrative | 15,416 |  |  | 24,159 |  |  | 44,158 |  |  | 26,182 |
Total equity-based compensation expense | $ | 22,504 |  |  | $ | 27,906 |  |  | $ | 65,839 |  |  | $ | 30,668 |
Earnout Shares The 9,000,000 Earnout Shares vest with the achievement of separate market conditions. One-third of the Earnout Shares will meet the market condition when the closing Class A common stock price is greater than or equal to $12.50 for any 20 trading days within a period of 30 consecutive trading days within five years of the Closing Date. An additional one-third will vest when the Class A common stock is greater than or equal to $15.00 over the same measurement period. The final one-third will vest when the Class A common stock is greater than or equal to $17.50 over the same measurement period. Earnout Shares that are attributable to WUP profits interests and restricted interests require continued employment as of the date on which each of the Earnout Share market conditions are met. As of September 30, 2022 forfeitures of Earnout Shares were not material. The grant-date fair value of the Earnout Shares attributable to the holders of WUP profits interests and restricted interests, using a Monte Carlo simulation model, was $57.9 million. The derived service period began on the Closing Date and is a weighted-average period of 1.7 years. Based on the Class A common stock trading price, the market conditions were not met, and no Earnout Shares vested as of September 30, 2022. Compensation expense for Earnout Shares recognized in the condensed consolidated statements of operations was $9.7 million and $28.8 million for the three and nine months ended September 30, 2022, respectively, and $8.3 million for each of the three and nine months ended September 30, 2021. The total unrecognized compensation cost related to Earnout Shares was $11.1 million as of September 30, 2022 and is expected to be recognized over 0.5 years. Treasury Stock During the three and nine months ended September 30, 2022, respectively, 473,339 and 2,386,585 shares, with a market value of $0.7 million and $7.3 million, respectively, or $1.39 and $3.47 per share, respectively, were withheld to settle employee taxes due upon the vesting of either restricted stock or RSUs and were added to treasury stock on our condensed consolidated balance sheets as of September 30, 2022.

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