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STOCKHOLDER’S EQUITY AND EQUITY-BASED COMPENSATION | 3 Months Ended
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Mar. 31, 2023
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 March 31, 2023, we have nine equity-based compensation plans that were approved by the board of directors of WUP prior to the Business Combination (as defined below), which collectively constitute the “WUP Management Incentive Plan”, and the Wheels Up Partners Holdings LLC Option Plan, which is the “WUP Option Plan.” Following the consummation of the Business Combination (as defined below), no new grants can be made under the WUP Management Incentive Plan or WUP Option Plan. In connection with the Business Combination (as defined below), 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 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 restricted stock units to Mr. Smith on July 1, 2022. Restricted stock unit awards granted under the 2022 Inducement Grant Plan contain generally the same terms as other restricted stock unit awards granted under the 2021 LTIP during the fiscal year ended December 31, 2022. WUP Management Incentive Plan WUP Profits Interests As of March 31, 2023, an aggregate of 31.3 million WUP profits interests have been authorized and issued under the WUP Management Incentive Plan. Vested WUP profits interests are eligible to be exchanged into shares of Class A common stock. Amounts of WUP profits interests reported in the tables below represent the maximum number of WUP profits interests outstanding or that could be realized upon vesting and immediately exchanged for the maximum number of shares of Class A common stock. The actual number of shares of Class A common stock received upon exchange of such WUP profits interests will depend on the trading price per share of Class A common stock at the time of such exchange. The following table summarizes the WUP profits interests activity under the WUP management incentive plan as of March 31, 2023:
| Number of WUP Profits Interests |  | Weighted-Average Grant Date Fair Value
| (in thousands) |  |
Outstanding WUP profits interests as of January 1, 2023 | 28,813 |  |  | $ | 0.42 |
Granted | — |  |  | — |
Exchanged | — |  |  | — |
Expired/forfeited | — |  |  | — |
Outstanding WUP profits interests as of March 31, 2023 | 28,813 |  |  | $ | 0.42 |
The weighted-average remaining contractual term as of March 31, 2023, for WUP profits interests outstanding was approximately 8.3 years. The following table summarizes the status of non-vested WUP profits interests as of March 31, 2023:
| Number of WUP Profits Interests |  | Weighted-Average Grant Date Fair Value
| (in thousands) |  |
Non-vested WUP profits interests as of January 1, 2023 | 1,697 |  |  | $ | 0.42 |
Granted | — |  |  | — |
Vested | (1,430) |  |  | 0.45 |
Forfeited | — |  |  | — |
Non-vested WUP profits interests as of March 31, 2023 | 267 |  |  | $ | 0.24 |
The total unrecognized compensation cost related to non-vested WUP profits interests was nominal as of March 31, 2023 and is expected to be recognized over a weighted-average period of 0.4 years. The total fair value for WUP profits interests that vested was approximately $0.6 million for the three months ended March 31, 2023. WUP Option Plan As of March 31, 2023, the number of WUP stock options authorized and issued in aggregate under the WUP 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 Option Plan as of March 31, 2023:
| 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, 2023 | 12,984 |  |  | $ | 7.51 |  |  | $ | 1.20 |
Granted | — |  |  | — |  |  | — |
Exercised | — |  |  | — |  |  | — |
Forfeited | (86) |  |  | 7.27 |  |  | 0.73 |
Expired | — |  |  | — |  |  | — |
Outstanding WUP stock options as of March 31, 2023 | 12,898 |  |  | $ | 7.51 |  |  | $ | 1.20 |
Exercisable WUP stock options as of March 31, 2023 | 11,974 |  |  | $ | 7.46 |  |  | $ | 1.13 |
The aggregate intrinsic value as of March 31, 2023, for WUP stock options that were outstanding and exercisable was nil, respectively. The weighted-average remaining contractual term as of March 31, 2023, for WUP stock options that were outstanding and exercisable was approximately 6.4 years and 6.3 years, respectively. The following table summarizes the status of non-vested WUP stock options as of March 31, 2023:
| Number of WUP Stock Options |  | Weighted-Average Grant Date Fair Value
| (in thousands) |  |
Non-vested WUP stock options as of January 1, 2023 | 1,044 |  |  | $ | 2.00 |
Granted | — |  |  | — |
Vested | (115) |  |  | 1.13 |
Expired | — |  |  | — |
Forfeited | (6) |  |  | 1.60 |
Non-vested WUP stock options as of March 31, 2023 | 923 |  |  | $ | 2.11 |
The total unrecognized compensation cost related to non-vested WUP stock options was $0.7 million as of March 31, 2023 and is expected to be recognized over a weighted-average period of 0.4 years. The total fair value for WUP stock options that vested was $0.1 million for the three months ended March 31, 2023. 2021 LTIP As of March 31, 2023, 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 March 31, 2023:
| Number of RSUs(1) |  | Weighted-Average Grant Date Fair Value
| (in thousands) |  |
Non-vested RSUs as of January 1, 2023 | 16,162 |  |  | $ | 3.46 |
Granted(2) | 15,136 |  |  | 0.63 |
Vested | (2,142) |  |  | 3.92 |
Forfeited | (1,334) |  |  | 3.75 |
Non-vested RSUs as of March 31, 2023 | 27,822 |  |  | $ | 1.87 |
(1) RSU awards granted under the 2022 Inducement Grant Plan contain generally the same terms as other RSU awards granted under the 2021 LTIP during the fiscal year ended December 31, 2022. The number of RSUs and weighted-average grant date fair value include 2,051,282 RSUs granted under the 2022 Inducement Grant Plan in July 2022, of which 683,760 RSUs had vested as of January 1, 2023 and the remaining 1,367,522 RSUs are scheduled to vest in equal installments on December 30, 2023 and December 30, 2024, subject to continued service through each such vesting date. (2) RSU awards granted during the three months ended of March 31, 2023 are liability classified because such awards are contingent on receipt of approval by the Company’s stockholders of the Amended and Restated Wheels Up Experience Inc. 2021 Long-Term Incentive Plan (the "Amended and Restated 2021 LTIP”) at the Company’s 2023 annual meeting of stockholders (the “2023 Annual Meeting”). If the Company’s stockholders do not approve the Amended and Restated 2021 LTIP at the 2023 Annual Meeting, the Compensation Committee of the Board will settle such awards in cash upon vesting based on the fair market value per share of Class A common stock on the applicable vesting date. The total unrecognized compensation cost related to non-vested RSUs was $42.7 million as of March 31, 2023 and is expected to be recognized over a weighted-average period of 1.4 years. The total fair value for RSUs that vested was approximated $8.4 million for the three months ended March 31, 2023. 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, 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 March 31, 2023:
| Number of PSUs |  | Weighted-Average Grant Date Fair Value
| (in thousands) |  |
Non-vested PSUs as of January 1, 2023 | 957 |  |  | $ | 2.17 |
Granted(1) | 1,262 |  |  | 0.63 |
Vested | (133) |  |  | 2.50 |
Forfeited | — |  |  | — |
Non-vested PSUs as of March 31, 2023(2) | 2,086 |  |  | $ | 1.22 |
(1) PSU awards granted during the three months ended March 31, 2023 are liability classified because such awards are contingent on receipt of approval by the Company’s stockholders of the Amended and Restated 2021 LTIP at the 2023 Annual Meeting. If the Company’s stockholders do not approve the Amended and Restated 2021 LTIP at the 2023 Annual Meeting, the Compensation Committee of the Board will settle such awards in cash upon vesting based on the fair market value per share of Class A common stock on the applicable vesting date. (2) Non-vested PSUs reflected in the table above include approximately 0.6 million of the PSUs reflected in this table may settle into shares of our Class A common stock equal to 0-120% of the PSUs and 1.3 million PSUs that may settle into shares of Class A common stock equal to 0-200% of the PSUs, in each case based on the level of performance. Compensation expense associated with PSUs is recognized over the vesting period of the awards that are ultimately expected to vest when the achievement of the related performance objectives becomes probable. Total unrecognized compensation cost related to non-vested PSUs was $2.5 million as of March 31, 2023. As of March 31, 2023, the achievement of the performance objectives associated with unvested awards was deemed not probable of being achieved and, accordingly, no compensation cost has been recognized. Compensation cost recognized during the three months ended March 31, 2023 associated with PSUs which vested during the period was $0.1 million. RSUs Subject to Market-Based Vesting Conditions (“Market-Based RSUs”) Under the terms of the non-vested Market-Based RSUs granted to certain employees each Market-Based RSU may settle into shares of our Class A common stock. The Market-Based RSUs will vest, if at all, based on the closing trading price per share of our Class A common stock over any 30 consecutive trading day-period that occurs prior to the end date specified in the underlying award agreement, subject to continued service through each such vesting date. The grant-date fair value of outstanding Market-Based RSUs, using a Monte Carlo simulation model, was $0.3 million. The derived service period for such Market-Based RSUs began on June 8, 2022 with a weighted average period of 3.8 years. Based on the Class A common stock trading price, the market conditions for the outstanding Market-Based RSUs were not met, and no shares vested as of March 31, 2023. The total unrecognized compensation cost related to such Market-Based RSUs was $0.2 million as of March 31, 2023 and is expected to be recognized over 3.0 years. Wheels Up Stock Options The following table summarizes the activity under the 2021 LTIP related to Wheels Up stock options as of March 31, 2023:
| 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, 2023 | 768 |  |  | $ | 10.00 |  |  | $ | 4.75 |
Granted | — |  |  | — |  |  | — |
Exercised | — |  |  | — |  |  | — |
Forfeited | — |  |  | — |  |  | — |
Expired | — |  |  | — |  |  | — |
Outstanding Wheels Up stock options as of March 31, 2023 | 768 |  |  | $ | 10.00 |  |  | $ | 4.75 |
Exercisable Wheels Up stock options as of March 31, 2023 | 768 |  |  | $ | 10.00 |  |  | $ | 4.75 |
The aggregate intrinsic value as of March 31, 2023, for Wheels Up stock options that were outstanding and exercisable was nil. The weighted-average remaining contractual term as of March 31, 2023, for Wheels Up stock options that were outstanding and exercisable was approximately 4.6 years, respectively. All Wheels Up stock options vested in prior periods. Equity-Based Compensation Expense Compensation expense for WUP profits interests recognized in the condensed consolidated statements of operations was $0.1 million and $0.7 million for the three months ended March 31, 2023 and March 31, 2022, respectively. Compensation expense for WUP restricted interests recognized in the condensed consolidated statements of operations was nil and $0.2 million for the three months ended March 31, 2023 and March 31, 2022, respectively. Compensation expense for WUP stock options under the WUP Option Plan and Wheels Up stock options under the 2021 LTIP recognized in the condensed consolidated statements of operations was $0.5 million and $3.1 million for the three months ended March 31, 2023 and March 31, 2022, respectively. Compensation expense for RSUs, PSUs, and Market-Based RSUs recognized in the condensed consolidated statements of operations was $5.7 million and $9.0 million for the three months ended March 31, 2023 and March 31, 2022, respectively. The following table summarizes equity-based compensation expense recognized by condensed consolidated statement of operations line item (in thousands):
| Three Months Ended March 31, |  |
| 2023 |  | 2022 |  |  |  |
Cost of revenue | $ | 1,179 |  |  | $ | 4,432 |  |  |  |  |
Technology and development | 484 |  |  | 641 |  |  |  |  |
Sales and marketing | 700 |  |  | 2,701 |  |  |  |  |
General and administrative | 9,175 |  |  | 14,780 |  |  |  |  |
Total equity-based compensation expense | $ | 11,538 |  |  | $ | 22,554 |  |  |  |  |
Earnout Shares On July 13, 2021 (the “Closing Date”), we consummated the transactions contained in the Agreement and Plan of Merger with Aspirational Consumer Lifestyle Corp. (“Aspirational”), a blank check company, dated as of February 1, 2021, as amended on May 6, 2021 (the “Business Combination”). As part of the Business Combination, existing holders of WUP equity, including certain holders of WUP profits interests and restricted interests, but excluding holders of WUP stock options, have the right to receive up to an aggregate of 9 million additional shares of our Class A common stock in three equal tranches, which are issuable upon the achievement of share price thresholds of $12.50, $15.00 and $17.50 for any 20 trading days within a period of 30 consecutive trading days within five years of the Closing Date, respectively (the “Earnout Shares”). Earnout Shares are not attributable to any equity compensation plan. 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. There have been no forfeitures of Earnout Shares as of March 31, 2023. 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 March 31, 2023. Compensation expense for Earnout Shares recognized in the condensed consolidated statements of operations was $1.4 million and $9.5 million for the three months ended March 31, 2023 and March 31, 2022, respectively. Treasury Stock As of March 31, 2023 and December 31, 2022, we had 2,644,415 shares of treasury stock. Treasury stock has historically consisted of shares of Class A common stock withheld to settle employee taxes due upon the vesting of RSUs and WUP restricted interests, none of which occurred during the three months ended March 31, 2023.

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