Employee Compensation

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

Phantom Stock Plan

On June 19, 2015, TaskUs Holdings’ board of directors officially adopted a company-wide phantom stock plan and related phantom share agreements. There were 6,514,360 outstanding phantom shares as of December 31, 2020. There were 1,399,470 phantom shares forfeited during the nine months ended September 30, 2021. Because the change in control became probable upon the IPO, the Company recognized expense in the amount of the cash settlement totaling $127.5 million recorded in selling, general, and administrative expense on the condensed consolidated statements of operations for the nine months ended September 30, 2021. As of September 30, 2021 there were no phantom shares outstanding.

2019 Stock Incentive Plan

On April 16, 2019, the Company established an equity incentive plan pursuant to which the Company has granted option awards to selected executives and other key employees (the “2019 Plan”). The stock options contain service, market and performance conditions. Stock options under this plan contingently vest over a period of two years in the event of a change in control and over a period of three years in the event of an IPO (each as defined in such plan), with the vesting period beginning on the date of the performance event so long as the holder remains employed. The amount of options eligible for vesting is contingent upon Blackstone’s return on invested capital in the Company. These options have contractual lives of 10 years. Following the IPO and establishment of the Company's 2021 Omnibus Incentive Plan (the “2021 Plan”) as further discussed below, it is not expected that any additional awards will be issued under the 2019 Plan.

At the date of the IPO, the Company concluded that the public offering represented a qualifying liquidity event that would cause the stock option’s performance condition to be probable of occurring. As such, the Company has begun to recognize compensation expense in relation to the stock options issued under the 2019 Plan.

2021 Omnibus Incentive Plan

In connection with the IPO, the Company adopted the 2021 Plan, which provides for the issuance of non-qualified stock options, incentive stock options, stock appreciation rights (“SARs”), restricted shares of Class A common stock, restricted stock units (“RSUs”), or other equity-based or cash-based awards. The Company initially granted 6,614,122 awards to its founders and reserved an additional 12,160,929 shares of Class A common stock for issuance under the 2021 Plan, subject to automatic annual evergreen increases.

Stock Options

During the nine months ended September 30, 2021, the Company granted 2,265,146 stock options to its founders and certain officers and employees with a weighted-average grant date fair value of $9.34. The stock options are subject to service-based vesting conditions and generally vest quarterly or annually over four years and expire 10 years from the date of the grant. The grant date fair value of the stock options was estimated using the Black-Scholes option pricing method with the following assumptions:


Dividend yield (%)	0	%
Expected volatility (%)	32-35%
Risk-free interest rate (%)	0.8-1.3%
Expected term (years)	5.1-7.0

As of September 30, 2021, there were 9,744,028 stock options outstanding with a weighted-average exercise price of $10.06 per share. As of September 30, 2021, there was $22.3 million of unrecognized compensation expense related to the Company’s unvested stock options that is expected to be recognized over a weighted-average period of 2.4 years.

RSUs

During the nine months ended September 30, 2021, the Company granted 4,277,543 RSUs to its founders and certain officers and employees with a weighted-average grant date fair value of $27.23. The RSUs are typically subject to service-based vesting conditions and generally vest quarterly or annually over four years. As of September 30, 2021, there was $98.9 million of unrecognized compensation expense related to the Company’s unvested RSUs that is expected to be recognized over a weighted-average period of 2.4 years.

PSUs

During the nine months ended September 30, 2021, the Company granted 3,373,417 PSUs to its founders a certain officer with a weighted-average grant date fair value of $4.02. The majority of the PSUs vest contingently in annual installments over four years subject to continued service and the achievement of certain enterprise value compound annual growth rate ("CAGR") targets. The remaining PSUs vest contingently in four years subject to continued service and the achievement of certain market capitalization CAGR targets. The grant date fair value of the PSUs were estimated using the Monte Carlo simulation method with the following assumptions:


Dividend yield (%)	0	%
Expected volatility (%)	40	%
Risk-free interest rate (%)	0.1-0.6 %

As of September 30, 2021, there was $11.7 million of unrecognized compensation expense related to the Company’s unvested PSUs that is expected to be recognized over a weighted-average period of 2.7 years.

Stock-Based Compensation Expense

We recognize stock-based compensation expense for all awards using a graded vesting method. The following table summarizes the components of stock-based compensation expense recognized for the periods presented:


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2021		2020		2021		2020
Cost of services	$	451	$	—	$	502	$	—
Selling, general, and administrative expense	18,792		—		152,008		—
Total	$	19,243	$	—	$	152,510	$	—