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Stockholders' Equity | 6 Months Ended
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Jun. 30, 2024
Equity [Abstract] |
Stockholders' Equity | Note 15. Stockholders' Equity Equity-Based Compensation On July 20, 2021, the Board of Directors approved the P10 Holdings, Inc. 2021 Stock Incentive Plan (the "Plan"), which replaced the 2018 Incentive Plan ("2018 Plan"), our previously existing equity compensation plan. The Compensation Committee of the Board of Directors may issue equity-based awards including stock options, stock appreciation rights, restricted stock units, and restricted stock awards. Starting with options granted in 2024 under the Plan, vesting occurs on a graded schedule with 25% vesting on each of the second, third, fourth, and fifth anniversary of the grant date, but only if the grantee is continuously employed by the Company or a subsidiary through each such date. Options granted prior to 2024 under both the Plan and the 2018 Plan cliff vest over a period of four or five year s. The term of each option is no more than ten year s from the date of grant. When the options are exercised, the Board of Directors has the option of issuing shares of common stock or paying a lump sum cash payment on the exercise date equal to the difference between the common stock’s fair market value on the exercise date and the option price. Terms of all future awards will be granted under the Plan, and no additional awards will be granted under the 2018 Plan. Awards granted under the 2018 Plan continue to follow the 2018 Plan. The 2018 Plan provided for an initial 6,300,000 shares (adjusted for the reverse stock split). The Plan provided for the issuance of 3,000,000 shares available for grant, in addition to those approved in the 2018 Plan for a total of 9,300,000 shares. On June 17, 2022, at the Annual Meeting of Stockholders, the shareholders authorized an increase of 5,000,000 shares that may be issued under the Plan. On December 9, 2022, a special meeting of stockholders was held to increase the number of shares issuable under the Plan by 4,000,000 shares. On June 14, 2024, at the Annual Meeting of Stockholders, the shareholders authorized an increase of 11,000,000 shares that may be issued under the Plan, resulting in a total of 29,300,000 shares available for grant under the Plan and the 2018 Plan. As of June 30, 2024, there are 9,635,674 shares available for grant under the Plan. A summary of stock option activity for the six months ended June 30, 2024 is as follows:
|  |  |  |  |  |  |  | Weighted Average |  |  |  |
|  |  |  |  |  |  |  | Contractual Life |  |  | Aggregate |
|  | Number of |  |  | Weighted Average |  |  | Remaining |  |  | Intrinsic Value |
|  | Shares |  |  | Exercise Price |  |  | (in years) |  |  | (whole dollars) |
Outstanding as of December 31, 2023 |  |  | 12,715,381 |  |  | $ | 8.15 |  |  |  | 7.82 |  |  | $ | 30,872,113 |
Granted |  |  | 2,539,309 |  |  |  | 8.00 |  |  |  |  |  |  |
Exercised |  |  | (314,405 | ) |  |  | 1.17 |  |  |  |  |  |  |
Expired/Forfeited |  |  | (257,260 | ) |  |  | 11.62 |  |  |  |  |  |  |
Outstanding as of June 30, 2024 |  |  | 14,683,025 |  |  | $ | 8.21 |  |  |  | 7.76 |  |  | $ | 19,711,039 |
Exercisable as of June 30, 2024 |  |  | 3,028,622 |  |  | $ | 5.13 |  |  |  | 6.47 |  |  | $ | 11,086,732 |
Compensation expense equal to the grant date fair value is recognized for these awards over the vesting period and is included in compensation and benefits in the Consolidated Statements of Operations. Stock option compensation cost is estimated at the grant date based on the fair-value of the award, which is determined using the Black Scholes option valuation model and is recognized as expense ratably over the requisite service period of the award, generally five years. The share price used in the Black Scholes model is based on the trading price of our shares on the public markets. Expected life is based on the vesting period and expiration date of the option. Until October 2023, stock price volatility was estimated based on a group of similar publicly traded companies determined to be most reflective of the expected volatility of the Company due to the nature of operations of these entities. Since October 2023, stock price volatility is estimated using a weighted average of P10 and a group of similar publicly traded companies determined to be most reflective of the expected volatility of the Company due to the nature of operations of these entities. The risk-free rates are based on the U.S. Treasury yield in effect at the time of grant. The dividend yield is based on the quarterly dividend as of the grant date. The stock-based compensation expense for stock options was $2.5 million and $5.3 million for the three and six months ended June 30, 2024, respectively, and $1.8 million and $3.4 million for the three and six months ended June 30, 2023, respectively. Unrecognized stock-based compensation expense related to outstanding unvested stock options as of June 30, 2024 was $12.8 million and is expected to be recognized over a weighted average period of 3.07 years. Any future forfeitures will impact this amount. The weighted average assumptions used in calculating the fair value of stock options granted during the six months ended June 30, 2024 and June 30, 2023 were as follows:
|  | For the Six Months Ended June 30, |
|  | 2024 |  |  | 2023 |
Expected life (in years) |  | 6.71 |  |  | 7.5 |
Expected volatility |  |  | 37.50 | % |  |  | 38.60 | %
Risk-free interest rate |  |  | 4.23 | % |  |  | 4.07 | %
Expected dividend yield |  |  | 1.63 | % |  |  | 1.20 | %
The Company has granted restricted stock awards ("RSAs") to certain non-employee directors. Holders of RSAs have no voting rights and accrue dividends until vesting with payment being made once they vest. All of the shares currently vest one year from the grant date.
|  | Number of |  |  | Weighted-Average Grant |
|  | RSAs |  |  | Date Fair Value Per RSA |
Outstanding as of December 31, 2023 |  |  | 32,722 |  |  | $ | 11.46 |
Granted |  |  | 93,473 |  |  |  | 8.02 |
Vested |  |  | — |  |  |  | — |
Forfeited |  |  | — |  |  |  | — |
Outstanding as of June 30, 2024 |  |  | 126,195 |  |  | $ | 8.91 |
The Company has granted restricted stock units ("RSUs") to certain employees. Holders of RSUs have no voting rights but generally are eligible to receive dividends or other distributions paid with respect to any RSUs that have not vested. Most of the shares currently vest one year from the grant date excluding the Hark, Bonaccord, and Executive Market Units, which are discussed in more detail below. At the time of the Bonaccord acquisition, the Company entered into a Notice of Restricted Stock Units with certain employees of Bonaccord for grants of Restricted Stock Units ("Bonaccord Units") to be allocated to employees at a later date for meeting certain performance metrics. The Bonaccord Units may not be transferred, sold, pledged, exchanged, assigned or otherwise encumbered or disposed of by any grantee until it has become vested. On August 16, 2022, allocations were finalized pursuant to which an aggregate value of $17.5 million of units may vest at each future achievement of performance metrics. As of June 30, 2024, certain performance metrics have been met and specific employees have earned $9.6 million in value, which $6.6 million was issued in shares and $3.0 million was issued in cash. The Company evaluates whether it is pro bable that the Bonaccord Units will vest and applies the tranche method to determine the amount of expense to recognize during the period. Future vested tranches will be settled in cash. An expense of $0.1 million and $0.1 million has been recorded for the three and six months ended June 30, 2024, respectively, and $1.6 million and $5.2 million for the three and six months ended June 30, 2023 on the Consolidated Statements of Operations. As of June 30, 2024, the Company deemed $13.0 million probable and $0.2 million is unrecognized expense. At the time of the Hark acquisition, the Company entered into a Notice of Restricted Stock Units with an employee, which grants Restricted Stock Units ("Hark Units") for meeting a certain performance metric. The Hark Units may not be transferred, s old, pledged, exchanged, assigned or otherwise encumbered or disposed of by any grantee until they have become vested. All Hark Units have vested and been issued. An expense of $0 has been recorded for the three and six months ended June 30, 2024, and $0.3 million for the three and six months ended June 30, 2023 on the Consolidated Statements of Operations. At the time of Executive Transition, the Company entered into an Executive Transition Agreement with a certain former executive, which granted Restricted Stock Units ("Executive Transition Units") for meeting a service requirement. The Executive Transition Units may not be transferred, sold, pledged, exchanged, assigned, or otherwise encumbered or disposed of by any grantee until they have become vested. The award has a stated value of $4.0 million and will be issued in $1.0 million increments quarterly beginning on October 20, 2023, and at the start of each of the following three quarters. Each $1.0 million increment will vest one year following issuance. Attributes of this award include graded vesting and service conditions; therefore, the expense recognition of this award is recognized on straight-line basis over the requisite service period of the award in line with the policy election discussed in Note 2. As of June 30, 2024, $3.0 million has been issued. For the three and six months ended June 30, 2024, $0.6 million and $1.2 million of stock compensation expense was recognized on the Consolidated Statements of Operations. No stock compensation expense for these units was incurred for the three and six months ended June 30, 2023. The unrecognized expense associated with the Executive Transition Units was $2.3 million as of June 30, 2024. At the time of Executive Transition, the Company entered into an Employment Agreement with a certain executive, which granted Restricted Stock Units ("Executive Market Units") for meeting a service requirement and achieving certain share price performance hurdles based on the thirty-day volume-weighted average price ("VWAP"). The executive is entitled to receive RSUs upon the thirty-day VWAP of the Company's common stock reaching certain per share prices at any time prior to the fifth anniversary of the start date. There are five price per share performance hurdles for the executive to meet with each hurdle achievement allowing for the issuance of $8.0 million of units, with the number of shares determined by dividing $8.0 million by the applicable stock price performance hurdle, for a total of up to $40.0 million of units or approximately 2 million shares. The Executive Market Units may not be transferred, sold, pledged, exchanged, assigned, or otherwise encumbered or disposed of by any grantee until they have become vested. The RSUs shall vest ratably on the third, fourth, and fifth anniversaries of the executive's start date, provided that no such units shall vest earlier than the first anniversary of the applicable issuance date of such units. The fair value was determined using a Monte Carlo simulation as of the executive's start date of October 23, 2023, and was determined to be $10.8 million. As of June 30, 2024, no ne of the Executive Market Units have vested. For the three and six months ended June 30, 2024, $0.7 million and $1.4 million of stock compensation expense was recognized on the Consolidated Statements of Operations. No stock compensation expense for these units was incurred for the three and six months ended June 30, 2023. The unrecognized expense associated with the Executive Market Units was $8.9 million as of June 30, 2024. The below table shows the assumptions used in the Monte Carlo simulation for the Executive Market Units' fair value.
|  | As of
|  | October 23, 2023
Expected life (in years) |  | 5
Expected volatility |  | 40.00%
Risk-free interest rate |  | 4.81%
Expected dividend yield |  | 1.42%
The below table excludes Executive Market Units that the market conditions have not been satisfied, Executive Transition Units that have not vested and are recorded as a liability, and Bonaccord or Hark Units that were issued outside of the Plan, that have not vested and are recorded as a liability or vested and settled in cash.
|  | Number of |  |  | Weighted-Average Grant |
|  | RSUs |  |  | Date Fair Value Per RSU |
Outstanding as of December 31, 2023 |  |  | 1,418,094 |  |  | $ | 9.15 |
Granted |  |  | 1,062,007 |  |  |  | 8.25 |
Vested |  |  | (750,714 | ) |  |  | 9.60 |
Forfeited |  |  | (3,819 | ) |  |  | 9.30 |
Outstanding as of June 30, 2024 |  |  | 1,725,568 |  |  | $ | 8.40 |

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