Share-Based Compensation

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

NOTE 9 - SHARE-BASED COMPENSATION

2021 Unit Option Plan

On May 25, 2021, the Intuitive Machines, LLC’s board of directors adopted, and its members approved the 2021 Unit Option Plan (the “2021 Plan”). The 2021 Plan allowed the Intuitive Machines, LLC to grant incentive unit options (“Incentive Unit Options”) to purchase Class B unit interests. Pursuant to the 2021 Plan, up to 6,125,000 shares of Class B units were reserved for issuance, upon exercise of the aforementioned Incentive Unit Options made to employees, directors and consultants.

As a result of the Business Combination discussed in Note 1 and per the terms of the Second Amended and Restated Intuitive Machines, LLC Operating Agreement, the unexpired and unexercised outstanding Incentive Unit Options at the closing of the Business Combination, whether vested or unvested, were proportionately adjusted using a conversion ratio of 0.5562 (rounded down to the nearest whole number of options). The exercise price of each option was adjusted accordingly. Each Incentive Unit Option continues to be subject to the terms and conditions of the 2021 Plan and will be exercisable for Class B common units of Intuitive Machines, LLC (the “Class B Common Units”). When an option is exercised, the participant will receive Class A Common Stock. As a result of the conversions, there was no incremental compensation cost and the terms of the outstanding options, including fair value, vesting conditions and classification, were unchanged.

As of March 31, 2024, Intuitive Machines, LLC was authorized to issue a total of 1,146,245 Class B Common Units upon exercise of the Incentive Unit Options under the 2021 Plan. The following table provides a summary of the option activity under the 2021 Plan for the three months ended March 31, 2024:


	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (000’s)
Outstanding as of December 31, 2023	1,325,354	$	3.15	7.61
Granted	—	—
Exercised	(167,985)	1.80
Forfeited	(11,124)	8.63
Balance as of March 31, 2024	1,146,245	$	3.30	7.46	$	3,986,920
Exercisable as of March 31, 2024	402,868	$	2.65	7.35	$	1,570,005

Aggregate intrinsic value represents the difference between the exercise price of the options and the market price of our Class A Common Stock.

The following table provides a summary of weighted-average grant-date fair value of unit options under the 2021 Plan:


	Weighted- Average Grant Date Fair Value
Non-vested as of December 31, 2023	$	1.80
Granted	—
Vested	0.54
Forfeited	5.50
Non-vested as of March 31, 2024	$	1.89

Share-based compensation expense related to options was $114 thousand and $207 thousand for the three months ended March 31, 2024 and 2023, respectively, and was classified in the condensed consolidated statement of operations under general and administrative expense. As of March 31, 2024, the Company had $585 thousand in estimated unrecognized share-based compensation costs related to outstanding unit options that is expected to be recognized over a weighted average period of 3.19 years.

Following the consummation of the Business Combination, no new awards will be granted under the 2021 Plan.

Intuitive Machines, Inc. 2023 Long Term Omnibus Incentive Plan (the “2023 Plan”)

The 2023 Plan, which became effective in conjunction with closing of the Business Combination, provides for the award to certain directors, officers, employees, consultants and advisors of the Company of incentive and nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards as well as cash-based awards and dividend equivalents, as determined, and subject to the terms and conditions established, by the Company’s Compensation Committee. Under the 2023 Plan, a maximum of 12,706,811 shares of Class A Common Stock are authorized to be issued. As of March 31, 2024, the Company has issued restricted stock units (“RSUs”) and performance stock units (“PSUs) as outlined in the following disclosures. No other awards have been granted under the 2023 Plan.

Restricted Stock Units and Performance Stock Units

Pursuant to the 2023 Plan, the Company grants RSUs with time-based vesting requirements which typically vest over one to four years and PSUs with target performance-based vesting requirements based on continuous service. The fair value of RSUs and PSUs are based on the Company’s closing stock price on the date of grant.

The following table provides a summary of the Company’s RSU and PSU activity:


	Number of Units(1)	Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2023	1,826,946	$	7.00
Granted	3,143,607	3.50
Vested	(137,500)	7.56
Forfeited	(416,597)	7.56
Balance as of March 31, 2024	4,416,456	$	4.44

(1) PSU grants of 919,007 were included at the 100% attainment level which were based on several performance goals related to our mission which successfully completed in February 2024.

For the three months ended March 31, 2024, share-based compensation expense was $1.1 million for RSUs and $2.7 million for PSUs, and classified in the condensed consolidated statement of operations under general and administrative expense. As of March 31, 2024, the Company had $12.1 million in estimated unrecognized share-based compensation costs related to unvested RSUs that is expected to be recognized over a weighted average period of 3.42 years. As of March 31, 2024, the Company had $0.5 million in estimated unrecognized share-based compensation costs related to unvested PSUs that is expected to be recognized in April 2024.