Share Based Compensation

3 Months Ended

Mar. 31, 2023

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

12. Share Based Compensation

Omnibus Incentive Plan

At the 2019 Annual Shareholders Meeting of Thunder Bridge, the shareholders considered and approved the 2019 Omnibus Incentive Plan (the “Incentive Plan”) which resulted in the reservation of 7,326,728 shares of Class A common stock for issuance thereunder. The Incentive Plan initially became effective immediately upon the closing of the Business Combination. In June 2022, the Incentive Plan was amended and restated to reserve a total of 13,826,728 shares of Class A common stock for issuance thereunder.

Under this plan, the Company currently has four types of share-based compensation awards outstanding: performance stock units (“PSUs”), restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance-based stock options (“PSOs”).

Share-Based Awards

The following table summarizes share-based compensation expense and the related income tax benefit recognized for the Company’s share-based compensation awards. Share-based compensation expenses are recorded within Selling, general and administrative in the Company’s Condensed Consolidated Statement of Operations.


	Three Months Ended March 31,
($ in millions)	2023		2022
Share-based compensation expense	$	4.1	$	3.1
Income tax (expense) benefit		1.1		1.2

Activities for RSAs for the three months ended March 31, 2023 are as follows:


	Class A Common Stock		Weighted Average Grant Date Fair Value
Unvested at December 31, 2022		2,111,635	$	16.23
Granted		2,519,355		6.16
Forfeited (1)(2)		179,419		17.53
Vested		381,116		17.26
Unvested at March 31, 2023		4,070,455	$	9.84

Activities for RSUs for the three months ended March 31, 2023 are as follows:


	Class A Common Stock		Weighted Average Grant Date Fair Value
Unvested at December 31, 2022		108,909	$	13.22
Granted		—		—
Forfeited		—		—
Vested		9,304		18.27
Unvested at March 31, 2023		99,605	$	12.75

Activities for PSUs for the three months ended March 31, 2023 are as follows:


	Class A Common Stock (3)		Weighted Average Grant Date Fair Value
Unvested at December 31, 2022		634,023	$	19.19
Granted		1,102,497		8.87
Forfeited		—		—
Vested		—		—
Unvested at March 31, 2023		1,736,520	$	12.64

(1)

The forfeited shares include the Company’s failure to meet certain performance measures and employee terminations during the three months ended March 31, 2023; further, these forfeited shares are added back to the amount of shares available for grant under the Incentive Plan.

(2)

Upon vesting, award-holders elected to sell shares to the Company in order to satisfy the associated tax obligations. The awards are not deemed outstanding; further, these forfeited shares are added back to the amount of shares available for grant under the Incentive Plan.

(3)

Represent shares to be paid out at target level.

Unrecognized compensation expense related to unvested PSUs, RSAs and RSUs was $41.1 million at March 31, 2023, which is expected to be recognized as expense over the weighted-average period of 2.9 years.

Stock Options

Activities for PSOs for the three months ended March 31, 2023 are as follows:


	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at December 31, 2022		—	$	—
Granted		1,148,822		6.13
Forfeited		—		—
Exercised		—		—
Outstanding at March 31, 2023		1,148,822	$	6.13		7.0	$	505,482

Options vested and exercisable at March 31, 2023		—	$	—		—	$	—

The Company recognized compensation expense for PSOs of $0.1 million during the three months ended March 31, 2023. Unrecognized compensation expense related to outstanding PSOs was $2.9 million at March 31, 2023, which is expected to be recognized as expense over the weighted-average period of 3.0 years.

The weighted average grant date fair value of PSOs granted during the three months ended March 31, 2023 was $2.61. Fair value was estimated on the date of grant using Monte Carlo simulation with the following weighted average assumptions:


	Three Months Ended March 31, 2023
Risk-free interest rate		3.42	%
Expected volatility		52.82	%
Dividend yield		0	%
Expected term (in years)		4.5

The risk-free interest rate was based on the yield of a zero coupon U.S. Treasury security with a maturity equal to the contractual term of seven years. The assumption on expected volatility was based on the average of historical peer group volatilities using daily prices. The dividend yield assumption was determined as 0% since the Company pays no dividends. Expected term was based on the simplified method outlined in Staff Accounting Bulletin No. 14, Share-Based Payment due to the fact that Company does not have sufficient historical data upon which to estimate an expected term. Given that the Company’s Class A common stock has been publicly traded for less than seven years, the Company believes that the simplified method is an applicable methodology to estimate the expected term of the options as of the grant date.