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Stock-Based Compensation

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

Note 8 — Stock-based compensation

The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. The fair value is recognized in earnings over the period during which an employee is required to provide the service. The Company accounts for forfeitures as they occur.

CuriosityStream 2020 Omnibus Plan

In October 2020, the Board of Directors of the Company adopted the CuriosityStream 2020 Omnibus Plan (the “2020 Plan”). The 2020 Plan became effective upon consummation of the Business Combination and succeeds the Legacy CuriosityStream Stock Option Plan. Upon adoption of the 2020 Plan, a total of 7,725,000 shares were approved to be issued as stock options, share appreciation rights, restricted stock units and restricted stock.

The following table summarizes stock option and restricted stock unit (RSU) activity for the six months ended June 30, 2021:

				Stock Options					Restricted Stock Units
	Number of Shares Available for Issuance Under the Plan			Number of Shares			Weighted- Average Exercise Price		Number of Shares			Weighted- Average Grant Date Fair Value
Outstanding at December 31, 2020		2,538,648			4,710,717		$	7.06		413,277		$	9.21
Granted ⁽¹⁾		(584,024	)		207,398			15.96		376,626			14.74
Options exercised and RSUs vested		-			(103,572	)		4.06		(7,726	)		13.79
Forfeited or expired		87,214			(77,321	)		4.13		(9,893	)		11.56
Outstanding at June 30, 2021		2,041,838			4,737,222		$	7.50		772,284		$	11.83

(1)

Included in options granted during the six months ended June 30, 2021, is a total of 152,358 fully vested options with an exercise price of $16.42 and a five-year contractual term, which resulted in compensation expense totaling $0.9 million being recorded upon grant. Such options were granted during the three months ended March 31, 2021.

The intrinsic value of options exercised during the three and six months ended June 30, 2021 was $315 and $1,266, respectively. There were no options exercised during the six months ended June 30, 2020.

Options and RSUs historically have a four-year vesting period with 25% of the shares vesting on each anniversary date. Grants during the six months ended June 30, 2021 generally have a four-year vesting period with options vesting quarterly or monthly and RSUs vesting monthly. When options are exercised, the Company’s policy is to issue previously unissued shares of Common Stock to satisfy share option exercises.

The fair value of stock option awards is estimated using the Black-Scholes option pricing model, which includes several assumptions including Company’s estimates of stock price volatility, employee stock option exercise behaviors, future dividend payments, and risk-free interest rates.

The expected term of options granted is the estimated period of time from the beginning of the vesting period to the date of expected exercise or other settlement, based on historical exercises and post-vesting terminations. The Company generally estimates expected term based on the midpoint between the vesting date and the end of the contractual term, the simplified method, given the lack of historical exercise behavior.

The Company uses historical volatility of similar public companies for estimating volatility. The risk-free interest rate is estimated using the rate of return on U.S. Treasury securities with maturities that approximate to the expected term of the option. The Company does not currently anticipate declaring any dividends.

Assumptions used to value the options granted and the resulting weighted-average grant date fair value and stock-based compensation expense for the three and six months ended June 30, 2021 and 2020 were as follows:

	Three months ended June 30,					Six months ended June 30,
	2021		2020			2021			2020

Dividend yield		N/A		0	%		0	%		0	%
Expected volatility		N/A		60	%		60	%		60	%
Expected term (years)		N/A		6.25			2.50-6.25			6.25
Risk-free interest rate		N/A		1.48	%		0.14%-1.11	%		0.45%-1.72	%
Weighted average grant date fair value		N/A	$	2.38		$	6.61		$	2.06
Stock-based compensation – Options	$	910	$	438		$	2,729		$	764
Stock-based compensation - RSUs	$	627	$	-		$	1,131		$	-

Stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized on a straight-line basis over the requisite service period.