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Share-Based Compensation | 12 Months Ended
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Dec. 31, 2023
Share-Based Payment Arrangement [Abstract] |
Share-Based Compensation | Share-Based Compensation 2020 Stock Option and Incentive Plan (the “2020 Plan”) The 2020 Plan, approved by Nebula’s stockholders on June 9, 2020, provides for the grant of stock options, stock appreciation rights, restricted stock units and other stock or cash-based awards. The Company initially reserved 9,693,750 shares, approximately 10% the number of shares of its common stock outstanding upon the Closing Date, as the initial limit for the issuance of awards under the 2020 Plan. The 2020 Plan provides that effective January 1, 2021, the number of shares reserved and available for issuance under the plan automatically increases on January 1 of each year by 4% of the outstanding number of shares of the Company’s common stock on December 31 of the immediately preceding year. The total reserved shares are subject to an adjustment in the event of a stock split, stock dividend or other change in the Company’s capitalization. As of December 31, 2023, the shares available for issuance under the 2020 Plan were 21 million shares, which includes the 4% annual increase in 2023 less RSUs, PSUs and stock options granted under the 2020 Plan. Share-based compensation expense recorded for each type of award is as follows:
|  | Year Ended December 31,
|  | 2023 |  | 2022 |  | 2021
|  | (in thousands)
Time-based restricted stock units |  | $ | 8,010 |  |  | $ | 5,458 |  |  | $ | 1,934 |
Performance-based restricted stock units |  | 965 |  |  | (727) |  |  | 1,122 |
Stock options |  | 517 |  |  | 718 |  |  | 759 |
Total share-based compensation expense |  | $ | 9,492 |  |  | $ | 5,449 |  |  | $ | 3,815 |
During the years ended December 31, 2023, 2022 and 2021, share-based compensation expense was allocated to cost of services, general and administrative, selling and marketing, and research and development, generally based on the functional responsibilities of the awarded unitholders in the accompanying Consolidated Statements of Operations as follows:
|  | Year Ended December 31,
|  | 2023 |  | 2022 |  | 2021
|  | (in thousands)
General and administrative |  | $ | 7,565 |  |  | $ | 4,028 |  |  | $ | 3,102 |
Selling and marketing |  | 858 |  |  | 687 |  |  | 366 |
Research and development |  | 385 |  |  | 395 |  |  | 217 |
Cost of services |  | 684 |  |  | 339 |  |  | 130 |
Total |  | $ | 9,492 |  |  | $ | 5,449 |  |  | $ | 3,815 |
Time-Based Restricted Stock Units RSUs represent the right to receive shares of common stock at the end of the vesting period in an amount equal to the number of RSUs that vest. RSUs are subject to restrictions on transfer and are generally subject to a risk of forfeiture if the award recipient ceases providing services to the Company prior to the lapse of the restriction. The fair value used to calculate share-based compensation expense of such RSUs is determined using the closing price on the date of grant applied to the total number of shares that were anticipated to fully vest based on schedules as set forth in the respective award agreements, generally over four years. The following table summarizes the RSU activity for the year end December 31, 2023:
|  | Time-Based Restricted Stock Units
|  | Number of Awards |  | Weighted Average Fair Value at Grant Date
Outstanding as of December 31, 2022 |  | 2,023,383 |  |  | $ | 11.52 |
Granted |  | 1,615,305 |  |  | 6.85 |
Vested |  | (588,586) |  |  | 13.26 |
Forfeited |  | (229,568) |  |  | 8.04
Outstanding as of December 31, 2023 |  | 2,820,534 |  |  | $ | 8.77 |
The total fair value of the RSUs that vested during the years ended December 31, 2023 and 2022 was $4.2 million and $0.9 million, respectively. Performance-Based Restricted Stock Units During 2021 and 2022, PSUs were granted with a three-year performance period. The terms and conditions of the PSUs allow for vesting of the awards ranging between forfeiture and 100% of target. PSUs represent the right to receive shares of common stock at the end of the vesting period in an amount equal to the number of PSUs that vest. PSUs are subject to restrictions on transfer and are generally subject to a risk of forfeiture if the award recipient ceases providing services to the Company prior to the lapse of the restriction. The Company evaluates the probability of achieving performance goals on a quarterly basis for these awards and recognizes share-based compensation to the extent achievement of performance goals is considered probable. During the year ended December 31, 2022, the Company determined certain performance goals were improbable of being achieved and recorded a reduction to its share-based compensation expense of approximately $1.0 million, which represented a change in estimate related to share-based compensation expense reported in prior periods. During the year ended December 31, 2023, PSUs were granted with a three-year performance period. The terms and conditions of the PSUs allow for vesting of the awards ranging between forfeiture and 200% of target. The vesting level is calculated based on the total stockholder return achieved during the performance period compared to the total stockholder return of a predetermined peer group. The fair value of the PSUs was determined using a Monte Carlo simulation and will be recognized over the requisite service period. The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award to calculate the fair value of the award. Expected volatility in the model was estimated using were estimated using a historical period consistent with the performance period of approximately three years. The risk-free interest rate was based on the United States Treasury rate for a term commensurate with the expected life of the grant. The Company used the following assumptions to estimate the fair value of PSUs granted during the periods indicated:
| Year ended December 31, 2023
Risk-free interest rate | 5 | %
Volatility | 63 | %
The following table summarizes the PSU activity for the year ended December 31, 2023:
|  | Performance-Based Restricted Stock Units
|  | Number of Awards |  | Weighted Average Fair Value at Grant Date
Unvested as of December 31, 2022 |  | 159,965 |  |  | $ | 23.35 |
Granted |  | 281,425 |  |  | 14.80 |
Outstanding as of December 31, 2023 |  | 441,390 |  |  | $ | 17.90 |
Stock Options The Company’s outstanding stock options vest, subject to the continued employment of the grantees, in equal annual installments over four years following the grant date. The contractual term for the exercisability of the stock options is ten years from the grant date. The following table summarizes the stock option activity for the year ended December 31, 2023:
|  | Stock Options
|  | Number of Awards |  | Weighted Average Exercise Price |  | Weighted Average Contractual Term (Years)
Outstanding as of December 31, 2022 |  | 172,461 |  |  | $ | 33.56 |  |  | 7.44
Expired |  | (20,244) |  |  | 33.56 |  |  |
Forfeited |  | (12,168) |  |  | 33.56 |  |  |
Outstanding as of December 31, 2023 |  | 140,049 |  |  | $ | 33.56 |  |  | 6.81
Vested and expected to vest at December 31, 2023 |  | 140,049 |  |  | $ | 33.56 |  |  | 6.81
Exercisable at December 31, 2023 |  | 106,012 |  |  | $ | 33.56 |  |  | 6.75
The Company’s stock options had no intrinsic value as of December 31, 2023 and 2022. The Company estimated the fair value of each stock option on the date of grant using a Black–Scholes option-pricing model, applying the following assumptions:
Grant date |  | December 30, 2020
Weighted average grant date fair value |  | $15.51
Risk-free interest rate (a) |  | 0.55%
Expected term (years) (b) |  | 6.25
Expected volatility rate (c) |  | 50.00%
Expected dividend yield (d) |  | —%
a)The risk-free interest rate was interpolated from the five-year and seven-year Constant Maturity Treasury rate published by the U.S. Treasury as of the date of the grant. b)The expected life was estimated using the Simplified Method, which utilizes the midpoint between the vesting date and the end of the contractual term. c)The expected volatility rate was based on the average of implied and observed historical volatility of comparable companies. d)At the grant date, no dividends were expected to be paid over the contractual term of the stock options granted, based on the Company's dividend policy, resulting in the use of a zero dividend rate. Unrecognized Share-Based Compensation Expense The following table reflects future compensation expense to be recorded for share-based compensation awards that were outstanding as of December 31, 2023:
|  | Unrecognized Expense |  | Weighted Average Amortization Period (Years)
|  | (in thousands) |  |
Time-based restricted stock units |  | $ | 19,943 |  |  | 2.67
Performance-based restricted stock units |  | 3,645 |  |  | 2.00
Stock options |  | 526 |  |  | 1.00
Total unrecognized stock-based compensation expense |  | $ | 24,114 |  |  | 2.54

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