XML 29 R20.htm IDEA: XBRL DOCUMENT
v3.23.1

Share-Based Compensation | 3 Months Ended
--- | ---
Mar. 31, 2023
Share-Based Payment Arrangement [Abstract] |
Share-based Compensation | Share-Based Compensation Prior Stock Plan In March 2018, Legacy Forge adopted its 2018 Equity Incentive Plan (as amended from time to time, the“2018 Plan”), which provides for grants of share-based awards, including stock options and restricted stock awards, and other forms of share-based awards. The 2018 Plan was terminated in March 2022 in connection with the adoption of the 2022 Stock Option and Incentive Plan (the “2022 Plan”). Accordingly, no shares are available for future grants under the 2018 Plan following the adoption of the 2022 Plan. 2022 Stock Plan In March 2022, prior to and in connection with the Merger, the Company adopted the 2022 Plan, which provides for grants of share-based awards, including stock options and restricted stock units (“RSUs”), and other forms of share-based awards. Through March 31, 2023, the Company has authorized 18,076,331 shares of common stock for the issuance of awards under the 2022 Plan. In addition, the number of shares of common stock reserved and available for issuance under the 2022 Plan will automatically increase on January 1 of each year for a period of ten years, beginning on January 1, 2023 and on each January 1 thereafter and ending on the tenth anniversary of the adoption date of the 2022 Plan, in an amount equal to (i) 3% of the outstanding number of shares of common stock of the Company on the preceding December 31, or (ii) a lesser number of shares as approved by the Company's board of directors. 2022 Employee Stock Purchase Plan In March 2022, prior to and in connection with the Merger, the Company adopted the 2022 Employee Stock Purchase Plan (the “2022 ESPP”). Through March 31, 2023, the Company has authorized the issuance of 5,797,609 shares of common stock under purchase rights granted to the Company's employees or to employees of any of its designated affiliates. The number of shares of common stock reserved for issuance will automatically increase on January 1 of each year, beginning on January 1, 2023 and each January 1 thereafter until the 2022 ESPP terminates according to its terms, by the lesser of (i) 4,072,000 shares of common stock, or (ii) 1% of the outstanding number of shares of common stock on the immediately preceding December 31. The Company's board of directors may determine that such increase will be less than the amount set forth in (i) and (ii) above. Reserve for Issuance The Company has the following shares of common stock reserved for future issuance, on an as-if converted basis:
| March 31, 2023 |  | December 31, 2022
Warrants to purchase common stock | 3,282,652 |  | 3,282,652
Stock options issued and outstanding under 2018 Plan | 12,519,275 |  | 12,853,072
Shares available for grant under 2022 Plan (1) | 10,784,382 |  | 4,804,751
RSUs issued and outstanding under 2022 Plan | 8,860,092 |  | 10,884,476
Shares available for grant under 2022 ESPP | 5,797,609 |  | 4,072,000
Outstanding Private Placement Warrants | 7,386,667 |  | 7,386,667
Total shares of common stock reserved | 48,630,677 |  |  | 43,283,618
(1) To the extent outstanding options granted under the 2018 Plan are cancelled, forfeited, or otherwise terminated without being exercised and would have been returned to the share reserve under the 2018 Plan following the closing date of the Merger, the number of shares of common stock underlying such awards will be available for future awards under the 2022 Plan. Stock options Stock options generally vest over four years and expire ten years from the date of grant. Vested stock options generally expire three months to five years after termination of employment. Stock option activity during the three months ended March 31, 2023 consisted of the following (in thousands, except for share and per share data):
| Stock Options |  | Weighted Average Exercise Price |  | Weighted- Average Life (Years) |  | Aggregate Intrinsic Value
Balance as of December 31, 2022 | 12,853,072 |  |  | $ | 2.39 |  |  | 7.0 |  | $ | 7,055 |
Exercised | (117,215) |  |  | 0.52 |  |  |  |  |
Cancelled/Forfeited/Expired | (216,582) |  |  | 1.74 |  |  |  |  |
Balance as of March 31, 2023 | 12,519,275 |  |  | $ | 2.42 |  |  | 6.8 |  | $ | 6,847 |
Vested and exercisable as of March 31, 2023 | 6,649,871 |  |  | $ | 1.72 |  |  | 5.7 |  | $ | 5,620 |
There were no stock options granted during the three months ended March 31, 2023 and 2022. The total grant date fair value of stock options vested during the three months ended March 31, 2023 and 2022 was $1.3 million and $5.7 million, respectively. The total intrinsic value of options exercised during the three months ended March 31, 2023 and 2022 were $0.2 million and $5.9 million, respectively. The Company recorded share-based compensation of $1.6 million and $7.8 million for the three months ended March 31, 2023 and 2022, respectively, related to stock options. In addition, for the three months ended March 31, 2022, the Company recognized share-based compensation expense of $0.6 million related to pre-close issuance of common stock for services. Unrecognized share-based compensation expense for unvested stock options granted and outstanding as of March 31, 2023, is $9.4 million, which is to be recognized over a weighted-average period of 1.9 years. Performance and Market Condition Options In May 2021, Legacy Forge’s board of directors granted the Chief Executive Officer a performance and market condition-based option covering 3,122,931 shares of Legacy Forge's Class AA common stock with an exercise price of $3.9760 per share. The options are divided into three tranches of 1,040,979 options, 1,040,979 options, and 1,040,979 options, corresponding to the three Aggregate Exit Proceeds Thresholds (as defined below). The awards vest only upon the satisfaction of (1) certain performance conditions, which is the occurrence of an IPO, merger with a SPAC, or a secondary sale for total proceeds of at least $250.0 million and (2) market condition, which is holders of Legacy Forge's B-1 convertible preferred stock having realized (i) aggregate exit proceeds with fair market value of at least $9.94, $14.91, and $19.88 per share (the “Share Price Thresholds”); and (ii) an aggregate interest rate compounded annually which, when used as the discount rate to calculate the net present value, with respect to the occurrence of an IPO, merger with a SPAC or acquisition, that is equal to or greater than 20.0%, 30.0% and 35.0% (the “IRR Thresholds,” and together with the Share Price Thresholds, the “Aggregate Exit Proceeds Thresholds”). In the event of an IPO or a merger with a SPAC, the Aggregate Exit Proceeds Thresholds are measured on the basis of the closing price average for any trailing 20 trading day period (the “Measurement Period”) that occurs following such IPO or a merger with a SPAC, with the Measurement Period commencing upon expiration of the 180-day lock-up period following such IPO or merger with a SPAC, until the options expire or the Chief Executive Officer ceases to provide services to the Company. The options expire within 10 years less one day following the grant date. Upon consummation of the Business Combination, the performance condition was met and the Company recorded cumulative catch-up compensation expense of $4.6 million for the three months ended March 31, 2022. Total compensation expense recognized for the performance and market condition-based option during the three months ended March 31, 2023 w as $0.3 million. The Company used the Monte Carlo simulation model to determine the fair value of the options with performance and market-based vesting conditions for purposes of calculating share-based compensation expense if vesting conditions are met. The Monte Carlo simulation model incorporates the probability of satisfying performance and market conditions and uses transaction details such as stock price, contractual terms, maturity and risk-free interest rates, as well as volatility. The fair value of the performance-based stock options w as $2.27 per option share estimated using the Monte Carlo simulation methodology. The unrecognized compensation expense was $0.5 million as of March 31, 2023. Early Exercised Options Under the 2018 Plan, certain stock option holders may have the right to exercise unvested options, subject to a repurchase right held by the Company at the original exercise price, in the event of voluntary or involuntary termination of employment of the option holders, until the options are fully vested. As of March 31, 2023 and December 31, 2022, the cash proceeds received for unvested shares of common stock recorded within accrued expenses and other current liabilities in the unaudited condensed consolidated balance sheets wer e $0.5 million a nd $0.6 million, respectively, which will be transferred to additional paid-in capital upon vesting. Options Granted to Directors In July 2021, Legacy Forge’s board of directors granted options to certain members of the board in connection with their services, to purchase 499,669 shares of Legacy Forge's Class AA common stock at exercise price of $5.43 per share. Subject to the option agreement, the options shall vest in full and become exercisable immediately prior to the consummation of a deemed liquidation event or SPAC transaction. The performance-based vesting condition for the options granted to certain board members was satisfied as of March 31, 2022 and the Company recorded $1.2 million of share-based compensation expense related to the options granted to certain board members. RSUs The Company’s RSUs are convertible into shares of the Company’s common stock upon vesting on a one-to-one basis, and generally contain time-based vesting conditions only. RSUs granted to certain executives (the “Executive Retention RSUs”) also contain market-based vesting conditions. The RSUs that contain time-based vesting conditions vest over the service period of three to four years. RSU activity during the three months ended March 31, 2023 was as follows:
| RSUs |  | Weighted Average Grant Date Fair Value Per Share
Unvested as of December 31, 2022 | 10,578,313 |  |  | $ | 10.04 |
Vested(1) | (1,233,277) |  |  | $ | 19.90 |
Forfeited | (559,416) |  |  | $ | 12.97 |
Unvested as of March 31, 2023 | 8,785,620 |  |  | $ | 8.47 |
(1) Common stock has not been issued in connection w ith 74,472 vested RSUs because such RSUs were unsettled as of March 31, 2023. During the three months ended March 31, 2023 and 2022, the Company recognize d share-based compensation expense of $5.8 million and zero related to all its RSUs, including Executive Retention RSUs , respectively. Future share-based compensation expense for unvested RSUs as of March 31, 2023 was $57.0 million, which is to be recognized over a weighted-average period of 2.5 years. Executive Retention RSUs On June 1, 2022, as a result of the consummation of the Merger, the Compensation Committee of the Company's board of directors granted a total of 1,859,137 RSUs to certain executives (the “Executive Retention RSUs”) that contained market-based vesting conditions in addition to time-based vesting conditions. The Executive Retention RSUs vest in three equal tranches on the earlier of: (1) first, second and third anniversaries of the consummation of the Merger, respectively, (the “Time Vesting Component”) or (2) achievement of following market-based conditions: (a)in the event the Company’s stock price meets or exceeds the price of $12.50 per share during the RSU Measurement Period (defined below), the first tranche will vest immediately, and the Time Vesting Component of the second and third tranches will be accelerated by six months; (b)in the event the Company’s stock price meets or exceeds the price of $15.00 per share during the RSU Measurement Period (defined below), the second tranche will vest immediately, and the Time Vesting Component of the third tranche will be accelerated by an additional six months. The RSU Measurement Period is equal to 20 trading days within any 30 trading day period commencing upon the expiration of a six-month lock-up period following the Merger. The fair value per share for the Executive Retention RSUs was determined by reference to the market price of the Company’s shares at the date of the grant, which was $20.26 per share. The Company used the Monte Carlo simulation model to determine the derived service period for the Executive Retention RSUs for the purposes of calculating the respective share-based compensation expense. The significant inputs used in the valuation included the Company's closing stock price as of the grant date of $20.26, cost of equity of 9.0%, dividend yield of 0.0%, volatility of 35.7%, and risk-free rate of 2.8%. The derived service period for the first, second, and third tranche of the Executive Retention RSUs was 0.4 years, 0.4 years, and 1.8 years, respectively. In December 2022, the Company accelerated vesting of 251,364 stock options and 210,987 Executive Retention RSUs of one of its executives in connection with the termination of his employment with the Company. During the three months ended March 31, 2023, 469,010 Executive Retention RSUs were vested. During the three months ended March 31, 2023 and 2022, the Company recognized share-based compensation expe nse of $1.3 million and zero related to the Executive Retention RSUs, respectively. Unrecognized share-based compensation expense for unvested Executive Retention RSUs as of March 31, 2023 was $5.1 million, which is to be recognized over a weighted-average period of 1.0 years

X
- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI https://asc.fasb.org/topic&trid=2228938 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (l) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 Reference 4: http://www.xbrl.org/2003/role/exampleRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (a)(1) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (h)(2)(i) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (h)(2) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration