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Equity-Based Compensation | 6 Months Ended
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Jun. 30, 2025
Equity [Abstract] |
Equity-Based Compensation | Equity-Based Compensation Incentive Units Authentic Brands' maintains an equity incentive plan (the “2018 Equity Incentive Plan”) under which it granted Incentive Units (as defined in the 2018 Equity Incentive Plan) to employees or non-employee directors prior to the Business Combination. As of June 30, 2025, 8,472 Incentive Units remain outstanding under the 2018 Equity Incentive Plan, and no new Incentive Units have been granted under the 2018 Equity Incentive Plan since the completion of the Business Combination. The Board of Directors has the authority to determine the terms and conditions of each grant under the 2018 Equity Incentive Plan, and 200,000 non-voting units have been authorized thereunder. These units may contain certain service and performance related vesting provisions. The Incentive Units were awarded to eligible employees and non-employee directors and entitle each grantee to receive non-voting member units upon vesting, subject solely to the employee’s continuing employment or the non-employee director’s continuing service on the Board of Directors. The grant date estimated fair value of the Incentive Units was based upon an option pricing model valuation of the awards at the grant date. The Company utilized the probability-weighted expected return method. The Incentive Units have no strike price; however, participation thresholds, as defined in the Plan, were established at the grant date and must be exceeded for the holder of the unit to participate in any distributions of the Company. The following assumptions were utilized in determining the fair value of the units at the grant date for the six months ended June 30, 2025 and 2024:
Expected dividend | —
Expected volatility | 60% to 85%
Risk-free interest rate | 0.13% to 2.53%
Expected life of incentive awards (in years) | 1 to 5 years
Grant date performance and market threshold | $35,000 to $1,250,000
The computation of expected volatility is based on a weighted average of comparable public companies within the Company’s industry. Expected life is based on the estimated liquidity event timing. The risk-free interest rate is based on the yield of zero-coupon U.S. Treasury securities of comparable terms. The Company does not anticipate paying dividends in the foreseeable future. The Company recognizes pre-vesting forfeitures as they occur rather than estimate the forfeiture rate at the grant date. The following table summarizes the changes in the number of Incentive Units for the six months ended June 30, 2025 and 2024:
| Incentive Units |  | Weighted Average Grant Date Fair Value
Granted and outstanding at January 1, 2025 | 8,472 |  |  | $ | 213.79 |
Granted | — |  |  | — |
Forfeited | — |  |  | — |
Granted and outstanding at June 30, 2025 | 8,472 |  |  | $ | 213.79 |
Vested at June 30, 2025 | 8,055 |  |  | $ | 213.71 |
Granted and outstanding at January 1, 2024 | 8,585 |  |  | $ | 213.81 |
Granted | — |  |  | — |
Forfeited | (113) |  |  | 215.31 |
Granted and outstanding at June 30, 2024 | 8,472 |  |  | $ | 210.97 |
Vested at June 30, 2024 | 6,817 |  |  | $ | 213.42 |
The total unrecognized equity compensation expense related to nonvested Incentive Units to be recognized was $33 and $265, respectively, over a weighted average period of approximately four months and one year, respectively, for the six months ended June 30, 2025 and 2024. In connection with the Business Combination, the Company adopted the 2022 Omnibus Incentive Plan (the "Omnibus Plan"), which replaced the 2018 Equity Incentive Plan, and the 2022 Employee Stock Purchase Plan (the "ESPP") (see disclosed below). Stock Options The Company grants stock options to employees under the Omnibus Plan that vest ratably over three years and expire after seven years. The grant date estimated fair value of the stock options is based upon a Black Scholes model valuation of the options at the grant date. The following weighted average assumptions were utilized in determining the fair value of options granted:
| Six Months Ended June 30,
| 2025 |  | 2024
Weighted average grant date fair value | $1.27 |  | $2.18
Expected dividend | — |  | —
Expected volatility | 71% |  | 65%
Risk-free interest rate | 4.05% |  | 4.37%
Options term (in years) | 4.5 |  | 4.5
The Company computes expected volatility based on the annualized historical daily volatility of our stock as a publicly traded company. Prior to 2024, the date at which we had sufficient history as a public company to estimate our volatility, the computation of expected volatility was based on a weighted average of comparable public companies within the Company’s industry. The Company uses the “simplified method” prescribed by the Securities and Exchange Commission Staff Accounting Bulletin No. 107, Share-Based Payment, to calculate the expected term of options granted. The risk-free interest rate is based on the yield of zero-coupon U.S. Treasury securities of comparable terms. The Company does not anticipate paying dividends in the foreseeable future. The Company recognizes pre-vesting forfeitures as they occur rather than estimate the forfeiture rate at the grant date. The following table summarizes information about stock options activities for the six months ended June 30, 2025 and 2024:
| Stock Options |  | Weighted Average Exercise Price
Outstanding at January 1, 2025 | 5,424,411 |  |  | $ | 4.41 |
Granted | 3,760,948 |  |  | 2.16 |
Forfeited | (1,189,691) |  |  | 3.44 |
Outstanding at June 30, 2025 | 7,995,668 |  |  | $ | 3.49 |
Vested and exercisable at June 30, 2025 | 1,029,129 |  |  | $ | 4.55 |
Outstanding at January 1, 2024 | 3,413,340 |  |  | $ | 5.19 |
Granted | 2,397,840 |  |  | 3.91 |
Forfeited | (401,598) |  |  | 5.74 |
Exercised | (2,546) |  |  | 5.05 |
Outstanding at June 30, 2024 | 5,407,036 |  |  | $ | 4.58 |
Vested and exercisable at June 30, 2024 | 404,849 |  |  | $ | 6.62 |
The total unrecognized equity compensation expense related to stock options to be recognized was $8,255 and $9,445, respectively, over a weighted average period of approximately two years, for both the six months ended June 30, 2025 and 2024. Restricted Stock Units The Company grants restricted stock unit (“RSU”) awards to employees and non-employee directors under the Omnibus Plan that vest annually over approximately three years. The grant date fair values are based on the closing price of the Class A Common Stock of the Company on the date of grant. The following table summarizes information about the RSUs under the Omnibus Plan for the six months ended June 30, 2025 and 2024:
| Restricted Stock Units |  | Weighted Average Grant Date Fair Value
Nonvested at January 1, 2025 | 2,232,952 |  |  | $ | 4.51 |
Granted | 3,808,610 |  |  | 1.98 |
Forfeited | (867,187) |  |  | 3.12 |
Vested | (715,258) |  |  | 5.12 |
Nonvested at June 30, 2025 | 4,459,117 |  |  | $ | 2.52 |
Nonvested at January 1, 2024 | 1,684,955 |  |  | $ | 5.77 |
Granted | 1,436,023 |  |  | 4.03 |
Forfeited | (298,696) |  |  | 5.50 |
Vested | (414,742) |  |  | 6.87 |
Nonvested at June 30, 2024 | 2,407,540 |  |  | $ | 4.58 |
The total unrecognized equity compensation expense related to RSUs to be recognized was $9,195 and $9,269, respectively, over a weighted average period of approximately two years for both the six months ended June 30, 2025 and 2024. Performance-Based Restricted Stock Units On December 29, 2022, the Company granted 8,462,412 performance-based restricted stock units (“PSUs”) to a key employee which vest if certain market capital growth rates are achieved each year through April 2027. Vested PSUs are settled in shares of the Company Class A Common Stock equal to the number of PSUs granted. The PSUs are forfeited upon termination of employment before the performance period ends. PSUs granted during the year ended December 31, 2022 have a weighted-average grant date fair value of $0.46 per share. All PSUs were unvested as of June 30, 2025. The Company used the Monte Carlo pricing model to estimate the fair value of PSUs utilizing the following assumptions at the grant date for the six months ended June 30, 2025 and 2024:
Expected dividend | —
Expected volatility | 65%
Risk-free interest rate | 3.97%
Award term years | 4.3
Valuation date share price | $6.21
The total unrecognized equity-based compensation expense related to PSUs to be recognized was $628 and $1,385, respectively, over a weighted average period of approximately two years and three years, respectively, for the six months ended June 30, 2025 and 2024. Employee Stock Purchase Plan In September 2022, the Company began offering shares of its Class A Common Stock under its ESPP adopted in connection with the Business Combination, whereby eligible employees may acquire an equity interest in the Company through payroll contributions. At the end of a six-month offering period, shares are purchased at 85% of the stock price at enrollment date or purchase date, whichever is lower. On March 8, 2025, the Company issued 100,626 shares for a total of $183 during the six-month offering period from September 9, 2024 through March 8, 2025.

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