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EQUITY-BASED COMPENSATION | 12 Months Ended
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Dec. 31, 2023
Share-Based Payment Arrangement [Abstract] |
EQUITY-BASED COMPENSATION | The Traeger, Inc. 2021 Incentive Award Plan (the "2021 Plan"), became effective as of July 28, 2021, the day prior to the first public trading date of our common stock. The 2021 Plan provides for the grant of stock options, including incentive stock options, and nonqualified stock options, restricted stock, dividend equivalents, restricted stock units, stock appreciation rights, and other stock or cash awards to the Company’s employees and consultants and directors of the Company and its subsidiaries. Subject to the adjustment described in the following sentence, the initial number of shares of our common stock available for issuance under awards granted pursuant to the 2021 Plan was equal to 14,105,750 shares, which shares may be authorized but unissued shares, treasury shares, or shares purchased in the open market. On January 1, 2024 and January 1, 2023, an additional 6,293,265 shares and 6,131,220 shares of common stock became available for issuance under awards granted pursuant to the 2021 Plan, respectively, as a result of the operation of an automatic annual increase provision in the 2021 Plan. Notwithstanding anything to the contrary in the 2021 Plan, no more than 100,000,000 shares o f our common stock may be issued pursuant to the exercise of incentive stock options under the 2021 Plan. On July 20, 2021, the board of directors approved grants of restricted stock units (“RSUs”) covering 12,163,242 shares of common stock that became effective in connection with the completion of the Company’s IPO, which included 7,782,957 RSUs underlying the CEO Awards and 4,380,285 RSUs underlying the IPO RSUs granted to other employees, directors, and certain non-employees. CEO Awards The awards include a combination of time-based and performance-based RSUs. Specifically, time-based RSUs covering 2,594,319 shares ("RSU CEO Award") and performance-based RSUs ("PSUs") covering 5,188,638 shares ("PSU CEO Award") were granted to Mr. Andrus (the "CEO"). Other IPO Awards The RSUs granted to other employees, directors, and certain non-employees, included 3,635,287 time-based RSUs ("IPO RSUs") and 744,998 performance-based RSUs ("IPO PSUs") granted to certain senior-level executives of the Company. IPO RSUs The IPO RSUs vest based on certain time-based conditions set forth in the applicable award agreement. IPO RSUs granted to certain senior executives of the Company were originally eligible to vest as to 50% of the underlying shares on each of the third and fourth anniversaries of the closing of the IPO, subject to continued employment with the Company or one of its subsidiaries. In August 2022, the vesting schedules of the IPO RSUs held by certain executives and employees were amended such that the IPO RSUs are eligible to vest as to one-third of the underlying shares on each of the first, second and third anniversaries of the closing of the IPO, subject to continued employment with the Company or one of its subsidiaries Letter Agreement On August 31, 2022, the board of directors approved a letter agreement between the Company and the Company’s CEO (the “Letter Agreement”) intended to facilitate a personal tax planning initiative. The Letter Agreement provided for the accelerated vesting of 2,075,455 unvested shares subject to the RSUs CEO Award and 518,864 earned but unvested shared subject to the PSU CEO Award, and required the CEO to pay the withholding tax associated with the acceleration of the awards by cash or check, rather than by selling vested shares to cover the tax obligation with respect to such accelerated vesting. In addition, the Letter Agreement imposes certain clawback rights intended to maintain the retention incentives of the RSU CEO Award and the PSU CEO Award by mirroring their former vesting schedule. If the CEO experiences a termination of service, other than due to a qualifying termination (as defined in the applicable award agreements), prior to an original vesting date of an RSU or PSU, the CEO will forfeit and return to the Company that number of shares of the Company’s common stock that would not otherwise have vested pursuant to the terms of the original award agreements or, if he has disposed of or transferred such shares, he will deliver to the Company the corresponding value of those shares plus any gain realized in connection with such sale or other transfer. The approval for the acceleration of vesting was determined to be a modification and therefore, the Company evaluated each of the modified awards to determine the necessary accounting treatment. Vesting of the awards was assessed as probable immediately prior to and after the modification resulting in an acceleration of the remaining expense based on the original grant date fair value. As a result of the modification of the CEO Awards, the Company recorded approximately $39.4 million of accelerated stock-based compensation for the year ended December 31, 2022. CEO and IPO PSU Cancellations; Performance Shares On April 13, 2023, following mutual agreement between the Company and each named executive officer, our board of directors approved the cancellation and termination of the unearned CEO PSUs and IPO PSUs originally granted to the executives on August 2, 2021. As a result, the Company recognized $27.5 million of stock-based compensation expense during the year ended December 31, 2023 related to the cancellations. On the same day, our board of directors approved a grant to the CEO of an award of 1,037,728 performance-based restricted shares (the “Performance Shares”). The Performance Shares were issued under the 2021 Plan and are intended to retain and incentivize the CEO to lead the Company to sustained, long-term superior financial performance. The Performance Shares are eligible to be earned upon the achievement of an Adjusted EBITDA goal during the fiscal year ending on December 31, 2023. If the Adjusted EBITDA goal is achieved, the earned Performance Shares will vest on March 31, 2024. If the Adjusted EBITDA goal is not achieved, then the Performance Shares instead will become eligible to be earned based on the achievement of a stock price goal of $18.00 per share (the "Stock Price Goal") for the period beginning on January 1, 2024 and ending on August 2, 2031. If the Stock Price Goal is achieved, the earned Performance Shares will vest on the later of March 31, 2024 or the date on which the Stock Price Goal is achieved. The vesting of the Performance Shares is in all cases subject to the CEO’s continued service as the Company's Chief Executive Officer or Executive Chairman of our board of directors. Upon a termination of the CEO’s service to the Company without cause, by the CEO for good reason, or due to the CEO’s death or disability (each as defined in his award agreement), any previously earned Performance Shares will vest, and any remaining Performance Shares will be forfeited and terminated without consideration as of the date of termination. The vesting of any Performance Shares upon a qualifying termination will be subject to the CEO’s timely execution and non-revocation of a general release of claims, and continued compliance with customary restrictive covenants. In the event the Company incurs a change in control (as defined in the 2021 Plan), then any previously-earned Performance Shares will vest, and any remaining Performance Shares will vest if the Stock Price Goal is achieved based on the price per share received by or payable to our holders of our common stock in connection with the transaction. Any remaining Performance Shares will be forfeited and terminated without consideration as of immediately prior to the change in control. The CEO is required to make an election under Section 83(b) of the Internal Revenue Code of 1986, as amended, with respect to the Performance Shares, and to pay the withholding tax associated with the issuance of the Performance Shares. To the extent the Performance Shares vest, the CEO must hold such shares for two years following the applicable vesting date, subject to certain exceptions set forth in the award agreement. For RSUs and for PSUs, and Performance Shares the compensation expense is recognized on a straight-line basis over the vesting schedule and on an accelerated basis over the requisite service period, respectively. In addition, when an award is forfeited prior to the vesting date, the Company will recognize an adjustment for the previously recognized expense in the period of the forfeiture, with the exception of performance-based awards for which the requisite service period has been satisfied. The Company uses the Monte Carlo pricing model to estimate the fair value of its PSUs and Performance Shares as of the grant date, and uses various simulations of future stock prices through the Stochastic model to estimate the fair value over the remaining term of the performance period as of the grant date. A summary of the time-based restricted stock unit activity for the year ended December 31, 2023 was as follows:
| Units |  | Weighted Average Grant Date Fair Value
Outstanding at December 31, 2022 | 5,923,835 |  |  | $ | 6.73 |
Granted | 4,638,063 |  |  | 3.90
Vested | (2,203,161) |  |  | 7.58 |
Forfeited | (260,077) |  |  | 7.68
Outstanding at December 31, 2023 | 8,098,660 |  |  | $ | 4.84 |
As of December 31, 2023, the Company had $27.2 million of unrecognized stock-based compensation expense related to unvested time-based restricted stock units that is expected to be recognized over a weighted-average period of 1.96 y ears. A summary of the performance-based restricted stock unit activity during the year ended December 31, 2023 was as follows:
| Units |  | Weighted Average Grant Date Fair Value
Outstanding at December 31, 2022 | 4,714,242 |  |  | $ | 12.59 |
Modified | (1,037,728) |  |  | 15.13
Granted | — |  |  | — |
Vested | — |  |  | — |
Forfeited | (3,676,514) |  |  | 11.87 |
Outstanding at December 31, 2023 | — |  |  | $ | — |
As of December 31, 2023, the Company had no unrecognized stock-based compensation expense related to unvested performance-based units. A summary of the performance-based restricted share activity for the year ended December 31, 2023 was as follows:
| Shares |  | Weighted Average Grant Date Fair Value
Outstanding at December 31, 2022 | — |  |  | $ | — |
Granted | 1,037,728 |  |  | 15.58 |
Vested | — |  |  | — |
Forfeited | — |  |  | — |
Outstanding at December 31, 2023 | 1,037,728 |  |  | $ | 15.58 |
As of December 31, 2023, the Company had $4.7 million of unrecognized stock-based compensation expense related to unvested performance-based restricted share that is expected to be recognized over a weighted-average period of 2.58 years. Summary of Stock-Based Compensation The Company's stock-based compensation was classified as follows in the accompanying consolidated statements of operations and comprehensive loss for the fiscal periods indicated (in thousands):
| Year-ended December 31,
| 2023 |  | 2022 |  | 2021
Cost of revenue | $ | 74 |  |  | $ | 202 |  |  | $ | 947 |
Sales and marketing | 4,115 |  |  | 3,796 |  |  | 16,401 |
General and administrative | 49,014 |  |  | 83,699 |  |  | 63,764 |
Total stock-based compensation | $ | 53,203 |  |  | $ | 87,697 |  |  | $ | 81,112 |

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