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Long-Term Incentive Compensation
 9 Months Ended
Sep. 30, 2023
Share-Based Payment Arrangement [Abstract]  
Long-Term Incentive Compensation

Note 13. Long-Term Incentive Compensation

 

The Company’s long-term incentive plan for employees, directors, consultants, and other service providers (as amended from time to time, the “LTIP”) provides for the grant of all or any of the following types of equity-based awards: (i) incentive stock options qualified as such under United States federal income tax laws; (ii) stock options that do not qualify as incentive stock options; (iii) stock appreciation rights; (iv) restricted stock awards; (v) restricted stock units; (vi) stock awards; (vii) performance awards; (viii) dividend equivalents; (ix) other stock-based awards; (x) cash awards; and (xi) substitute awards.

 

Subject to adjustment in accordance with the terms of the LTIP, 35,000,000 shares of the Company’s Common Stock were reserved for issuance pursuant to awards under the LTIP, as such LTIP was in effect as of September 30, 2023 and without consideration of the Reverse Stock Split. This number was subsequently adjusted to 1,225,000 shares, effective as of October 16, 2023, to reflect the Reverse Stock Split. After giving effect to the Reverse Stock Split and the awards that have been granted under the LTIP as of September 30, 2023 there were 604,000 shares remaining available for grant under the LTIP.

 

Stock-Based Compensation

 

The Company’s stock-based compensation is classified as either equity awards or liability awards in accordance with GAAP. The fair value of an equity-classified award is determined at the grant date and is amortized to general and administrative expense on a straight-line basis over the vesting period of the award. The fair value of a liability-classified award is determined on a quarterly basis beginning at the grant date until final vesting. Changes in the fair value of liability-classified awards are recorded to general and administrative expense over the vesting period of the award.

 

The Company issued restricted stock units (“RSUs”) to employees, directors and advisors that either cliff-vest on May 3, 2024 (the one-year anniversary of the Merger) or, in the case of the advisor, one year after the effective date of the applicable consulting agreement, or vest ratably over three years, on each anniversary date of the Merger beginning with May 3, 2024. RSUs granted under the LTIP can immediately vest upon (A) a termination due to (i) death, (ii) disability, (iii) or retirement in the case of employee awards, or (B) in connection with a change in control; provided that for employee awards, such accelerated vesting upon a change in control only applies to the extent no provision is made in connection with a change in control for the assumption of awards previously granted or there is no substitution of such awards for new awards, then outstanding awards will become fully vested. To the extent an employee’s RSU award is assumed or substituted in connection with the change in control, if a participant is terminated by the Company without “cause” or the employee terminates for “good reason” (each as defined in the award agreement), then each award will become fully vested.

 

The Company recognized the following amounts in total related to long-term incentive compensation costs for the three and nine months ended September 30, 2023 and 2022:

 

   For the three months ended September 30,   For the nine months ended September 30, 
   2023   2022   2023   2022 
Long-term incentive compensation  $953,671   $—   $953,671   $— 

 

Equity-Classified Awards

 

The Company recognized $0.9 million in equity-classified stock-based compensation costs for the three and nine months ended September 30, 2023. There were no equity-classified stock-based compensation costs for the three and nine months ended September 30, 2022.

 

 

Equity-Classified Restricted Stock Units

 

As of September 30, 2023, there was $8.2 million of total unrecognized compensation cost related to the Company’s unvested equity-classified restricted stock units. This cost is expected to be recognized over a weighted-average period of 1.5 years. The following table summarizes equity-classified restricted stock units for the nine months ended September 30, 2023 and provides information for unvested units as of September 30, 2023.

 

  

Number of Shares

   Weighted Average Fair Value 
         
Unvested units at December 31, 2022   —   $— 
Granted   624,706   $14.57 
Vested   —   $— 
Forfeited   —   $— 
Unvested units at March 31, 2023   624,706   $11.86 

 

Liability-Classified Awards

 

The Company recognized $26,451 in liability-classified stock-based compensation costs for the three and nine months ended September 30, 2023. There were no liability-classified stock-based compensation costs for the three and nine months ended September 30, 2022.

 

Liability-Classified Restricted Stock Units

 

In August 2023, the Company granted restricted stock units to directors and an advisor that vest in May 2024 and August 2024, respectively, which are payable 60% in common shares and 40% in either cash or shares at the option of the Compensation Committee of the Board. The Company has accounted for the portion of the awards that can be settled in cash as liability-classified awards and accordingly changes in the market value of the instruments will be recorded to general and administrative expense over the vesting period of the award. As of September 30, 2023, there was $0.2 million of total unrecognized compensation cost related to liability-classified restricted stock units that is expected to be recognized over a weighted-average period of 0.6 years. The amount of unrecognized compensation cost for liability-classified awards will fluctuate over time as they are marked to market.

 

The following table summarizes activity related to liability-classified RSUs for the nine months ended September 30, 2023:

 

  

Number of Units

   Weighted Average Fair Value 
         
Unvested units at December 31, 2022   —   $— 
Granted   16,471   $14.57 
Vested   —   $— 
Forfeited   —   $— 
Unvested units at September 30, 2023   16,471   $11.86