Stock-Based Compensation

6 Months Ended

Jun. 30, 2022

Share-based Payment Arrangement [Abstract]

Note

Stock-Based Compensation

In 2017, the Company’s Board of Directors adopted the Dave Inc. 2017 Stock Plan (the “2017 Plan”). The 2017 Plan authorized the award of stock options, restricted stock, and restricted stock units. On January 4, 2022, the stockholders of the Company approved the 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan was previously approved, subject to stockholder approval, by the Company’s Board of Directors on January 4, 2022. Upon the consummation of the Business Combination with VPCC, the 2017 Plan was terminated and replaced by the 2021 Plan. The maximum term of stock options granted under the 2021 Plan is 10 years and the awards generally vest over a four year period.

On January 4, 2022, the stockholders of the Company approved the 2021 Employee Stock Purchase Plan (the “ESPP”). The ESPP was previously approved, subject to stockholder approval, by the Company’s Board of Directors on January 4, 2022. The ESPP became effective immediately upon the completion of the Business Combination with VPCC.

The Company recognized approximately $22.9 million and $26.0 million of stock-based compensation expense arising from stock option and restricted stock grants which is recorded as a component of compensation and benefits in the condensed consolidated statements of operations for the three and six months ended June 30, 2022, respectively. The Company recognized approximately $1.1 million and $2.8 million of stock-based compensation expense arising from stock option and restricted stock grants for the three and six months ended June 30, 2021, respectively.

Stock Options:

Management has valued stock options at their date of grant utilizing the Black-Scholes option pricing model. The fair value of the underlying shares was estimated by using a number of inputs, including recent arm’s length transactions involving the sale of the Company’s Class A Common Stock.

The following table presents the weighted-average assumptions used to value options granted during the six months ended June 30, 2021:


Expected term	6.0 years
Risk-free interest rate	0.9	%
Expected dividend yield	0.0	%
Expected volatility	60.7	%

The Company had no stock options granted during the six months ended June 30, 2022.

Expected term

—The expected term represents the period of time that options are expected to be outstanding. As the Company does not have sufficient historical exercise behavior, it determines the expected life assumption using the simplified method, which is an average of the contractual term of the option and its vesting period.

Risk free interest rate

—The risk-free interest rate is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options depending on the date of the grant and expected life of the options.

Expected dividend yield

—The Company bases the expected dividend yield assumption on the fact that it has never paid cash dividends and has no present intention to pay cash dividends.

Expected volatility

—Due to the Company’s limited operating history and lack of company-specific historical or implied volatility, the expected volatility assumption is based on historical volatilities of a peer group of similar companies whose share prices are publicly available. The Company identified a group of peer companies and considered their historical stock prices. In identifying peer companies, the Company considered the industry, stage of life cycle, size, and financial leverage of such other entities.

Activity with respect to stock options is summarized as follows:


	Shares			Weighted- Average Exercise Price
Options outstanding, January 1, 2022		34,709,027		$	0.64
Granted		—		$	—
Exercised		(3,399,111	)	$	0.45
Forfeited		(919,941	)	$	0.68
Expired		(2,595	)	$	0.69

Options outstanding, June 30, 2022		30,387,380		$	0.66

Nonvested options, June 30, 2022		20,097,672		$	0.72

Vested and exercisable, June 30, 2022		10,289,708		$	0.54

At June 30, 202

, total estimated unrecognized stock-based compensation cost related to nonvested stock options granted prior to that date was approximately $15.6 million, which is expected to be recognized over a weighted-average period of 3.8 years. The weighted-average grant date fair value of options granted during the six months ended June 30, 2022 and 2021 was $0 and $1.23 per share, respectively.

The

Company allowed certain stock option holders to exercise unvested options to purchase shares of Common Stock. Shares received from such early exercises are subject to repurchase in the event of the optionee’s employment termination, at the original issuance price, until the options are fully vested. As of June 30, 2022 and 2021,

355,526

and

736,230

shares of Common Stock were subject to repurchase at weighted-average exercise prices of $

0.69

and $

, respectively. The shares issued pursuant to unvested options have been included in shares issued and outstanding on the condensed consolidated balance sheets as such shares are considered legally outstanding.

On March 3, 2021, the Company granted the Chief Executive Officer stock options to purchase up to 11,456,061 shares of Common Stock in nine tranches. Each of the nine tranches contain service, market, and performance conditions. The market conditions relate to the achievement of certain specified price targets. Vesting commences on the grant date; however, no compensation charges are recognized until the service, market, and performance conditions are probable, which is upon the completion of a liquidity event, the achievement of specified price targets for each tranche of shares, and continuous employment. Upon the completion of a business combination with VPCC, the performance condition was met and the Company recorded a cumulative stock-based compensation expense as of approximately $1.9 million. The options have a strike price of $0.72 per share. The Company determined the fair value of the options on the grant date to be approximately $10.5 million (unaudited) using a Monte Carlo simulation with key inputs and assumptions such as stock price, term, dividend yield, risk-free interest rate, and volatility. Each tranche will vest monthly over a derived service period.

The following table presents the key inputs and assumptions used to value the options granted to the Chief Executive Officer on the grant date:


Remaining term	10.0 years
Risk-free interest rate	1.5	%
Expected dividend yield	0.0	%
Expected volatility	40.	0%

Restricted Stock Units:

Activity with respect to Restricted Stock Units is summarized as follows:


	Shares			Weighted- Average Grant-Date Fair Value
Nonvested shares at January 1, 2022		—		$	—
Granted		16,019,813		$	6.48
Vested		—		$	—
Forfeited		(954,777	)	$	6.56

Nonvested shares at June 30 , 2022		15,065,036		$	6.48

The Company had RSUs activity during the six months ended June 30, 2021.

At June 30, 2021, total estimated unrecognized stock-based compensation cost related to nonvested RSUs was approximately $76.2 million, which is expected to be recognized over a weighted-average period of 3.2 years.