Equity-Based Compensation |
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||
| Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||
| Equity-Based Compensation | Equity-Based Compensation Class P Unit Incentive Plan
Holdings, the Company’s former parent adopted a written compensatory benefit plan (the “Class P Unit Incentive Plan”) to provide incentives to existing or new employees, officers, managers, directors, or other service providers of the Company or its subsidiaries in the form of the Holdings’ Class P Units (“Incentive Units”). Incentive Units have a participation threshold of $1.00 and are divided into three tranches (“Tranche I,” “Tranche II,” and “Tranche III”): Tranche I, Tranche II, and Tranche III Incentive Units were subject to performance-based, service-based, and market-based conditions.
On March 24, 2021 (“modification date”), Holdings, the Company’s former parent amended the Class P Unit Incentive Plan so that the Tranche I and the Tranche III Incentive Units became fully vested, upon the closing of the Merger. Holdings also amended the Class P Unit Incentive Plan so that the Tranche II Incentive Units would vest on any liquidation event, as defined in the Class P Unit Incentive Plan, rather than only upon consummation of the sale of Holdings, subject to the market-based condition stipulated in the Class P Unit Incentive Plan prior to its amendment.
As a result of the Merger, Tranches I and III Incentive Units vested on September 2, 2021 (“vesting date”) and the performance vesting condition was met for the Tranche II Incentive Units. The fair value determined at the date of the amendment of the Class P Unit Incentive Plan was immediately recognized as compensation expense on the vesting date for Tranches I and III. Compensation expense for the Tranche II Incentive Units is being recognized over the derived service period of twelve months from the modification date, which resulted in approximately fifty percent of the compensation expense for Tranche II being recognized during the three and nine months ended September 30, 2021. The remaining compensation expense for the Tranche II Incentive Units will be recognized over the remaining service period of approximately six months. The total fair value recognized by the Company for Tranches I, II and III Incentive Units was $22,543 thousand. The Company recorded $21,089 thousand of this compensation expense in selling, general and administrative expense and $1,454 thousand in cost of sales during both the three and nine months ended September 30, 2021.
As of September 30, 2021, there was approximately $4,704 thousand of unrecognized compensation costs related to Tranche II Incentive Units.
2021 Omnibus Incentive Plan
On September 2, 2021, the Company adopted the Redwire Corporation 2021 Omnibus Incentive Plan (the “Plan”). The purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by providing eligible employees, prospective employees, consultants, and non-employee directors of the Company (the “Grantees”) the opportunity to receive equity- and cash-based incentive awards.
Stock Options
On September 2, 2021, pursuant to the Redwire Corporation 2021 Omnibus Incentive Plan (the “Plan”), the Company’s board of directors granted certain Grantees, options to purchase shares of the Company’s common stock with an exercise price of $10.03 and contractual term of 10 years. The options vest over a three year term as follows: 33.3% on the first anniversary of the grant date, 33.3% on the second anniversary of the grant date, and 33.4% on the third anniversary of the grant date. Vesting is contingent upon continued employment or service to the Company; both the vested and unvested portion of a Grantee’s option will be immediately forfeited and cancelled if the Grantee ceases employment or service to the Company.
As of September 30, 2021, the Company granted 1,548,850 options valued at $3.32 each. The fair value of the options were estimated on the date of grant under the Black-Scholes OPM using the following assumptions:
The Company recognizes equity-based compensation expense for the options equal to the fair value of the awards on a straight-line basis over the service based vesting period. The Company recorded $167 thousand of equity-based compensation expense for the options in selling, general and administrative expense in the condensed consolidated statements of operations and comprehensive income (loss) during both the three and nine months ended September 30, 2021.
Restricted Stock Units
On September 2, 2021 (“the grant date”), the Company’s board of directors authorized and approved the grant of restricted stock units (“RSUs”) under the Plan to certain Grantees. RSUs either follow the same vesting terms and conditions as the options set forth above or vest over one year. As of September 30, 2021, the Company granted 823,700 RSUs valued at $10.50 per share based on the closing stock price on the grant date. The Company recognizes equity-based compensation expense for the RSUs equal to the fair value of the awards on a straight-line basis over the service based vesting period. The Company recorded $209 thousand of equity-based compensation expense for the RSUs in selling, general and administrative expense in the condensed consolidated statements of operations and comprehensive income (loss) during both the three and nine months ended September 30, 2021.
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