Employee Benefit Plans | Employee Benefit Plans Employee Savings Plan The Corporation has a defined contribution retirement savings plan (the “401(k) Plan”) covering eligible employees, which includes matching contributions based on the amount of employees' contributions to this plan. The Corporation contributes to the 401(k) Plan annually 100.0% of the first 4.0% compensation that is contributed by the employee up to 4.0% of eligible annual compensation. The Corporation's service contributions to the 401(k) Plan amounted to approximately $0.2 million and $0.3 million for the three months ended June 30, 2021 and 2020, respectively, and $0.5 million and $0.7 million for the six months ended June 30, 2021 and 2020, respectively, and are included in salaries and benefits on the Condensed Consolidated Statements of Operations and Comprehensive Loss. The Corporation's cash match is invested pursuant to the participant's contribution direction. Employer contributions are immediately 100.0% vested. Stock-based Compensation The Corporation's 2020 Equity Incentive Plan (the "2020 Plan"), 2014 Equity Incentive Plan (the "2014 Plan"), and the 2020 Management Incentive Plan (collectively with the 2020 Plan and the 2014 Plan, the "Plan"), provide for grants to acquire shares of the Corporation's common stock, par value $0.0001 per share, to employees, directors, officers, and consultants of the Corporation. During the six months ended June 30, 2021, the Corporation approved the 2020 Plan and the 2020 Management Incentive Plan. The maximum number of shares of the Corporation's common stock reserved for issuance over the term of the Plan, shares outstanding, and shares remaining under the Plan, after giving effect to the Exchange Ratio, as of June 30, 2021, and December 31, 2020, were as follows: June 30, 2021 Shares Authorized Under Plan Shares Outstanding Under Plan Shares Remaining Under Plan 2014 Plan 54,402,264 45,896,586 N/A 2020 Plan 30,641,401 1,794,857 28,846,544 2020 Management Incentive Plan 33,426,983 33,426,983 — December 31, 2020 Shares Authorized Under Plan Shares Outstanding Under Plan Shares Remaining Under Plan 2014 Plan 54,402,264 36,557,759 17,844,505 Effective as of the closing of the Business Combination, the 2014 Plan terminated at which time the outstanding awards previously granted thereunder were assumed by the Corporation, and no new awards are available for grant under the 2014 Plan. Shares that are expired, terminated, surrendered or canceled under the Plan without having been fully exercised will be available for future awards under the 2020 Plan. Shares may be issued from authorized but unissued Corporation stock. The Plan is administered by the Board. The options are subject to the terms and conditions applicable to options granted under the Plan, as described in the Plan and the applicable stock option grant agreement. The exercise prices, vesting and other restrictions are determined at the discretion of the Board, except that the exercise price per share of incentive stock options may not be less than 100.0% of the fair value of a share of common stock on the date of grant. Stock options awarded under the Plan expire 10 years after the grant date. Incentive stock options and non-statutory options granted to employees, directors, officers and consultants of the Corporation typically vest over four years. The fair value of each restricted stock award is determined based on the fair value of the Corporation's common shares on the date of grant. The total estimated fair value is amortized as an expense over the requisite service period as approved by the Board. The Corporation granted options to purchase 1,937,968 shares of common stock during the six months ended June 30, 2021. The Corporation recorded stock-based compensation expense for options, RSUs, and performance restricted stock units (PRSUs) granted of $43.0 million and $85.7 million during the three and six months ended June 30, 2021, presented in salaries and benefits in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss. Compensation cost presented in salaries and benefits in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss were as follows: Three Months Ended June 30, 2021 2020 (in thousands) Stock options $ 1,375 $ 1,471 RSUs 14,277 — PRSUs 27,374 — Total compensation cost recognized for stock-based compensation plans $ 43,026 $ 1,471 Six Months Ended June 30, 2021 2020 (in thousands) Stock options $ 5,069 $ 3,448 RSUs 28,329 — PRSUs 52,341 — Total compensation cost recognized for stock-based compensation plans $ 85,739 $ 3,448 As of June 30, 2021, there was approximately $481.8 million of unrecognized stock-based compensation expense related to unvested stock options, RSUs, and PRSUs, estimated to be recognized over a period of 4.52 years. As of December 31, 2020, there was approximately $14.9 million of unrecognized stock-based compensation expense related to unvested stock options. Stock Options The assumptions that the Corporation used in the Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted for the six months ended June 30, 2021 and 2020, respectively, were as follows: Six Months Ended June 30, 2021 2020 Weighted-average risk-free interest rate 1.06 % 1.26 % Expected term (in years) 6.06 6.29 Expected volatility 37.74 % 30.38 % Expected dividend yield — — A summary of option activity under the 2020 Plan during the six months ended June 30, 2021 is as follows: Number of options Weighted-average exercise price Outstanding, January 1, 2021 — $ — Granted during 2021 1,937,968 8.88 Exercised — Forfeited (143,111) 8.87 Outstanding, June 30, 2021 1,794,857 $ 8.88 A summary of option activity under the 2014 Plan during the six months ended June 30, 2021 is as follows: Number of options Weighted-average exercise price Outstanding, January 1, 2021 36,513,193 $ 2.26 Granted during 2021 — — Exercised (975,768) 1.71 Forfeited (387,711) 2.54 Outstanding, June 30, 2021 35,149,714 $ 2.27 The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Corporation's common stock for those stock options that had exercise prices lower than the fair value of the Corporation's common stock. The weighted-average grant date fair value of stock options granted during the six months ended June 30, 2021 and 2020 was $3.36 per share and $1.83 per share, respectively. As of June 30, 2021, outstanding stock options, substantially all of which are expected to vest, had an aggregate intrinsic value of $396.1 million, and a weighted-average remaining contractual term of 7.10 years. As of June 30, 2021, there were 22,820,428 options exercisable under the Plan, with an aggregate intrinsic value of $255.8 million, a weighted-average exercise price of $2.11 per share, and a weighted-average remaining contractual term of 6.31 years. The total intrinsic value of stock options exercised during the six months ended June 30, 2021 and 2020 was $8.2 million and $0.7 million, respectively. Cash received from stock option exercises during the six months ended June 30, 2021 and 2020 totaled $1.6 million and $0.7 million, respectively. Pursuant to the Plan agreement, employees may exercise options at any time while maintaining the original vesting period. The proceeds from exercise of unvested options are recorded as a liability until the option vests at which time the liability is reclassified to equity. If the employee terminates or otherwise forfeits an unvested option that has been exercised, the Corporation must redeem those shares at the original exercise price and remit payment of the forfeited portion of shares back to the employee. Restricted Stock Units A summary of total RSU activity for the six months ended June 30, 2021, is presented below: Six Months Ended June 30, 2021 Granted 18,091,714 Exercised (95,834) Outstanding, June 30, 2021 17,995,880 The weighted-average grant date fair value of the RSUs was $15.69 per underlying share. Performance Restricted Stock Units The Corporation has granted PRSUs which become eligible to vest if prior to the vesting date the average closing price of one share of the Corporation's common stock for ninety The weighted-average grant date fair value of Market PRSUs granted during the six months ended June 30, 2021, was $9.59 per underlying share. There were no Market PRSUs granted prior to 2021. The grant date fair value of Market PRSUs was determined using a Monte Carlo simulation model that incorporated multiple valuation assumptions, including the probability of achieving the specified market condition and the following assumptions: Six Months Ended June 30, 2021 Expected volatility (1) 40.70 % Risk-free interest rate (2) 0.50 Dividend yield (3) — (1) Expected volatility is based on a blend of peer group company historical data adjusted for the Corporation's leverage. (2) Risk-free interest rate based on U.S. Treasury yields with a term equal to the remaining Performance Period as of the grant date. (3) Dividend yield was assumed to be zero as the Corporation does not anticipate paying dividends. A summary of total PRSU activity for the six months ended June 30, 2021, is presented below: Six Months Ended June 30, 2021 Granted 27,460,364 Non-vested at June 30, 2021 27,460,364 As of June 30, 2021, there was $210.9 million of unrecognized share-based compensation expense related to PRSUs, which is expected to be recognized over a period of 4.52 years. Equity warrants In November 2016 and December 2017, the Corporation issued warrants to purchase 139,629 shares of the Corporation's common stock at an exercise price of $2.61 per share, and 122,052 shares of the Corporation's common stock at an exercise price of $3.45 per share, respectively, as part of payment to certain providers for services provided to the Corporation. These warrants were automatically exercised in connection with the Business Combination. See Note 3 (Business Combination) for additional information. The total fair value of warrants vested during the six months ended June 30, 2021 and 2020, was $0.0 million and $2.0 million, respectively. A summary of activity relating to the warrants of the service providers during the six months ended June 30, 2021 and 2020, respectively, is as follows: Number of warrants Weighted-average exercise price Outstanding, December 31, 2019 261,681 $ 3.00 Granted during 2020 — — Exercised — — Forfeited — — Outstanding, June 30, 2020 261,681 $ 3.00 Outstanding, December 31, 2020 261,681 $ 3.00 Granted during 2021 — — Exercised (261,681) 3.00 Forfeited — — Outstanding, June 30, 2021 — $ — During the three months ended June 30, 2021, the Corporation began planning the launch of an Employee Stock Purchase Plan (ESPP), which is tentatively expected to be offered beginning in third quarter 2021. The ESPP will provide a means by which eligible employees and/or eligible service providers of either our Corporation or designated-related corporations and affiliates may be given an opportunity to purchase shares of our Class A common stock at a 15.0% discount from the fair market value of the common stock as determined on a specific date at six-month intervals. At the time of filing this report, no shares of the Corporation’s common stock have been purchased or distributed pursuant to the ESPP. |