Stockholders' and Members' Equity | 9. Stockholders’ and Members’ Equity Predecessor Equity Class A Common Units There were no grants of Class A common units during the six months ended June 30, 2021. Each holder of Class A common units is entitled to one vote per unit. Class A-1 Common Units During the six months ended June 30, 2021, the Company granted 643 Restricted Class A-1 common units. Holders of Class A-1 common units are not entitled to voting rights. Class B Common Units During the six months ended June 30, 2021, there were no grants of Class B common units. Holders of Class B common units are not entitled to voting rights. Successor Equity Preferred Stock Upon the Closing of the Business Combination, 1,000,000 preferred shares, par value $ 0.0001 per share, were authorized. There were no preferred shares issued and outstanding as of June 30, 2022. Class A Common Stock As of June 30, 2022, 465,629,457 shares of Class A Common Stock, including 7,583,284 of shares of unvested Class A Common Stock, were legally issued and outstanding. Holders of shares of Class A Common Stock are entitled to one vote per share, and together with the holders of shares of Class B Common Stock, will participate ratably in any dividends that may be declared by the Company’s Board of Directors. Class B Common Stock Upon the Closing of the Business Combination, the Seller Earnouts resulted in the issuance of a total of 14,999,998 Class B instruments (including 808,276 unvested shares of Class B Common Stock related to employee compensation) to the equityholders of the Predecessor. The equityholders of the Predecessor that exchanged their Predecessor Class A units for shares of Class A Common Stock in the Business Combination received shares of Class B Common Stock, and the equityholders of the Predecessor that continue to hold Class A units of Alight Holdings (“Continuing Unitholders”) received Class B common units of Alight Holdings. The Class B Common Stock and Class B common units are not entitled to a vote and accrue dividends equal to amounts declared per corresponding share of Class A Common Stock and Class A unit; however, such dividends are paid if and when such share of Class B Common Stock or Class B unit converts into a share of Class A Common Stock or Class A unit. If any of the shares of Class B Common Stock or Class B common units do not vest on or before the seventh anniversary of the Closing Date, such shares or units will be automatically forfeited and cancelled for no consideration and will not be entitled to receive any cumulative dividend payments. These Class B instruments (excluding the unvested shares of Class B Common Stock related to employee compensation) are liability classified; refer to Note 14 “Financial Instruments” for additional information. As further described below, there are two series of Class B instruments outstanding. Class B-1 As of June 30, 2022, 4,990,453 shares of Class B-1 Common Stock were legally issued and outstanding, including 404,138 unvested shares of Class B-1 Common Stock related to employee compensation. Shares of Class B-1 Common Stock vest and automatically convert into shares of Class A Common Stock on a 1 -for-1 basis if the volume weighted average price (“VWAP”) of the shares of Class A Common Stock equals or exceeds $ 12.50 per share for 20 or more trading days within a consecutive 30 -trading day period (or in the event of a change of control or liquidation event that implies a $ 12.50 per share valuation on a diluted basis). To the extent any unvested share of Class B-1 Common Stock automatically converts into a share of Class A Common Stock, (i) such share or unit shall remain unvested in accordance with the terms and conditions of the applicable award agreement until it vests or is forfeited in accordance with the terms thereof and (ii) such share or unit shall be treated as unvested Class A consideration as if such share or unit was part of the unvested Class A consideration as of the Closing Date. As of June 30, 2022, 2,509,546 Class B-1 common units of Alight Holdings were legally issued and outstanding. Class B-1 common units vest and automatically convert into Class A common units of Alight Holdings on a 1 -for-1 basis if the VWAP of the shares of Class A Common Stock equals or exceeds $ 12.50 per share for 20 or more trading days within a consecutive 30 -trading day period (or in the event of a change of control or liquidation event that implies a $ 12.50 per share valuation on a diluted basis). Class B-2 As of June 30, 2022, 4,990,453 shares of Class B-2 Common Stock were legally issued and outstanding, including 404,138 unvested shares of Class B-2 Common Stock related to employee compensation. Shares of Class B-2 Common Stock vest and automatically convert into shares of Class A Common Stock on a 1 -for-1 basis if the VWAP of the shares of Class A Common Stock equals or exceeds $ 15.00 per share for 20 or more trading days within a consecutive 30 -trading day period (or in the event of a change of control or liquidation event that implies a $ 15.00 per share valuation on a diluted basis). To the extent any unvested share of Class B-2 Common Stock automatically converts into a share of Class A Common Stock, (i) such share or unit shall remain unvested in accordance with the terms and conditions of the applicable award agreement until it vests or is forfeited in accordance with the terms thereof and (ii) such share or unit shall be treated as unvested Class A consideration as if such share or unit was part of the unvested Class A consideration as of the Closing Date. As of June 30, 2022, 2,509,546 Class B-2 common units of Alight Holdings were legally issued and outstanding. Class B-2 common units vest and automatically convert into Class A common units of Alight Holdings on a 1 -for-1 basis if the VWAP of the shares of Class A Common Stock equals or exceeds $ 15.00 per share for 20 or more trading days within a consecutive 30 -trading day period (or in the event of a change of control or liquidation event that implies a $ 15.00 per share valuation on a diluted basis). Class B-3 Upon the Closing of the Business Combination, 10,000,000 shares of Class B-3 Common Stock, par value $ 0.0001 , were authorized. There are no shares of Class B-3 Common Stock issued and outstanding as of June 30, 2022. Class V Common Stock As of June 30, 2022, 75,886,716 shares of Class V Common Stock were legally issued and outstanding. Holders of Class V Common Stock are entitled to one vote per share and have no economic rights. The Class V Common Stock is held on a 1 -for-1 basis with Class A Units in Alight Holdings held by Continuing Unitholders. The Class A Units, together with an equal number of shares of Class V Common Stock, can be exchanged for an equal number of shares of Class A Common Stock. Class Z Common Stock Upon the Closing of the Business Combination, a total of 8,671,507 Class Z instruments were issued to the equityholders of the Predecessor. The equityholders of the Predecessor that exchanged their Predecessor Class A units for shares of Class A Common Stock in the Business Combination received shares of Class Z Common Stock, and the Continuing Unitholders received Class Z common units of Alight Holdings. The Class Z instruments were issued to the equityholders of the Predecessor to allow for the re-allocation of the consideration paid to the holders of unvested management equity (i.e., the unvested shares of Class A, Class B-1, and Class B-2 Common Stock) to the equityholders of the Predecessor in the event such equity is forfeited under the terms of the applicable award agreement and will only vest in connection with any such forfeiture. As of June 30, 2022, 5,595,577 shares of Class Z Common Stock ( 5,046,819 Class Z-A, 274,379 Class Z-B-1, and 274,379 Class Z-B-2) were legally issued and outstanding. Holders of shares of Class Z-A, Class Z-B-1 and Class Z-B-2 Common Stock are not entitled to voting rights. The Class Z shares convert into shares of Class A Common Stock, Class B-1 Common Stock or Class B-2 Common Stock, as applicable, in connection with the ultimate forfeiture of the shares of unvested Class A, unvested Class B-1, and unvested Class B-2 common stock issued to participating management holders. As of June 30, 2022, 3,075,930 Class Z common units ( 2,774,272 Class Z-A, 150,829 Class Z-B-1, and 150,829 Class Z-B-2) were legally issued and outstanding. Holders of Class Z-A, Class Z-B-1 and Class Z-B-2 common units are not entitled to voting rights. The Class Z units convert into units of Alight Holdings Class A common units, Alight Holdings Class B-1 or Alight Holdings Class B-2 common units, as applicable, in connection with the ultimate forfeiture of the shares of unvested Class A, unvested Class B-1, and unvested Class B-2 common stock issued to participating management holders. Class A Units Holders of Alight Holdings Class A units can exchange all or any portion of their Class A units, together with the cancellation of an equal number of shares of Class V Common Stock, for a number of shares of Class A Common Stock equal to the number of exchanged Class A units. Alight has the option to cash settle any future exchange. The Continuing Unitholders’ ownership of Class A units represents the noncontrolling interest of the Company, which is accounted for as permanent equity on the Condensed Consolidated Balance Sheets. As of June 30, 2022, there were 541,516,173 Class A Units outstanding, of which 465,629,457 are held by the Company and 75,886,716 are held by the noncontrolling interest of the Company. The Alight Holdings limited liability company agreement contains provisions which require that a one-to-one ratio is maintained between each class of Alight Holdings units held by Alight and its subsidiaries (including the Alight Group, Inc. and certain tax blocker entities, but excluding subsidiaries of Alight Holdings) and the number of outstanding shares of the corresponding class of Alight common stock, subject to certain exceptions (including in respect of management equity in the form of options, rights or other securities which have not been converted into or exercised for Alight common stock). In addition, the Alight Holdings limited liability company agreement permits Alight, in its capacity as the managing member of Alight Holdings, to take actions to maintain such ratio, including undertaking stock splits, combinations, recapitalizations and exercises of the exchange rights of holders of Alight Holdings units. Exchange of Class A Units During the six months ended June 30, 2022, 1,572,971 Class A units and a corresponding number of shares of Class V Common Stock were exchanged for Class A Common Stock. As a result of the exchanges, Alight, Inc. increased its ownership in Alight Holdings and accordingly increased its equity by approximately $ 16 million, recorded in Additional paid-in capital. Pursuant to the TRA, described in Note 15 "Tax Receivable Agreement," the Class A unit exchanges created additional TRA liabilities of $ 7 million, with offsets to Additional paid-in-capital. The following table reflects the changes in our outstanding stock: Class A Class B-1 Class B-2 Class V Class Z Balance at December 31, 2021 456,282,881 4,990,453 4,990,453 77,459,687 5,595,577 Conversion of noncontrolling interest 1,239,256 — — ( 1,239,256 ) — Shares granted upon vesting 106,188 — — — — Issuance for compensation to non-employees (1) 13,743 — — — — Balance at March 31, 2022 457,642,068 4,990,453 4,990,453 76,220,431 5,595,577 Conversion of noncontrolling interest 333,715 — — ( 333,715 ) — Shares granted upon vesting 50,132 — — — — Issuance for compensation to non-employees (1) 20,258 — — — — Balance at June 30, 2022 458,046,173 4,990,453 4,990,453 75,886,716 5,595,577 (1) Issued to certain members of the Board of Directors in lieu of cash retainer. Dividends There were no dividends declared during the Successor three and six months ended June 30, 2022. Accumulated Other Comprehensive Income As of June 30, 2022, the Accumulated other comprehensive income balance included unrealized losses for interest rate swaps and foreign currency translation adjustments related to our foreign subsidiaries that do not have the U.S. dollar as their functional currency. Changes in accumulated other comprehensive income, net of noncontrolling interests and tax, are as follows (in millions): Foreign Currency Interest Translation Rate Adjustments Swaps (1) Total Balance at December 31, 2021 $ — $ 8 $ 8 Other comprehensive (loss) income before reclassifications ( 4 ) 53 49 Tax expense (benefit) 1 ( 14 ) ( 13 ) Other comprehensive (loss) income before reclassifications, net of tax ( 3 ) 39 36 Amounts reclassified from accumulated other comprehensive income — — — Tax expense — — — Amounts reclassified from accumulated other comprehensive income, net of tax — — — Net current period other comprehensive income, net of tax ( 3 ) 39 36 Balance at March 31, 2022 $ ( 3 ) $ 47 $ 44 Other comprehensive (loss) income before reclassifications ( 11 ) 19 8 Tax expense (benefit) — 9 9 Other comprehensive (loss) income before reclassifications, net of tax ( 11 ) 28 17 Amounts reclassified from accumulated other comprehensive income — — — Tax expense — — — Amounts reclassified from accumulated other comprehensive income, net of tax — — — Net current period other comprehensive income, net of tax ( 11 ) 28 17 Balance at June 30, 2022 $ ( 14 ) $ 75 $ 61 (1) Reclassifications from this category are recorded in Interest expense. See Note 13 “Derivative Financial Instruments” for additional information. |