Stockholders' Equity and Stock-Based Compensation Plans

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Stockholders' Equity and Stock-Based Compensation Plans

Stockholders’ Equity and Stock-Based Compensation Plans

The rights and privileges of the Company’s stockholders’ equity and LLC Interests are described in the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and there have been no changes to those rights and privileges during the six months ended June 30, 2022.

Stock-Based Compensation Plans

Under the Tradeweb Markets Inc. 2019 Omnibus Equity Incentive Plan, the Company is authorized to issue up to 8,841,864 new shares of Class A common stock to employees, officers and non-employee directors. Under this plan, the Company may grant awards in respect of shares of Class A common stock, including performance-based restricted stock units (“PRSUs”), stock options, restricted stock units (“RSUs”) and dividend equivalent rights. The awards may have performance-based and/or time-based vesting conditions. RSUs and PRSUs each represent promises to issue actual shares of Class A common stock at the end of a vesting period. Stock options have a maximum contractual term of 10 years.

On February 16, 2022, the Company announced that Mr. Olesky will retire as Chief Executive Officer (“CEO”) of the Company, effective December 31, 2022. On February 11, 2022, the board of directors elected the Company’s President, Mr. Billy Hult, to succeed Mr. Olesky as CEO of the Company, effective January 1, 2023. Mr. Olesky will stay on with the Company in the position of Chairman of the board of directors, and accordingly will continue to serve in his capacity as a director of the Company.

As of the beginning of Mr. Olesky’s six month notice period under the Company’s 2019 Omnibus Equity Incentive Plan, there was approximately $6.7 million in total unamortized stock-based compensation associated with equity awards previously granted to Mr. Olesky plus $5.0 million in unamortized stock-based compensation awards granted to Mr. Olesky during 2022 that will both be accelerated and amortized into expense over a revised estimated service period ending on August 11, 2022, the date that ends such six month notice period. Of these amounts, $3.1 million represents regular amortization that would have been recognized through August 11, 2022 if Mr. Olesky had not announced his retirement and $8.6 million represents accelerated stock-based compensation (the “CEO Retirement Accelerated Stock-Based Compensation Expense”). Total amortization amounts disclosed are based on a 100% multiplier achieved for the 2022 PRSUs and are subject to adjustment, up or down, in an amount up to $2.1 million, based on the final performance multiplier achieved for the year ending December 31, 2022. During the three and six months ended June 30, 2022, the Company incurred a total of $5.7 million and $7.4 million, respectively, in CEO Retirement Accelerated Stock-Based Compensation Expense.

During the three months ended June 30, 2022, the Company granted 1,125 RSUs at a weighted-average grant-date fair value of $88.84. No PRSUs were granted during the three months ended June 30, 2022. During the six months ended June 30, 2022, the Company granted 396,554 RSUs and 249,292 PRSUs at a weighted-average grant-date fair value of $83.81 and $83.74, respectively. RSU awards granted to employees will generally vest one-third each year over a three-year period, and RSU awards granted to non-employee directors will vest after one year. PRSUs generally cliff vest on January 1 of the third calendar year from the calendar year of the date of grant and the number of shares a participant will receive upon vesting is determined by a performance modifier, which is adjusted as a result of the financial performance of the Company in the grant year. The performance modifier can vary between 0% (minimum) and 200% (maximum) of the target (100%) award amount.

A summary of the Company’s total stock-based compensation expense, including expense associated with the CEO Retirement Accelerated Stock-Based Compensation Expense, is presented below:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
	(in thousands)
Total stock-based compensation expense	$	20,963	$	12,407	$	34,675	$	23,167

Share Repurchase Program

On February 4, 2021, the Company announced that the board of directors authorized a new share repurchase program (the “Share Repurchase Program”), primarily to offset annual dilution from stock-based compensation plans. The Share Repurchase Program authorizes the purchase of up to $150.0 million of the Company’s Class A common stock at the Company’s discretion through the end of fiscal year 2023. The Share Repurchase Program will be effected primarily through regular open-market purchases (which may include repurchase plans designed to comply with Rule 10b5-1). The amounts and timing of the repurchases will be subject to general market conditions and the prevailing price and trading volumes of the Company’s Class A common stock. The Share Repurchase Program does not require the Company to acquire a specific number of shares and may be suspended, amended or discontinued at any time. For shares repurchased pursuant to the Share Repurchase Program, the excess of the repurchase price paid over the par value of the Class A common stock will be recorded as a reduction to retained earnings.

The Company began purchasing shares pursuant to the Share Repurchase Program during the second quarter of 2021. During the three months ended June 30, 2022 and 2021, the Company acquired a total of 103,458 and 617,644 shares of Class A common stock, at an average price of $86.99 and $83.67, for purchases totaling $9.0 million and $51.7 million, respectively. During the six months ended June 30, 2022 and 2021, the Company acquired a total of 662,886 and 617,644 shares of Class A common stock, at an average price of $84.97 and $83.67, for purchases totaling $56.3 million and $51.7 million, respectively. Each share of Class A common stock repurchased pursuant to the Share Repurchase Program was funded with the proceeds, on a dollar-for-dollar basis, from the repurchase by Tradeweb Markets LLC of an LLC Interest from the Company in order to maintain the one-to-one ratio between outstanding shares of the Company’s common stock and LLC Interests owned by the Company. Subsequent to their repurchase, the shares of Class A common stock and the LLC Interests were all cancelled and retired. As of June 30, 2022, a total of $18.0 million remained available for repurchase pursuant to the Share Repurchase Program.

Other Share Repurchases

During the three months ended June 30, 2022 and 2021, the Company withheld 29,530 and 98,003 shares, respectively, of common stock from employee stock option, PRSU and RSU awards, at an average price per share of $75.14 and $81.32, respectively, and an aggregate value of $2.2 million and $8.0 million, respectively, based on the price of the Class A common stock on the date the relevant withholding occurred. During the six months ended June 30, 2022 and 2021, the Company withheld 1,015,489 and 794,850 shares, respectively, of common stock from employee stock option, PRSU and RSU awards, at an average price per share of $96.49 and $67.23, respectively, and an aggregate value of $98.0 million and $53.4 million, respectively, based on the price of the Class A common stock on the date the relevant withholding occurred.

These shares are withheld in order for the Company to cover the payroll tax withholding obligations upon the exercise of stock options and settlement of RSUs and PRSUs and such shares were not withheld in connection with the Share Repurchase Program discussed above.