Stock-based Compensation (Q3)

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

12. Stock-based Compensation

WM Holding Company, LLC Equity Incentive Plan

The Company has accounted for the issuance of Class A-3 and Class B Units issued under WM Holding Company, LLC’s Equity Incentive Plan in accordance with ASC 718 - Stock Based Compensation. The Company considers the limitation on the exercisability of the Class A-3 and Class B Units to be a performance condition and records compensation cost when it becomes probable that the performance condition will be met.

In connection with the Business Combination, each of the Class A-3 Units outstanding prior to the Business Combination were cancelled, and the holder thereof received a number of Class A units representing limited liability company interests of WMH LLC (the “Class A Units”) and an equivalent number of shares of Class V Common Stock, par value $0.0001 per share (together with the Class A Units, the “Paired Interests”), and each of the Class B Units outstanding prior to the Business Combination were cancelled and holders thereof received a number of Class P units representing limited liability company interests of WMH LLC (the “Class P Units” and together with the Class A Units, the “Units”), each in accordance with the Merger Agreement.

Concurrently with the closing of the Business Combination, the Unit holders entered into an exchange agreement (the “Exchange Agreement”). The terms of the Exchange Agreement, among other things, provide the Unit holders (or certain permitted transferees thereof) with the right from time to time at and after 180 days following the Business Combination to exchange their vested Paired Interests for shares of Class A Common Stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications, or Class P Units for shares of Class A Common Stock with a value equal to the value of such Class P Units less their participation threshold, or in each case, at the Company’s election, the cash equivalent of such shares of Class A Common Stock.

A summary of the Class P Unit activity for the nine months ended September 30, 2021 is as follows:

	Number of Units
Outstanding Class A-3 and Class B Units, December 31, 2020		274,816
Repurchases		(8,279	)
Cancellations		(4,288	)
Outstanding Class A-3 and Class B Units, June 15, 2021 (Pre-Business Combination)		262,249
Class A-3 Units outstanding exchanged for Class A Units in connection with the Business Combination		(53,333	)
Recapitalization in connection with the Business Combination		25,687,126
Outstanding Class P Units, June 16, 2021		25,896,042
Cancellations		(216,920	)
Outstanding Class P Units, September 30, 2021		25,679,122
Vested, September 30, 2021		23,197,454

As of September 30, 2021, unrecognized stock-based compensation expense for non-vested Class P Units was $5.0 million, which is expected to be recognized over a weighted-average period of 2.2 years. For the three and nine months ended September 30, 2021, the Company recorded stock-based compensation expense for the Class P Units of $0.7 million and $20.1 million, respectively. Due to the Business Combination completed in the second quarter of 2021, certain limitations on exercisability related to the Company’s Class P equity awards issued to employees and consultants were removed and as a result the Company recognized the life-to-date expense on units vested through the Business Combination date on those equity awards. The stock-based compensation expense recognized during the nine months ended September 30, 2021 also included a one-time incremental expense of $4.1 million recognized during the second quarter related to an award modification as a result of an advisory agreement entered into with a former executive.

WM Technology, Inc. Equity Incentive Plan

In connection with the Business Combination, the Company adopted the WM Technology, Inc. 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan permits the granting of incentive stock options to employees and for the grant of nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other forms of stock awards to employees, directors and consultants. As of September 30, 2021, 19,209,986 shares of Class A Common Stock are authorized for issuance pursuant to awards under the 2021 Plan. The number of shares of Class A Common stock reserved for issuance under the 2021 Plan will automatically increase on January 1 of each year for a period of ten years commencing on January 1, 2022 and ending on (and including) January 1, 2031, in an amount equal to five percent (5%) of the total number of shares of the Company’s capital stock outstanding on December 31 of the preceding year; provided, however that the Board may act prior to January 1st of a given year to provide that the increase for such year will be a lesser number of shares of Common Stock. As of September 30, 2021, 15,108,441 shares of Class A Common Stock are available for future issuance.

A summary of the restricted stock unit (“RSU”) activity for the nine months ended September 30, 2021 is as follows:

	Number of RSUs			Weighted-average Grant Date Fair Value
Non-vested at December 31, 2020		—		$	—
Granted		4,112,855		$	13.66
Vested		(242,600	)	$	13.70
Forfeited		(11,310	)	$	13.70
Non-vested at September 30, 2021		3,858,945		$	13.66

As of September 30, 2021, unrecognized stock-based compensation expense for non-vested RSUs was $51.9 million, which is expected to be recognized over a weighted-average period of 3.8 years. For the three and nine months ended September 30, 2021, the Company recorded stock-based compensation expense for the RSUs of $3.5 million.

The Company recorded stock-based compensation cost related to the Class P Units and RSUs in the following expense categories on the accompanying condensed consolidated statements of income (in thousands):

	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Sales and marketing	$	689	$	4,515
Product development		1,865		3,859
General and administrative		1,638		15,251
Total stock-based compensation expense		4,192		23,625
Amount capitalized to software development		695		695
Total stock-based compensation cost	$	4,887	$	24,320