Equity-Based Compensation

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

13. Equity-Based Compensation

Under the Equity Plan, the Company grants equity-based awards to employees. The fair value of all grants is based on the grant date fair value, which considers the public share price of AGM’s common stock subject to certain discounts, as applicable. Equity-based awards granted to employees and non-employees as compensation are measured based on the grant date fair value of the award. Equity-based awards that do not require future service (i.e., vested awards) are expensed immediately.

The Company grants both service and performance-based awards. The estimated total grant date fair value for service-based awards is charged to compensation expense on a straight-line basis over the vesting period, which is generally one to six years from the date of grant. Certain service-based awards are tied to profit sharing arrangements in which a portion of the performance fees distributed to the general partner are required to be used by employees to purchase restricted shares of common stock or RSUs, which are granted under the Company’s Equity Plan. Performance based awards vest subject to continued employment and the Company’s achievement of specified performance goals. In accordance with U.S. GAAP, equity-based compensation expense for performance grants are typically recognized on an accelerated recognition method over the requisite service period to the extent the performance revenue metrics are met or deemed probable.

For the three months ended June 30, 2022 and June 30, 2021, the Company recorded equity-based compensation expense of $126.0 million and $53.0 million, respectively. For the six months ended June 30, 2022 and June 30, 2021, the Company recorded equity-based compensation expense of $294.0 million and $109.4 million, respectively. As of June 30, 2022, there was $828.0 million of estimated unrecognized compensation expense related to unvested RSU awards. This cost is expected to be recognized over a weighted-average period of 3.0 years.

Service-Based Awards

During the six months ended June 30, 2022 and June 30, 2021, the Company awarded service-based grants of 4.6 million RSUs and 2.2 million RSUs with a grant date fair value of $281.1 million and $108.6 million, respectively.

During the three months ended June 30, 2022 and June 30, 2021, the Company recorded equity-based compensation expense on service-based awards of $56.0 million and $23.4 million, respectively. During the six months ended June 30, 2022 and June 30, 2021, the Company recorded equity-based compensation expense on service-based awards of $122.5 million and $42.1 million, respectively.

Performance-Based Awards

During the six months ended June 30, 2022 and June 30, 2021, the Company awarded performance-based grants of 2.6 million and 1.2 million RSUs to certain employees with a grant date fair value of $147.6 million and $51.5 million, respectively, which primarily vest subject to continued employment and the Company’s receipt of performance revenues, within prescribed periods, sufficient to cover the associated equity-based compensation.

During the three months ended June 30, 2022 and June 30, 2021, the Company recorded equity-based compensation expense for performance-based awards of $50.2 million and $17.5 million, respectively. During the six months ended June 30, 2022 and June 30, 2021, the Company recorded equity-based compensation expense for performance-based awards of $124.0 million and $43.9 million, respectively.

In December 2021, the Company awarded one-time grants to the Co-Presidents of AAM of 6.0 million RSUs which vest on a cliff basis subject to continued employment over five years, with 2.0 million of those RSUs also subject to the Company’s achievement of certain fee related earnings and spread related earnings per share metrics. During the three and six months ended June 30, 2022, the Company recorded equity-based compensation expense of $13.9 million and $27.8 million, respectively, for service-based awards and $5.9 million and $11.8 million, respectively, for performance-based awards, each related to these one-time grants.

The following table summarizes all RSU activity for the current period:


	Unvested	Weighted Average Grant Date Fair Value	Vested	Total Number of RSUs Outstanding
Balance at January 1, 2022	—		—	—
RSUs assumed in the Mergers	16,345,396	$52.45	15,976,551	32,321,947
Granted	6,483,384	$59.86	677,914	7,161,298
Forfeited	(221,379)	$49.27	(429)	(221,808)
Vested	(3,031,445)	$43.98	3,031,445	—
Issued	—	—	(6,015,987)	(6,015,987)
Balance at June 30, 2022	19,575,956	$56.69	13,669,494	33,245,450

Restricted Stock Awards

During the six months ended June 30, 2022 and June 30, 2021, the Company awarded 0.5 million and 0.1 million restricted stock awards related to profit sharing arrangements with a grant date fair value of $31.5 million and $3.2 million, respectively.

During the three months ended June 30, 2022 and June 30, 2021, the Company recorded equity-based compensation expense on restricted stock related to profit sharing arrangements of $13.7 million and $6.9 million, respectively. During the six months ended June 30, 2022 and June 30, 2021, the Company recorded equity-based compensation expense on restricted stock related to profit sharing arrangements of $32.8 million and $10.9 million, respectively.