Share-Based Compensation

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

2021 Equity Incentive Plan

In November 2021, the Company’s Board of Directors adopted, and the Company’s shareholders approved, the 2021 Equity Incentive Plan, or the “2021 Plan.” The 2021 Plan allows the Compensation Committee of the Board to make share-based and cash-based incentive awards to the Company’s officers, employees, directors and other key persons (including consultants).

The Company initially reserved 14,092,530 of its common shares for the issuance of awards under the 2021 Plan. On the first day of each fiscal year of the Company during the term of the 2021 Plan, commencing on January 1, 2022 and ending on January 1, 2031, the aggregate number of common shares that may be issued under the 2021 Plan shall automatically increase by a number equal to the lesser of (i) 3% of the total number of common shares actually issued and outstanding on the last day of the preceding fiscal year and (ii) a number of common shares determined by the Board (such amount, the “2021 Plan Evergreen”). The 2021 Plan Evergreen amount of shares added to the available share authorization under the 2021 Plan on each of January 1, 2022 and 2023 was 2,818,506 and 3,283,847, respectively. The Company has not yet registered the 2023 Equity Plan Evergreen shares on a registration statement on Form S-8 with the SEC.

Options under the 2021 Plan

During the year ended December 31, 2022, the Company granted options to purchase 359,297 common shares to employees under its 2021 Plan. The options issued under the 2021 Plan become exercisable in one-third increments on each of the first three anniversaries of the grant date, subject to the employee remaining employed on each vesting date, and expire 10 years after issuance.

Stock option transactions during the year ended December 31, 2022 are summarized as follows:


Options to purchase common share	Number of Options Outstanding	Weighted Average Strike Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2021	2,456,102	$	11.04	9.9	$	—
Granted	359,297	1.91
Exercised	—	—
Forfeited	(806,263)	10.97
Outstanding at December 31, 2022	2,009,136	$	9.44	9.0	$	—
Exercisable at December 31, 2022	549,943	$	11.07	8.9	$	—

The weighted average grant-date fair value of share options granted by the Company was $1.00 per share during the year ended December 31, 2022.

As of December 31, 2022, there was $5.5 million of unrecognized compensation cost related to options to purchase common shares of the Company, which is expected to be recognized over a weighted-average period of 1.9 years.

Share Option Valuation

The following table presents, on a weighted-average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of the options under the 2021 Plan issued during the years ended December 31, 2022 and 2021:


	Year Ended December 31,
	2022		2021
Expected term (in years)	6.0		6.0
Expected volatility	55.4	%	46.4	%
Risk-free interest rate	3.0	%	1.3	%
Expected dividend yield	—	%	—	%

Restricted Share Units under the 2021 Plan

On November 19, 2021, the Company granted 4,227,759 Restricted Share Units under the 2021 Plan.

The Company granted 939,502 RSUs to one director which were fully vested upon the grant date, and his share-based compensation expense of $10.7 million was immediately recognized in the general and administrative expenses during the year ended December 31, 2021. Under the relevant grant agreement, payment of 50% of the award to the director shall be made on each of the first two anniversaries of the grant date in the form of 60% common shares and 40% cash (based on the fair market value of the underlying common shares as of the applicable settlement date), or such other mix of common shares and cash as determined by the Company’s Compensation Committee. The Compensation Committee resolved to make the first 50% settlement of the award fully in common shares on November 19, 2022. As such, 469,751 of the RSUs were settled as of December 31, 2022.

The Company granted 2,818,506 RSUs in the aggregate to a director and an executive director, 50% of those RSUs shall vest on the 18-month anniversary of the grant date with the balance of the RSUs vesting on the 30-month anniversary of the grant date. As there is no substantive service condition for the 2,818,506 RSUs from accounting perspective, the share-based compensation expense of $32.1 million was immediately recognized in the general and administrative expenses during the year ended December 31, 2021.

There is a service condition for 469,751 RSUs issued to one executive director. One third of the RSUs will vest on each of the first, second and third anniversaries of grant date. Per the agreement, 156,583 of the RSUs were vested as of December 31, 2022.

During the year ended December 31, 2022, the Company granted 4,675,923 RSUs under the 2021 Plan. One third of the RSUs will vest on each of the first, second and third anniversaries of grant date.

RSU transactions during the year ended December 31, 2022 are summarized as follows:


	Number of Units Outstanding	Weighted Average Fair Value Per Unit
Outstanding at December 31, 2021	3,288,257	$	11.38
Granted	4,675,923	2.00
Vested	(366,583)	6.60
Forfeited	(850,262)	1.84
Outstanding at December 31, 2022	6,747,335	$	6.34

Market-Based Restricted Stock Units under the 2021 Plan

On July 15, 2022, the Company entered into agreements with Richard Barlow, the Company’s CEO, to award an equity grant that was originally approved by the Company’s Board at the closing of the Virtuoso Business Combination. The grant is in the form of 4,697,511 RSUs (that settle for common shares), which is equal to 5% of the number of the common shares outstanding as of the closing of the Virtuoso Business Combination. The RSUs will vest if the price of the Company’s common shares as quoted on the NASDAQ equals or exceeds $50.00 on any twenty trading days in any thirty-trading day period (the “Share Price Condition”) between November 18, 2026 and November 18, 2031. Under the RSU award agreement between the Company and Mr. Barlow, dated July 15, 2022, if the Share Price Condition is satisfied on or before November 17, 2026, the RSUs will lapse and Mr. Barlow may exchange the 1,000 Class B Ordinary shares he holds in Wejo Limited for 4,697,511 common shares of the Company under that certain Subscription Agreement Relating to B Ordinary Shares in the Capital of Wejo Limited by and among the Company, Mr. Barlow, and Wejo Limited, dated July 15, 2022.

Market-based RSU transactions during the year ended December 31, 2022 are summarized as follows:


	Number of Units Outstanding	Weighted Average Fair Value Per Unit
Unvested at December 31, 2021	—	$	—
Granted	4,697,511	0.20
Vested	—	—
Forfeited	—	—
Unvested at December 31, 2022	4,697,511	$	0.20

As of December 31, 2022, there was $9.6 million of unrecognized compensation expense related to unvested RSUs and market-based RSUs, which is expected to be recognized over a weighted-average period of 2.6 years. Of the total $9.6 million of unrecognized compensation expense, $8.7 million relates to RSUs and $0.9 million relates to market-based RSUs.

Share-based Compensation Expense

Share-based compensation expense recorded is as follows (in thousands):


	Year Ended December 31,
	2022		2021
General and administrative	$	5,946	$	46,029
Sales and marketing	749		3,218
Technology and development	193		2,718
Cost of revenue	50		351
Total	$	6,938	$	52,316