|3 Months Ended|
Mar. 31, 2022
|Share-based Payment Arrangement [Abstract]|
Note 13 – Equity Compensation
Profit interest units –
Under the Pre-IPO Plan, the Parent granted time-based and performance-based profit interest units to certain key employees of the Company and its subsidiaries. Subsequent to the IPO, the profit interest units converted to Class B shares.
In June 2021, the Parent amended previously issued profit interest units with performance-based vesting conditions that were based on performance targets connected to the value received from change of control of the Parent. The vesting condition, as amended, is based on the average trading price of XPO Inc. common stock exceeding the IPO threshold price, as defined in the agreement. The amendment of these units is treated as a modification with the compensation cost of the amended units of $18,127 recognized over the new estimated service period through November 2022. In March 2022, the units vested when the average trading price condition was met. During the three months ended March 31, 2022, the Company recognized $12,126 of expense, including $8,467 of accelerated compensation expense when these grants vested in March 2022.
The fair value of the time-based grants was recognized as compensation expense over the vesting period (generally four years), with an increase to Member’s contribution / Additional Paid-in Capital in Member’s / Stockholders' equity. The fair value of the time-based grants was calculated using a Black-Scholes option-pricing model. During the three months ended March 31, 2022 and 2021, the Company recognized $78 and $222 of expense, respectively. During the three months ended March 31, 2022, the Company had $133 of unrecognized compensation expense. The unrecognized compensation expense is expected to be recognized over a weighted average period of approximately 0.93 years for the time-based grants.
Restricted stock units –
In November 2021, the Company granted restricted stock unit (“RSU”) awards with performance conditions of meeting certain EBITDA targets through the year ending December 31, 2024. The awards were granted with fixed dollar valuation and the number of shares granted depends on the trading price at the closing date of the period in which the EBITDA target is met. As such, these awards are classified as a liability. As of March 31, 2022, management believes that the EBITDA targets will be achieved and is accordingly recognizing expense ratably over the vesting period. Management performs a regular assessment to determine the likelihood of meeting the targets and adjusts the expense recognized if necessary. During the three months ended March 31, 2022, the Company recognized $621 of expense and had $6,901 of unrecognized expense relating to these grants.
The following table summarizes activity for RSUs for the three months ended March 31, 2022:
During the three months ended March 31, 2022, the Company granted 1,274,422 shares underlying RSUs, at a weighted average grant-date fair value of $20.04 per share. RSUs are valued at the Company’s closing stock price on the date of grant, and generally vest over a - to four-year period. Compensation expense for RSUs is recognized on a straight-line basis.
During the three months ended March 31, 2022, the company recognized $2,423 of expense and had $35,792 of total unamortized compensation expense related to non-vested RSUs. That cost is expected to be recognized over a weighted-average period of 3.07 years.
The entire disclosure for share-based payment arrangement.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef