|12 Months Ended|
Dec. 31, 2021
|Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]|
18. Share-Based Compensation
At the special meeting of Haymaker stockholders held on December 8, 2020, Haymaker stockholders considered and approved the ARKO Corp. 2020 Incentive Compensation Plan (the “Plan”). The total number of shares of common stock authorized for issuance under the Plan is 12.4 million. Stock options granted under the Plan expire no later than ten years from the date of grant and the exercise price may not be less than the fair market value of the shares on the date of grant. Vesting periods are assigned to stock options and restricted share units on a grant-by-grant basis at the discretion of the Board. The Company issues new shares of common stock upon exercise of stock options and vesting of RSUs.
In March 2021, the Compensation Committee of the Board approved the grant of nonqualified stock options and restricted stock units (“RSUs”) to certain employees, non-employees and members of the Board under the Plan.
Additionally, a non-employee director may receive RSUs in lieu of up to 100% of his or her cash fees, which RSUs will be settled in common stock upon the director’s departure from the Board or an earlier change in control. There were 89,570 RSUs issued to non-employee directors with a fair value of $0.9 million outstanding at December 31, 2021.
The following table summarizes share activity related to stock options and restricted stock units:
The following table summarizes the stock options granted in 2021:
The fair value of each stock option award is estimated by management on the date of the grant using the Black-Scholes option pricing model. The following table summarizes the assumptions utilized in the valuation of the stock option awards granted in 2021:
The expected stock price volatility is based on the historical volatility of the Company’s peer group’s stock price. The volatilities are estimated for a period of time equal to the expected term of the related option. The risk-free interest rate is based on the implied yield of U.S. Treasury zero-coupon issues with an equivalent remaining term. The expected term of the options represents the estimated period of time until exercise and is determined by considering the contractual terms, vesting schedule and expectations of future employee behavior. All of the stock option awards were out of the money as of December 31, 2021.
The weighted average grant date fair value of time-vested RSUs granted in March 2021 was $9.60 with a grant date fair value of $8.3 million and vesting over 2.0 years as of December 31, 2021.
In the first quarter of 2021, the Company granted a target of 644,867 performance-based RSUs with a weighted average grant date fair value of $9.60 and a grant date fair value of $6.2 million. The 2021 performance-based RSUs were awarded to certain members of senior management in connection with the achievement of a specific annual financial metric measured annually during a three-year period and cliff vest at the end of such three-year period. The number of 2021 performance-based RSUs that will ultimately vest is contingent upon the achievement of the applicable financial metric by the end of year three. The Company assesses the probability of achieving these metrics on a quarterly basis, and as of December 31, 2021, the grant date fair value of these awards was adjusted for the probability of achieving these metrics to $7.2 million. For these awards, the Company recognizes the fair value expense ratably over the performance and vesting period. There were 3,333 performance-based RSUs forfeited during 2021. Performance-based awards grants and forfeitures are included above in the Nonvested RSUs totals.
In connection with the consummation of the Merger Transaction, approximately 96 thousand unvested RSUs which were previously granted to officers and other employees of Arko Holdings became fully vested and were exercised into ordinary shares of Arko Holdings. In December 2020, Arko Holdings granted approximately 200 thousand ordinary shares to officers of Arko Holdings. The shares, following the Merger Transaction, are governed by the Israel Appendix to the Plan. The shares are subject to the following terms: (a) approximately 133 thousand shares were granted with no vesting period; (b) approximately 67 thousand shares vest over a two year period from the grant date, subject to the grantees being employed by Arko Holdings; and (c) the fair value of the total Arko Holdings’ shares granted, based on the market value of Arko Holdings’ shares at the time of grant, was $1.8 million.
Total compensation cost recorded for employees, non-employees and members of the Board for the years ended December 31, 2021, 2020 and 2019 was $5.8 million, $1.9 million and $0.5 million, respectively, and included in general and administrative expenses on the consolidated statements of operations. As of December 31, 2021, total unrecognized compensation cost related to unvested shares, stock options and RSUs granted was approximately $11.6 million, which is expected to be recognized over a weighted average period of approximately 2.0 years.
The entire disclosure for share-based payment arrangement.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef