Stock-Based Compensation |
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| Stock-Based Compensation | Stock-Based Compensation During 2018, Landsea Holdings created a long-term incentive compensation program designed to align the interests of Landsea Holdings, the Company, and its executives by enabling key employees to participate in the Company’s future growth through the issuance of phantom equity awards. Landsea Holdings’ phantom equity awards issued on or after January 1, 2018 were accounted for pursuant to ASC 710, Compensation, as the value was not based on the shares of comparable public entities or other equity, but was based on the book value of Landsea Holdings' equity. Landsea Holdings measured the value of phantom equity awards on a quarterly basis using the intrinsic value method and pushed down the expense to the Company as the employees participating in the long-term incentive compensation program primarily benefit the Company. In connection with the Merger all of the phantom equity awards vested and were either paid out in cash or were converted to stock of LHC and the program was terminated. The Company recorded $2.7 million in general and administrative expenses in the three months ended March 31, 2021 related to the accelerated vesting of the phantom awards. The Company paid cash of $2.9 million for the phantom stock awards and granted 0.2 million shares with a grant date value of $1.9 million at the time of the Merger.
The Company adopted the Landsea Homes Corporation 2020 Stock Incentive Plan (the "Plan") which provides for the grant of options, stock appreciation rights, restricted stock units ("RSUs"), and restricted stock, any of which may be performance-based, as determined by the Company's Compensation Committee. The Company reserved a total of 6.0 million shares of our common stock for issuance under the Plan. As of March 31, 2022, approximately 4.4 million shares of common stock remained available for issuance under the Plan.
The Company granted long term performance share unit awards (“PSUs”) to certain executives under the Plan. The PSUs are earned based upon the Company’s performance over three years, measured by adjusted earnings per share ("EPS") over fiscal years 2021, 2022 and 2023 (the "Performance Periods"). Each award is conditioned upon the Company achieving adjusted EPS targets over the Performance Periods. Target awards of 100% will be earned if the Company’s adjusted EPS meets set thresholds in each of the Performance Periods ("Target Goals"). If adjusted EPS is below or above the target thresholds by defined amounts, an award may be earned in a range between 50%-200% of the Target Goals. In March 2022, the 2021 PSU tranche vested at 200% and 136,170 shares of common stock vested.
The following table presents a summary of the Company’s nonvested PSUs and RSUs for the three months ended March 31, 2022:
Most awards vest ratably over three years; however, some have been granted with different vesting schedules. The Company records actual forfeitures related to unvested awards upon employee terminations.
The Company granted 0.7 million stock options during the three months ended March 31, 2022 with a weighted-average exercise price of $8.82 per share. The weighted-average grant date fair value of stock options granted during the three months ended March 31, 2022 was $4.38 per share. The aggregate intrinsic value of options at March 31, 2022 is $0 based on the Company's stock price of $8.55 per share. The stock options generally vest ratably over three years.
Stock-based compensation expense related to our RSUs, PSUs, and stock options of $0.5 million and $2.4 million is included in general and administrative expenses on our consolidated statements of operations during the three months ended March 31, 2022 and 2021, respectively.
A summary of our outstanding RSUs and PSUs, assuming current estimated level of performance achievement, are as follows (in thousands, except years):
Stock-based compensation expense associated with the outstanding RSUs and PSUs is measured using the grant date fair value. The expense associated with the PSUs also incorporates the estimated achievement of the established performance criteria at the end of each reporting period until the performance period ends.
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