Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.22.1
Stock-Based Compensation
 3 Months Ended
Mar. 31, 2022
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation 13. Stock-Based Compensation
The Company adopted two equity incentive plans in prior years. Legacy BlackSky issued equity and equity-based awards under its 2014 stock incentive plan (the “2014 Plan”) and 2011 stock incentive plan (the “2011 Plan”, together with the 2014 Plan, collectively the “Plans”), which are now administered by the Company’s board of directors. The Plans are no longer active; however, outstanding awards granted under these Plans will not be affected. Both Plans allowed the board of directors to grant stock options, designated as incentive or nonqualified, and stock awards to employees, officers, directors, and consultants. Stock options were granted with an exercise price per share equal to at least the estimated fair value of the underlying class A common stock on the date of grant. The vesting period was determined through individual award agreements and was generally over a four-year period. Awards generally expired 10 years from the date of grant. As of March 31, 2022, the Company had 41 thousand and 1.8 million options outstanding, respectively, under the 2011 and 2014 Plans.
The stock-based compensation expense attributable to continuing operations was included in the unaudited condensed consolidated statements of operations and comprehensive loss as follows:
Three Months Ended March 31,
2022 2021
(in thousands)
Imagery & software analytical service costs, excluding depreciation and amortization $ 801  $ — 
Engineering & systems integration costs, excluding depreciation and amortization 120  — 
Selling, general and administrative 9,319  508 
Total stock-based compensation expense $ 10,240  $ 508 
For the three months ended March 31, 2021, the Company did not record any stock-based compensation expense for the restricted stock units ("RSU"s) granted during that time for which vesting only commenced upon satisfaction of a performance condition. This performance condition attributable to the RSUs was not deemed probable until occurrence of the Merger as the Merger was not within the control of Legacy BlackSky. Additionally, the Company recorded $0.6 million and $0, respectively, of stock-based compensation related to capitalized internal labor for software development activities during the three months ended March 31, 2022 and 2021. These amounts are included in property, plant, and equipment - net on the unaudited condensed consolidated balance sheets.
Stock Options
Following the Merger, the outstanding stock options issued under the 2014 Plan may be exercised (subject to their original vesting, exercise and other terms and conditions) to purchase a number of shares of class A common stock equal to the number of shares of Legacy BlackSky class A common stock, as adjusted for the common stock exchange ratio, subject to the same terms and conditions as were applicable to such Legacy BlackSky stock option (each an “Assumed Company Stock Option”). The exercise price per share of each Assumed Company Stock Option was equal to the quotient obtained by dividing the exercise price per share applicable to such Legacy BlackSky stock option by the common stock exchange ratio.
The Black-Scholes option pricing model is used to determine the fair value of options granted. The Company utilized assumptions concerning expected term, a risk-free interest rate, and expected volatility to determine such values. The Company did not award any stock options during the three months ended March 31, 2022 or 2021.
A summary of the Company’s stock option activity under the Plans during the three months ended March 31, 2022 is presented below:
Three months ended March 31, 2022
Options Weighted-Average Exercise Price Weighted Average Contractual Term Aggregate Intrinsic Value
(in thousands) (in thousands)
Outstanding - January 1, 2022 5,022  $ 4.4914 
Granted —  — 
Exercised (404) 0.0437 
Forfeited (11) 0.0121 
Outstanding - March 31, 2022 4,607  4.8917  8.61 $ 2,975 
Exercisable - March 31, 2022 1,063  0.4854  6.79 1,515
For options exercised, intrinsic value is calculated as the difference between the estimated fair value on the date of exercise and the exercise price. The total intrinsic value of options exercised during the three months ended March 31, 2022 and 2021 was $1.2 million and $2.7 million, respectively. The total fair value of options vested during the three months ended March 31, 2022 and 2021 was $0.2 million.
As of March 31, 2022, there was $3.8 million of total unrecognized compensation cost, which is expected to be recognized over a weighted-average period of 3.5 years.
Restricted Stock Awards
In the year ended December 31, 2020, the Company granted restricted stock awards ("RSA")s, which vest based upon the individual award agreements and generally vest over a three to four-year period. These shares are deemed issued as of the date of grant, but not outstanding until they vest. The Company intends to settle the RSAs in stock, and the Company has the shares available to do so.
A summary of the Company’s nonvested RSA activity during the three months ended March 31, 2022 is presented below:
Three months ended March 31, 2022
Restricted Stock Awards Weighted-Average Grant-Date Fair Value
(in thousands)
Nonvested - January 1, 2022 335  $ 0.0121 
Vested (128) 0.0121 
Nonvested - March 31, 2022 207  0.0121 
The Company has not granted any RSAs since 2020.
As of March 31, 2022, there was $2 thousand of total unrecognized compensation cost related to nonvested RSAs granted under the Plans, which is expected to be recognized over a weighted-average period of 1.6 years. The total grant date fair value of shares vested during the three months ended March 31, 2022 was $2 thousand.
Restricted Stock Units
The Company granted an aggregate of 1.0 million RSUs to certain employees and service providers during the three months ended March 31, 2022 under the 2021 Plan as follows:
Grant Date Number of Shares
(in thousands)		 First Tranche Second Tranche
March 2022 868
25% of such RSUs will vest at the one-year anniversary of the vesting commencement date
75% of such units will vest ratably over twelve consecutive quarters, on specified quarterly vesting dates with the first of such quarterly vesting dates occurring at least three months after the vesting of the initial 25% of the RSUs.
March 2022 155
50% of total number of RSUs will be scheduled to vest annually on the anniversary of the vesting commencement date
 N/A
Total 1,023 
A summary of the Company’s nonvested RSU activity during the three months ended March 31, 2022 is presented below:
Three months ended March 31, 2022
Restricted Stock Units Weighted-Average Grant-Date Fair Value
(in thousands)
Nonvested - January 1, 2022 10,959  $ 6.7675 
Granted 1,023  1.8000 
Vested (4,816) 6.9843 
Canceled (60) 7.6612 
Nonvested - March 31, 2022 7,106  5.8975 
A significant portion of the pre-Merger RSU grants vested in accordance with the vesting schedule of 180 days subsequent to the Merger and 1.9 million of the vested RSUs were used to satisfy payroll tax withholding obligations, which was recorded to additional paid-in capital totaling $3.6 million. Unrecognized compensation costs related to nonvested restricted stock units totaled $24.7 million as of March 31, 2022, which is expected to be recognized over a weighted-average period of 2.3 years.