Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.21.2
Stock-Based Compensation
 9 Months Ended
Sep. 30, 2021
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation
18. Stock-Based Compensation
The Company adopted two equity incentive plans in prior years, the 2011 Plan and 2014 Plan. 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 are 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 is determined through individual award agreements and is generally over a four-year period. Awards generally expire 10 years from the date of grant. 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 The Plans are no longer active; however, outstanding awards granted under these Plans will not be affected. As of September 30, 2021, the Company had 41 thousand and 2.3 million options outstanding, respectively, under the 2011 and 2014 Plans.
As part of the Merger, Osprey’s shareholders approved the Company’s 2021 Equity Incentive Plan (the “2021 Plan”) and the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which are administered by the Company’s board of directors. Under the 2021 Plan, the number of shares initially subject to issuance is 15.0 million, with automatic increases beginning in 2022. Additionally, up to 13.1 million shares can be added to the 2021 Plan pursuant to assumed awards granted under the 2011 Plan and 2014 Plan that are subsequently forfeited or fail to vest. Under the 2021 ESPP, the maximum number of shares made available for sale is 3.0 million, with automatic increases beginning in 2022. The Company has not issued equity awards in any form—options, RSUs, RSAs, warrants, etc.—since the closing of the Merger, and the Company does not intend to issue awards until the effectiveness of our first form S-8 registration statement registering the shares issuable under our 2021 Plan.
The stock-based compensation expense attributable to continuing operations was included in imagery & software analytical service costs, excluding depreciation and amortization and selling, general and administrative expense in the unaudited condensed consolidated statements of operations and comprehensive loss as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
(in thousands) (in thousands)
Imagery & software analytical service costs, excluding depreciation and amortization $ 2,898  $ —  $ 2,949  $ — 
Selling, general and administrative 25,595  550  26,316  1,692 
Total stock-based compensation expense $ 28,493  $ 550  $ 29,265  $ 1,692 

The stock-based compensation expense recorded for the RSUs during the three and nine months ended September 30, 2021 included a cumulative adjustment for service completed from the grant date to the close of the Merger.
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 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 life, a risk-free interest rate, and expected volatility to determine such values.
A summary of the weighted-average assumptions used by Legacy BlackSky is presented below for the nine months ended September 30, 2020; there were no stock options awarded during the nine months ended September 30, 2021:
Nine Months Ended September 30,
2020
Fair value per common share $ 0.0121 
Weighted-average risk-free interest rate 0.83  %
Volatility 65.00  %
Expected term (in years) 2.50
Dividend rate 0  %
A summary of the Company’s stock option activity under the Plans during the nine months ended September 30, 2021 is presented below:
Nine Months Ended September 30, 2021
Options Weighted-Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value
(in thousands)
(in thousands)
Outstanding - December 31, 2020 3,489  $ 0.2160 
Granted —  — 
Exercised (969) 0.1030 
Forfeited (176) 0.1507 
Outstanding - September 30, 2021 2,344  0.2500  7.7 $ 23,670 
Exercisable - September 30, 2021 1,241  0.4367  7.2 $ 12,302 
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 September 30, 2021 and 2020 was $2.4 million and $0.3 million, respectively. The total intrinsic value of options exercised during the nine months ended September 30, 2021 and 2020 was $6.8 million and $0.4 million, respectively. The total fair value of options vested during the nine months ended September 30, 2021 and 2020, was $0.6 million and $0.6 million, respectively.
As of September 30, 2021, there was $0.5 million of total unrecognized compensation cost, which is expected to be recognized over a weighted-average period of 1.1 years.
Restricted Stock Awards
In the year ended December 31, 2020, the Company granted RSAs, which vest based upon the individual award agreements and generally 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 nine months ended September 30, 2021 is presented below:
Nine Months Ended September 30, 2021
Restricted Stock Awards Weighted-Average Grant-Date Fair Value
(in thousands)
Nonvested - January 1, 2021 891 $ 0.0121
Granted — —
Vested (461) 0.0121
Canceled (10) 0.0121
Nonvested - September 30, 2021 420 0.0121
As of September 30, 2021, there was $98 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 1.5 years. The total grant date fair value of shares vested during the nine months ended September 30, 2021 was $6 thousand.
Restricted Stock Units
The Company granted an aggregate of 9.3 million RSUs to certain employees and service providers during the nine months ended September 30, 2021 under the 2014 Plan as follows:
Grant Date Number of Shares
(in thousands)		 First Tranche Second Tranche Third Tranche
February 2021 8,533
50% of such RSUs will vest 180 days subsequent to consummation of the Merger
50% of such units will vest ratably over eight 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 50% of the RSUs
 N/A
March 2021 229
50% of such RSUs will vest 180 days subsequent to consummation of the Merger
50% of such units will vest ratably over eight 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 50% of the RSUs
 N/A
March 2021 137
25% vested immediately upon issuance
50% of these RSUs vested on the date of the Merger
The remaining 25% of the RSUs will vest ratably over 12 months, on the same day of the month that the Merger closed, commencing as of the month following satisfaction of the performance condition
June 2021 164
25% of such RSUs will vest at the later of: a) 180 days subsequent to consummation of Merger or b) 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
 N/A
July 2021 285
25% of such RSUs will vest at the later of: a) 180 days subsequent to consummation of the Merger or b) 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
 N/A
Total 9,348 

A summary of the Company’s nonvested RSU activity during the nine months ended September 30, 2021 is presented below:
Nine Months Ended September 30, 2021
Restricted Stock Units Weighted-Average Grant-Date Fair Value
(in thousands)
Nonvested - January 1, 2021 —  $ — 
Granted 9,348  7.0844 
Vested (103) 8.0407 
Canceled (88) 7.0633 
Nonvested - September 30, 2021 9,158  7.0738 
Unrecognized compensation costs related to nonvested restricted stock units totaled $37.1 million as of September 30, 2021, which is expected to be recognized over a weighted-average period of 2.4 years.