PLAYSTUDIOS, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

2011 and 2021 Equity Incentive Plans

The Company has two equity incentive plans: Old PLAYSTUDIOS' 2011 Omnibus Stock and Incentive Plan (the “2011 Plan”) and the 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan provides for the grant of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units and other stock awards, and performance awards to employees, officers, non-employee directors and independent service providers of the Company. The 2021 Plan became effective immediately upon the closing of the Business Combination and replaces the 2011 Plan and no additional awards will be available under the 2011 Plan.

Each Old PLAYSTUDIOS stock option from the 2011 Plan that was outstanding immediately prior to the Business Combination and held by current employees or service providers, whether vested or unvested, was converted into an option to purchase approximately 0.233 shares of common stock (each such option, an “Exchanged Option”). Except as specifically provided in the Merger Agreement, following the Business Combination, each Exchanged Option continues to be governed by the same terms and conditions (including vesting and exercisability terms) as were applicable to the corresponding former Old PLAYSTUDIOS option immediately prior to the consummation of the Business Combination. All equity awards activity was retroactively restated to reflect the Exchanged Options.

The number of shares of common stock available under the 2021 Plan will increase annually on the first day of each calendar year, beginning with the calendar year ending December 31, 2022, with such annual increase equal to the lesser of (i) 5% of the number of shares of common stock issued and outstanding on the last business day of the immediately preceding fiscal year and (ii) an amount determined by the Company's Board of Directors. If any award (or any award under the 2011 Plan) is forfeited, cancelled, expires, terminates or otherwise lapses or is settled in cash, in whole or in part, without the delivery of Class A common stock or Class B common stock, then the shares (including both the Class A common stock and Class B common stock) covered by such forfeited, expired, terminated or lapsed award shall again be available as shares for grant under the 2021 Plan.

As of March 31, 2022, the Company has 15.7 million shares of Class A common stock reserved for issuance under the 2021 Plan.

Stock-Based Compensation

The following table summarizes stock-based compensation expense that the Company recorded in income (loss) from operations for the periods shown:


	Three Months Ended March 31,
	2022		2021
Selling and marketing	$	319	$	21
General and administrative	3,149		383
Research and development	3,400		496
Stock-based compensation expense	$	6,868	$	900
Capitalized stock-based compensation	$	1,101	$	209

Stock Options

All of the options granted under the 2011 Plan have time-based vesting periods vesting over a period of three to four years and a maximum term of 10 years from the grant date.

The following is a summary of stock option activity for time-based and performance-based options for the three months ended March 31, 2022 (in thousands, except weighted-average exercise price and remaining term):


	No. of Options	Weighted-Average Exercise Price		Weighted-Average Remaining Term (in Years)	Aggregate Intrinsic Value
Outstanding - December 31, 2021	14,749	$	0.85
Granted	—	—
Exercised	(113)	1.15
Forfeited	(85)	2.06
Expired	(64)	1.74
Outstanding - March 31, 2022	14,487	0.84		6.0	$	58,490
Unvested - March 31, 2022	3,141	0.85		7.3	12,803
Exercisable - March 31, 2022	11,346	0.83		5.6	45,687

As of March 31, 2022, there was approximately $4.9 million of total unrecognized compensation expense related to stock options to employees. As of March 31, 2022, this cost is expected to be recognized over a remaining average period of 1.4 years. The total intrinsic value of stock options exercised under the provisions of the 2011 Plan during the three months ended March 31, 2022 and 2021, was $0.4 million and $4.9 million, respectively.

Restricted Stock Units ("RSUs")

During the three months ended March 31, 2022, the Company approved the issuance of 7.9 million RSUs. Generally, RSUs are granted using a three or four year vesting schedule, either vesting pro rata annually or a cliff vest over the requisite service period, subject to continued employment. Except as provided in an award agreement between the Company and the employee, if an employee is terminated (voluntarily or involuntarily), any unvested awards as of the date of termination will be forfeited. RSUs settle for outstanding shares of the Company’s Class A common stock upon vesting.

During the three months ended March 31, 2022, the Company accelerated the first year vesting for several employees, resulting in 0.2 million RSUs vesting during the same period.

The following is a summary of RSU activity for the three months ended March 31, 2022:


			No. of RSUs
Outstanding - December 31, 2021			—
Granted			7,871
Vested			(160)
Forfeited			(21)
Outstanding - March 31, 2022			7,690

As of March 31, 2022, there was approximately $26.0 million of total unrecognized compensation expense related to RSUs granted to employees and this cost is expected to be recognized over a remaining average period of 2.6 years.