Black Rifle Coffee Company Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Equity-Based Compensation

Equity-Based Compensation

3 Months Ended

Mar. 31, 2024

Incentive Units

Authentic Brands' maintains an equity incentive plan (the “2018 Equity Incentive Plan”) under which it granted Incentive Units (as defined in the 2018 Equity Incentive Plan) to employees or non-employee directors prior to the Business Combination. As of March 31, 2024, 8,585 Incentive Units remain outstanding under the 2018 Equity Incentive Plan, and no new Incentive Units have been granted under the 2018 Equity Incentive Plan since the completion of the Business Combination. The board of directors has the authority to determine the terms and conditions of each grant under the 2018 Equity Incentive Plan, and 200,000 non-voting units have been authorized thereunder. These units may contain certain service and performance related vesting provisions. The Incentive Units were awarded to eligible employees and non-employee directors and entitle each grantee to receive non-voting member units upon vesting, subject solely to the employee’s continuing employment or the non-employee director’s continuing service on the board of directors.

The following table summarizes the changes in the number of Incentive Units for the three months ended March 31, 2024:


	Incentive Units	Weighted Average Grant Date Fair Value
Granted and outstanding at January 1, 2024	8,585	$	213.81
Granted	—	—
Forfeited	—	—
Granted and outstanding at March 31, 2024	8,585	$	213.81
Vested at March 31, 2024	6,507	$	213.33

As of March 31, 2024, total unrecognized equity compensation expense related to nonvested Incentive Units to be recognized over a weighted average period of approximately two years was $351.

In connection with the Business Combination, the Company adopted the 2022 Omnibus Incentive Plan (the "Omnibus Plan"), which replaced the 2018 Equity Incentive Plan, and the 2022 Employee Stock Purchase Plan (the "ESPP").

Stock Options

The Company granted stock options to employees under the Omnibus Plan that vest ratably over three years and expire after seven years. The grant date estimated fair value of the stock options was based upon a Black Scholes model valuation of the options at the grant date. The following weighted average assumptions were utilized in determining the fair value of options granted:


Weighted average grant date fair value			$2.18
Expected dividend			—
Expected volatility			65%
Risk-free interest rate			4.37%
Options term (in years)			4.5

The computation of expected volatility is based on a weighted average of comparable public companies within the Company’s industry. The Company uses the "simplified method" prescribed by the Securities and Exchange Commission Staff Accounting Bulletin No. 107, Share-Based Payment, to calculate the expected term of options granted. The risk-free interest rate is based on the yield of zero-coupon U.S. Treasury securities of comparable terms. The Company does not anticipate paying dividends in the foreseeable future. The Company recognizes pre-vesting forfeitures as they occur rather than estimate the forfeiture rate at the grant date.

The following table summarizes information about stock options activities for the three months ended March 31, 2024:


	Stock Options	Weighted Average Exercise Price
Outstanding at January 1, 2024	3,413,340	$	5.19
Granted	2,371,128	3.91
Forfeited	(226,832)	6.18
Outstanding at March 31, 2024	5,557,636	$	4.60
Vested at March 31, 2024	100,468	$	9.51

As of March 31, 2024, total unrecognized equity compensation expense related to stock options to be recognized over a weighted average period of approximately two years was $10,901.

Restricted Stock Units

The Company granted restricted stock unit (“RSU”) awards to employees and non-employee directors under the Omnibus Plan that vest annually over approximately three years. The grant date fair values were based on the closing price of the Class A Common Stock of the Company on the date of grant.

The following table summarizes information about the RSUs under the Omnibus Plan for the three months ended March 31, 2024:


	Restricted Stock Units	Weighted Average Grant Date Fair Value
Nonvested at January 1, 2024	1,684,955	$	5.77
Granted	1,079,772	3.91
Forfeited	(150,329)	5.63
Vested	(35,349)	6.59
Nonvested at March 31, 2024	2,579,049	$	4.99

As of March 31, 2024, total unrecognized equity compensation expense related to RSUs to be recognized over a weighted average period of approximately two years was $9,751.

Performance-Based Restricted Stock Units

On December 29, 2022, the Company granted 8,462,412 performance-based restricted stock units (“PSUs”) to a key employee which vest if certain market capital growth rates are achieved each year through April 2027. Vested PSUs are settled in shares of the Company Class A Common Stock equal to the number of PSUs granted. The PSUs are forfeited upon termination of employment before the performance period ends. PSUs granted during the year ended December 31, 2022 have a weighted-average grant date fair value of $0.46 per share. All PSUs were unvested as of March 31, 2024. The Company used the Monte Carlo pricing model to estimate the fair value of PSUs utilizing the following assumptions at the grant date:


Expected dividend			—
Expected volatility			65%
Risk-free interest rate			3.97%
Award term years			4.3
Valuation date share price			$6.21

As of March 31, 2024, total unrecognized equity-based compensation expense related to PSUs to be recognized over a weighted average period of approximately three years was $1,614.

Employee Stock Purchase Plan

In September 2022, the Company began offering shares of its Class A Common Stock under its Employee Stock Purchase Plan ("ESPP") adopted in connection with the Business Combination, whereby eligible employees may acquire

an equity interest in the Company through payroll contributions. At the end of a six-month offering period, shares are purchased at 85% of the stock price at enrollment date or purchase date, whichever is lower.

On March 8, 2024, the Company issued 63,832 shares for a total of $251 under the September 9, 2023 ESPP period, which covered the period between September 9, 2023 and March 8, 2024.