Abacus Global Management, Inc.ABX
Abacus Global Management, Inc. Stock Compensation Disclosure
STOCK-BASED COMPENSATION
As of December 31, 2024 there was $— of unamortized stock-based compensation expense for unvested Restricted Stock relative to the CEO.
Long-term Incentive Plan:
In October 2023, the Compensation Committee approved the issuance of 2,468,500 restricted stock units (“RSUs”) to executives, employees and directors as part of the Company’s 2023 Long-Term Equity Compensation Incentive Plan (“Long-term Incentive Plan”). This plan provides for equity-based awards, including restricted stock units, performance stock units (“PSU”), stock options and unrestricted shares of common stock, may be granted to officers, key employees and directors of the Company. The Company has granted RSUs that provide the right to receive, subject to service based vesting conditions, shares of common stock pursuant to the Equity Plan. The expense associated with these awards will be based on the fair value of the stock as of the grant date, where the Company will elect to straight line recognition over the vesting period, which is three years.
In February 2024, the Compensation Committee approved the issuance of 108,000 RSUs and 345,263 stock options (“Options”) at an exercise price of $12.37 (closing price on February 12, 2024).
In April 2024, the Company’s Board of Directors adopted a resolution to amend the Long-Term Incentive Plan to update certain terms and increase the RSUs available for future equity-based awards by 5,000,000 shares and provided for an additional 5,000,000 shares to be available for incentive stock options in the Company’s common stock bringing the total authorized shares available for awards to 13,164,991. This resolution was approved by the Company’s shareholders during the Company’s annual shareholder meeting in June 2024.
Under the approved Long-term Incentive Plan, generally, each RSU entitles the unit holder to one share of common stock when the restriction expires. RSUs have service conditions associated with them that range from to three years. In our plan, subject to continuous employment, employees that were part of the Company at the time of the Merger, the vesting periods are 9 months for the 10% and 33 months for the 90% of the Initial Annual Awards. After satisfying the above vesting conditions, the participants will be fully entitled to their shares of Class A common stock. Shares that are issued upon vesting are newly issued shares from the Long-term Incentive Plan and are not issued from treasury stock. Forfeitures are
recorded as they occur. Stock options generally expire after ten years and vest equally over three years from the grant date.
After the approved amendment to the Long-Term Incentive Plan, 10,215,756 shares of common stock remained available for issuance.
The following table shows a summary of the unvested restricted stock under the 2023 Long-Term Equity Compensation Incentive Plan as of December 31, 2023 as well as activity during the year:
| Weighted Average | |||||||||||
| Number of shares | Grant Date Fair Value | ||||||||||
| Restricted stock units, unvested, December 31, 2023 | 2,429,500 | $ | 6.16 | ||||||||
| Granted | 1,319,532 | 8.32 | |||||||||
| Vested | (271,772) | 6.16 | |||||||||
| Forfeited | (1,500) | 6.16 | |||||||||
| Restricted stock units, unvested, December 31, 2024 | 3,475,760 | $ | 6.98 | ||||||||
Black-Scholes option-pricing model assumptions and the resulting fair value of options are presented in the following table:
| Stock Options on Grant Date | |||||
| Dividend yield | — | % | |||
| Expected volatility | 23.00 | % | |||
| Risk-free interest rate | 3.98 | % | |||
| Expected option life | 5.81 years | ||||
| Weighted average fair value of stock options | $ | 3.91 | |||
The Company does not intend to pay dividends for the foreseeable future. The expected volatility reflects the Company’s past daily common stock price volatility. The risk-free interest rate is derived using the term matched U.S. Treasury constant maturity yields. The expected stock option life is based on the average of the average time to vest and the remaining contractual term.
The following table shows the status of, and changes in, common stock options:
| Number of Options | Weighted Average Exercise Price | ||||||||||
| Options outstanding, December 31, 2023 | — | $ | — | ||||||||
| Granted | 345,263 | 3.91 | |||||||||
| Exercised | — | — | |||||||||
| Expired or cancelled | — | — | |||||||||
| Options exercisable, December 31, 2024 | 345,263 | $ | 3.91 | ||||||||
Compensation costs recognized for RSUs and Options were $6,766,160 and $1,600,760 for the years ended December 31, 2024 and 2023, respectively. $1,585,379 and $5,180,781 of the 2024 compensation costs is recorded in cost of revenue (including stock-based compensation) and in general and administrative expense (including stock-based compensation) in the consolidated statements of operations
and comprehensive (loss) income, respectively. As of December 31, 2024, there was approximately $19,152,022 of unrecognized compensation costs related to these restricted stock units which the Company expects to recognize over the next 2.0 years.
CEO Restriction Agreement:
As part of the Merger, the Chief Executive Officer (“CEO”) entered into a Restriction Agreement with the Company that provides terms for the CEO’s ownership interest grant that were assigned to him from the three original founders of Abacus Settlements. As of the Closing Date of the Merger on June 30, 2023, the CEO received 4,569,922 shares of Restricted Stock.
Vesting Conditions. The Company shall issue the shares of Restricted Stock either (a) in certificate form or (b) in book entry form, registered in the CEO’s name, referring to the terms, conditions and restrictions applicable to the shares as outlined below. The CEO’s Ownership Interest Grant (“Restricted Stock”) shall vest as follows:
i. 50% of the shares on the 25th month following the Effective Date,
ii. 50% of the shares on the 30th month following the Effective Date,
iii. Additionally, the Restricted Stock will become fully vested upon the first to occur of one of the following events: (i) separation from service due to disability, (ii) death, (iii) separation from service without cause; or (iv) separation from service for good reason.
On November 21, 2024, the Company’s board of directors accelerated the vesting of the CEO’s 4,569,922 shares Restricted Stock held by Company’s CEO, pursuant to that certain Restriction Agreement, dated as of June 30, 2023 (the “Restriction Agreement”), between the Company and the CEO.
CEO Stock-based compensation expense is recorded in general and administrative expense (including stock-based compensation) in the consolidated statements of operations and comprehensive (loss) income is summarized as follows:
| Years Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Stock-based compensation expense | $ | 22,918,159 | $ | 9,167,264 | |||||||
Restricted Stock activity relative to the CEO for the year ended December 31, 2024 is summarized as follows:
| Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||
| Outstanding at December 31, 2023 | 4,569,922 | $ | 10.03 | ||||||||
| Granted | — | — | |||||||||
| Vested | (4,569,922) | 10.03 | |||||||||
| Forfeited | — | — | |||||||||
| Outstanding at December 31, 2024 | — | $ | — | ||||||||
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.