Brilliant Earth Group, Inc.BRLT
Brilliant Earth Group, Inc. Stock Compensation Disclosure
EQUITY-BASED COMPENSATION
Overview
The 2021 Incentive Award Plan and the 2021 Employee Stock Purchase Plan (the “2021 Plans”) were adopted to attract, retain, and motivate selected employees, consultants, and directors through the granting of equity-based compensation awards and cash-based performance bonus awards. The compensation committee or its approved designees administer the 2021 Plans. Subject to the terms and conditions of the 2021 Plans, the administrator has the authority to select the persons to whom awards are to be made, to determine the number of shares to be subject to awards and the terms and conditions of awards, and to make all other determinations and to take all other actions necessary or advisable for the administration of the 2021 Plans.
As of December 31, 2024 we have reserved 12,593,079 shares of common stock for issuance pursuant to a variety of equity-based compensation awards, including stock options, stock appreciation rights, or SARs, restricted stock awards, restricted stock unit awards, and other equity-based awards under the 2021 Incentive Award Plan. In addition, 1,847,197 shares of Class A common stock are reserved for issuance under our Employee Stock Purchase Plan. The number of shares initially reserved for issuance or transfer pursuant to awards under the 2021 Incentive Award Plan is increased by an annual increase on the first day of each fiscal year beginning in 2022 and ending in 2031, equal to the lesser of (A) 5% of the shares of common stock outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year and (B) such smaller number of shares of stock as determined by the Board; provided, however, that no more than 81,929,342 shares of stock may be issued upon the exercise of incentive stock options. As of December 31, 2024, 5,072,048 shares of common stock are available for future grants under the 2021 Incentive Award Plan. Vesting is subject to certain change in control provisions as provided in the award agreements.
Grants of Restricted Stock Units
The fair value of RSUs are based on the fair value of a Class A share of common stock at the time of grant. RSUs have a time-based vesting requirement (based on continuous employment). Upon vesting, the RSUs convert into Class A common stock; unvested RSUs are not considered outstanding shares of Class A common stock. The agreements generally provide for 25% vesting at the first anniversary of the date of the grant (or a shorter period at the administrator’s discretion), with the remainder vesting quarterly over the following three years.
The following table summarizes the activity related to the Company’s RSUs for the year ended December 31, 2024:
| Number of Restricted Stock Units | Weighted average grant date fair value per unit | ||||||||||
| Balance as of December 31, 2022, unvested | 3,158,686 | $ | 9.01 | ||||||||
| Granted | 2,640,038 | $ | 4.28 | ||||||||
| Vested | (1,064,101) | $ | 9.07 | ||||||||
| Forfeited | (792,571) | $ | 7.65 | ||||||||
| Balance as of December 31, 2023, unvested | 3,942,052 | $ | 6.10 | ||||||||
| Granted | 2,075,931 | $ | 2.77 | ||||||||
| Vested | (1,587,519) | $ | 6.28 | ||||||||
| Forfeited | (582,828) | $ | 5.71 | ||||||||
| Balance as of December 31, 2024, unvested | 3,847,636 | $ | 4.29 | ||||||||
The total fair value of RSUs vested for the years ended December 31, 2024 and 2023, was $10.0 million and $9.7 million, respectively.
Total compensation expense for RSUs was approximately $9.2 million and $8.9 million for the years ended December 31, 2024 and 2023, respectively, and is included in general and administrative expenses in the consolidated statements of operations. The Company recognized $0.1 million of tax benefit associated with the equity-based compensation expense for RSUs for the years ended December 31, 2024, and $0.1 million of tax benefit for the year ended December 31, 2023, respectively.
As of December 31, 2024, total compensation expense related to unvested RSUs not yet recognized was $14.2 million and the weighted-average period over which the compensation is expected to be recognized was 2.1 years.
Stock Options
Stock option awards have a time-based vesting requirement that is based on continuous employment. Upon vesting, the stock options are exercisable into Class A common stock. Vesting is generally over four years from the date of grant and options may be exercised up to 10 years from the date of issuance.
The following table summarizes the activity related to the outstanding and exercisable stock options:
| Number of options | Weighted average exercise price | Weighted average grant date fair value per option | Weighted average remaining contractual term (years) | ||||||||||||||||||||
| Outstanding as of December 31, 2023 | 758,458 | $ | 12.00 | $ | 4.27 | 7.7 | |||||||||||||||||
| Forfeited | (92,553) | $ | 12.00 | $ | 4.28 | ||||||||||||||||||
| Outstanding as of December 31, 2024 | 665,905 | $ | 12.00 | $ | 4.27 | 6.7 | |||||||||||||||||
| Exercisable as of December 31, 2024 | 627,870 | $ | 12.00 | $ | 4.27 | 6.7 | |||||||||||||||||
| Unvested as of December 31, 2024 | 38,035 | $ | 12.00 | $ | 4.29 | 6.7 | |||||||||||||||||
| Vested and expected to vest as of December 31, 2024 | 665,905 | $ | 12.00 | $ | 4.27 | 6.7 | |||||||||||||||||
As of December 31, 2024, the vested stock options did not have an aggregated intrinsic value as the exercise price exceeded the estimated fair market value of the stock options.
Total compensation expense for stock options was approximately $0.6 million and $0.8 million for the years ended December 31, 2024 and 2023, respectively, and is included in general and administrative expenses in the consolidated statements of operations. No tax benefit was associated with the equity-based compensation expense for stock options.
As of December 31, 2024, total compensation expense related to unvested option awards not yet recognized was $0.2 million and the weighted-average period over which the compensation is expected to be recognized was less than 1.0 year.
LLC Units
The fair value of restricted LLC Units was based on the fair value of an unrestricted LLC Unit at the date of grant. The following table summarizes the activity related to the unvested LLC Units:
| Number of LLC Units | Weighted average grant date fair value per unit | ||||||||||
| Balance, December 31, 2023, unvested | 177,884 | $ | 0.93 | ||||||||
| Forfeited | (4,158) | $ | 0.21 | ||||||||
| Vested | (148,823) | $ | 0.85 | ||||||||
| Balance, December 31, 2024, unvested | 24,903 | $ | 1.50 | ||||||||
The total fair value of LLC Units vested for the years ended December 31, 2024 and 2023, was $0.1 million and $0.2 million, respectively.
Total compensation expense for LLC Units was approximately $0.1 million and $0.2 million for the years ended December 31, 2024 and 2023, respectively, and is included in general and administrative expenses in the consolidated statements of operations.
As of December 31, 2024, total expense related to unvested LLC Units not yet recognized was less than $0.1 million and the weighted-average period over which the compensation is expected to be recognized was less than 1.0 year.
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.