LanzaTech Global, Inc.LNZA
LanzaTech Global, Inc. Stock Compensation Disclosure
Share-Based Compensation
In 2023, the Company adopted the LanzaTech Long-Term Incentive Plan (the “LTIP”) in conjunction with the closing of the Business Combination. The LTIP provides for grants of a variety of awards to employees, directors, and other service providers to the Company, including, but not limited to stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance awards and other stock-based awards or cash incentives. Prior to the effective date of the closing of the Business Combination, the Company granted awards under the LanzaTech NZ Inc. 2013 Stock Plan, the LanzaTech NZ Inc. 2015 Stock Plan, and the LanzaTech NZ, Inc. 2019 Stock Plan, (collectively, the “Prior Stock Plans”).
Equity Classified Awards:
RSUs
Under the LTIP, the Company has granted two types of RSUs: time-based RSUs, and market-based RSUs. Time-based RSUs granted to employees and other service providers (other than directors) are generally subject to a three-year annual pro-rata vesting schedule whereby the awards generally vest in three equal tranches on the first, second, and third anniversaries of the vesting commencement date, subject to grantee’s continued service through each vesting date. However, vesting will accelerate in certain circumstances (e.g., retirement, death, disability, or a qualified termination in connection with a change in control). Time-based RSUs granted to directors are subject to a one-year vesting schedule and the full award vests on the first anniversary of the vesting commencement date, subject to the director’s continued service through the vesting date. However, vesting will accelerate in certain circumstances (e.g., removal in connection with a change in control).
The market-based RSUs have both a time-based and a market-based vesting component. Both components must be met for the award to vest. The market-based RSUs are subject to a three-year annual pro-rata vesting schedule whereby the awards generally vest in three equal tranches on the first, second, and third anniversaries of
the vesting commencement date, subject to grantee’s continued service through each vesting date. The market-based vesting component is satisfied if on any date during the period beginning on the 151st date following the vesting commencement date and ending on the fifth anniversary of the vesting commencement date, the average closing price of a share of the Company’s common stock, equals or exceeds $11.50, determined using the closing share price from the 20 trading days preceding such determination date.
A summary of the unvested time-based and market-based equity-classified RSUs are presented in the following table:
| Time-based RSUs | Market-based RSUs | ||||||||||||||||||||||
| Shares (in thousands) | Weighted Average Grant Date Fair Value | Shares (in thousands) | Weighted Average Grant Date Fair Value | ||||||||||||||||||||
Non-vested Outstanding at January 1, 2024 | 3,155 | $ | 3.51 | 3,930 | $ | 1.69 | |||||||||||||||||
| Granted | 2,401 | 3.00 | — | — | |||||||||||||||||||
| Vested | (1,151) | 3.49 | (253) | 1.61 | |||||||||||||||||||
| Cancelled/forfeited | (396) | 3.32 | (214) | 1.61 | |||||||||||||||||||
| Non-vested Outstanding at December 31, 2024 | 4,009 | $ | 3.22 | 3,463 | $ | 1.71 | |||||||||||||||||
The Company recorded compensation expense related to the time-based RSUs of $5,355 for the year ended December 31, 2024. Unrecognized compensation cost as of December 31, 2024 was $8,444 and will be recognized over a weighted average of 1.75 years.
The Company recorded compensation expense related to the market-based RSUs of $1,958 for the year ended December 31, 2024. Unrecognized compensation costs as of December 31, 2024 was $896 and will be recognized over a weighted average of 1.03 years.
Stock Options
In accordance with the LTIP and Prior Stock Plans, grantees have also been granted stock options to purchase common shares. The exercise price of each stock option was no less than the fair market value price of the Company’s common shares determined as of the date of grant. The stock options generally vest over the course of to five years, subject to the service provider’s continued service through each vesting date. Upon termination of service, unvested stock options are forfeited in accordance with their terms unless the award agreement provides for accelerated vesting (e.g., due to retirement). The below tables reflect the stock options granted prior to the Business Combination multiplied by the exchange ratio and the weighted average exercise price divided by the exchange ratio.
Stock option awards outstanding as of December 31, 2024 and changes during the period ended December 31, 2024 were as follows:
| Shares subject to option (thousands) | Weighted average exercise price | Weighted average remaining contractual term (years) | Aggregate intrinsic value (thousands) | ||||||||||||||||||||
Outstanding at January 1, 2024 | 16,412 | $ | 1.96 | ||||||||||||||||||||
| Vested and expecting to vest at January 1, 2024 | 16,412 | 1.96 | |||||||||||||||||||||
Exercisable at January 1, 2024 | 10,869 | 1.49 | |||||||||||||||||||||
| Granted | 3,254 | 3.10 | |||||||||||||||||||||
| Exercised | (206) | 1.44 | |||||||||||||||||||||
| Cancelled/forfeited | (560) | 3.31 | |||||||||||||||||||||
| Expired | (241) | 3.19 | |||||||||||||||||||||
Outstanding at December 31, 2024 | 18,659 | $ | 2.11 | 5.60 | $ | 1,476 | |||||||||||||||||
| Vested and expecting to vest at December 31, 2024 | 18,659 | 2.11 | 5.60 | 1,476 | |||||||||||||||||||
Exercisable at December 31, 2024 | 12,819 | $ | 1.67 | 4.31 | $ | 1,294 | |||||||||||||||||
The Company recorded compensation expense related to the options of $6,132 and $5,623 for the years ended December 31, 2024 and 2023, respectively. Unrecognized compensation costs as of December 31, 2024 was $8,369 and will be recognized over a weighted average of 1.78 years.
Restricted Stock Awards (“RSAs”)
Under the Prior Stock Plans, the Company granted RSAs which become eligible to vest upon the satisfaction of a time-based service condition. However, in order to vest, a liquidity event, defined as acquisition, asset transfer, or initial listing, must occur within 10 years from the grant date. Upon a liquidity event, if the participant’s service has not terminated, the entire RSA award vests in full, whether or not previously eligible for vesting. If the participant’s service has terminated and the participant has satisfied the time-based service condition, the RSAs that are outstanding and eligible for vesting immediately vest in full upon liquidity event. The time-based service requirements of the RSAs have a maximum term of three years from the date of grant.
The Business Combination constituted a “liquidity event” which caused the vesting of all such outstanding, unvested RSAs. The vesting of the RSAs resulted in compensation expense of $2,741 for the year ended December 31, 2023. In connection with the vesting of these RSAs, certain holders of the RSAs surrendered 771,141 shares in a withhold to cover transaction to fund the payment of applicable tax withholding on their behalf by the Company. This resulted in a total cash payment of $7,650 by the Company to the Internal Revenue Service for the applicable tax withholding associated with this vesting event. There were no RSA award outstanding as of December 31, 2024.
Liability-Classified Awards
Phantom RSUs
Under a phantom equity sub-plan of the LTIP, certain non-US employees of the Company were provided with Phantom RSUs that can only be settled in cash and are therefore recorded as a liability. The Phantom RSUs have a graded vesting schedule and vest in three equal tranches on the first, second, and third anniversaries of the vesting commencement date, subject to the employee meeting the requisite service requirements. Grantees are entitled to receive a cash payment equal to the fair market value of a share multiplied by the number of vested Phantom RSUs as of the applicable vesting date.
Phantom SARs
Under a phantom equity sub-plan of the LTIP, certain non-US employees of the Company were provided with Phantom SARs that can only be settled in cash and are therefore recorded as a liability. The Phantom SARs
have a graded vesting schedule and vest in three equal tranches on the first, second, and third anniversaries of the vesting commencement date, subject to the employee meeting the requisite service requirements. Phantom SARs expire 10 years after the grant date and entitle the grantee to receive a cash payment upon exercise of the award equal to the excess of the fair market value of a share on the date of exercise over the exercise price multiplied by the number of SARs exercised.
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.