Open Lending CorpLPRO
Open Lending Corp Stock Compensation Disclosure
Share-Based Compensation
2020 Stock Option and Incentive Plan (the “2020 Plan”)
The 2020 Plan, approved by Nebula’s stockholders on June 9, 2020, provides for the grant of stock options, stock appreciation rights, restricted stock units and other stock or cash-based awards. As of December 31, 2024, 24,421,694 shares were available for issuance under the 2020 Plan.
Share-based compensation expense recorded for each type of award and the related income tax benefits were as follows:
| Year Ended December 31, | ||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Time-based restricted stock units | $ | 7,771 | $ | 8,010 | $ | 5,458 | ||||||||||||||
Performance-based restricted stock units | 461 | 965 | (727) | |||||||||||||||||
| Stock options | 445 | 517 | 718 | |||||||||||||||||
| Total share-based compensation expense | $ | 8,677 | $ | 9,492 | $ | 5,449 | ||||||||||||||
| Income tax benefit related to share-based compensation | $ | 743 | $ | 253 | $ | 54 | ||||||||||||||
Time-Based Restricted Stock Units
RSUs represent the right to receive shares of common stock at the end of the vesting period in an amount equal to the number of RSUs that vest. RSUs are subject to restrictions on transfer and are generally subject to a risk of forfeiture if the award recipient ceases providing services to the Company prior to the lapse of the restriction. The fair value used to calculate share-based compensation expense of such RSUs is determined using the closing price on the date of grant applied to the total number of shares that were anticipated to fully vest based on schedules as set forth in the respective award agreements, generally over four years.
The following table summarizes the RSU activity for the year end December 31, 2024:
| Time-Based Restricted Stock Units | ||||||||||||||
| Number of Awards | Weighted Average Fair Value at Grant Date | |||||||||||||
| Outstanding as of December 31, 2023 | 2,820,534 | $ | 8.77 | |||||||||||
| Granted | 1,796,721 | 5.87 | ||||||||||||
| Vested | (729,175) | 10.10 | ||||||||||||
| Forfeited | (1,089,141) | 7.09 | ||||||||||||
| Outstanding as of December 31, 2024 | 2,798,939 | $ | 7.22 | |||||||||||
The total fair value of the RSUs that vested during the years ended December 31, 2024, 2023 and 2022 was $4.7 million, $4.2 million, and $0.9 million respectively.
Performance-Based Restricted Stock Units
During the year ended December 31, 2022, PSUs were granted with a three-year performance period. The terms and conditions of the PSUs allow for vesting of the awards ranging between forfeiture and 100% of target. PSUs represent the right to receive shares of common stock at the end of the vesting period in an amount equal to the number of PSUs that vest. PSUs are subject to restrictions on transfer and are generally subject to a risk of forfeiture if the award recipient ceases providing services to the Company prior to the lapse of the restriction.
During the years ended December 31, 2024 and 2023, PSUs were granted with a three-year performance period. The terms and conditions of the PSUs allow for vesting of the awards ranging between forfeiture and 200% of target. The vesting level is calculated based on the total stockholder return achieved during the performance period compared to the total stockholder return of a predetermined peer group. The fair value of the PSUs was determined using a Monte Carlo simulation and will be recognized over the requisite service period. The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying the performance condition stipulated in the award to calculate the fair value of the award. Expected volatility in the model was estimated using a historical period consistent with the performance period of approximately three years. The risk-free interest rate was based on the United States Treasury rate for a term commensurate with the expected life of the grant.
The Company used the following assumptions to estimate the fair value of PSUs granted during the periods indicated:
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
Risk-free interest rate | 5 | % | 5 | % | |||||||
Volatility | 62 | % | 63 | % | |||||||
The following table summarizes the PSU activity for the year ended December 31, 2024:
| Performance-Based Restricted Stock Units | ||||||||||||||
| Number of Awards | Weighted Average Fair Value at Grant Date | |||||||||||||
| Outstanding as of December 31, 2023 | 441,390 | $ | 17.90 | |||||||||||
| Granted | 599,081 | 5.48 | ||||||||||||
| Vested | (24,427) | 33.44 | ||||||||||||
| Forfeited | (318,806) | 15.86 | ||||||||||||
| Outstanding as of December 31, 2024 | 697,238 | $ | 7.62 | |||||||||||
The total fair value of the PSUs that vested during the year ended December 31, 2024 was $0.2 million. No PSUs vested during the years ended December 31, 2023 and 2022.
Stock Options
The Company’s outstanding stock options vest, subject to the continued employment of the grantees, in equal annual installments over four years following the grant date. The contractual term for the exercisability of the stock options is ten years from the grant date. The following table summarizes the stock option activity for the year ended December 31, 2024:
| Stock Options | ||||||||||||||||||||
| Number of Awards | Weighted Average Exercise Price | Weighted Average Contractual Term (Years) | ||||||||||||||||||
| Outstanding as of December 31, 2023 | 140,049 | $ | 33.56 | 6.81 | ||||||||||||||||
| Expired | (13,810) | 33.56 | ||||||||||||||||||
| Forfeited | (3,274) | 33.56 | ||||||||||||||||||
| Outstanding as of December 31, 2024 | 122,965 | $ | 33.56 | 6.00 | ||||||||||||||||
| Vested and expected to vest at December 31, 2024 | 122,965 | $ | 33.56 | 6.00 | ||||||||||||||||
| Exercisable at December 31, 2024 | 122,965 | $ | 33.56 | 6.00 | ||||||||||||||||
The Company’s stock options had no intrinsic value as of December 31, 2024, 2023 and 2022.
Unrecognized Share-Based Compensation Expense
The following table reflects future compensation expense to be recorded for share-based compensation awards that were outstanding as of December 31, 2024:
| Unrecognized Expense | Weighted Average Amortization Period (Years) | |||||||||||||
| (in thousands) | ||||||||||||||
| Time-based restricted stock units | $ | 14,786 | 2.54 | |||||||||||
| Performance-based restricted stock units | 1,736 | 1.81 | ||||||||||||
| Total unrecognized stock-based compensation expense | $ | 16,522 | 2.46 | |||||||||||
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.