Quarterly report pursuant to Section 13 or 15(d)

Incentive Plans

v3.21.2
Incentive Plans
6 Months Ended
Jun. 30, 2021
Share-based Payment Arrangement [Abstract]  
Incentive Plans Incentive Plans
2021 Omnibus Incentive Plan
The Clear Secure, Inc 2021 Omnibus Incentive Plan (“2021 Omnibus Incentive Plan”) became effective on June 29, 2021 to provide grants of equity-based awards for the employees, consultants, and directors of the Company and its affiliates.
The 2021 Omnibus Incentive Plan authorized the issuance of up to 20,000,000 shares of Class A common stock as of the date of the Reorganization. The 2021 Omnibus Incentive Plan authorized the issuance of shares pursuant to the grant, settlement or exercise of restricted stock units (“RSUs”), restricted stock (“RSAs”), stock options and other share-based awards. Beginning with the first business day of each calendar year beginning in 2022 through 2031, the number of shares available will increase in an amount up to 5% of the total number of common shares outstanding (assuming exchange and/or conversion of all classes of common shares into Class A common stock) as of the last day of the immediately preceding year or a lesser amount approved by our board of directors or its compensation committee, so long as the total share reserve available for future awards at the time is not more than 12% of common shares outstanding (assuming exchange and/or conversion of all classes of common shares into Class A common stock).
Alclear Holdings, LLC Equity Incentive Plan
Prior to the Reorganization, Alclear granted profit unit awards and RSUs to various employees of the Company. In connection with the Company’s Reorganization described in Note 1, these awards were substituted as follows:

The Company substituted Alclear’s RSUs with RSUs under the 2021 Omnibus Incentive Plan.
The Company substituted Alclear’s performance vesting profit units with performance vesting RSUs under the 2021 Omnibus Incentive Plan.
The Company substituted Alclear’s other profit units with only a service vesting condition to RSAs under the 2021 Omnibus Incentive Plan.
In all cases of the respective substitutions, the new awards retained the same terms and conditions (including applicable vesting requirements). Each award was converted to reflect the $31.00 share price contemplated in the Company’s IPO while retaining the same fair value. The RSUs originally granted by Alclear were subject to both service and liquidity event vesting conditions. The Company concluded that the Reorganization represented a qualifying liquidity event that would cause the RSUs’ liquidity event vesting conditions to be met.
The following table summarizes information about the unvested profit units and RSUs in Alclear that were reclassified to RSAs or RSUs in the Company:
Alclear RSU’s Weighted-
Average
Grant-Date
Fair Value
Profit Units Weighted-
Average
Grant-Date
Fair Value
Unvested balance, January 1, 2021
453,350  $ 14.51  9,085,704  $ 1.12 
Granted 860,357  15.33  —  — 
Vested —  —  (345,703) (0.40)
Forfeited (25,479) (15.36) (881,227) (0.90)
Effect of reorganization (1,288,228) (15.04) (7,858,774) (1.17)
Unvested balance, June 30, 2021
       

Restricted Stock Awards

In accordance with the Reorganization Agreement, the Company substituted Alclear Holdings’ profit units with service vesting conditions with RSAs, which are subject to the same vesting terms as applied to Alclear’s profit units; each also maintained the same fair value immediately before and after the exchange of the award. As such, there was no additional compensation expense that was recorded as a result of the substitution of the awards.

The RSAs are subject to service-based vesting conditions and will vest on a specified date, provided the applicable service, generally three years, has been satisfied.

The Company determines the fair value of each RSA based on the grant date and records the expense over the vesting period or requisite service period.
The following is a summary of activity related to the RSAs associated with compensation arrangements during six months ended June 30, 2021:

RSA - Class A Common Stock Weighted-
Average
Grant-Date
Fair Value
RSA - Alclear Units Weighted-
Average
Grant-Date
Fair Value
Balance upon effect of reorganization* 1,878,986  $ 1.03  2,144,361  $ 1.29 
Granted —  —  —  — 
Vested —  —  —  — 
Forfeited —  —  —  — 
Balance, June 30, 2021 1,878,986  $ 1.03  2,144,361  $ 1.29 

*The amounts reflected above reflect the Reorganization and maintain the fair value for the substitution of profit units to RSAs.

Below is the compensation expense (credit) related to the RSAs:
Three Months Ended Six Months Ended
June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
General and administrative $ 299  $ 249  $ 600  $ 526 
Research and development 61  74  108  138 
Sales and marketing (7) (28) 13 
Total $ 353  $ 328  $ 680  $ 677 

As of June 30, 2021, estimated unrecognized expense for RSAs that are probable of vesting was $1,263 with such expense to be recognized over a weighted-average period of approximately 0.6 years subsequent to June 30, 2021.
Restricted Stock Units

The RSUs granted under the 2021 Omnibus Incentive Plan in substitution of Alclear awards were subject to the same vesting terms as applied to the Alclear awards and maintained the same fair value immediately before and after the exchange of the award. The RSUs are subject to both service-based and, in some cases, business performance-based vesting conditions. RSUs will vest on a specified date, provided the applicable service (generally three years) and, if applicable, business performance condition, have been satisfied. The RSUs with performance conditions issued are also subject to long-term revenue and cash-basis earnings performance hurdles (the “Financial Targets”). The Company determines the fair value of each RSU based on the grant date and records the expense over the vesting period or requisite service period.
The following is a summary of activity related to the RSUs associated with compensation arrangements during six months ended June 30, 2021:

RSU’s Weighted-
Average
Grant-Date
Fair Value
RSU Units - Class B Common Stock Weighted-
Average
Grant-Date
Fair Value
Balance upon effect of reorganization* 3,009,982  $ 7.23  2,113,672  $ 2.29 
Granted —  —  —  — 
Vested —  —  —  — 
Forfeited —  —  —  — 
Unvested balance, June 30, 2021
3,009,982  $ 7.23  2,113,672  $ 2.29 

*The amounts reflected above reflect the Reorganization and maintain the fair value for the substitution of Alclear RSUs to RSUs.

Below is the compensation expense recognized related to the RSUs:
Three and Six Months Ended
June 30, 2021
General and administrative $ 2,969 
Research and development 707 
Sales and marketing 85 
Total $ 3,761 
As of June 30, 2021, estimated unrecognized expense for RSUs that are probable of vesting was $15,609 with such expense to be recognized over a weighted-average period of approximately 1.25 years.
Founder PSUs
During June 2021, the Company established a long-term incentive compensation plan for the co-founders, which consists of performance restricted stock-unit awards (the “Founder PSUs”), that will be settled in Class A shares pursuant to the 2021 Omnibus Incentive Plan if the vesting conditions are satisfied. The awards have both service and market based vesting conditions.
The grant date fair value for the Founder PSUs was determined by a Monte Carlo simulation and discounted by the risk-free rate on the grant date and an expected volatility of 45%. The Founder PSUs are estimated to vest over a five year period, based on the achievement of specified price hurdles of the Company’s Class A common stock. The specified price hurdles of the Company’s Class A common stock will be measured on the volume-weighted average price per share for the trailing days during any 180 day period that ends within the applicable measurement period. During the six months ended June 30, 2021, the Company granted 4,208,617 Founder PSUs at a weighted average grant date fair value of $16.54 and recorded $139 in expense related to these awards within general and administrative in the condensed consolidated statements of operations.
As of June 30, 2021, estimated unrecognized expense for Founder PSUs was $69,480 with such expense to be recognized over a weighted-average period of approximately 1.46 years.
Below is a summary of total compensation expense recorded in relation to the Company’s incentive plans, excluding additional expense related to repurchases:
Three Months Ended Six Months Ended
June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
RSAs $ 353  $ 328  $ 680  $ 677 
RSUs 3,761  —  3,761  — 
Founder PSUs 139  —  139  — 
Total $ 4,253  $ 328  $ 4,580  $ 677 

Three Months Ended Six Months Ended
June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
General and administrative $ 3,407  $ 249  $ 3,708  $ 526 
Research and development 768  74  815  138 
Sales and marketing 78  57  13 
Total $ 4,253  $ 328  $ 4,580  $ 677