Share-Based and Unit-Based Compensation |
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| Share-Based and Unit-Based Compensation | Share-Based and Unit-Based Compensation 2021 Incentive Plan Bakkt's 2021 Omnibus Incentive Plan, as amended (the “2021 Incentive Plan”), became effective on the Closing Date with the approval of VIH’s shareholders and the Board. The 2021 Incentive Plan allows the Company to make equity and equity-based incentive awards to employees, non-employee directors and consultants. There were initially 1,032,677 shares of Class A Common Stock reserved for issuance under the 2021 Incentive Plan which can be granted as stock options, stock appreciation rights, restricted shares, restricted stock units ("RSUs"), performance stock units ("PSUs"), dividend equivalent rights and other share-based awards. On June 6, 2023, the Incentive Plan was amended to increase the shares reserved for issuance under the 2021 Incentive Plan by 1,063,618 shares. On May 31, 2024, the 2021 Incentive Plan was again amended to increase the shares reserved for issuance under the 2021 Incentive Plan by 938,625 shares for a new aggregate total of 3,034,920 shares. On June 17, 2025, the 2021 Incentive Plan was once more amended to increase the shares reserved for issuance under the 2021 Incentive plan by 979,201 shares for a new aggregate of 4,014,121 shares. No award may vest earlier than the first anniversary of the date of grant, subject to limited exceptions. Share-Based Compensation Expense During the three and six months ended June 30, 2025, the Company granted 160,032 and 887,881 RSUs, respectively, to employees and directors. During the three and six months ended June 30, 2025, the Company granted 1,793,873 PSUs. During the three and six months ended June 30, 2024, Bakkt granted 545,553 and 1,028,152 RSUs, respectively, to employees and directors. During the three and six months ended June 30, 2024, Bakkt did not grant any PSUs. Bakkt recorded $3.6 million and $6.4 million of share-based compensation expense related to RSUs during the three and six months ended June 30, 2025, respectively. During the three and six months ended June 30, 2024, the Company recorded $2.4 million and $10.1 million of share-based compensation expense related to RSUs, respectively. The Company recorded $2.7 million and $3.2 million of share-based compensation expense related to PSUs during the three and six months ended June 30, 2025. During the three and six ended June 30, 2024, the company recorded zero and $0.3 million respectively of share-based compensation expense related to PSUs. Share-based compensation expense for both RSUs and PSUs, is included in “Compensation and benefits” in the consolidated statements of operations. Unrecognized compensation expense as of June 30, 2025 and December 31, 2024 was $24.8 million and $12.9 million, respectively, for the RSUs and PSUs. The unrecognized compensation expense as of June 30, 2025 and December 31, 2024 will be recognized over a weighted-average period of 1.23 years and 1.36 years, respectively. RSU and PSU Activity The following tables summarize RSU and PSU activity under the 2021 Incentive Plan for the six months ended June 30, 2025 and June 30, 2024 (in thousands, except per unit data):
During the three and six months ended June 30, 2025, Bakkt recorded $1.9 million and $1.9 million, respectively of share-based compensation expense related to the accelerated vesting of awards for certain employees, primarily related to the Sale of Bakkt Trust and the termination of a former executive. During the three and six months ended June 30, 2024, we recorded $4.9 million and $4.9 million, respectively, of share-based compensation expense related to the accelerated vesting of awards for certain employees, primarily related to the termination of a former executive. Acceleration of share- based compensation expense related to the Company's restructuring efforts is included in “Restructuring expenses” in the consolidated statements of operations. Total fair value of vested RSU and PSU awards was $4.1 million and $6.9 million for the three and six months ended June 30, 2025, respectively. Total fair value of vested RSU and PSU awards was $1.6 million and $6.4 million for the three and six months ended June 30, 2024, respectively. The fair value of the RSUs and PSUs used in determining share-based compensation expense is based on the closing price of Bakkt's common stock on the grant date for standard RSUs and PSUs. For PSUs with market conditions, fair value was determined using a Monte Carlo simulation model, along with a Geometric Brownian Motion formula to model stock price movements. The assumptions noted in the table below were used to estimate the fair value of the PSUs with market conditions.
PSUs provide an opportunity for the recipient to receive a number of shares of the Company's common stock based on various performance metrics. Upon vesting, each performance stock unit equals one share of common stock of the Company. The Company accrues compensation expense for the PSUs based on management's assessment of the probable outcome of the performance conditions. PSUs awarded in 2025 are subject to market-based vesting conditions tied to the company’s stock performance. Specifically, the PSUs vest based on the achievement of a target stock price, determined using the volume-weighted average price ("VWAP") of the company’s Class A Common Stock over a specified period. Vesting occurs only if the company's average stock price meets or exceeds predetermined VWAP thresholds during the measurement period and the recipients provide at least one year of service. The metrics for PSUs granted during 2024 relate to the Company's performance during fiscal year 2024, as measured against objective performance goals approved by the Board. The actual number of units earned range from 0% to 150% or 200% of the target number of units depending on the metric and achievement of the 2024 performance goals. PSUs granted in 2024 vest in two equal annual installments from 2025 to 2026. The metrics for PSUs granted during 2023 relate to Bakkt's performance during fiscal year 2023, as measured against objective performance goals approved by the Board. The actual number of units earned range from 0% to 150% of the target number of units depending upon achievement of the 2023 performance goals. PSUs granted in 2023 vest in three equal annual installments from 2024 to 2026. The metrics for PSUs granted during 2022 relate to the Company's performance during fiscal years 2022, 2023 and 2024, as measured against objective performance goals as determined by the Board. The actual number of units earned range from 0% to 150% of the target number of units depending upon achievement of each year’s performance goals. PSUs granted in 2022 vest in three equal annual installments, subject to a catch-up provision over the three annual performance targets. Opco Plan Preferred incentive units and common incentive units (collectively, “incentive units”) represent an ownership interest in Opco and are entitled to receive distributions from Opco, subject to certain vesting conditions. Opco classifies incentive units as equity awards on its consolidated balance sheets. Participation units, issued directly by Opco to Opco Plan participants, do not represent an ownership interest in Opco but rather provide Opco Plan participants the contractual right to participate in the value of Opco, if any, through either a cash payment or issuance of Class A Common Stock upon the occurrence of certain events following vesting of the participation units. Refer to Note 11 to the consolidated financial statements included in the Company's 2024 Form 10-K where the modifications to the Opco Plan are described in detail. Upon consummation of the VIH Business Combination, the 76,475,000 outstanding preferred incentive units and 23,219,745 outstanding common incentive units were converted into 17,473,362 common incentive units, and the 10,811,502 outstanding participation units were converted into 1,197,250 participation units. Opco preferred incentive units and common incentive units outstanding prior to the VIH Business Combination, as well as participation units, were not impacted by the Reverse Stock Split discussed in Note 2, therefore these amounts are presented without consideration of the Reverse Stock Split Ratio. Contemporaneously with the conversion, approximately one-third of the awards in the Opco Plan vested. The second tranche vested on the one-year anniversary of the Closing Date and the third tranche vested on the two-year anniversary of the Closing Date, although under the terms of the Opco Plan, employees who were terminated without cause after the Closing Date vested in the unvested portion of their awards immediately upon their termination date. There has not been, and will not be, any additional awards made under the Opco Plan following the VIH Business Combination. Incentive Unit Activity The following table summarizes common incentive unit activity under the Opco Plan for the six months ended June 30, 2025 and June 30, 2024 (in thousands, except per unit data):
The Company did not make any cash payments to settle vested participation units during the six months ended June 30, 2025 or June 30, 2024.
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