The Vivint Smart Home, Inc. 2020 Omnibus Incentive Plan (the “Plan”) provides for the issuance of stock-based incentive awards to attract, motivate and retain qualified employees and non-employee directors, and to align their financial interests with those of company stockholders. In addition to the rollover awards converted as part of the Business Combination, the Company utilizes a combination of time-based and performance-based restricted stock units.

The Company issued tracking units to certain executives to align their financial interests with those of company stockholders. The tracking units are recognized as expense over the employee's requisite service period. In 2022, the Company approved the acceleration of the unvested Tracking Units to immediately vest. As a result, 1,121,681 tracking units vested. As of December 31, 2022, no tracking units were unvested, and there was no unrecognized compensation expense.


	Rollover SARs	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in millions)








Outstanding, December 31, 2020	2,474,011	17.59		6.60	7.8
Forfeited	(409,566)	18.50
Exercised	(59,733)	9.32
Outstanding, December 31, 2021	2,004,712	17.65		5.62	—
Forfeited	(608,481)	18.47
Exercised	(56,808)	7.36
Outstanding, December 31, 2022	1,339,423	17.71		4.67	—

Exercisable at December 31, 2022	1,339,423	$	17.71	4.67	—

The Company established four incentive compensation pools with a number of hypothetical SARs with awards to certain employees entitling them to a portion of the proceeds of such hypothetical SARs on certain distribution dates (the “Rollover LTIP Plans”). In February 2020, the board of directors approved the 2020 modification with respect to such shares, such that they would be distributed in January 2021, to the extent not then distributed. Each hypothetical Rollover SAR has a strike price of $7.22 per share. In the first quarter of 2021, the Company made the final distribution of shares of Class A common stock pursuant to the Rollover LTIP Plans resulting in the issuance of 1,609,627 shares of Class A common stock to holders of Rollover LTIP Awards. As a result of this distribution, the Company recorded compensation costs totaling $37.2 million, of which $32.7 million and $4.5 million was included in selling expenses and operating expenses, respectively.

During the year ended December 31, 2022, holders of Rollover Equity Awards became entitled to receive share of our Class A Common Stock as a result of the attainment of the First Earnout, Second Earnout and Third Earnout (see Note 6 Business Combination for further discussion). Such shares were issuable in respect to holders of Rollover Equity Awards, subject to the same vesting terms and conditions as the underlying Rollover Equity Awards. Associated with the Rollover LTIP distribution in 2021, 847,141 shares of related earnouts were issued, resulting in $19.6 million expense, of which $17.2 million and $2.4 million was included in selling expenses and operating expenses, respectively. At December 31, 2022, there was an immaterial amount of unrecognized compensation expense related to earnouts granted, which is expected to be recognized over a weighted-average period of 0.5 years.

During the year ended December 31, 2022, the Company approved grants under the Plan of time-vesting restricted stock units (the “RSUs”) awards (each representing the right to receive one share of Class A common stock of the Company upon the settlement of each restricted stock unit) to various levels of key employees. The RSUs granted to employees are generally subject to a four-year vesting schedule, and 25% of the units will vest on each of the first four anniversaries of the applicable vesting reference date. Additionally, RSUs were granted to non-employee board members which are subject to a one year vesting schedule. All vesting shall be subject to the recipient’s continued employment with Vivint Smart Home, Inc. or its subsidiaries through the applicable vesting dates. Compensation expense associated with the unvested restricted stock units is recognized on a straight-line basis over the vesting period. At December 31, 2022, there was approximately $77.4 million of unrecognized compensation expense related to restricted stock units, which is expected to be recognized over a weighted-average period of 2.3 years.

The PSUs predominately vest based upon the Company’s achievement of specified performance goals through the performance period and the passage of time. The PSUs granted to employees are generally subject to a four-year vesting schedule, and 25% of the units will vest on each of the first four anniversaries of the applicable vesting reference date, subject to continued employment on the applicable vesting date.

During the year ended December 31, 2022, the Company deemed the achievement of certain PSU vesting conditions as being probable, and thus began recognizing stock-based compensation over the service period. At December 31, 2022, there was approximately $51.2 million of unrecognized compensation expense related to PSUs, which is expected to be recognized over a weighted-average period of 2.3 years.

Class A Common Stock—The Company is authorized to issue 3,000,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of the Company’s Class A common stock are entitled to one vote for each share on each matter on which they are entitled to vote. At December 31, 2022, there were 213,606,672 shares of Class A common stock issued and outstanding.

On January 17, 2020, Mosaic Acquisition Corp. (“MOSC”), the predecessor to the Company, held a special meeting of stockholders (the “MOSC special meeting”) to approve certain matters relating to the business combination between MOSC and Legacy Vivint Smart Home, Inc. One of these matters was a proposal (the “Share Authorization Proposal”) to increase the total number of authorized shares of MOSC’s common stock, par value $0.0001 per share (the “common stock”), from 220,000,000 shares to 3,000,000,000 shares, which included an increase in the number of shares of the series of common stock designated as “Class A common stock” (the “Class A common stock”) from 200,000,000 shares to 3,000,000,000 shares and the elimination of the series of common stock designated as “Class F common stock” following the conversion thereof into Class A common stock at the completion of the business combination (the “Class F common stock”). The Share Authorization Proposal was approved by a majority of the shares of common stock voting together as a single class (95.6% of shares voted), including a majority of the shares of Class A common stock (94.3% of shares voted) and a majority of the shares of Class F common stock (100% of shares voted), that were outstanding as of the record date for the MOSC special meeting. After the MOSC special meeting, MOSC and Legacy Vivint Smart Home, Inc. closed the business combination, and MOSC changed its name to Vivint Smart Home, Inc.

A recent ruling by the Delaware Court of Chancery (the “Court of Chancery”) introduces uncertainty as to whether the approval obtained by the Company (and other companies that similarly obtained stockholder approval of proposals akin to the Share Authorization Approval) to approve the Share Authorization Proposal was sufficient under Section 242(b)(2) of the Delaware General Corporation Law (the “DGCL”), which may have required the Share Authorization Proposal to be approved by separate votes of the majority of MOSC’s then-outstanding shares of Class A common stock and the majority of MOSC’s then-outstanding shares of Class F common stock.

On February 9, 2023, the Company filed a petition in the Court of Chancery seeking validation of the Company’s Amended and Restated Certificate of Incorporation and the shares issued pursuant thereto to resolve any uncertainty with respect to those matters. The Court of Chancery will hold a final hearing to consider the merits of the petition filed by the Company on February 27, 2023. Based on advice from legal counsel, considering the Company’s facts and circumstances as well as recent rulings by the Court of Chancery with respect to similarly situated companies, the Company has concluded that the Class A common stock is appropriately classified as equity.

Warrants—As of December 31, 2022, 5,933,334 private placement warrants were outstanding. Each whole private placement warrant entitled the holder to purchase one Class A common stock at an exercise price of $11.50 per share, subject to adjustment. Warrants can only be exercised for a whole number of shares. The private placement warrants will be non-redeemable so long as they are held by the initial purchasers or such purchasers’ permitted transferees. If the private placement warrants are held by someone other than the initial stockholders or their permitted transferees, the private placement warrants will be redeemable by the Company and exercisable by such holders on the same basis as the public warrants. The private placement warrants will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation.