22. SHARE-BASED COMPENSATION AND PROFITS INTERESTS

Restricted Stock and RSUs

On July 6, 2021, the Company adopted the 2021 Incentive Award Plan, which became effective on July 20, 2021, under which 6,600,000 shares of the Company’s Class A common stock were reserved for issuance. As of December 31, 2021, 4,450,628 remained available for future grants. In connection with the IPO, the Company granted 2,161,072 shares of Restricted Stock and 16,500 RSUs associated with Class A common stock. The Restricted Stock and RSUs are subject to graded vesting with approximately one-third of such grants vesting on the third, fourth and fifth anniversaries of the grant date. At vesting of the RSUs, the Company issues shares of Class A common stock.

The fair value of the Restricted Stock and RSUs is based upon our stock price at grant date and is expensed over the vesting period. We classify both Restricted Stock and RSUs as equity instruments. Share-based compensation expense is included in employee compensation and benefits in the consolidated and combined statement of operations, with the corresponding increase included in additional paid-in capital or non-controlling interests in consolidated and combined balance sheet. If the recipient leaves prior to vesting of the Restricted Stock or RSUs, the awards are forfeited. During the year ended December 31, 2021, the Company reversed $17,000 of share-based compensation related to Restricted Stock and RSU forfeitures.

Restricted Stock is Class A common stock with certain restrictions that relate to trading and carry the possibility of forfeiture. Holders of Restricted Stock have full voting rights and receive dividend equivalents during the vesting period. RSUs represent rights to one share of common stock for each unit. Holders of RSUs receive dividends during the vesting period but do not have voting rights.

During the year ended December 31, 2021, 16,500 RSUs were issued at a weighted-average fair value per share of $15.79. The following summarizes Restricted Stock activity for the year ended December 31, 2021:

The total value at grant date of Restricted Stock and RSUs granted during the year ended December 31, 2021 was $38.7 million and $0.3 million, respectively. As of December 31, 2021, 2,417,662 shares of Restricted Stock and 16,500 RSUs were expected to vest with an aggregate intrinsic value of $60.4 million and $0.4 million, respectively.

At December 31, 2021, the aggregate unrecognized compensation cost for all unvested Restricted Stock and RSU awards was $29.8 million, which is expected to be recognized over a weighted-average period of 2.3 years.

Profits Interests

The Operating Company issued profits interests in the Operating Company and certain Fund Managers in 2019, 2020, and 2021 to certain members of management to participate in the growth of the Operating Company and the respective Fund Managers. A holding company was formed for each of the Fund Managers to hold these profits interests. The holding company’s ownership equates from 5% to 40% of the related Fund Managers above a certain income and valuation threshold. The Operating Company issued two types of profits interests: (i) award shares and (ii) anti-dilutive shares. The fair value of these awards was determined using a Monte Carlo Valuation model. Each of the awards has an earnings threshold for distributions and equity appreciation. The grant date fair value of the profits interests awards are expensed over the vesting period. The award shares are subject to graded vesting with approximately one-third such grants vesting on the third, fourth and fifth anniversaries of the grant date. The Operating Company also issued anti-dilutive awards to active partners. Since the anti-dilutive awards were fully vested, the Company recorded 100% of the fair value as share-based compensation in the year the anti-dilutive shares were granted, which represents $13.6 million, for the year ended December 31, 2021.

If the recipient leaves after the awards vest, the Company has the option to repurchase the shares at fair value. If the recipient leaves prior to vesting, the awards are forfeited.

At December 31, 2021, the aggregate unrecognized compensation cost for all unvested profits interests awards was $10.3 million, which is expected to be recognized over a weighted-average period of 2.1 years.