Pursuant to the terms of the A&R MLTIP executed on October 28, 2020, the Company granted each employee who held Phantom Units in FoA Equity and remained employed as of the Replacement RSU grant date, April 1, 2021, in consideration for the cancellation of a portion of their Phantom Units, Replacement RSUs that will vest into shares of Class A Common Stock.

Following the terms of the A&R MLTIP, 25% of the Replacement RSUs vested on the Replacement RSU grant date, and the remaining 75% vest in equal installments on each of the first three anniversaries of the Closing of the Business Combination, subject to each holder’s continued employment.

In addition to the Replacement RSUs, participants in the A&R MLTIP are entitled to receive additional Earnout Right RSUs depending on whether the Company achieves certain market-based conditions. The market-based vesting conditions have been factored into the grant date fair value measurement of the Earnout Right RSUs using a Monte Carlo simulation. The assumptions used in the Monte Carlo simulation model included a volatility rate of 60%, risk free rate of 1.14% and a weighted average expected term of 1.06 years for the first tranche of Earnout Right RSUs and 1.52 years for the second tranche of Earnout Right RSUs.

Earnout Right RSUs have the same service-based vesting conditions listed above for the Replacement RSUs along with market-based vesting conditions. The first tranche of Earnout Right RSUs vest upon satisfaction of the service-based vesting conditions and if, at any time during the six years following the Closing, the VWAP of FoA’s Class A Common Stock is greater than or equal to $12.50 for any twenty Trading Days within the First Earnout Achievement Date. The second tranche of Earnout Right RSUs vest upon satisfaction of the service-based vesting conditions and if, at any time during the six years following the Closing, the VWAP of FoA’s Class A Common Stock is greater than or equal to $15.00 for any twenty Trading Days within the Second Earnout Achievement Date.

Pursuant to the terms of the 2021 Omnibus Incentive Plan executed on November 18, 2021, the Company granted the CFO 112,149 RSUs and five Board of Directors members 18,691 RSUs each, as

the terms of 2021 Omnibus Incentive Plan, the CFO RSUs vest in three tranches. vested and settled on the grant date, remaining will vest in equal installments on next two anniversaries of the grant date. Further, the Board of Directors RSUs vest on the earlier of the first anniversary of

A summary of the each classification of RSU activity for the periods indicated is presented below in thousands, except for share information:

 

Twenty-five percent of Replacement RSUs are scheduled to vest from January 1, 2022 to December 31, 2022 on the first anniversary of the Business Combination (April 1, 2022). Equity based compensation expense for the Replacement RSUs totaled $64.9 million for the Successor period from April 1, 2021 to December 31, 2021 and $0 for the Predecessor period from January 1, 2021 to March 31, 2021.

 

Equity based compensation expense for the Earnout Right RSUs totaled $6.6 million for the Successor period from April 1, 2021 to December 31, 2021, and $0 for the Predecessor period from January 1, 2021 to March 31, 2021. Unrecognized equity based compensation expense for the Earnout Right RSUs totaled $7.0 million as of December 31, 2021. There were no Earnout Right RSUs outstanding as of December 31, 2020.

 

of the CFO RSUs and 100% of the Board of Directors RSUs are scheduled to vest from January 1, 2022 to December 31, 2022. Equity based compensation expense for the RSUs totaled $0.3 million for the Successor period from April 1, 2021 to December 31, 2021 and $0 for the Predecessor period from January 1, 2021 to March 31, 2021. Unrecognized equity based compensation expense for the RSUs totaled $0.8 million as of December 31, 2021. There were no RSUs outstanding as of December 31, 2020.

On January 1, 2015, the Company established a long-term incentive plan (the “Plan”) to compensate key employees. Any distributions are based on distributions received by equity holders of the Company in excess of the contributed equity capital, plus a designated return on contributed equity capital (the “Hurdle”).

The phantom units are accounted for as a profit-sharing arrangement, as they do not represent a substantive form of equity and were not indexed to the price of UFG common units. Equity based compensation expense for the long-term incentive plan totaled $0 million for the period ended December 31, 2020 and $2.9 million for the period ended December 31, 2019.

In connection with the Closing of the Business Combination, which occurred on April 1, 2021, the holders of Phantom Units (1,077 units outstanding) received lump sum cash payments totaling $24.0 million as it relates to the achievement of the Hurdle being met under the original terms of the Plan.

The cash payment of $24.0 million relates to prior services provided solely for the benefit of the Company and not for ongoing services to be provided in the future that would benefit the post-combination entity. Given that the payment was triggered by the distributions made in connection with the successful closing of the Business Combination, the payment of $24.0 million is considered to have been incurred “on the line.” The balance of the Company’s obligation under the Plan was replaced by the issuance of Replacement RSUs and Earnout Right RSUs described above as governed by the A&R MLTIP.