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Stock-Based Compensation

12 Months Ended

Dec. 31, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Wynn Resorts, Limited

The Company's 2002 Stock Incentive Plan, as amended and restated (the "WRL 2002 Plan"), allowed it to grant stock options and nonvested shares of Wynn Resorts' common stock to eligible directors, officers, employees, and consultants of the Company. Under the WRL 2002 Plan, a maximum of 12,750,000 shares of the Company's common stock was reserved for issuance.

On May 16, 2014, the Company adopted the Wynn Resorts, Limited 2014 Omnibus Incentive Plan (the "Omnibus Plan") after approval from its stockholders. The Omnibus Plan allows for the grant of stock options, restricted stock, restricted stock units, stock appreciation rights, performance awards, and other share-based awards to the same eligible participants as the WRL 2002 Plan. Under the approval of the Omnibus Plan, no new awards may be made under the WRL 2002 Plan. The outstanding awards under the WRL 2002 Plan were transferred to the Omnibus Plan and will remain pursuant to their existing terms and related award agreements. The Company reserved 4,409,390 shares of its common stock for issuance under the Omnibus Plan. These shares were transferred from the remaining available amount under the WRL 2002 Plan.

The Omnibus Plan is administered by the Compensation Committee (the "Committee") of the Wynn Resorts Board of Directors. The Committee has discretion under the Omnibus Plan regarding which type of awards to grant, the vesting and service requirements, exercise price, and other conditions, in all cases subject to certain limits. For stock options, the exercise price of stock options must be at least equal to the fair market value of the stock on the date of grant and the maximum term of such an award is 10 years.

As of December 31, 2019, the Company had an aggregate of 2,640,796 shares of its common stock available for grant as share-based awards under the Omnibus Plan.

Stock Options

The summary of stock option activity under the Omnibus Plan for the year ended December 31, 2019 is presented below:


	Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding as of January 1, 2019	345,790	$	60.99
Granted	—	—
Exercised	(293,690)	50.04
Forfeited or expired	(28,400)	158.09
Outstanding as of December 31, 2019	23,700	$	80.42	6.16	$	1,385,194
Fully vested and expected to vest as of December 31, 2019	23,700	$	80.42	6.16	$	1,385,194
Exercisable as of December 31, 2019	23,700	$	80.42	6.16	$	1,385,194

The following is provided for stock options under the Omnibus Plan (in thousands):


	Years Ended December 31,
	2019		2018		2017
Intrinsic value of stock options exercised	$	24,731	$	22,387	$	29,716
Cash received from the exercise of stock options	$	14,696	$	20,148	$	61,506

As of December 31, 2019, there was no unamortized compensation expense related to stock options.

Nonvested and performance nonvested shares

The summary of nonvested and performance nonvested share activity under the Omnibus Plan for the year ended December 31, 2019 is presented below:


	Shares	Weighted Average Grant Date Fair Value
Nonvested as of January 1, 2019	526,387	$	127.84
Granted	413,697	119.61
Vested	(151,808)	117.88
Forfeited	(43,825)	138.78
Nonvested as of December 31, 2019	744,451	$	123.62

Certain members of the executive management team receive grants of nonvested share awards that are subject to service and performance conditions. Generally, these awards vest if certain revenue and Adjusted Property EBITDA fair share metrics (as approved by the Company's Compensation Committee of the Board of Directors) are attained over either a one or three-year performance period. The Company records expense for these awards if it determines that vesting is probable. At December 31, 2019, all performance nonvested awards were deemed to be probable of vesting; however, none of the performance criteria contingencies have been resolved. The activity for these performance nonvested shares is included in the table above.

The following is provided for the share awards under the Omnibus Plan (in thousands, except weighted average grant date fair value):


	Years Ended December 31,
	2019		2018		2017
Weighted average grant date fair value	$	119.61	$	170.13	$	109.28
Fair value of shares vested	$	19,428	$	13,024	$	45,801

As of December 31, 2019, there was $58.1 million of unamortized compensation expense related to nonvested shares, which is expected to be recognized over a weighted average period of 2.16 years.

Annual Incentive Bonus

Certain members of the Company's executive management team receive a portion of their annual incentive bonus in shares of the Company's stock. The number of shares is determined based on the closing stock price on the date the annual incentive bonus is settled. As the number of shares is variable, the Company records a liability for the fixed monetary amount over the service period. The Company recorded stock-based compensation expense associated with these awards of $6.7 million for the years ended December 31, 2019 and 2018, respectively, and $23.7 million for the year ended December 31, 2017. The Company settled its obligations for the 2019 and 2018 annual incentive bonuses by issuing 44,788 and 58,783 of vested shares, respectively, with a weighted-average grant date fair value of $150.03 and $113.55, respectively, in January of the respective following year. The Company settled the obligation for the 2017 annual incentive bonus by issuing 141,216 of vested shares with a weighted average grant date fair value of $167.82 in December 2017 and January 2018.

Wynn Macau, Limited

The Company's majority-owned subsidiary, WML, has two stock-based compensation plans that provide awards based on shares of WML's common stock. The shares available for issuance under these plans are separate and distinct from the common stock of Wynn Resorts' share plan and are not available for issuance for any awards under the Wynn Resorts share plan.

WML Share Option Plan

WML adopted a stock incentive plan, for the grant of stock options to purchase shares of WML to eligible directors and employees of WML and its subsidiaries, on September 16, 2009 ( the “Original Share Option Plan”) until it was terminated on May 30, 2019 upon the adoption of a new share option plan (the “WML Share Option Plan”) on May 30, 2019. The WML Share Option Plan is administered by WML's Board of Directors, which has the discretion on the vesting and service requirements, exercise price, performance targets to exercise if applicable and other conditions, subject to certain limits.

Upon the adoption of the WML Share Option Plan, no further options may be offered or granted under the Original Share Option Plan but in all other respects the provisions of the Original Share Option Plan shall remain in full force and effect in respect of options which are granted during the life of the Original Share Option Plan and which remain unexpired immediately prior to the termination of the operation of the Original Share Option Plan.

The WML Share Option Plan was adopted for a period of 10 years commencing from May 30, 2019. The maximum number of Shares which may be issued pursuant to the WML Share Option Plan is 519,695,860 Shares. Except for the number of the options that may be granted and the expiration date of the WML Share Option Plan, the terms of the WML Share Option Plan and Original Share Option Plan are the same in all material respects. As of December 31, 2019, no options have been granted or are outstanding under the WML Share Option Plan.

The summary of stock option activity under the Original Share Option Plan for the year ended December 31, 2019 is presented below:


	Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding as of January 1, 2019	10,558,400	$	2.49
Granted	455,000	$	2.54
Exercised	—	$	—
Outstanding as of December 31, 2019	11,013,400	$	2.51	6.87	$	2,521,979
Fully vested and expected to vest as of December 31, 2019	11,013,400	$	2.51	6.87	$	2,521,979
Exercisable as of December 31, 2019	5,212,000	$	2.60	5.37	$	1,398,941

The following is provided for stock options under the Original Share Option Plan (in thousands, except weighted average grant date fair value):


	Years Ended December 31,
	2019		2018		2017
Weighted average grant date fair value	$	0.55	$	0.57	$	0.56
Intrinsic value of stock options exercised	$	—	$	1,715	$	369
Cash received from the exercise of stock options	$	—	$	1,823	$	703

As of December 31, 2019, there was $2.7 million of unamortized compensation expense related to stock options, which is expected to be recognized over a weighted average period of 3.57 years.

Share Award Plan

On June 30, 2014, the Company's majority-owned subsidiary, WML, approved and adopted the WML Employee Ownership Scheme (the "Share Award Plan"). The Share Award Plan allows for the grant of nonvested shares of WML's common stock to eligible employees. The Share Award Plan is administered by WML's Board of Directors and has been mandated under the plan to allot, issue and process the transfer of a maximum of 50,000,000 shares. The Board of Directors has discretion on the vesting and service requirements, exercise price and other conditions, subject to certain limits. As of December 31, 2019, there were 31,029,177 shares available for issuance under the Share Award Plan.

The summary of nonvested share activity under the Share Award Plan for the year ended December 31, 2019 is presented below:


	Shares	Weighted Average Grant Date Fair Value
Nonvested as of January 1, 2019	9,753,267	$	2.07
Granted	3,742,418	$	2.43
Vested	(2,420,915)	$	1.44
Forfeited	(1,408,607)	$	2.26
Nonvested as of December 31, 2019	9,666,163	$	2.36

The weighted average grant date fair value for shares granted during the year and the total fair value of shares vested under the Share Award Plan is presented below (in thousands, except weighted average grant date fair value):


	Years Ended December 31,
	2019		2018		2017
Weighted average grant date fair value	$	2.43	$	3.07	$	2.22
Fair value of shares vested	$	5,139	$	12,442	$	6,884

As of December 31, 2019, there was $13.3 million of unamortized compensation expense, which is expected to be recognized over a weighted average period of 2.38 years.

Compensation Cost

The total compensation cost for stock-based compensation plans was recorded as follows (in thousands):


	Years Ended December 31,
	2019		2018		2017
Casino	$	7,903	$	5,946	$	6,954
Rooms	1,046		437		655
Food and beverage	1,807		1,125		1,466
Entertainment, retail and other	174		111		147
General and administrative	28,772		28,872		34,749
Pre-opening	670		750		—
Property charges and other (1)	—		(2,201)		—
Total stock-based compensation expense	40,372		35,040		43,971
Total stock-based compensation capitalized	350		11		80
Total stock-based compensation costs	$	40,722	$	35,051	$	44,051

(1) In 2018, reflects the reversal of compensation cost previously recognized for awards forfeited in connection with the departure of an employee.

During the years ended December 31, 2019, 2018 and 2017, the Company recognized income tax benefits in the Consolidated Statements of Income of $5.8 million, $5.7 million, and $10.8 million, respectively, related to stock-based compensation expense. Additionally, during the years ended December 31, 2019, 2018, and 2017, the Company realized tax benefits of $8.4 million, $4.6 million, and $25.4 million, respectively, related to stock option exercises and restricted stock vesting that occurred in those years.

Option Valuation Inputs

There were no stock options granted under the Omnibus Plan during the years ended December 31, 2019, 2018, and 2017.

The fair value of stock options granted under WML's Share Option Plan was estimated on the date of grant using the following weighted average assumptions:


	Years Ended December 31,
	2019		2018		2017
Expected dividend yield	5.7	%	5.7	%	5.7	%
Expected volatility	40.7	%	40.2	%	41.5	%
Risk-free interest rate	1.4	%	2.3	%	1.1	%
Expected term (years)	6.5		6.5		6.5