XML 32 R20.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Stock-Based Compensation Plans | 12 Months Ended
--- | ---
Dec. 31, 2021
Share-based Payment Arrangement [Abstract] |
Stock-Based Compensation Plans | STOCK-BASED COMPENSATION PLANS Our total compensation expense, which includes expense related to restricted stock awards, restricted stock unit awards, performance share unit awards, and stock options associated with our employee stock purchase plan, was $27.8 million in 2021, $23.7 million in 2020, and $23.8 million in 2019. We recorded a deferred tax asset related to stock-based compensation expense of $1.5 million in 2021, $1.9 million in 2020, and $2.1 million in 2019. Our stock-based employee compensation plans are described below. 2016 Omnibus Stock Incentive Plan We have a stock-based employee compensation plan with awards outstanding under the Churchill Downs Incorporated 2016 Omnibus Stock Incentive Plan (the "2016 Plan") and Executive Long-Term Incentive Compensation Plan, which was adopted pursuant to the 2016 Plan. The 2016 Plan is intended to advance our long-term success by encouraging stock ownership among key employees and the Board of Directors. Awards may be in the form of stock options, stock appreciation rights, restricted stock awards ("RSA"), restricted stock units ("RSU"), performance share units ("PSU"), performance units, or performance cash. The 2016 Plan has a minimum vesting period of one year for awards granted. Restricted Stock, Restricted Stock Units, and Performance Share Units The 2016 Plan permits the award of RSAs, RSUs, or PSUs to directors and key employees responsible for the management, growth and protection of our business. The fair value of RSAs and RSUs that vest solely based on continued service under the Plan is determined by the product of the number of shares granted and the grant date market price of our common stock. RSAs and RSUs granted to employees under the 2016 Plan generally vests either in full upon three years from the date of grant or on a pro rata basis over a three-year term. RSAs are legally issued common stock at the time of grant, with certain restrictions placed on them. RSUs granted to employees are converted into shares of our common stock at vesting. The RSUs granted to directors under the 2016 Plan generally vests in full upon one year from the date of grant. RSUs granted to directors are converted into shares of our common stock at the time of the director's retirement. In 2019, 2020, and 2021, the Company granted three-year performance and total shareholder return ("TSR") PSU awards (the "PSU Awards") to certain named executive officers ("NEOs"). The two performance criteria for the PSU Awards are: (1) a cumulative Adjusted EBITDA target that was set at the beginning of the plan performance period for the three-year period; and (2) a cash flow metric that is the aggregate of the cash flow targets for the three individual years that is set annually at the beginning of each year. The cash flow metric is defined as cash flow from operating activities and discontinued operations excluding the change in restricted cash, plus distributions of capital from equity investments less capital maintenance expenditures. The Compensation Committee of the Board of Directors (the "Compensation Committee") can make adjustments as it may deem appropriate to these metrics. Measurement against these criteria will be determined against a payout curve which provides up to 200% of performance share units based on the original award. The PSU Awards may be adjusted based on the Company’s TSR performance relative to the TSR performance during the performance period of the Companies remaining in the Russell 2000 index at the end of the performance period as follows: 1.The PSU Awards will increase by 25% if the Company’s TSR is in the top quartile; 2.The PSU Awards will decrease by 25% if the Company’s TSR is in the bottom quartile; and 3.The PSU Awards will not change if the Company’s TSR is in the middle two quartiles. The maximum number of PSU Awards, including the impact of the TSR performance, that can be earned for a performance period is 250% of the original award. On February 12, 2020, the Compensation Committee offered, and the NEOs accepted, to settle the 2017 PSU Awards in cash. In October 2018, the Company granted a special equity award to two NEOs ("7-Year Grant") consisting of PSU Awards that may be adjusted up to 200% based on the Company's relative TSR performance versus the Russell 2000 over a three-year period ended October 29, 2021, and service-based RSU awards, both of which vest in 25% annual increments over four years beginning on the fourth anniversary of the grant date, totaling seven years to be fully vested. The performance period ended on October 29, 2021, and the TSR performance was 200%. The total compensation cost recognized for PSU Awards is determined using the Monte Carlo valuation methodology, which factors in the value of the TSR when determining the grant date fair value of the award. Compensation cost for the PSU Awards is recognized during the three-year performance and service period based on the probable achievement of the two performance criteria, with the exception of the 7-Year Grant, which compensation cost is recognized during the seven-year service period. All PSUs awards are converted into shares of our common stock at the time the award value is finalized. A summary of the 2021 RSUs, and PSUs granted to certain NEOs, employees, and the Board of Directors is presented below (shares/units in thousands):
Grant Year |  | Award Type |  | Number of Units Awarded(1) |  | Vesting Terms
2021 |  | RSU |  | 63 |  | Vest equally over three service periods ending in 2024
2021 |  | PSU |  | 27 |  | Three-year performance and service period ending in 2023
2021 |  | RSU |  | 5 |  | One year service period ending in 2022
(1) PSUs presented are based on the target number of units for the original PSU grant. Activity for our RSAs, RSUs, and PSUs is presented below (shares/units in thousands):
| PSUs |  | RSAs and RSUs |  | Total
(in thousands, except grant date values) | Number of Shares/Units |  | Weighted Average Grant Date Fair Value |  | Number of Shares/Units |  | Weighted Average Grant Date Fair Value |  | Number of Shares/Units |  | Weighted Average Grant Date Fair Value
Balance as of December 31, 2018 | 321 |  |  | $ | 65.77 |  |  | 275 |  |  | $ | 72.03 |  |  | 596 |  |  | $ | 68.66 |
Granted | 58 |  |  | $ | 92.90 |  |  | 130 |  |  | $ | 94.42 |  |  | 188 |  |  | $ | 93.96 |
Performance adjustment(1) | 87 |  |  | $ | 55.75 |  |  | — |  |  | $ | — |  |  | 87 |  |  | $ | 55.75 |
Vested | (152) |  |  | $ | 55.75 |  |  | (135) |  |  | $ | 68.15 |  |  | (287) |  |  | $ | 61.57 |
Canceled/forfeited | — |  |  | $ | — |  |  | (5) |  |  | $ | 77.59 |  |  | (5) |  |  | $ | 77.59 |
Balance as of December 31, 2019 | 314 |  |  | $ | 72.84 |  |  | 265 |  |  | $ | 85.07 |  |  | 579 |  |  | $ | 78.45 |
Granted | 37 |  |  | $ | 182.45 |  |  | 94 |  |  | $ | 150.12 |  |  | 131 |  |  | $ | 159.30 |
Performance adjustment(1) | 41 |  |  | $ | 90.73 |  |  | — |  |  | $ | — |  |  | 41 |  |  | $ | 90.73 |
Vested | (90) |  |  | $ | 90.73 |  |  | (121) |  |  | $ | 90.01 |  |  | (211) |  |  | $ | 90.32 |
Canceled/forfeited | — |  |  | $ | — |  |  | (3) |  |  | $ | 121.39 |  |  | (3) |  |  | $ | 121.39 |
Balance as of December 31, 2020 | 302 |  |  | $ | 83.40 |  |  | 235 |  |  | $ | 107.90 |  |  | 537 |  |  | $ | 94.14 |
Granted | 27 |  | $ | 254.29 |  |  | 68 |  | $ | 211.11 |  |  | 95 |  | $ | 223.25 |
Performance adjustment(1) | 258 |  | $ | 68.87 |  |  | — |  |  | $ | — |  |  | 258 |  | $ | 68.87 |
Vested | (108) |  |  | $ | 92.90 |  |  | (112) |  |  | $ | 121.77 |  |  | (220) |  |  | $ | 107.63 |
Canceled/forfeited | — |  |  | $ | — |  |  | (12) |  |  | $ | 160.42 |  |  | (12) |  |  | $ | 160.42 |
Balance as of December 31, 2021 | 479 |  | $ | 82.99 |  |  | 179 |  | $ | 135.01 |  |  | 658 |  | $ | 90.27 |
(1)Adjustment to number of target units awarded for PSUs based on achievement of underlying performance goals. The fair value of shares and units vested was $45.4 million in 2021, and $36.9 million in 2020 and 2019. A summary of total unrecognized stock-based compensation expense related to RSAs, RSUs, and PSUs (based on current performance estimates), at December 31, 2021 is presented below:
(in millions, except years) | December 31, 2021 |  | Weighted Average Remaining Vesting Period (Years)
Unrecognized expense: |  |  |
RSU | $ | 9.2 |  |  | 1.76
PSU | 12.9 |  |  | 2.08
Total | $ | 22.1 |  |  | 1.94
Employee Stock Purchase Plan Under the Employee Stock Purchase Plan (the "ESP Plan"), we are authorized to sell, pursuant to short-term stock options, shares of our common stock to our full-time and qualifying part-time employees at a discount from our common stock’s fair market value. The ESP Plan operates on the basis of recurring, consecutive one-year periods. Each period commences on August 1 and ends on the following July 31. Compensation expense related to the ESP Plan was not material for any year included in our accompanying consolidated statements of comprehensive income (loss).

X
- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration