Stock Incentive Plans and Share-Based Compensation

3 Months Ended

Mar. 31, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock Incentive Plans and Share-Based Compensation

Note 6 – Stock Incentive Plans and Share-Based Compensation

As of March 31, 2019, a total of 1,399,820 shares of the Company’s common stock remained available for grants of awards under the Golden Entertainment, Inc. 2015 Incentive Award Plan (the “2015 Plan”), which includes the annual increase in the number of shares available for grant on January 1, 2019 of 1,119,924 shares.

Stock Options

The following table summarizes the Company’s stock option activity:

	Stock Options
				Weighted-
				Average
	Shares			Exercise Price
Outstanding at January 1, 2019		3,424,755		$	11.49
Granted		—		$	—
Exercised		(2,500	)	$	7.34
Cancelled		(21,875	)	$	11.41
Outstanding at March 31, 2019		3,400,380		$	11.50
Exercisable at March 31, 2019		2,533,382		$	11.32

Share-based compensation expense related to stock options was $2.5 million and $1.5 million for the three months ended March 31, 2019 and 2018, respectively. The Company’s unrecognized share-based compensation expense related to stock options was approximately $4.5 million as of March 31, 2019, which is expected to be recognized over a weighted-average period of 1.6 years.

Restricted Stock Units

On March 14, 2018, the Compensation Committee of the Board of Directors of the Company approved a new long-term incentive structure for equity awards to be granted to the executive officers of the Company under the 2015 Plan. Under this new structure, commencing in the first quarter of 2018, the executive officers of the Company receive long-term equity awards in a combination of time-based restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”). The number of PSUs that will be eligible to vest will be determined based on the Company’s attainment of performance goals set by the Compensation Committee. Following the two-year performance period, the number of “vesting eligible” PSUs will then be subject to one additional year of time-based vesting. Share-based compensation costs related to RSU and PSU awards are calculated based on the market price on the date of the grant. The Company periodically reviews the estimates of performance against the defined criteria to assess the expected payout of each outstanding PSU grant and adjusts the stock compensation expense accordingly.

The following table summarizes the Company’s RSU and PSU activity:

	RSUs					PSUs
				Weighted-				Weighted-
				Average Grant				Average Grant
	Shares			Date Fair Value		Shares⁽¹⁾		Date Fair Value
Outstanding at January 1, 2019		232,299		$	29.10		171,748	$	28.41
Granted		414,951		$	14.13		204,580	$	14.13
Vested		(68,874	)	$	28.72		—	$	—
Cancelled		(6,863	)	$	28.56		—	$	—
Outstanding at March 31, 2019		571,513		$	18.28		376,328	$	20.65

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(1)

The number of shares for 62,791 of the PSUs listed as outstanding at January 1, 2019 represents the actual number of PSUs granted to each recipient eligible to vest if the Company meets its performance goals for the applicable period. The number of shares for the remainder of the PSUs listed as outstanding at January 1, 2019 and for all of the PSUs granted in 2019 represents the “target” number of PSUs granted to each recipient eligible to vest if the Company meets its “target” performance goals for the applicable period. The actual number of PSUs eligible to vest for those PSUs will vary depending on whether or not the Company meets or exceeds the applicable threshold, target or maximum performance goals for the PSUs, with 200% of the “target” number of PSUs will be eligible to vest at “maximum” performance levels.

Share-based compensation expense related to RSUs was $1.1 million and $0.2 million for the three months ended March 31, 2019 and 2018, respectively. Share-based compensation expense related to PSUs was $0.4 million and $0.2 million for the three months ended March 31, 2019 and 2018, respectively.

As of March 31, 2019, there was $8.0 million and $5.4 million of unamortized share-based compensation expense related to RSUs and PSUs, respectively, which is expected to be recognized over a weighted-average period of 2.7 years for both RSUs and PSUs.