Capital Stock

9 Months Ended

Dec. 31, 2020

Equity and Share-based Compensation [Abstract]

(a) Common Shares

The Company had 500 million authorized Class A voting shares and 500 million authorized Class B non-voting shares at December 31, 2020 and March 31, 2020. The table below outlines common shares reserved for future issuance:


	December 31, 2020	March 31, 2020
	(Amounts in millions)
Stock options and SARs outstanding	26.8	35.7
Restricted stock and restricted share units — unvested	9.1	3.7
Common shares available for future issuance	15.5	11.5
Shares reserved for future issuance	51.4	50.9

(b) Share-based Compensation

On September 15, 2020, the Company’s shareholders approved an amendment to the Lions Gate Entertainment Corp. 2019 Performance Incentive Plan (the “2019 Plan”) previously adopted by the Board of Directors of the Company to increase the maximum number of the Company’s common shares that may be issued or transferred pursuant to awards under the 2019 Plan by an additional 10.0 million shares so that the new aggregate share limit under the 2019 Plan is 16.1 million common shares (not including shares that were originally approved for issuance under the Company’s prior stock incentive plans that have become available for issuance under the 2019 Plan pursuant to the terms of the 2019 Plan).

The Company recognized the following share-based compensation expense during the three and nine months ended December 31, 2020 and 2019:


	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2020		2019		2020		2019
	(Amounts in millions)
Compensation Expense:
Stock options	$	4.4	$	5.5	$	13.7	$	14.3
Restricted share units and other share-based compensation	14.3		9.8		37.6		23.1
Share appreciation rights	1.3		1.9		5.9		3.6
	20.0		17.2		57.2		41.0

Impact of accelerated vesting on equity awards(1)	—		—		2.8		0.3
Total share-based compensation expense	$	20.0	$	17.2	$	60.0	$	41.3

Tax impact(2)	(3.9)		(3.6)		(12.2)		(8.7)
Reduction in net income	$	16.1	$	13.6	$	47.8	$	32.6

___________________

(1)Represents the impact of the acceleration of certain vesting schedules for equity awards pursuant to certain severance arrangements.

(2)Represents the income tax benefit recognized in the unaudited condensed consolidated statements of operations for share-based compensation arrangements prior to the effects of changes in the valuation allowance.

Share-based compensation expense, by expense category, consisted of the following:


	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2020		2019		2020		2019
	(Amounts in millions)
Share-Based Compensation Expense:
Direct operating	$	0.5	$	0.7	$	1.5	$	1.1
Distribution and marketing	0.2		0.2		0.5		0.4
General and administration	19.3		16.3		55.2		39.5
Restructuring and other	—		—		2.8		0.3
	$	20.0	$	17.2	$	60.0	$	41.3

The following table sets forth the stock option, SARs, restricted stock and restricted share unit activity during the nine months ended December 31, 2020:


	Stock Options and SARs					Restricted Stock and Restricted Share Units
	Class A Voting Shares		Class B Non-Voting Shares			Class A Voting Shares			Class B Non-Voting Shares
	Number of Shares	Weighted-Average Exercise Price	Number of Shares		Weighted-Average Exercise Price	Number of Shares		Weighted-Average Grant-Date Fair Value	Number of Shares	Weighted-Average Grant-Date Fair Value
	(Number of shares in millions)
Outstanding at March 31, 2020	7.2	$26.21	28.5		$19.03	—	(1)	$14.89	3.8	$14.63
Granted	—	—	4.9	(2)	$8.74	—	(1)	$9.87	8.1	$7.80
Options exercised or restricted stock or RSUs vested	—	—	—	(1)	7.13	—	(1)	$16.57	(2.4)	$14.48
Awards canceled in exchange program	(1.1)	$31.56	(4.1)		$26.49	—		—	—	—
Awards issued in exchange program	0.1	$7.70	0.8		$7.13	—		—	—	—
Forfeited or expired	(0.7)	$31.28	(8.8)		$16.49	—		—	(0.4)	$8.82
Outstanding at December 31, 2020	5.5	$24.20	21.3		$15.82	—	(1)	$11.10	9.1	$8.81

__________________

(1)Represents less than 0.1 million shares.

(2)During the nine months ended December 31, 2020, the Company granted 3.6 million SARs.

Exchange Program

On January 10, 2020, the Company’s Board of Directors authorized, and on April 2, 2020, the Company’s shareholders approved, a stock option and share appreciation rights exchange program (the “Exchange Program”) that permitted certain current employees to exchange certain outstanding stock options and share appreciation rights with exercise prices substantially above the current market price of the Company’s Class A voting shares and the Company’s Class B non-voting shares for a lesser number of stock options and share appreciation rights that have a fair value that is lower than the fair value of the “out of the money” stock options and share appreciation rights. The program began on April 9, 2020 and was completed on May 7, 2020. As a result of this program 1.1 million outstanding eligible stock options and share appreciation rights of Class A voting shares were exchanged for 0.1 million new stock options and share appreciation rights at an exercise price of $7.70 per share and 4.3 million outstanding eligible stock options and share appreciation rights of Class B non-voting shares were exchanged for 0.8 million new stock options and share appreciation rights at an exercise price of $7.13.

During the three months ended December 31, 2020, the Company did not repurchase any common shares. During the nine months ended December 31, 2020, the Company repurchased 0.2 million of its Class A voting shares for an aggregate cost of $1.0 million, with an average repurchase price per share of $5.75. During the three and nine months ended December 31, 2019 the Company did not repurchase any common shares. To date, approximately $288.1 million common shares have been repurchased, leaving approximately $179.9 million of authorized potential repurchases.