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SHARE-BASED COMPENSATION PLANS | 12 Months Ended
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Jun. 30, 2022
Share-Based Payment Arrangement [Abstract] |
SHARE-BASED COMPENSATION PLANS | SHARE-BASED COMPENSATION PLANS The Company has various share-based compensation programs (the “the Compensation Plans”) under which awards, including non-qualified stock options, Series A and Series A-1 Preferred Stock, RSUs, restricted stock and other share-based awards, may be granted or shares of Class A Common Stock may be purchased. As of June 30, 2022, up to 74.1 million shares of the Company's Class A Common Stock were authorized to be granted pursuant to these Plans, of which 40.1 million shares were available. The Company may satisfy the obligation of its stock-based compensation awards with new shares. The Company accounts for its share-based compensation plans for Common Stock as equity plans. The share-based compensation for equity plans is estimated and fixed at the grant date, based on the estimated fair value of the award. Series A Preferred Stock is accounted for partially as equity and partially using liability plan accounting to the extent the award is expected to be settled in cash. Accordingly, share-based compensation expense for the liability plan awards are measured at the end of each reporting period based on the fair value of the award on each reporting date and recognized as an expense to the extent earned. Total share-based compensation from continuing operations is shown in the table below:
| 2022 |  | 2021 |  | 2020
Equity plan expense (a) | $ | 195.4 |  |  | $ | 25.4 |  |  | $ | 24.8 |
Equity plan modified and cash settled | — |  |  | 0.9 |  |  | 18.3 |
Liability plan expense (income) | 0.1 |  |  | 1.6 |  |  | (2.0) |
Fringe expense | 2.3 |  |  | 0.5 |  |  | 1.1 |
Total share-based compensation expense | $ | 197.8 |  |  | $ | 28.4 |  |  | $ | 42.2 |
(a) Equity plan shared-based compensation expense of $195.4 and $27.4 was recorded to additional paid in capital and presented in the Consolidated Statement of Equity for the fiscal years ended June 30, 2022 and 2021, respectively. Of the $195.4 and $27.4 for the fiscal years ended June 30, 2022 and 2021, respectively, $0.0 and $2.0 was reclassified to discontinued operations. The share-based compensation expense for fiscal 2022, 2021 and 2020 of $197.8, $28.4 and $42.2, respectively, includes $202.0, $34.7, and $48.9 expense for the respective period offset by $(4.2), $(6.3) and $(6.7) of income for the respective periods primarily due to significant executive forfeitures of share-based compensation instruments. During fiscal 2020, $18.3 of share-based compensation expense related to the repurchase of Series A-1 Preferred Stock shares from the Company’s former CEO. As of June 30, 2022, the total unrecognized share-based compensation expense related to unvested stock options, Series A and Series A-1 Preferred Stock, restricted stock, and restricted stock units and other share awards is $2.2, $0.0, $3.1 and $155.6, respectively. The unrecognized share-based compensation expense related to unvested stock options, Series A and A-1 Preferred Stock, restricted stock, and restricted stock units and other share awards is expected to be recognized over a weighted-average period of 1.07, 0.00, 1.72 and 1.42 years, respectively. Non-Qualified Stock Options During fiscal 2022, 2021 and 2020, the Company granted 0.0 million, 0.0 million and 2.2 million non-qualified stock option awards, respectively. These options are accounted for using equity accounting whereby the share-based compensation expense is estimated and fixed at the grant date based on the estimated value of the options using the Black-Scholes valuation model. During fiscal 2020, the share-based compensation expense recognized on non-qualified stock options is based upon the fair value on the grant date estimated using the Black-Scholes valuation model with the following weighted-average assumptions:
| 2020 |  |
Expected life | 7.4 years |  |
Risk-free interest rate | 1.63% |  |
Expected volatility | 41.67% |  |
Expected dividend yield | 4.10% |  |
Expected life—The expected life represented the period of time (years) that options granted were expected to be outstanding, which the Company calculated using a formula based on the vesting term and the contractual life of the respective option. Risk-free interest rate—The Company based the risk-free interest rate on the implied yield available on a U.S. Treasury note with a term equal to the expected term of the underlying options. Expected volatility—The expected volatility is derived using historical stock price information for the Company’s common stock and that of certain peer group companies, and the volatility implied by the trading of options to purchase the Company’s stock on open-market exchanges. Expected dividend yield—The weighted-average expected dividend yield is based upon the Company’s expectation to pay dividends over the contractual term of the options. Non-qualified stock options generally become exercisable five years from the date of the grant or on a graded vesting schedule where 60% of each award granted vests after three years, 20% of each award granted vests after four years and 20% of each award granted vests after five years. All grants expire ten years from the date of the grant. The Company’s outstanding non-qualified stock options as of June 30, 2022 and activity during the fiscal year then ended are presented below:
| Shares (in millions) |  | Weighted Average Exercise Price |  | Aggregate Intrinsic Value |  | Weighted Average Remaining Contractual Term (in years)
Outstanding at July 1, 2021 | 13.4 |  |  | $ | 13.00 |  |  |  |  |
Forfeited | (7.6) |  |  | 13.12 |  |  |  |  |
Outstanding at June 30, 2022 | 5.8 |  |  | $ | 12.85 |  |  |  |  |
Vested and expected to vest at June 30, 2022 | 5.2 |  |  | $ | 13.13 |  |  | $ | — |  |  | 6.11
Exercisable at June 30, 2022 | 3.5 |  |  | $ | 13.59 |  |  | $ | — |  |  | 5.88
Of the 5.8 million stock options outstanding at June 30, 2022, 2.5 million vest on the fifth anniversary of the grant date and 3.3 million vest on the graded vesting schedule. As of June 30, 2022, the grant prices of the outstanding options ranged from $8.65 to $18.55, and the grant prices for exercisable options ranged from $9.20 to $18.55. A summary of the aggregated weighted-average grant date fair value of stock options granted and total intrinsic value of stock options exercised for fiscal 2020 is presented below:
| 2020 |  |
Weighted-average grant date fair value of stock options | $ | 3.41 |  |  |
Intrinsic value of options exercised | 6.1 |  |  |
The Company’s non-vested non-qualified stock options as of June 30, 2022 and activity during the fiscal year then ended are presented below:
| Shares (in millions) |  | Weighted Average Grant Date Fair Value
Non-vested at July 1, 2021 | 12.8 |  |  | $ | 2.84 |
Vested | (3.9) |  |  | 4.39 |
Forfeited | (6.6) |  |  | 3.61 |
Non-vested at June 30, 2022 | 2.3 |  |  | $ | 3.14 |
The share-based compensation expense recognized on the non-qualified stock options was $(0.9), $0.5 and $3.6 during fiscal 2022, 2021 and 2020, respectively. Executive Ownership Programs The Company encourages executive stock ownership through various programs. These programs govern shares of Class A Common Stock purchased by employees (“Purchased Shares”). Employees purchased 0.0 million, 0.1 million and 0.8 million shares in fiscal 2022, 2021 and 2020, respectively, and received matching non-qualified stock options or RSUs in accordance with the terms of the Compensation Plans under the Omnibus Long-Term Incentive Plan (“Omnibus LTIP”). There was no share-based compensation expense recorded in connection with Purchased Shares for fiscal 2022, 2021 and 2020. Additionally, share-based compensation expense recorded in connection with matching stock awards granted in accordance with the Compensation Plans are noted in their respective section of this footnote. Series A and Series A-1 Preferred Stock In addition to the Executive Ownership Programs discussed above, the Series A Preferred Stock are accounted for partially as equity and partially as a liability as of June 30, 2022, 2021 and 2020 and the Company recognized an (income) expense of $(0.2), $0.8 and $15.8 in fiscal 2022, 2021 and 2020, respectively. See Note 23—Equity and Convertible Preferred Stock for additional information. On February 27, 2020, the Company agreed to repurchase 6.9 million shares of Series A-1 Preferred Stock from the former CEO for $18.3, which settled in cash during fiscal 2020. The repurchase was treated as a modification of stock compensation awards’ vesting and settlement terms. The Company recorded an incremental expense of $18.3 related to the modification during fiscal 2020. The Company uses the binomial lattice or the Black-Scholes model to value the equity and cash bonus components of the granted outstanding Series A Preferred Stocks. The fair value of the Company’s outstanding Series A Preferred Stock were estimated with the following assumptions.
| 2022 |  | 2021 |  | 2020
Expected life, in years | 1.74 years |  | 2.74 years |  | 3.74 years
Expected volatility | 65.57% |  | 51.64% |  | 53.20%
Risk-free rate of return | 2.89% |  | 0.46% |  | 0.24%
Dividend yield on Class A Common Stock | 1.56% |  | 1.34% |  | 8.39%
Expected life, in years - The expected life represents the period of time (years) that Series A Preferred Stock granted are expected to be outstanding, which the Company calculates using a formula based on the contractual life of the respective Series A Preferred Stock. Expected volatility - The expected volatility is derived using historical stock price information for the Company’s common stock and that of certain peer group companies, and the volatility implied by the trading of options to purchase the Company’s stock on open-market exchanges. Risk-free rate of return - The Company bases the risk-free rate of return on the U.S. Constant Maturity Treasury Rate. Dividend yield on Class A Common Stock - The Company calculated the dividend yield on shares using the expected annualized dividend rate and the stock price as of the valuation date. Series A Preferred Shares generally expire seven years from the date of the grant. The Company’s outstanding Series A Preferred Shares as of June 30, 2022 and activity during the fiscal year then ended are presented below:
| Shares (in millions) |  | Weighted Average Exercise Price |  | Aggregate Intrinsic Value |  | Weighted Average Remaining Contractual Term (in years)
Outstanding at July 1, 2021 | 1.5 |  |  | $ | 22.10 |  |  |  |  |
Outstanding at June 30, 2022 | 1.5 |  |  | 22.10 |  |  |  |  |
Vested and expected to vest at June 30, 2022 | 1.0 |  |  | $ | 22.39 |  |  | $ | — |  |  | 1.74
Exercisable | 1.3 |  |  | $ | 22.45 |  |  | $ | — |  |  | 1.72
The Company’s non-vested shares of Series A Preferred Stock as of June 30, 2022 and activity during the fiscal year then ended are presented below:
| Shares (in millions) |  | Weighted Average Grant Date Fair Value
Non-vested at July 1, 2021 | 0.5 |  |  | $ | 3.55 |
Vested | (0.3) |  |  | 3.48 |
Non-vested at June 30, 2022 | 0.2 |  |  | $ | 3.65 |
Restricted Stock Units On October 14, 2020, the Company’s Board of Directors approved a new vesting schedule applicable to RSUs granted during fiscal 2021, to three-year graded vesting where one-third of each award granted vests after the first anniversary of grant, one-third of each award granted vests after the second anniversary of grant and one-third of each awarded granted vests after the third anniversary of grant. On October 14, 2021, the Company’s Board of Directors approved a new vesting schedule applicable to RSUs granted during fiscal 2022, to three-year graded vesting where one-quarter of each award granted vests after the first anniversary of grant, one-quarter of each award granted vests after the second anniversary of grant and one-half of each awarded granted vests after the third anniversary of grant. During fiscal 2022, 2021 and 2020, 4.6 million, 38.1 million and 6.2 million RSUs were granted under the Omnibus LTIP and 0.3 million, 0.3 million and 0.1 million RSUs were granted under the 2007 Stock Plan for Directors, respectively. The Company’s CEO, Sue Nabi, was granted a one-time sign-on award of restricted stock units (the “Award”) on June 30, 2021. The Award will vest and settle in 10,000,000 shares of the Company’s Class A Common Stock, par value $0.01 per share, on each of August 31, 2021, August 31, 2022 and August 31, 2023, subject to her continued employment through each such date. The Company will recognize approximately $280.2 of share-based compensation expense, on a straight-line basis over the vesting period, based on the fair value on the grant date. The amount of compensation cost recognized at each vesting date must at least equal the portion of the award legally vested. As such, $170.9 was recognized in fiscal year 2022. In addition, $93.4 and $15.9 will be recognized in the fiscal years ending 2023 and 2024, respectively. In connection with this Award, Cottage Holdco B.V., the Company’s largest stockholder and a wholly-owned subsidiary of JAB Holding Company S.à r.l., agreed, pursuant to an equity transfer agreement, to transfer to Ms. Nabi (either directly or through contributing to the Company) 10,000,000 shares of Common Stock no later than sixty days following the first vesting date. On October 29, 2021, Cottage Holdco B.V. completed the transfer of 10,000,000 shares of Common Stock to Ms. Nabi. If, however, Ms. Nabi is terminated without cause or due to death or disability on or following the first vesting date but prior to the second vesting date, the Company has agreed to issue to Cottage Holdco B.V. the number of shares of Common Stock determined on pro-rata basis in accordance with the equity transfer agreement. In the event Ms. Nabi remains employed through the third vesting date, Cottage Holdco B.V. has agreed to transfer an additional 5,000,000 shares of Common Stock to Ms. Nabi. The Company’s outstanding RSUs as of June 30, 2022 and activity during the fiscal year then ended are presented below:
| Shares (in millions) |  | Aggregate Intrinsic Value |  | Weighted Average Remaining Contractual Term
Outstanding at July 1, 2021 | 44.2 |  |  |  |  |
Granted | 4.9 |  |  |  |  |
Settled | (14.2) |  |  |  |  |
Cancelled | (2.5) |  |  |  |  |
Outstanding at June 30, 2022 | 32.4 |  |  |  |  |
Vested and expected to vest at June 30, 2022 | 31.0 |  |  | $ | 248.4 |  |  | 1.35
The share-based compensation expense recorded in connection with the RSUs was $197.2, $26.1 and $18.2 during fiscal 2022, 2021 and 2020, respectively. The Company’s outstanding and non-vested RSUs as of June 30, 2022 and activity during the fiscal year then ended are presented below:
| Shares (in millions) |  | Weighted Average Grant Date Fair Value
Outstanding and nonvested at July 1, 2021 | 43.9 |  |  | $ | 8.78 |
Granted | 4.9 |  |  | 7.86 |
Vested | (14.3) |  |  | 8.84 |
Cancelled | (2.5) |  |  | 8.56 |
Outstanding and nonvested at June 30, 2022 | 32.0 |  |  | $ | 8.63 |
The total intrinsic value of RSUs vested and settled during fiscal 2022, 2021 and 2020 is $33.5, $32.9 and $30.3, respectively. Restricted Stock During fiscal 2022 and 2021, 0.3 million and 0.0 million restricted stock awards were granted under the Omnibus LTIP. The Company’s outstanding restricted stock as of June 30, 2022 and activity during the fiscal year then ended are presented below:
| Shares (in millions) |  | Aggregate Intrinsic Value |  | Weighted Average Remaining Contractual Term
Outstanding at July 1, 2021 | 0.5 |  |  |  |  |
Granted | 0.3 |  |  |  |  |
Settled | (0.2) |  |  |  |  |
Outstanding at June 30, 2022 | 0.6 |  |  |  |  |
Vested and expected to vest at June 30, 2022 | 0.5 |  |  | $ | 4.4 |  |  | 1.82
The share-based compensation expense recorded in connection with the restricted stock was $1.8 and $1.0 during fiscal 2022 and 2021, respectively. The Company’s outstanding and non-vested restricted stock as of June 30, 2022 and activity during the fiscal year then ended are presented below:
| Shares (in millions) |  | Weighted Average Grant Date Fair Value
Outstanding and nonvested at July 1, 2021 | 0.5 |  |  | $ | 5.08 |
Granted | 0.3 |  |  | 7.47 |
Vested | (0.2) |  |  | 5.08 |
Outstanding and nonvested at June 30, 2022 | 0.6 |  |  | $ | 6.58 |
The total intrinsic value of restricted stock vested and settled during fiscal 2022 and 2021 was $1.7 and $1.2, respectively. Phantom Units On July 21, 2015, the Board granted Mr. Becht, the Company’s former Chairman of the Board and interim CEO, an award of 300,000 phantom units, in consideration of Mr. Becht’s increased and continuing responsibilities as interim CEO of the Company. Each phantom unit has an economic value equivalent to one share of the Company’s Class A Common Stock settleable in cash or shares at the election of Mr. Becht. The award to Mr. Becht was made outside of the Company’s Omnibus LTIP. On July 24, 2015, Mr. Becht elected to receive payment of the phantom units in the form of shares of Class A Common Stock and the phantom units were valued at $8.0. The phantom units vested on the fifth anniversary of the grant date and remain outstanding as of June 30, 2022.

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