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SHARE-BASED COMPENSATION PLANS | 12 Months Ended
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Jun. 30, 2023
Share-Based Payment Arrangement [Abstract] |
SHARE-BASED COMPENSATION PLANS | SHARE-BASED COMPENSATION PLANSThe 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, PRSUs, restricted stock and other share-based awards, may be granted or shares of Class A Common Stock may be purchased. As of June 30, 2023, 114.5 million shares of the Company's Class A Common Stock were authorized to be granted pursuant to these Plans. As of June 30, 2023, approximately 46.3 million shares of Class A Common Stock were reserved and available to be granted pursuant to these Plans. 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:
| 2023 |  | 2022 |  | 2021
Equity plan expense (a) | $ | 134.7 |  |  | $ | 195.4 |  |  | $ | 25.4 |
Equity plan modified and cash settled | — |  |  | — |  |  | 0.9 |
Liability plan expense (income) | 1.2 |  |  | 0.1 |  |  | 1.6 |
Fringe expense | 1.7 |  |  | 2.3 |  |  | 0.5 |
Total share-based compensation expense(b) | $ | 137.6 |  |  | $ | 197.8 |  |  | $ | 28.4 |
(a) Equity plan shared-based compensation expense of $134.7, $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, 2023, 2022, and 2021, respectively. Of the $134.7, $195.4, and $27.4 for the fiscal years ended June 30, 2023, 2022, and 2021, respectively, $0.0, $0.0, and $2.0 was reclassified to discontinued operations. (b)Expenses relating to share-based awards granted to non-Coty employees (Wella) are recorded within other income, net, within the Consolidated Statement of Operations. See Note 27 -Related Party Transactions for additional information. The share-based compensation expense for fiscal 2023, 2022 and 2021 of $137.6, $197.8 and $28.4, respectively, includes $138.7, $202.0, and $34.7 expense for the respective period offset by $(1.1), $(4.2) and $(6.3) of income for the respective periods primarily due to significant executive forfeitures of share-based compensation instruments. As of June 30, 2023, the total unrecognized share-based compensation expense related to unvested stock options, Series A Preferred Stock, restricted stock, PRSUs, and restricted stock units and other share awards is $0.8, $0.0, $3.2, $5.0 and $172.9, respectively. The unrecognized share-based compensation expense related to unvested stock options, Series A Preferred Stock, restricted stock, PRSUs, and restricted stock units and other share awards is expected to be recognized over a weighted-average period of 0.86, 0.00, 1.95, 2.31 and 3.74 years, respectively. Non-Qualified Stock Options During fiscal 2023, 2022 and 2021, the Company granted 0.0 million, non-qualified stock option awards. 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. 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, 2023 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, 2022 | 5.8 |  |  | $ | 12.85 |  |  |  |  |
Exercised | (0.1) |  |  | 11.08 |  |  |  |  |
Forfeited | (0.6) |  |  | 11.42 |  |  |  |  |
Outstanding at June 30, 2023 | 5.1 |  |  | $ | 13.06 |  |  |  |  |
Vested and expected to vest at June 30, 2023 | 4.9 |  |  | $ | 13.13 |  |  | $ | — |  |  | 5.10
Exercisable at June 30, 2023 | 4.1 |  |  | $ | 13.48 |  |  | $ | — |  |  | 4.95
Of the 5.1 million stock options outstanding at June 30, 2023, 2.0 million vest on the fifth anniversary of the grant date and 3.1 million vest on the graded vesting schedule. As of June 30, 2023, the grant prices of the outstanding options ranged from $11.08 to $18.55, and the grant prices for exercisable options ranged from $11.08 to $18.55. A summary of the aggregated intrinsic value of stock options exercised for fiscal 2023 is presented below:
| 2023 |  |
Intrinsic value of options exercised | $ | 0.1 |  |  |
The Company’s non-vested non-qualified stock options as of June 30, 2023 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, 2022 | 2.3 |  |  | $ | 3.14 |
Vested | (0.9) |  |  | 3.70 |
Forfeited | (0.4) |  |  | 2.23 |
Non-vested at June 30, 2023 | 1.0 |  |  | $ | 3.02 |
The share-based compensation expense recognized on the non-qualified stock options was $1.3, $(0.9) and $0.5 during fiscal 2023, 2022 and 2021, 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, 0.0 million and 0.1 million shares in fiscal 2023, 2022 and 2021, 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 2023, 2022 and 2021. 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 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, 2023, 2022 and 2021 and the Company recognized an expense (income) of $0.2, $(0.2) and $0.8 in fiscal 2023, 2022 and 2021, respectively. See Note 23—Equity and Convertible Preferred Stock for additional information. The Company uses the binomial lattice or the Black-Scholes model to value the outstanding Series A Preferred Stocks. The fair value of the Company’s outstanding Series A Preferred Stock were estimated with the following assumptions.
| 2023 |  | 2022 |  | 2021
Expected life, in years | 0.74 years |  | 1.74 years |  | 2.74 years
Expected volatility | 66.31% |  | 65.57% |  | 51.64%
Risk-free rate of return | 5.44% |  | 2.89% |  | 0.46%
Dividend yield on Class A Common Stock | —% |  | 1.56% |  | 1.34%
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, 2023 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, 2022 | 1.5 |  |  | $ | 22.10 |  |  |  |  |
Forfeited | (0.5) |  |  | 21.52 |  |  |  |  |
Outstanding at June 30, 2023 | 1.0 |  |  | 22.39 |  |  |  |  |
Vested and expected to vest at June 30, 2023 | 1.0 |  |  | $ | 22.39 |  |  | $ | — |  |  | 0.74
Exercisable | 1.0 |  |  | $ | 22.39 |  |  | $ | — |  |  | 0.74
The Company’s non-vested shares of Series A Preferred Stock as of June 30, 2023 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, 2022 | 0.2 |  |  | $ | 3.65 |
Forfeited | (0.2) |  |  | 3.65 |
Non-vested at June 30, 2023 | — |  |  | $ | — |
Long-term Equity Program for CEO 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, $93.4 and $170.9 were recognized in fiscal years ended June 30, 2023 and 2022. In addition, $15.9 will be recognized in the fiscal year ending 2024. In connection with this Award, on October 29, 2021, JAB Beauty B.V., the Company’s largest stockholder and a wholly-owned subsidiary of JAB Holding Company S.à r.l., completed the transfer of 10,000,000 shares of Common Stock to Ms. Nabi. In the event Ms. Nabi remains employed through the third vesting date, JAB Beauty B.V. has agreed, pursuant to an equity transfer agreement, to transfer (either directly or through contributing to the Company) an additional 5,000,000 shares of Common Stock to Ms. Nabi. On August 31, 2022, the Company issued 10,000,000 shares of Class A Common Stock to Ms. Nabi in connection with the second vesting of the Award. On May 4, 2023 the Company granted Ms. Nabi 10,416,667 RSUs (the “Second Award”), which will vest and settle in shares of the Company’s Class A Common Stock, par value $0.01 per share over five years on the following vesting schedule: (i) 15% on September 1, 2024, (ii) 15% on September 1, 2025, (iii) 20% on September 1, 2026, (iv) 20% on September 1, 2027; and (v) 30% on September 1, 2028, in each case subject to Ms. Nabi’s continued employment through the applicable vesting date. The Company will recognize approximately $109.6 of share-based compensation expense, on a straight-line basis over the vesting period, based on the fair value on the grant date, net of forfeitures. The amount of compensation cost recognized at each vesting date must at least equal the portion of the award legally vested. For the fiscal year ended June 30, 2023, $3.2 was recognized. In addition, pursuant to the terms of the amended employment agreement the Company agreed to grant Ms. Nabi an award of 2,083,333 PRSUs which shall fully vest on September 1, 2026, subject to the achievement of three-year performance objectives to be determined by the Board on or around September 2023 and subject to Ms. Nabi’s continued employment. The new arrangement also provides that on or around each September 1 of 2024 through 2027, the Company shall grant Ms. Nabi an additional award of 2,083,333 PRSUs, which shall vest on the third-year anniversary of the respective grant date, subject in each case to the achievement of three-year performance objectives to be determined by the Board. The Company will recognize share-based compensation expense associated with these PRSUs, on a straight-line basis over the vesting period, based on the fair value on the grant date when it is probable that the performance condition will be achieved. In the event that JAB and Ms. Nabi sell shares of Common Stock for cash in a privately negotiated transaction, subject to Board approval, the Company will grant Ms. Nabi new options to acquire shares of Common Stock (the “Reload Options”) in an amount equal to the number of shares sold by Ms. Nabi in such transaction. The Reload Options will have a strike price equal to the greater of the volume weighted average price for shares at the time of the relevant transaction and the fair market value on the date of grant. The potential expense attributed to the reload options will be recognized when the reload options are granted. 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 2023, 2022 and 2021, 17.2 million, 4.6 million and 38.1 million RSUs were granted under the Omnibus LTIP and 0.3 million, 0.3 million and 0.3 million RSUs were granted under the 2007 Stock Plan for Directors, respectively. The Company’s outstanding RSUs as of June 30, 2023 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, 2022 | 32.4 |  |  |  |  |
Granted | 17.5 |  |  |  |  |
Settled | (14.9) |  |  |  |  |
Cancelled | (1.1) |  |  |  |  |
Outstanding at June 30, 2023 | 33.9 |  |  |  |  |
Vested and expected to vest at June 30, 2023 | 31.0 |  |  | $ | 381.0 |  |  | 2.26
The share-based compensation expense recorded in connection with the RSUs was $131.9, $197.2 and $26.1 during fiscal 2023, 2022 and 2021, respectively. The Company’s outstanding and non-vested RSUs as of June 30, 2023 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, 2022 | 32.0 |  |  | $ | 8.63 |
Granted | 17.5 |  |  | 9.70 |
Vested | (15.0) |  |  | 8.79 |
Cancelled | (1.1) |  |  | 8.02 |
Outstanding and nonvested at June 30, 2023 | 33.4 |  |  | $ | 9.38 |
The total intrinsic value of RSUs vested and settled during fiscal 2023, 2022 and 2021 is $34.3, $33.5 and $32.9, respectively. Performance Restricted Stock Units During fiscal 2023, 1.2 million PRSUs were granted under the Omnibus LTIP. The Company’s outstanding PRSUs as of June 30, 2023 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, 2022 | — |  |  |  |  |
Granted | 1.2 |  |  |  |  |
Settled | — |  |  |  |  |
Outstanding at June 30, 2023 | 1.2 |  |  |  |  |
Vested and expected to vest at June 30, 2023 | 1.0 |  |  | 12.3 |  |  | 2.31
The share-based compensation expense recorded in connection with the PRSUs was $1.5 during fiscal 2023. The Company’s outstanding and non-vested PRSUs as of June 30, 2023 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, 2022 | — |  |  |
Granted | 1.2 |  |  | 6.62 |
Vested | — |  |  |
Outstanding and nonvested at June 30, 2023 | 1.2 |  |  | $ | 6.62 |
The total intrinsic value of PRSUs vested and settled during fiscal 2023 was $0.0. Restricted Stock During fiscal 2023, 2022 and 2021, 0.4 million, 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, 2023 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, 2022 | 0.6 |  |  |  |  |
Granted | 0.4 |  |  |  |  |
Settled | (0.3) |  |  |  |  |
Outstanding at June 30, 2023 | 0.7 |  |  |  |  |
Vested and expected to vest at June 30, 2023 | 0.6 |  |  | $ | 7.8 |  |  | 1.95
The share-based compensation expense recorded in connection with the restricted stock was $2.7, $1.8, $1.0 during fiscal 2023, 2022 and 2021, respectively. The Company’s outstanding and non-vested restricted stock as of June 30, 2023 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, 2022 | 0.6 |  |  | $ | 6.58 |
Granted | 0.4 |  |  | 6.62 |
Vested | (0.3) |  |  | 5.94 |
Outstanding and nonvested at June 30, 2023 | 0.7 |  |  | $ | 6.94 |
The total intrinsic value of restricted stock vested and settled during fiscal 2023 and 2022 was $2.6 and $1.7, 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, 2023.

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