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SHARE-BASED COMPENSATION PLANS | 12 Months Ended
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Jun. 30, 2024
Share-Based Payment Arrangement [Abstract] |
SHARE-BASED COMPENSATION PLANS | SHARE-BASED COMPENSATION PLANS The Company has various share-based compensation programs (“the Compensation Plans”) under which awards, including non-qualified stock options, Series A 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, 2024, 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, 2024, approximately 46.0 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. Total share-based compensation from continuing operations is shown in the table below:
| 2024 |  | 2023 |  | 2022
Equity plan expense (a) | $ | 88.5 |  |  | $ | 134.7 |  |  | $ | 195.4 |
Liability plan expense | 0.3 |  |  | 1.2 |  |  | 0.1 |
Fringe expense | 3.0 |  |  | 1.7 |  |  | 2.3 |
Total share-based compensation expense(b) | $ | 91.8 |  |  | $ | 137.6 |  |  | $ | 197.8 |
Income tax benefits recognized in earnings related to share-based compensation | $ | 3.0 |  |  | $ | 2.2 |  |  | $ | 1.6 |
Excess tax benefits related to share-based compensation | $ | 1.1 |  |  | $ | — |  |  | $ | 0.2 |
(a) Equity plan shared-based compensation expense of $88.5, $134.7, and $195.4 was recorded to additional paid in capital and presented in the Consolidated Statement of Equity for the fiscal years ended June 30, 2024, 2023, and 2022, respectively. (b)Expenses relating to share-based awards granted to non-Coty employees (Wella) are recorded within Other expense (income), net, within the Consolidated Statement of Operations. See Note 25 -Related Party Transactions for additional information. The share-based compensation expense for fiscal 2024, 2023 and 2022 of $91.8, $137.6 and $197.8, respectively, includes $91.8, $138.7 and $202.0 expense for the respective period offset by nil, $(1.1) and $(4.2) of income for the respective periods primarily due to significant executive forfeitures of share-based compensation instruments. As of June 30, 2024, the total unrecognized share-based compensation expense related to unvested stock options, PRSUs, and restricted stock units and other share awards is $0.1, $30.3 and $134.7, respectively. The unrecognized share-based compensation expense related to unvested stock options, PRSUs, and restricted stock units and other share awards is expected to be recognized over a weighted-average period of 0.38, 2.18 and 3.30 years, respectively. Non-Qualified Stock Options During fiscal 2024, 2023 and 2022, the Company granted nil, 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, 2024 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, 2023 | 5.1 |  |  | $ | 13.06 |  |  |  |  |
Exercised | (1.2) |  |  | 11.08 |  |  |  |  |
Forfeited | (0.3) |  |  | 11.79 |  |  |  |  |
Outstanding at June 30, 2024 | 3.6 |  |  | $ | 13.82 |  |  |  |  |
Vested and expected to vest at June 30, 2024 | 3.5 |  |  | $ | 13.85 |  |  | $ | — |  |  | 3.91
Exercisable at June 30, 2024 | 3.3 |  |  | $ | 13.98 |  |  | $ | — |  |  | 3.80
Of the 3.6 million stock options outstanding at June 30, 2024, 1.7 million vest on the fifth anniversary of the grant date and 1.9 million vest on the graded vesting schedule. As of June 30, 2024, the grant prices of the outstanding options ranged from $11.08 to $19.17, and the grant prices for exercisable options ranged from $11.08 to $19.17. The total intrinsic value of stock options vested and exercised during fiscal 2024, 2023 and 2022 was $1.2, $0.1 and nil. The Company’s non-vested non-qualified stock options as of June 30, 2024 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, 2023 | 1.0 |  |  | $ | 3.02 |
Vested | (0.4) |  |  | 2.93 |
Forfeited | (0.3) |  |  | 2.88 |
Non-vested at June 30, 2024 | 0.3 |  |  | $ | 3.41 |
The share-based compensation expense recognized on the non-qualified stock options was $0.3, $1.3 and $(0.9) during fiscal 2024, 2023 and 2022, respectively. 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, 2024, 2023 and 2022 and the Company recognized an (income) expense of $(0.8), $0.2 and $(0.2) in fiscal 2024, 2023 and 2022, respectively. See Note 21—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
Expected life, in years |  | 0.74 years |  | 1.74 years
Expected volatility |  | 66.31% |  | 65.57%
Risk-free rate of return |  | 5.44% |  | 2.89%
Dividend yield on Class A Common Stock |  | —% |  | 1.56%
Pursuant to the Series A Preferred Stock subscription agreement dated March 27, 2017, the vested Series A Preferred Stock expired on March 31, 2024. As such, the fair value of the outstanding Series A Preferred Stock was zero and no valuation was performed. 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, 2024 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, 2023 | 1.0 |  |  | $ | 22.39 |  |  |  |  |
Forfeited | — |  |  | — |  |  |  |  |
Outstanding at June 30, 2024 | 1.0 |  |  | — |  |  |  |  |
Vested and expected to vest at June 30, 2024 | — |  |  | $ | — |  |  | $ | — |  |  | — |
Exercisable | — |  |  | $ | — |  |  | $ | — |  |  | — |
The Company has no non-vested shares of Series A Preferred Stock as of June 30, 2024 or 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 vested and settled in 10.0 million 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. The Company recognized the 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. In connection with this Award, on October 29, 2021 and September 18, 2023, JAB, the Company’s largest stockholder and a wholly-owned subsidiary of JAB Holding Company S.à r.l., completed the transfer of 10.0 million and 5.0 million shares of Class A Common Stock, respectively, to Ms. Nabi. On August 31, 2023 and 2022, the Company issued 5.0 million and 10.0 million shares of Class A Common Stock, respectively, to Ms. Nabi in connection with the third and second vesting of the Award. Pursuant to the term of the amended employment agreement on May 4, 2023, the Company granted Ms. Nabi a one-time award of 10,416,667 RSUs and will grant a total of 10,416,665 PRSUs in five equal tranches over the next five years. These two awards will vest periodically over the next seven years in accordance with the terms discussed below. Ms. Nabi's 10,416,667 RSUs 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. The first tranche of Ms. Nabi's PRSU award of 2,083,333 shares shall fully vest on September 1, 2026, subject to the achievement of three-year performance objectives determined by the Board on September 28, 2023 (the grant date) and subject to Ms. Nabi’s continued employment. The next four tranches of 2,083,333 PRSUs will be granted on or around each September 1 of 2024 through 2027, 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 During fiscal 2024, 2023 and 2022, 4.1 million, 17.2 million and 4.6 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, 2024 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, 2023 | 33.9 |  |  |  |  |
Granted | 4.4 |  |  |  |  |
Settled | (15.1) |  |  |  |  |
Cancelled | (1.1) |  |  |  |  |
Outstanding at June 30, 2024 | 22.1 |  |  |  |  |
Vested and expected to vest at June 30, 2024 | 19.5 |  |  | $ | 195.7 |  |  | 2.85
The share-based compensation expense recorded in connection with the RSUs and other share awards was $78.5, $131.9 and $197.2 during fiscal 2024, 2023 and 2022, respectively, of which $36.5, $96.6 and $170.9 related to Ms. Nabi's award, as described above. The Company’s outstanding and non-vested RSUs as of June 30, 2024 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, 2023 | 33.4 |  |  | $ | 9.38 |
Granted | 4.4 |  |  | 9.79 |
Vested | (15.4) |  |  | 8.36 |
Cancelled | (1.1) |  |  | 7.59 |
Outstanding and nonvested at June 30, 2024 | 21.3 |  |  | $ | 9.92 |
The total intrinsic value of RSUs vested and settled during fiscal 2024, 2023 and 2022 is $166.7, $34.3 and $33.5, respectively. Performance Restricted Stock Units During fiscal 2024 and 2023, 4.0 million and 1.2 million PRSUs were granted under the Omnibus LTIP, respectively. The Company’s outstanding PRSUs as of June 30, 2024 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, 2023 | 1.2 |  |  |  |  |
Granted | 4.0 |  |  |  |  |
Settled | — |  |  |  |  |
Cancelled | (0.1) |  |  |  |  |
Outstanding at June 30, 2024 | 5.1 |  |  |  |  |
Vested and expected to vest at June 30, 2024 | 4.4 |  |  | 43.9 |  |  | 2.05
The share-based compensation expense recorded in connection with the PRSUs was $10.7, $1.5 and nil during fiscal 2024, 2023 and 2022, respectively, of which $5.4, nil and nil related to Ms. Nabi's award, as described above. The Company’s outstanding and non-vested PRSUs as of June 30, 2024 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, 2023 | 1.2 |  |  | $ | 6.62 |
Granted | 4.0 |  |  | 10.53 |
Vested | — |  |  |
Cancelled | (0.1) |  |  | 7.86 |
Outstanding and nonvested at June 30, 2024 | 5.1 |  |  | $ | 9.66 |
The total intrinsic value of PRSUs vested and settled during fiscal 2024, 2023 and 2022 was nil. Restricted Stock During fiscal 2024, 2023 and 2022, 0.3 million, 0.4 million, and 0.3 million, restricted stock awards were granted under the Omnibus LTIP, respectively. The Company’s outstanding restricted stock as of June 30, 2024 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, 2023 | 0.7 |  |  |  |  |
Granted | 0.3 |  |  |  |  |
Settled | (0.5) |  |  |  |  |
Cancelled | (0.5) |  |  |  |  |
Outstanding at June 30, 2024 | — |  |  |  |  |
Vested and expected to vest at June 30, 2024 | — |  |  | $ | — |  |  | — |
The share-based compensation expense recorded in connection with the restricted stock was $3.1, $2.7, $1.8 during fiscal 2024, 2023 and 2022, respectively. Due to significant executive forfeitures, 0.5 million shares of restricted stock were cancelled and reclassified as Treasury Stock. The Company’s outstanding and non-vested restricted stock as of June 30, 2024 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, 2023 | 0.7 |  |  | $ | 6.94 |
Granted | 0.3 |  |  | 9.63 |
Vested | (0.5) |  |  | 9.19 |
Cancelled | (0.5) |  |  | 8.09 |
Outstanding and nonvested at June 30, 2024 | — |  |  | $ | — |
The total intrinsic value of restricted stock vested and settled during fiscal 2024, 2023 and 2022 was $5.0, $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, 2024.

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