Stock-Based Compensation

Wynn Resorts, Limited

The Company's 2002 Stock Incentive Plan, as amended and restated (the "WRL 2002 Plan"), allowed it to grant stock options and nonvested shares of Wynn Resorts, Limited's common stock to eligible directors, officers, employees, and consultants of the Company. Under the WRL 2002 Plan, a maximum of 12,750,000 shares of the Company's common stock was reserved for issuance.

On May 16, 2014, the Company adopted the Wynn Resorts, Limited 2014 Omnibus Incentive Plan (the "Omnibus Plan") after approval from its stockholders. The Omnibus Plan allows for the grant of stock options, restricted stock, restricted stock units, stock appreciation rights, performance awards and other share-based awards to the same eligible participants as the WRL 2002 Plan. Under the approval of the Omnibus Plan, no new awards may be made under the WRL 2002 Plan. The outstanding awards under the WRL 2002 Plan were transferred to the Omnibus Plan and will remain pursuant to their existing terms and related award agreements. The Company reserved 4,409,390 shares of its common stock for issuance under the Omnibus Plan. These shares were transferred from the remaining available amount under the WRL 2002 Plan.

The Omnibus Plan is administered by the Compensation Committee (the "Committee") of the Wynn Resorts, Limited Board of Directors. The Committee has discretion under the Omnibus Plan regarding which type of awards to grant, the vesting and service requirements, exercise price and other conditions, in all cases subject to certain limits. For stock options, the exercise price of stock options must be at least equal to the fair market value of the stock on the date of grant and the maximum term of such an award is 10 years.

As of December 31, 2014, the Company had an aggregate of 4,407,390 shares of its common stock available for grant as share-based awards under the Omnibus Plan.

Stock Options

The summary of stock option activity under the plans for the year ended December 31, 2014 is presented below:



	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2014	1,606,309		$	75.89
Granted	25,800		$	201.22
Exercised	(211,133	)	$	52.51
Forfeited or expired	(40,000	)	$	140.36
Outstanding at December 31, 2014	1,380,976		$	79.93	4.34	$	96,400,313
Fully vested and expected to vest at December 31, 2014	1,260,693		$	78.98	4.39	$	89,241,158
Exercisable at December 31, 2014	355,610		$	65.10	4.78	$	29,751,409

The following is provided for stock option exercises from the plans (in thousands, except weighted average grant date fair value):



	Years Ended December 31,
	2014		2013		2012
Weighted average grant date fair value	$	29.29	$	39.93	$	33.03
Intrinsic value	$	30,485	$	33,830	$	22,416
Cash received	$	11,086	$	20,436	$	15,583
Tax benefits realized	$	8,506	$	6,362	$	4,903

As of December 31, 2014, there was a total of $24.4 million of unamortized compensation related to stock options, which is expected to be recognized over a weighted-average period of 3.1 years.

Nonvested shares

The summary of nonvested share activity under the plans for the year ended December 31, 2014 is presented below:



	Shares		Weighted Average Grant Date Fair Value
Nonvested at January 1, 2014	397,500		$	113.13
Granted	54,500		209.92
Vested	(52,834	)	178.48
Forfeited	(9,166	)	104.79
Nonvested at December 31, 2014	390,000		$	118.00

The following is provided for the share award vesting from the plans (in thousands, except weighted average grant date fair value):



	Years Ended December 31,
	2014		2013		2012
Weighted average grant date fair value	$	178.48	$	125.56	$	110.04
Fair value of shares vested	$	9,430	$	36,328	$	15,653
Tax benefits realized	$	870	$	4,112	$	634

As of December 31, 2014, there was a total of $22.7 million of unamortized compensation related to nonvested shares, which is expected to be recognized over a weighted-average period of 3.0 years.

Wynn Macau, Limited

The Company’s majority owned subsidiary Wynn Macau, Limited has two stock-based compensation plans which provide awards based on shares of Wynn Macau, Limited's common stock. The shares available for issuance under these plans are separate and distinct from the common stock of Wynn Resorts, Limited's share plan and are not available for issuance for any awards under the Wynn Resorts, Limited share plan.

Share Option Plan

Wynn Macau, Limited adopted a stock incentive plan effective September 16, 2009 for the grant of stock options to purchase shares of Wynn Macau, Limited to eligible directors and employees of its subsidiaries (the "Share Option Plan"). The Share Option Plan is administered by Wynn Macau, Limited's Board of Directors, which have the discretion on the vesting and service requirements, exercise price, performance targets to exercise if applicable and other conditions, subject to certain limits. A maximum of 518,750,000 shares have been reserved for issuance under the Share Option Plan.

The summary of stock option activity under the plan for the year ended December 31, 2014 is presented below:



	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2014	2,910,000		$	2.44
Granted	644,000		$	4.00
Exercised	(464,000	)	$	1.66
Outstanding at December 31, 2014	3,090,000		$	2.88	7.5	$	—
Fully vested and expected to vest at December 31, 2014	3,090,000		$	2.88	7.5	$	—
Exercisable at December 31, 2014	990,000		$	2.37	6.5	$	505,273

The following is provided for stock option exercises from the Share Option Plan (in thousands, except weighted average grant date fair value):



	Years Ended December 31,
	2014		2013		2012
Weighted average grant date fair value	$	1.66	$	0.78	$	0.78
Intrinsic value	$	1,134	$	—	$	—
Cash received	$	773	$	—	$	—

As of December 31, 2014, there was a total of $1.3 million of unamortized compensation related to stock options, which is expected to be recognized over a weighted-average period of 3.4 years.

Share Award Plan

On June 30, 2014, the Company's majority-owned subsidiary Wynn Macau, Limited approved and adopted the Wynn Macau, Limited Employee Ownership Scheme (the "Share Award Plan"). The Share Award Plan allows for the grant of nonvested shares of Wynn Macau, Limited's common stock to eligible employees. The Share Award Plan is administered by Wynn Macau, Limited's Board of Directors and has been mandated under the plan to allot, issue and procedure the transfer of a maximum of 50,000,000 shares. The Board of Directors have discretion on the vesting and service requirements, exercise price and other conditions, subject to certain limits.

The summary of nonvested share activity under the Share Award Plan for the year ended December 31, 2014 is presented below:



	Shares		Weighted Average Grant Date Fair Value
Nonvested at January 1, 2014	—		—
Granted	8,019,000		$	3.81
Vested	—		—
Forfeited	(276,000	)	$	3.81
Nonvested at December 31, 2014	7,743,000		$	3.81

As of December 31, 2014, no shares have vested under the Share Award Plan.

Compensation Cost

The total compensation cost for stock-based compensation plans are allocated as follows (in thousands):



	Years Ended December 31,
	2014		2013		2012
Casino	$	8,360	$	4,791	$	4,794
Rooms	216		853		313
Food and beverage	753		1,202		178
Entertainment, retail and other	55		477		43
General and administrative	29,770		32,214		14,320
Pre-opening costs	42		—		—
Total stock-based compensation expense	39,196		39,537		19,648
Total stock-based compensation capitalized	5,710		195		195
Total stock-based compensation costs	$	44,906	$	39,732	$	19,843

During 2014, the Company recognized an incremental $17.9 million of stock-based compensation expense associated with the equity portion of 2014 annual performance awards for our executive management. These equity awards consist of immediately vested restricted stock granted in January 2015.

During the first quarter of 2014, the Company capitalized $5.5 million of stock-based compensation into construction for a restricted stock award granted which immediately vested. The restricted stock award was granted to an employee of the Company's design, development and construction subsidiary and will be amortized over the useful life of the related asset.

During the second quarter of 2013, the Company recognized $23.0 million of stock-based compensation expense due to the retirement of the Company's former chief operating officer and the related accelerated vesting of shares previously granted to him.

The Company uses the Black-Scholes valuation model to determine the estimated fair value for stock options with highly subjective assumptions, changes in which could materially affect the estimated fair value. Dividend yield is based on the estimate of annual dividends expected to be paid at the time of the grant. Expected volatility is based on implied and historical factors related to the Company’s common stock. The risk-free interest rate used for each period presented is based on the U.S. Treasury yield curve for stock options issued under the Wynn Resorts, Limited's plans and the Hong Kong Exchange Fund rates for stock options issued under the Share Option Plan, both at the time of grant for the period equal to the expected term. Expected term represents the weighted average time between the option’s grant date and its exercise date. The Company used historical award exercise activity and termination activity in estimating the expected term for the Wynn Resorts, Limited plans. The Company uses the simplified method for estimating the expected term for Wynn Macau, Limited's Share Option Plan.

The fair value of stock options granted under Wynn Resorts, Limited's stock-based compensation plans were estimated on the date of grant using the following weighted-average assumptions:



	Years Ended December 31,
	2014		2013		2012
Expected dividend yield	4.0	%	3.0	%	4.0	%
Expected volatility	43.3	%	39.4	%	48.8	%
Risk-free interest rate	1.6	%	1.1	%	1.2	%
Expected term (years)	6.5		6.7		7.0

The fair value of stock options granted under Wynn Macau, Limited's Share Option Plan was estimated on the date of grant using the following weighted-average assumptions:



	Years Ended December 31,
	2014		2013		2012
Expected dividend yield	5.0	%	5.0	%	4.0	%
Expected stock price volatility	40.9	%	43.3	%	49.0	%
Risk-free interest rate	1.1	%	0.6	%	0.7	%
Expected term (years)	6.5		6.5		6.5