XML 43 R23.htm IDEA: XBRL DOCUMENT

Stock-Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

17. Stock-Based Compensation

The Company’s stock-based compensation plans authorize awards of restricted stock units (“RSUs”), stock options and other equity-related awards. The Company’s 2023 Omnibus Incentive Plan (“2023 Plan”) was adopted by the Company’s Board of Directors on April 10, 2023 and approved by our stockholders on May 9, 2023. The 2023 Plan succeeds the 2021 Omnibus Incentive Plan and the 2018 Omnibus Incentive Plan (collectively, the “Prior Plans”) such that shares subject to the unused reserves of the Prior Plans (e.g., as a result of termination or forfeiture of awards) are instead rolled over to the 2023 Plan. The Company has two other predecessor plans, the 2016 Long-Term Incentive Plan and the Second Long-Term Incentive Plan (collectively, the “Terminated Plans”), whose available balances were terminated in connection with approval of the 2018 Omnibus Incentive Plan. Although outstanding awards under the Terminated Plans remain governed by the terms of such plans, no new awards may be granted or become available for grant thereunder.

As of December 31, 2023, there were (i) 378,000 shares subject to outstanding awards under the 2023 Plan, including 250,000 shares subject to performance-based target awards, 93,750 shares subject to market-price vesting conditions, and 31,250 shares subject to awards as to which the applicable vesting conditions have been met which remain subject to deferred settlement, (ii) 2,433,225 shares subject to outstanding awards under the Prior Plans, including 358,506 shares subject to performance-based target awards, 97,500 shares subject to market-price vesting conditions, 190,586 shares subject to awards that were previously subject to performance criteria that were determined to have been met for the applicable performance year which awards continue to remain subject to a time-based vesting schedule and 1,225,300 shares subject to awards as to which the applicable vesting conditions have been met which remain subject to deferred settlement; and (iii) 1,168,686 shares subject to outstanding awards under the Terminated Plans as to which the applicable vesting conditions have been met which remain subject to deferred settlement. As of December 31, 2023, there were 2,881,460 shares available for new awards under the 2023 Plan (which includes shares rolled over from the Prior Plans) and no shares available for new awards under the Prior Plans. All awards outstanding as of December 31, 2023 consisted of RSUs (including time-based RSUs, performance-based RSUs and stock price based RSUs).

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2023 AND 2022, AND FOR THE YEARS ENDED

DECEMBER 31, 2023, 2022 AND 2021

The Company also has an employee stock purchase plan (“ESPP”) that authorizes the issuance of up to an aggregate of 500,000 shares of common stock pursuant to purchases thereunder by employees. The ESPP, which was approved by stockholders in July 2017, is administered by the Compensation Committee which has discretion to designate the length of offering periods and other terms subject to the requirements of the ESPP. Offerings may also be under the ESPP’s subplan for UK-based employees (the “Subplan”) which was adopted in June 2022 and is designed to meet the requirements of a sharesave scheme under UK law. The terms applicable to offerings approved under the ESPP and Subplan for 2022 and 2023 are described below.

ESPP — Eligible employees may contribute up to 10% of base compensation through payroll deductions over a period of twelve months, a maximum of 1,000 shares may be purchased per participant, the purchase price is equal to 85% of the lower of the closing price of the common stock at the beginning of the offering period and the end of the offering period and shares are purchased on the last day of the offering period.

Subplan (UK) — Eligible employees may contribute a maximum amount of £350 per month through payroll deductions over a period of three years, the purchase price is equal to 85% of the closing price of the common stock on the day prior to commencement of the enrollment window for the offering, and participants have a period of six months following the end of the offering to elect to purchase shares or receive a refund.

As of December 31, 2023, a total of 463,671 shares remained available for purchase under the ESPP. No shares were issued under the ESPP in 2021 or 2022 and a total of 4,080 shares were purchased in 2023 (at a purchase price of $8.483 per share) and such shares were issued in 2024. Based on enrollments in the ESPP (including the Subplan), an aggregate of approximately 105,000 shares were subject to outstanding purchase rights thereunder as of December 31, 2023.

A summary of the Company’s RSU activity is as follows:

		Number of Shares				Weighted Average Grant Date Fair Value Per Share
Unvested Outstanding at January 1, 2023			1,647,544			$	11.11
Granted ⁽¹⁾			888,225			$	14.14
Forfeited			(66,880	)		$	(14.00	)
Vested ⁽²⁾			(914,214	)		$	(11.52	)
Unvested Outstanding at December 31, 2023			1,554,675			$	12.57

(1)	The amount shown as granted in the table includes 219,213 performance-based target RSUs as to which the number eligible to vest ranged from 0% to 200% of the target amount of RSUs (a maximum of 438,426 RSUs based on attainment of Adjusted EBITDA targets for 2023 and criteria previously set by the Compensation Committee). Following the year ended December 31, 2023, the Committee determined that the performance level attained would equate to approximately 47% of the target amount of RSUs. The amount shown in the table includes additional performance-based RSUs, awarded as sign-on grants to our Executive Chairman and our CEO (comprising tranches covering an aggregate of 250,000 Adjusted EBITDA RSUs (with targets for 2025, 2026 and 2027) and 125,000 stock-price based RSUs) which can be earned at up to 100% of the target amount of RSUs.

(2)	The RSUs that vested during the year ended December 31, 2023 included: (a) approximately 351,000 RSUs that are subject to deferred settlement terms; and (b) approximately 546,000 RSUs that vested on the last day of the year and will be settled on a net share basis in 2024.

The Company issued a total of 435,283 shares during the year ended December 31, 2023 in net settlement of RSUs which included an aggregate of 332,227 shares in settlement of RSUs that vested during the prior year on December 30, 2022.

The weighted average grant date fair value of awards granted for years ended December 31, 2023, December 31, 2022 and December 31, 2021 amounted to $14.14, $14.36 and $10.15, respectively. The vesting date value of RSUs vesting for years ended December 31, 2023, December 31, 2022 and December 31, 2021 amounted to $10.2 million, $10.8 million and $16.1 million, respectively. There was no income tax benefit recognized related to awards that vested during the years ended December 31, 2023, 2022, and 2021, respectively as there is a full valuation allowance in place against the RSU scheme’s deferred tax asset.

Stock-based compensation is recognized as an expense over the requisite service period, which is generally the vesting period. For performance awards that are contingent upon the Company achieving certain pre-determined financial performance targets, compensation expense is calculated based on the number of shares expected to vest after assessing the probability that the performance criteria will be met. Determining the probability of achieving a performance target requires estimates and judgment. For market-based awards that are contingent upon the Company’s stock achieving certain pre-determined price targets, compensation expense is calculated based upon the determination of the fair value of the awards as derived through multiple running of the Monte Carlo valuation model, with the fair value recognized on a straight-line basis over the requisite service period. The requisite service period for awards to employees is generally satisfied over a vesting period of three years (and one year for non-employee directors). The Company accounts for forfeitures as they occur. For stock purchase rights under the Company’s ESPP (including its subplan), the Company estimates fair value using the Black-Scholes option pricing model on the dates of grant, with the compensation expense recognized over the requisite service period.

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2023 AND 2022, AND FOR THE YEARS ENDED

DECEMBER 31, 2023, 2022 AND 2021

The Company recognized stock-based compensation expense as follows:

		Year Ended December 31, 2023				Year Ended December 31, 2022				Year Ended December 31, 2021
		(in millions)
Restricted Stock and RSUs		$	10.4			$	10.1			$	11.9
ESPP			0.2				—				—
Payroll taxes on vesting of RSUs			0.6				0.7				1.1
		$	11.2			$	10.8			$	13.0

Total unrecognized compensation expense related to unvested stock awards and unvested RSUs at December 31, 2023 amounts to $5.4 million and is expected to be recognized over a weighted average period of 1.2 years.