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Stockholders' Equity (Deficit)
 12 Months Ended
Dec. 31, 2020
Stockholders' Equity Note [Abstract]  
Stockholders' Deficit
The following reflects total stock-based compensation expense recognized under all programs:
Year Ended December 31,
202220212020
Related to L&W stock options$1 $31 $8 
Related to L&W RSUs56 75 26 
Related to SciPlay RSUs12 7 22 
   Total(1)
$69 $113 $56 
(1) The years ended December 31, 2022 and 2021 include $24 million and $34 million, respectively, classified as liability awards.
The following table sets forth the change in the number of shares of common stock outstanding during the fiscal years ended December 31, 2022 and 2021:
 December 31,
 20222021
Shares outstanding as of beginning of period97 95 
Shares issued as part of equity-based compensation plans and the employee stock purchase plan (“ESPP”), net of shares surrendered1 2 
Shares repurchased into treasury stock(7)— 
Shares outstanding as of end of period91 97 
Series A Junior Participating Preferred Stock and Rights Agreement
Under our 2018 Amended and Restated Rights Agreement (which amended the rights agreement between L&W and American Stock Transfer & Trust Company, LLC) (the “Rights Agreement”), we reserved for issuance 20,000 shares of Series A Junior Participating Preferred Stock (“Preferred Stock”), par value $.001 per share, upon the exercise of rights under our Amended and Restated Rights Agreement. The Amended and Restated Rights Agreement provides for a dividend of one preferred share purchase right (“Right”) for each share of common stock of L&W. Each Right entitles the holder to purchase one ten-thousandth of a share of Series A Junior Preferred Stock for a purchase price of $109.00, subject to adjustment as provided in the Amended and Restated Rights Agreement.
The Amended and Restated Rights Agreement was extended to expire on June 19, 2023 (subject to earlier expiration as described in the Rights Agreement). The Board submitted such amendment extending the Rights Agreement for ratification by a vote by the Company’s stockholders at the Company’s 2021 annual stockholders’ meeting, and it was approved by the affirmative vote of holders of a majority of outstanding shares of common stock of L&W entitled to vote thereon. As of December 31, 2022, no shares of Preferred Stock were outstanding and no Rights were exercised.
L&W Stock-Based and Other Incentive Compensation
Pursuant to our incentive stock plans we offer stock-based compensation in the form of stock options and RSUs to employees and our non-employee directors. The terms of such stock option and RSU awards, including the vesting schedule of such awards, are determined at our discretion subject to the terms of the applicable equity-based compensation plan. We also offer an ESPP, which allows for a total of up to 2 million shares of common stock to be purchased by eligible employees under offerings made each January 1 and July 1. Employees participate through payroll deductions up to a maximum of 15% of eligible compensation. The term of each offering period is six months, and shares are purchased on the last day of the offering period at a 15% discount to the stock’s market value. For offering periods in 2022, 2021 and 2020, we issued approximately 50,000, 40,000 and 80,000 shares of common stock, respectively, at average prices of $44.08, $60.09 and $19.55 per share, respectively.
Options granted over the last several years have generally become exercisable in four equal installments beginning on the first anniversary of the date of grant or when certain performance targets are determined to have been met, in all cases, with
a maximum term of ten years. RSUs typically vest in three or four equal installments beginning on the first anniversary of the date of grant or when certain performance targets are determined to have been met.
We recognize expense for stock-based compensation plans based on the estimated grant date fair value of the related awards in accordance with ASC 718. Stock options are granted with exercise prices that are not less than the fair market value of our common stock on the date of grant. We periodically grant certain stock-based awards that are contingent upon L&W or certain of our subsidiaries achieving certain pre-determined financial performance targets. Upon determining that the performance target is probable, the fair value of the award is recognized over the service period. Determining the probability of achieving a performance target requires estimates and judgment.        
As of December 31, 2022, we had approximately 27 million shares of common stock authorized for awards under the 2003 Incentive Compensation Plan, as amended and restated (the “2003 Plan”) (plus available shares from a pre-existing equity-based compensation plan). As of December 31, 2022, we had approximately 5 million shares reserved under the 2003 Plan for future grants of equity awards and less than 0.1 million shares available under a pre-existing plan.
Stock Options
A summary of the changes in stock options outstanding under our equity-based compensation plans during 2022 is presented below:
Number of OptionsWeighted Average Remaining Contract Term (Years)Weighted Average Exercise Price (per share)Aggregate Intrinsic Value
Options outstanding as of December 31, 2021
2.0 5.3$33.59 $68 
Granted— — $57.67 $— 
Exercised(0.1)— $25.94 $3 
Cancelled(0.1)— $22.69 $— 
Options outstanding as of December 31, 2022
1.8 3.5$34.40 $45 
Options exercisable as of December 31, 2022
1.8 3.5$34.35 $44 
Options expected to vest as of December 31, 2022
0.1 7.2$37.49 $1 
The weighted-average grant date fair value of options granted during 2022, 2021 and 2020 was $57.67, $74.16 and $35.41, respectively. The aggregate intrinsic value of the options exercised during the years ended December 31, 2022, 2021 and 2020 was approximately $3 million, $7 million and $6 million respectively.
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. The weighted-average assumptions used in the model are outlined in the following table:
202220212020
Assumptions:
Expected volatility71 %74 %75 %
Risk-free interest rate3.01 %0.96 %0.36 %
Dividend yield— — — 
Expected life (in years)666
The computation of the expected volatility is based on historical daily stock prices over a period commensurate with the expected life of the option. Expected life is based on annual historical employee exercise behavior of option grants with similar vesting periods and option expiration dates. The risk-free interest rate is based on the yield of zero-coupon U.S. Treasury securities of comparable terms. We do not anticipate paying dividends in the foreseeable future.
At December 31, 2022, we had $1 million of unrecognized stock-based compensation expense relating to unvested stock options that will be amortized over a weighted-average period of approximately two years. During the year ended December 31, 2022, we received $3 million in cash from the exercise of stock options.
Restricted Stock Units
A summary of the changes in RSUs outstanding under our equity-based compensation plans during 2022 is presented below:
Number of Restricted Stock UnitsWeighted Average Grant Date Fair Value
Unvested RSUs as of December 31, 2021
2.7 $32.03 
Granted1.8 $56.88 
Vested(2.0)$38.91 
Cancelled(0.8)$38.23 
Unvested RSUs as of December 31, 2022
1.7 $46.66 
The weighted-average grant date fair value of RSUs granted during 2022 and 2021 was $56.88 and $55.64, respectively. The fair value of each RSU grant is based on the market value of our common stock at the time of grant. At December 31, 2022, we had $48 million of unrecognized stock-based compensation expense relating to unvested RSUs amortized over a weighted-average period of approximately two years. The fair value at vesting date of RSUs vested during the years ended December 31, 2022, 2021 and 2020 was $118 million, $88 million and $17 million, respectively.
SciPlay Stock-Based Compensation
In 2019, SciPlay adopted the SciPlay Long-Term Incentive Plan (“SciPlay LTIP”). The SciPlay LTIP authorizes the issuance of up to 6.5 million shares of SciPlay’s Class A common stock to be granted in connection with awards of incentive and nonqualified stock options, restricted stock, RSUs, stock appreciation rights and performance-based awards. As of December 31, 2022, there were a total of 2.0 million time-based and performance-based SciPlay RSUs outstanding with an average grant price of $13.56 per share of SciPlay Class A common stock. As of December 31, 2022, SciPlay had $22 million in unrecognized stock-based compensation expense that is expected to be recognized over a weighted-average expected vesting period of 1.5 years.
Share Repurchase Programs
On March 1, 2022, our Board of Directors approved a share repurchase program under which the Company is authorized to repurchase, from time to time through February 25, 2025, up to an aggregate amount of $750 million of shares of our outstanding common stock. Repurchases may be made at the discretion of the Transaction Committee of the Board of Directors through one or more open market transactions, privately negotiated transactions, accelerated share repurchases, issuer tender offers or other derivative contracts or instruments, or a combination of the foregoing. During the year ended December 31, 2022, we repurchased 7.0 million shares of common stock under the program at an aggregate cost of $405 million.
On May 9, 2022, SciPlay’s Board of Directors approved a share repurchase program under which it is authorized to repurchase, from time to time through May 9, 2024, up to an aggregate amount of $60 million of shares of its outstanding Class A common stock. Repurchases may be made at the discretion of the Board of Directors or the Transaction Committee of the Board of Directors of SciPlay through one or more open market transactions, privately negotiated transactions, including block trades, accelerated share repurchases, issuer tender offers or other derivative contracts or instruments, “10b5-1” plan, or other financial arrangements or other arrangements. During the year ended December 31, 2022, SciPlay repurchased 2.7 million shares of Class A common stock under the program at an aggregate cost of $37 million.