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Stockholders' Equity (Deficit)
 12 Months Ended
Dec. 31, 2021
Stockholders' Equity Note [Abstract]  
Stockholders' Deficit
The following reflects total stock-based compensation expense recognized under all programs:
Year Ended December 31,
202320222021
Related to L&W stock options$— $1 $31 
Related to L&W RSUs89 56 75 
Related to SciPlay RSUs(1)
29 12 7 
   Total(2)
$118 $69 $113 
(1) Stock-based compensation expense related to SciPlay RSUs was for awards granted prior to the SciPlay Merger. Upon completion of the SciPlay Merger, these RSUs were converted to awards denominated in L&W shares, as discussed below within SciPlay Long-Term Incentive Plan and Modification.
(2) The years ended December 31, 2023, 2022 and 2021 include $63 million, $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, 2023 and 2022:
 December 31,
 20232022
Shares outstanding as of beginning of period91 97 
Shares issued as part of equity-based compensation plans and the employee stock purchase plan (“ESPP”), net of shares surrendered1 1 
Shares repurchased into treasury stock(2)(7)
Shares outstanding as of end of period90 91 
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 and 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 2023, 2022 and 2021, we issued approximately 38,000, 50,000 and 40,000 shares of common stock, respectively, at average prices of $63.85, $44.08 and $60.09 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, 2023, 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, 2023, we had approximately 4 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 2023 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, 2022
1.8 3.5$34.40 $45 
Granted— — $— $— 
Exercised(0.3)— $31.81 $14 
Cancelled— — $— $— 
Options outstanding as of December 31, 2023
1.5 3.1$34.98 $72 
Options exercisable as of December 31, 2023
1.5 3.0$34.85 $72 
Options expected to vest as of December 31, 2023
— 7.2$54.56 $— 
No stock options were granted during the period ended December 31, 2023. The weighted-average grant date fair value of options granted during 2022 and 2021 was $57.67 and $74.16, respectively. The aggregate intrinsic value of the options exercised during the years ended December 31, 2023, 2022 and 2021 was approximately $14 million, $3 million and $7 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:
20222021
Assumptions:
Expected volatility71 %74 %
Risk-free interest rate3.01 %0.96 %
Dividend yield— — 
Expected life (in years)66
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, 2023, unrecognized stock-based compensation expense relating to unvested stock options was not material. During the year ended December 31, 2023, we received $11 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 2023 is presented below:
Number of Restricted Stock UnitsWeighted Average Grant Date Fair Value
Unvested RSUs as of December 31, 2022
1.7 $46.66 
Granted1.2 $59.10 
SciPlay Converted RSUs0.6 $54.57 
Vested(1.0)$45.00 
Cancelled(0.2)$50.38 
Unvested RSUs as of December 31, 2023
2.3 $55.53 
The weighted-average grant date fair value of RSUs granted during 2023 and 2022 was $59.10 and $56.88, 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, 2023, we had $80 million of unrecognized stock-based compensation expense relating to all 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, 2023, 2022 and 2021 was $62 million, $118 million and $88 million, respectively.
SciPlay Long-Term Incentive Plan and Modification
In 2019, we adopted the SciPlay Long-Term Incentive Plan (“SciPlay LTIP”). The SciPlay LTIP authorized 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.
In connection with the SciPlay Merger, all of the outstanding RSUs and performance-based RSUs previously granted to SciPlay employees were converted to awards denominated in shares of L&W common stock. The share conversion was calculated using a ratio in which the numerator is the $22.95 per share of merger consideration paid to holders of SciPlay Class A common stock and the denominator is the average of the volume-weighted averages of the L&W common stock prices on each of the ten consecutive trading days ending on (and including) the trading day that was two trading days prior to the date of the merger agreement. Approximately 2.0 million time-based and performance-based SciPlay RSUs with an average grant price of $16.39 per share of SciPlay Class A common stock were converted in the SciPlay Merger as described above. These awards were converted into approximately 0.6 million L&W awards, resulting in total modified compensation cost of $35 million, which will continue to be expensed over the life of the awards. As of December 31, 2023, $27 million is expected to be expensed over the remaining service period of the affected awards, a weighted average of 1.3 years.
Share Repurchase Program
On February 25, 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, 2023, we repurchased 2.4 million shares of common stock under the program at an aggregate cost of $171 million (including excise tax).
During the year ended December 31, 2023 and prior to the SciPlay Merger and termination of the SciPlay share repurchase program, SciPlay repurchased 1.4 million shares of Class A common stock at an aggregate cost of $23 million.