Stock-Based Compensation (Notes)

9 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Caesars Entertainment Stock-Based Compensation

During the second quarter 2016, we implemented the FASB’s ASU No. 2016-09, which amended Topic 718, Compensation - Stock Compensation. This updated guidance amended the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. We applied the amended guidance using a modified retrospective transition method of a cumulative-effect adjustment to beginning equity of $1 million.

We maintain long-term incentive plans for management, other personnel, and key service providers. The plans allow for granting stock-based compensation awards, based on CEC common stock (NASDAQ symbol “CZR”), including time-based and performance-based stock options, restricted stock units, restricted stock awards, stock grants, or a combination of awards.

Composition of Stock-Based Compensation Expense

	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2016		2015		2016		2015
Corporate expense	$	7	$	11	$	26	$	46
Property, general, administrative, and other	1		3		4		5
Total stock-based compensation expense	$	8	$	14	$	30	$	51

CIE Stock-Based Compensation

Historically, CIE has granted stock-based compensation awards in CIE common stock to its employees, directors, service providers and consultants in accordance with the Caesars Interactive Entertainment, Inc. Amended and Restated Management Equity Incentive Plan, which was intended to promote the interests of CIE and its shareholders by providing key employees, directors, service providers and consultants with an incentive to encourage their continued employment or service and improve the growth and profitability of CIE. These awards were classified as liability-based instruments and were re-measured at their fair value at each reporting date.

As described in Note 1, in September 2016, CIE sold its SMG Business, which represented the majority of CIE’s operations, and the SMG Business is now presented as a discontinued operation (see Note 14). Upon the closing of the SMG Business sale, all outstanding CIE stock-based compensation awards were deemed fully vested and were subsequently paid in cash in connection with the closing of the SMG Business sale, as described in Note 14. There was no liability related to CIE’s stock-based compensation awards as of September 30, 2016. As of December 31, 2015, the liability related to CIE’s stock-based compensation awards was $107 million, which was reported within deferred credits and other liabilities on the Balance Sheets.

As shown in the table below, the portion of CIE’s stock-based compensation expense directly identifiable with employees of the SMG Business was reclassified to discontinued operations for all periods presented in the Statements of Operations. The portion of CIE’s stock-based compensation expense not directly identifiable with employees of the SMG Business was included in property, general, administrative, and other in the Statements of Operations. For both the three and nine months ended September 30, 2016, the majority of stock-based compensation expense resulted from the acceleration of the vesting of CIE stock-based compensation awards.

Composition of CIE Stock-Based Compensation Expense

	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2016		2015		2016		2015
Property, general, administrative, and other	$	145	$	13	$	188	$	24
Discontinued operations	212		9		263		18
Total stock-based compensation expense	$	357	$	22	$	451	$	42

Stock Option and Restricted Stock Unit Activity

Grants During 2016

	September 30, 2016
	Quantity	Wtd Avg ⁽¹⁾
CEC
Restricted stock units	6,034,985	$	6.35
CIE
Stock options	377	19,166.18
Restricted stock units	103	16,452.14

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⁽¹⁾	Represents weighted average exercise price for stock options and weighted average fair value for restricted stock units.

Outstanding at End of Period

	September 30, 2016			December 31, 2015
	Quantity	Wtd Avg ⁽¹⁾		Quantity	Wtd Avg ⁽¹⁾
CEC
Stock options	9,907,155	$	11.69	10,638,219	$	12.90
Restricted stock units	8,513,882	8.05		6,329,435	12.06
CIE
Stock options	—	—		21,057	9,584.64
Restricted stock units	—	—		4,539	7,827.24

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⁽¹⁾	Represents weighted average exercise price for stock options and weighted average fair value for restricted stock units.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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