Stock-Based Compensation

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Caesars Entertainment Stock-Based Compensation Plans

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 (“RSUs”), performance stock units (“PSUs”), market-based stock units (“MSUs”), restricted stock awards, stock grants, or a combination of awards. Forfeitures are recognized in the period in which they occur.

Performance Incentive Plans

In July 2017, we adopted the Caesars Entertainment Corporation 2017 Performance Incentive Plan, (the “2017 Incentive Plan”) upon approval of the Company’s stockholders and, upon adoption, awards are no longer granted under the Caesars Entertainment Corporation 2012 Performance Incentive Plan, as amended, (the “2012 Incentive Plan”). As of December 31, 2019, there were approximately 2 million options outstanding under the 2012 Incentive Plan, which will expire between years 2022 and 2025. As of December 31, 2019, there were less than a million RSUs outstanding under the 2012 Incentive Plan.

The 2017 Incentive Plan allows for the granting of equity-based awards for directors, employees, officers and consultants or advisers who render services to Caesars Entertainment or its subsidiaries. Under the 2017 Incentive Plan, a total of 25 million shares of our common stock have been authorized for issuance. No options have been granted under the 2017 plan. RSUs granted under the 2017 Incentive Plan generally vest ratably over four years. PSUs vest over three years and MSUs cliff vest over three years. The number of unissued common shares reserved for future grants under the plan is 8 million as of December 31, 2019.

During November and December 2019, certain employees were terminated under the VSP (See Note 11). As a result of separation agreements, including those under the VSP, certain equity awards of the 43 participants were modified to decrease the requisite service period and, in some cases, allow for immediate vesting and issuance of shares of our common stock. As a result of these

modifications, we accelerated all unvested compensation expense for the modified awards and recorded incremental stock-based compensation of approximately $2 million based on the fair value of the modified awards.

Caesars Entertainment Stock Option Activity

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in millions)
Outstanding as of December 31, 2018	8,360,365		$	10.63	2.8	$	—
Exercised	(5,550,720	)	8.51
Forfeited	(45,544	)	8.65
Expired	(616,351	)	15.74
Outstanding as of December 31, 2019	2,147,750		14.67		2.8	9
Vested and expected to vest as of December 31, 2019	2,147,750		14.67		2.8	9
Exercisable as of December 31, 2019	1,516,588		8.71		3.7	8

Caesars Entertainment Stock Option Exercises

	Years Ended December 31,
(Dollars in millions)	2019		2018		2017
Option Exercises:
Number of options exercised	5,550,720		746,332		1,249,640
Cash received for options exercised	$	47	$	6	$	8
Aggregate intrinsic value of options exercised	$	17	$	3	$	7

Caesars Entertainment Restricted Stock Unit Activity

During the year ended December 31, 2019, we granted RSUs to employees of Caesars Entertainment with an aggregate fair value of $45 million. Each RSU represents the right to receive payment in respect of one share of the Caesars Entertainment’s common stock. The following table summarizes the activity of Caesars Entertainment’s RSUs during the year ended December 31, 2019.



	Units		Weighted Average Fair Value ⁽¹⁾
Outstanding as of December 31, 2018	13,455,092		$	11.51
Granted	5,228,512		8.77
Vested	(8,087,020	)	10.76
Forfeited	(2,264,434	)	10.58
Outstanding as of December 31, 2019	8,332,150		10.77

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⁽¹⁾	Represents the weighted average grant date fair value of RSUs, which is the share price of our common stock on the grant date.

The fair value of RSUs vested during the years ended December 31, 2019, 2018, and 2017, was $85 million, $72 million, and $29 million, respectively.

Caesars Entertainment Performance Stock Unit Activity

The Company granted approximately 1.2 million PSUs in 2019 and 1.6 million PSUs in 2018 that are scheduled to vest in three equal tranches over a three-year period. On each vesting date, recipients will receive between 0% and 200% of the granted PSUs in the form of CEC common stock based on the achievement of specified performance service conditions. Based on the terms and conditions of the awards, the fair value of the PSUs was initially set equal to the quoted market price of our common stock on the date of grant. The grant date fair value is reassessed at each reporting date to reflect the market price of our common stock until a mutual understanding of the key terms and conditions of the awards, between the Company and recipient, is achieved. The following table summarizes the activity of Caesars Entertainment’s PSUs during the year ended December 31, 2019.



	Units		Weighted Average Fair Value ⁽¹⁾
Outstanding as of December 31, 2018	1,466,183		$	6.79
Granted	1,166,336		8.71
Vested	(676,923	)	10.34
Forfeited	(501,933	)	9.19
Outstanding as of December 31, 2019	1,453,663		13.60

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⁽¹⁾	Grant date fair value, for which compensation expense of these unvested awards is measured, has not been achieved. This represents the quoted market price of our common stock on the dates indicated.

Caesars Entertainment Market-Based Stock Unit Activity

In 2019, the Company granted approximately 703 thousand MSUs that are scheduled to cliff vest in three years. On the vesting date, recipients will receive between 0% and 200% of the granted MSUs in the form of CEC common stock based on the achievement of specified market and service conditions. Based on the terms and conditions of the awards, the grant date fair value of the MSUs was determined using a Monte-Carlo simulation model. Key assumptions for the Monte-Carlo simulation model are the risk-free interest rate, expected volatility, expected dividends and correlation coefficient. The effect of market conditions is considered in determining the grant date fair value, which is not subsequently revised based on actual performance. The aggregate value of MSUs granted during December 31, 2019 was $9 million.



	Units		Weighted Average Fair Value ⁽¹⁾
Outstanding as of December 31, 2018	—		$	—
Granted	702,761		12.63
Vested	(81,832	)	12.63
Forfeited	(186,008	)	12.63
Outstanding as of December 31, 2019	434,921

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⁽¹⁾	Represents the fair value determined using a Monte-Carlo simulation model.

The fair value of MSUs vested during the year ended December 31, 2019 was $1 million.

Unrecognized Compensation Cost

As of December 31, 2019, there was $84 million of total unrecognized compensation cost related to Caesars Entertainment stock-based compensation plans, which is expected to be recognized over a remaining weighted-average period of 1.8 years.

Composition of Stock-Based Compensation Expense (All Plans)

	Years Ended December 31,
(In millions)	2019		2018		2017
Corporate expense	$	69	$	60	$	36
Property, general, administrative, and other	19		19		7
Total stock-based compensation expense	$	88	$	79	$	43