EQUITY AND CONVERTIBLE PREFERRED STOCK

12 Months Ended

Jun. 30, 2022

Equity [Abstract]

EQUITY AND CONVERTIBLE PREFERRED STOCK

EQUITY AND CONVERTIBLE PREFERRED STOCK

Common Stock

As of June 30, 2022, the Company’s Common Stock consisted of Class A Common Stock with a par value of $0.01 per share. The holders of Class A Common Stock are entitled to one vote per share. As of June 30, 2022, total authorized shares of Class A Common Stock was 1,250.0 million and total outstanding shares of Class A Common Stock was 839.2 million.

In the fiscal years ended June 30, 2022, 2021, and 2020, the Company issued 3.3, 1.7, and 1.4 million shares of its Class A Common Stock, respectively, and received nil, nil, and $2.7, in cash, respectively, in connection with the exercise of employee stock options and settlement of RSUs and special incentive awards.

In the fiscal years ended June 30, 2022, 2021, and 2020, the Company issued 69.9, 0.0, and 0.0 million shares of its Class A Common Stock, respectively, as a result of conversions of Series B Preferred Stock.

During the fiscal year ended June 30, 2021, the Company reacquired 0.8 million of the 1.4 million shares of Class A Common Stock issued the grant of restricted stock awards during the year ended June 30, 2020. Of the 0.8 million shares of Class A Common Stock reacquired, 0.1 million were withheld for employee taxes due on vested restricted stock awards and 0.7 million were for restricted stock awards forfeited during the year ended, June 30, 2021.

During the fiscal years ended June 30, 2022, 2021 and 2020, Cottage Holdco B.V. (“Cottage”), a wholly-owned subsidiary of JAB Cosmetics B.V. (“JABC”), and JABC acquired 0.0, 0.3 and 10.6 million shares, respectively, of Class A Common Stock in the open market. During the year ended June 30, 2020, JABC acquired 3.3 million shares of Class A Common Stock from the Company’s former CEO and elected to receive 7.3 million shares of Class A Common Stock, under the Company’s dividend reinvestment program. The Company did not receive any proceeds from these stock purchases conducted by Cottage or JABC.

As of June 30, 2022, the Company’s largest stockholder was Cottage Holdco B.V., which owned approximately 54% of Coty’s outstanding Class A Common Stock. Cottage Holdco B.V., a wholly-owned subsidiary of JAB Cosmetics B.V. (“JABC”), is indirectly controlled by Lucresca SE, Agnaten SE and JAB Holdings B.V. (“JAB”). The Company’s CEO, Sue Nabi, was granted a one-time sign-on award of restricted stock units (the “Award”) on June 30, 2021. On October 29, 2021,

Cottage Holdco B.V. completed the transfer of 10.0 million shares of Common Stock to Ms. Nabi in connection with her sign-on award of restricted stock units. See Note 24—Share-Based Compensation Plans for additional information.

Series A and A-1 Preferred Stock

As of June 30, 2022, total authorized shares of preferred stock are 20.0 million. There are two classes of Preferred Stock, Series A Preferred Stock and Series A-1 Preferred Stock, both with a par value of $0.01 per share.

As of June 30, 2022, there were 1.5 million shares of Series A and no shares of Series A-1 Preferred Stock authorized, issued and outstanding. Series A Preferred Stock and Series A-1 Preferred Stock are not entitled to receive any dividends and have no voting rights except as required by law.

On March 27, 2020, the Company reacquired, retired and cancelled 7.9 million shares of its Series A-1 Preferred Stock, reducing the total authorized number of shares of Series A-1 Preferred Stock from 7.9 million to zero shares.

The Series A and Series A-1 Preferred Stock were issued to executive officers and directors under subscription agreements. Generally, the subscription agreements entitle the holder of the vested Series A or Series A-1 Preferred Stock to exchange the Series A or Series A-1 Preferred Stock into either cash or shares of Class A Common Stock, at the election of the Company, at the exchange value. The exchange value is generally equal to the difference between the 10-day trailing average closing price of a share of Class A Common Stock on the date of exchange and a predetermined hurdle price. The Series A Preferred Stock generally vests on the fifth anniversary of issuance, subject to continued employment with the Company and investment by the holder in shares of Class A Common Stock throughout the vesting period. The Series A-1 Preferred Stock generally vests on graded vesting terms where 60% of the award granted vests after three years, 20% of the award granted vests after four years and 20% of the award granted vests after five years, subject to continued employment with the Company and investment by the holder in shares of Class A Common Stock throughout the vesting period. To the extent the Company controls whether such shares will be settled in cash or equity and intends to settle the grant in equity, the grant is treated as an equity grant, otherwise the grant is treated as a liability grant.

The following table summarizes the key terms of each outstanding issuance of Series A Preferred Stock:

Issuance Date	Type	Number of Shares Awarded at Grant Date (millions of shares)	Number of Shares Outstanding (millions of shares)	Hurdle Price per Share
February 16, 2017 (a)	Series A	0.5	0.3	$22.66
March 27, 2017 (a) (b)	Series A	1.0	1.0	$22.39
November 16, 2017 (a)	Series A	1.0	0.2	$19.85

(a)If the holder does not exchange the vested Series A Preferred Stock by a specified expiration date, the Company must automatically exchange the Series A Preferred Stock into cash or shares, at election of the Company.

(b)This grant was sold to Lambertus J.H. Becht (“Mr. Becht”), the Company’s former Chairman of the Board. Under the terms provided in the subscription agreement, the Series A Preferred Stock immediately vested on the grant date and the holder may exchange the vested shares after the fifth anniversary of the date of issuance. The Company requires shareholder approval in order to settle the exchange in shares of Class A Common Stock. Therefore, the award is classified as a liability as of June 30, 2022. An (income) expense of $(0.2), $0.8 and $(1.9) was recorded during fiscal 2022, 2021 and 2020, respectively, and has been included in Selling, general and administrative expenses on the Consolidated Statements of Operations.

As of June 30, 2022, total issued and outstanding shares of Series A and Series A-1 Preferred Stock are 1.5 million and nil, respectively. Of the 1.5 million outstanding shares of Series A Preferred Stock, 1.0 million shares vested on March 27, 2017 and 0.5 million shares were forfeited but remain outstanding pending cancellation. As of June 30, 2022, the Company classified nil Series A and Series A-1 Preferred Stock as equity and $0.7 as a liability, recorded in Other noncurrent liabilities in the Consolidated Balance Sheet.

Convertible Series B Preferred Stock

On May 11, 2020, the Company entered into an investment agreement (the “Investment Agreement”) with KKR Aggregator (the “Investor”), relating to the issuance and sale by the Company to the Investor of up to 1,000,000 shares of the Company’s new Convertible Series B Preferred Stock, par value $0.01 per share (the “Series B Preferred Stock”), for an aggregate purchase price of up to $1,000.0, or $1,000 per share (the “Issuance”). The Issuance was proposed to be issued in two tranches: (i) an initial issuance of 750,000 shares of Series B Preferred Stock (the “Initial Issuance”) and (ii) a subsequent issuance of 250,000 shares of Series B Preferred Stock (the “Second Issuance”), which was subject to the execution and delivery of a definitive purchase agreement between the Company and the Investor or certain of its affiliates in respect of the Wella Business.

On May 26, 2020 (the “Closing Date”), the Company and the Investor completed the issuance and sale of 750,000 shares of the Company’s Series B Preferred Stock for an aggregate purchase price of $750.0. In connection with the issuance of the Series B Preferred Stock, the Company incurred direct and incremental expenses of $40.7, comprised of transaction fees, and financial advisory and legal expenses, which reduced the carrying value of the Series B Preferred Stock. Cumulative preferred dividends accrue daily on the Series B Preferred Stock at a rate of 9.0% per year.

On July 31, 2020, the Company completed the previously announced issuance and sale of 250,000 shares of the Company’s Series B Preferred Stock to the Investor for an aggregate purchase price of $250.0.

On June 3, 2021, the Board of Directors declared and paid a dividend on Series B Preferred Stock, totaling $24.2, for the quarter ended June 30, 2021.

On September 10, 2021, KKR Aggregator converted 285,576 shares of Series B Preferred Stock, and $26.4 of unpaid dividends into 50,000,088 shares of Class A common stock. Immediately after the conversion, KKR Aggregator completed the public secondary offering of 50,000,088 shares of Class A common stock. The Company did not receive any proceeds from the sale of the shares of Class A Common Stock by KKR Aggregator. As a result of the conversion, the Company measured the accrued dividends at fair value, which resulted in an increase of $6.7. Such adjustment is considered a deemed dividend for purposes of calculating basic and diluted EPS.

On September 30, 2021, the Company entered into a definitive agreement to sell a 9.4% stake in Wella to KKR Aggregator in exchange for the redemption of 290,465 shares of Series B Preferred Stock and $22.5 of unpaid dividends, as previously defined as the First Exchange. As a result, the Series B Preferred Stock, net of issuance costs, and related accrued dividends were reclassified from temporary equity to a liability as Mandatorily redeemable Convertible Series B Preferred Stock as of September 30, 2021. Upon reclassification, the Company measured the Series B Preferred Stock and accrued dividends at fair value, which resulted in an increase of $93.6. The excess in fair value is considered a deemed dividend for purposes of calculating basic and diluted EPS. The First Exchange was completed on October 20, 2021. Upon closing, the Company re-measured the Series B Preferred Stock and accrued dividends at fair value, which resulted in a decrease of $6.5. Such adjustment is considered a gain on extinguishment and is included in Other (income) expense, net in the Consolidated Statements of Operations. A key input in determining the fair value of the liability was based on the Company's share price as of the measurement date. As this liability is not actively traded, it is classified as a Level 2 fair value measurements. Upon closing of the First Exchange, the Company recognized a non-monetary loss of $2.9 and is included in Other income, net in the Consolidated Statements of Operations. See Note 13—Equity Investments for additional information.

On November 10, 2021, KKR Aggregator converted 123,219 shares of Series B Preferred Stock, and $1.2 of unpaid dividends into 19,944,701 shares of Class A common stock. Immediately after the conversion, KKR Aggregator completed a sale of 19,944,701 shares of Class A common stock. The Company did not receive any proceeds from the sale of the shares of Class A Common Stock by KKR Aggregator. As a result of the conversion, the Company measured the accrued dividends at fair value, which resulted in an increase of $0.8. Such adjustment is considered a deemed dividend for purposes of calculating basic and diluted EPS.

On November 6, 2021, the Company entered into a definitive agreement to sell an additional 4.7% stake in Wella to KKR Aggregator in exchange for the redemption or conversion of 154,683 shares of Series B Preferred Stock, as previously defined as the Second Exchange. The Second Exchange closed on November 30, 2021. Upon closing, the Company recognized $66.4 in excess of the fair value of the consideration transferred in exchange for the redemption of the Series B Preferred Stock. The excess in fair value is considered a deemed dividend for purposes of calculating basic and diluted EPS. As of December 31, 2021, KKR has fully redeemed/exchanged all of their Series B Preferred Stock. See Note 13—Equity Investments for additional information.

In October 2021, the Company paid the remaining accrued dividends on the Series B Preferred Stock that were outstanding as of June 30, 2021, totaling $25.1. As a result, $4.4 of previously recorded fair value adjustments for unpaid dividends were reversed through additional paid-in capital (“APIC”) and was considered a deemed contribution.

Cumulative preferred dividends accrue daily on the Series B Preferred Stock at a rate of 9.0% per year. During the three months ended June 30, 2022, the Board of Directors declared dividends on the Series B Preferred Stock of $3.3, which was paid on July 1, 2022. Additionally, on April 1, 2022 the Company paid previously accrued dividends that were outstanding as of March 31, 2022, totaling $3.3. During the twelve months ended June 30, 2022, the Board of Directors declared dividends on the Series B Preferred Stock of $35.2 of which $30.7 was paid and $1.2 was converted as part of the November 10, 2021 conversion. As of June 30, 2022 and June 30, 2021, the Series B Preferred Stock had outstanding accrued dividends of $3.3 and $74.1, respectively.

Dividend Rights and Liquidation Preferences. The Series B Preferred Stock rank senior to the Company’s Common Stock with respect to dividend rights and rights on the distribution of assets on any liquidation, dissolution or winding up of the affairs of the Company. The Series B Preferred Stock has a liquidation preference of $1,000 per share, representing an aggregate liquidation preference of $1,000.0 upon issuance. Holders of the Series B Preferred Stock are entitled to the dividend at the rate of 9% per annum, accruing daily and payable quarterly in arrears. The dividend rate will increase by a 1% on the seven-year anniversary of the Closing Date and shall increase by an additional 1% on each subsequent anniversary up to a total of 12%. If the Company does not declare and pay a dividend on the Series B Preferred Stock on any dividend payment date, the dividend rate will increase by 1% per annum until all accrued but unpaid dividends have been paid in full. Dividends will be payable in cash, or by increasing the amount of accrued dividends on Series B Preferred Stock, or any combination thereof, at the sole discretion of the Company. Accrued and unpaid dividends are not payable in shares unless the Series B Preferred Stock is converted to Common Stock.

Conversion Features. The Series B Preferred Stock is convertible at the option of the holders at any time into shares of Common Stock at an initial conversion price of $6.24 per share of Series B Preferred Stock and an initial conversion rate of 160.2564 shares of Common Stock per share of Series B Preferred Stock. At any time after the third anniversary of the closing date, if the volume weighted average price of the Common Stock exceeds $12.48 per share for at least 20 trading dates in any period of 30 consecutive trading days, at the election of the Company, all or any portion of the Series B Preferred Stock will be convertible into the relevant number of shares of Common Stock.

Redemption Features. At any time following the fifth anniversary of the Closing Date, the Company may redeem some or all of the Series B Preferred Stock for a per share amount in cash equal to (i) the sum of (x) 100% of the liquidation preference plus (y) all accrued and unpaid dividends, multiplied by (ii) (A) 107% if the redemption occurs at any time after the fifth anniversary of the Closing Date and prior to the sixth anniversary of the Closing Date, (B) 105% if the redemption occurs at any time after the sixth anniversary of the Closing Date and prior to the seventh anniversary of the Closing Date, and (C) 100% if the redemption occurs at any time after the seventh anniversary of the Closing Date.

Voting rights. Holders of Series B Preferred Stock are entitled to vote with holders of Common Stock on an as-converted basis, subject to the Ownership Limitation as defined in the Investment Agreement. Holders of the Series B Preferred Stock are entitled to a separate class vote with respect to, among other things, amendments to the Company’s organizational documents that have an adverse effect on the Series B Preferred Stock, authorizations or issuances by the Company of securities that are senior to, or equal in priority with, the Series B Preferred Stock, increases or decreases in the number of authorized shares of Series B Preferred Stock, and issuances of shares of the Series B Preferred Stock.

Change of Control Put. Upon certain change of control events involving the Company holders of Series B Preferred Stock may, at the holder’s election (i) convert their shares of Series B Preferred Stock into Common Stock at the then-current conversion price or (ii) cause the Company to redeem their shares of Series B Preferred Stock in an amount in cash equal to (x) if the change of control occurs on or before the fifth anniversary of the Closing Date, 110% of the sum of the liquidation preference thereof plus any accrued and unpaid dividends and (y) if the change of control occurs on or after the fifth anniversary of the Closing Date, 100% of the Redemption Price, provided that in the case of either clause (i) or (ii) above, if such change of control occurs on or before the fifth anniversary of the Closing Date, the Company will also be required to pay the holders of the Series B Preferred Stock a “make-whole” premium.

Participation and Other Pertinent Rights. Following the Second Exchange, KKR no longer holds any preferred stock of the Company and no longer has the right to designate any directors to the Company's Board of Directors.

Dividends - Common Stock

On April 29, 2020, the Board of Directors suspended the payment of dividends on Common Stock. No dividends on Common Stock were declared for the year ended June 30, 2022.

During fiscal 2020, prior to the Board’s decision to suspend the payment of dividends, the Company maintained a Stock Dividend Reinvestment Program and had registered a total of 19.3 million shares of Class A Common Stock for purchase under the program. All holders of records of Class A Common Stock had the opportunity to participate in the program; if a holder

elected to participate in the program, fifty percent (50%) of their cash dividends were reinvested in additional shares of Class A Common Stock.

The following dividends were declared during fiscal year 2020:

Declaration Date	Dividend Type	Dividend Per Share		Holders of Record Date	Dividend Value		Dividend Payment Date	Dividends Settled in Cash		Dividends Settled in Stock (a)		Dividends Payable (b)
Fiscal 2020
August 28,  2019	Quarterly	$	0.125	September 9, 2019	$	95.3	September 30, 2019	$	63.3	$	30.9	$	1.1
November 6, 2019	Quarterly	0.125		November 18, 2019	96.1		December 27, 2019	65.5		29.3		1.3
February 5, 2020	Quarterly	0.125		February 18, 2020	96.3		March 27, 2020	66.4		28.7		1.2
Fiscal 2020		$	0.375		$	287.7		$	195.2	$	88.9	$	3.6

(a)The September 30, 2019, December 27, 2019 and March 27, 2020 stock dividend payments of $30.9, $29.3 and $28.7 resulted in the issuances of 3.2 million, 2.4 million and 2.4 million shares of Class A Common Stock, respectively.

(b)The dividend payable is the value of the remaining dividends payable upon settlement of the RSUs and phantom units outstanding as of the Holders of Record Date. Dividends payable are recorded as Accrued expense and other current liabilities and Other noncurrent liabilities in the Consolidated Balance Sheet.

Total dividends in cash and other recorded to additional paid-in capital (“APIC”) in the Consolidated Balance Sheet as of June 30, 2022 was $(0.8) which represents dividends no longer expected to vest as a result of forfeitures of outstanding RSUs.

In addition to the activity noted above, the Company made a payment of $1.4 for the previously accrued dividends on RSUs that vested during the twelve months ended June 30, 2022. Thus, total dividends settled in cash during the twelve months ended June 30, 2022 was $1.4.

Total accrued dividends on unvested RSUs and phantom units of $1.4 and $0.5, and $2.4 and $1.7 are included in Accrued expenses and other current liabilities and Other noncurrent liabilities, respectively, in the Consolidated Balance Sheets as of June 30, 2022 and 2021, respectively.

Accumulated Other Comprehensive (Loss) Income

			Foreign Currency Translation Adjustments
	(Losses) Gains on Cash Flow Hedges		(Losses) Gains on Net Investment Hedge		Foreign Currency Translation Adjustments		Pension and Other Post-Employment Benefit Plans		Total
Beginning balance at July 1, 2020	$	(43.0)	$	261.9	$	(683.8)	$	8.7	$	(456.2)
Other comprehensive income (loss) before reclassifications	0.6		(294.1)		424.5		(24.2)		106.8
Net amounts reclassified from AOCI/(L) (a)	26.9		—		—		0.6		27.5
Net current-period other comprehensive income (loss)	27.5		(294.1)		424.5		(23.6)		134.3
Ending balance at June 30, 2021	$	(15.5)	$	(32.2)	$	(259.3)	$	(14.9)	$	(321.9)
Other comprehensive income (loss) before reclassifications	11.0		36.3		(511.5)		58.0		(406.2)
Net amounts reclassified from AOCI/(L) (a)	8.8		—		—		1.4		10.2
Net current-period other comprehensive income (loss)	19.8		36.3		(511.5)		59.4		(396.0)
Ending balance at June 30, 2022	$	4.3	$	4.1	$	(770.8)	$	44.5	$	(717.9)

(a) Amortization of actuarial gains of $1.6 and $0.9, net of taxes of $0.2 and $0.3, were reclassified out of AOCI/(L) and included in the computation of net period pension costs for the fiscal years ended June 30, 2022 and 2021, respectively (see Note 19—Employee Benefit Plans).

Treasury Stock - Share Repurchase Program

Since February 2014, the Board has authorized the Company to repurchase its Class A Common Stock under approved repurchase programs. On February 3, 2016, the Board authorized the Company to repurchase up to $500.0 of its Class A Common Stock (the “Incremental Repurchase Program”). Such repurchases may be made from time to time at the Company’s discretion, based on ongoing assessments of the capital needs of the business, the market price of its Class A Common Stock, and general market conditions. As of June 30, 2022, the Company has $396.8 remaining under the Incremental Repurchase Program. There were no share repurchase activities during the years ended June 30, 2022, 2021 and 2020 under the Incremental Repurchase Program.

In June 2022, the Company entered into forward repurchase contracts (the “Forward” and together the “Forwards”) with three large financial institutions (“Counterparties”) to start hedging for a potential $200.0 share buyback program in 2024. In connection with the Forward transactions, the Company incurred certain execution fees of $2.0, which was recognized as a premium to the forward price recorded at inception and amortized ratably over the contract period.

As part of the Forward agreements, the Company will pay interest on the outstanding underlying notional amount of the Forwards held by the Counterparties during the contract period. The interest rates are variable, based on the United States secured overnight funding rate (“SOFR”) plus a spread. The weighted average interest rate plus applicable spread was 6.4% as of June 30, 2022.

The Forward agreements with two of the Counterparties, which purchased approximately 13.7 million and 3.8 million shares of the Company’s Class A Common Stock in June 2022, respectively, require the Company to: (i) repurchase the shares on or before June 6, 2024 at a price based on the weighted average of the daily volume weighted average price (“VWAP”) during the initial acquisition period (“Initial Price”); or (ii) at the Company’s option, pay or receive the difference between the Final Price, defined as the weighted average of the daily VWAP during the unwind period as defined in the agreement, and Initial Price of the Forwards.

Simultaneously, the remaining Counterparty purchased approximately 7.1 million shares of the Company’s Class A Common Stock during June 2022. This Forward requires the Company to pay or receive the difference between the Final Price and Initial Price established at inception of the Forward on or before June 6, 2024.

In addition, the Forwards include a provision for a potential true-up in cash upon specified changes in the price of the Company’s Class A Common Stock relative to the Initial Price (“Hedge Valuation Adjustment”). Such Hedge Valuation Adjustment shall not result in a termination date or any adjustment of the number of Coty’s Class A Common Stock shares purchased by the Counterparties at inception.

In the event, the Company declares and pays any cash dividends on its Class A Common Stock, the Forward Counterparties will be entitled to such dividend payments and payable at termination of the Forwards.

Since the Forwards permit a net cash settlement alternative in addition to the physical settlement, the Company accounted for the Forwards initially and subsequently at their fair value, with changes in the fair value recorded in Other income, net in the Consolidated Statement of Operations.