Share-Based Compensation

9 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

See Note 13 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2019 for more information regarding (i) the MSG Networks Inc. 2010 Employee Stock Plan, as amended (the “Employee Stock Plan”), and (ii) the MSG Networks Inc. 2010 Stock Plan For Non-Employee Directors, as amended (the “Non-Employee Director Plan”). On December 6, 2019, the Company’s stockholders amended the Non-Employee Director Plan to increase the shares available for issuance thereunder to 400 and to extend the expiration date to December 6, 2029.

Share-based compensation expense, presented within selling, general and administrative expenses and direct operating expenses, was $3,753 and $4,371 for the three months ended March 31, 2020 and 2019, respectively, and $13,852 and $13,658 for the nine months ended March 31, 2020 and 2019, respectively.

Non-Qualified Stock Options (“NQSOs”) Award Activity

The following table summarizes activity relating to holders of the Company’s NQSOs for the nine months ended March 31, 2020:



	Number of		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value
	Nonperformance Based Vesting NQSOs	Performance Based Vesting NQSOs	Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value
Balance as of June 30, 2019	1,277	1,277	$	20.87	5.52	$	3,132
Granted^(a)	556	557	14.33
Balance as of March 31, 2020	1,833	1,834	18.88		5.42	—
Exercisable as of March 31, 2020	924	536	$	19.07	4.29	$	—

(a) Includes incremental shares of performance based NQSOs that were historically reported at a target payout of 100%. Upon meeting the performance objective, the number of performance based NQSOs vested at a payout of 100.3% of target.

Nonperformance based vesting NQSOs granted under the Employee Stock Plan during the nine months ended March 31, 2020 are subject to three-year ratable vesting. Performance based vesting NQSOs granted under the Employee Stock Plan during the nine months ended March 31, 2020 are subject to three-year cliff vesting and the achievement of certain Company performance criteria. These NQSOs have an expiration period of 7.5 years. The Company calculated the fair value of these NQSOs on the date of grant using the Black-Scholes option pricing model, which resulted in a grant date fair value of $4.32 per NQSO.

The following were the key assumptions used to calculate the fair value of this award:



Risk-free interest rate	1.4	%
Expected term	5.25 years
Expected volatility	30.68	%

The Company’s computation of expected term was calculated using the simplified method (the average of the vesting period and option term) as prescribed in ASC Topic 718-10-S99. The Company’s computation of expected volatility was based on historical volatility of its common stock.

The aggregate intrinsic value is calculated for in-the-money NQSOs as the difference between (i) the exercise price of the underlying award and (ii) the quoted price of the Company’s Class A common stock, par value $0.01 per share (“Class A Common Stock”) at March 31, 2020 and June 30, 2019, as applicable.

Restricted Share Units Award Activity

The following table summarizes activity relating to holders of the Company’s RSUs for the nine months ended March 31, 2020:



	Number of
	Nonperformance Based Vesting RSUs		Performance Based Vesting RSUs		Weighted-Average Fair Value Per Share At Date of Grant
Unvested award balance as of June 30, 2019	541		836		$	23.08
Granted^(a)	388		316		14.51
Vested^(a)	(328	)	(279	)	20.62
Forfeited	(2	)	(3	)	19.14
Unvested award balance as of March 31, 2020	599		870		$	20.00

(a) Includes incremental shares of performance based RSUs that were historically reported at a target payout of 100%. Upon meeting the performance objective, the number of performance based RSUs vested at a payout of 100.3% of target.

Nonperformance based vesting RSUs granted under the Employee Stock Plan during the nine months ended March 31, 2020 are subject to three-year ratable vesting and RSUs granted under the Non-Employee Director Plan vest upon date of grant. Performance based vesting RSUs granted under the Employee Stock Plan during the nine months ended March 31, 2020 are subject to three-year cliff vesting. RSUs granted under the Employee Stock Plan and Non-Employee Director Plan will settle in shares of the Company’s Class A Common Stock (either from treasury or with newly issued shares), or, at the option of the Compensation Committee of the Board of Directors, in cash. RSUs granted under the Non-Employee Director Plan will settle on the first business day after ninety days from the date the director’s service on the Board of Directors (the “Board”) ceases or, if earlier, upon the director’s death.

The fair value of RSUs that vested during the nine months ended March 31, 2020 was $9,659. Upon delivery, RSUs granted under the Employee Stock Plan were net share-settled to cover the required statutory tax withholding obligations and the remaining number of shares were issued from the Company’s treasury shares. To fulfill the employees’ statutory tax withholding obligations for the applicable income and other employment taxes, 264 of these RSUs, with an aggregate value of $4,235 were retained by the Company and the taxes paid during the nine months ended March 31, 2020 are reflected as a financing activity in the accompanying consolidated statement of cash flows.