Share-Based Compensation

9 Months Ended

Sep. 30, 2011

Share-Based Compensation

Share-Based Compensation

13. Share-Based Compensation

• Predecessors

        Long-term incentive compensation was provided in the form of non-voting limited liability company membership interests in FCP and Fertitta Partners LLC, a Nevada limited liability company ("Fertitta Partners") pursuant to the Second Amended and Restated Operating Agreement of Fertitta Colony Partners and the Amended and Restated Operating Agreement of Fertitta Partners, respectively (collectively "the Operating Agreements"). The Operating Agreements allowed certain officers and members of management of STN to participate in the long-term growth and financial success of STN through indirect ownership of Class B Units and direct ownership of Class C Units in FCP and Fertitta Partners. The purpose was to promote the STN's long-term growth and profitability by aligning the interests of STN's management with the interests of the owners of STN and by encouraging retention.

        Upon consummation of the Merger, FCP and Fertitta Partners issued Class B Units to an affiliate of Frank J. Fertitta III and Lorenzo J. Fertitta, and during the year ended December 31, 2008, certain members of management were awarded indirect ownership of Class B Units and direct ownership of Class C Units in each of FCP and Fertitta Partners. Pursuant to the accounting guidance for share-based payments, the unearned share-based compensation related to the Class B Units was being amortized to compensation expense over the requisite service period (immediate to five years). The share-based expense for these awards was based on the estimated fair market value of the Class B Units at the date of grant applied to the total number of Class B Units that were anticipated to fully vest and then amortized over the vesting period. Pursuant to the accounting guidance for share-based payments, the unearned share-based compensation related to the Class C Units was being amortized to compensation expense over the requisite service period (five years). The share-based expense for these awards was based on the estimated fair market value of the Class C Units at the date of grant, applied to the total number of Class C Units that were anticipated to fully vest and then amortized over the vesting period. The Class C Units include certain call and put provisions as defined in the Operating Agreements, such that under certain circumstances, within ninety days after termination of the Class C Unit holder's employment with STN, FCP and Fertitta Partners can call the Class C Units and the employee that holds the Class C Units can put the Class C Units back to FCP and Fertitta Partners. The conditions that could result in the employee putting the Class C Units back to FCP and Fertitta Partners were either contingent or within the control of the issuer, therefore it was accounted for as equity.

        On the Effective Date, the grants of the Class B Units and Class C Units were cancelled, and as a result, Predecessor recognized share-based compensation expense of approximately $19.4 million representing the remaining amount of compensation cost measured at the grant date that had not yet been recognized. No replacement grants were awarded.

        The following table shows the classification of share-based compensation expense within the accompanying condensed consolidated financial statements (amounts in thousands, unaudited):

		Predecessor
		Station Casinos, Inc.
		Three Months Ended September 30, 2010			Period From January 1, 2011 Through June 16, 2011			Nine Months Ended September 30, 2010
Total share-based compensation		$	3,376		$	25,673		$	10,302
	Less compensation costs capitalized		(59	)		—			(177	)
Share-based compensation recognized as expense		$	3,317		$	25,673		$	10,125
	Casino	$	34		$	3		$	103
	Selling, general and administrative		398			302			1,583
	Corporate		2,083			5,857			6,108
	Development and preopening		802			62			2,331
	Reorganization items		—			19,449			—
Share-based compensation recognized as expense			3,317			25,673			10,125
	Tax benefit		(1,161	)		(8,986	)		(3,544	)
Share-based compensation expense, net of tax		$	2,156		$	16,687		$	6,581