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Equity-Based Compensation
 12 Months Ended
Jun. 30, 2023
Share-Based Payment Arrangement [Abstract]  
Equity-Based Compensation
NOTE 13. EQUITY-BASED COMPENSATION
Employees, Directors and other service providers of the Company (“participants”) are eligible to participate in the News Corporation 2013 Long-Term Incentive Plan (as amended and restated, the “2013 LTIP”), which provides for equity-based compensation including performance stock units (“PSUs”), restricted stock units (“RSUs”) and other types of awards. The Company has the ability to award up to 50 million shares of Class A Common Stock under the terms of the 2013 LTIP. All shares of Class A Common Stock reserved for cancelled or forfeited equity-based compensation awards under the 2013 LTIP become available for future grants.
The following table summarizes the Company’s equity-based compensation expense reported in the Statements of Operations:
For the fiscal years ended June 30,
202320222021
(in millions)
Total equity compensation expense
$92 $59 $128 
As of June 30, 2023, the total compensation cost not yet recognized for all unvested awards held by participants was approximately $66 million and is expected to be recognized over a weighted average period of between one and two years. The total intrinsic value of all outstanding awards was approximately $188 million as of June 30, 2023.
The tax benefit recognized on PSUs and RSUs for participants that vested during the applicable fiscal year was $11 million, $25 million and $18 million for the fiscal years ended June 30, 2023, 2022 and 2021, respectively.
Summary of Incentive Plans
The fair value of equity-based compensation granted under the 2013 LTIP is calculated according to the type of award issued. Cash-settled awards are marked-to-market at the end of each reporting period.
Performance Stock Units
PSUs are grants that entitle the holder to shares of the Company’s Class A Common Stock or the cash equivalent value of such shares based on the achievement of pre-established performance metrics over the applicable performance period. The fair value of PSUs is determined on the date of grant and expensed using a straight-line method over the applicable vesting period. The expense is adjusted to reflect the number of shares expected to vest based on management’s determination of the probable achievement of the pre-established performance metrics. The Company records a cumulative adjustment in periods in which its estimate of the number of shares expected to vest changes. Additionally, the Company ultimately adjusts the expense recognized to reflect the actual vested shares following the final determination of the achievement of the performance conditions. Any person who holds PSUs shall have no ownership interest in the shares or cash to which such PSUs relate unless and until the shares or cash are delivered to the holder. Each PSU is entitled to receive dividend equivalents for each regular cash dividend on the Class A Common Stock paid by the Company during the award period, subject to the same terms and conditions as apply to the underlying award.
During fiscal 2023, 2022 and 2021, certain participants in the 2013 LTIP received grants of PSUs which have a three-year performance measurement period. The number of shares that will be issued upon vesting of these PSUs can range from 0% to 200% of the target award, subject to three-year performance conditions based on a combination of cumulative business-unit-specific revenue, EBITDA (as defined in Note 9—Borrowings) and free cash flow, or the Company’s cumulative earnings per share, cumulative free cash flow and three-year total stockholder return relative to the individual companies that comprise the Standard and Poor’s 1500 Media Index.
During fiscal 2023, 2022 and 2021, the Company granted approximately 1.4 million, 1.0 million and 1.6 million PSUs, respectively, at target to participants, of which approximately 0.8 million, 0.6 million and 0.8 million PSUs, respectively, will be settled in Class A Common Stock, with the remaining PSUs, which are granted to executive Directors and to employees in certain foreign locations, being settled in cash, assuming performance conditions are met.
During fiscal 2023, 2022 and 2021, approximately 2.8 million, 3.0 million and 3.6 million PSUs respectively, vested, of which approximately 1.3 million, 1.0 million and 1.2 million PSUs, respectively, were settled in cash for approximately $25 million, $24 million and $18 million, respectively, before statutory tax withholdings. The remaining PSUs that vested during fiscal 2023, 2022 and 2021 were settled in Class A Common Stock having a fair value of approximately $27 million, $42 million and $36 million, respectively, before statutory tax withholdings.
Restricted Stock Units
RSUs are grants that entitle the holder to shares of the Company’s Class A Common Stock or the cash equivalent value of such shares. The fair value of RSUs is based upon the fair market value of the shares underlying the awards on the grant date and expensed using a straight-line method over the applicable vesting period. Any person who holds RSUs shall have no ownership interest in the shares or cash to which such RSUs relate unless and until the shares or cash are delivered to the holder. Each RSU is entitled to receive dividend equivalents for each regular cash dividend on the Class A Common Stock paid by the Company during the award period, subject to the same terms and conditions as apply to the underlying award.
During fiscal 2023, 2022 and 2021, certain participants in the 2013 LTIP received grants of time-vested RSUs. Vesting of the awards is subject to the participants’ continued service with the Company through the applicable vesting date. During the fiscal years ended June 30, 2023, 2022 and 2021, 4.2 million, 3.0 million and 3.4 million RSUs, respectively, were granted to participants, of which approximately 0.8 million, 0.6 million and 1.0 million RSUs, respectively, which are granted to employees in certain foreign locations, will be settled in cash, with the remaining RSUs outstanding being settled in Class A Common Stock. These RSUs have graded vesting primarily over three years.
During fiscal 2023, 2022 and 2021, approximately 2.7 million, 2.1 million and 1.6 million RSUs, respectively, vested, of which approximately 0.7 million, 0.5 million and 0.3 million RSUs, respectively, were settled in cash for approximately $13 million, $13 million and $4 million, respectively, before statutory tax withholdings. The remaining RSUs that vested during fiscal 2023, 2022 and 2021 were settled in Class A Common Stock having a fair value of approximately $39 million, $41 million and $21 million, respectively, before statutory tax withholdings.
The following table summarizes the activity related to the target PSUs and RSUs granted to participants that will be settled in shares of the Company (PSUs and RSUs in thousands):
Fiscal 2023Fiscal 2022Fiscal 2021
Number
of
shares
Weighted
average
grant-
date fair
value
Number
of
shares
Weighted
average
grant-
date fair
value
Number
of
shares
Weighted
average
grant-
date fair
value
PSUs and RSUs
Unvested units at beginning of the year
6,297 $18.65 7,022 $14.61 7,717 $13.39 
Granted(a)
4,665 18.13 3,475 21.96 3,546 15.59 
Vested(3,487)16.32 (3,526)13.56 (3,676)13.30 
Cancelled(b)
(711)19.59 (674)19.12 (565)15.05 
Unvested units at the end of the year6,764 $19.40 6,297 $18.65 7,022 $14.61 
________________________
(a)For fiscal 2023, includes 0.8 million target PSUs and 3.4 million RSUs granted and a payout adjustment of 0.5 million PSUs due to the actual performance level achieved for PSUs granted in fiscal 2020 that vested during fiscal 2023.
For fiscal 2022, includes 0.6 million target PSUs and 2.4 million RSUs granted and a payout adjustment of 0.5 million PSUs due to the actual performance level achieved for PSUs granted in fiscal 2019 that vested during fiscal 2022.
For fiscal 2021, includes 0.8 million target PSUs and 2.4 million RSUs granted and a payout adjustment of 0.3 million PSUs due to the actual performance level achieved for PSUs granted in fiscal 2018 that vested during fiscal 2021.
(b)For fiscal 2023, includes 0.1 million of target PSUs and 0.6 million RSUs cancelled.
For fiscal 2022, includes 0.2 million of target PSUs and 0.5 million RSUs cancelled.
For fiscal 2021, includes 0.3 million of target PSUs and 0.3 million RSUs cancelled.