Prior to the Distribution, the Company’s employees participated in 21CF’s equity plans. 21CF had plans authorized to grant equity awards of 21CF stock to the Company’s employees. The equity-based compensation expense recorded by the Company, in the periods presented, includes the expense associated with the employees historically attributable to the Company’s operations, as well as the expense associated with the allocation of equity-based compensation expense for corporate employees.

The Company participated in 21CF’s 2013 Long-Term Incentive Plan (the “2013 Plan”), under which performance stock units (“PSUs”) and RSUs were granted. The Company’s employees were eligible to participate in the 2013 Plan prior to the Distribution. The Compensation Committee of 21CF’s Board (“21CF’s Compensation Committee”) determined the recipients, type of award to be granted and amounts of awards to be granted under the 2013 Plan.

The fair value of equity-based compensation under the Plans was calculated according to the type of award issued.

Certain employees of the Company received a grant of 21CF PSUs that had a three-year performance measurement period beginning in July of each fiscal year. The awards were subject to the achievement of one or more pre-established objective performance measures determined by 21CF’s Compensation Committee. The awards issued would generally be settled in shares of 21CF’s class A common stock upon vesting and were subject to the participants’ continued employment with 21CF. In fiscal 2019, 2018 and 2017, a total of approximately nil, 3.1 million and 3.3 million 21CF PSUs were granted, respectively.

In February 2018, 21CF’s Compensation Committee determined that, upon vesting, the outstanding 21CF PSU awards for the fiscal 2016-2018 performance period granted to all participants in the 21CF PSU award program, including 21CF’s named executive officers, would be paid out based on the target number of 21CF PSUs awarded in accordance with the original vesting schedule.

In fiscal 2018, 21CF’s Compensation Committee made a special grant of approximately 2.6 million 21CF restricted stock units (“Retention RSUs”) to certain of the Company’s senior executives, including 21CF named executive officers. In addition, in fiscal 2019, certain employees of the Company were granted approximately 1.6 million 21CF RSUs that primarily had a three-year vesting period beginning in July 2018.

In connection with the Distribution, the Company adopted the Fox Corporation 2019 Shareholder Alignment Plan (the “SAP”), under which equity-based compensation, including stock options, stock appreciation rights, restricted and unrestricted stock, RSUs and other types of FOX equity awards may be granted. The Company’s officers, directors and employees are eligible to participate in the SAP. The maximum number of shares of Class A Common Stock that may be issued under the SAP is 65 million shares. As of June 30, 2019, the remaining number of shares of Class A Common Stock available for issuance under the SAP was approximately 59 million.

In connection with the Distribution, the 21CF PSUs scheduled to vest in 2019 were accelerated and paid out and 50% of the Retention RSUs were paid out in shares of 21CF class A common stock in March 2019. 21CF RSUs and PSUs scheduled to vest after 2019 and certain 21CF RSUs that were scheduled to vest during 2019 were converted into new equity awards of the Company, using a formula designed to preserve the intrinsic value of the awards immediately prior to the Distribution. Converted awards have the same terms and features as the original 21CF awards, except for the 21CF PSUs, which were converted into FOX RSUs that are subject only to time-based vesting conditions and are no longer subject to achievement of applicable performance goals. In addition, the remaining 50% of the Retention RSUs were converted into FOX RSUs and Disney RSUs on the same pro rata basis accorded to shareholders of 21CF common stock in the mergers contemplated by the 21CF Disney Merger Agreement. All of the converted FOX RSUs were granted under the SAP and the approximately 5.5 million shares of Class A Common Stock that may be issued under the converted FOX RSUs do not count against the maximum number of shares that may be issued under the SAP described above.

Awards granted under the SAP (other than a stock option or stock appreciation right) entitle the holder to receive Dividend Equivalents (as defined in the SAP) for each regular cash dividend on the common stock underlying the award paid by the Company during the award period. Dividend equivalents granted with respect to equity awards will be accrued during the applicable award period and such dividend equivalents will vest and be paid only if and when the underlying award vests.

RSUs are awards that represent the potential to receive shares of Class A Common Stock at the end of the applicable vesting period, subject to the terms and conditions of the SAP, the applicable award documents and such other terms and conditions as the Compensation Committee of the Board of Directors of FOX (the “Compensation Committee”) may establish. RSUs awarded under the SAP are fair valued based upon the fair market value of Class A Common Stock on the grant date. Any person who holds RSUs has no ownership interest in the shares of Class A Common Stock to which such RSUs relate until and unless shares of Class A Common Stock are delivered to the holder.

In March 2019, in connection with the Distribution, the Compensation Committee granted approximately 2.4 million RSUs under the SAP, which will primarily vest in two tranches. Approximately 50% of the RSUs will vest on June 15, 2020 and 50% will vest on June 15, 2021, in each case, subject to a service requirement through the vesting dates.

The following table summarizes the activity related to target PSUs and RSUs granted to the Company’s employees to be settled in stock (PSUs and RSUs in thousands):

	Fiscal 2019					Fiscal 2018					Fiscal 2017
	Number of shares			Weighted average grant- date fair value^(a)		Number of shares			Weighted average grant- date fair value^(a)		Number of shares			Weighted average grant- date fair value^(a)
PSUs and RSUs
Unvested units at beginning of the year		10,896		$	29.77		7,102		$	28.62		6,125		$	32.96
Granted prior to the Distribution		1,565			46.11		5,698			32.21		3,312			24.49
Vested		(5,070	)		30.07		(1,112	)		34.59		(1,297	)		34.91
Cancelled		(3,166	)		29.72		(792	)		30.28		(1,038	)		33.18
Net units granted in conversion, as a result of the Separation^(b)		1,011		N/A			-			-		-			-
Granted after the Distribution		2,424			40.11		-			-		-			-

Unvested units at the end of the year^(c)		7,660		$	32.27		10,896		$	29.77		7,102		$	28.62

^(a)

The weighted average grant date fair value prior to the Distribution represents the fair value of awards granted with respect to 21CF Class A common stock prior to the conversion of the awards to FOX equity awards. The weighted average grant date fair value of the unvested units after the conversion represents the fair value of awards using the applicable conversion ratio.

^(b)

As disclosed above, 21CF RSUs and PSUs scheduled to vest after 2019 and certain 21CF RSUs that were scheduled to vest during 2019 were converted into new equity awards of the Company, using a formula designed to preserve the value of the awards immediately prior to the Distribution. In addition, the 50% of the Retention RSUs that were not paid out in shares of 21CF class A common stock were converted into FOX RSUs and Disney RSUs on the same pro rata basis accorded to shareholders of 21CF common stock in the mergers contemplated by the 21CF Disney Merger Agreement.

^(c)	The intrinsic value of these unvested RSUs was approximately $280 million as of June 30, 2019.

Stock options are awards that entitle the holder to purchase a specified number of shares of Class A Common Stock at a specified price for a specified period of time and become exercisable over time, subject to the terms and conditions of the SAP, the applicable award documents and such other terms and conditions as the Compensation Committee may establish. Stock Options granted under the SAP were fair valued using a Black-Scholes option valuation model that uses the following assumptions: (i) expected volatility was based on historical volatility of 21CF and the Company’s peer group over the expected term of the stock options; (ii) expected term of stock options granted was determined by analyzing historical data of the Company’s peer group and represented the period of time that stock options granted were expected to be outstanding; (iii) risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award; and (iv) expected dividend yield.

In March 2019, in connection with the Distribution, the Compensation Committee granted approximately 3.1 million stock options. The stock options will vest 50% on June 15, 2020 and 50% on June 15, 2021, in each case, subject to a service requirement through the vesting dates. The options will expire approximately seven years from the grant date.

The following table summarizes information about the Company’s stock options granted under the SAP (options in thousands).

	Fiscal 2019
	Number of options			Weighted average exercise price
Outstanding at the beginning of the year		-		$	-
Granted		3,118			40.25
Cancelled		(5	)		40.26
Outstanding at the end of the year^(a)		3,113		$	40.25
Weighted average grant-date fair value of options granted				$	8.67
Weighted average remaining contractual term of options outstanding at the end of the year				6.72 years

^(a)	The intrinsic value of options outstanding at June 30, 2019 was nil.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants during fiscal 2019:

	For the years ended June 30,
	2019		2018		2017
	(in millions)
Equity-based compensation^(a)	$	103	$	100	$	57

Intrinsic value of all settled equity-based awards	$	247	$	31	$	38

Tax benefit on vested equity-based awards	$	47	$	9	$	14

^(a)	Prior to the Distribution, equity-based compensation included allocated expense for both executive directors and corporate executives of 21CF, allocated using a proportional allocation driver, which management has deemed to be reasonable.

As of June 30, 2019, the Company’s total estimated compensation cost, not yet recognized, related to non-vested equity awards held by the Company’s employees was approximately $180 million and is expected to be recognized over a weighted average period between one and two years.