STOCK COMPENSATION PLAN

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

Revlon maintains the Fourth Amended and Restated Revlon, Inc. Stock Plan (as amended, the "Stock Plan"), which provides for awards of stock options, stock appreciation rights, restricted or unrestricted stock and restricted stock units ("RSUs") to eligible employees and directors of Revlon and its affiliates, including Products Corporation. An aggregate of 6,565,000 shares were reserved for issuance as Awards under the Stock Plan, of which there remained approximately 1.1 million shares available for grant as of June 30, 2020. In July 2014, the Stock Plan was amended to renew the Stock Plan for a 7-year renewal term expiring on April 14, 2021. In September 2019 the Stock Plan was amended in connection with the 2019 TIP, described below, to: (1) allow the Compensation Committee to delegate to Revlon’s Chief Executive Officer the authority to grant RSUs to the Company’s employees, other than its officers who are subject to Section 16 of the Securities Exchange Act of 1934, as amended (i.e., the Company’s Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer & Controller); (2) allow for accelerated vesting of equity awards upon a termination without cause; (3) change the minimum vesting period for specified equity awards from 3 years to 2 years; and (4) to increase by 250,000 shares the number of shares of Revlon common stock that are not subject to the Stock Plan’s minimum vesting requirements.

Revlon 2019 Transaction Incentive Program

In August 2019, it was disclosed that MacAndrews & Forbes and Revlon determined to explore strategic transactions involving Revlon and third parties (the "Strategic Review"). In light of this, the Compensation Committee of Revlon’s Board of Directors approved a Revlon 2019 Transaction Incentive Program (the “2019 TIP”) that enables the Company to award cash-based and RSU-based retention grants and transaction bonus awards, as well as providing for the accelerated vesting of time-based RSUs and restricted shares following a termination without cause or due to death or disability.

Each Tier 1 participant’s 2019 TIP award is payable two-thirds in cash and one-third in RSUs vesting in 50% tranches on each of December 31, 2020 and December 31, 2021, while Tier 2 awards are payable 100% in cash in one lump-sum on December 31, 2020, in each case subject to certain earlier vesting for a change of control or termination of employment without cause, as described below. As of September 5, 2019, the Company approved a total of 206,812 time-based RSUs under Tier 1 of the 2019 TIP, which are scheduled to vest in equivalent amounts on each of December 31, 2020 and December 31, 2021, subject to continued employment (the “2019 TIP RSUs”). As of June 30, 2020, a total of 153,739 time-based RSUs under Tier 1 of the 2019 TIP had been granted and are outstanding. The Company’s President and Chief Executive Officer declined an award under the retention program and will receive a transaction bonus only if the Company completes a transaction.

The 2019 TIP RSUs vest in full upon an involuntary termination, other than if due to cause; provided that if a change of control occurs or a brand or business segment is sold and (i) the impacted grantee accepts an offer of employment from the buyer, then: (A) if the buyer assumes the 2019 TIP RSUs, the grantee will continue to vest in the assumed awards (with the grantee having the continued right to accelerated vesting upon an involuntary termination, other than if due to cause); and (B) if the buyer does not assume the 2019 TIP RSUs, the grantee’s 2019 TIP RSUs will vest upon closing the change of control; and (ii) the impacted grantee declines an offer of employment from the buyer for substantially comparable total compensation and benefits, the grantee will forfeit their unvested 2019 TIP RSUs (collectively, the “Special Vesting Rules”).

The 2019 TIP also provides for the following cash-based awards payable to certain employees, subject to continued employment through the respective vesting dates: (i) Tier 1 - $6.8 million payable in two equal installments as of December 31, 2020 and December 31, 2021; and (ii) Tier 2 - $2.5 million payable in one installment as of December 31, 2020. Such cash-based awards follow the Special Vesting Rules following a termination without cause or due to death or disability. During 2019 and through June 30, 2020, the Company granted $4.9 million and $2.4 million cash-based awards, net of forfeitures, under Tier 1 and Tier 2 of the 2019 TIP, respectively, which are being amortized over the period from the grant dates to December 31, 2021 and December 31, 2020, respectively. The total amount amortized for these cash-based awards since the program's inception and through June 30, 2020 is approximately $3.8 million, of which $1.1 million and $2.6 million were recorded during the three and six months ended June 30, 2020, respectively, within "Acquisition, integration and divestiture costs" in the Company's Unaudited Consolidated Statements of Operations and Comprehensive Loss.

Long-Term Incentive Program

The Company's LTIP RSUs consist of time-based RSUs and performance-based RSUs. Time-based RSUs are generally scheduled to vest ratably over a 3-year service period, while performance-based RSUs are scheduled to vest based on the achievement of certain Company performance metrics and cliff-vest at the completion of a 3-year performance period.

The fair value of the LTIP and TIP RSUs is determined based on the NYSE closing share price on the grant date.

In connection with the announcement of the 2019 TIP, in August 2019 the Company also approved applying the Special Vesting Rules to outstanding, pre-existing LTIP RSUs, except that accelerated vesting in the case of termination of employment

without cause will apply only to any tranche of outstanding, pre-existing LTIP RSUs scheduled to vest in the 12-month period following termination, with any future tranches being forfeited. Prior to the approval of these Special Vesting Rules, while the outstanding, pre-existing LTIP RSUs would generally have accelerated vesting upon a change of control, they did not feature accelerated vesting for termination and, in such cases, they were entirely forfeited upon termination.

During the first quarter of 2020, the Company granted approximately 1.3 million time-based and performance-based RSU awards under the Stock Plan (the "2020 LTIP RSUs"). During the second quarter of 2020, there were no grants under the 2020 LTIP RSUs. See the roll-forward table in the following sections of this Note 11 for activity related to the six months ended June 30, 2020.

Acceleration of Vesting

Under the aforementioned provisions for acceleration of vesting, as of June 30, 2020 and since the time these provisions became effective in September 2019, 30,781 LTIP RSUs and 22,798 2019 TIP Tier 1 RSUs were vested on an accelerated basis due to involuntary terminations, resulting in accelerated amortization of approximately $1.0 million. In addition, for the three and six months ended June 30, 2020 and under the same accelerated vesting provisions, the Company also recorded approximately $0.1 million and $0.8 million of accelerated amortization in connection with the cash portion of the 2019 TIP Tier 1 and Tier 2 awards that were vested on an accelerated basis due to involuntary terminations. See the roll-forward table in the following sections of this Note 11 for activity related to the six months ended June 30, 2020.

During the six months ended June 30, 2020, the activity related to time-based and performance-based RSUs previously granted to eligible employees and the grant date fair value per share related to these RSUs were as follows under the LTIP and 2019 TIP programs, respectively:


	Time-Based LTIP			Performance-Based LTIP
	RSUs (000's)	Weighted-Average Grant Date Fair Value per RSU	RSUs (000's)		Weighted-Average Grant Date Fair Value per RSU
Outstanding as of December 31, 2019
2019 TIP RSUs ^(b)	200.6	16.44	n/a		—
LTIP RSUs:
2019	425.6	22.55	425.6		22.55
2018	241.9	19.00	364.7		19.00
2017 ^(a)	54.0	19.70	110.9		19.70
Total LTIP RSUs	721.5		901.2
Total LTIP and TIP RSUs Outstanding as of December 31, 2019	922.1		901.2
Granted
2019 TIP RSUs Granted ^(b)	11.7	10.24	n/a		—
LTIP RSUs:
2020	648.4	14.96	648.4		14.96
2019	—	—	—		—
2018	—	—	—		—
2017 ^(a)	—	—	—		—
Total LTIP RSUs Granted	648.4		648.4
Vested
2019 TIP RSUs Vested ^(b)(c)	(22.8)	16.44	n/a		—
LTIP RSUs:
2019^(c)	(131.0)	22.55	—		—
2018^(c)	(105.6)	19.31	—		—
2017 ^(a)(c)	(53.4)	19.70	(14.2)		19.70
Total LTIP RSUs Vested	(290.0)		(14.2)
Forfeited/Canceled
2019 TIP RSUs Forfeited/Canceled ^(b)	(35.8)	16.44	n/a		—
LTIP RSUs:
2019	(79.8)	22.55	(102.5)		22.55
2018	(49.0)	17.56	(101.4)		17.87
2017 ^(a)	(0.6)	19.70	(96.7)		19.70
Total LTIP RSUs Forfeited/Canceled	(129.4)		(300.6)
Outstanding as of June 30, 2020
2019 TIP RSUs	153.7	15.97	n/a		—
LTIP RSUs:
2020	648.4	14.96	648.4		14.96
2019	214.8	22.55	323.1		22.55
2018	87.3	19.44	263.3		19.44
2017 ^(a)	—	—	—		—
Total LTIP RSUs	950.5		1,234.8
Total LTIP and TIP RSUs Outstanding as of June 30, 2020	1,104.2		1,234.8

^(a)The 2017 time-based and performance-based LTIP RSUs were recognized over a 2-year service and performance period (i.e., 2018 and 2019).

^(b) The 2019 TIP provides for RSU awards that are only time-based.

^(c) Includes acceleration of vesting upon involuntary terminations for the six months ended June 30, 2020 of 25,321 RSUs under the 2019, 2018 and 2017 LTIPs and of 22,798 RSUs under the 2019 TIP Tier I awards.

Time-Based LTIP and TIP RSUs

The Company recognized $2.1 million and $3.8 million of net compensation expense related to the time-based LTIP and TIP RSUs for the three and six months ended June 30, 2020, respectively. As of June 30, 2020, the Company had $15.5 million of total deferred compensation expense related to non-vested, time-based LTIP and TIP RSUs. The cost is recognized over the vesting period of the awards, as described above.

Performance-based LTIP RSUs

The Company recognized $1.5 million and $1.2 million of net adjustments to compensation expense related to the performance-based LTIP RSUs for the three and six months ended June 30, 2020, respectively. The amount of net compensation expense recognized during 2020 was affected by adjustments to the awards' expected achievement rates made primarily as a result of the ongoing adverse impact of COVID-19 on the Company's results of operations. As of June 30, 2020, the Company had $21.9 million of total deferred compensation expense related to non-vested, performance-based LTIP RSUs. The cost is recognized over the service period of the awards, as described above.