PENN Entertainment, Inc.PENN
PENN Entertainment, Inc. Stock Compensation Disclosure
Note 15—Stock-Based Compensation
2022 Long Term Incentive Compensation Plan
On June 7, 2022, the Company’s shareholders, upon the recommendation of the Board, approved the Company’s 2022 Long Term Incentive Compensation Plan (the “2022 Plan”). The 2022 Plan authorizes the Company to issue stock options (incentive and/or non-qualified), stock appreciation rights (“SARs”), restricted stock (shares and/or units), performance awards (shares and/or units), and cash awards to executive officers, non-employee directors, other employees, consultants, and advisors of the Company and its subsidiaries. Non-employee directors and consultants are eligible to receive all such awards, other than incentive stock options. Pursuant to the 2022 Plan, an initial 6,870,000 shares of the Company’s common stock were reserved for issuance, plus any shares of common stock subject to outstanding awards under both the previous 2018 Long Term Incentive Compensation Plan, as amended (“2018 Plan”) and Score Media and Gaming Inc. Second Amended and Restated Stock Option and Restricted Stock Unit Plan (the “theScore Plan”) as of June 7, 2022, and outstanding awards that are forfeited or settled for cash under each of the prior plans. In connection with the approval of the 2022 Plan, the 2018 Plan and theScore Plan remain in place until all the awards previously granted thereunder have been paid, forfeited, or expired. However, no shares are available for issuance and all future equity awards will be granted pursuant to the 2022 Plan.
On June 6, 2023, the Company’s shareholders, upon the recommendation of the Board, approved an amendment to the 2022 Plan (as amended, the “2022 Amended Plan”), which increased the number of shares reserved for issuance under the plan by 7,000,000 shares.
On June 17, 2025, upon the recommendation of the Board, shareholders approved a second amendment to the 2022 Plan (as amended, the “2022 Plan – Second Amendment”). Among other changes, this amendment increased the total number of shares reserved for issuance to 22,067,275 shares.
For purposes of determining the number of shares available for issuance under the 2022 Plan – Second Amendment, stock options, restricted stock, and all other equity settled awards count against the 22,067,275 share limit as one share of common stock for each share granted. Any awards that are not settled in shares of common stock are not counted against the share limit. As of December 31, 2025, there are 9,309,563 shares available for future grants under the 2022 Plan – Second Amendment.
Stock-based Compensation Expense
Stock-based compensation expense pertains to our stock options and restricted stock, including restricted stock with performance and market conditions. For options, restricted stock, and performance awards, the expense is recognized ratably over the total requisite service period for the entire award, which is generally to four years, based on the grant date fair value. We recognize forfeitures as they occur. For performance awards, the expense is adjusted based on the expectation of the achievement of the performance conditions. For awards with market conditions, we recognize the expense over the service period derived from the related valuation. The Company recognized $60.9 million, $52.9 million, and $85.9 million stock-based compensation expense for the years ended December 31, 2025, 2024, and 2023, respectively, which is included within the Consolidated Statements of Operations as a component of “General and administrative” expense.
Stock Options
Stock options are usually awarded to officers, directors and employees. The Company determines the grant date fair value of these options using the Black-Scholes option-pricing model. Typically, stock options are awarded with a ten-year contractual term. To fulfill stock option exercises, the Company issues new authorized common shares.
The following table presents activity related to our stock options for the year ended December 31, 2025:
| Number of Stock Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in millions) | ||||||||||||||||||||
Outstanding as of January 1, 2025 | 4,611,862 | $28.07 | |||||||||||||||||||||
| Granted | 810,502 | $19.18 | |||||||||||||||||||||
| Exercised | (30,701) | $11.99 | |||||||||||||||||||||
| Expired | (196,410) | $30.05 | |||||||||||||||||||||
| Forfeited | (8,704) | $22.42 | |||||||||||||||||||||
Outstanding as of December 31, 2025 | 5,186,549 | $26.71 | 6.3 | $0.1 | |||||||||||||||||||
Exercisable as of December 31, 2025 | 3,049,612 | $28.72 | 5.0 | $0.1 | |||||||||||||||||||
Expected to vest as of December 31, 2025 | 2,136,937 | $23.84 | 8.2 | $0.0 | |||||||||||||||||||
The following table presents information related to the fair value and intrinsic value of our stock options:
| For the year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Weighted-average grant-date fair value of options | $12.72 | $15.28 | $18.60 | ||||||||||||||
| Aggregate intrinsic value of stock options exercised (in millions) | $0.2 | $1.2 | $4.1 | ||||||||||||||
| Fair value of stock options vested (in millions) | $13.2 | $11.6 | $15.9 | ||||||||||||||
As of December 31, 2025, the unamortized compensation costs not yet recognized related to stock options granted totaled $19.8 million and the weighted-average period over which the costs are expected to be recognized was 1.4 years.
The following table provides the weighted-average assumptions used in the Black-Scholes option-pricing model:
| For the year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Risk-free interest rate | 4.38 | % | 4.07 | % | 3.88 | % | |||||||||||
| Expected volatility | 77.30 | % | 75.96 | % | 74.85 | % | |||||||||||
Dividend yield (1) | — | — | — | ||||||||||||||
| Weighted-average expected life (in years) | 5.2 | 5.2 | 5.1 | ||||||||||||||
(1)The expected dividend yield is zero, as the Company has not historically paid dividends.
Restricted Stock Awards and Restricted Stock Units
As noted above, the Company grants restricted stock to our employees and certain non-employee directors. In addition, the Company issues its named executive officers (“NEOs”) and other key executives restricted stock with performance and market conditions, which are discussed in further detail below. The grant date fair value for restricted stock is generally based on the closing stock price of the Company’s shares of common stock on the trading day preceding the grant date.
On April 12, 2021, the Board granted 600,000 restricted stock units and 300,000 restricted stock awards with market-based and service-based vesting conditions (collectively the “Stock Awards”), solely to the Company’s Chief Executive Officer and President pursuant to the 2018 Plan. The Stock Awards were classified as equity with separate tranches and requisite service periods identified for each separately achievable component. As of the grant date, the fair value of the Stock Awards was $48.7 million and was calculated using a Monte Carlo simulation. The fair value of the restricted stock awards was estimated at $19.4 million and segregated into 15 tranches with expense recognition periods ranging from 2.2 to 6.0 years. The fair value of the restricted stock units was estimated at $29.3 million and segregated into four tranches with expense recognition periods ranging from 6.7 to 8.7 years. We recognized $5.8 million, $7.4 million, and $8.4 million of stock compensation expense for the Stock Awards during the years ended December 31, 2025, 2024, and 2023, respectively. The market-based conditions associated with the Stock Awards were not achieved by December 31, 2025; therefore, in accordance with the terms of the agreement, all Stock Awards were forfeited as of that date.
Performance Share Programs
The Company’s performance share programs were adopted to provide our NEOs and certain other key executives with stock-based compensation tied directly to the Company’s performance, which further aligns their interests with our shareholders and provides compensation only if the designated performance goals are met for the applicable performance periods.
The Company granted 1,254,323 and 1,317,269 restricted units with performance-based vesting conditions, at target, during the years ended December 31, 2025 and 2024, respectively. The restricted performance units were granted under the 2022 Amended Plan, and each grant consists of one three-year performance period over a three-year service period. The awards have the potential to be earned at between 0% and 200% of the number of shares granted depending on achievement of the performance goals, and remain subject to vesting for the full three-year service period.
During the year ended December 31, 2023, the Company granted 461,747 restricted units with performance-based vesting conditions, at target, under the 2022 Plan. The restricted performance units granted in 2023 consist of three one-year performance periods over a three-year service period. The awards have the potential to be earned at between 0% and 150% of the number of shares granted depending on achievement of the annual performance goals, and remain subject to vesting for the full three-year service period.
The following table presents activity related to our restricted stock for the year ended December 31, 2025:
| With Performance Conditions | Without Performance Conditions | ||||||||||||||||||||||
| Number of Shares | Weighted- Average Grant Date Fair Value | Number of Shares | Weighted- Average Grant Date Fair Value | ||||||||||||||||||||
Nonvested as of January 1, 2025 | 2,995,735 | $31.21 | 2,509,623 | $26.11 | |||||||||||||||||||
| Granted | 1,569,647 | $14.76 | 2,762,449 | $18.72 | |||||||||||||||||||
| Vested | (237,746) | $39.14 | (907,738) | $27.03 | |||||||||||||||||||
| Forfeited | (1,081,198) | $47.89 | (893,265) | $23.90 | |||||||||||||||||||
Nonvested as of December 31, 2025 | 3,246,438 | $17.12 | 3,471,069 | $20.56 | |||||||||||||||||||
As of December 31, 2025, the unamortized compensation costs not yet recognized related to restricted stock totaled $65.8 million and the weighted-average period over which the costs are expected to be recognized is 1.5 years. The total fair values of restricted stock that vested during the years ended December 31, 2025, 2024, and 2023 were $33.8 million, $38.3 million, and $57.2 million, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.