Sphere Entertainment Co.SPHR
Sphere Entertainment Co. Stock Compensation Disclosure
Share-based Compensation
Share-based Compensation Expense
The Company has three share-based compensation plans: the 2020 Employee Stock Plan (as amended, the “Employee Stock Plan”), the 2020 Stock Plan for Non-Employee Directors (as amended, the “Non-Employee Director Plan”) and the MSG Networks Inc. 2010 Employee Stock Plan (as amended, the “MSG Networks Employee Stock Plan”).
Share-based compensation expense is generally recognized straight-line over the vesting term of the award, which typically provides for three-year cliff or graded vesting subject to continued employment.
In connection with the MSGE Distribution, pursuant to the terms of the incentive plans and applicable award agreements, (i) each holder of an employee restricted stock unit and performance stock unit received one MSG Entertainment restricted stock unit or performance stock unit in respect of every one Company restricted stock unit (“RSU”) or performance stock unit (“PSU”) owned on the Record Date and continues to be entitled to one share of the Company’s Class A Common Stock for each Company RSU or PSU in accordance with the existing award agreement, (ii) one share of MSG Entertainment Class A Common Stock was issued under the MSG Entertainment Non-Employee Director Plan in respect of every one RSU outstanding under the Company’s 2020 Stock Plan for Non-Employee Directors, which remain outstanding and continue to be entitled to a share of the Company’s Class A Common Stock in accordance with the existing award agreement, and (iii) each option to purchase the Company’s Class A Common Stock became two options: one option to acquire MSG Entertainment Class A Common Stock and one option to acquire the Company’s Class A Common Stock. The existing exercise price was allocated between the Company’s options and the new MSG Entertainment options based upon the weighted average price of each of our Class A Common Stock and MSG Entertainment Class A Common Stock over the ten trading days immediately following the MSGE Distribution as reported by Bloomberg, and the underlying share amount was consistent with the one-to-one distribution ratio in the MSGE Distribution. Other than the split of the options and the allocation of the existing exercise price, there were no additional adjustments to existing options in connection with the MSGE Distribution.
Share-based compensation expense for the Company’s RSUs, PSUs, stock options and/or cash-settled stock appreciation rights (“SARs”) are recognized in the consolidated statements of operations as a component of direct operating expenses or selling, general and administrative expenses.
The Company’s RSUs/PSUs and/or stock options held by individuals who are solely employees of MSG Sports or MSG Entertainment are not expensed by the Company; however, such RSUs/PSUs and/or stock options do have a dilutive effect on earnings (loss) per share available to the Company’s common stockholders.
The following table summarizes the Company’s share-based compensation expense for the year ended December 31, 2025, the six months ended December 31, 2024 and the years ended June 30, 2024 and 2023:
Year Ended December 31, | Six Months Ended December 31, | Years Ended June 30, | ||||||||||||||||||||||||
| 2025 | 2024 | 2024 | 2023 | |||||||||||||||||||||||
Share-based compensation expense (a) | $ | 65,357 | $ | 33,968 | $ | 47,382 | $ | 42,607 | ||||||||||||||||||
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(a) Share-based compensation expense excludes costs that have been capitalized of $763, $1,250, $2,193 and $3,642 for the year ended December 31, 2025, the six months ended December 31, 2024, and the years ended June 30, 2024 and 2023, respectively. For the year ended December 31, 2025, the six months ended December 31, 2024 and the years ended June 30, 2024 and 2023, share-based compensation expense also excludes costs of $0, $700, $1,166 and $8,118 respectively, that have been reclassified to Restructuring charges in the consolidated statements of operations, as detailed in Note 6. Restructuring Charges.
As of December 31, 2025, there was $85,367 of unrecognized compensation cost related to unvested awards held by the Company’s employees. The cost is expected to be recognized over a weighted-average period of approximately 1.7 years.
RSU and PSU Award Activity
The following table summarizes activity related to the Company’s RSUs and PSUs, held by the Company, MSG Sports and MSG Entertainment employees for the year ended December 31, 2025:
| Number of | Weighted-Average Grant-date Fair Vale (b) | ||||||||||||||||
| RSUs | PSUs | ||||||||||||||||
Unvested award balance as of December 31, 2024 | 917 | 805 | $ | 40.33 | |||||||||||||
| Granted | 474 | 375 | $ | 51.99 | |||||||||||||
Vested (a) | (570) | (478) | $ | 38.46 | |||||||||||||
| Forfeited | (169) | (143) | $ | 37.02 | |||||||||||||
| Unvested award balance as of December 31, 2025 | 652 | 559 | $ | 50.97 | |||||||||||||
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(a) Upon delivery, RSUs and PSUs granted under the Employee Stock Plan and the MSG Networks Employee Stock Plan were net share-settled to cover the required statutory tax withholding obligations. To fulfill the employees’ statutory minimum tax withholding obligations for the applicable income and other employment taxes, 463 awards, with an aggregate value of $24,549 were retained by the Company during the year ended December 31, 2025.
(b) The weighted-average grant-date fair value for unvested awards granted prior to the MSGE Distribution Date reflects the impact of the MSGE Distribution as described above.
The following table summarizes additional information about RSUs and PSUs for the year ended December 31, 2025, the six months ended December 31, 2024, and the years ended June 30, 2024 and 2023:
Year Ended December 31, | Six Months December 31, | Years Ended June 30, | |||||||||||||||||||||
| 2025 | 2024 | 2024 | 2023 | ||||||||||||||||||||
| Weighted average grant date fair value per share of awards granted | $ | 51.99 | $ | 48.27 | $ | 36.94 | $ | 50.81 | |||||||||||||||
| Fair value of awards vested | $ | 51,667 | $ | 37,533 | $ | 45,263 | $ | 42,467 | |||||||||||||||
Stock Options Award Activity
Compensation expense for the Company’s existing stock options is determined based on the grant date fair value of the award calculated using the Black-Scholes or Monte Carlo options-pricing models. Stock options generally cliff-vest after a three year service period and expire 5 to 10 years from the date of grant.
The following table summarizes activity related to the Company’s stock options for the year ended December 31, 2025:
| Number of Stock Options | Weighted-Average Exercise Price Per Share | Weighted-Average Remaining Contractual Term (In Years) | Aggregate Intrinsic Value | ||||||||||||||||||||
Balance as of December 31, 2024 | 5,532 | $ | 42.62 | 8.65 | $ | 11,601 | |||||||||||||||||
| Options granted | 1,685 | $ | 38.72 | ||||||||||||||||||||
| Options exercised | (191) | $ | 33.90 | ||||||||||||||||||||
| Options forfeited | (159) | $ | 57.09 | ||||||||||||||||||||
| Balance as of December 31, 2025 | 6,867 | $ | 41.55 | 7.80 | $ | 367,515 | |||||||||||||||||
Exercisable as of December 31, 2025 | 902 | $ | 39.32 | 3.04 | $ | 50,310 | |||||||||||||||||
Effective as of the 2020 Entertainment Distribution, the Company adopted two share-based compensation plans: Employee Stock Plan and the Non-Employee Director Plan”.
Under the Employee Stock Plan, the Company is authorized to grant incentive stock options, non-qualified stock options, restricted shares, RSUs, stock appreciation rights and other equity-based awards. The Company may grant awards for up to 11,600 shares of Class A Common Stock (subject to certain adjustments). Options and stock appreciation rights under the Employee Stock Plan must be granted with an exercise price of not less than the fair market value of a share of Class A Common Stock on the date of grant and must expire no later than 10 years from the date of grant (or up to additional year in the case of the death of a holder). The terms and conditions of awards granted under the Employee Stock Plan, including vesting and exercisability, were determined by the Compensation Committee of the Board of Directors (“Compensation Committee”) and included terms or conditions based upon performance criteria. RSUs that were awarded by the Company to its employees will settle in shares of Class A Common Stock (either from treasury or with newly issued shares), or, at the option of the Compensation Committee, in cash.
Under the Non-Employee Director Plan, the Company is authorized to grant non-qualified stock options, RSUs, restricted shares, stock appreciation rights and other equity-based awards. The Company may grant awards for up to 500 shares of Class A Common Stock (subject to certain adjustments). Options under the Non-Employee Director Plan must be granted with an exercise price of not less than the fair market value of a share of Class A Common Stock on the date of grant and must expire no later than 10 years from the date of grant (or up to additional year in the case of the death of a holder). The terms and conditions of awards granted under the Non-Employee Director Plan, including vesting and exercisability, were determined by the Compensation Committee. Unless otherwise provided in an applicable award agreement, options granted under this plan will be fully vested and exercisable upon the date of grant. Unless otherwise provided in an applicable award agreement, RSUs granted under this plan will be fully vested upon the date of grant and will settle in shares of Class A Common Stock (either from treasury or with newly issued shares), or, at the option of the Compensation Committee, in cash, on the first business day after ninety days from the date the director incurs a separation from service or, if earlier, upon the director’s death.
SARs Award Activity
Compensation expense for the Company’s SARs is determined based on mark-to-market valuation of the awards calculated using the Black-Scholes options-pricing model. SARs cliff-vest after a three year service period.
The following table summarizes activity related to the Company’s SARs for the year ended December 31, 2025:
| Number of SARs | Weighted-Average Price | Weighted-Average Remaining Contractual Term (In Years) | Aggregate Intrinsic Value | ||||||||||||||||||||
Balance as of December 31, 2024 | 188 | $ | 46.17 | 1.80 | $ | — | |||||||||||||||||
| SARs granted | — | $ | — | ||||||||||||||||||||
SARs forfeited | (13) | $ | 46.17 | ||||||||||||||||||||
| Balance as of December 31, 2025 | 175 | $ | 46.17 | 0.82 | $ | 8,533 | |||||||||||||||||
Exercisable as of December 31, 2025 | — | $ | — | — | $ | — | |||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Aug 14, 2024 | |
| 2023 | Aug 22, 2023 | |
| 2022 | Aug 19, 2022 | |
| 2021 | Aug 23, 2021 | |
| 2020 | Aug 31, 2020 | |
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.