SEC Info - Warner Music Group Corp. - ‘10-K’ for 9/30/16

Warner Music Group Corp. – ‘10-K’ for 9/30/16 – ‘R19’

On: Thursday, 12/8/16, at 7:47am ET · For: 9/30/16 · Accession #: 1564590-16-29963 · File #: 1-32502

As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 12/08/16 Warner Music Group Corp. 10-K 9/30/16 113:44M ActiveDisclosure/FA

Document/Exhibit Description Pages Size 1: 10-K Annual Report HTML 2.72M 3: EX-10.12 Material Contract HTML 39K 4: EX-10.17 Material Contract HTML 37K 5: EX-10.41 Material Contract HTML 905K 6: EX-10.44 Material Contract HTML 1.14M 2: EX-10.8 Material Contract HTML 78K 7: EX-21.1 Subsidiaries List HTML 56K 8: EX-31.1 Certification -- §302 - SOA'02 HTML 36K 9: EX-31.2 Certification -- §302 - SOA'02 HTML 37K 10: EX-32.1 Certification -- §906 - SOA'02 HTML 33K 11: EX-32.2 Certification -- §906 - SOA'02 HTML 33K 18: R1 Document and Entity Information HTML 61K 19: R2 Consolidated Balance Sheets HTML 131K 20: R3 Consolidated Balance Sheets (Parenthetical) HTML 43K 21: R4 Consolidated Statements of Operations HTML 85K 22: R5 Consolidated Statements of Operations HTML 36K (Parenthetical) 23: R6 Consolidated Statements of Comprehensive Loss HTML 54K 24: R7 Consolidated Statements of Cash Flows HTML 148K 25: R8 Consolidated Statements of Cash Flows HTML 42K (Parenthetical) 26: R9 Consolidated Statement of Equity HTML 60K 27: R10 Description of Business HTML 50K 28: R11 Summary of Significant Accounting Policies HTML 87K 29: R12 Comprehensive Income (Loss) HTML 107K 30: R13 Property, Plant and Equipment HTML 73K 31: R14 Goodwill and Intangible Assets HTML 188K 32: R15 Debt HTML 91K 33: R16 Income Taxes HTML 265K 34: R17 Employee Benefit Plans HTML 38K 35: R18 Restructuring HTML 120K 36: R19 Share-Based Compensation Plans HTML 175K 37: R20 Related Party Transactions HTML 47K 38: R21 Commitments and Contingencies HTML 67K 39: R22 Derivative Financial Instruments HTML 47K 40: R23 Segment Information HTML 253K 41: R24 Additional Financial Information HTML 35K 42: R25 Fair Value Measurements HTML 138K 43: R26 Subsequent Events HTML 40K 44: R27 Quarterly Financial Information HTML 262K 45: R28 Guarantor and Non-Guarantor Subsidiaries Financial HTML 4.28M Information 46: R29 Schedule II - 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10. Share-Based Compensation Plans

Effective January 1, 2013, eligible individuals were invited to participate in the Senior Management Free Cash Flow Plan (the “Plan”). Eligible individuals include any employee, consultant or officer of the Company or any of its affiliates, who is selected by the Company’s Compensation Committee to participate in the Plan. Under the Plan, participants are allocated a specific portion of the Company’s free cash flow to use to purchase the equivalent of Company stock through the acquisition of deferred equity units. Participants also receive a grant of profit interests in a purposely established LLC holding company (the “LLC”) that represent an economic entitlement to future appreciation over an equivalent number of shares of Company stock (“matching units”). The Company’s Board of Directors authorized the issuance of up to 82.1918 shares of the Company’s common stock pursuant to the Plan, 41.0959 in respect of deferred equity units and 41.0959 in respect of matching units. The LLC currently owns 55 issued and outstanding shares. Each deferred equity unit is equivalent to 1/10,000 of a share of Company stock. The Company will allocate units to active participants each Plan year at the time that annual free cash flow bonuses for such Plan year are determined and may grant unallocated units under the Plan to certain members of current or future management. At the time that annual free cash flow bonuses for such Plan year are determined, a participant shall be credited a number of deferred equity units based on their respective allocation divided by $107.13 (the grant date intrinsic value) and an equal number of the related matching units will be allocated. The redemption price of the deferred equity units will equal the fair market value of a fractional share of the Company’s stock on the date of the settlement and the redemption price for the matching units will equal the excess, if any, of the then fair market value of one Company fractional share over the grant date intrinsic value of one fractional share.

The Company accounts for share-based payments as required by ASC 718. ASC 718 requires all share-based payments to employees to be recognized as compensation expense. Under the recognition provision of ASC 718, liability classified share-based compensation costs are measured each reporting date until settlement. The Company’s policy is to measure share-based compensation costs to employees using the intrinsic value method instead of fair value as it is not practical to estimate the volatility of its share price. In accordance with ASC 718, the Company measures share-based compensation costs to non-employees at fair value under ASC 820, which does not allow for use of the intrinsic method.

For accounting purposes, the grant date was established at the point the Company and the participant reached a mutual understanding of the key terms and conditions, in this case the date at which the participant accepted the invitation to participate in the Plan. For accounting purposes, deferred equity units are deemed to generally vest between one and seven years and matching equity units granted under the Plan are deemed to vest two years after the allocation to the participant’s account. All deferred and matching equity units will be settled in three installments in December 2018, 2019, and 2020. The deferred units will be settled at the participant’s election for cash equal to the fair market value or one fractional company share. The matching units will be settled for cash equal to the redemption price. In December 2020, all outstanding units become mandatorily redeemable at the then redemption price. Due to this mandatory redemption clause, the Company has classified the awards under the Plan as liability awards. Dividend distributions, if any, are also paid out on vested deferred equity units and are calculated on the same basis as the Company’s common shares. The Company has applied a graded (tranche-by-tranche) attribution method and expenses share-based compensation on an accelerated basis over the vesting period of the share award.

The following is a summary of the Company’s share awards:

									Matching		Deferred Equity		Matching Equity
							Deferred		Equity Units		Units Weighted-		Units Weighted-
							Equity Units		Weighted-		Average		Average
							Weighted-		Average		Grant-Date		Grant-Date
	Deferred			Matching			Average		Intrinsic		Intrinsic		Intrinsic
	Equity Units			Equity Units			Fair Value		Value		Value		Value
Unvested units at September 30, 2014		19			24		$	132.92	$	25.79	$	107.13	$	—
Granted		3			3			132.92		—		107.13		—
Vested		(2	)		—			132.92		25.79		107.13		—
Forfeited		(2	)		(2	)		132.92		25.79		107.13		—
Unvested units at September 30, 2015		18			25		$	135.00	$	27.87	$	107.13	$	—
Granted		9			9			135.00		—		107.13		—
Vested		(7	)		(5	)		135.00		27.87		107.13		—
Forfeited		(1	)		(1	)		135.00		27.87		107.13		—
Unvested units at September 30, 2016		19			28		$	142.21	$	35.08	$	107.13	$	—

The weighted-average grant date intrinsic value of deferred equity unit awards for the fiscal year ended September 30, 2016 was $107.13. The fair value of these deferred equity units at September 30, 2016 was $142.21. The weighted-average grant date intrinsic value of deferred equity unit awards for the period ended September 30, 2015 was $107.13. The fair value of these deferred equity units at September 30, 2015 was $135.00. The weighted-average grant date intrinsic value of deferred equity unit awards for the period ended September 30, 2014 was $107.13. The fair value of these deferred equity units at September 30, 2014 was $132.92.

Compensation Expense

The Company recognized non-cash share-based compensation expense of $23 million for the fiscal year ended September 30, 2016. Of the $23 million, $13 million related to awards for employees and $10 million related to awards for non-employees for the fiscal year ended September 30, 2016. The Company recognized non-cash share-based compensation of $3 million for the fiscal year ended September 30, 2015. Of the $3 million, $1 million related to awards for employees and $2 million related to awards for non-employees for the fiscal year ended September 30, 2015. The Company recognized non-cash share-based compensation of $8 million for the fiscal year ended September 30, 2014. Of the $8 million, $5 million related to awards for employees and $3 million related to awards for non-employees for the fiscal year ended September 30, 2014.

In addition, at September 30, 2016, September 30, 2015 and September 30, 2014, the Company had approximately $2 million, $7 million and $12 million, respectively, of unrecognized compensation costs related to its unvested share awards. As of September 30, 2016, the remaining weighted average period over which total compensation related to unvested awards is expected to be recognized is 1 year.

This ‘10-K’ Filing

Date

Other Filings

Filed on:

12/8/16

8-K, D

For Period end:

9/30/16

9/30/15

10-K

9/30/14

10-K

1/1/13

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Warner Music Group Corp. – ‘10-K’ for 9/30/16 – ‘R19’

On: Thursday, 12/8/16, at 7:47am ET · For: 9/30/16 · Accession #: 1564590-16-29963 · File #: 1-32502

Previous ‘10-K’: ‘10-K’ on 12/10/15 for 9/30/15 · Next: ‘10-K’ on 12/5/17 for 9/30/17 · Latest: ‘10-K’ on 11/21/23 for 9/30/23

Annual Report — Form 10-K — Sect. 13 / 15(d) – SEA’34
Filing Table of Contents

‘R19’ — Share-Based Compensation Plans

This is an IDEA Financial Report. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

Warner Music Group Corp. – ‘10-K’ for 9/30/16 – ‘R19’

On: Thursday, 12/8/16, at 7:47am ET · For: 9/30/16 · Accession #: 1564590-16-29963 · File #: 1-32502

Previous ‘10-K’: ‘10-K’ on 12/10/15 for 9/30/15 · Next: ‘10-K’ on 12/5/17 for 9/30/17 · Latest: ‘10-K’ on 11/21/23 for 9/30/23

Annual Report — Form 10-K — Sect. 13 / 15(d) – SEA’34Filing Table of Contents

‘R19’ — Share-Based Compensation Plans

This is an IDEA Financial Report. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

Annual Report — Form 10-K — Sect. 13 / 15(d) – SEA’34
Filing Table of Contents