EQUITY AND EARNINGS PER SHARE (Tables)
|
12 Months Ended |
Dec. 31, 2018 |
|---|
| Equity [Abstract] |
|
| Schedule of amounts used in computing basic and diluted EPS |
The Company is required to present both basic and diluted earnings per share (“EPS”). The following table shows the amounts used in computing basic and diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Year Ended December 31, |
|
|
2018 |
|
2017 |
|
2016 |
Numerator for basic and diluted earnings per share: |
|
|
|
|
|
|
(Loss) income from continuing operations after preferred dividends and noncontrolling interest |
|
$ |
(44,263 |
) |
|
$ |
(47,781 |
) |
|
$ |
71,499 |
|
(Loss) Income Applicable to Common Stockholders |
|
$ |
(44,263 |
) |
|
$ |
(47,781 |
) |
|
$ |
71,499 |
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
Denominator for basic earnings per share - weighted average shares |
|
66,993,543 |
|
|
66,903,457 |
|
|
66,709,925 |
|
Effect of dilutive securities |
|
|
|
|
|
|
Options |
|
— |
|
|
— |
|
|
2,078,515 |
|
RSUs |
|
— |
|
|
— |
|
|
— |
|
Denominator for diluted earnings per share - adjusted weighted average shares |
|
66,993,543 |
|
|
66,903,457 |
|
|
68,788,440 |
|
|
|
|
|
|
|
|
Basic earnings per share: |
|
|
|
|
|
|
(Loss) income from continuing operations per share of common stock, after preferred dividends and noncontrolling interest |
|
$ |
(0.66 |
) |
|
$ |
(0.71 |
) |
|
$ |
1.07 |
|
(Loss) Income Applicable to Common Stock, per share |
|
$ |
(0.66 |
) |
|
$ |
(0.71 |
) |
|
$ |
1.07 |
|
|
|
|
|
|
|
|
Diluted earnings per share: |
|
|
|
|
|
|
(Loss) income from continuing operations per share of common stock, after preferred dividends and noncontrolling interest |
|
$ |
(0.66 |
) |
|
$ |
(0.71 |
) |
|
$ |
1.04 |
|
(Loss) Income Applicable to Common Stock, per share |
|
$ |
(0.66 |
) |
|
$ |
(0.71 |
) |
|
$ |
1.04 |
|
|
| Schedule of outstanding options |
The following is a summary of the changes in the Company's outstanding options for the year ended December 31, 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Options |
|
Weighted Average Strike Price |
|
Weighted Average Life Remaining (in years) |
Balance at December 31, 2017 |
|
5,010,576 |
|
|
$ |
2.55 |
|
|
|
Granted |
|
3,426,355 |
|
|
5.44 |
|
|
|
Balance at December 31, 2018 (A) |
|
8,436,931 |
|
|
$ |
3.72 |
|
|
7.72 years |
|
|
|
|
|
|
|
Exercisable at December 31, 2018 |
|
2,705,586 |
|
|
$ |
2.64 |
|
|
4.64 years |
|
| Schedule of outstanding options summary |
The Company's outstanding options were summarized as follows:
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
2018 |
|
2017 |
Held by the former Manager |
|
2,705,253 |
|
|
3,857,748 |
|
Issued to the former Manager and subsequently transferred to certain Manager’s employees (B) |
|
2,304,990 |
|
|
1,152,495 |
|
Issued to the independent directors |
|
333 |
|
|
333 |
|
Issued to Drive Shack employees (C) |
|
3,426,355 |
|
|
— |
|
Total (A) |
|
8,436,931 |
|
|
5,010,576 |
|
|
|
(A) |
The total at December 31, 2018 excludes 54,641 RSUs granted to certain non-employee directors as part of the annual compensation.
|
|
|
(B) |
The Company and the former Manager agreed that options held by certain employees formerly employed by the Manager will not terminate or be forfeited as a result of the Termination and Cooperation Agreement, and the vesting of such options will relate to the relevant holder’s employment with the Company and its affiliates following January 1, 2018. In both February 2017 and April 2018, the former Manager issued 1,152,495 options to certain employees formerly employed by the Manager as part of their compensation. The options fully vest and are exercisable one year prior to the option expiration date, beginning March 2020 through January 2024.
|
|
|
(C) |
On November 12, 2018, the Company issued options to certain employees as provided in their employment agreements. The options fully vest and are exercisable as follows: 3,351,355 options vest in equal annual installments on each of the first three anniversaries of the grant date; and 75,000 options fully vest on the third anniversary of the grant date.
|
|
| Schedule of assumptions for fair value of options |
The fair value of the options was determined using the following assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Valuation Date |
|
January 1, 2018 |
|
|
April 10, 2018 |
|
|
November 12, 2018 |
|
Expected Volatility |
|
39.73 |
% |
|
35.66 |
% |
|
35.4 - 35.8% |
|
Expected Dividend Yield |
|
0.00 |
% |
|
0.00 |
% |
|
0.00 |
% |
Expected Remaining Term |
|
3.0 - 6.6 years |
|
|
2.7 - 6.3 years |
|
|
6.0 - 6.5 years |
|
Risk-Free Rate |
|
2.16 - 2.29% |
|
|
2.68 - 2.82% |
|
|
3.09 - 3.11% |
|
Fair Value at Valuation Date |
|
$ |
4,272 |
|
|
$ |
3,558 |
|
|
$ |
7,478 |
|
|
| Summary of Drive Shack's outstanding options |
The following table summarizes the Company’s outstanding options at December 31, 2018. Note that the last sales price on the New York Stock Exchange for the Company’s common stock in the year ended December 31, 2018 was $3.92 per share.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recipient |
|
Date of Grant/Exercise |
|
Number of Options |
|
Options Exercisable at
December 31, 2018 |
|
Weighted Average
Strike Price |
|
Fair Value At Grant
Date (millions) (A) |
|
Intrinsic Value at
December 31, 2018
(millions) |
Directors |
|
Various |
|
3,666 |
|
|
333 |
|
|
$ |
— |
|
|
Not Material |
|
— |
|
Manager (B)
|
|
2002 - 2008 |
|
587,277 |
|
|
— |
|
|
$ |
0.00 |
|
|
$ |
6.4 |
|
|
— |
|
Manager (B)
|
|
Mar-11 |
|
311,853 |
|
|
82,141 |
|
|
$ |
1.00 |
|
|
$ |
7.0 |
|
|
$ |
0.6 |
|
Manager (B)
|
|
Sep-11 |
|
524,212 |
|
|
166,582 |
|
|
$ |
1.00 |
|
|
$ |
5.6 |
|
|
$ |
1.1 |
|
Manager (B)
|
|
Apr-12 |
|
348,352 |
|
|
140,112 |
|
|
$ |
1.00 |
|
|
$ |
5.6 |
|
|
$ |
0.8 |
|
Manager (B)
|
|
May-12 |
|
396,316 |
|
|
158,345 |
|
|
$ |
1.00 |
|
|
$ |
7.6 |
|
|
$ |
0.9 |
|
Manager (B)
|
|
Jul-12 |
|
437,991 |
|
|
178,478 |
|
|
$ |
1.00 |
|
|
$ |
8.3 |
|
|
$ |
1.0 |
|
Manager (B)
|
|
Jan-13 |
|
958,331 |
|
|
489,196 |
|
|
$ |
2.32 |
|
|
$ |
18.0 |
|
|
$ |
1.4 |
|
Manager (B)
|
|
Feb-13 |
|
383,331 |
|
|
195,679 |
|
|
$ |
2.95 |
|
|
$ |
8.4 |
|
|
$ |
0.3 |
|
Manager (B)
|
|
Jun-13 |
|
670,829 |
|
|
342,438 |
|
|
$ |
3.23 |
|
|
$ |
3.8 |
|
|
$ |
0.4 |
|
Manager (B)
|
|
Nov-13 |
|
965,847 |
|
|
493,032 |
|
|
$ |
3.57 |
|
|
$ |
6.0 |
|
|
$ |
0.3 |
|
Manager (B)
|
|
Aug-14 |
|
765,416 |
|
|
459,250 |
|
|
$ |
4.01 |
|
|
$ |
1.7 |
|
|
$ |
— |
|
Employees |
|
Nov-18 |
|
3,426,355 |
|
|
— |
|
|
$ |
5.44 |
|
|
$ |
7.5 |
|
|
$ |
— |
|
Exercised (C)
|
|
Prior to 2008 |
|
(173,853 |
) |
|
N/A |
|
|
$ |
14.09 |
|
|
N/A |
|
|
N/A |
|
Exercised (D)
|
|
Oct-12 |
|
(15,972 |
) |
|
N/A |
|
|
$ |
1.48 |
|
|
N/A |
|
|
N/A |
|
Exercised (E)
|
|
Sep-13 |
|
(51,306 |
) |
|
N/A |
|
|
$ |
1.67 |
|
|
N/A |
|
|
N/A |
|
Exercised (F)
|
|
2014 |
|
(216,186 |
) |
|
N/A |
|
|
$ |
1.46 |
|
|
N/A |
|
|
N/A |
|
Exercised (G)
|
|
2015 |
|
(202,446 |
) |
|
N/A |
|
|
1.00 |
|
|
N/A |
|
|
N/A |
|
Exercised (H)
|
|
2016 |
|
(266,657 |
) |
|
N/A |
|
|
3.01 |
|
|
N/A |
|
|
N/A |
|
Expired unexercised |
|
2002-2008 |
|
(416,425 |
) |
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
Outstanding |
|
|
|
8,436,931 |
|
|
2,705,586 |
|
|
|
|
|
|
|
|
|
(A) |
The fair value of the options was estimated using an option valuation model. Since the option plans have characteristics significantly different from those of traded options, and since the assumptions used in such model, particularly the volatility assumption, are subject to significant judgment and variability, the actual value of the options could vary materially from management’s estimate. The volatility assumption for these options was estimated based primarily on the historical volatility of the Company’s common stock and management’s expectations regarding future volatility. The expected life assumption for options issued prior to 2011 was estimated based on the simplified term method. This simplified method was used because the Company did not have sufficient historical data to conclude on the appropriate expected life of its options and because historical data to date was consistent with the simplified term method. The expected life assumption for options issued in 2011 and thereafter was estimated based primarily on the historical expected life of applicable previously issued options. |
|
|
(B) |
The former Manager assigned certain of its options to Fortress’s employees as follows: |
|
|
|
|
|
|
Date of Grant |
|
Strike Prices |
|
Total Unexercised Inception to Date |
Mar-11 |
|
$1.00 |
|
124,740 |
Sep-11 |
|
$1.00 |
|
209,686 |
Apr-12 |
|
$1.00 |
|
139,340 |
May-12 |
|
$1.00 |
|
158,526 |
Jul-12 |
|
$1.00 |
|
175,196 |
Jan-13 |
|
$2.32 |
|
383,332 |
Feb-13 |
|
$2.95 |
|
153,332 |
Jun-13 |
|
$3.23 |
|
268,332 |
Nov-13 |
|
$3.57 |
|
386,340 |
Aug-14 |
|
$4.01 |
|
306,166 |
|
|
Total |
|
2,304,990 |
The Company and the former Manager agreed that options held by certain employees formerly employed by the Manager will not terminate or be forfeited as a result of the Termination and Cooperation Agreement, and the vesting of such options will relate to the relevant holder’s employment with the Company and its affiliates following January 1, 2018.
|
|
(C) |
111,770 of the total options exercised were by the former Manager. 61,417 of the total options exercised were by employees of Fortress subsequent to their assignment. 666 of the total options exercised were by directors.
|
|
|
(D) |
Exercised by employees of Fortress subsequent to their assignment. The options exercised had an intrinsic value of $0.2 million.
|
|
|
(E) |
Exercised by employees of Fortress subsequent to their assignment. The options exercised had an intrinsic value of $0.9 million.
|
|
|
(F) |
215,853 options were exercised by employees of Fortress subsequent to their assignment with an intrinsic value of $4.1 million. 333 options were exercised by directors with a minimal intrinsic value.
|
|
|
(G) |
Exercised by employees of Fortress subsequent to their assignment. The options exercised had an intrinsic value of $0.8 million.
|
|
|
(H) |
Exercised by employees of Fortress subsequent to their assignment. The options exercised had an intrinsic value of $0.4 million. As a result of his resignation, the Company's former CEO forfeited 16,748 options and were transferred back to the former Manager.
|
|
| Schedule of assigned options to Fortress's employees |
The former Manager assigned certain of its options to Fortress’s employees as follows:
|
|
|
|
|
|
Date of Grant |
|
Strike Prices |
|
Total Unexercised Inception to Date |
Mar-11 |
|
$1.00 |
|
124,740 |
Sep-11 |
|
$1.00 |
|
209,686 |
Apr-12 |
|
$1.00 |
|
139,340 |
May-12 |
|
$1.00 |
|
158,526 |
Jul-12 |
|
$1.00 |
|
175,196 |
Jan-13 |
|
$2.32 |
|
383,332 |
Feb-13 |
|
$2.95 |
|
153,332 |
Jun-13 |
|
$3.23 |
|
268,332 |
Nov-13 |
|
$3.57 |
|
386,340 |
Aug-14 |
|
$4.01 |
|
306,166 |
|
|
Total |
|
2,304,990 |
The Company and the former Manager agreed that options held by certain employees formerly employed by the Manager will not terminate or be forfeited as a result of the Termination and Cooperation Agreement, and the vesting of such options will relate to the relevant holder’s employment with the Company and its affiliates following January 1, 2018.
|