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Stock-Based Compensation | 12 Months Ended
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Sep. 30, 2021
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Stock-Based Compensation | 4. Stock-Based Compensation In February 2017, the Company’s shareholders approved the 2017 Incentive Stock and Awards Plan (the “2017 Stock Plan”). The 2017 Stock Plan replaced the 2009 Incentive Stock and Awards Plan (as amended, the “2009 Stock Plan”). While no new awards will be granted under the 2009 Stock Plan, awards previously made under the 2009 Stock Plan that were outstanding as of the approval date of the 2017 Stock Plan will remain outstanding and continue to be governed by the provisions of that plan. At September 30, 2021, the Company had reserved 4,426,671 shares of Common Stock available for issuance to provide for the exercise of outstanding stock options and the issuance of Common Stock under incentive compensation awards, including awards issued prior to the effective date of the 2017 Stock Plan. Under the 2017 Stock Plan, officers, directors, including non-employee directors, and employees of the Company may be granted stock options, stock appreciation rights (SAR), performance shares, performance units, shares of Common Stock, restricted stock, restricted stock units (RSU) or other stock-based awards. The 2017 Stock Plan provides for the granting of options to purchase shares of the Company’s Common Stock at not less than the fair market value of such shares on the date of grant. Stock options granted under the 2017 Stock Plan generally become exercisable in equal installments over a three-year period, beginning with the first anniversary of the date of grant of the option, unless a shorter or longer duration is established by the Human Resources Committee of the Board of Directors at the time of the option grant. Stock options terminate not more than ten years from the date of grant. The exercise price of stock options and the market value of restricted stock unit awards are determined based on the closing market price of the Company’s Common Stock on the date of grant. Except to the extent vesting is accelerated upon early retirement and except for performance shares and performance units, vesting is based solely on continued service as an employee of the Company. The Company recognizes stock-based compensation expense over the requisite service period for vesting of an award, or to an employee’s eligible retirement date, if earlier and applicable. Information related to the Company’s equity-based compensation plans in effect as of September 30, 2021 was as follows:
Plan Category |  | Number of Securities to be Issued Upon Exercise of Outstanding Options or Vesting of Share Awards |  |  | Weighted-Average Exercise Price of Outstanding Options |  |  | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans |
Equity compensation plans approved by security holders |  |  | 1,115,679 |  |  | $ | 77.96 |  |  |  | 3,310,992 |
Equity compensation plans not approved by security holders |  |  | — |  |  |  | — |  |  |  | — |
|  |  | 1,115,679 |  |  | $ | 77.96 |  |  |  | 3,310,992 |
Total stock-based compensation expense was as follows (in millions):
|  | Fiscal Year Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Stock options |  | $ | 1.8 |  |  | $ | 6.8 |  |  | $ | 6.9 |
Stock awards (shares and units) |  |  | 19.3 |  |  |  | 15.8 |  |  |  | 15.0 |
Performance share awards |  |  | 6.1 |  |  |  | 6.7 |  |  |  | 7.1 |
Cash-settled stock appreciation rights |  |  | 1.1 |  |  |  | 0.2 |  |  |  | 0.4 |
Cash-settled restricted stock unit awards |  |  | 1.5 |  |  |  | 0.7 |  |  |  | 0.6 |
Total stock-based compensation cost |  |  | 29.8 |  |  |  | 30.2 |  |  |  | 30.0 |
Income tax benefit recognized for stock-based compensation |  |  | (4.4 | ) |  |  | (3.6 | ) |  |  | (4.9 | )
Stock-based compensation cost, net of tax |  | $ | 25.4 |  |  | $ | 26.6 |  |  | $ | 25.1 |
Stock Options — A summary of the Company’s stock option activity is as follows:
|  | Fiscal Year Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
|  | Options |  |  | Weighted- Average Exercise Price |  |  | Options |  |  | Weighted- Average Exercise Price |  |  | Options |  |  | Weighted- Average Exercise Price |
Outstanding, beginning of year |  |  | 1,083,402 |  |  | $ | 74.38 |  |  |  | 1,328,390 |  |  | $ | 62.62 |  |  |  | 1,268,984 |  |  | $ | 57.03 |
Granted |  |  | — |  |  |  | — |  |  |  | 301,025 |  |  |  | 90.28 |  |  |  | 372,450 |  |  |  | 66.09 |
Forfeited |  |  | (8,065 | ) |  |  | 81.40 |  |  |  | (40,965 | ) |  |  | 79.00 |  |  |  | (24,175 | ) |  |  | 72.88 |
Expired |  |  | (3,999 | ) |  |  | 86.59 |  |  |  | (5,869 | ) |  |  | 84.25 |  |  |  | (8,721 | ) |  |  | 76.92 |
Exercised |  |  | (599,662 | ) |  |  | 71.38 |  |  |  | (499,179 | ) |  |  | 52.18 |  |  |  | (280,148 | ) |  |  | 40.62 |
Outstanding, end of year |  |  | 471,676 |  |  |  | 77.96 |  |  |  | 1,083,402 |  |  |  | 74.38 |  |  |  | 1,328,390 |  |  |  | 62.62 |
Exercisable, end of year |  |  | 251,049 |  |  |  | 74.73 |  |  |  | 537,241 |  |  |  | 68.16 |  |  |  | 709,826 |  |  |  | 55.11 |
Stock options outstanding and exercisable as of September 30, 2021 were as follows (in millions, except share and per share amounts):
|  | Outstanding |  |  | Exercisable |
Exercise Prices |  | Options |  |  | Weighted Average Remaining Contractual Life (in years) |  |  | Weighted Average Exercise Price |  |  | Aggregate Intrinsic Value |  |  | Options |  |  | Weighted Average Remaining Contractual Life (in years) |  |  | Weighted Average Exercise Price |  |  | Aggregate Intrinsic Value |
$40.00 - $60.00 |  |  | 14,838 |  |  |  | 1.1 |  |  | $ | 41.52 |  |  | $ | 0.9 |  |  |  | 14,838 |  |  |  | 1.1 |  |  | $ | 41.52 |  |  | $ | 0.9 |
$60.01 - $80.00 |  |  | 201,069 |  |  |  | 6.0 |  |  |  | 66.28 |  |  |  | 7.3 |  |  |  | 122,137 |  |  |  | 5.2 |  |  |  | 66.40 |  |  |  | 4.4 |
$80.01 - $100.00 |  |  | 255,769 |  |  |  | 7.6 |  |  |  | 89.25 |  |  |  | 3.3 |  |  |  | 114,074 |  |  |  | 6.9 |  |  |  | 87.97 |  |  |  | 1.6 |
|  |  | 471,676 |  |  |  | 6.7 |  |  |  | 77.96 |  |  | $ | 11.5 |  |  |  | 251,049 |  |  |  | 5.7 |  |  |  | 74.73 |  |  | $ | 6.9 |
The aggregate intrinsic values in the tables above represent the total pre-tax intrinsic value (difference between the Company’s closing stock price on the last trading day of fiscal 2021 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 30, 2021. This amount changes based on the fair market value of the Company’s Common Stock. The total intrinsic value of options exercised for fiscal 2021, 2020 and 2019 was $22.6 million, $18.5 million and $10.2 million, respectively. The actual income tax benefit realized totaled $3.5 million, $4.3 million and $2.4 million for those same periods. As of September 30, 2021, total unrecognized compensation cost related to outstanding stock options was $0.7 million, net of estimated forfeitures, which the Company expects to be recognized over a weighted-average period of 1.1 years. The Company uses the Black-Scholes valuation model to value stock options utilizing the following weighted-average assumptions:
|  | Fiscal Year Ended September 30, |
Options Granted During |  | 2020 |  |  | 2019 |
Assumptions: |  |  |  |  |  |  |  |
Expected term (in years) |  |  | 5.4 |  |  |  | 5.4 |
Expected volatility |  |  | 34.10 | % |  |  | 33.40 | %
Risk-free interest rate |  |  | 1.63 | % |  |  | 2.87 | %
Expected dividend yield |  |  | 1.37 | % |  |  | 1.50 | %
The expected option term represents the period of time that the options granted are expected to be outstanding and was based on historical experience. The Company used its historical stock prices over the expected term as the basis for the Company’s volatility assumption. The assumed risk-free interest rates were based on five-year U.S. Treasury rates in effect at the time of grant. The expected dividend yield was based on average actual yield on the ex-dividend date. The weighted-average per share grant date fair values for stock option grants during fiscal 2020 and 2019 were $26.16 and $20.00, respectively. Stock Awards — A summary of the Company’s stock award activity is as follows:
|  | Fiscal Year Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
|  | Number of Shares |  |  | Weighted- Average Grant Date Fair Value |  |  | Number of Shares |  |  | Weighted- Average Grant Date Fair Value |  |  | Number of Shares |  |  | Weighted- Average Grant Date Fair Value |
Nonvested, beginning of year |  |  | 346,808 |  |  | $ | 79.44 |  |  |  | 411,510 |  |  | $ | 72.66 |  |  |  | 332,473 |  |  | $ | 69.15 |
Granted |  |  | 307,025 |  |  |  | 82.80 |  |  |  | 183,725 |  |  |  | 87.82 |  |  |  | 278,175 |  |  |  | 69.98 |
Forfeited |  |  | (36,545 | ) |  |  | 78.81 |  |  |  | (27,076 | ) |  |  | 80.57 |  |  |  | (13,610 | ) |  |  | 71.17 |
Vested |  |  | (222,400 | ) |  |  | 80.39 |  |  |  | (221,351 | ) |  |  | 73.64 |  |  |  | (185,528 | ) |  |  | 62.47 |
Nonvested, end of year |  |  | 394,888 |  |  |  | 81.58 |  |  |  | 346,808 |  |  |  | 79.44 |  |  |  | 411,510 |  |  |  | 72.66 |
The total fair value of shares vested during fiscal 2021, 2020 and 2019 was $21.0 million, $18.6 million and $12.3 million, respectively. The actual income tax benefit realized totaled $2.0 million, $3.1 million and $2.1 million for those same periods. As of September 30, 2021, total unrecognized compensation cost related to stock awards was $11.6 million, net of estimated forfeitures, which the Company expects to be recognized over a weighted-average period of 2.0 years. Performance Share Awards — A summary of the Company’s performance share awards activity is as follows:
|  | Fiscal Year Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
|  | Number of Shares |  |  | Weighted- Average Grant Date Fair Value |  |  | Number of Shares |  |  | Weighted- Average Grant Date Fair Value |  |  | Number of Shares |  |  | Weighted- Average Grant Date Fair Value |
Nonvested, beginning of year |  |  | 110,450 |  |  | $ | 89.54 |  |  |  | 124,750 |  |  | $ | 84.10 |  |  |  | 98,375 |  |  | $ | 89.11 |
Granted |  |  | 86,550 |  |  |  | 86.09 |  |  |  | 55,325 |  |  |  | 109.09 |  |  |  | 73,950 |  |  |  | 74.70 |
Forfeited |  |  | (52,099 | ) |  |  | 90.03 |  |  |  | (16,615 | ) |  |  | 92.88 |  |  |  | (1,600 | ) |  |  | 93.92 |
Performance adjustments |  |  | 63,843 |  |  |  | 80.45 |  |  |  | 33,941 |  |  |  | 87.44 |  |  |  | 31,768 |  |  |  | 71.43 |
Vested |  |  | (136,269 | ) |  |  | 80.73 |  |  |  | (86,951 | ) |  |  | 92.73 |  |  |  | (77,743 | ) |  |  | 76.12 |
Nonvested, end of year |  |  | 72,475 |  |  |  | 93.62 |  |  |  | 110,450 |  |  |  | 89.54 |  |  |  | 124,750 |  |  |  | 84.10 |
Performance share awards generally vest over a three-year service period following the grant date. Performance shares vest under two separate measurement criteria. The first type vest only if the Company’s total shareholder return (TSR) over the three year term of the awards compares favorably to that of a comparator group of companies. The second type vest only if the Company’s return on invested capital (ROIC) over the vesting period compares favorably to that of a comparator group of companies. Potential payouts range from zero to 200% of the target awards and changes from target amounts are reflected as performance adjustments. Actual payouts for TSR performance share awards vesting in fiscal 2021, 2020 and 2019 were 185%, 111% and 126% of target levels, respectively. Actual payout for the ROIC performance share award vesting in fiscal 2021, 2020 and 2019 were 200%, 200%, and 200% of target levels. In October 2021, 55,819 shares of Common Stock were issued from treasury for unpaid performance shares that vested in fiscal 2021. The total fair value of performance shares vested during fiscal 2021, 2020 and 2019 was $15.4 million, $6.9 million and $5.8 million, respectively. The actual income tax benefit realized totaled $0.5 million, $0.2 million and $1.4 million for the same periods. As of September 30, 2021, the Company had $5.3 million of unrecognized compensation expense related to performance share awards, which will be recognized over a weighted-average period of 1.9 years. The grant date fair values of the TSR performance share awards were estimated using a Monte Carlo simulation model utilizing the following weighted-average assumptions:
|  | Fiscal Year Ended September 30, |
Total Shareholder Return Performance Shares Granted During |  | 2021 |  |  | 2020 |  |  | 2019 |
Assumptions: |  |  |  |  |  |  |  |  |  |  |  |
Expected term (in years) |  |  | 2.87 |  |  |  | 2.87 |  |  |  | 2.86 |
Expected volatility |  |  | 40.33 | % |  |  | 31.16 | % |  |  | 32.72 | %
Risk-free interest rate |  |  | 0.23 | % |  |  | 1.59 | % |  |  | 2.80 | %
The Company used its historical stock prices as the basis for the Company’s volatility assumption. The assumed risk-free interest rates were based on U.S. Treasury rates in effect at the time of grant. The expected term was based on the vesting period. The weighted-average fair value used to record compensation expense for TSR performance share awards granted during fiscal 2021, 2020 and 2019 was $94.86, $137.74 and $85.89 per award, respectively. The grant date fair value of the ROIC awards were determined based on the Company’s stock price at the time of the grant and the anticipated awards expected to vest. Compensation expense is recorded ratably over the vesting period based on the amount of award that is expected to be earned under the plan formula, adjusted each reporting period based on current information. Cash-Settled Stock Appreciation Rights — The Company did not grant employees any cash-settled SARs in fiscal 2021. In fiscal 2020 and 2019, the Company granted employees 14,875 and 18,250 cash-settled SARs, respectively. Each SAR award represents the right to receive cash equal to the excess of the per share price of the Company’s Common Stock on the date that a participant exercises such right over the grant date price of the Company’s Common Stock. Compensation cost for SARs is remeasured at each reporting period based on the estimated fair value on the date of grant using the Black Scholes option-pricing model, utilizing assumptions similar to stock option awards and is recognized as an expense over the requisite service period. The total value of SARs exercised during fiscal 2021, 2020 and 2019 was $0.5 million, $0.7 million and $0.6 million, respectively. Cash-Settled Restricted Stock Units — In fiscal 2021, 2020 and 2019 the Company granted employees 14,550, 7,925 and 8,350 cash-settled RSUs, respectively. Each RSU award provides recipients the right to receive cash equal to the value of a share of the Company’s Common Stock at predetermined vesting dates. Compensation cost for RSUs is remeasured at each reporting period and is recognized as an expense over the requisite service period. The total value of RSUs vested during fiscal 2021, 2020 and 2019 was $0.7 million, $0.8 million and $0.4 million, respectively.

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