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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2022
Share-Based Payment Arrangement [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 that 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 December 31, 2022, the Company had reserved 3,454,322 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 December 31, 2022 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 |  |  | 956,284 |  |  | $ | 79.86 |  |  |  | 2,498,048 |
Equity compensation plans not approved by security holders |  |  | — |  |  |  | — |  |  |  | — |
|  |  | 956,284 |  |  | $ | 79.86 |  |  |  | 2,498,048 |
Total stock-based compensation expense was as follows (in millions):
|  | Year Ended December 31, |  |  | Three Months Ended December 31, (transition period) |  |  | Year Ended September 30, |
|  | 2022 |  |  | 2021 |  |  | 2021 |  |  | 2020 |
Stock options |  | $ | 0.3 |  |  | $ | 0.2 |  |  | $ | 1.8 |  |  | $ | 6.8 |
Stock awards (shares and units) |  |  | 25.7 |  |  |  | 3.5 |  |  |  | 19.3 |  |  |  | 15.8 |
Performance share awards |  |  | 2.6 |  |  |  | 0.5 |  |  |  | 6.1 |  |  |  | 6.7 |
Cash-settled stock appreciation rights |  |  | (0.8 | ) |  |  | 0.3 |  |  |  | 1.1 |  |  |  | 0.2 |
Cash-settled restricted stock unit awards |  |  | 0.9 |  |  |  | 0.4 |  |  |  | 1.5 |  |  |  | 0.7 |
Total stock-based compensation cost |  |  | 28.7 |  |  |  | 4.9 |  |  |  | 29.8 |  |  |  | 30.2 |
Income tax benefit recognized for stock-based compensation |  |  | (4.2 | ) |  |  | (0.8 | ) |  |  | (4.4 | ) |  |  | (3.6 | )
Stock-based compensation cost, net of tax |  | $ | 24.5 |  |  | $ | 4.1 |  |  | $ | 25.4 |  |  | $ | 26.6 |
Stock Options — A summary of the Company’s stock option activity is as follows:
|  | Year Ended December 31, |  |  | Three Months Ended December 31, (transition period) |  |  | Year Ended September 30, |
|  | 2022 |  |  | 2021 |  |  | 2021 |  |  | 2020 |
|  | Options |  |  | Weighted- Average Exercise Price |  |  | Options |  |  | Weighted- Average Exercise Price |  |  | Options |  |  | Weighted- Average Exercise Price |  |  | Options |  |  | Weighted- Average Exercise Price |
Outstanding, beginning of period |  |  | 433,026 |  |  | $ | 78.37 |  |  |  | 471,676 |  |  | $ | 77.96 |  |  |  | 1,083,402 |  |  | $ | 74.38 |  |  |  | 1,328,390 |  |  | $ | 62.62 |
Granted |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 301,025 |  |  |  | 90.28 |
Forfeited |  |  | (4,170 | ) |  |  | 90.28 |  |  |  | (2,002 | ) |  |  | 85.04 |  |  |  | (8,065 | ) |  |  | 81.40 |  |  |  | (40,965 | ) |  |  | 79.00 |
Expired |  |  | (4,583 | ) |  |  | 84.67 |  |  |  | — |  |  |  | — |  |  |  | (3,999 | ) |  |  | 86.59 |  |  |  | (5,869 | ) |  |  | 84.25 |
Exercised |  |  | (47,504 | ) |  |  | 64.90 |  |  |  | (36,648 | ) |  |  | 72.69 |  |  |  | (599,662 | ) |  |  | 71.38 |  |  |  | (499,179 | ) |  |  | 52.18 |
Outstanding, end of period |  |  | 376,769 |  |  |  | 79.86 |  |  |  | 433,026 |  |  |  | 78.37 |  |  |  | 471,676 |  |  |  | 77.96 |  |  |  | 1,083,402 |  |  |  | 74.38 |
Exercisable, end of period |  |  | 376,769 |  |  |  | 79.86 |  |  |  | 364,403 |  |  |  | 76.13 |  |  |  | 251,049 |  |  |  | 74.73 |  |  |  | 537,241 |  |  |  | 68.16 |
Stock options outstanding and exercisable as of December 31, 2022 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 |
$60.01 - $80.00 |  |  | 153,431 |  |  |  | 4.7 |  |  |  | 66.29 |  |  |  | 3.4 |  |  |  | 153,431 |  |  |  | 4.7 |  |  |  | 66.29 |  |  |  | 3.4 |
$80.01 - $100.00 |  |  | 223,338 |  |  |  | 6.3 |  |  |  | 89.19 |  |  |  | 0.1 |  |  |  | 223,338 |  |  |  | 6.3 |  |  |  | 89.19 |  |  |  | 0.1 |
|  |  | 376,769 |  |  |  | 5.6 |  |  |  | 79.86 |  |  | $ | 3.5 |  |  |  | 376,769 |  |  |  | 5.6 |  |  |  | 79.86 |  |  | $ | 3.5 |
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 2022 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 December 31, 2022. This amount changes based on the fair market value of the Company’s Common Stock. The total intrinsic value of options exercised was $1.8 million in fiscal 2022, $1.5 million in the three months ended December 31, 2021, $22.6 million in the year ended September 30, 2021 and $18.5 million in the year ended September 30, 2020. The actual income tax benefit realized totaled $0.4 million in fiscal 2022, $0.3 million in the three months ended December 31, 2021, $3.5 million in the year ended September 30, 2021 and $4.3 million in the year ended September 30, 2020. As of December 31, 2022, no unrecognized compensation cost remains related to outstanding stock options. The following weighted-average assumptions were used in the Black-Scholes valuation model for stock options granted during the year ended September 30, 2020:
Assumptions: |  |  |
Expected term (in years) |  |  | 5.4 |
Expected volatility |  |  | 34.10 | %
Risk-free interest rate |  |  | 1.63 | %
Expected dividend yield |  |  | 1.37 | %
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 the year ended September 30, 2020 was $26.16. Stock Awards — A summary of the Company’s stock award activity is as follows:
|  | Year Ended December 31, |  |  | Three Months Ended December 31, (transition period) |  |  | Year Ended September 30, |
|  | 2022 |  |  | 2021 |  |  | 2021 |  |  | 2020 |
|  | 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 |  |  | Number of Shares |  |  | Weighted- Average Grant Date Fair Value |
Nonvested, beginning of period |  |  | 308,941 |  |  | $ | 90.10 |  |  |  | 394,888 |  |  | $ | 81.58 |  |  |  | 346,808 |  |  | $ | 79.44 |  |  |  | 411,510 |  |  | $ | 72.66 |
Granted |  |  | 255,375 |  |  |  | 109.66 |  |  |  | 63,800 |  |  |  | 114.89 |  |  |  | 307,025 |  |  |  | 82.80 |  |  |  | 183,725 |  |  |  | 87.82 |
Forfeited |  |  | (26,020 | ) |  |  | 97.24 |  |  |  | (4,428 | ) |  |  | 86.08 |  |  |  | (36,545 | ) |  |  | 78.81 |  |  |  | (27,076 | ) |  |  | 80.57 |
Vested |  |  | (174,635 | ) |  |  | 88.98 |  |  |  | (145,319 | ) |  |  | 77.97 |  |  |  | (222,400 | ) |  |  | 80.39 |  |  |  | (221,351 | ) |  |  | 73.64 |
Nonvested, end of period |  |  | 363,661 |  |  |  | 103.86 |  |  |  | 308,941 |  |  |  | 90.10 |  |  |  | 394,888 |  |  |  | 81.58 |  |  |  | 346,808 |  |  |  | 79.44 |
The total fair value of shares vested was $16.3 million during fiscal 2022, $16.5 million in the three months ended December 31, 2021, $21.0 million in the year ended September 30, 2021 and $18.6 million in the year ended September 30, 2020. The actual income tax benefit realized totaled $2.5 million in fiscal 2022, $3.1 million in the three months ended December 31, 2021, $2.0 million in the year ended September 30, 2021 and $3.1 million in the year ended September 30, 2020. As of December 31, 2022, total unrecognized compensation cost related to stock awards was $14.8 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. There was no activity related to performance share awards during the three months ended December 31, 2021:
|  | Year Ended December 31, |  |  | Year Ended September 30, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | 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 period |  |  | 72,475 |  |  | $ | 93.62 |  |  |  | 110,450 |  |  | $ | 89.54 |  |  |  | 124,750 |  |  | $ | 84.10 |
Granted |  |  | 57,250 |  |  |  | 126.60 |  |  |  | 86,550 |  |  |  | 86.09 |  |  |  | 55,325 |  |  |  | 109.09 |
Forfeited |  |  | (3,748 | ) |  |  | 114.83 |  |  |  | (52,099 | ) |  |  | 90.03 |  |  |  | (16,615 | ) |  |  | 92.88 |
Performance adjustments |  |  | 369 |  |  |  | 107.45 |  |  |  | 63,843 |  |  |  | 80.45 |  |  |  | 33,941 |  |  |  | 87.44 |
Vested |  |  | (28,746 | ) |  |  | 103.47 |  |  |  | (136,269 | ) |  |  | 80.73 |  |  |  | (86,951 | ) |  |  | 92.73 |
Nonvested, end of period |  |  | 97,600 |  |  |  | 108.20 |  |  |  | 72,475 |  |  |  | 93.62 |  |  |  | 110,450 |  |  |  | 89.54 |
Performance share awards generally vest over a three-year service period following the grant date. Performance shares vest under three separate sets of 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. The third type vest only if the Company’s actual results for Diversity, Equity, and Inclusion and Environmental, Social and Governance (DEI/ESG) measures compare favorably to the targets set by the Company. Potential payouts range from zero to 200% of the target awards and changes from target amounts are reflected as performance adjustments. Actual payouts for T SR performance share awards vesting in the years ended December 31, 2022, September 30, 2021 and September 30, 2020 were 83%, 185% and 111% of target levels, respectively. Actual payout for the ROIC performance share award vesting in the years ended December 31, 2022, September 30, 2021 and September 30, 2020 were 122%, 200%, and 200% of target levels, respectively. No actual payouts have occurred for the DEI/ESG awards as no awards have reached the end of the vesting period. In January 2023, 3,435 shares of Common Stock were issued from treasury for unpaid performance shares that vested during the year ended December 31, 2022. The total fair value of performance shares vested was $2.3 million in fiscal 2022, $15.4 million in the year ended September 30, 2021 and $6.9 million in the year ended September 30, 2020. The actual income tax benefit realized totaled $0.1 million in fiscal 2022, $0.5 million in the year ended September 30, 2021 and $0.2 million in the year ended September 30, 2020. As of December 31, 2022, the Company had $4.3 million of unrecognized compensation expense related to performance share awards, which will be recognized over a weighted-average period of 1.7 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:
|  | Year Ended December 31, |  |  | Year Ended September 30, |
Total Shareholder Return Performance Shares Granted During |  | 2022 |  |  | 2021 |  |  | 2020 |
Assumptions: |  |  |  |  |  |  |  |  |
Expected term (in years) |  |  | 2.86 |  |  |  | 2.87 |  |  |  | 2.87 |
Expected volatility |  |  | 38.52 | % |  |  | 40.33 | % |  |  | 31.16 | %
Risk-free interest rate |  |  | 1.64 | % |  |  | 0.23 | % |  |  | 1.59 | %
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 the years ended December 31, 2022, September 30, 2021 and September 30, 2020 was $146.99, $94.86 and $137.74 per award, respectively. There were no TSR performance share awards granted during the three months ended December 31, 2021. 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. The grant date fair value of the DEI/ESG 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 — In the year ended September 30, 2020, the Company granted employees 14,875 cash-settled SARs. 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 was $0.2 million in fiscal 2022, $0.1 million in the three months ended December 31, 2021, $0.5 million in the year ended September 30, 2021 and $0.7 million in the year ended September 30, 2020. Cash-Settled Restricted Stock Units — The Company granted employees 11,850 cash-settled RSUs in fiscal 2022, 2,450 cash-settled RSUs in the three months ended December 31, 2021, 14,550 cash-settled RSUs in the year ended September 30, 2021 and 7,925 cash-settled RSUs in the year ended September 30, 2020. 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 was $0.7 million in fiscal 2022, $1.1 million in the three months ended December 31, 2021, $0.7 million in the year ended September 30, 2021 and $0.8 million in the year ended September 30, 2020.

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