XML 62 R26.htm IDEA: XBRL DOCUMENT v3.23.3
Share-based Compensation
 12 Months Ended
Sep. 30, 2023
Share-Based Payment Arrangement, Noncash Expense [Abstract]  
Share-based Compensation
Note 17—Share-based Compensation
Equity Incentive Compensation Plan
The Company’s 2007 Amended and Restated Equity Incentive Compensation Plan (EIP) authorizes the compensation committee of the board of directors to grant non-qualified stock options (options), RSUs, performance-based shares and restricted stock awards to its employees and non-employee directors, for up to 198 million shares of class A common stock. Shares available for grant may be either authorized and unissued or previously issued shares subsequently acquired by the Company. Under the EIP, shares withheld for taxes, or shares used to pay the exercise or purchase price of an award, shall not again be available for future grant. The EIP will continue to be in effect until all of the common stock available under the EIP is delivered and all restrictions on those shares have lapsed, unless the EIP is terminated earlier by the Company’s board of directors.
For fiscal 2023, 2022 and 2021, the Company recorded share-based compensation cost related to the EIP of $734 million, $571 million and $518 million, respectively, in personnel expense on its consolidated statements of operations. The related tax benefits for fiscal 2023, 2022 and 2021 were $112 million, $82 million and $73 million, respectively.
Options
Options issued under the EIP expire 10 years from the date of grant and primarily vest ratably over three years from the date of grant, subject to earlier vesting in full under certain conditions.
The fair value of each stock option was estimated on the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:
For the Years Ended September 30,
202320222021
Expected term (in years)(1)
4.174.114.07
Risk-free rate of return(2)
4.0 %1.1 %0.3 %
Expected volatility(3)
28.6 %27.1 %25.1 %
Expected dividend yield(4)
0.8 %0.7 %0.6 %
Fair value per option granted$57.31$43.16$39.51
(1)Based on Visa’s historical exercise experience.
(2)Based on the zero-coupon U.S. Treasury constant maturity yield curve, continuously compounded over the expected term of the awards.
(3)Based on the Company’s implied and historical volatilities.
(4)Based on the Company’s annual dividend rate on the date of grant.
The following table summarizes the Company’s option activity:
OptionsWeighted-
Average
Exercise Price
Per Share		Weighted-
Average
Remaining
Contractual
Term
(in years)
Aggregate
Intrinsic
Value(1)
(in millions)
Outstanding as of September 30, 20226,168,624 $145.92 
Granted798,017 $211.09 
Forfeited(32,358)$205.35 
Expired(2,716)$191.77 
Exercised(1,006,212)$98.54 
Outstanding as of September 30, 20235,925,355 $162.40 5.96$401 
Options exercisable as of September 30, 20234,241,861 $144.75 5.01$362 
Options exercisable and expected to vest as of September 30, 2023(2)
5,884,022 $162.07 5.94$400 
(1)Calculated using the closing stock price on the last trading day of fiscal 2023 of $230.01, less the option exercise price, multiplied by the number of instruments.
(2)Applied a forfeiture rate to unvested options outstanding as of September 30, 2023 to estimate the options expected to vest in the future.
During fiscal 2023, 2022 and 2021, the total intrinsic value of options exercised was $134 million, $56 million and $124 million, respectively, and the tax benefit realized was $28 million, $11 million and $23 million, respectively. As of September 30, 2023, there was $25 million of total unrecognized compensation cost related to unvested options, which is expected to be recognized over a weighted-average period of approximately 0.38 year.
Restricted Stock Units
RSUs issued under the EIP primarily vest ratably over three years from the date of grant, subject to earlier vesting in full under certain conditions. Upon vesting, RSUs can be settled in class A common stock on a one-for-one basis or in cash, or a combination thereof, at the Company’s option. The Company does not currently intend to settle any RSUs in cash. During the vesting period, RSU award recipients are eligible to receive dividend equivalents, but do not participate in the voting rights granted to the holders of the underlying class A common stock.
The fair value and compensation cost before estimated forfeitures is calculated using the closing price of class A common stock on the date of grant. During fiscal 2023, 2022 and 2021, the weighted-average grant date fair value of RSUs granted was $212.94, $204.73 and $209.00, respectively. During fiscal 2023, 2022 and 2021, the total grant date fair value of RSUs vested was $486 million, $380 million and $331 million, respectively.
The following table summarizes the Company’s RSU activity:
 UnitsWeighted-
Average
Grant Date
Fair Value
Weighted-
Average
Remaining
Contractual
Term
(in years)
Aggregate
Intrinsic
Value(1)
(in millions)
Outstanding as of September 30, 20225,794,320 $203.23 
Granted
3,373,137 $212.94 
Vested
(2,428,334)$200.33 
Forfeited
(321,726)$207.97 
Outstanding as of September 30, 20236,417,397 $209.19 0.96$1,476 
(1)Calculated by multiplying the closing stock price on the last trading day of fiscal 2023 of $230.01 by the number of instruments.
As of September 30, 2023, there was $745 million of total unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately 0.96 year.
Performance-based Shares
For the Company’s performance-based shares, in addition to service conditions, the ultimate number of shares to be earned depends on the achievement of both performance and market conditions. The performance condition is based on the Company’s earnings per share target. The market condition is based on the Company’s total shareholder return ranked against that of other companies that are included in the Standard & Poor’s 500 Index.
The fair value of each performance-based shares incorporating the market condition was estimated on the date of grant using a Monte Carlo simulation model with the following weighted-average assumptions:
For the Years Ended September 30,
202320222021
Expected term (in years)2.152.052.00
Risk-free rate of return(1)
4.4 %0.5 %0.2 %
Expected volatility(2)
28.9 %28.3 %27.2 %
Expected dividend yield(3)
0.8 %0.8 %0.6 %
Fair value per performance-based share granted$221.32$186.50$229.81
(1)Based on the zero-coupon U.S. treasury constant maturity yield curve, continuously compounded over the expected term of the awards.
(2)Based on the Company’s implied and historical volatilities.
(3)Based on the Company’s annual dividend rate on the date of grant.
Performance-based shares vest over three years and are subject to earlier vesting in full under certain conditions. During fiscal 2023, 2022 and 2021, the total grant date fair value of performance-based shares vested and earned was $44 million, $49 million and $47 million, respectively. Compensation cost for performance-based shares is initially estimated based on target performance. It is recorded net of estimated forfeitures and adjusted as appropriate throughout the performance period.
The following table summarizes the maximum number of performance-based shares which could be earned and related activity:
Shares
Weighted-
Average
Grant Date
Fair Value
Weighted-
Average
Remaining
Contractual
Term
(in years)
Aggregate
Intrinsic
Value(1)
(in millions)
Outstanding as of September 30, 2022834,196 $199.92 
Granted(2)
551,818 $221.32 
Vested and earned(219,523)$201.70 
Unearned(167,989)$194.42 
Outstanding as of September 30, 2023998,502 $212.28 1.00$230 
(1)Calculated by multiplying the closing stock price on the last trading day of fiscal 2023 of $230.01 by the number of instruments.
(2)Represents the maximum number of performance-based shares which could be earned.
As of September 30, 2023, there was $81 million of total unrecognized compensation cost related to unvested performance-based shares, which is expected to be recognized over a weighted-average period of approximately one year.