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STOCK-BASED COMPENSATION | 12 Months Ended
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Sep. 30, 2025
Share-Based Payment Arrangement [Abstract] |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company's stock-based compensation plans include performance shares, restricted stock, restricted stock units, and stock options. Although the Company has discretion, shares distributed under these plans are issued from treasury stock. In fiscal 2022, the Company changed the terms of its annual performance share awards that were issued in the first quarter. The terms meet the criteria for equity classification in accordance with ASC 718, Compensation - Stock Compensation, and therefore expense is recognized on a fixed basis over the three-year performance period. Prior to Emerson's purchase of the remaining outstanding shares of common stock of AspenTech not already owned by the Company in March 2025, AspenTech had stock-based compensation plans that were settled in its own stock. These plans consisted of performance shares, restricted stock units and stock options. Upon completion of the transaction, each award of performance shares and restricted stock units that were outstanding and unvested were assumed by Emerson and converted into Emerson time-based restricted stock units, but otherwise subject to the same terms and conditions (including vesting and payment schedule). The Company also paid $76 to settle AspenTech stock options that were outstanding prior to the transaction closing. As a result of the Company's acquisition of NI in 2024, outstanding NI restricted stock units and performance stock units were assumed by Emerson and converted at the time of the acquisition into Emerson time-based restricted stock units, but otherwise subject to the same terms and conditions (including vesting and payment schedule) as the awards originally issued by NI. Total compensation expense and income tax benefits for Emerson and AspenTech stock options and incentive shares follows.
| 2023 |  |  | 2024 |  |  | 2025
Performance shares | $ | 165 |  |  | 90 |  |  | 94 |
Restricted stock and restricted stock units | 24 |  |  | 115 |  |  | 147 |
AspenTech stock-based compensation plans | 82 |  |  | 55 |  |  | 24 |
Total stock compensation expense | 271 |  |  | 260 |  |  | 265 |
Less: discontinued operations | 21 |  |  | — |  |  | 2 |
Stock compensation expense from continuing operations | $ | 250 |  |  | 260 |  |  | 263 |
Income tax benefits recognized | $ | 28 |  |  | 32 |  |  | 35 |
Stock compensation expense for 2025 includes $35 of integration-related stock compensation expense attributable to AspenTech (of which $22 was reported as restructuring costs) and $12 attributable to NI (of which $3 was reported as restructuring costs). Stock compensation expense for 2024 includes $96 related to NI restricted stock units, which includes $58 of integration-related stock compensation expense (of which $43 was reported as restructuring costs). As of September 30, 2025, total unrecognized compensation expense related to unvested shares awarded under Emerson plans was $247, which is expected to be recognized over a weighted-average period of 1.2 years. Emerson Performance Shares, Restricted Stock and Restricted Stock Units The Company's incentive shares plans include performance shares awards which distribute the value of common stock to key management employees at the conclusion of a three-year period subject to certain operating performance conditions and other terms and restrictions. Dividend equivalents are only paid on earned awards after the performance period has concluded. Compensation expense for performance shares is recognized over the service period based on the number of shares ultimately expected to be earned. Information related to performance share payouts for the years ended September 30, 2024 and 2025 follows (shares in thousands):
| 2024 |  |  | 2025
Performance period | 2021 - 2023 |  | 2022 - 2024
Percent payout | 118 | % |  | 118 | %
Total shares earned | 1,733 |  | 1,084
Shares distributed in cash, primarily for tax withholding | 755 |  | 450
As of September 30, 2025, approximately 919,000 shares awarded primarily in 2023 were outstanding, contingent on the Company achieving its performance objectives through 2025. The objectives for these shares were met at the 115 percent level and the shares will be distributed in early fiscal 2026. Additionally, the rights to receive approximately 477,000 and 505,000 shares awarded in 2025 and 2024, respectively, are outstanding and contingent upon the Company achieving its performance objectives through 2027 and 2026, respectively. Incentive shares plans also include restricted stock awards and restricted stock units. Restricted stock awards involve distribution of common stock to key management employees subject to cliff vesting at the end of service periods ranging from three to ten years while restricted stock units granted to employees generally vest over a three-year period. The fair value of restricted stock awards and restricted stock units is determined based on the average of the high and low market prices of the Company's common stock on the date of grant, with compensation expense recognized ratably over the applicable vesting period. In 2025, approximately 56,000 shares of restricted stock and approximately 1,317,000 restricted stock units vested as a result of participants fulfilling the applicable service requirements. Consequently, approximately 33,000 shares and 1,001,000 units were issued while 23,000 shares and 316,000 units were withheld for income taxes in accordance with minimum withholding requirements. As of September 30, 2025, there were approximately 2,976,000 shares of unvested restricted stock and restricted stock units outstanding. In addition to the employee stock option and incentive share plans, in 2025 the Company awarded approximately 15,000 restricted stock units under the restricted stock plan for non-management directors. As of September 30, 2025, approximately 25,000 shares were available for issuance under this plan. As of September 30, 2025, 15.7 million shares remained available for award under incentive shares plans. Changes in shares outstanding but not yet earned under incentive shares plans during the year ended September 30, 2025 follow (shares in thousands; assumes 100 percent payout of unvested awards):
| Shares |  | Average Grant Date Fair Value Per Share
Beginning of year | 4,634 |  |  |  | $ | 91.46 |  |
Granted | 1,690 |  |  |  | $ | 109.21 |  |
Assumed | 1,097 |  |  |  | $ | 114.57 |  |
Earned/vested | (2,291) |  |  |  | $ | 96.41 |  |
Canceled | (253) |  |  |  | $ | 105.99 |  |
End of year | 4,877 |  |  |  | $ | 98.52 |  |
Information related to Emerson incentive shares plans follows:
| 2023 |  |  | 2024 |  |  | 2025 |
Total fair value of shares earned/vested | $ | 158 |  |  | 284 |  |  | 256 |
Share awards distributed in cash, primarily for tax withholding | $ | 73 |  |  | 81 |  |  | 59 |
Emerson Stock Options There were no stock option grants in 2025, 2024 and 2023. Previously awarded stock options allow key officers and employees to purchase common stock at specified prices, which are equal to 100 percent of the closing market price of the Company's stock on the date of grant. Options generally vest one-third in each of the three years subsequent to grant and expire 10 years from the date of grant. Changes in shares subject to options during the year ended September 30, 2025 follow (shares in thousands):
| Weighted- Average Exercise Price Per Share |  | Shares |  | Total Intrinsic Value of Shares |  | Average Remaining Life (Years)
Beginning of year |  | $ | 51.71 |  |  |  | 288 |  |  |  |  |  |  |  |  |
Options exercised |  | $ | 50.45 |  |  |  | (189) |  |  |  |  |  |  |  |  |
Options canceled |  | $ | 46.92 |  |  |  | (1) |  |  |  |  |  |  |  |  |
End of year |  | $ | 54.16 |  |  |  | 98 |  |  |  | $ | 7 |  |  |  |  | 1.0 |
Exercisable at end of year |  | $ | 54.16 |  |  |  | 98 |  |  |  | $ | 7 |  |  |  |  | 1.0 |
Information related to Emerson stock options follows:
| 2023 |  |  | 2024 |  |  | 2025 |
Cash received for option exercises | $ | 49 |  |  | 14 |  |  | 9 |
Intrinsic value of options exercised | $ | 27 |  |  | 15 |  |  | 14 |
Tax benefits related to option exercises | $ | 4 |  |  | 5 |  |  | 3 |

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