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Share-based Payments
 3 Months Ended
Dec. 31, 2017
Share-based Payments  
Share-based Payments

9.Share-based Payments

 

The fair value of the Company’s employee stock option awards is estimated on the date of grant. The expected term of awards granted represents the period of time the awards are expected to be outstanding. The risk-free interest rate is based on U.S. Treasury bond rates with maturities equal to the expected term of the option on the grant date. The Company uses historical data as a basis to estimate the probability of forfeitures.

 

Stock option activity for the three months ended December 31 was as follows:

 

 

 

2017

 

2016

 

 

 

Shares of stock
under options

 

Weighted average
exercise price

 

Shares of stock
under options

 

Weighted average
exercise price

 

 

 

(in millions)

 

 

 

(in millions)

 

 

 

Outstanding at September 30

 
0.7

 

$
31.11

 
0.9

 

$
30.36

 

Options granted

 

—

 

—

 

—

 

—

 

Options exercised

 
(0.1

)
27.67

 
(0.1

)
25.46

 

Options forfeited or expired

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

Outstanding at December 31

 
0.6

 
31.54

 
0.8

 
30.86

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vested and expected to vest in the future as of December 31

 
0.6

 

$
31.54

 
0.8

 

$
30.86

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Company grants stock units to employees under its Performance Earnings Program (PEP), whereby units are earned and issued dependent upon meeting established cumulative performance objectives and vest over a three-year service period. Additionally, the Company issues restricted stock units to employees which are earned based on service conditions. The grant date fair value of PEP awards and restricted stock unit awards is that day’s closing market price of the Company’s common stock. The weighted average grant date fair value of PEP awards were $37.90 and $38.16 during the three months ended December 31, 2017 and 2016, respectively. The weighted average grant date fair value of restricted stock unit awards were $36.93 and $38.08 during the three months ended December 31, 2017 and 2016, respectively. Total compensation expense related to these share-based payments including stock options were $16.5 million and $21.3 million during the three months ended December 31, 2017 and 2016, respectively. Unrecognized compensation expense related to total share-based payments outstanding as of December 31, 2017 and September 30, 2017 were $148.5 million and $96.8 million, respectively, to be recognized on a straight-line basis over the awards’ respective vesting periods which are generally three years.