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Share-Based Payments

12 Months Ended

Sep. 30, 2023

Share-based Payments

Share-based Payments

13. Share-Based Payments

Defined Contribution Plans—Substantially all permanent domestic employees are eligible to participate in defined contribution plans provided by the Company. Under these plans, participants may make contributions into a variety of funds, including a fund that is fully invested in Company stock. Employees are not required to allocate any funds to Company stock; however, the Company does provide an annual Company match in AECOM shares. Employees may generally reallocate their account balances on a daily basis; however, employees classified as insiders are restricted under the Company’s insider trading policy. Compensation expense for the employer contributions related to AECOM stock issued under defined contribution plans during fiscal years ended September 30, 2023, 2022 and 2021 was $23.1 million, $22.7 million, and $26.1 million, respectively.

Stock Incentive Plans—Under the 2020 Stock Incentive Plan, the Company has up to 10.2 million securities remaining available for future issuance as of September 30, 2023. Stock options may be granted to employees and non-employee directors with an exercise price not less than the fair market value of the stock on the date of grant. Unexercised options expire seven years after date of grant.

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.

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 primarily based on that day’s closing market price of the Company’s common stock.

Restricted stock unit, PEP unit, and Stock Option activity for the year ended September 30 was as follows:


				Weighted					Weighted
				Average					Average					Weighted
		Restricted		Grant-Date					Grant-Date					Average
		Stock Units		Fair Value			PEP Units		Fair Value			Stock Options		Exercise Price
		(in millions)					(in millions)					(in millions)
Outstanding at September 30, 2020		2.1		$	35.56		1.6		$	33.86		0.4		$	36.41
Granted		0.4		$	49.21		0.3		$	52.76		—		$	—
PEP units earned (unearned)		—		$	—		0.1		$	37.37		—		$	—
Vested / Exercised		(0.9)		$	36.24		(0.6)		$	38.13		(0.1)		$	31.62
Cancelled		(0.3)		$	36.89		(0.2)		$	37.53		—		$	—
Outstanding at September 30, 2021		1.3		$	38.88		1.2		$	37.22		0.3		$	38.72
Granted		0.3		$	74.30		0.2		$	85.46		—		$	—
PEP units earned (unearned)		—		$	—		0.6		$	27.90		—		$	—
Vested / Exercised		(0.5)		$	29.44		(1.3)		$	27.90		—		$	—
Cancelled		(0.1)		$	49.74		—		$	56.64		—		$	—
Outstanding at September 30, 2022		1.0		$	53.05		0.7		$	60.60		0.3		$	38.72
Granted		0.3		$	83.64		0.2		$	94.64		—		$	—
PEP units earned (unearned)		—		$	—		0.2		$	43.19		—		$	—
Vested / Exercised		(0.4)		$	44.35		(0.4)		$	43.19		(0.2)		$	38.72
Cancelled		(0.1)		$	62.09		—		$	71.71		—		$	—
Outstanding at September 30, 2023		0.8		$	68.34		0.7		$	75.54		0.1		$	38.72

Total compensation expense related to these share-based payments including stock options was $45.9 million, $38.5 million, and $44.7 million during the years ended September 30, 2023, 2022 and 2021, respectively. Unrecognized compensation expense related

to total share-based payments outstanding as of September 30, 2023 and 2022 was $48.3 million and $45.9 million, respectively, to be recognized on a straight-line basis over the awards’ respective vesting periods which are generally three years.