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STOCK-BASED COMPENSATION PLANS | 12 Months Ended
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Jun. 30, 2024
Share-Based Payment Arrangement, Noncash Expense [Abstract] |
STOCK-BASED COMPENSATION PLANS | STOCK-BASED COMPENSATION PLANS In November 2021, the Company’s stockholders voted to approve the amended and restated 2005 Stock Incentive Plan (the Plan). The Plan permits the Company to grant various nonqualified stock-based compensation awards, including stock options, restricted stock, performance shares, deferred stock units, stock appreciation rights and other stock-based awards. The Plan as amended and restated provides that the maximum number of shares which may be issued under the Plan will be 5 million common shares that may be issued for stock-based compensation purposes. As of June 30, 2024, the Company was authorized to grant up to approximately 5 million common shares, plus additional shares equal to shares that are potentially deliverable under an award that expires or are canceled, forfeited or settled without the delivery of shares, under the Plan. As of June 30, 2024, approximately 3 million common shares remained available for grant. Compensation cost and the related income tax benefit recognized for stock-based compensation plans were classified as indicated below for the fiscal years ended June 30:
| 2024 |  | 2023 |  | 2022
Cost of products sold | $ | 7 |  |  | $ | 7 |  |  | $ | 6 |
Selling and administrative expenses | 63 |  |  | 61 |  |  | 42 |
Research and development costs | 4 |  |  | 5 |  |  | 4 |
Total compensation costs | $ | 74 |  |  | $ | 73 |  |  | $ | 52 |
Related income tax benefit | $ | 18 |  |  | $ | 17 |  |  | $ | 12 |
Cash received during fiscal years 2024, 2023 and 2022 from stock options exercised under all stock-based payment arrangements was $23, $52 and $35, respectively. The Company issues shares for stock-based compensation plans from treasury stock. The Company may repurchase stock under its Evergreen Program to offset the estimated impact of dilution related to stock-based awards. Details regarding the valuation and accounting for stock options, restricted stock awards, performance shares and deferred stock units for non-employee directors follow. Stock Options There were no stock option awards granted during the fiscal year 2024. The fair value of each stock option award granted during fiscal years 2023 and 2022 was estimated on the date of grant using the Black-Scholes valuation model and assumptions noted in the following table:
|  | 2023 |  | 2022
Expected life |  | 5.3 years |  | 5.4 years
Weighted-average expected life |  | 5.3 years |  | 5.4 years
Expected volatility |  | 24.2% |  | 21.7% to 25.0%
Weighted-average volatility |  | 24.2% |  | 21.8%
Risk-free interest rate |  | 3.7% |  | 0.9% to 2.1%
Weighted-average risk-free interest rate |  | 3.7% |  | 0.9%
Dividend yield |  | 3.4% |  | 2.9% to 3.7%
Weighted-average dividend yield |  | 3.4% |  | 2.9%
The expected life of the stock options is based on historical exercise patterns. The expected volatility is based on implied volatility from publicly traded options on the Company’s stock at the date of grant, historical implied volatility of the Company’s publicly traded options and other factors. The risk-free interest rate is based on the implied yield on a U.S. Treasury zero-coupon issue with a remaining term equal to the expected term of the option. The dividend yield is based on the projected annual dividend payment per share, divided by the stock price at the date of grant. Details of the Company’s stock option activities are summarized below:
| Number of Shares (In thousands) |  | Weighted- Average Exercise Price per Share |  | Average Remaining Contractual Life |  | Aggregate Intrinsic Value
Options outstanding as of June 30, 2023 | 4,075 |  |  | $ | 147 |  |  | 5 years |  | $ | 69 |
Granted | — |  |  |  |  |  |  |
Exercised | (234) |  |  | 104 |  |  |  |  |
Canceled | (51) |  |  | 170 |  |  |  |  |
Options outstanding as of June 30, 2024 | 3,790 |  |  | $ | 150 |  |  | 4 years |  | $ | 16 |
Options vested as of June 30, 2024 | 3,052 |  |  | $ | 148 |  |  | 4 years |  | $ | 16 |
The weighted-average fair value per share of each option granted during fiscal years 2023 and 2022, estimated at the grant date using the Black-Scholes option pricing model, was $26.95 and $22.26, respectively. The total intrinsic value of options exercised in fiscal years 2024, 2023 and 2022 was $12, $27 and $18, respectively. Stock option awards outstanding as of June 30, 2024, have been granted at prices that are equal to the market value of the stock on the date of grant. Stock option grants generally vest over 4 years and expire no later than 10 years after the grant date. The Company recognizes compensation expense on a straight-line basis over the vesting period. Awards to employees eligible for retirement prior to the award becoming full vested are amortized to compensation expense from the grant date through the date that the employee is no longer required to provide service to earn the award. As of June 30, 2024, there was $5 of total unrecognized compensation cost related to non-vested options, which is expected to be recognized over a remaining weighted-average vesting period of 2 years, subject to forfeiture changes. Restricted Stock Awards The fair value of restricted stock awards is estimated on the date of grant based on the market price of the stock and is amortized to compensation expense on a straight-line basis over the related vesting periods, which are generally 3 to 4 years. Awards to employees eligible for retirement prior to the award becoming fully vested are amortized to compensation expense from the grant date through the date that the employee is no longer required to provide service to earn the award. The total number of restricted stock awards expected to vest is adjusted by actual and estimated forfeitures. Restricted stock awards receive dividend distributions earned during the vesting period upon vesting. As of June 30, 2024, there was $41 of total unrecognized compensation cost related to non-vested restricted stock awards, which is expected to be recognized over a remaining weighted-average vesting period of 2 years. The total fair value of the shares that vested in each of the fiscal years 2024, 2023 and 2022 was $28, $22 and $20, respectively. The weighted-average grant-date fair value of awards granted was $138.51, $143.20 and $157.50 per share for fiscal years 2024, 2023 and 2022, respectively. A summary of the status of the Company’s restricted stock awards is presented below:
| Number of Shares (In thousands) |  | Weighted-Average Grant Date Fair Value per Share
Restricted stock awards as of June 30, 2023 | 544 |  |  | $ | 155 |
Granted | 405 |  |  | 139 |
Vested | (173) |  |  | 162 |
Forfeited | (55) |  |  | 142 |
Restricted stock awards as of June 30, 2024 | 721 |  |  | $ | 145 |
Performance Shares The fair value of performance shares is estimated on the date of grant based on the market price of the stock and is amortized to compensation expense on a straight line basis over the related vesting periods, which are generally 3 years. Awards to employees eligible for retirement prior to the award becoming fully vested are amortized to compensation expense from the grant date through the date that the employee is no longer required to provide service to earn the award. As of June 30, 2024, there was $15 in unrecognized compensation cost related to non-vested performance shares that is expected to be recognized over a remaining weighted-average performance period of 1 year. The weighted-average grant-date fair value of awards granted was $140.39, $141.90 and $162.46 per share for fiscal years 2024, 2023 and 2022, respectively. A summary of the status of the Company’s performance share awards is presented below:
| Number of Shares (In thousands) |  | Weighted-Average Grant Date Fair Value per Share
Performance share awards as of June 30, 2023 | 368 |  |  | $ | 158 |
Granted | 176 |  |  | $ | 140 |
Distributed | (39) |  |  | $ | 189 |
Forfeited | (22) |  |  | $ | 177 |
Performance share awards as of June 30, 2024 | 483 |  |  | $ | 148 |
Performance shares vested and deferred as of June 30, 2024 | 83 |  |  | $ | 164 |
The non-vested performance shares outstanding as of June 30, 2024 and 2023 were 400,000 and 306,000, respectively, and the weighted average grant date fair value was $145.06 and $162.77 per share, respectively. During fiscal year 2024, 58,000 shares vested. The total fair value of shares vested was $12, $12 and $11 during fiscal years 2024, 2023 and 2022, respectively. Upon vesting, the recipients of the grants receive the distribution as shares or, if previously elected by eligible recipients, as deferred stock. Deferred shares continue to earn dividends, which are also deferred. Deferred Stock Units for Nonemployee Directors Nonemployee directors receive annual grants of deferred stock units under the Company’s director compensation program and can elect to receive all or a portion of their annual retainers and fees in the form of deferred stock units. The deferred stock units receive dividend distributions, which are reinvested as deferred stock units, and are recognized at their fair value on the date of grant. Each deferred stock unit represents the right to receive one share of the Company’s common stock following the completion of a director’s service. During fiscal year 2024, the Company granted 19,000 deferred stock units, reinvested dividends of 4,000 units and distributed 24,000 shares, which had a weighted-average fair value on the grant date of $141.85, $145.15 and $89.91 per share, respectively. As of June 30, 2024, 127,000 units were outstanding, which had a weighted-average fair value on the grant date of $140.22 per share.

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