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Share-based Payments | 9 Months Ended
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May 31, 2020
Share-based Payment Arrangement [Abstract] |
Share-based Payments | Share-based Payments We account for share-based payments through the measurement and recognition of compensation expense for share-based payment awards made to employees and directors over the related requisite service period, including stock options, performance share units, and restricted shares (all part of our equity incentive plan), as well as share units representing certain deferrals into our director deferred compensation plan or our supplemental deferred savings plan. The following table presents share-based payment expense for the periods presented (in millions):
| Three Months Ended |  | Nine Months Ended
| May 31, 2020 |  | May 31, 2019 |  | May 31, 2020 |  | May 31, 2019
Share-based payment expense | $ | 7.8 |  |  | $ | 7.6 |  |  | $ | 32.5 |  |  | $ | 22.9 |
Further details regarding our stock options, restricted shares, and director compensation award programs and our share-based payments are included within the Share-based Payments footnote of the Notes to Consolidated Financial Statements within our Form 10-K. Equity Plan Updates Beginning in fiscal 2020, the Board of Directors (the “Board”) approved grants of performance share units to certain executives and key employees. These shares vest over a three-year period and are valued at the closing stock price on the date of grant. During the second quarter, additional performance shares were issued to certain key employees that vest over a two-year period based on the level of achievement of established performance thresholds and were valued at the closing stock price on the date of grant. The actual number of performance shares earned for these awards will be determined at the end of the related two-year or three-year period based on the level of achievement of established performance thresholds. We recognize compensation expense for these awards proportionately over the requisite service period for each employee when it becomes probable that the performance metric will be satisfied. As of May 31, 2020, we had approximately 67,000 performance share units outstanding. Additionally, effective for restricted stock and performance share grants awarded in October 2019 and thereafter, the Board reinstated a policy that provides for the continued vesting of stock awards following retirement for all eligible participants who have attained age 60 and have at least 10 years of service with the Company. As such, for awards granted in October 2019 and later, we deem the requisite service period for a participant to be the shorter of either the award's stated vesting period or the time from grant until the participant satisfies the age and service criteria. Stock Options As of May 31, 2020, we had approximately 917,000 options outstanding to officers and other key employees. The increase from the prior fiscal year end was due to a grant on January 31, 2020 of 500,000 options that have an exercise price equal to or greater than the fair market value of our stock as of the grant date. Of these options, 400,000 vest and become exercisable over a three year period (the "Service Options"). The remaining 100,000 vest and become exercisable over a four year period and are also subject to a market condition (the "Market Options"). All of these options expire after ten years from the date of grant. The following weighted average assumptions were used to estimate the fair value of stock options granted in the second quarter of fiscal 2020:
| Service Options |  | Market Options
Valuation Methodology | Black-Scholes |  | Monte Carlo Simulation
Dividend yield | 0.4% |  | 0.4%
Expected volatility | 33.7% |  | 33.7%
Risk-free interest rate | 1.3% |  | 1.5%
Expected life of options | 5 years |  | 7 years
Weighted-average fair value of options | $34.22 |  | $44.74
The dividend yield was calculated based on annual dividends paid and the trailing 12-month average closing stock price at the time of grant. Expected volatility was based on historical volatility of our stock, calculated using the most recent time period equal to the expected life of the options. The risk-free interest rate was based on the U.S. Treasury yield for a term equal to the expected life of the options at the time of grant for the Service Options and equal to the contractual term for the Market Options. We used historical exercise behavior data of similar employee groups to determine the expected life of options. All inputs noted above are estimates made at the time of grant. Actual realized value of each option grant could materially differ from these estimates, without impact to future reported net income. No options were granted during the third quarter of fiscal 2020. Stock option activity during the periods presented was as follows:
| Outstanding |  | Exercisable
| Number of Shares (in millions) |  | Weighted Average Exercise Price |  | Number of Shares (in millions) |  | Weighted Average Exercise Price
Outstanding at August 31, 2019 | 0.4 |  | $146.70 |  | 0.3 |  | $147.51
Granted | 0.5 |  | $121.87 |  |  |  |
Exercised | — | * | $116.36 |  |  |  |
Canceled | — | * | — |  |  |  |
Outstanding at May 31, 2020 | 0.9 |  | $133.18 |  | 0.4 |  | $151.07
Range of option exercise prices: |  |  |  |  |  |  |
$40.01 - $100.00 (average life - 2.4 years) | 0.1 |  | $62.25 |  | 0.1 |  | $62.25
$100.01 - $160.00 (average life - 8.6 years) | 0.7 |  | $123.02 |  | 0.2 |  | $126.16
$160.01 - $210.00 (average life - 5.4 years) | 0.1 |  | $207.80 |  | 0.1 |  | $207.80
$210.01 - $239.76 (average life - 6.4 years) | — | * | $239.76 |  | — | * | $239.76
___________________________ * Represents shares of less than 0.1 million. There were 522 shares issued from option exercises during fiscal 2020, and no options were exercised during fiscal 2019. As of May 31, 2020, the total intrinsic value of options outstanding was $1.5 million, the total intrinsic value of options expected to vest was zero, and the total intrinsic value of options exercisable was $1.5 million. As of May 31, 2020, there was $16.8 million of total unrecognized compensation cost related to unvested options. That cost is expected to be recognized over a weighted-average period of approximately 2.0 years.

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