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Share-based Payments | 12 Months Ended
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Aug. 31, 2024
Share-Based Payment Arrangement [Abstract] |
Share-based Payments | Share-based Payments Omnibus Stock Compensation Incentive and Directors’ Equity Plans In January 2022, our stockholders approved the Amended and Restated Acuity Brands, Inc. 2012 Omnibus Stock Compensation Incentive Plan (the “Stock Incentive Plan”), which, among other things, increased the total number of shares authorized for issuance pursuant to the Stock Incentive Plan from 2.7 million to 3.6 million, with a corresponding increase to shares available for grant. The Compensation and Management Development Committee of the Board of Directors (the “Compensation Committee”) is authorized to issue awards consisting of incentive and non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance stock awards, performance stock units, stock bonus awards, and cash-based awards to eligible employees, non-employee directors, and outside consultants. Shares available for grant under the Stock Incentive Plan were approximately 0.7 million, 1.0 million, and 1.1 million at August 31, 2024, 2023, and 2022, respectively. Any shares subject to an award under the Stock Incentive Plan that are forfeited, canceled, expired, or settled for cash will be available for future grant under the Stock Incentive Plan. Our share-based payment awards are valued based on their grant date fair values as described further below. We recognize compensation cost for share-based payment transactions in accordance with ASC 718. For most of our awards, compensation cost is recognized on a straight-line basis over the award's requisite service period. We apply the accelerated attribution method in certain circumstances, such as when a performance stock unit is subject to graded vesting. For awards subject to a market condition, we consider both actual and derived service periods, as well as the expected performance period, to determine the appropriate compensation recognition method. Compensation expense recognized related to our share-based payment awards during the periods presented is summarized as follows (in millions):
| Year Ended August 31,
| 2024 |  | 2023 |  | 2022
Restricted stock awards and units | $ | 23.9 |  |  | $ | 19.6 |  |  | $ | 17.2 |
Performance stock units | 18.6 |  |  | 15.2 |  |  | 9.9 |
Stock options | 2.6 |  |  | 5.7 |  |  | 8.8 |
Director stock units | 1.5 |  |  | 1.5 |  |  | 1.5 |
Total share-based payment expense | $ | 46.6 |  |  | $ | 42.0 |  |  | $ | 37.4 |
Restricted Stock As of August 31, 2024, we had approximately 0.3 million shares outstanding of restricted stock to officers, directors, and other key employees under the Stock Incentive Plan. Grants awarded beginning in fiscal 2022 vest primarily over a three-year period, and grants awarded prior to fiscal 2022 vest primarily over a four-year period. Our restricted stock grants are valued at the closing stock price on the date of the grant. Activity related to restricted stock awards during the periods presented was as follows (in millions, except per share data):
| Number of Shares |  | Weighted Average Grant Date Fair Value Per Share
Outstanding at August 31, 2021 | 0.4 |  | $ | 116.77 |
Granted | 0.1 |  | $ | 204.36 |
Vested | (0.1) |  | $ | 122.27 |
Forfeited | (0.1) |  | $ | 131.08 |
Outstanding at August 31, 2022 | 0.3 |  | $ | 144.51 |
Granted | 0.2 |  | $ | 175.23 |
Vested | (0.1) |  | $ | 140.85 |
Forfeited | (0.1) |  | $ | 163.37 |
Outstanding at August 31, 2023 | 0.3 |  | $ | 159.33 |
Granted | 0.2 |  | $ | 168.74 |
Vested | (0.2) |  | $ | 153.74 |
Forfeited | — | * | $ | 154.90 |
Outstanding at August 31, 2024 | 0.3 |  | $ | 167.39 |
___________________________ * Represents shares of less than 0.1 million. As of August 31, 2024, there was $30.1 million of total unrecognized compensation cost related to unvested restricted stock, which is expected to be recognized over a weighted-average period of 1.3 years. The total fair value of stock vested during the years ended August 31, 2024, 2023, and 2022 was approximately $22.9 million, $19.9 million, and $16.4 million, respectively. Performance Stock Units As of August 31, 2024, we had approximately 0.3 million performance stock units outstanding to officers and other key employees under the Stock Incentive Plan. Our performance stock units vest primarily over a three-year period. For most of these grants, the actual number of performance stock units earned for these awards will be determined at the end of the related performance period based on the level of achievement of established performance thresholds. Such grants are valued at the closing stock price on the date of grant. We recognize compensation expense for these grants proportionately over the requisite service period for each employee when it becomes probable that the performance metric will be satisfied. A small subset of our performance stock units granted in fiscal 2024 and fiscal 2023 have a payout based on a total shareholder return relative to a peer group index over a three-year period. These awards are valued using a Monte-Carlo simulation and are expensed over the longer of the requisite service period and the derived service period. Stock compensation may be accelerated if a market condition is met prior to the derived service period lapsing. All inputs into the Monte Carlo simulation are estimates made at the time of grant, which are summarized in the table below. Actual realized value of each award could materially differ from these estimates, without impact to future reported net income. Dividends were assumed to be reinvested on the ex-dividend date for us and peer companies. Expected volatility was based on historical volatility of our stock as well as our peer group. The risk-free interest rate was based on the U.S. Treasury yield consistent with the derived performance period.
|  | 2024 |  | 2023 |  |  |  |
Dividend yield |  | —% |  | —% |  |  |  |
Expected volatility |  | 34.6% |  | 46.7% |  |  |  |
Risk-free interest rate |  | 4.9% |  | 4.5% |  |  |  |
Fair value of awards |  | $241.39 |  | $254.19 |  |  |  |
Activity related to performance stock units during the periods presented was as follows (in millions, except per share data):
| Number of Shares |  | Weighted Average Grant Date Fair Value Per Share
Outstanding at August 31, 2021 | 0.2 |  | $ | 109.99 |
Granted | — | * | $ | 207.02 |
Forfeited | — | * | $ | 113.51 |
Outstanding at August 31, 2022 | 0.2 |  | $ | 145.46 |
Granted | 0.1 |  | $ | 186.78 |
Vested | (0.1) |  | $ | 124.29 |
Forfeited | — | * | $ | 195.67 |
Outstanding at August 31, 2023 | 0.2 |  | $ | 171.01 |
Granted | 0.2 |  | $ | 172.98 |
Vested | (0.1) |  | $ | 91.36 |
Outstanding at August 31, 2024 | 0.3 |  | $ | 186.66 |
___________________________ * Represents shares of less than 0.1 million. As of August 31, 2024 there was $12.6 million of total unrecognized compensation cost related to unvested performance stock units. This cost is expected to be recognized over a weighted-average period of approximately 1.4 years. The total fair value of performance units vested during the years ended August 31, 2024 and 2023 was $5.0 million and $11.5 million, respectively. No awards vested during the year ended August 31, 2022. Stock Options As of August 31, 2024, we had approximately 0.9 million options outstanding to officers as well as other key current and former employees under the Stock Incentive Plan, all of which were granted in previous fiscal years. Of these options, 0.3 million were granted in fiscal 2021 and become exercisable over a four-year period. These options are also subject to a market condition (the “Market Options”). Options issued under the Stock Incentive Plan are generally granted with an exercise price equal to the fair market value of our stock on the date of grant, but never less than the fair market value on the grant date, and expire 10 years from the date of grant. The fair value of each Market Option was estimated on the date of grant using the Monte Carlo simulation model. 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 contractual term for the Market Options. The expected life of the Market Options is based on projected exercise dates resulting from the Monte Carlo simulation for each award tranche. 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. The following weighted average assumptions were used to estimate the fair value of the stock options granted in the fiscal year presented:
|  | Market Options |  |  |  |
|  | 2021 |  |  |  |  |  |
Dividend yield |  | 0.5% |  |  |  |  |  |
Expected volatility |  | 36.5% |  |  |  |  |  |
Risk-free interest rate |  | 0.7% |  |  |  |  |  |
Expected life of options |  | 8 years |  |  |  |  |  |
Weighted-average fair value of options |  | $40.45 |  |  |  |  |  |
Stock option activity during the periods presented was as follows:
| Outstanding |  | Exercisable
| Number of Options (in millions) |  | Weighted Average Exercise Price |  | Number of Options (in millions) |  | Weighted Average Exercise Price
Outstanding at August 31, 2021 | 1.2 |  | $ | 127.98 |  |  | 0.5 |  | $ | 142.36 |
Exercised | (0.1) | * | $ | 88.94 |  |  |  |  |
Outstanding at August 31, 2022 | 1.1 |  | $ | 132.50 |  |  | 0.6 |  | $ | 143.15 |
Exercised | — | * | $ | 126.92 |  |  |  |  |
Forfeitures | (0.1) |  | $ | 227.15 |  |  |  |  |
Outstanding at August 31, 2023 | 1.0 |  | $ | 131.81 |  |  | 0.9 |  | $ | 135.91 |
Exercised | (0.1) |  | $ | 143.92 |  |  |  |  |
Outstanding at August 31, 2024 | 0.9 |  | $ | 130.74 |  |  | 0.9 |  | $ | 132.48 |
Range of option exercise prices: |  |  |  |  |  |  |
$100.00 - $160.00 (average life - 5.5 years) | 0.8 |  | $ | 118.70 |  |  | 0.8 |  | $ | 119.58 |
$160.01 - $210.00 (average life - 1.2 years) | — | * | $ | 207.80 |  |  | — | * | $ | 207.80 |
$210.01 - $239.76 (average life - 2.1 years) | 0.1 |  | $ | 239.76 |  |  | 0.1 |  | $ | 239.76 |
___________________________ * Represents amounts of less than 0.1 million. The total intrinsic value of options exercised during the years ended August 31, 2024, 2023, and 2022 was approximately $6.6 million, $0.5 million, and $14.0 million, respectively. As of August 31, 2024, the total intrinsic value of options outstanding was $116.5 million, the total intrinsic value of options expected to vest was $10.1 million, and the total intrinsic value of options exercisable was $106.4 million. As of August 31, 2024, there was $0.7 million of total unrecognized compensation cost related to unvested options. We expect to recognize this cost over the next fiscal year. Employee Deferred Stock Units We previously allowed employees to defer a portion of restricted stock awards granted in fiscal 2003 and fiscal 2004 into the SDSP as stock units. The stock units are payable in shares of stock at the time of distribution from the SDSP. As of August 31, 2024, approximately 4,000 fully vested stock units remain deferred, but undistributed, under the Stock Incentive Plan. There was no compensation expense related to these stock units during fiscal years 2024, 2023, and 2022. Director Deferred Stock Units In January 2022, the total remaining shares available for issuance under the Director Plan were transferred into the Stock Incentive Plan. As of August 31, 2024, approximately 38,000 stock units were deferred but undistributed under the Director Plan. Employee Stock Purchase Plan Employees are able to purchase, through payroll deduction, common stock at a 5% discount on a monthly basis. There were 1.5 million shares of our common stock reserved for purchase under the plan, of which approximately 1.0 million shares remain available as of August 31, 2024. Employees may participate at their discretion.

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