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SHARE CAPITAL, OPTION PLANS AND SHARE-BASED PAYMENTS | 3 Months Ended
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Sep. 30, 2022
Share-Based Payment Arrangement [Abstract] |
SHARE CAPITAL, OPTION PLANS AND SHARE-BASED PAYMENTS | SHARE CAPITAL, OPTION PLANS AND SHARE-BASED PAYMENTS Cash Dividends For the three months ended September 30, 2022, pursuant to the Company’s dividend policy, we declared total non-cumulative dividends of $0.24299 per Common Share in the aggregate amount of $64.7 million which we paid during the same period (three months ended September 30, 2021—$0.2209 per Common Share in the aggregate amount of $59.9 million). Share Capital Our authorized share capital includes an unlimited number of Common Shares and an unlimited number of Preference Shares. No Preference Shares have been issued. Treasury Stock From time to time we may provide funds to an independent agent to facilitate repurchases of our Common Shares in connection with the settlement of awards under the Long-Term Incentive Plans (LTIP) or other plans. During the three months ended September 30, 2022 and 2021, we did not repurchase any Common Shares on the open market for potential settlement of awards under our LTIP or other plans as described below. During the three months ended September 30, 2022, we delivered to eligible participants 120,406 Common Shares that were purchased in the open market in connection with the settlement of awards and other plans (three months ended September 30, 2021—141,452 Common Shares). Share Repurchase Plan On November 4, 2021, the Board authorized a share repurchase plan (Fiscal 2022 Repurchase Plan), pursuant to which we may purchase in open market transactions, from time to time over the 12-month period commencing November 12, 2021, up to an aggregate of $350 million of our Common Shares. During the three months ended September 30, 2022 and 2021, we did not repurchase and cancel any Common Shares. Share-Based Payments Share-based compensation expense for the periods indicated below is detailed as follows:
| Three Months Ended September 30,
| 2022 |  | 2021
Stock Options (issued under Stock Option Plans) | $ | 3,585 |  |  | $ | 4,267 |
Performance Share Units (issued under LTIP) | 4,235 |  |  | 3,445 |
Restricted Share Units (issued under LTIP) | 2,175 |  |  | 2,166 |
Restricted Share Units (other) | 10,637 |  |  | 1,728 |
Deferred Share Units (directors) | 961 |  |  | 830 |
Employee Stock Purchase Plan | 1,615 |  |  | 1,498 |
Total share-based compensation expense | $ | 23,208 |  |  | $ | 13,934 |
A summary of unrecognized compensation cost for unvested shared-based payment awards is as follows:
| As of September 30, 2022
| Unrecognized Compensation Cost |  | Weighted Average Recognition Period (years)
Stock Options (issued under Stock Option Plans) | 49,204.7 |  |  | 2.6
Performance Share Units (issued under LTIP) | 45,389.4 |  |  | 2.5
Restricted Share Units (issued under LTIP) | 23,596.2 |  |  | 1.8
Restricted Share Units (other) | 76,748.6 |  |  | 1.9
Total unrecognized share-based compensation cost | $ | 194,938.9 |  |  |
Stock Option Plans Stock Options A summary of activity under our stock option plans for the three months ended September 30, 2022 is as follows:
| Options |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Term (years) |  | Aggregate Intrinsic Value ($’000's)
Outstanding at June 30, 2022 | 8,820,662 |  |  | $ | 42.74 |  |  | 4.68 |  | $ | 7,111 |
Granted | 1,872,400 |  |  | 35.24 |  |  |  |  |
Exercised | (72,080) |  |  | 27.66 |  |  |  |  |
Forfeited or expired | (505,374) |  |  | 44.34 |  |  |  |  |
Outstanding at September 30, 2022 | 10,115,608 |  |  | $ | 41.38 |  |  | 4.87 |  | $ | — |
Exercisable at September 30, 2022 | 3,651,940 |  |  | $ | 39.07 |  |  | 3.30 |  | $ | — |
As of September 30, 2022, 8,227,818 options to purchase Common Shares were available for issuance under our stock option plans. We estimate the fair value of stock options using the Black-Scholes option-pricing model or, where appropriate, the Monte Carlo pricing model, consistent with the provisions of ASC Topic 718, “Compensation—Stock Compensation” (Topic 718) and SEC Staff Accounting Bulletin No. 107. The option-pricing models require input of subjective assumptions, including the estimated life of the option and the expected volatility of the underlying stock over the estimated life of the option. We use historical volatility as a basis for projecting the expected volatility of the underlying stock and estimate the expected life of our stock options based upon historical data. We believe that the valuation techniques and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair value of our stock option grants. Estimates of fair value are not intended, however, to predict actual future events or the value ultimately realized by employees who receive equity awards. For the periods indicated, the weighted-average fair value of options and weighted-average assumptions estimated under the Black-Scholes option-pricing model were as follows:
| Three Months Ended September 30,
| 2022 |  | 2021
Weighted–average fair value of options granted | $ | 8.16 |  |  | $ | 9.75 |
Weighted-average assumptions used: |  |  |
Expected volatility | 27.46 | % |  | 26.62 | %
Risk–free interest rate | 2.86 | % |  | 0.55 | %
Expected dividend yield | 2.32 | % |  | 1.56 | %
Expected life (in years) | 4.18 |  | 4.16
Forfeiture rate (based on historical rates) | 7 | % |  | 7 | %
Average exercise share price | $ | 39.09 |  |  | $ | 52.62 |
Performance Options During the three months ended September 30, 2022, we granted 1,000,000 performance options (during the three months ended September 30, 2021—nil). For the period in which performance options were granted, the weighted-average fair value of performance options and weighted-average assumptions estimated under the Monte Carlo pricing model were as follows:
| Three Months Ended September 30,
| 2022
Weighted–average fair value of options granted | $ | 8.09 |
Derived service period (in years) | 1.7
Weighted-average assumptions used: |
Expected volatility | 26.00 | %
Risk–free interest rate | 3.21 | %
Expected dividend yield | 2.00 | %
Average exercise share price | $ | 31.89 |
Long-Term Incentive Plans We incentivize certain eligible employees, in part, with long-term compensation pursuant to our LTIP. The LTIP is a rolling three-year program that grants eligible employees a certain number of target Performance Share Units (PSUs) and/or Restricted Share Units (RSUs). Target PSUs become vested upon the achievement of certain financial and/or operational performance criteria (the Performance Conditions) that are determined at the time of the grant. RSUs become vested when an eligible employee remains employed throughout the vesting period. PSUs and RSUs granted under the LTIP have been measured at fair value as of the effective date, consistent with Topic 718, and will be charged to share-based compensation expense over the remaining life of the plan. We estimate the fair value of PSUs using the Monte Carlo pricing model and RSUs have been valued based upon their grant date fair value. Stock options granted under the LTIP have been measured using the Black-Scholes option-pricing model, consistent with Topic 718. LTIP 2025 Grants made in Fiscal 2023 under the LTIP (collectively referred to as LTIP 2025), consisting of PSUs and RSUs, took effect in Fiscal 2023 starting on August 8, 2022. The Performance Conditions for vesting of the PSUs are based solely upon market conditions. The RSUs are employee service-based awards and vest over the life of the LTIP 2025. We expect to settle the LTIP 2025 awards in Common Shares. The LTIP 2025 PSU and RSU awards are eligible to receive dividend equivalent units that vest under the same conditions as the underlying grants. Performance Share Units (Issued Under LTIP) A summary of activity under our performance share units issued under the LTIP for the three months ended September 30, 2022 is as follows:
| Units |  | Weighted-Average Grant Date Fair Value |  | Weighted- Average Remaining Contractual Term (years) |  | Aggregate Intrinsic Value ($’000's)
Outstanding at June 30, 2022 | 812,937 |  |  | $ | 61.29 |  |  | 1.89 |  | $ | 30,762 |
Granted (1) | 526,865 |  |  | 54.70 |  |  |  |  |
Vested | — |  |  | — |  |  |  |  |
Forfeited or expired | (58,350) |  |  | 67.10 |  |  |  |  |
Outstanding at September 30, 2022 | 1,281,452 |  |  | $ | 58.37 |  |  | 2.12 |  | $ | 33,882 |
__________________________ (1)PSUs are earned based on market conditions and the actual number of PSUs earned, if any, is dependent upon performance and may range from 0 to 200 percent. For the periods indicated, the weighted-average fair value of PSUs issued under LTIP, and weighted-average assumptions estimated under the Monte Carlo pricing model were as follows:
| Three Months Ended September 30,
| 2022 |  | 2021
Weighted–average fair value of performance share units granted | $ | 55.06 |  |  | $ | 75.15 |
Weighted-average assumptions used: |  |  |
Expected volatility | 29.00 | % |  | 28.00 | %
Risk–free interest rate | 3.13 | % |  | 0.45 | %
Expected dividend yield | — | % |  | 1.70 | %
Expected life (in years) | 3.11 |  | 3.10
Forfeiture rate (based on historical rates) | 7 | % |  | 7 | %
Restricted Share Units (Issued Under LTIP) A summary of activity under our RSUs issued under the LTIP for the three months ended September 30, 2022 is as follows:
| Units |  | Weighted-Average Grant Date Fair Value |  | Weighted- Average Remaining Contractual Term (years) |  | Aggregate Intrinsic Value ($’000's)
Outstanding at June 30, 2022 | 611,743 |  |  | $ | 44.14 |  |  | 1.62 |  | $ | 23,148 |
Granted | 394,584 |  |  | 38.97 |  |  |  |  |
Vested | — |  |  | — |  |  |  |  |
Forfeited or expired | (45,030) |  |  | 45.85 |  |  |  |  |
Outstanding at September 30, 2022 | 961,297 |  |  | $ | 41.94 |  |  | 2.07 |  | $ | 25,417 |
Restricted Share Units (Other) In addition to the grants made in connection with the LTIP discussed above, from time to time, we may grant RSUs to certain employees in accordance with employment and other non-LTIP related agreements. RSUs (other) vest over a specified contract date, typically two or three years from the respective date of grants. A summary of activity under our RSUs (other) issued for the three months ended September 30, 2022 is as follows:
| Units |  | Weighted-Average Grant Date Fair Value |  | Weighted- Average Remaining Contractual Term (years) |  | Aggregate Intrinsic Value ($’000's)
Outstanding at June 30, 2022 | 2,593,707 |  |  | $ | 44.90 |  |  | 2.86 |  | $ | 98,146 |
Granted | — |  |  | — |  |  |  |  |
Vested | (120,406) |  |  | 37.83 |  |  |  |  |
Forfeited or expired | (88,587) |  |  | 44.84 |  |  |  |  |
Outstanding at September 30, 2022 | 2,384,714 |  |  | $ | 44.86 |  |  | 2.68 |  | $ | 63,052 |
Deferred Share Units (DSUs) The DSUs are granted to certain non-employee directors. DSUs are issued under our Deferred Share Unit Plan. DSUs granted as compensation for director fees vest immediately, whereas all other DSUs granted vest at our next annual general meeting following the granting of the DSUs. No DSUs are payable by us until the director ceases to be a member of the Board. A summary of activity under our deferred share units issued for the three months ended September 30, 2022 is as follows:
| Units |  | Weighted-Average Price |  | Weighted- Average Remaining Contractual Term (years) |  | Aggregate Intrinsic Value ($’000's)
Outstanding at June 30, 2022 (1) | 885,701 |  |  | $ | 31.49 |  |  | 0.36 |  | $ | 33,515 |
Granted | 13,747 |  |  | 32.41 |  |  |  |  |
Outstanding at September 30, 2022 (1) | 899,448 |  |  | $ | 31.50 |  |  | 0.10 |  | $ | 21,934 |
______________________ (1) Includes 55,520 unvested DSUs. Employee Stock Purchase Plan (ESPP) Our ESPP offers employees the opportunity to purchase our Common Shares at a purchase price discount of 15%. During the three months ended September 30, 2022, 354,465 Common Shares were eligible for issuance to employees enrolled in the ESPP (three months ended September 30, 2021—225,731 Common Shares). During the three months ended September 30, 2022, cash in the amount of $8.0 million was received from employees relating to the ESPP (three months ended September 30, 2021—$9.4 million).

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- Definition The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI https://asc.fasb.org/topic&trid=2208762 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI https://asc.fasb.org/topic&trid=2228938 + Details
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