Stock-based Compensation Plans

6 Months Ended

Mar. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Stock-based Compensation Plans

We have granted various forms of stock-based compensation, including stock options, restricted stock units and both cash-settled and stock-settled performance-based restricted stock units (“PRSUs”) under our Amended and Restated 2006 Mueller Water Products, Inc. Stock Incentive Plan (the “2006 Stock Plan”).

A PRSU award represents a target number of units that may be paid out at the end of a multi-year award cycle consisting of a series of annual performance periods coinciding with our fiscal years. After we determine the financial performance targets related to PRSUs for a given performance period, typically during the first quarter of that fiscal year, we consider that portion of a PRSU award to be granted. Thus, each award consists of a grant in the year of award and grants in the designated following years. Settlement will range from zero to two times the number of PRSUs granted, depending on our financial performance against the targets. As determined at the date of award, PRSUs may settle in cash-value equivalent of, or directly in, shares of our common stock.

The stock-settled PRSUs awarded in 2013 settled in the quarter ended December 31, 2015 with an issuance of 542,212 shares of our common stock. This settlement reflected payouts of zero times target for the 2015 performance period, two times target for the 2014 performance period and two times target for the 2013 performance period.

We awarded 233,471 stock-settled PRSUs in the quarter ended December 31, 2015 that will settle in three years.

We have granted cash-settled Phantom Plan instruments under the Mueller Water Products, Inc. Phantom Plan (“Phantom Plan”). At March 31, 2016, the outstanding Phantom Plan instruments had a fair value of $9.88 per instrument and our liability for Phantom Plan instruments was $2.0 million.

We granted stock-based compensation awards under the 2006 Stock Plan, the Mueller Water Products, Inc. 2006 Employee Stock Purchase Plan and the Phantom Plan during the six months ended March 31, 2016 as follows.



	Number granted	Weighted average grant date fair value per instrument		Total grant date fair value (in millions)
Quarter ended December 31, 2015:
Restricted stock units	233,471	$	9.38	$	2.2
Employee stock purchase plan instruments	61,313	1.84		0.1
Phantom Plan awards	232,090	9.38		2.2
PRSUs: 2016 award	77,824	9.38		0.7
2015 award	80,229	9.38		0.8
2014 award	90,849	9.38		0.9
Quarter ended March 31, 2016:
Restricted stock units	93,849	8.63		0.8
Phantom Plan awards	1,500	8.11		—
Employee stock purchase plan instruments	58,411	1.67		0.1
				$	7.8

We recorded stock-based compensation expense of $2.1 million and $1.9 million during the three months ended March 31, 2016 and 2015, respectively, and $4.5 million and $5.3 million during the six months ended March 31, 2016 and 2015, respectively. At March 31, 2016, there was approximately $6.4 million of unrecognized compensation expense related to stock-based compensation arrangements, and 235,876 PRSUs that have been awarded but not yet granted.

We excluded 1,038,029 and 998,980 of stock-based compensation instruments from the calculations of diluted earnings per share for the quarters ended March 31, 2016 and 2015, respectively, and 1,016,155 and 2,812,066 for the six months ended March 31, 2016 and 2015, respectively, since their inclusion would have been antidilutive. We recorded a net loss during the six months ended March 31, 2015; therefore, all stock-based compensation instruments were excluded from the diluted loss per share calculation since their inclusion would have been antidilutive.