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Stock-based Compensation Plans | 12 Months Ended
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Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | Stock-based Compensation Plans The effect of stock-based compensation on our statements of operations, including discontinued operations, is presented below.
| 2017 |  | 2016 |  | 2015
| (in millions, except per share data)
Decrease in operating income | $ | 8.6 |  |  | $ | 9.1 |  |  | $ | 7.0 |
Decrease in net income | 4.8 |  |  | 5.8 |  |  | 4.4 |
Decrease in earnings per basic share | 0.03 |  |  | 0.04 |  |  | 0.03 |
Decrease in earnings per diluted share | 0.03 |  |  | 0.04 |  |  | 0.03 |
We excluded 238,826, 867,065 and 1,165,414 instruments from the calculation of diluted earnings per share for 2017, 2016 and 2015, respectively, because the effect of including them would have been antidilutive. At September 30, 2017, there was approximately $8.0 million of unrecognized compensation expense related to stock-based awards not yet vested. We expect to recognize this expense over a weighted average life of approximately 1.6 years. The Mueller Water Products, Inc. 2006 Stock Incentive Plan (“2006 Plan”) authorizes an aggregate of 20,500,000 shares of common stock that may be granted through the issuance of stock-based awards. Any awards canceled are available for reissuance. Generally, all of our employees and members of our board of directors are eligible to participate in the 2006 Plan. At September 30, 2017, 7,204,369 shares of common stock were available for future grants of awards under the 2006 Plan. This total assumes that the maximum number of shares will be earned for awards for which the final number of shares to be earned has not yet been determined. An award granted under the 2006 Plan vests at such times and in such installments as set by the Compensation and Human Resources Committee of the board of directors, but no award will be exercisable after the ten-year anniversary of the date on which it is granted. Management expects some instruments will be forfeited prior to vesting. Grants to members of our board of the directors are expected to vest fully. Based on historical forfeitures, we expect grants to others to be forfeited at an annual rate of 2%. Restricted Stock Units. Depending on the specific terms of each award, restricted stock units generally vest ratably over the life of the award, usually three years, on each anniversary date of the original grant. Compensation expense for restricted stock units is recognized between the grant date and the vesting date (or the date on which a participant becomes Retirement-eligible, if sooner) on a straight-line basis for each tranche of each award. Fair values of restricted stock units are determined using the closing price of our common stock on the respective dates of grant. Restricted stock unit activity under the 2006 Plan is summarized below.
| Restricted stock units |  | Weighted average grant date fair value per unit |  | Weighted average remaining contractual term (years) |  | Aggregate intrinsic value (millions)
Outstanding at September 30, 2014 | 1,206,761 |  |  | $ | 5.04 |  |  | 0.7 |  |
Granted | 459,659 |  |  | 9.70 |  |  |  |  |
Vested | (793,630 | ) |  | 3.99 |  |  |  |  | $ | 7.7 |
Cancelled | — |  |  | — |  |  |  |  |
Outstanding at September 30, 2015 | 872,790 |  |  | 8.45 |  |  | 0.8 |  |
Granted | 360,255 |  |  | 9.33 |  |  |  |  |
Vested | (510,535 | ) |  | 7.94 |  |  |  |  | 4.7 |
Cancelled | (59,062 | ) |  | 8.23 |  |  |  |  |
Outstanding at September 30, 2016 | 663,448 |  |  | 9.34 |  |  | 1.0 |  |
Granted | 343,860 |  |  | 13.05 |  |  |  |  |
Vested | (359,797 | ) |  | 9.34 |  |  |  |  | 4.7 |
Cancelled | (21,681 | ) |  | 13.26 |  |  |  |  |
Outstanding at September 30, 2017 | 625,830 |  |  | $ | 11.23 |  |  | 0.9 |  |
Performance Shares. Performance-based restricted stock units (“PRSUs”) represent a target number of units that may be paid out at the end of a multi-year award cycle consisting of annual performance periods coinciding with our fiscal years. As determined at the date of award, PRSUs may settle in cash-value equivalent of, or directly in, shares of our common stock. Settlement will range from zero to two times the number of PRSUs granted, depending on our financial performance against predetermined targets. The Compensation and Human Resources Committee of our board of directors (“Committee”) establishes performance goals within 90 days of the beginning of each performance period, with such date referred to as the “grant date”. At the end of each annual performance period, the Committee confirms performance against the applicable performance targets. PRSUs do not convey voting rights or earn dividends. PRSUs vest on the last day of an award cycle, unless vested sooner due to a “Change of Control” of the Company, or the death, disability or Retirement of a participant. We recognize compensation expense for stock-settled PRSUs starting on the first day of the applicable performance period and ending on the respective vesting dates. We base the recognized compensation expense upon the number of units awarded for each performance period, the closing price of our common stock on the grant date and the estimated performance factor. In 2017 and 2016, we issued 263,410 shares and 542,212 shares, respectively, to settle PRSUs. Stock-settled PRSUs activity under the 2006 Plan is summarized below.
Award date |  | Settlement year |  | Performance period |  | Grant date per unit fair value |  | Units awarded |  | Units forfeited |  | Net units |  | Performance factor |  | Shares earned
November 27, 2012 |  | 2016 |  | 2013 |  | $ | 5.22 |  |  | 135,553 |  |  | — |  |  | 135,553 |  |  | 2.000 |  | 271,106 |
|  |  |  | 2014 |  | $ | 8.52 |  |  | 135,553 |  |  | — |  |  | 135,553 |  |  | 2.000 |  | 271,106 |
|  |  |  | 2015 |  | $ | 9.78 |  |  | 135,552 |  |  | — |  |  | 135,552 |  |  | 0.000 |  | — |
December 3, 2013 |  | 2017 |  | 2014 |  | $ | 8.52 |  |  | 90,841 |  |  | (4,401 | ) |  | 86,440 |  |  | 2.000 |  | 172,880 |
|  |  |  | 2015 |  | $ | 9.78 |  |  | 90,841 |  |  | (4,401 | ) |  | 86,440 |  |  | 0.000 |  | — |
|  |  |  | 2016 |  | $ | 9.38 |  |  | 90,849 |  |  | (7,402 | ) |  | 83,447 |  |  | 1.021 |  | 85,195 |
December 2, 2014 |  | 2018 |  | 2015 |  | $ | 9.78 |  |  | 80,233 |  |  | (3,835 | ) |  | 76,398 |  |  | 0.000 |  | — |
|  |  |  | 2016 |  | $ | 9.38 |  |  | 80,229 |  |  | (6,447 | ) |  | 73,782 |  |  | 1.021 |  | 75,327 |
|  |  |  | 2017 |  | $ | 13.26 |  |  | 80,229 |  |  | (11,673 | ) |  | 68,556 |  |  | 1.000 |  | 68,556 |
December 1, 2015 |  | 2019 |  | 2016 |  | $ | 9.38 |  |  | 77,823 |  |  | (3,998 | ) |  | 73,825 |  |  | 1.021 |  | 75,375 |
|  |  |  | 2017 |  | $ | 13.26 |  |  | 77,824 |  |  | (3,997 | ) |  | 73,827 |  |  | 1.000 |  | 73,827 |
|  |  |  | 2018 |  |  |  | 77,824 |  |  | (6,752 | ) |  | 71,072 |  |  |  |  |
November 29, 2016 |  | 2020 |  | 2017 |  | $ | 13.26 |  |  | 59,285 |  |  | (5,279 | ) |  | 54,006 |  |  | 1.000 |  | 54,006 |
|  |  |  | 2018 |  |  |  | 59,286 |  |  | (7,227 | ) |  | 52,059 |  |  |  |  |
|  |  |  | 2019 |  |  |  | 59,290 |  |  | (7,227 | ) |  | 52,063 |  |  |  |  |
January 23, 2017 |  | 2020 |  | 2017 |  | $ | 13.15 |  |  | 19,012 |  |  | — |  |  | 19,012 |  |  | 1.000 |  | 19,012 |
|  |  |  | 2018 |  |  |  | 19,011 |  |  | — |  |  | 19,011 |  |  |  |  |
|  |  |  | 2019 |  |  |  | 19,011 |  |  | — |  |  | 19,011 |  |  |  |  |
Stock Options. Stock options generally vest ratably over three years on each anniversary date of the original grant. Stock options granted since November 2007 also vest upon the Retirement of a participant. Compensation expense for stock options is recognized between the grant date and the vesting date (or the date on which a participant becomes Retirement-eligible, if sooner) on a straight-line basis for each tranche of each award. No stock options were granted in 2017 or 2016. Stock option activity under the 2006 Plan is summarized below.
| Options |  | Weighted average exercise price per option |  | Weighted average remaining contractual term (years) |  | Aggregate intrinsic value (millions)
Outstanding at September 30, 2014 | 4,552,235 |  |  | $ | 6.37 |  |  | 5.0 |  | $ | 13.6 |
Granted | 97,119 |  |  | 9.97 |  |  |  |  |
Exercised | (506,632 | ) |  | 3.42 |  |  |  |  | 3.2 |
Cancelled | (150,056 | ) |  | 13.90 |  |  |  |  |
Outstanding at September 30, 2015 | 3,992,666 |  |  | 6.54 |  |  | 4.2 |  | 9.3 |
Exercised | (270,599 | ) |  | 6.83 |  |  |  |  | 0.8 |
Cancelled | (167,759 | ) |  | 17.82 |  |  |  |  |
Outstanding at September 30, 2016 | 3,554,308 |  |  | 5.99 |  |  | 3.4 |  | 23.8 |
Exercised | 905,834 |  |  | 4.71 |  |  |  |  | 7.3 |
Cancelled | (207,820 | ) |  | 14.72 |  |  |  |  |
Outstanding at September 30, 2017 | 2,440,654 |  |  | $ | 5.72 |  |  | 2.5 |  | $ | 17.3 |
Exercisable at September 30, 2017 | 2,415,475 |  |  | $ | 5.67 |  |  | 2.5 |  | $ | 17.2 |
Expected to vest after September 30, 2017 | 25,179 |  |  | $ | 9.97 |  |  | 7.3 |  | $ | 0.1 |
Stock option exercise prices are equal to the closing price of our common stock on the relevant grant date. The ranges of exercise prices for stock options outstanding at September 30, 2017 are summarized below.
Exercise price |  | Options |  | Weighted average exercise price |  | Weighted average remaining contractual term (years) |  | Exercisable options |  | Weighted average exercise price
| $ | 0.00 |  | - | $ | 4.99 |  |  |  | 804,173 |  |  | $ | 3.29 |  |  | 3.4 |  | 804,173 |  |  | $ | 3.29 |
| $ | 5.00 |  | - | $ | 9.99 |  |  |  | 1,330,050 |  |  | 6.05 |  |  | 2.5 |  | 1,304,871 |  |  | 5.97 |
| $ | 10.00 |  | - | $ | 14.99 |  |  |  | 306,431 |  |  | 10.66 |  |  | 0.2 |  | 306,431 |  |  | 10.66 |
|  |  |  |  |  | 2,440,654 |  |  | $ | 5.72 |  |  | 2.5 |  | 2,415,475 |  |  | $ | 5.67 |
Compensation expense attributed to stock options is based on the fair value of the awards on their respective grant dates, as determined using a Black-Scholes model. The weighted average grant-date fair values of stock options granted in 2015 and the weighted average assumptions used to determine these fair values are indicated below.
Grant-date fair value | $ | 5.93 |
Risk-free interest rate | 1.74 | %
Dividend yield | 0.80 | %
Expected life (years) | 8.0 |
Expected annual volatility | 0.6199 |
The risk-free interest rate is based on the U.S. Treasury zero-coupon yield in effect at the grant date with a term equal to the expected life. The expected dividend yield is based on our estimated annual dividend and stock price history at the grant date. The expected term represents the period of time the awards are expected to be outstanding. Employee Stock Purchase Plan. The Mueller Water Products, Inc. 2006 Employee Stock Purchase Plan (“ESPP”) authorizes the sale of up to 5,800,000 shares of our common stock to employees. Generally, all full-time, active employees are eligible to participate in the ESPP, subject to certain restrictions. Employee purchases are funded through payroll deductions, and any excess payroll withholdings are returned to the employee. The price for shares purchased under the ESPP is 85% of the lower of the closing price on the first day or the last day of the offering period. At September 30, 2017, 2,901,604 shares were available for issuance under the ESPP. Phantom Plan. Under the Mueller Water Products, Inc. Phantom Plan we adopted in 2012 (“Phantom Plan”), we have awarded “phantom units” to certain non-officer employees. A phantom unit settles in cash equal to the price of one share of our common stock on the vesting date. Phantom units vest ratably over three years on each anniversary date of the original grant. We recognize compensation expense for phantom units on a straight-line basis for each tranche of each award based on the closing price of our common stock at each balance sheet date. The outstanding phantom units had a fair value of $12.80 per unit at September 30, 2017 and our accrued liability for such units was $3.0 million. Phantom Plan activity is summarized below.
| Phantom Plan units |  | Weighted average grant date fair value per unit |  | Weighted average remaining contractual term (years) |  | Aggregate intrinsic value (millions)
Outstanding at September 30, 2014 | 643,288 |  |  | $ | 6.22 |  |  | 0.8 |  |
Granted | 289,524 |  |  | 9.78 |  |  |  |  |
Vested | (317,409 | ) |  |  |  |  |  | $ | 3.1 |
Cancelled | (56,525 | ) |  | 8.29 |  |  |  |  |
Outstanding at September 30, 2015 | 558,878 |  |  | 8.49 |  |  | 0.8 |  |
Granted | 302,875 |  |  | 9.84 |  |  |  |  |
Vested | (270,822 | ) |  |  |  |  |  | 2.5 |
Cancelled | (56,905 | ) |  | 9.28 |  |  |  |  |
Outstanding at September 30, 2016 | 534,026 |  |  | 9.60 |  |  | 0.9 |  |
Granted | 199,260 |  |  | 13.22 |  |  |  |  |
Vested | (278,000 | ) |  |  |  |  |  | 3.7 |
Cancelled | (103,279 | ) |  | 10.87 |  |  |  |  |
Outstanding at September 30, 2017 | 352,007 |  |  | $ | 11.36 |  |  | 0.9 |  |

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -URI http://asc.fasb.org/subtopic&trid=2208855 + Details
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