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EQUITY | 12 Months Ended
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Sep. 30, 2023
Equity [Abstract] |
EQUITY | EQUITY (DEFICIT) Authorized and issued shares consisted of the following (in millions):
| September 30,
| 2023 |  | 2022
Preferred shares, no par value: |  |  |
Authorized | 0.2 shares |  | 0.2 shares
Issued | 0.0 shares |  | 0.0 shares
Common shares, no par value, $0.01 stated value per share: |  |  |
Authorized | 100.0 shares |  | 100.0 shares
Issued | 68.1 shares |  | 68.1 shares
In fiscal 1995, The Scotts Company merged with Stern’s Miracle-Gro Products, Inc. (“Miracle-Gro”). At September 30, 2023, the former shareholders of Miracle-Gro, including the Hagedorn Partnership, L.P., owned approximately 24% of Scotts Miracle-Gro’s outstanding Common Shares on a fully diluted basis and, therefore, have the ability to significantly influence the election of directors and other actions requiring the approval of Scotts Miracle-Gro’s shareholders. Under the terms of the merger agreement with Miracle-Gro, the former shareholders of Miracle-Gro may not collectively acquire, directly or indirectly, beneficial ownership of Voting Stock (as that term is defined in the Miracle-Gro merger agreement) representing more than 49% of the total voting power of the outstanding Voting Stock, except pursuant to a tender offer for 100% of that total voting power, which tender offer is made at a price per share which is not less than the market price per share on the last trading day before the announcement of the tender offer and is conditioned upon the receipt of at least 50% of the Voting Stock beneficially owned by shareholders of Scotts Miracle-Gro other than the former shareholders of Miracle-Gro and their affiliates and associates. Accumulated Other Comprehensive Loss Changes in AOCL by component were as follows for the fiscal years ended September 30:
|  | Foreign Currency Translation Adjustments |  | Net Unrealized Gain (Loss) On Derivative Instruments |  | Net Unrealized Loss On Securities |  | Pension and Other Post- Retirement Benefit Adjustments |  |  |  | Accumulated Other Comprehensive Income (Loss)
Balance at September 30, 2020 |  | $ | (6.2) |  |  | $ | (15.1) |  |  | $ | — |  |  | $ | (77.8) |  |  |  |  | $ | (99.1) |
Other comprehensive income (loss) before reclassifications |  | 4.5 |  |  | 26.8 |  |  | (3.1) |  |  | 6.9 |  |  |  |  | 35.1 |
Amounts reclassified from accumulated other comprehensive net income (loss) |  | — |  |  | 7.3 |  |  | — |  |  | 0.4 |  |  |  |  | 7.7 |
Income tax benefit (expense) |  | — |  |  | (8.9) |  |  | 0.8 |  |  | (1.9) |  |  |  |  | (10.0) |
Net current period other comprehensive income (loss) |  | 4.5 |  |  | 25.2 |  |  | (2.3) |  |  | 5.4 |  |  |  |  | 32.8 |
Balance at September 30, 2021 |  | (1.7) |  |  | 10.2 |  |  | (2.3) |  |  | (72.5) |  |  |  |  | (66.4) |
Other comprehensive income (loss) before reclassifications |  | (27.2) |  |  | 40.1 |  |  | (102.0) |  |  | (7.3) |  |  |  |  | (96.4) |
Amounts reclassified from accumulated other comprehensive net income (loss) |  | — |  |  | (9.1) |  |  | — |  |  | 11.7 |  |  |  |  | 2.6 |
Income tax benefit (expense) |  | — |  |  | (7.9) |  |  | 24.6 |  |  | (1.1) |  |  |  |  | 15.6 |
Net current period other comprehensive income (loss) |  | (27.2) |  |  | 23.1 |  |  | (77.4) |  |  | 3.3 |  |  |  |  | (78.2) |
Balance at September 30, 2022 |  | (28.9) |  |  | 33.3 |  |  | (79.7) |  |  | (69.3) |  |  |  |  | (144.6) |
Other comprehensive income (loss) before reclassifications |  | 7.0 |  |  | 5.6 |  |  | (34.9) |  |  | (2.5) |  |  |  |  | (24.8) |
Amounts reclassified from accumulated other comprehensive net income (loss) |  | — |  |  | (23.3) |  |  | 101.3 |  |  | (1.6) |  |  |  |  | 76.4 |
Income tax benefit (expense) |  | — |  |  | 4.5 |  |  | (25.3) |  |  | 1.0 |  |  |  |  | (19.8) |
Net current period other comprehensive income (loss) |  | 7.0 |  |  | (13.2) |  |  | 41.1 |  |  | (3.1) |  |  |  |  | 31.8 |
Balance at September 30, 2023 |  | $ | (21.9) |  |  | $ | 20.1 |  |  | $ | (38.6) |  |  | $ | (72.4) |  |  |  |  | $ | (112.8) |
The sum of the components may not equal due to rounding. Share Repurchases On February 6, 2020, Scotts Miracle-Gro announced that its Board of Directors authorized the repurchase of up to $750.0 of Common Shares from April 30, 2020 through March 25, 2023. There were no share repurchases under this share repurchase authorization during fiscal 2023 through its expiration on March 25, 2023. During fiscal 2022 and fiscal 2021, Scotts Miracle-Gro repurchased 1.1 million and 0.6 million Common Shares under this share repurchase authorization for $175.0 and $113.1, respectively. Treasury share purchases also include cash paid to tax authorities to satisfy statutory income tax withholding obligations related to share-based compensation of $9.3, $82.9 and $16.3 for fiscal 2023, fiscal 2022 and fiscal 2021, respectively. Share-Based Awards In January 2023, the shareholders of Scotts Miracle-Gro approved an amendment and restatement of The Scotts Miracle-Gro Company Long-Term Incentive Plan. As of September 30, 2023, the Company is authorized under this plan to grant up to approximately 5.6 million Common Shares, which includes an estimate of the number of Common Shares subject to outstanding awards under the plan that terminate, expire, or are cancelled, forfeited, exchanged, or surrendered without having been exercised, vested, or paid. At September 30, 2023, approximately 3.2 million Common Shares were not subject to outstanding awards and were available to underlie the grant of new share-based awards. Common Shares held in treasury totaling 0.4 million, 0.9 million and 0.4 million were reissued in support of share-based compensation awards under this plan and employee purchases under the employee stock purchase plan during fiscal 2023, fiscal 2022 and fiscal 2021, respectively. Subsequent to September 30, 2023, the Company awarded restricted stock units and stock options representing 1.5 million Common Shares to employees with an estimated grant date fair value of $29.8. Total share-based compensation was as follows for each of the periods indicated:
| Year Ended September 30,
| 2023 |  | 2022 |  | 2021
Share-based compensation | $ | 68.1 |  |  | $ | 30.3 |  |  | $ | 40.6 |
Related tax benefit recognized | 15.6 |  |  | 4.9 |  |  | 7.4 |
Excess tax benefit (tax deficiency) related to share-based compensation was $(1.5), $14.8 and $18.3 for fiscal 2023, fiscal 2022 and fiscal 2021, respectively. Stock Options Stock option activity was as follows:
| No. of Options |  | Wtd. Avg. Exercise Price |  | Wtd Avg Remaining Life |  | Aggregate Intrinsic Value
Awards outstanding at September 30, 2022 | 528,471 |  |  | $ | 110.86 |  |  | 4.4 years |  |
Granted | 696,268 |  |  | 52.54 |  |  |  |  |
Forfeited | (33,556) |  |  | 115.53 |  |  |  |  |
Awards outstanding at September 30, 2023 | 1,191,183 |  |  | 76.64 |  |  | 6.6 years |  | $ | 0.8 |
Exercisable | 399,223 |  |  | 66.24 |  |  | 2.2 years |  | — |
The weighted average fair value per share of each option granted during fiscal 2023 and fiscal 2021 was $14.25 and $61.15, respectively. There were no options granted during fiscal 2022. The total intrinsic value of options exercised during fiscal 2021 was $41.8. There were no options exercised during fiscal 2023 or fiscal 2022. As of September 30, 2023, there was $2.9 of total unrecognized pre-tax compensation cost, net of estimated forfeitures, related to nonvested stock options that is expected to be recognized over a weighted-average period of 2.0 years. Cash received from the exercise of stock options, including amounts received from employee purchases under the employee purchase plan, was $2.3, $3.3 and $15.2 for fiscal 2023, fiscal 2022 and fiscal 2021, respectively. The grant date fair value of stock option awards is estimated using a binomial model. Expected market price volatility is based on implied volatilities from traded options on Common Shares and historical volatility specific to the Common Shares. Historical data, including demographic factors impacting historical exercise behavior, is used to estimate stock option exercises and employee terminations within the valuation model. The risk-free rate for periods within the contractual life of the stock option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected life of stock options is based on historical experience and expectation for grants outstanding. The weighted average assumptions for awards granted in fiscal 2023 are as follows:
Expected volatility | 36.8 | % |  |  |
Risk-free interest rate | 4.3 | % |  |  |
Expected dividend yield | 3.9 | % |  |  |
Expected life | 6.1 years |  |  |
Restricted share-based awards Restricted share-based award activity (including restricted stock units and deferred stock units) was as follows:
| No. of Units |  | Wtd. Avg. Grant Date Fair Value per Unit
Awards outstanding at September 30, 2022 | 320,575 |  |  | $ | 143.19 |
Granted | 479,787 |  |  | 59.48 |
Vested | (140,334) |  |  | 112.64 |
Forfeited | (48,190) |  |  | 85.48 |
Awards outstanding at September 30, 2023 | 611,838 |  |  | 89.10 |
The weighted-average grant-date fair value of restricted stock-based awards granted during fiscal 2023, fiscal 2022 and fiscal 2021 was $59.48, $109.10 and $230.95 per share, respectively. As of September 30, 2023, there was $16.5 of total unrecognized pre-tax compensation cost, net of estimated forfeitures, related to nonvested restricted stock-based awards that is expected to be recognized over a weighted-average period of 1.5 years. The total fair value of restricted stock units and deferred stock units vested during fiscal 2023, fiscal 2022 and fiscal 2021 was $11.2, $28.2 and $41.8, respectively. Performance-based awards Performance-based award activity was as follows (based on target award amounts):
| No. of Units |  | Wtd. Avg. Grant Date Fair Value per Unit
Awards outstanding at September 30, 2022 | 113,256 |  |  | $ | 130.94 |
Granted | 707,665 |  |  | 66.00 |
Vested (a) | (250,586) |  |  | 69.16 |
Forfeited | (25,545) |  |  | 91.56 |
Awards outstanding at September 30, 2023 | 544,790 |  |  | 76.85 |
(a)Vested at a weighted average of 102% of the target performance share units granted. The weighted-average grant-date fair value of performance-based awards granted during fiscal 2023, fiscal 2022 and fiscal 2021 was $66.00, $132.74 and $236.53 per share, respectively. As of September 30, 2023, there was $1.8 of total unrecognized pre-tax compensation cost, net of estimated forfeitures, related to nonvested performance-based awards that is expected to be recognized over a weighted-average period of 2.4 years. The total fair value of performance-based units vested during fiscal 2023, fiscal 2022 and fiscal 2021 was $17.4, $182.5 and $11.9, respectively. During fiscal 2023, short-term variable incentive compensation was provided to certain employees as performance-based awards in lieu of a cash-based program. During the third quarter of fiscal 2023, a cumulative adjustment was recognized to share-based compensation expense for certain of these performance-based award units to reflect management’s assessment of a lower probability of achievement of performance goals. During the fourth quarter of fiscal 2023, 0.2 million performance-based awards issued in lieu of a cash-based short-term variable incentive compensation program were modified to remove the specified performance targets. As a result of that modification, the Company recognized $10.6 of additional compensation expense during the fourth quarter of fiscal 2023. Restricted shares issued to vendor During fiscal 2023, the Company issued 0.8 million restricted shares, with a weighted-average grant date fair value of $52.44 per share, out of its treasury shares to a vendor in exchange for advertising services. As of September 30, 2023, there was $20.7 of total unrecognized pre-tax compensation cost related to these restricted shares that is expected to be recognized during fiscal 2024.

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