Ashland has stock incentive plans under which key employees or directors are granted stock appreciation rights (SARs), performance awards or nonvested stock awards. Each program is typically a long-term incentive plan designed to link employee compensation with increased shareholder value or reward superior performance and encourage continued employment with Ashland. Ashland recognizes compensation expense for the grant date fair value of stock-based awards over the applicable vesting period.

The components of Ashland’s pre-tax stock-based compensation expense included in continuing operations are as follows:

	Three months ended					Nine months ended
	June 30					June 30
(In millions)	2019 (a)			2018 (b)		2019 (a)		2018 (b)
SARs	$	1		$	2	$	5	$	5
Nonvested stock awards		6			6		16		17
Performance share awards		(1	)		4		1		10
	$	6		$	12	$	22	$	32

SARs are granted to employees or directors at a price equal to the fair market value of the stock on the date of grant and typically become exercisable over periods of one to three years. Unexercised SARs generally lapse ten years after the date of grant. SARs granted for nine months ended June 30, 2019 and 2018 were 300 thousand and 470 thousand, respectively. As of June 30, 2019, there was $8 million of total unrecognized compensation costs related to SARs. That cost is expected to be recognized over a weighted-average period of 1.8 years. Ashland estimates the fair value of SARs granted using the Black-Scholes option-pricing model. This model requires several assumptions which Ashland has developed and updates based on historical trends and current market observations. The accuracy of these assumptions is critical to the estimate of fair value for these equity instruments.

Nonvested stock awards are granted to employees or directors at a price equal to the fair market value of the stock on the date of grant and generally vest over a one-to-five-year period. However, such shares or units are subject to forfeiture upon termination of service before the vesting period ends. Only nonvested stock awards granted in the form of shares entitle employees or directors to vote the shares. Dividends on nonvested stock awards granted are in the form of additional units or shares of nonvested stock awards, which are subject to vesting and forfeiture provisions.

Nonvested stock awards granted in the form of shares or units were 1 thousand and 2 thousand for the three months ended June 30, 2019 and 2018, respectively, and 95 thousand and 146 thousand for the nine months ended June 30, 2019 and 2018, respectively. As of June 30, 2019, there was $9 million of total unrecognized compensation costs related to these nonvested stock awards. That cost is expected to be recognized over a weighted-average period of 1.9 years.

Certain nonvested stock awards are granted to employees and are settled in cash upon vesting. As of June 30, 2019, 113 thousand cash-settled nonvested stock awards were outstanding. The value of these cash-settled nonvested stock awards changes in connection with changes in the fair market value of the Ashland Common Stock. These awards generally vest over a period of three years. The expense recognized related to cash-settled nonvested stock awards was $2 million and $3 million during the three months ended June 30, 2019 and 2018, respectively, and $5 million and $7 million during the nine months ended June 30, 2019 and 2018, respectively.

During 2016, certain executives were granted performance-based restricted shares of Ashland in order to provide an incentive to remain employed in the period after the full separation of Ashland and Valvoline. At June 30, 2019, there were 30 thousand shares outstanding in connection with these awards, which includes forfeitures and the cumulative value of forfeitable dividends. The expense recognition for these awards commenced upon completing the full separation of Valvoline which occurred on May 12, 2017 and resulted in $1 million and $2 million of expense for the three and nine months ended June 30, 2019, respectively, and $1 million and $4 million of expense for the three and nine months ended June 30, 2018, respectively. As of June 30, 2019, there was $1 million of total unrecognized compensation costs related to these awards.

Ashland sponsors a long-term incentive plan that awards performance shares/units to certain key employees that are primarily tied to Ashland’s overall financial performance relative to internal targets. Additionally, certain outstanding performance awards are tied to Ashland's overall financial performance relative to the financial performance of selected industry peer groups. Awards are granted annually, with each award covering a three-year vesting period. Awards settled in shares are recorded as a component of stockholders’ equity while awards settled in cash are recorded as a liability within the Condensed Consolidated Balance Sheets.

The performance measure used to determine the actual number of performance shares/units issuable upon vesting is the financial performance of Ashland compared to award targets. The financial performance award metric is considered a performance condition under applicable U.S. GAAP. Additionally, the actual number of performance shares/units issuable upon vesting can be potentially increased or decreased based on a total shareholder return (TSR) performance modifier relative to peers of Ashland. For awards granted in fiscal 2017, each performance unit will be settled in cash based on the fair value of Ashland common stock. For awards granted in fiscal 2018 and 2019, each performance share/unit is convertible to one share of Ashland Common Stock.

Nonvested performance shares/units do not entitle employees to vote the shares or to receive any dividends thereon. No performance shares/units were granted for the three months ended June 30, 2019 and 2018. Performance shares/units granted for the nine months ended June 30, 2019 and 2018 were 78 thousand and 101 thousand, respectively. As of June 30, 2019, there was $5 million of total unrecognized compensation costs related to performance shares/units. That cost is expected to be recognized over a weighted-average period of 1.6 years.