

Note 8.	STOCK-BASED COMPENSATION

Adient provides certain key employees equity awards in the form of performance share units (PSUs) and restricted stock units (RSUs) under the Adient plc 2016 Omnibus Incentive Plan and provides directors with share awards under the Adient plc 2016 Director Share Plan. These plans were adopted in conjunction with the separation.

Total cash and non-cash stock-based compensation cost included in the consolidated statements of income was $11 million and $33 million for the three and nine months ended June 30, 2017, respectively, and $14 million and $20 million for the three and nine months ended June 30, 2016, respectively. Stock-based compensation expense prior to the separation was allocated to Adient based on the portion of Adient's equity compensation programs in which Adient employees participated.

In conjunction with the separation, previously outstanding stock-based compensation awards granted under JCI's equity compensation programs prior to the separation and held by certain executives and employees of Adient were adjusted and converted into new Adient equity awards using a formula designated to preserve the intrinsic value of the awards. Upon the separation on October 31, 2016, holders of JCI stock, stock options, RSUs, and SARs generally received one ordinary share of Adient for every ten ordinary shares of JCI held at the close of business on October 19, 2016, the record date of the distribution, and cash in lieu of fractional shares (if any) of Adient. Accordingly, certain executives and employees of Adient hold converted awards in both JCI and Adient shares subsequent to the separation. Converted awards retained the vesting schedule and expiration date of the original awards. Outstanding stock awards related to JCI stock are not included in Adient's dilutive share calculation.

The following tables present activity related to the conversion and granting of awards during the nine months ended June 30, 2017 along with the composition of outstanding and exercisable awards at June 30, 2017 for remaining JCI and new Adient awards.

Stock Options

A summary of stock option activity for the nine months ended June 30, 2017:



	Weighted Average Option Price		Shares Subject to Option		Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value (in millions)
Outstanding, September 30, 2016	$	32.42	2,336,028
Exercised	27.22		(6,280	)
Forfeited or expired	31.71		(3,330	)
Converted	33.28		169,125
Converted and outstanding on October 31, 2016	32.49		2,495,543
Granted	—		—
Exercised	27.13		(922,734	)
Forfeited or expired	26.10		(3,083	)
Outstanding, June 30, 2017	$	35.65	1,569,726		4.8	$	23
Exercisable, June 30, 2017	$	29.67	1,298,785		4.1	$	22

JCI outstanding, June 30, 2017	$	35.97	1,354,043		4.9	$	16
Adient outstanding, June 30, 2017	33.67		215,683		4.1	7
Total outstanding, June 30, 2017	$	35.65	1,569,726		4.8	$	23

JCI exercisable, June 30, 2017	$	29.28	1,107,731		4.2	$	16
Adient exercisable, June 30, 2017	31.90		191,054		3.6	6
Total exercisable, June 30, 2017	$	29.67	1,298,785		4.1	$	22

At June 30, 2017, Adient had approximately $0.3 million of total unrecognized compensation cost related to nonvested stock options granted. That cost is expected to be recognized over a weighted-average period of 1.1 years.

Stock Appreciation Rights

A summary of SAR activity for the nine months ended June 30, 2017:



	Weighted Average SAR Price		Shares Subject to SAR		Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value (in millions)
Outstanding, September 30, 2016	$	31.26	654,694
Exercised	29.68		(9,470	)
Converted	33.16		41,713
Converted and outstanding on October 31, 2016	31.40		686,937
Granted	—		—
Exercised	31.20		(50,266	)
Forfeited or expired	48.32		(4,757	)
Outstanding, June 30, 2017	$	31.29	631,914		3.7	$	11
Exercisable, June 30, 2017	$	27.95	594,610		3.5	$	10

JCI outstanding, June 30, 2017	$	31.22	571,699		3.7	$	9
Adient outstanding, June 30, 2017	32.01		60,215		3.8	2
Total outstanding, June 30, 2017	$	31.29	631,914		3.7	$	11

JCI exercisable, June 30, 2017	$	27.61	537,786		3.5	$	8
Adient exercisable, June 30, 2017	31.11		56,824		3.5	2
Total exercisable, June 30, 2017	$	27.95	594,610		3.5	$	10

Restricted Stock

A summary of the activity of nonvested restricted stock awards for the nine months ended June 30, 2017:



	Weighted Average Price		Shares/Units Subject to Restriction
Nonvested, September 30, 2016	$	46.42	1,320,448
Converted	48.06		135,026
Converted and nonvested on October 31, 2016	46.57		1,455,474
Granted	45.19		1,162,213
Vested	50.30		(281,084	)
Forfeited	44.65		(47,297	)
Nonvested, June 30, 2017	$	45.46	2,289,306

JCI nonvested, June 30, 2017	$	45.57	1,031,972
Adient nonvested, June 30, 2017	45.41		1,257,334
Total nonvested, June 30, 2017	$	45.46	2,289,306

At June 30, 2017, Adient had approximately $63 million of total unrecognized compensation cost related to nonvested restricted stock arrangements granted. That cost is expected to be recognized over a weighted-average period of 2.1 years.

Performance Share Awards

A summary of the activity of nonvested performance-based share unit awards for the nine months ended June 30, 2017:



	Weighted Average Price		Shares/Units Subject to PSU
Nonvested, September 30, 2016	$	—	—
Converted and nonvested on October 31, 2016	—		—
Granted	44.60		236,034
Vested	—		—
Forfeited	—		—
Nonvested, June 30, 2017	$	44.60	236,034

At June 30, 2017, Adient had approximately $17 million of total unrecognized compensation cost related to nonvested performance share units granted. That cost is expected to be recognized over a weighted-average period of 2.4 years.