8. Share-Based Compensation Plans

Effective January 1, 2013, eligible individuals were invited to participate in the Senior Management Free Cash Flow Plan (the “Plan”). Eligible individuals include any employee, consultant or officer of the Company or any of its affiliates who is selected by the Company’s Compensation Committee to participate in the Plan. Under the Plan, participants are allocated a specific portion of the Company’s free cash flow to use to purchase the equivalent of Company stock through the acquisition of deferred equity units. Participants also receive a grant of profit interests in a purposely established LLC holding company (the “LLC”) that represent an economic entitlement to future appreciation over an equivalent number of shares of Company stock (“matching units”). The Company’s Board of Directors authorized the issuance of up to 82.1918 shares of the Company’s common stock pursuant to the Plan, 41.0959 in respect of deferred equity units and 41.0959 in respect of matching units. The LLC currently owns 55 issued and outstanding shares. Each deferred equity unit is equivalent to 1/10,000 of a share of Company stock. The Company will allocate units to active participants each Plan year at the time that annual free cash flow bonuses for such Plan year are determined and may grant unallocated units under the Plan to certain members of current or future management. At the time that annual free cash flow bonuses for such Plan year are determined, a participant shall be credited a number of deferred equity units based on their respective allocation divided by $107.13 (the grant date intrinsic value) and an equal number of the related matching units will be allocated. The redemption price of the deferred equity units will equal the fair market value of a fractional share of the Company’s stock on the date of the settlement and the redemption price for the matching units will equal the excess, if any, of the then fair market value of one Company fractional share over the grant date intrinsic value of one fractional share.

The Company accounts for share-based payments as required by FASB ASC Topic 718, Compensation-Stock Compensation (“ASC 718”). ASC 718 requires all share-based payments to employees to be recognized as compensation expense. Under the recognition provision of ASC 718, liability classified share-based compensation costs are measured each reporting date until settlement. The Company’s policy is to measure share-based compensation costs using the intrinsic value method instead of fair value as it is not practical to estimate the volatility of its share price.

For accounting purposes, the grant date was established at the point the Company and the participant reached a mutual understanding of the key terms and conditions, in this case the date at which the participant accepted the invitation to participate in or increase their allocation in the Plan. For accounting purposes, deferred equity units are deemed to generally vest between one and seven years and matching equity units granted under the Plan are deemed to vest two years after the allocation to the participant’s account. All deferred and matching equity units will be settled in three installments in December 2018, 2019, and 2020. The deferred units will be settled at the participant’s election for cash equal to the fair market value or one fractional company share. The matching units will be settled for cash equal to the redemption price. In December 2020, all outstanding units become mandatorily redeemable at the then redemption price. Due to this mandatory redemption clause, the Company has classified the awards under the Plan as liability awards. Dividend distributions, if any, are also paid out on vested deferred equity units and are calculated on the same basis as the Company’s common shares. The Company has applied a graded (tranche-by-tranche) attribution method and expenses share-based compensation on an accelerated basis over the vesting period of the share award.

The following is a summary of the Company’s share awards for the six months ended March 31, 2014:

	Deferred Equity Units			Matching Equity Units			Deferred Equity Units Weighted-Average Fair Value		Matching Equity Units Weighted-Average Intrinsic Value		Deferred Equity Units Weighted- Average Grant-Date Intrinsic Value		Matching Equity Units Weighted- Average Grant-Date Intrinsic Value
Unvested units at September 30, 2013		24			24		$	134.62	$	27.49	$	107.13	$	—
Granted		2			2			134.62		—		107.13		—
Vested		(5	)		—			134.62		27.49		107.13		—
Forfeited		(1	)		(1	)		134.62		27.49		107.13		—
Unvested units at March 31, 2014		20			25			134.62		25.20		107.13		—

The weighted-average grant date intrinsic value of deferred equity unit awards for the six months ended March 31, 2014 was $107.13. The fair value of these deferred equity units at March 31, 2014 was $134.62.

Compensation Expense

The Company did not recognize a material amount of non-cash compensation expense related to its share-based compensation plan for the three months ended March 31, 2014. The Company recognized non-cash compensation expense related to its share-based compensation plan of $4 million for the three months ended March 31, 2013. Of the $4 million for the three months ended March 31, 2013, $3 million related to awards for employees and $1 million related to awards for non-employees. The Company recognized non-cash compensation expense related to its share-based compensation plan of $3 million and $4 million for the six months ended March 31, 2014 and March 31, 2013, respectively. Of the $3 million for the six months ended March 31, 2014, $2 million related to awards for employees and $1 million related to awards for non-employees. Of the $4 million for the six months ended March 31, 2013, $3 million related to awards for employees and $1 million related to awards for non-employees.

In addition, as of March 31, 2014, the Company had approximately $15 million of unrecognized compensation costs related to its unvested share awards. The remaining weighted average period over which total compensation related to unvested awards is expected to be recognized is 4 years.