Stock-based Compensation Plans

6 Months Ended

Mar. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]


ote 6.	Stock-based Compensation Plans

From time to time, we grant various forms of stock-based compensation, including stock options, restricted stock units, and both cash-settled and stock-settled performance-based restricted stock units ("PRSUs") under our Amended and Restated 2006 Mueller Water Products, Inc. Stock Incentive Plan (the “2006 Stock Plan”).

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 grant, 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 cash-settled PRSUs granted in 2013 will settle in November 2014. Outstanding cash-settled PRSUs had a fair value of $9.50 per share at March 31, 2014 and our liability for cash-settled PRSUs was $2.8 million at March 31, 2014.

The stock-settled PRSUs granted in 2013 and 2014 will settle in November 2015 and December 2016, respectively. The stock prices used to value the awards were $5.22 for the 2013 performance period and $8.52 for the 2014 performance period.

From time to time, we grant Phantom Plan awards under the Mueller Water Products, Inc. Phantom Plan (“Phantom Plan”). At March 31, 2014, the outstanding Phantom Plan awards had a fair value of $9.50 per award and our liability for Phantom Plan awards was $2.4 million.

We granted stock-based compensation awards under the 2006 Stock Plan, the Mueller Water Products, Inc. 2006 Employee Stock Purchase Plan and the Phantom Plan during the six months ended March 31, 2014 as follows.



	Number granted	Weighted average grant date fair value per instrument		Total grant date fair value (in millions)
Quarter ended December 31, 2013:
Restricted stock units	333,816	$	8.50	$	2.8
Employee stock purchase plan instruments	56,643	1.87		0.1
Phantom Plan awards	304,815	8.52		2.6
PRSUs	272,531	8.52		2.3
Quarter ended March 31, 2014:
Restricted stock units	47,196	8.58		0.4
Non-qualified stock options	86,904	5.13		0.4
Employee stock purchase plan instruments	52,980	1.80		0.1
				$	8.7

We recorded stock-based compensation expense in continuing operations of $2.0 million and $3.3 million during the three months ended March 31, 2014 and 2013, respectively, and $6.1 million and $5.6 million during the six months ended March 31, 2014 and 2013, respectively. At March 31, 2014, there was approximately $7.8 million of unrecognized compensation expense related to stock-based awards.

We exclude stock-based compensation instruments from the calculations of diluted earnings per share when inclusion of such instruments would have an antidilutive effect. We excluded 1,087,649 and 1,634,143 of such instruments from the calculations of diluted earnings per share for the quarters ended March 31, 2014 and 2013, respectively, and 1,159,708 and 1,539,933 for the six months ended March 31, 2014 and 2013, respectively.

- 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.

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