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Stock-based Compensation Plans
 6 Months Ended
Mar. 31, 2020
Share-based Payment Arrangement, Noncash Expense [Abstract]  
Share-based Payment Arrangement [Text Block] Stock-based Compensation Plans
We have granted various forms of stock-based compensation, including stock options, restricted stock units, performance-based restricted stock units (“PRSUs”) and market-based restricted stock units (“MRSUs”) under our Amended and Restated 2006 Mueller Water Products, Inc. Stock Incentive Plan (the “2006 Stock Plan”).
A PRSU award consists of a number of units that may be paid out at the end of a multi-year award cycle consisting of a series of annual performance periods coinciding with our fiscal years. After we establish the financial performance targets related to PRSUs for a given performance period, typically during the first quarter of that fiscal year, we consider that portion of a PRSU award to be granted. Thus, each award consists of a grant in the year of award and grants in the designated following years. Settlements, in our common shares, will range from zero to two times the number of PRSUs granted, depending on our financial performance against the targets.
A MRSU award represents a target number of units that may be paid out at the end of a three-year award cycle based on a calculation of the Company's relative total shareholder return (“TSR”) performance as compared with a selected peer group's TSR. Settlements, in our common shares, will range from zero to two times the number of MRSUs granted, depending on our TSR performance versus the peer group.
The table below provides information regarding MRSU awards, which were valued using Monte Carlo simulations on the dates the units were granted.
December 3, 2019January 28, 2020February 24, 2020
Fair Value at grant date$14.94  $16.76  $18.17  
Units granted147,213  2,763  7,498  
Variables used in determining grant date fair value:
Dividend yield  1.87 %1.76 %1.73 %
Risk-free rate  1.53 %1.44 %1.23 %
Expected term (in years) 2.832.672.60
We awarded 209,966 stock-settled PRSUs and 157,474 MRSUs in the six months ended March 31, 2020 that are scheduled to settle in 3 years.
We issued 93,647 shares and 181,065 shares of common stock during the six months ended March 31, 2020 and 2019, respectively, to settle PRSUs that vested during those periods.
In addition to the PRSU activity, we issued 114,691 and 246,994 shares of common stock for restricted stock units vested during the three and six months ended March 31, 2020, respectively.
We have granted cash-settled Phantom Plan instruments under the Mueller Water Products, Inc. Phantom Plan (“Phantom Plan”). At March 31, 2020, the outstanding Phantom Plan instruments had a fair value of $8.01 per instrument and our liability for Phantom Plan instruments was $1.0 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, 2020 as follows.
Number grantedWeighted average grant date fair value per instrumentTotal grant date fair value
(in millions)
Quarter ended December 31, 2019  
    Restricted stock units  162,433  $11.26  $1.8  
    Employee stock purchase plan instruments  39,492  1.97  0.1  
    Phantom Plan awards  188,973  11.26  2.1  
    PRSUs: 2020 award  65,428  11.26  0.7  
    2019 award  102,203  11.26  1.2  
    2018 award  44,451  11.26  0.5  
    MRSUs  147,213  14.94  2.2  
Quarter ended March 31, 2020  
    Restricted stock units  118,684  12.14  1.4  
    Employee stock purchase plan instruments  53,876  2.09  0.1  
    PRSUs: 2020 award  13,682  12.09  0.2  
    MRSUs  10,261  17.79  0.2  
$10.5  
Operating income included stock-based compensation expense of $1.3 million and $1.0 million during the three months ended March 31, 2020 and 2019, respectively and $3.2 million and $2.7 million during the six months ended March 31, 2020 and 2019, respectively. At March 31, 2020, there was approximately $10.4 million of unrecognized compensation expense related to stock-based compensation arrangements and there were 232,262 PRSUs that have been awarded for the 2021 and 2022 performance periods for which performance goals have not been set.
We excluded 267,697 and 202,245 of stock-based compensation instruments from the calculations of diluted earnings per share for the quarters ended March 31, 2020 and 2019, respectively, and 184,296 and 1,077,983 for the six months ended March 31, 2020 and 2019, respectively, since their inclusion would have been antidilutive.