Stock-Based Compensation Plans (Tables)

12 Months Ended

Sep. 30, 2019

Share-based Payment Arrangement [Abstract]

Schedule of Stock-based Compensation Expense

The following is a summary of stock-based compensation expense recognized by the Company during the years ended September 30:

(In millions)	2019		2018		2017 (b)
Stock appreciation rights	$	1	$	2	$	3
Nonvested stock awards	8		9		5
Performance awards	1		1		2
Total stock-based compensation expense, pre-tax (a)	10		12		10
Tax benefit	(2)		(3)		(4)
Total stock-based compensation expense, net of tax	$	8	$	9	$	6

(a)Includes approximately $1 million in each period presented related to certain awards that are cash-settled and liability-classified; therefore, fair value is remeasured at the end of each reporting period until settlement.

(b)Stock-based compensation expense in fiscal 2017 includes $4 million that was allocated from Ashland prior to the Distribution.

Summary of Stock Appreciation Rights Activity

The following table summarizes the activity relative to SARs for the year ended September 30, 2019:

	Number of shares (in thousands)	Weighted average exercise price per share		Weighted average remaining term (in years)	Aggregate intrinsic value (in millions)
SARs outstanding as of September 30, 2018	1,798	$	18.54	6.7 years	$	6
Granted	240	$	20.37
Exercised	(185)	$	17.19		$	1
Forfeited	(38)	$	20.35
SARs outstanding as of September 30, 2019	1,815	$	18.88	6.2 years	$	6
SARs exercisable as of September 30, 2019	1,342	$	18.15	5.4 years	$	5

Summary of Fair Value Assumptions Utilized in Determining Value of Awards

Stock-based compensation expense for SARs was computed using the Black-Scholes option-pricing model to estimate the grant date fair value of new or modified awards with the following key assumptions:

	2019			2018			2017
Weighted average grant date fair value per share	$	5.36		$	5.56		$	7.44
Assumptions (weighted average)
Risk-free interest rate (a)	2.9		%	2.2		%	1.7		%
Expected dividend yield	1.5		%	0.9		%	0.9		%
Expected volatility (b)	26.8		%	23.3		%	22.8		%
Expected term (in years) (c)	5.88			5.88			7.45

(a)Based on the U.S. Treasury yield curve in effect at the time of grant or modification for the expected term of the award. The range of risk-free interest rates used for SARs converted at Distribution in fiscal 2017 was 1.1% to 1.9%.

(b)Due to the lack of historical data for Valvoline, expected volatility is based on the average of peer companies’ historical daily equity volatilities with look-back periods commensurate with the expected term. The range of expected volatility used for SARs converted at Distribution in fiscal 2017 was 21.5% to 24.4%.

(c)Due to the lack of historical data for Valvoline, the expected term is based on the mid-point between the vesting date and the end of the contractual term.

Summary of Nonvested Stock Award Activity

The following table summarizes nonvested share activity for the year ended September 30, 2019:

	Number of shares (in thousands)	Weighted average grant date fair value per share
Unvested shares as of September 30, 2018	1,278	$	23.07
Granted	345	$	20.41
Vested	(443)	$	22.62
Forfeited	(97)	$	21.52
Unvested shares as of September 30, 2019	1,083	$	21.52

Summary of Performance Share Activity

The following table summarizes performance award activity for the year ended September 30, 2019:

	Number of shares (in thousands)	Weighted average grant date fair value per share
Unvested shares as of September 30, 2018	327	$	22.64
Granted	195	$	21.22
Vested	(66)	$	30.66
Forfeited	(33)	$	21.80
Unvested shares as of September 30, 2019	423	$	22.31

Summary of Fair Value Assumptions Utilized in Monte Carlo Model to Determine Value of Awards

For market conditions, compensation cost is recognized regardless of whether the conditions are satisfied and based on the grant date fair value of new or modified awards using a Monte Carlo simulation valuation model using the following key assumptions:

	2019			2018			2017
Weighted average grant date fair value per share	$	21.22		$	23.82		$	18.44
Assumptions (weighted average)
Risk-free interest rates (a)	2.8		%	1.7		%	1.2		%
Expected dividend yield	1.3		%	1.0		%	1.0		%
Expected volatility (b)	26.8		%	24.2		%	21.0		%
Expected term (in years)	3.0			3.0			1.9

(a)Based on the U.S. Treasury yield curve in effect at the time of grant or modification for the expected term of the award. The range of risk-free interest rates used for performance awards was 1.6% to 1.8% in fiscal 2018 and 0.9% to 1.5% in fiscal 2017 for awards converted at Distribution.

(b)Due to the lack of historical data for Valvoline, expected volatility is based on the average of peer companies’ historical volatilities with look-back periods commensurate with the expected term. The range of expected volatility used for performance awards converted at Distribution in fiscal 2017 was 18.9% to 22.4%.