Share-based compensation

3 Months Ended

Oct. 31, 2025

Share-Based Payment Arrangement [Abstract]

The Company grants share-based compensation awards that can be broadly characterized by the underlying vesting conditions as follows:

•Time vested, restricted stock units (“RSU”) vest over time. RSU awards granted prior to fiscal 2025 cliff vest, typically at the end of three years. RSU awards granted in fiscal 2025 and beyond will vest in equal, annual installments over three years. The fair value of these awards is based on the closing share price on the date of grant.

•Multiple metric performance stock units granted to certain members of management (“PSU-EX”) typically vest following three-year performance cycles. The number of shares issued will vary based upon adjusted EPS growth (diluted), return on capital employed (“ROCE”) and relative total shareholder return (“rTSR”). The fair value of awards vesting based upon EPS growth (diluted) and ROCE are equal to the closing share price on the date of grant and the fair value of rTSR awards are determined using a Monte-Carlo simulation.

•Single metric performance stock units (“PSU”) typically vest following three-year performance cycles. The number of shares issued will vary based upon the Company’s performance against an adjusted operating profit measure. The Company did not issue new PSUs in the current quarter.

The following table summarizes the share-based incentive awards activity for the three months ended October 31, 2025:


	Number of shares	Weighted average grant date fair value
Outstanding as of July 31, 2025	636,239	$159.58
RSU awards granted	95,641	234.31

PSU-EX granted	34,884	282.98
Share adjustments from modification(1)	193,618	224.13
Share adjustments based on performance	84,585	199.13
Vested	(338,550)	176.54
Forfeited	(7,652)	172.21
Outstanding as of October 31, 2025	698,765	$190.20

(1)In September 2025, the Company’s Compensation Committee used discretion to adjust the payout percentage for certain performance stock awards granted in fiscal 2023 that were not probable of vesting such that they became probable of vesting. This modification resulted in $43 million of share-based compensation expense and impacted approximately 530 grantees.

The following table relates to RSU, PSU and PSU-EX awards activity:


			Three months ended
			October 31,
(In millions, except per share amounts)			2025
Fair value of awards vested			$80
Weighted average grant date fair value per share granted			$247.32

The following table relates to all share-based compensation awards:


	Three months ended
	October 31,
(In millions)	2025	2024
Share-based compensation expense (within SG&A)	$64	$11
Income tax benefit	16	3

Total unrecognized share-based compensation expense for all share-based payment plans was $96 million at October 31, 2025, which is expected to be recognized over a weighted average period of 2.1 years.

Stock Options

In October 2025, the Company granted 25,135 stock options with an exercise price equal to the closing share price of the Company's common stock on the last trading day prior to the date of grant. These options vest and become exercisable over three years, in equal, annual installments beginning one year from the date of grant, and expire 10 years from the date of grant. The fair value of the Company's stock options was estimated on the date of grant using the Black-Scholes option-pricing model. As of October 31, 2025, the Company had 63,523 total stock options outstanding. The share-based compensation expense of stock options is not material.