Stock Incentive Plans

12 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

The Company's 2016 Omnibus Stock Incentive Plan ("2016 SIP") provides for the granting of share-based incentive awards in the form of nonqualified stock options, stock appreciation rights ("SARs"), restricted stock units ("RSUs") and restricted and unrestricted stock to officers and key employees of the Company. On October 23, 2019, our shareholders approved the Board of Directors' recommendation to increase the number of shares of common stock authorized for issuance under the 2016 SIP by 7.8 million shares. The amended aggregate number of shares of common stock authorized for total issuance under the 2016 SIP is 23.8 million. At June 30, 2020, 13.5 million common stock shares were available for future issuance.

We satisfy share-based incentive award obligations by issuing shares of common stock out of treasury, which have been repurchased pursuant to our share repurchase program described in Note 13, or through the issuance of previously unissued common stock.

SARs - Upon exercise, SARs entitle the participant to receive shares of common stock equal to the increase in value of the award between the grant date and the exercise date. SARs are exercisable from one to three years after the date of grant and expire no more than 10 years after grant.

The fair value of each SAR award granted in 2020, 2019 and 2018 was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:



	2020			2019			2018
Risk-free interest rate	1.5		%	2.8		%	1.9		%
Expected life of award	5.1 years			5.1 years			5.2 years
Expected dividend yield of stock	2.0		%	1.9		%	2.0		%
Expected volatility of stock	25.9		%	24.2		%	23.4		%
Weighted-average fair value	$	31.68		$	35.09		$	29.71

The risk-free interest rate was based on U.S. Treasury yields with a term similar to the expected life of the award. The expected life of the award was derived by referring to actual exercise and post-vesting employment termination experience. The expected dividend yield was based on our historical dividend rate and stock price over a period similar to the expected life of the award. The expected volatility of stock was derived by referring to changes in our historical common stock prices over a time-frame similar to the expected life of the award.

SAR activity during 2020 is as follows (aggregate intrinsic value in millions):



	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding June 30, 2019	5,749,455		$	119.29
Granted	815,035		$	158.90
Exercised	(1,341,539	)	$	91.37
Canceled	(38,981	)	$	161.10
Outstanding June 30, 2020	5,183,970		$	132.42	6.0 years	$	263.6
Exercisable June 30, 2020	3,644,468		$	120.28	5.0 years	$	229.6

A summary of the status and changes of shares subject to SAR awards and the related average price per share follows:



	Number of Shares		Weighted-Average Grant Date Fair Value
Nonvested June 30, 2019	1,661,198		$	31.58
Granted	815,035		$	31.68
Vested	(899,126	)	$	30.26
Canceled	(37,605	)	$	31.46
Nonvested June 30, 2020	1,539,502		$	32.41

During 2020, 2019 and 2018, we recognized stock-based compensation expense of $26,108, $26,568 and $27,422, respectively, relating to SAR awards. The Company derives a tax deduction measured by the excess of the market value over the grant price at the date stock-based awards are exercised. The related income tax benefit was credited to income tax expense.

At June 30, 2020, $10,364 of expense with respect to nonvested SAR awards has yet to be recognized and will be amortized into expense over a weighted-average period of approximately 14 months. The total fair value of shares vested during 2020, 2019 and 2018 was $27,209, $25,365 and $26,461, respectively.

Information related to SAR awards exercised during 2020, 2019 and 2018 is as follows:



	2020		2019		2018
Net cash proceeds	$	2,623	$	2,475	$	3,682
Intrinsic value	133,641		95,502		136,000
Income tax benefit	$	21,132	$	15,584	$	28,701
Number of shares surrendered	228,986		158,610		269,670

RSUs - RSUs constitute an agreement to deliver shares of common stock to the participant at the end of a vesting period. Generally, the RSUs granted to employees vest, and the underlying stock is issued ratably, over a three-year graded vesting period. Nonvested RSUs may not be transferred and do not have dividend or voting rights. For each nonvested RSU, recipients are entitled to receive a dividend equivalent, payable in cash or common shares, equal to the cash dividend per share paid to common shareholders.

The fair value of each RSU award granted in 2020, 2019 and 2018 was based on the fair market value of our common stock on the date of grant. A summary of the status and changes of shares subject to RSU awards for employees and the related average price per share follows:



	Number of Shares		Weighted-Average Grant Date Fair Value
Nonvested June 30, 2019	374,080		$	155.07
Granted	150,489		$	160.54
Vested	(158,823	)	$	147.20
Canceled	(15,173	)	$	162.41
Nonvested June 30, 2020	350,573		$	160.66

During 2020, 2019 and 2018, we recognized stock-based compensation expense of $25,560, $25,258 and $24,073, respectively, relating to RSU awards for employees. At June 30, 2020, $18,474 of expense with respect to nonvested RSU awards has yet to be recognized and will be amortized into expense over a weighted-average period of approximately 19 months. The total fair value of RSU awards vested during 2020, 2019 and 2018 was $23,380, $20,475 and $20,681, respectively. We recognized an income tax benefit of $1,037, $1,548 and $2,451 relating to the issuance of common stock for RSU awards that vested during 2020, 2019 and 2018, respectively.

Additionally, we granted RSUs with a one-year vesting period to non-employee members of the Board of Directors. Recipients receive a dividend equivalent payable in common shares, equal to the cash dividend per share paid to common shareholders. A summary of the status and changes of shares subject to Board of Directors RSU awards and the related average price per share follows:



	Number of Shares		Weighted-Average Grant Date Fair Value
Nonvested June 30, 2019	8,003		$	147.38
Granted	8,300		$	187.31
Vested	(8,041	)	$	147.38
Nonvested June 30, 2020	8,262		$	187.49

The fair value of each RSU award granted to the Board of Directors in 2020, 2019 and 2018 was based on the fair market value of our common stock on the date of grant. In 2020, 2019 and 2018, we recognized stock-based compensation expense of $1,434, $1,345, and $1,697, respectively, relating to these awards. During 2020, 2019 and 2018, we recognized an income tax benefit (cost) of $86, $(82) and $270, respectively related to the vesting of Board of Directors RSU awards. At June 30, 2020, $510 of expense with respect to nonvested RSU awards granted to the Board of Directors has yet to be recognized and will be amortized into expense over a weighted-average period of approximately four months.

LTIP - The Company's Long Term Incentive Plans ("LTIP") provide for the issuance of unrestricted stock to certain officers and key employees based on the attainment of certain goals relating to our revenue growth, earnings per share growth and return on invested capital during the three-year performance period.



Stock issued and surrendered for LTIP	2020		2019		2018
LTIP three-year plan	2017-18-19		2016-17-18		2015-16-17
Number of shares issued	279,469		293,136		308,278
Number of shares surrendered	132,449		134,169		139,918
Share value on date of issuance	$	134.95	$	183.00	$	176.39
Total value of shares issued	$	37,714	$	53,644	$	54,377

Under the Company's 2018-19-20 LTIP, a payout of unrestricted stock will be issued in April 2021.

The fair value of each LTIP award granted in 2020, 2019 and 2018 was based on the fair market value of our common stock on the date of grant. Beginning January 2019, we changed the terms of the LTIP plan allowing newly granted LTIP awards to earn a dividend equivalent unit, payable in common shares, equal to the cash dividend per share paid to common shareholders. These dividend equivalent units do not have dividend or voting rights and are subject to the same performance goals as the initial award granted. Since the revised terms of the LTIP were not applied retroactively, any nonvested LTIP awards granted prior to January 2019 are ineligible to earn dividend equivalent units. A summary of the status and changes of shares relating to the LTIP and the related average price per share follows:



	Number of Shares		Weighted-Average Grant Date Fair Value
Nonvested June 30, 2019	600,717		$	169.36
Granted	173,075		$	197.84
Vested	(226,081	)	$	149.52
Canceled	(8,652	)	$	174.29
Nonvested June 30, 2020	539,059		$	186.75

During 2020, 2019 and 2018, we recorded stock-based compensation expense of $58,273, $50,908 and $65,640, respectively, relating to the LTIP. During 2020, 2019 and 2018, we recognized an income tax (cost) benefit of $(1,251), $14,101 and $3,893, respectively, relating to the LTIP.