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STOCK-BASED COMPENSATION
 12 Months Ended
Jun. 30, 2020
Share-based Payment Arrangement [Abstract]  
Share-based Payment Arrangement [Text Block]
STOCK-BASED COMPENSATION
The Company has two primary stock-based compensation programs under which we annually grant stock option, restricted stock unit (RSU) and performance stock unit (PSU) awards to key managers and directors.
In our main long-term incentive program, key managers can elect to receive options or RSUs. All options vest after three years and have a 10-year life. Exercise prices on options are set equal to the market price of the underlying shares on the date of the grant. Effective in fiscal year 2017, RSUs vest and settle in shares of common stock three years from the grant date. RSUs granted prior to fiscal year 2017 vest and settle in shares of common stock five years from the grant date.
Senior-level executives participate in an additional long-term incentive program that awards PSUs, which are paid in shares after the end of a three-year performance period subject to pre-established performance goals. Effective in fiscal year 2019, we added a Relative Total Shareholder Return (R-TSR) modifier to the PSUs, under which the number of shares ultimately granted is also impacted by the Company's actual shareholder return relative to our consumer products competitive peer set.
In addition to these long-term incentive programs, we award RSUs to the Company's non-employee directors and make other minor stock option and RSU grants to employees for which the terms are not substantially different from our long-term incentive awards.
A total of 150 million shares of common stock were newly authorized for issuance under the stock-based compensation plan approved by shareholders in 2019. Additionally, the number of shares available for award under the 2019 plan includes 37 million previously authorized but not awarded under the shareholders approved plan in 2014 plus any shares of Common Stock subject to outstanding awards under the 2014 Plan that are forfeited, cancelled or otherwise terminated without the issuance of shares of Common Stock as set forth in the 2019 Plan. A total of 166 million shares remain available for grant under the 2019 plan.
The Company recognizes stock-based compensation expense based on the fair value of the awards at the date of grant. The fair value is amortized on a straight-line basis over the requisite service period. Awards to employees eligible for retirement prior to the award becoming fully vested are recognized as compensation expense from the grant date through the date the employee first becomes eligible to retire and is no longer required to provide services to earn the
award. Stock-based compensation expense is included as part of Cost of products sold and SG&A in the Consolidated Statement of Earnings and includes an estimate of forfeitures, which is based on historical data. Total expense and related tax benefit were as follows:
Years ended June 30202020192018
Stock options$249  $246  $220  
RSUs and PSUs309  269  175  
Total stock-based expense$558  $515  $395  
Income tax benefit$97  $101  $87  

We utilize an industry standard lattice-based valuation model to calculate the fair value for stock options granted. Assumptions utilized in the model, which are evaluated and revised to reflect market conditions and experience, were as follows:
Years ended June 30202020192018
Interest rate1.1-1.4 %2.5-2.7 %1.9-2.9 %
Weighted average interest rate1.3 %2.6 %2.8 %
Dividend yield2.4 %3.0 %3.1 %
Expected volatility17 %17 %18 %
Expected life in years9.29.29.2

Lattice-based option valuation models incorporate ranges of assumptions for inputs and those ranges are disclosed in the preceding table. Expected volatilities are based on a combination of historical volatility of our stock and implied volatilities of call options on our stock. We use historical data to estimate option exercise and employee termination patterns within the valuation model. The expected life of options granted is derived from the output of the option valuation model and represents the average period of time that options granted are expected to be outstanding. The interest rate for periods within the contractual life of the options is based on the U.S. Treasury yield curve in effect at the time of grant.
A summary of options outstanding under the plans as of June 30, 2020 and activity during the year then ended is presented below:
OptionsOptions (in thousands)Weighted Average Exercise PriceWeighted Average Contract-ual Life in YearsAggregate Intrinsic Value
Outstanding, beginning of year164,741  $79.59  
Granted14,277  115.01  
Exercised(28,722) 70.34  
Forfeited/expired(424) 83.23  
OUTSTANDING, END OF YEAR149,872  $84.71  5.5$5,241  
EXERCISABLE102,702  $79.54  4.2$4,111  
The following table provides additional information on stock options:
Years ended June 30202020192018
Weighted average grant-date fair value of options granted$15.60  $13.60  $11.89  
Intrinsic value of options exercised1,455  1,770  500  
Grant-date fair value of options that vested217  180  209  
Cash received from options exercised2,019  3,381  1,245  
Actual tax benefit from options exercised298  221  127  
At June 30, 2020, there was $171 of compensation cost that has not yet been recognized related to stock option grants. That cost is expected to be recognized over a remaining weighted average period of 2.0 years.
A summary of non-vested RSUs and PSUs outstanding under the plans as of June 30, 2020 and activity during the year then ended is presented below:
RSUsPSUs
RSU and PSU awardsUnits (in thousands)Weighted Average Grant Date Fair ValueUnits (in thousands)Weighted Average Grant Date Fair Value
Non-vested at July 1, 20195,493  $84.00  1,295  $92.98  
Granted1,516  114.44  562  123.52  
Vested(2,376) 88.61  (799) 79.64  
Forfeited(135) 84.61  (10) 94.94  
Non-vested at June 30, 20204,498  $92.15  1,048  $117.02  

At June 30, 2020, there was $251 of compensation cost that has not yet been recognized related to RSUs and PSUs. That cost is expected to be recognized over a remaining weighted average period of 1.9 years. The total grant date fair value of shares vested was $264, $205 and $175 in 2020, 2019 and 2018, respectively.
The Company settles equity issuances with treasury shares. We have no specific policy to repurchase common shares to
mitigate the dilutive impact of options, RSUs and PSUs. However, we have historically made adequate discretionary purchases, based on cash availability, market trends and other factors, to offset the impacts of such activity.