Employee Benefit Plans

6 Months Ended

Mar. 31, 2024

Compensation Related Costs [Abstract]

Compensation Related Costs, General

EMPLOYEE BENEFIT PLANS

Stock-Based Compensation

The Company’s Stock Incentive Plan provides for the granting of stock options and restricted stock units to executive officers, other key employees and non-management directors. Restricted stock unit (RSU) awards may be based on performance (performance-based) or on service over a requisite time period (time-based). RSU equity awards represent the contingent right to receive one share of the Company’s common stock per RSU if the vesting conditions and/or performance criteria are satisfied. The RSUs have no dividend or voting rights until vested.

In October 2023, the Company granted 277,779 performance-based RSUs to its executive officers. This grant was subsequently modified in December 2023 to change the performance criteria to total shareholder return, return on assets and operating margin. The number of units that ultimately vest depends on the Company’s relative position as compared to its peers in achieving each of the performance criteria and can range from 0% to 200% of the number of units granted. These awards vest at the end of a three-year performance period ending September 30, 2026. The grant date fair value of these equity awards was $146.72 per unit. Compensation expense related to this grant was $6.8 million in the six months ended March 31, 2024 based on an estimate of the Company’s performance against its peer group, the elapsed portion of the performance period and the grant date fair value of the award.

During the six months ended March 31, 2024, the Company granted approximately 660,000 time-based RSUs to approximately 1,460 recipients, including executive officers, other key employees and non-management directors. The weighted average grant date fair value of these equity awards was $147.58 per unit, and they vest annually in equal installments over periods of three to five years. Compensation expense related to these grants was $3.5 million and $17.4 million in the three and six months ended March 31, 2024, respectively. Compensation expense in the three and six months ended March 31, 2024 included $2.6 million and $16.4 million, respectively, of expense recognized for employees that were retirement eligible on the date of grant.

Total stock-based compensation expense related to the Company’s performance-based and time-based RSUs was $22.1 million and $59.4 million during the three and six months ended March 31, 2024, respectively, compared to $26.0 million and $47.1 million during the three and six months ended March 31, 2023.