Share-Based Compensation (Tables)

12 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Compensation Cost Relating to Share-Based Payments

The amounts and location of compensation cost relating to share-based payments included in consolidated statements of income is as follows:

(Millions of dollars)	2014		2013		2012
Cost of products sold	$	23	$	20	$	18
Selling and administrative expense		74		66		59
Research and development expense		16		14		12
	$	113	$	100	$	89

Assumptions for Estimation of Fair Values of Stock Appreciation Rights Granted During Reporting Periods

The fair value was estimated on the date of grant using a lattice-based binomial option valuation model that uses the following weighted-average assumptions:

	2014	2013	2012
Risk-free interest rate	2.31%	1.33%	1.67%
Expected volatility	19.0%	21.0%	22.0%
Expected dividend yield	2.00%	2.60%	2.50%
Expected life	7.8 years	8.0 years	7.9 years
Fair value derived	$19.90	$12.08	$12.61

Summary of SARs Outstanding

A summary of SARs outstanding as of September 30, 2014 and changes during the year then ended is as follows:

	SARs (in thousands)			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (Millions of dollars)
Balance at October 1		8,594		$	73.52
Granted		1,073			108.89
Exercised		(1,728	)		72.56
Forfeited, canceled or expired		(87	)		80.30
Balance at September 30		7,852		$	78.49		6.13	$	277
Vested and expected to vest at September 30		7,562		$	78.16		6.06	$	270
Exercisable at September 30		4,950		$	73.40		4.98	$	200

Summary of Stock Options Outstanding

A summary of stock options outstanding as of September 30, 2014 and changes during the year then ended is as follows:

	Stock Options (in thousands)			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (Millions of dollars)
Balance at October 1		435		$	49.74
Exercised		(337	)		49.43
Forfeited, canceled or expired		(23	)		38.78
Balance at September 30		74		$	54.57		0.15	$	4
Vested at September 30		74		$	54.57		0.15	$	4
Exercisable at September 30		74		$	54.57		0.15	$	4

Summary of Performance-Based Restricted Stock Units Outstanding

A summary of performance-based restricted stock units outstanding as of September 30, 2014 and changes during the year then ended is as follows:

	Stock Units (in thousands)			Weighted Average Grant Date Fair Value
Balance at October 1		1,651		$	74.15
Granted		382			110.58
Distributed		(80	)		76.64
Forfeited or canceled		(698	)		77.06
Balance at September 30(A)		1,255		$	83.47
Expected to vest at September 30(B)		526		$	79.98

(A) Based on 200% of target payout.

(B) Net of expected forfeited units and units in excess of the expected performance payout of 84 thousand and 645 thousand shares, respectively.

Summary of Time-Vested Restricted Stock Units Outstanding

A summary of time-vested restricted stock units outstanding as of September 30, 2014 and changes during the year then ended is as follows:

	Stock Units (in thousands)			Weighted Average Grant Date Fair Value
Balance at October 1		2,787		$	71.81
Granted		904			102.74
Distributed		(407	)		75.80
Forfeited or canceled		(270	)		77.67
Balance at September 30		3,015		$	80.03
Expected to vest at September 30		2,829		$	79.70