Share Based Compensation

12 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Equity based incentive and performance compensation awards provided to employees, directors, officers and consultants were issued pursuant to the following awards plans:

•HRG Group, Inc. 2011 Omnibus Equity Award Plans as approved and amended by the HRG Legacy stockholders (the "HRG Equity Plan").

•Harbinger Group, Inc. 2014 Warrant Plan, as approved by the HRG Legacy stockholders (the "HRG Warrant Plan").

•Spectrum Brands Holdings, Inc. 2011 Omnibus Equity Awards Plan as approved and amended by the Spectrum Legacy stockholders, (the "Spectrum Equity Plan").

•Spectrum Brands Holdings, Inc. 2020 Omnibus Equity Plan, as approved by the Spectrum stockholders (the "New 2020 Equity Plan").

The following is a summary of the authorized and available shares per the respective plans:


(number of shares, in millions)	Authorized	Available
HRG Group 2011 Omnibus Equity Award Plans	2.7	0.8
Harbinger Group, Inc. 2014 Warrant Plan	3.0	—
Spectrum Brands Holdings, Inc. 2011 Omnibus Equity Awards Plan	7.1	0.2
Spectrum Brands Holdings, Inc. 2020 Omnibus Equity Plan	1.2	1.2

Effective at the close of the Spectrum Merger, each stock option, warrant and restricted stock award granted under the HRG Equity Plan and HRG Warrant Plan that was outstanding and unvested immediately prior to the closing became fully vested and exercisable. Each exercisable award that was unexercised was adjusted (including to give effect to the reverse stock split) and remains outstanding, subject to the same terms and conditions as applied in the corresponding awards. Each restricted stock award became fully vested and treated as a share of HRG common stock for purposes of the reverse stock split and Spectrum Merger.

Further, effective at the close of the Spectrum Merger, each restricted stock award, restricted stock unit and performance stock unit under the Spectrum Equity Plan, whether vested or unvested, were assumed by SBH and automatically converted into a corresponding equity-based award in SBH with the right to hold or acquire shares of common stock equal to the number of shares of Spectrum Legacy common stock previously underlying such award. Each new award is subject to the same terms and conditions as the corresponding Spectrum Legacy award. SBH assumed all rights and obligation in respect of each equity-based plan of Spectrum Legacy.

Share based compensation expense is recognized as General and Administrative Expenses on the Consolidated Statements of Income. The following is a summary of the share based compensation expense for the years ended September 30, 2020, 2019 and 2018:


(in millions)	2020		2019		2018
SBH	$	37.7	$	49.2	$	11.9
SB/RH	$	36.4	$	47.6	$	8.8

The Company measures share based compensation expense of its Restricted Stock Units (“RSUs”) based on the fair value of the awards, as determined based on the market price of the Company’s shares of common stock on the grant date and recognized these costs on a straight-line basis over the requisite period of the awards. Certain RSUs are performance-based awards that are dependent upon achieving specified financial metrics over a designated period of time.

The following is a summary of the RSU activity for the years ended September 30, 2020, 2019 and 2018:


	SBH					SB/RH
(in millions, except per share data)	Shares	Weighted Average Grant Date Fair Value		Fair Value at Grant Date		Shares	Weighted Average Grant Date Fair Value		Fair Value at Grant Date
At September 30, 2017	0.8	$	114.67	$	87.2	0.7	$	116.32	$	82.4
Granted	0.4	102.96		45.9		0.4	102.92		44.4
Forfeited	(0.1)	115.08		(8.5)		(0.1)	115.08		(8.5)
Vested	(0.5)	113.07		(55.6)		(0.4)	114.07		(51.1)
At September 30, 2018	0.6	107.71		69.0		0.6	108.75		67.2
Granted	1.5	53.11		81.4		1.5	52.82		79.8
Forfeited	(0.7)	92.76		(63.7)		(0.7)	93.05		(63.5)
Vested	(0.2)	83.47		(19.7)		(0.2)	82.37		(18.5)
At September 30, 2019	1.2	53.58		67.0		1.2	53.22		65.0
Granted	0.9	61.72		55.6		0.9	61.68		54.3
Forfeited	(0.1)	60.79		(4.0)		(0.1)	60.79		(3.9)
Vested	(0.6)	57.80		(39.3)		(0.6)	57.29		(37.7)
At September 30, 2020	1.4	$	56.41	$	79.3	1.4	$	56.33	$	77.7


	SBH					SB/RH
(in millions, except per share data)	Units	Weighted Average Grant Date Fair Value		Fair Value at Grant Date		Units	Weighted Average Grant Date Fair Value		Fair Value at Grant Date
Time-based grants
Vesting in less than 24 months	0.3	$	62.33	$	18.6	0.3	$	62.25	$	17.3
Vesting in more than 24 months	0.1	62.80		8.4		0.1	62.80		8.4
Total time-based grants	0.4	$	62.48	$	27.0	0.4	$	62.43	$	25.7
Performance-based grants
Vesting in less than 24 months	0.1	53.19		4.8		0.1	53.19		4.8
Vesting in more than 24 months	0.4	62.88		23.8		0.4	62.88		23.8
Total performance-based grants	0.5	$	61.03	$	28.6	0.5	$	61.03	$	28.6
Total grants	0.9	$	61.72	$	55.6	0.9	$	61.68	$	54.3

Beginning in the year ended September 30, 2019, the Company provided to certain employees RSU grants issued under a Long-Term Incentive Plan (“LTIP”), with a 3-year, cliff vesting schedule and having both performance conditions dependent upon achieving specified financial targets (adjusted EBITDA, return on equity, and adjusted free cash flow) and time-based service. The Company also provided for bridge awards, that are special awards to certain employees, for transitioning to the LTIP from previous equity incentive compensation plans. Bridge awards vest annually, on November 21, 2019 and November 21, 2020, and have both performance conditions dependent upon achieving specified financial targets in fiscal year 2019 and 2020, respectively, (adjusted EBITDA and adjusted free cash flow) and time-based service conditions. Bridge awards are payable in either RSUs or cash, or both, based upon an employee election. Bridge awards elected to be payable in RSU are recognized as equity awards and included as a component of share-based compensation expense.

Additionally, the Company regularly issues individual RSU awards under its equity plan to its Board members and individual employees for recognition, incentive, or retention purposes, when needed, which are primarily conditional upon time-based service conditions and included as a component of share-based compensation. In addition to RSU awards, the Company also provides for a portion of its annual management incentive compensation plan ("MIP") to be paid in common stock of the Company, in lieu of cash payment, and is recognized as a liability plan. Share based compensation expense associated with the annual MIP was $16.9 million and $9.5 million for the years ended September 30, 2019 and 2018, respectively. During the year ended September 30, 2020, the Company made a change to our annual MIP payout that previously provided for the issuance of stock for a designated pool of recipients in lieu of cash and will instead be fully funded through cash distribution with no stock issuance. As a result, there was no portion of annual MIP to paid in common stock for the year ended September 30, 2020.

As of September 30, 2020, the remaining unrecognized pre-tax compensation cost for SBH and SB/RH is $34.0 million.

HRG Legacy Equity Plans

The following is a summary of HRG stock option awards, warrants, and restricted stock awards during the years ended September 30, 2020, 2019, and 2018:


	Stock Options					Warrants					Restricted Stock Awards
(in millions, except per share data)	Options	Weighted Average Exercise Price		Weighted Average Grant Date Fair Value		Units	Weighted Average Exercise Price		Weighted Average Grant Date Fair Value		Units	Weighted Average Exercise Price		Fair Value at Grant Date
As of September 30, 2017	4.0	$	9.69	$	3.88	0.6	$	13.13	$	3.22	0.1	$	13.36	$	1.9
Granted	—	—		—		—	—		—		0.1	16.85		0.4
Exercised	(2.5)	8.38		3.33		(0.6)	13.13		3.22		(0.2)	13.85		2.3
As of As of As of July 13, 2018	1.5	$	11.80	$	4.78	—	$	—	$	—	—	$	—	$	—
Vested and exercisable at September 30, 2020	0.2	$	73.96	$	4.82

During the year ended September 30, 2018, HRG stock option awards with a fair value $0.8 million vested. The intrinsic value of HRG share options exercised during the year ended September 30, 2018 was $21.5 million which HRG received $19.9 million in cash settlement. As of September 30, 2020, there are $0.2 million vested and exercisable HRG options outstanding with a weighted average exercise price of $73.96, as converted due to the reverse stock split to facilitate the Spectrum Merger.

HRG measures shared based compensation expense of its restricted stock awards based on the fair value of the awards, as determined based on the market price of the HRG shares of common stock on the grant date and recognizes these costs on a straight-line basis over the requisite period of the awards. There is no remaining unrecognized pre-tax compensation cost associated with HRG share-based awards as of September 30, 2020.