Equity Based Compensation

3 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Equity Based Compensation

Equity Based Compensation

In November 2019, the Board of Directors approved a grant of performance share units to all executives eligible to participate in the long-term incentive plan. Each performance share unit represents the right to receive one share of common stock or its cash equivalent upon achievement of certain performance and time vesting criteria. The fair value of each performance share unit was $25.25, which was the company’s share price on the grant date of December 1, 2019. The Board of Directors also approved a grant of 0.3 million restricted share units to these executives. The restricted share units vest at the earlier of three years from the date of grant or upon termination of employment with the company under certain circumstances. The fair value of each restricted share unit was $25.25, which was the company's share price on the grant date of December 1, 2019.

The actual number of performance share units that will vest depends upon the company’s performance relative to the established performance metrics for the three-year performance period of October 1, 2019 to September 30, 2022, measured at the end of the performance period. The number of performance share units that vest will depend on adjusted EBITDA margin, new business wins, free cash flow conversion and adjusted diluted earnings per share from continuing operations which are all weighted at 25%. The number of performance share units that vest will be between 0% and 200% of the grant date amount of 0.4 million performance share units.

For the three months ended December 31, 2019 and December 31, 2018, the dilutive impact of previously issued restricted shares, restricted share units and performance share units was 1.6 million and 2.1 million shares, respectively. For the three months ended December 31, 2019 and December 31, 2018, compensation cost related to restricted shares, restricted share units and performance share units was $3 million and $5 million, respectively.

For the three months ended December 31, 2019 and December 31, 2018, 0.9 million and 0.6 million shares, respectively, were included in the computation of diluted earnings per share, as the company's average stock price during these periods exceeded the conversion price for the 7.875 percent convertible notes due 2026.