Stock-based Compensation Plans

3 Months Ended

Dec. 31, 2018

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

Stock-based Compensation Plans

We have granted various forms of stock-based compensation, including stock options, restricted stock units and performance-based restricted stock units (“PRSUs”) under our Amended and Restated 2006 Mueller Water Products, Inc. Stock Incentive Plan (the “2006 Stock Plan”).

A PRSU award represents a target number of units that may be paid out at the end of a multi-year award cycle consisting of a series of annual performance periods coinciding with our fiscal years. After we determine the financial performance targets related to PRSUs for a given performance period, typically during the first quarter of that fiscal year, we consider that portion of a PRSU award to be granted. Thus, each award consists of a grant in the year of award and grants in the designated following years. Settlements, in our common shares, will range from zero to two times the number of PRSUs granted, depending on our financial performance against the targets.

We awarded 332,875 stock-settled PRSUs in the quarter ended December 31, 2018, which are scheduled to settle in 3 years.

We issued 181,065 shares and 146,061 shares of common stock during the quarters ended December 31, 2018 and 2017, respectively, to settle PRSUs.

In addition to the PRSU activity, 143,809 restricted stock units vested during the quarter ended December 31, 2018.

We have granted cash-settled Phantom Plan instruments under the Mueller Water Products, Inc. Phantom Plan (“Phantom Plan”). At December 31, 2018, the outstanding Phantom Plan instruments had a fair value of $9.10 per instrument and our liability for Phantom Plan instruments was $0.6 million.

We granted stock-based compensation awards under the 2006 Stock Plan, the Mueller Water Products, Inc. 2006 Employee Stock Purchase Plan and the Phantom Plan during the three months ended December 31, 2018 as follows.



	Number granted	Weighted average grant date fair value per instrument		Total grant date fair value (in millions)
Restricted stock units	147,409	$	10.53	$	1.6
Employee stock purchase plan instruments	45,464	2.30		0.1
Phantom Plan awards	168,380	10.53		1.8
PRSUs: 2019 award	110,595	10.53		1.2
2018 award	49,236	10.53		0.5
2017 award	31,229	10.53		0.3
				$	5.5

Operating income included stock-based compensation expense of $1.7 million and $2.4 million during the three months ended December 31, 2018 and 2017, respectively. At December 31, 2018, there was approximately $9.2 million of unrecognized compensation expense related to stock-based compensation arrangements, and there were 279,024 PRSUs that have been awarded for the 2020 and 2021 performance periods, for which performance goals have not been set.

We excluded 165,467 and 70,996 of stock-based compensation instruments from the calculations of diluted earnings per share for the quarters ended December 31, 2018 and 2017, respectively, since their inclusion would have been antidilutive.