STOCK INCENTIVE PLAN

12 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

STOCK INCENTIVE PLAN

5. STOCK INCENTIVE PLAN

On November 21, 2019, the Company's board of directors approved the Atkore International Group Inc. 2020 Omnibus Incentive Plan (the “2020 Omnibus Incentive Plan”), which was subsequently approved by the Company’s shareholders on January 30, 2020. The 2020 Omnibus Incentive Plan provides for stock purchases and grants of other equity awards, including non-qualified stock options, stock purchase rights, restricted stock, restricted stock units (“RSUs”), performance shares, performance stock units (“PSUs”), stock appreciation rights, dividend equivalents and other stock-based awards to directors, officers, other employees and consultants. The 2020 Omnibus Incentive Plan replaces and succeeds the Atkore International Group Inc. 2016 Omnibus Incentive Plan (the “2016 Omnibus Incentive Plan”). The Company no longer grants awards from the 2016 Omnibus Incentive Plan. Awards previously granted under the 2016 Omnibus Incentive Plan were unaffected by the termination. A maximum of 2.2 million shares of common stock is reserved for issuance under the 2020 Omnibus Incentive Plan. All stock option awards have a ten year life. All share-based awards are expected to be fulfilled with new shares of common stock. Stock compensation expense is included in selling, general and administrative in the Company's consolidated statements of operations and was $17,047, $13,064 and $11,798 for fiscal years 2021, 2020 and 2019, respectively. The total income tax benefit recognized for share-based compensation arrangements was $2,073, $3,014 and $2,949 for fiscal years 2021, 2020 and 2019, respectively.

    Stock Options

In accordance with ASC 718 Compensation - Stock Compensation, stock compensation expense for stock options is recorded on a straight-line basis over the requisite service period (generally the vesting period), net of actual forfeitures based on the grant-date fair value of the option under the equity accounting method.

The assumptions used in the Black-Scholes option pricing model to value the options granted were as follows:    

	Fiscal Year Ended
	September 30, 2021		September 30, 2020		September 30, 2019
Expected dividend yield	—	%	—	%	—	%
Expected volatility	59	%	36	%	45	%
Range of risk-free interest rates	0.52	%	1.67	%	2.94% - 3.00%
Range of expected option lives	6 years		6 years		6 to 10 years

Dividends are not paid on the Company’s common stock. For grants during fiscal year ended 2021 and 2020, the expected volatility is based on the Company’s stock price volatility. For grants and modifications during fiscal years ended 2019, expected volatility is based on historical volatilities of comparable companies. The risk-free interest rate is based on the United States Treasury yield curve in effect at the time of the grant for periods corresponding with the expected life of the options. The expected life of options is estimated using the simplified method due to limited historical exercise activity. The Company does not estimate forfeitures, which are accounted for as they occur.

Stock option activity for the period September 30, 2018 to September 30, 2021 was as follows: 

	Shares (in thousands)	Weighted-Average Exercise Price		Weighted-Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)		Weighted-Average Remaining Contractual Term (in years)
Outstanding as of September 30, 2018	2,605	9.91				$	43,302
Granted	342	23.45		$	11.35
Exercised	(985)	8.62				$	16,453
Forfeited	(126)	12.64
Outstanding as of September 30, 2019	1,836	12.94				$	31,957
Granted	67	37.24		$	14.05
Exercised	(508)	8.55				$	14,548
Forfeited	(20)	19.13
Outstanding as of September 30, 2020	1,375	15.66				$	11,443
Granted	72	29.80		$	13.46
Exercised	(678)	12.30				$	33,075
Forfeited	—	—
Outstanding as of September 30, 2021	769	19.95				51,441		5.64
Exercisable as of September 30, 2021	484	$	15.25			$	34,715	4.41

As of September 30, 2021, there was $786 of total unrecognized compensation expense related to non-vested options granted expected to be recognized over a weighted-average period of approximately 5.6 years. The total fair value of shares vested during fiscal years 2021, 2020 and 2019 was $1,465, $1,894 and $3,038, respectively.

Cash received from stock option exercises for the fiscal years 2021, 2020 and 2019 was $8,535, $4,347 and $7,374, respectively. The actual tax benefit for the tax deductions from stock option exercises totaled $8,228, $3,681 and $4,031, respectively, for fiscal years 2021, 2020 and 2019. The Company does not settle any option exercises, under its current stock incentive plan, in cash.

    Restricted Stock Units

Generally, RSUs granted under the 2020 Omnibus Incentive Plan vest ratably over three years. The fair value of RSU grants was based on the closing price of the Company's common stock on the date of grant. RSU compensation expense is recorded on a straight-line basis over the remaining vesting period.

Changes to the Company’s nonvested RSU awards for the year ended September 30, 2021 were as follows:

	Shares (in thousands)	Weighted-average grant-date fair value
Nonvested as of September 30, 2018	650	$	19.91
Granted	361	19.23
Vested	(195)	21.51
Forfeited	(142)	18.52
Nonvested as of September 30, 2019	674	19.37
Granted	166	37.24
Vested	(403)	19.43
Forfeited	(32)	22.29
Nonvested as of September 30, 2020	405	26.44
Granted	218	32.01
Vested	(229)	23.78
Forfeited	(10)	28.48
Nonvested as of September 30, 2021	384	$	30.30

As of September 30, 2021, there was $5,589 of total unrecognized compensation expense related to non-vested RSUs granted, expected to be recognized over a weighted-average period of approximately 1.40 years. The total fair value of RSUs vested during fiscal years 2021, 2020 and 2019 was $8,897, $14,513 and $4,271, respectively.

    Performance Share Units

The Company awards PSUs whose vesting is contingent upon meeting or exceeding certain market and performance conditions. The performance condition, which was based on an adjusted net income, represented 70% of the award and the market condition, which was based on Total Shareholder Return (“TSR”) of the Company's common stock relative to a peer group represented the remaining 30%. All PSUs cliff vest at the end of three years based on the satisfaction of the performance conditions. Expense for the performance condition based award is recorded when the achievement of the performance condition is considered probable of achievement and is recorded on a straight-line basis over the requisite service period. If such performance criteria are not met, no compensation cost is recognized and any recognized compensation cost is reversed. Expense for the market condition based award is recorded on a straight-line basis over the explicit service period.

The grant-date fair value for the performance condition based awards represents the closing stock price on the date of grant. For the grants in fiscal 2021, 2020, and 2019, the closing stock price on the date of grant was $29.80, $37.24 and $17.90, respectively. The grant-date fair value for the market condition based awards was determined using the Monte-Carlo method. The assumptions used in the Monte-Carlo method to value the performance share awards granted during the fiscal year ended September 30, 2021 were as follows: 

	September 30, 2021		September 30, 2020		September 30, 2019
Expected dividend yield	—	%	—	%	—	%
Expected volatility	61	%	21% - 53%		21% - 74%
Risk free interest rates	0.21	%	1.59	%	2.84%
Expected life	3 years		3 years		3 years
Fair value	$33.80		$44.22		$18.84

Dividends are not paid on the Company’s common stock. For grants during fiscal year ended 2021 and 2020, the expected volatility is based on the Company’s stock price volatility. For grants during fiscal year 2019, expected volatility is based on historical volatilities of comparable companies. The risk-free interest rate is based on the United States Treasury yield curve in effect at the time of the grant for periods corresponding with the expected life of the award. The expected life of the award represents the weighted-average period of time that awards granted are expected to be outstanding, giving consideration to vesting schedules and expected exercise patterns. The Company does not estimate forfeitures, which are accounted for as they occur.

Changes to the Company’s non-vested PSU awards for the year ended September 30, 2021 were as follows:

	Shares (in thousands)	Weighted-average grant-date fair value
Nonvested as of September 30, 2018	307	$	21.22
Granted	242	18.17
Forfeited	(94)	20.55
Nonvested as of September 30, 2019	455	$	21.11
Granted	115	40.43
Vested	(162)	25.21
Adjustment for achieved performance upon issuance	31	21.68
Forfeited	(14)	22.82
Nonvested as of September 30, 2020	425	$	25.15
Granted	156	31.67
Vested	(171)	21.55
Adjustment for achieved performance upon issuance	57	22.95
Forfeited	(14)	29.43
Nonvested as of September 30, 2021	453	$	28.07

As of September 30, 2021, there was $4,316 of total unrecognized compensation expense related to non-vested PSUs granted, expected to be recognized over a weighted-average period of approximately 1.1 years. There were no PSUs vested during fiscal year 2019.