STOCK-BASED COMPENSATION PLANS

12 Months Ended

Aug. 31, 2022

Share-based Payment Arrangement [Abstract]

NOTE 14. STOCK-BASED COMPENSATION PLANS

The Company's stock-based compensation plans provide for the issuance of incentive and nonqualified stock options, restricted stock awards and performance-based awards. The Compensation Committee of CMC's Board of Directors (the "Compensation Committee") approves all awards that are granted under the Company's stock-based compensation plans. Stock-based compensation expense for 2022, 2021 and 2020 of $47.0 million, $43.7 million and $31.9 million, respectively, was primarily included in selling, general and administrative expenses on the Company's consolidated statements of earnings. As of August 31, 2022, total unrecognized compensation cost related to unvested stock-based compensation arrangements was $15.6 million, which is expected to be recognized over a weighted average period of three years.

The following table summarizes the total awards granted:


	Restricted Stock Awards/Units	Performance Awards
2022 grants	652,951	328,734
2021 grants	847,872	406,098
2020 grants	997,454	536,022

As of August 31, 2022, the Company had 4,575,646 shares of common stock available for future grants.

Restricted Stock Units

Restricted stock units issued under the Company's stock-based compensation plans may not be sold, transferred, pledged or assigned until service-based restrictions lapse. The restricted stock units generally vest and are converted to shares of the Company's common stock in three equal installments on each of the first three anniversaries of the date of grant. Generally, upon termination of employment, restricted stock units that have not vested are forfeited. Other than awards granted to certain executives, which continue to vest following qualifying retirement, a pro-rata portion of the unvested restricted stock awarded will vest and become payable upon death, disability or qualifying retirement.

The estimated fair value of the restricted stock units is based on the closing price of the Company's common stock on the date of grant, discounted for the expected dividend yield through the vesting period. Compensation cost related to the restricted stock units is recognized ratably over the service period and is included in equity on the Company's consolidated balance sheets.

Performance Stock Units

Performance stock units issued under the Company's stock-based compensation plans may not be sold, transferred, pledged or assigned until service-based restrictions lapse and any performance objectives have been attained as established by the Compensation Committee. Recipients of these awards generally must be actively employed by and providing services to the Company on the last day of the performance period in order to receive an award payout. Other than awards granted to certain executives, which continue to vest following qualifying retirement, a pro-rata portion of the performance stock units will vest and become payable at the end of the performance period upon death, disability or qualifying retirement.

Compensation cost for performance stock units is accrued based on the probable outcome of specified performance conditions, net of estimated forfeitures. The Company accrues compensation cost if it is probable that the performance conditions will be met. The Company reassesses the probability of meeting the specified performance conditions at the end of each reporting period and adjusts compensation cost, as necessary, based on the probability of achieving the performance conditions. If the performance conditions are not met at the end of the performance period, the Company reverses the related compensation cost.

Performance targets established by the Compensation Committee for performance stock units awarded in 2022, 2021 and 2020 were weighted 75% based on the Company's cumulative EBITDA targets and positive return on invested capital for the fiscal year in which the awards were granted and the succeeding two fiscal years, as approved by CMC's Board of Directors in the respective year's business plan, and 25% based on a three-year relative total stockholder return metric. Performance stock units awarded will be settled in shares of the Company's common stock. Award payouts range from a threshold of 50% to a maximum of 200% for each portion of the target awards. The performance stock units awarded in 2022 and 2021 associated

with the cumulative EBITDA targets have been classified as liability awards because the final EBITDA target will not be set until the third year of the performance period. Consequently, these awards were included in accrued expenses and other payables on the Company's consolidated balance sheets. The fair value of these performance stock units is remeasured each reporting period and is recognized ratably over the service period. The performance stock units associated with the total stockholder return metric were valued at fair value on the date of grant using the Monte Carlo pricing model and were included in equity on the Company's consolidated balance sheets.

Information for restricted stock units and performance stock units is as follows:


	Number	Weighted Average Fair Value
Outstanding as of September 1, 2019	2,279,568	$	15.99
Granted	1,529,212	18.32
Vested	(1,417,552)	18.80
Forfeited	(145,591)	21.35
Outstanding as of August 31, 2020	2,245,637	18.79
Granted	1,519,153	20.49
Vested	(1,451,846)	17.62
Forfeited	(122,149)	20.19
Outstanding as of August 31, 2021	2,190,795	20.67
Granted	1,466,628	28.16
Vested	(1,617,943)	18.84
Forfeited	(45,850)	23.57
Outstanding as of August 31, 2022	1,993,630	$	27.59

The total fair value of shares vested during 2022, 2021 and 2020 was $30.5 million, $25.6 million and $26.7 million, respectively.

The Company granted 261,275 and 323,880 equivalent shares of restricted stock units and performance stock units accounted for as liability awards during 2022 and 2021, respectively. As of August 31, 2022, the Company had 591,483 equivalent shares of awards outstanding and expects 561,908 equivalent shares to vest.

Stock Purchase Plan

Almost all U.S. resident employees may participate in the Company's employee stock purchase plan. Each eligible employee may purchase up to 500 shares annually. The Board of Directors established a 15% purchase discount based on market prices on specified dates for 2022, 2021 and 2020. Yearly activity of the stock purchase plan was as follows:


	Year Ended August 31,
	2022		2021		2020
Shares subscribed	279,370		347,510		347,870
Price per share	$	29.90	$	17.14	$	18.80
Shares purchased	313,790		292,690		365,990
Price per share	$	17.14	$	18.80	$	13.80
Shares available for future issuance	1,306,694