Share-Based Compensation

6 Months Ended

Mar. 31, 2012

Share-Based Compensation [Abstract]

Share-Based Compensation

13. SHARE-BASED COMPENSATION

We have various share-based compensation programs, which include stock options, deferred stock units, and restricted shares. During the six months ended 31 March 2012, we granted 1,079,860 stock options at a weighted-average exercise price of $82.64 and an estimated fair value of $21.43 per option. The fair value of these options was estimated using a Black Scholes option valuation model that used the following assumptions: expected volatility of 29.0%-30.4%; expected dividend yield of 2.3%; expected life in years of 7.3-9.0; and a risk-free interest rate of 1.7%-2.1%. In addition, we granted 247,063 deferred stock units at a weighted-average grant-date fair value of $83.17 and 34,595 restricted shares at a weighted-average grant-date fair value of $82.64. Refer to Note 18, Share-Based Compensation, in our 2011 Form 10-K for information on the valuation and accounting for these programs.

Share-based compensation cost charged against income in the three and six months ended 31 March 2012 was $15.6 ($9.8 after-tax) and $27.4 ($17.5 after-tax), respectively. Of the share-based compensation cost recognized for the six months ended 31 March 2012, $23.6 was a component of selling and administrative expense, $2.6 a component of cost of sales, $.8 a component of research and development, and $.4 a component of the cost reduction plan. Share-based compensation cost charged against income in the three and six months ended 31 March 2011 was $11.7 ($7.1 after-tax) and $21.9 ($13.5 after-tax), respectively. The amount of share-based compensation cost capitalized in 2012 and 2011 was not material.