Share-Based Compensation

12 Months Ended

Sep. 30, 2023

Share-Based Compensation

Share-Based Compensation

8.      Share-Based Compensation

We provide compensation benefits to certain key employees under several share-based plans providing for performance-accelerated and/or time-vested restricted stock unit awards, and to non-employee directors under a separate compensation plan for non-employee directors. As of September 30, 2023, our equity compensation plans had a total of 1,033,413 shares authorized and available for future issuance.

Performance-Accelerated Restricted Stock Unit (PARS) Awards, Time-Vested Restricted Stock Unit (RSU) Awards, and Performance Share Unit (PSU) Awards

A PARS award represents the right to receive a specified number of shares of Company common stock if and when the award vests. A PARS award is not stock and does not give the recipient any rights as a shareholder until it vests and is paid out in shares of stock. PARS awards currently outstanding have a five-year vesting period, with accelerated vesting if certain targets based on market conditions are achieved. In these cases, if it is probable that the performance condition will be met, the Company recognizes compensation cost on a straight-line basis over the shorter performance period; otherwise, it will recognize compensation cost over the longer service period. Compensation cost for the outstanding PARS awards is being recognized over the shorter performance period, as it is probable the performance condition will be met. The PARS award grants were valued at the stock price on the date of grant.

The terms of the RSU awards are similar to those of the PARS awards, but without any provision for acceleration of the vesting date. Each RSU represents the right to receive one share of Company common stock if the recipient remains continuously employed by the Company until the award vests, normally 3 ½ years after the effective award date. The RSU award grants were valued at the stock price on the date of grant.

Beginning in fiscal 2022, the Company granted PSU awards with a three-year vesting period, with each PSU representing the right to receive one share of Company common stock if certain performance targets are achieved. The targets are based on achieving certain EBITDA metrics and a Total Shareholder return (rTSR) metric over a three-year period. In fiscal 2023, the Company granted PSU awards with a three-year vesting period, with performance targets based on achieving certain EBITDA and Return on Invested Capital (ROIC) metrics and utilizing a rTSR modifier.

Pretax compensation expense related to the above awards was $7.6 million, $6.1 million and $5.6 million for 2023, 2022 and 2021, respectively.

The following summary presents information regarding outstanding share-based compensation awards as of the specified dates, and changes during the specified periods:

	FY 2023			FY 2022			FY 2021
		Estimated			Estimated			Estimated
		Weighted			Weighted			Weighted
	Shares	Avg. Price		Shares	Avg. Price		Shares	Avg. Price
Nonvested at October 1,	265,367	$	84.29	226,705	$	76.15	220,300	$	66.55
Granted	84,880		93.64	117,045		82.54	51,476		108.05
Vested	(119,811)		82.28	(75,327)		56.87	(35,753)		64.40
Cancelled	(40,711)		85.00	(3,056)		89.51	(9,318)		70.50
Nonvested at September 30,	189,725	$	94.91	265,367	$	84.29	226,705	$	76.15

Compensation Plan for Non-Employee Directors

In addition to an annual cash retainer, we provide each non-employee director with an annual equity award having a grant date market value of $180,000, based on the NYSE closing price of the Company’s stock on the date of grant. The award is in the form of Restricted Stock Units, each of which represents the right to receive one share of Company stock at the end of a one-year vesting period. At the end of the vesting period, each award will be converted into the right to receive the same number of actual shares of common stock, plus additional shares representing the value of the quarterly dividends which would have accrued on the underlying shares during the vesting period. Compensation expense related to the non-employee director grants was $1.3 million, $1.2 million and $1.3 million for 2023, 2022 and 2021, respectively.

Total Share-Based Compensation

The total share-based compensation cost that has been recognized in results of operations and included within SG&A was $8.9 million, $7.3 million and $6.9 million for 2023, 2022 and 2021, respectively. The total income tax benefit recognized in results of operations for share-based compensation arrangements was $1.3 million, $1.5 million and $1.4 million for 2023, 2022 and 2021, respectively. As of September 30, 2023, there was $9.0 million of total unrecognized compensation cost related to share-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of 1.5 years.