Employee Benefit Plans

9 Months Ended

Jun. 30, 2023

Compensation Related Costs [Abstract]

Compensation Related Costs, General

EMPLOYEE BENEFIT PLANS

Stock-Based Compensation

The Company’s Stock Incentive Plan provides for the granting of stock options and restricted stock units to executive officers, other key employees and non-management directors. Restricted stock unit (RSU) awards may be based on performance (performance-based) or on service over a requisite time period (time-based). RSU equity awards represent the contingent right to receive one share of the Company’s common stock per RSU if the vesting conditions and/or performance criteria are satisfied. The RSUs have no dividend or voting rights until vested.

In October 2022, the Company granted 600,000 performance-based RSUs to its executive officers. These awards vest at the end of a three-year performance period ending September 30, 2025. The number of units that ultimately vest depends on the Company’s relative position as compared to its peers in achieving certain performance criteria and can range from 0% to 200% of the number of units granted. The performance criteria are total shareholder return; return on investment; selling, general and administrative expense containment; and gross profit. The grant date fair value of these equity awards was $79.97 per unit. Compensation expense related to this grant was $2.6 million and $11.5 million in the three and nine months ended June 30, 2023, respectively, based on an estimate of the Company’s performance against its peer group, the elapsed portion of the performance period and the grant date fair value of the award.

During the nine months ended June 30, 2023, the Company granted approximately 880,000 time-based RSUs to approximately 1,380 recipients, including executive officers, other key employees and non-management directors. The weighted average grant date fair value of these equity awards was $93.44 per unit, and they vest annually in equal installments over periods of three to five years. Compensation expense related to these grants was $9.3 million and $11.6 million in the three and nine months ended June 30, 2023, respectively. Compensation expense in the three and nine months ended June 30, 2023 included $5.1 million and $7.0 million, respectively, of expense recognized for employees that were retirement eligible on the date of grant.

Total stock-based compensation expense related to the Company’s performance-based and time-based RSUs was $26.3 million and $73.4 million during the three and nine months ended June 30, 2023, respectively, compared to $23.4 million and $74.3 million during the three and nine months ended June 30, 2022.