Equity-Based Compensation

12 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

Note 14 — Equity-Based Compensation

The Company grants equity-based awards to employees and non-employee directors comprising UGI stock options, UGI Common Stock-based equity instruments and, prior to the AmeriGas Merger, AmeriGas Partners Common Unit-based equity instruments. We recognized total pre-tax equity-based compensation expense of $21 ($15 after-tax), $15 ($11 after-tax) and $18 ($13 after-tax) in Fiscal 2021, Fiscal 2020 and Fiscal 2019, respectively.

UGI Equity-Based Compensation Plans and Awards. On January 29, 2021, the Company’s shareholders approved the 2021 IAP. Under the 2021 IAP, awards representing up to 20,500,000 shares of UGI Common Stock may be granted. UGI Unit Awards granted to employees and non-employee directors, including dividend equivalents, are settled in shares of UGI Common Stock and cash. The 2021 IAP supersedes and replaces the 2013 OICP for awards granted on or after February 1, 2021. The terms and conditions of the 2013 OICP will continue to govern any outstanding awards granted thereunder. Similar to the 2013 OICP, under the 2021 IAP, we may grant options to acquire shares of UGI Common Stock, SARs, UGI Units (comprising “Stock Units” and “UGI Performance Units”), other equity-based awards and cash to key employees and non-

employee directors. The exercise price for options may not be less than the fair market value on the grant date. Awards granted under the 2021 IAP may vest immediately or ratably over a period of years, and stock options can be exercised no later than ten years from the grant date. Except in the event of retirement, death or disability, each grant, unless paid, will terminate when the participant ceases to be employed. There are certain change of control and retirement eligibility conditions that, if met, generally result in accelerated vesting or elimination of further service requirements.

There were 20,037,430 shares of Common Stock available for future grants under the 2021 IAP at September 30, 2021.

UGI Stock Option Awards. We measure the fair value of stock options using a Black-Scholes option pricing model that uses certain key assumptions for such options related to the expected life, volatility, dividend yield and the Company’s risk-free rate at the valuation date. The per share weighted average fair value of stock options granted under our option plans was $6.05, $5.58 and $8.70 in Fiscal 2021, Fiscal 2020 and Fiscal 2019, respectively. As of September 30, 2021, there was $7 of unrecognized compensation cost associated with unvested stock options that is expected to be recognized over a weighted-average period of 2.0 years. There were 10,204,836 stock options outstanding at September 30, 2021, of which, 7,445,827 stock options were exercisable with a weighted-average option price of $38.42.

UGI Unit Awards. UGI Stock Unit and UGI Performance Unit awards entitle the grantee to shares of UGI Common Stock or cash once the service condition is met and, with respect to UGI Performance Unit awards, subject to market performance conditions. UGI Performance Unit grant recipients are awarded a target number of UGI Performance Units. The number of UGI Performance Units ultimately paid at the end of the performance period (generally three years) may be higher or lower than the target amount, or even zero, based on UGI’s TSR percentile rank relative to the UGI comparator group. Grantees may receive 0% to 200% of the target award granted.

The fair value of UGI Stock Units on the grant date is equal to the market price of UGI Stock on the grant date plus the fair value of dividend equivalents if applicable. The fair value of UGI Performance Units is estimated using a Monte Carlo valuation model. The fair value associated with the target award is accounted for as equity and the fair value of the award over the target, as well as all dividend equivalents, is accounted for as a liability.

The weighted-average grant date fair value of UGI Stock Units and UGI Performance Units granted to employees during Fiscal 2021, Fiscal 2020, and Fiscal 2019 was $41.41, $41.47 and $55.40, respectively.

As of September 30, 2021, there was a total of $19 unrecognized compensation cost associated with UGI Unit awards outstanding that is expected to be recognized over a weighted-average period of 1.9 years. As of September 30, 2021, there were 1,124,369 UGI Unit awards outstanding with a weighted-average grant-date fair value of $33.41 per share.