The Company’s 1993 Stock Incentive Plan, as amended (the “SIP”), was established to provide for the grant of stock-based compensation awards to its employees, consultants, and directors. The SIP authorizes the grant of restricted shares, restricted stock units, performance-based awards including performance share awards, stock options, and stock appreciation rights, and other stock-based awards. The SIP is administered by the Compensation Committee of the Company’s Board of Directors (“Compensation Committee”). There are 12.2 million shares of Class A common stock reserved for issuance under the SIP, of which 2.0 million were available for future grants as of August 31, 2023. Share-based compensation expense recognized in cost of goods sold or selling, general, and administrative expense, as applicable, was $11 million, $19 million, and $18 million for the years ended August 31, 2023, 2022, and 2021, respectively.

During the years ended August 31, 2023, 2022, and 2021, the Compensation Committee granted 213,080, 160,312, and 317,760 RSUs, respectively, to the Company’s key employees under the SIP. RSUs generally vest 20% per year over five years commencing October 31 of the year after grant. Each RSU entitles the recipient to receive one share of Class A common stock upon vesting.

The estimated fair value of an RSU is based on the market closing price of the underlying Class A common stock on the date of grant. The weighted average grant date fair value of RSUs granted was $31.80, $52.32, and $22.26 per unit for the years ended August 31, 2023, 2022, and 2021, respectively. The total estimated fair value of RSUs granted was $7 million, $8 million, and $7 million for the years ended August 31, 2023, 2022, and 2021, respectively. For RSUs granted in each of these fiscal years, the compensation cost is recognized over the requisite service period of the awards, net of forfeitures, which for participants who were retirement eligible as of the grant date or who will become retirement eligible during the five-year term of the award is the longer of two years or the period ending on the date retirement eligibility is achieved.

A summary of the Company’s RSU activity for the year ended August 31, 2023 is as follows:


	Number of Units (in thousands)			Weighted Average Grant Date Fair Value
Outstanding as of August 31, 2022		813		$	26.59
Granted		213		$	31.80
Vested		(270	)	$	25.17
Forfeited		(42	)	$	28.61
Outstanding as of August 31, 2023		714		$	28.57

The total fair value of RSUs that vested, based on the market closing price of the underlying Class A common stock on the vesting date, was $7 million, $15 million, and $10 million for the years ended August 31, 2023, 2022, and 2021, respectively. As of August 31, 2023, total unrecognized compensation costs related to unvested RSUs amounted to $8 million, which is expected to be recognized over a weighted average period of two years.

The SIP authorizes performance-based awards to certain employees subject to certain conditions and restrictions. Vesting is subject to both the continued employment of the participant with the Company and the achievement of certain performance goals established by the Compensation Committee. A participant generally must be employed by the Company on October 31 following the end of the performance period to receive an award payout. However, adjusted awards are paid if employment terminates earlier on account of a qualifying employment termination event such as death, disability, retirement, termination without cause after the first year of the performance period, or a sale of the Company.

In recent years, the performance share awards have comprised two separate and distinct awards with different vesting conditions. Awards vest if the threshold level under the specified metric is met at the end of the approximately three-year performance period. For awards granted in fiscal 2023 and 2022, the performance metrics are the Company’s recycled metal volume growth and its return on capital employed (“ROCE”). Award share payouts depend on the extent to which the performance goals have been achieved, which performance-based payout factors are adjusted by a total shareholder return (“TSR”) modifier based on the Company’s average TSR percentile rank relative to a designated peer group. The number of shares that a participant receives is equal to the number of performance shares granted multiplied by an initial payout factor based on recycled metal volume growth and ROCE, which ranges from a threshold of 50% to a maximum of 200%. The final payout factor is then determined by applying the TSR modifier to the initial payout factor within a certain range, with a maximum increase or decrease of 20%.

For awards granted in fiscal 2021, the performance metrics are the Company’s TSR relative to a designated peer group and the Company’s ROCE. Award share payouts depend on the extent to which the performance goals have been achieved. The number of shares that a participant receives is equal to the award granted multiplied by a payout factor, which ranges from a threshold of 50% to a maximum of 200%. The TSR awards granted in fiscal 2021 stipulate certain limitations to the payout in the event the payout reaches a defined ceiling level or the Company’s TSR is negative.

The Company estimates the fair value of performance share awards with a TSR market condition using a Monte-Carlo simulation model utilizing several key assumptions, including the following for such awards granted during the years ended August 31:


	2023			2022			2021
Expected share price volatility (Radius)		56.1	%		51.6	%		48.5	%
Expected share price volatility (Peer group)		60.5	%		58.5	%		54.9	%
Expected correlation to peer group companies		48.1	%		46.0	%		44.5	%
Risk-free rate of return		4.16	%		0.61	%		0.23	%

The fair value of the ROCE awards granted in fiscal 2021, which awards do not have a TSR market condition, is based on the market closing price of the underlying Class A common stock on the grant date.

All the performance share awards granted in fiscal 2023 and 2022 have a non-market performance condition (either recycled metal volume growth or ROCE) in addition to a market condition (TSR modifier), and the ROCE awards granted in fiscal 2021 have only a non-market performance condition. The Company accrues compensation cost for these performance share awards based on the probable outcome of achieving the specified performance conditions, net of estimated forfeitures, over the requisite service period (or to the date a qualifying employment termination event entitles the recipient to a prorated award, if before the end of the service period). The Company reassesses whether achievement of the performance conditions is probable at each reporting date. If it is probable that the actual performance results will exceed the stated target performance conditions, the Company accrues additional compensation cost for the additional performance shares to be awarded. If, upon reassessment, it is no longer probable that the actual performance results will exceed the stated target performance conditions, or that it is no longer probable that the target performance conditions will be achieved, the Company reverses any recognized compensation cost for shares no longer probable of being issued. If the performance conditions are not achieved at the end of the performance period, all related compensation cost previously recognized is reversed.

The compensation cost for the TSR awards granted in fiscal 2021 based on the grant-date fair value, net of estimated forfeitures, is recognized over the requisite service period (or to the date a qualifying employment termination event entitles the recipient to a prorated award, if before the end of the service period), regardless of whether the market condition has been or will be satisfied.

During the years ended August 31, 2023, 2022, and 2021, the Compensation Committee granted a total of 211,046 (105,523 recycled metal volume growth with TSR modifier and 105,523 ROCE with TSR modifier), 153,080 (76,540 recycled metal volume growth with TSR modifier and 76,540 ROCE with TSR modifier), and 316,649 (157,791 TSR and 158,858 ROCE) performance share awards,

respectively. The weighted average grant date fair value per share of performance share awards granted was $32.10, $54.29, and $22.33 for the years ended August 31, 2023, 2022, and 2021, respectively.

A summary of the Company’s performance-based awards activity for the year ended August 31, 2023 is as follows:


	Number of Awards (in thousands)			Weighted Average Grant Date Fair Value
Outstanding as of August 31, 2022		782		$	28.16
Granted		211		$	32.10
Performance achievement(1)		171		$	20.98
Vested		(487	)	$	21.20
Forfeited		(50	)	$	34.20
Outstanding as of August 31, 2023		627		$	32.44

(1)

Reflects the net number of awards achieved above target levels based on actual performance measured at the end of the performance period.

The total fair value of performance share awards which vested, based on the market closing price of the Company’s Class A common stock on the vesting date, was $13 million, $14 million, and $7 million for the years ended August 31, 2023, 2022, and 2021, respectively. As of August 31, 2023, total unrecognized compensation costs related to unvested performance share awards amounted to $4 million, which is expected to be recognized over a weighted average period of two years.

The Deferred Compensation Plan for Non-Employee Directors (“DSU Plan”) provides for the issuance of DSUs to non-employee directors to be granted under the DSU Plan. Each DSU gives the director the right to receive one share of Class A common stock at a future date. Immediately following the annual meeting of shareholders, each non-employee director receives DSUs which become fully vested on the day before the next annual meeting, subject to continued service on the Board. The compensation cost associated with the DSUs granted is recognized over the requisite service period of the awards.

The Company issues Class A common stock to a director pursuant to vested DSUs in a lump sum in January of the first year after the director ceases to be a director of the Company, subject to the right of the director to elect an installment payment program under the DSU Plan.

DSUs with vesting conditions granted during the years ended August 31, 2023, 2022, and 2021 totaled 21,438 units, 20,876 units, and 28,042 units, respectively. The compensation cost associated with DSUs and the total value of shares vested during each of these fiscal years, as well as the unrecognized compensation cost as of August 31, 2023, were not material.