STOCK PROGRAMS

12 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

As of June 30, 2024, the Company has two active equity compensation plans which include the Amended and Restated Fiscal 2002 Share Incentive Plan (the “Fiscal 2002 Plan”) and the Amended and Restated Non-Employee Director Share Incentive Plan (collectively, the “Plans”). These Plans currently provide for the issuance of approximately 88.8 million shares of Class A Common Stock, which consist of shares originally provided for and shares transferred to the Fiscal 2002 Plan from other inactive plans and employment agreements, to be granted in the form of stock-based awards to key employees and non-employee directors of the Company. As of June 30, 2024, approximately 7.1 million shares of Class A Common Stock were reserved and available to be granted pursuant to these Plans. The Company may satisfy the obligation of its stock-based compensation awards with either new or treasury shares. The Company’s equity compensation awards include stock options, restricted stock units (“RSUs”), performance share units (“PSUs”), long-term PSUs, including long-term price-vested units (“PVUs”), and share units.

Total net stock-based compensation expense is attributable to the granting of and the remaining requisite service periods of stock options, RSUs, PSUs, long-term PSUs and share units. Compensation expense attributable to net stock-based compensation is as follows:


	Year Ended June 30
(In millions)	2024		2023		2022
Compensation expense(1)	$	325	$	267	$	331
Income tax benefit	$	58	$	52	$	51

(1)Excludes compensation expense relating to liability-classified awards, including DECIEM stock options discussed below.

As of June 30, 2024, the total unrecognized compensation cost related to unvested stock-based awards was $208 million and the related weighted-average period over which it is expected to be recognized is approximately one year.

Stock Options

The following is a summary of the status of the Company’s stock options as of June 30, 2024 and activity during the fiscal year then ended:


(Shares in thousands)	Shares	Weighted- Average Exercise Price Per Share		Aggregate Intrinsic Value(1) (in millions)		Weighted-Average Contractual Life Remaining in Years
Outstanding at June 30, 2023	7,497.1	$	184.41
Granted at fair value	1,780.6	155.92
Exercised	(480.7)	81.57
Expired	(161.3)	240.00
Forfeited	(140.0)	199.73
Outstanding at June 30, 2024	8,495.7	182.95		$	32	6.0

Vested and expected to vest at June 30, 2024	8,415.7	182.95		$	32	6.0

Exercisable at June 30, 2024	5,842.7	175.76		$	32	5.0

(1)The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option.

The exercise period for all stock options generally may not exceed ten years from the date of grant. Stock option grants to individuals generally become exercisable in three substantively equal tranches over a service period of up to four years. The Company attributes the value of option awards on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards.

The following is a summary of the per-share weighted-average grant date fair value of stock options granted and total intrinsic value of stock options exercised:


	Year Ended June 30
(In millions, except per share data)	2024		2023		2022
Per-share weighted-average grant date fair value of stock options granted	$	52.83	$	79.09	$	85.56

Intrinsic value of stock options exercised	$	31	$	93	$	276

The fair value of each of the Company's option grants were estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:


	Year Ended June 30
	2024	2023	2022
Weighted-average expected stock-price volatility	33.8%	30.8%	27.3%
Weighted-average expected option life	6 years	6 years	6 years
Average risk-free interest rate	4.3%	3.4%	0.9%
Average dividend yield	1.5%	0.8%	0.7%

The Company uses a weighted-average expected stock-price volatility assumption that is a combination of both current and historical implied volatilities of the underlying stock. The implied volatilities were obtained from publicly available data sources. For the weighted-average expected option life assumption, the Company considers the exercise behavior for past grants and models the pattern of aggregate exercises. The average risk-free interest rate is based on the U.S. Treasury strip rate for the expected term of the options and the average dividend yield is based on historical experience.

Restricted Stock Units

The Company granted RSUs in respect of approximately 1.6 million shares of Class A Common Stock during fiscal 2024 with a weighted-average grant date fair value per share of $155.82 that, at the time of grant, are scheduled to vest as follows: 0.6 million in fiscal 2025, 0.6 million in fiscal 2026 and 0.4 million in fiscal 2027. Vesting of RSUs granted is generally subject to the continued employment or the retirement of the grantees. The RSUs are generally accompanied by dividend equivalent rights, payable upon settlement of the RSUs either in cash or shares (based on the terms of the particular award) and, as such, were generally valued at the closing market price of the Company’s Class A Common Stock on the date of grant.

The following is a summary of the status of the Company’s RSUs as of June 30, 2024 and activity during the fiscal year then ended:


(Shares in thousands)	Shares	Weighted-Average Grant Date Fair Value Per Share
Nonvested at June 30, 2023	1,789.9	$	265.04
Granted	1,606.1	155.82
Dividend equivalents	45.0	200.19
Vested(1)	(849.7)	262.76
Forfeited	(148.8)	201.52
Nonvested at June 30, 2024	2,442.5	196.69

1) The total fair value of RSUs vested during fiscal 2024, 2023 and 2022 was $91.6 million, $155.5 million, and $307.4 million, respectively.

Performance Share Units

During fiscal 2024, the Company granted PSUs with a target payout of approximately 0.2 million shares of Class A Common Stock with a weighted-average grant date fair value per share of $156.39, which will be settled in stock subject to the achievement of the Company’s net sales, diluted net earnings per common share and return on invested capital goals for the three fiscal years ending June 30, 2026, all subject to continued employment or the retirement of the grantees. For PSUs granted, no settlement will occur for results below the applicable minimum threshold. PSUs are accompanied by dividend equivalent rights that will be payable in cash upon settlement of the PSUs and, as such, were valued at the closing market value of the Company’s Class A Common Stock on the date of grant.

In August 2023, less than 0.1 million shares of the Company’s Class A Common Stock were issued, and related accrued dividends were paid, relative to the target goals set at the time of the issuance, in settlement of 0.2 million PSUs with a performance period ended June 30, 2023.

The following is a summary of the status of the Company’s PSUs as of June 30, 2024 and activity during the fiscal year then ended:


(Shares in thousands)	Shares	Weighted-Average Grant Date Fair Value Per Share
Nonvested at June 30, 2023	365.2	$	260.90
Granted	164.5	156.39
Vested and issued(1)	(44.8)	218.12
Forfeited	(111.0)	217.85
Nonvested at June 30, 2024	373.9	232.83

(1) The total fair value of PSUs vested and issued during fiscal 2024, 2023 and 2022 was $7.3 million, $66.6 million, and $108.9 million, respectively.

Long-term Performance Share Units

During September 2015, the Company granted PSUs to the Company's Chief Executive Officer (“CEO”) with an aggregate target payout of 387,848 shares (in three tranches of approximately 129,283 each) of the Company’s Class A Common Stock, generally subject to continued employment through the end of relative performance periods, which ended June 30, 2018, 2019, and 2020. Since the Company achieved positive Net Earnings, as defined in the PSU award agreement, for the fiscal year ended June 30, 2016, performance and vesting of each tranche was based on the Company achieving positive Cumulative Operating Income, as defined in the PSU award agreement, during the relative performance period. Payment with respect to a tranche was made on the third anniversary of the last day of the respective performance period. The PSUs are accompanied by dividend equivalent rights that was payable in cash at the same time as the payment of shares of Class A Common Stock. The grant date fair value of these PSUs of $30 million was estimated using the closing stock price of the Company’s Class A Common Stock as of September 4, 2015, the date of grant. As of June 30, 2023, all 387,848 shares of the Company’s Class A Common Stock were issued, and the related dividends paid, in accordance with the terms of the grant, related to the performance periods ended June 30, 2018, 2019, and 2020.

In February 2018, the Company granted to the Company's CEO PSUs with an aggregate payout of 195,940 shares (in two tranches of 97,970 shares each) of the Company’s Class A Common Stock, generally subject to continued employment through the end of the respective performance periods ending June 30, 2021 and 2022. No portion of the award will generally vest unless the Company has achieved positive Cumulative Operating Income, as defined in the performance share unit award agreement, during the relevant performance period. Settlement, if any, with respect to both tranches will be made on September 3, 2024. The PSUs are accompanied by dividend equivalent rights that will be payable in cash at the same time as any payment of shares of Class A Common Stock. The grant date fair value of these PSUs of $27 million was estimated using the closing stock price of the Company’s Class A Common Stock as of the date of grant. Since the Company achieved positive Cumulative Operating Income, as defined in the PSU award agreement, and since the executive completed the requisite service, 195,940 shares of the Company’s Class A Common Stock are anticipated to be issued, and the related dividends to be paid, in accordance with the terms of the grant on September 3, 2024.

In March 2021, the Company granted to the Company’s CEO PSUs with an aggregate payout of 68,578 shares of the Company's Class A Common Stock, to incentivize him to continue serving through at least June 30, 2024. Generally, no portion of this award will vest unless the Company has achieved positive Cumulative Operating Income, as defined in the performance share unit award agreement, during the relevant performance period, and delivery of shares of the Company’s Class A Common Stock, if any, will be made on September 2, 2025. The PSUs are accompanied by dividend equivalent rights that will be payable in cash at the same time as any delivery of shares of the Company's Class A Common Stock. The aggregate grant date fair value of the PSUs of approximately $20 million was estimated using the closing stock price of the Company's Class A Common Stock on the date of grant.

Long-term Price-Vested Units

In March 2021, the Company granted to the Company’s CEO PVUs with an aggregate payout of 85,927 shares, divided into three tranches, of the Company's Class A Common Stock, to incentivize him to continue serving through at least June 30, 2024. Generally, no portion of this award will vest unless the Company has achieved positive Cumulative Operating Income, as defined in the price-vested unit award agreement, during the relevant performance period. In addition, the vesting of each tranche is contingent upon the Company’s achievement of the respective stock price goal, which means that the average closing price per share of the Company’s Class A Common Stock traded on the New York Stock Exchange be at or above the applicable stock price goal (noted in the table below) for 20 consecutive trading days during the applicable performance period.

The number of shares subject to each tranche of the price-vested unit award, as well as the stock price goals, service periods, performance periods and share delivery dates for each tranche are as follows:

Number
of
Shares
per
Tranche

Stock Price Goal
(per Share)

Service Period

Performance Period for Stock Price Goal

Performance Period for Cumulative Operating Income Goal

Share Delivery Date

First tranche

27,457

323.03

March 11, 2021 - June 30, 2024

July 1, 2021 - June 30, 2025

September 2, 2025

Second tranche

28,598

333.21

March 11, 2021 - June 30, 2024

July 1, 2021 - June 30, 2025

September 2, 2025

Third tranche

29,872

343.61

March 11, 2021 - June 30, 2024

July 1, 2021 - June 30, 2025

September 2, 2025

Total shares

85,927

The Stock Price Goals (per Share) were all achieved during fiscal 2022 but delivery of the shares are still subject to achievement of the Cumulative Operating Income goal and other terms and conditions in accordance with the terms of the award agreement.

Generally, delivery of shares of the Company’s Class A Common Stock, if any, will be made on September 2, 2025. The PVUs are accompanied by dividend equivalent rights that will be payable in cash at the same time as any delivery of shares of the Company's Class A Common Stock. The aggregate grant date fair value of the PVUs of approximately $20 million was estimated using the Monte Carlo Method, which requires certain assumptions. The significant assumptions used for this award were as follows:


Expected volatility	31.8	%
Dividend yield	0.8	%
Risk-free interest rate	0.4	%
Expected term	3.3 years

Share Units

The Company grants share units to certain non-employee directors under the Amended and Restated Non-Employee Director Share Incentive Plan. The share units are convertible into shares of the Company’s Class A Common Stock as provided for in that plan. Share units are accompanied by dividend equivalent rights that are converted to additional share units when such dividends are declared.

The following is a summary of the status of the Company’s share units as of June 30, 2024 and activity during the fiscal year then ended:


(Shares in thousands)	Shares	Weighted-Average Grant Date Fair Value Per Share
Outstanding at June 30, 2023	112.7	$	87.84
Granted	8.7	123.81
Dividend equivalents	2.2	139.11
Converted (1)	(10.0)	105.78
Outstanding at June 30, 2024	113.6	90.02

(1) The total intrinsic value of share units converted during fiscal 2024, 2023 and 2022 was $1.5 million, $4.1 million, and $8.5 million, respectively.

Cash Units

Certain non-employee directors defer cash compensation in the form of cash payout share units, which are not subject to the Plans. These share units are classified as liabilities and, as such, their fair value is adjusted to reflect the current market value of the Company’s Class A Common Stock. The Company recorded $13 million, $8 million and $5 million as compensation income to reflect additional deferrals and the change in the market value for fiscal 2024, 2023 and 2022, respectively.

DECIEM Stock Options

As a result of the fiscal 2021 acquisition of additional shares of DECIEM, the Company had a stock option plan relating to its majority-owned subsidiary DECIEM (“DECIEM Stock Option Plan”). The DECIEM stock options were issued in replacement of and exchange for certain vested and unvested DECIEM employee stock options previously issued by DECIEM. The DECIEM stock options were subject to the terms and conditions of the DECIEM 2021 Stock Option Plan. In connection with the purchase of the remaining interest in DECIEM, all DECIEM stock options were exercised in the fiscal 2024 fourth quarter, resulting in the settlement of the stock option liability reducing the balance to zero as of June 30, 2024. The DECIEM stock options were reported as a stock option liability of $99 million in Other accrued liabilities in the accompanying consolidated balance sheets at June 30, 2023.

The DECIEM stock options were liability-classified awards as they were expected to be settled in cash and were remeasured to fair value at each reporting date through date of settlement, with a corresponding charge to compensation expense. Total stock-based compensation expense is attributable to the exchange or replacement of and the remaining requisite service period of stock options. The total stock option expense (income), net of foreign currency remeasurements, for the year ended June 30, 2024, 2023 and 2022 was $13 million, $22 million and $(55) million, respectively, and as a result of the settlement of the stock option liability in the fourth quarter of fiscal 2024, the Company also incurred $10 million in employer-related payroll taxes. There is no related income tax benefit on the DECIEM stock-based compensation expense.

The following is a summary of the DECIEM stock option program as of June 30, 2024 and changes during the fiscal year then ended:


(Shares in thousands)	Shares	Weighted- Average Exercise Price Per Share
Outstanding at June 30, 2023	94.1	$	58.48
Granted at fair value	—	—
Exercised	94.1	56.65
Expired	—	—
Forfeited	—	—
Outstanding at June 30, 2024	—	—

Stock options granted to individuals under the DECIEM 2021 Stock Option Plan had a per-share weighted average grant date fair value of $1,557. There were no options granted during fiscal 2024, 2023 and 2022. Stock options granted vested between two to seven tranches over a service period of up to two years and all post-combination options were fully vested as of June 30, 2023. The total fair value of vested awards during fiscal 2023 and 2022 was not material. The Company attributed the value of option awards under the DECIEM Stock Option Plan on a graded vesting basis where awards vested at specified rates over a specified period. During fiscal 2024, all the DECIEM stock options were exercised and the intrinsic value of the stock options exercised was $114 million, which represented the cash paid to settle the DECIEM stock option liability.

The DECIEM stock option liability as of June 30, 2023 and June 30, 2022 was measured using the Monte Carlo Method, which required certain significant assumptions including the starting equity value, revenue growth rates and EBITDA assumptions. Significant changes in the projected future operating results would have resulted in a higher or lower fair value measurement. Changes to the discount rates or volatilities would have had a lesser effect. These inputs were categorized as Level 3 of the valuation hierarchy. The following key assumptions were also used in the Monte Carlo Method:


	June 30, 2023	June 30, 2022
Risk-free rate	4.90%	3.20%
Term to mid of last twelve-month period	0.46 years	1.42 years
Operating leverage adjustment	0.45	0.45
Net sales discount rate	7.80%	6.00%
EBITDA discount rate	11.30%	9.40%
EBITDA volatility	32.00%	33.90%
Net sales volatility	14.40%	15.30%