Johnson Controls International plcJCI
Johnson Controls International plc Stock Compensation Disclosure
STOCK-BASED COMPENSATION
Unless otherwise noted, all activities and amounts reported in this footnote include both continuing operations of the Company and activities and amounts related to the R&LC HVAC business. See Note 2, "Acquisitions and Divestitures" for additional details regarding divestiture of the R&LC HVAC business.
The Johnson Controls International plc 2021 Equity and Incentive Plan authorizes stock options, stock appreciation rights, restricted (non-vested) stock/units, performance shares, performance units and other stock-based awards. The Compensation and Talent Development Committee of the Company's Board of Directors determines the types of awards to be granted to individual participants and the terms and conditions of the awards. Annual awards are typically granted in the first quarter of the fiscal year. As of September 30, 2025, there were 55 million shares of the Company's common stock reserved and 30 million shares available for issuance under the 2021 Equity and Incentive Plan.
The following table summarizes stock-based compensation related charges and benefits (in millions):
| Year Ended September 30, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Compensation expense | $ | 126 | $ | 100 | $ | 101 | ||||||||||||||
| Income tax benefit resulting from share-based compensation arrangements | 19 | 25 | 25 | |||||||||||||||||
| Tax impact from exercise and vesting of equity settled awards | 14 | 1 | 7 | |||||||||||||||||
Substantially all compensation expense is recorded in selling, general and administrative expenses. The Company does not settle stock options granted under share-based payment arrangements in cash.
Restricted (Non-vested) Stock / Units
A summary of non-vested restricted stock awards at September 30, 2025, and changes for the year then ended, is presented below:
| Weighted Average Price | Shares/Units Subject to Restriction | ||||||||||
| Non-vested, September 30, 2024 | $ | 59.29 | 2,904,103 | ||||||||
| Granted | 83.08 | 1,297,984 | |||||||||
| Vested | 62.59 | (1,231,731) | |||||||||
| Forfeited | 65.78 | (423,369) | |||||||||
| Non-vested, September 30, 2025 | $ | 69.68 | 2,546,987 | ||||||||
At September 30, 2025, the Company had approximately $116 million of total unrecognized compensation cost related to non-vested restricted stock arrangements granted which is expected to be recognized over a weighted-average period of 1.8 years.
Performance Share Awards (PSU's)
The following table summarizes the assumptions used in determining the fair value of performance share awards granted:
| Year Ended September 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Risk-free interest rate | 4.01% | 4.21% | 4.04% | ||||||||||||||
| Expected volatility of the Company’s stock | 28.50% | 27.20% | 33.50% | ||||||||||||||
A summary of the status of the Company’s non-vested PSU's at September 30, 2025, and changes for the year then ended, is presented below:
| Weighted Average Price | Shares/Units Subject to PSU | ||||||||||
| Non-vested, September 30, 2024 | $ | 71.20 | 795,633 | ||||||||
| Granted | 97.77 | 375,308 | |||||||||
| Vested | 90.50 | (230,999) | |||||||||
| Forfeited | 80.05 | (27,178) | |||||||||
| Non-vested, September 30, 2025 | $ | 76.97 | 912,764 | ||||||||
At September 30, 2025, the Company had approximately $46 million of total unrecognized compensation cost related to non-vested performance-based share unit awards which is expected to be recognized over a weighted-average period of 2.0 years.
Stock Options
The following table summarizes the assumptions used in determining the fair value of stock options granted:
| Year Ended September 30, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Expected life of option (years) | 5.7 | 5.7 | 5.8 | ||||||||||||||
| Risk-free interest rate | 4.07% | 3.86% | 3.59% | ||||||||||||||
| Expected volatility of the Company’s stock | 30.20% | 29.80% | 29.40% | ||||||||||||||
| Expected dividend yield on the Company’s stock | 1.83% | 2.77% | 2.10% | ||||||||||||||
A summary of stock option activity at September 30, 2025, and changes for the year then ended, is presented below:
| Weighted Average Option Price | Shares Subject to Option | Weighted Average Remaining Contractual Life (years) | Aggregate Intrinsic Value (in millions) | ||||||||||||||||||||
| Outstanding, September 30, 2024 | $ | 46.51 | 4,244,782 | ||||||||||||||||||||
| Granted | 82.15 | 530,251 | |||||||||||||||||||||
| Exercised | 39.99 | (2,812,821) | |||||||||||||||||||||
| Forfeited or expired | 67.00 | (66,609) | |||||||||||||||||||||
| Outstanding, September 30, 2025 | $ | 65.42 | 1,895,603 | 8.07 | $ | 84 | |||||||||||||||||
| Exercisable, September 30, 2025 | $ | 62.05 | 688,036 | 7.31 | $ | 33 | |||||||||||||||||
The following table summarizes additional stock option information:
| Year Ended September 30, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Weighted-average grant-date fair value of options granted | $ | 23.97 | $ | 13.74 | $ | 18.21 | ||||||||||||||
| Intrinsic value of options exercised (in millions) | 130 | 22 | 27 | |||||||||||||||||
At September 30, 2025, the Company had approximately $12 million of total unrecognized compensation cost related to non-vested stock options which is expected to be recognized over a weighted-average period of 1.6 years.
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.