The Company has two primary share-based compensation programs under which we annually grant stock option, restricted stock unit (RSU) and performance stock unit (PSU) awards to certain managers and directors.

In our main long-term incentive program, managers can elect to receive stock options or RSUs. All options vest after three years and have a 10-year life. Exercise prices on options are set equal to the market price of the underlying shares on the date of the grant. RSUs vest and settle in shares of common stock three years from the grant date.

Senior-level executives participate in an additional long-term incentive program that awards PSUs, which are paid in shares after the end of a three-year performance period subject to pre-established performance goals. The program includes a Relative Total Shareholder Return (R-TSR) modifier under which the number of shares ultimately granted is also impacted by the Company's actual shareholder return relative to our consumer products competitive peer set.

In addition to these long-term incentive programs, we award RSUs to the Company's non-employee directors and make other minor stock option and RSU grants to employees for which the terms are not substantially different from our long-term incentive awards.

The Company's share-based compensation plan was approved by shareholders in 2019. Under the 2019 plan, a maximum of 150 million shares of common stock was authorized for issuance and a total of 58 million shares remain available for grant.

The Company recognizes share-based compensation expense based on the fair value of the awards at the date of grant. The expense is recognized on a straight-line basis over the requisite service period. Awards to employees eligible for retirement prior to the award becoming fully vested are recognized as compensation expense ratably from the grant date through the date the employee first becomes eligible to retire and/or is no longer required to provide services to earn the award. Share-based compensation expense is included as part of Cost of products sold and SG&A in the Consolidated Statements of Earnings and includes an estimate of forfeitures, which is based on historical data.


Fiscal years ended June 30	2025		2024		2023
Stock options	$	219	$	270	$	303
RSUs and PSUs	257		292		242
Total share-based expense	$	476	$	562	$	545

Income tax benefit	$	85	$	103	$	103

We utilize an industry standard lattice-based valuation model to calculate the fair value for stock options granted. Assumptions utilized in the model, which are evaluated and revised to reflect market conditions and experience, were as follows:


Fiscal years ended June 30	2025				2024				2023
Interest rate	3.5	-	4.4	%	4.6	-	5.5	%	3.7	-	4.1	%
Weighted average interest rate	3.7			%	4.6			%	3.7			%
Dividend yield	2.4			%	2.5			%	2.6			%
Expected volatility	18			%	18			%	21			%
Expected life in years	8.9				8.8				8.8

Lattice-based option valuation models incorporate ranges of assumptions for inputs and those ranges are disclosed in the preceding table. Expected volatilities are based on a combination of historical volatility of our stock and implied volatilities of call options on our stock. We use historical data to estimate option exercise and employee termination patterns within the valuation model. The expected life of options granted is derived from the output of the option valuation model and represents the average period of time that options granted are expected to be outstanding. The interest rate for periods within the contractual life of the options is based on the U.S. Treasury yield curve in effect at the time of grant.

We utilize a Monte-Carlo simulation model to estimate the fair value of performance stock units granted. Assumptions utilized in the model are not substantially different from those used for stock options.


Options	Options (in thousands)	Weighted Average Exercise Price		Weighted Average Contractual Life in Years	Aggregate Intrinsic Value
OUTSTANDING AT JULY 1, 2024	107,362	$	111.59
Granted	8,347	173.33
Exercised	(18,806)	90.05
Forfeited/expired	(282)	150.86
OUTSTANDING AT JUNE 30, 2025	96,621	$	120.96	5.0	$	3,822
Exercisable	70,717	$	110.32	3.9	$	3,466

The following table provides additional information on stock options:


Fiscal years ended June 30	2025		2024		2023
Weighted average grant-date fair value of options granted	$	36.23	$	34.25	$	29.58
Intrinsic value of options exercised	1,546		1,621		979
Grant-date fair value of options that vested	299		244		219
Cash received from options exercised	1,693		1,888		1,189
Actual tax benefit from options exercised	321		330		207

At June 30, 2025, $180 of compensation cost had not yet been recognized related to stock option grants. That cost is expected to be recognized over a remaining weighted average period of 1.6 years.

A summary of non-vested RSUs and PSUs outstanding under the plans as of June 30, 2025, and activity during the year then ended is presented below:


	RSUs			PSUs
RSU and PSU awards	Units (in thousands)	Weighted Average Grant Date Fair Value		Units (in thousands)	Weighted Average Grant Date Fair Value
Non-vested at July 1, 2024	3,321	$	139.65	1,016	$	144.06
Granted	1,418	171.87		459	177.08
Vested	(1,291)	143.38		(541)	134.16
Forfeited	(87)	148.61		(10)	164.79
Non-vested at June 30, 2025	3,361	$	151.58	924	$	166.15

At June 30, 2025, $244 of compensation cost had not yet been recognized related to RSUs and PSUs. That cost is expected to be recognized over a remaining weighted average period of 1.6 years. The total grant date fair value of shares vested was $258, $256 and $220 in 2025, 2024 and 2023, respectively.

The Company settles equity issuances with treasury shares. We have no specific policy to repurchase common shares to mitigate the dilutive impact of options, RSUs and PSUs. However, we have historically made adequate discretionary purchases, based on cash availability, market trends and other factors, to offset the impacts of such activity.