Note 19. Stockholders’ equity

Common Stock

Holders of Woodward’s common stock are entitled to receive dividends when and as declared by the Board of Directors and have the right to one vote per share on all matters requiring stockholder approval.

Dividends declared and paid during the 2013, 2012 and 2011 fiscal years were:



	Year Ended September 30,
	2013		2012		2011
Dividends declared and paid	$	21,866	$	21,351	$	18,581
Dividend per share amount		0.32		0.31		0.27

Stock Repurchase Program

In July 2010, the Board of Directors authorized the repurchase of up to $200,000 of Woodward’s outstanding shares of common stock on the open market or in privately negotiated transactions over a three-year period that ended in July 2013 (the “2010 Authorization”). Woodward purchased a total of 1,233 shares with an aggregate purchase price of $45,754, 1,132 shares with an aggregate purchase price of $44,110, and 208 shares with an aggregate purchase price of $6,837 of its common stock under the 2010 Authorization in fiscal years 2013, 2012 and 2011, respectively.

On July 24, 2013, Woodward’s Board of Directors approved a new stock repurchase plan, that replaced the 2010 Authorization, that authorizes the repurchase of up to $200,000 of its outstanding shares of common stock on the open market or in privately negotiated transactions over a three-year period that will end in July 2016 (the “2013 Authorization”). As of September 30, 2013, Woodward has purchased no shares under the 2013 Authorization.

Stock-based compensation

Non-qualified stock option awards and restricted stock awards are granted to key management members and directors of the Company. The grant date for these awards is used for the measurement date. Vesting would be accelerated in the event of retirement, disability, or death of a participant, or change in control of the Company, as defined. These awards are valued as of the measurement date and are amortized on a straight-line basis over the requisite vesting period for all awards, including awards with graded vesting. Stock for exercised stock options and for restricted stock awards is issued from treasury stock shares.

Provisions governing the outstanding awards are included in the 2006 Omnibus Incentive Plan (the “2006 Plan”) and the 2002 Stock Option Plan (the “2002 Plan”). The 2006 Plan was approved by stockholders and became effective on January 25, 2006. No further grants will be made under the 2002 Plan. The 2006 Plan made 7,410 shares of our common stock available for grants made on or after January 25, 2006, to members and directors of the Company, subject to annual award limits as specified in the 2006 Plan. In October 2008, Woodward granted 70 shares of restricted stock from treasury stock shares to eligible management employees of MPC pursuant to the 2006 Plan. These shares became fully vested in fiscal year 2011. There were 3,120 shares of our common stock available for future grants as of September 30, 2013.

Stock-based compensation expense recognized was as follows:



	Year Ended September 30,
	2013		2012		2011
Employee stock-based compensation expense	$	9,414	$	8,628	$	6,590

Stock options

The 2006 Plan provides for the grant of up to 7,410 share of our common stock, including in the form of stock options, to its employees and directors. Woodward believes that these stock options align the interests of its employees and directors with those of its stockholders. Stock option awards are granted with an exercise price equal to the market price of Woodward’s stock at the date of grant, a ten-year term, and a four-year vesting schedule at a rate of 25% per year.

The fair value of options granted was estimated on the date of grant using the Black-Scholes-Merton option-valuation model using the assumptions in the following table. Woodward calculates the expected term, which represents the period of time that stock options granted are expected to be outstanding, based upon historical experience of plan participants. Expected volatility is based on historical volatility using daily stock price observations. The estimated dividend yield is based upon Woodward’s historical dividend practice and the market value of its common stock. The risk-free rate is based on the U.S. treasury yield curve, for periods within the contractual life of the stock option, at the time of grant.



	Year Ended September 30,
	2013				2012			2011
Expected term (years)		5.8	-	8.6	5.9	-	8.5	5.8	-	8.7
Estimated volatility		48.7%	-	54.9%	48.9%	-	55.6%	48.0%	-	54.0%
Estimated dividend yield		0.8%	-	1.0%	0.7%	-	1.1%	1.0%	-	1.3%
Risk-free interest rate		0.8%	-	1.3%	0.8%	-	1.6%	1.8%	-	2.6%

The weighted average grant date fair value of options granted follows:



	Year Ended September 30,
	2013		2012		2011
Weighted-average grant date fair value of options	$	15.84	$	12.14	$	15.00

The following is a summary of the activity for stock option awards during the fiscal year ended September 30, 2013:



	Number		Weighted-Average Exercise Price
Balance at September 30, 2012		4,556	$	$ 21.79
Options granted		693		$ 33.72
Options exercised		(796)		$ 13.71
Options forfeited		(30)		$ 29.11
Balance at September 30, 2013		4,423		$ 25.06

Exercise prices of stock options outstanding as of September 20, 2013 range from $9.83 to $44.54.

Changes in non-vested stock options during the fiscal year ended September 30, 2013 were as follows:



	Number		Weighted-Average Exercise Price
Balance at September 30, 2012		1,670	$	27.07
Options granted		693		33.72
Options vested		(596)		26.26
Options forfeited		(30)		29.11
Balance at September 30, 2013		1,737		29.97

At September 30, 2013, there was approximately $11,544 of total unrecognized compensation cost, which assumes a weighted-average forfeiture rate of 5.2%, related to non-vested stock-based compensation arrangements granted under the 2002 Plan (for which no further grants will be made) and the 2006 Plan. The remaining unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 2.1 years.

Information about stock options that have vested, or are expected to vest, and are exercisable at September 30, 2013 was as follows:



	Number		Weighted- Average Exercise Price		Weighted- Average Remaining Life in Years		Aggregate Intrinsic Value
Options outstanding		4,423	$	25.06		5.7	$	69,796
Options vested and exercisable		2,685		21.89		4.1		50,888
Options vested and expected to vest		4,329		24.93		5.6		68,902

Other information follows:



	Year Ended September 30,
	2013		2012		2011
Total fair value of stock options vested	$	7,271	$	5,907	$	5,587
Total intrinsic value of options exercised		19,692		12,521		10,145
Cash received from exercises of stock options		8,272		6,180		4,402
Excess tax benefit realized from exercise of stock options		5,154		3,990		3,558