In November 2019, the Woodward board of directors (the “Board”) had authorized a program for the repurchase of up to $500,000 of Woodward’s outstanding shares of common stock on the open market or in privately negotiated transactions over a three-year period that was scheduled to expire in November 2022 (the “2019 Authorization”). During the first six months of fiscal year 2022, Woodward repurchased 233 shares of its common stock for $26,742 under the 2019 Authorization.

In January 2022, the Board terminated the 2019 Authorization and concurrently authorized a new program for the repurchase of up to $800,000 of Woodward’s outstanding shares of common stock on the open market or in privately negotiated transactions over a two-year period ending in January 2024 (the “2022 Authorization”). During the first six months of fiscal year 2023, Woodward repurchased 274 shares of its common stock for $26,369 under the 2022 Authorization, compared to 2,047 shares of its common stock for $245,357 during the first six months of fiscal year 2022.

Provisions governing outstanding stock option awards are included in the 2017 Omnibus Incentive Plan, as amended from time to time (the “2017 Plan”) and the 2006 Omnibus Incentive Plan (the “2006 Plan”), as applicable.

The 2017 Plan was first approved by Woodward’s stockholders in January 2017 and is the successor plan to the 2006 Plan. As of September 14, 2016, the effective date of the 2017 Plan, the Board delegated authority to administer the 2017 Plan to the Compensation Committee of the Board, including, but not limited to, the power to determine the recipients of awards and the terms of those awards. On January 26, 2022 and January 25, 2023, Woodward’s stockholders approved an additional 800 and 500 shares, respectively, of Woodward’s common stock to be made available for future grants. Under the 2017 Plan, there were approximately 2,709 shares of Woodward’s common stock available for future grants as of March 31, 2023 and 2,938 shares as of September 30, 2022.

Woodward believes that stock options align the interests of its employees and directors with the interests of its stockholders. Stock option awards are granted with an exercise price equal to the market price of Woodward’s stock at the date the grants are awarded, a ten-year term, and generally have a four-year vesting schedule at a rate of 25% per year.

The fair value of options granted is estimated as of the grant date using the Black-Scholes-Merton option-valuation model. Woodward calculates the expected term, which represents the average 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.

The following is a summary of the activity for stock option awards:


	Three-Months Ended March 31, 2023					Six-Months Ended March 31, 2023
	Number of options			Weighted-Average Exercise Price per Share		Number of options			Weighted-Average Exercise Price per Share
Beginning balance		5,836		$	75.27		5,339		$	74.40
Granted		4			100.49		522			83.76
Exercised		(251	)		50.82		(270	)		51.14
Forfeited		(15	)		90.71		(17	)		91.90
Ending balance		5,574		$	76.35		5,574		$	76.35

Changes in non-vested stock options were as follows:


	Three-Months Ended March 31, 2023					Six-Months Ended March 31, 2023
	Number of options			Weighted-Average Grant Date Fair Value per Share		Number of options			Weighted-Average Grant Date Fair Value Per Share
Beginning balance		1,751		$	30.98		1,812		$	30.03
Granted		4			40.23		522			33.67
Exercised		(65	)		22.13		(642	)		29.07
Forfeited		(15	)		32.89		(17	)		33.23
Ending balance		1,675		$	31.39		1,675		$	31.39

Information about stock options that have vested, or are expected to vest, and are exercisable at March 31, 2023 was as follows:


	Number of options		Weighted-Average Exercise Price		Weighted-Average Remaining Life in Years		Aggregate Intrinsic Value
Options outstanding		5,574	$	76.35		5.6	$	130,942
Options vested and exercisable		3,899		71.14		4.5		107,908
Options vested and expected to vest		5,503		76.16		5.6		130,216

The Company has granted restricted stock units (“RSUs”) to certain employees under its form attraction and retention RSU agreement, which is generally used for new hires and specific retention purposes, and under its form RSU agreement, which is generally used for annual grants and promotional awards. The RSUs granted under these programs are generally scheduled to fully vest on the third or fourth anniversary of the respective grant dates, subject to continued employment.

A summary of the activity for restricted stock units for the three and six-months ended March 31, 2023:


	Three-Months Ended March 31, 2023					Six-Months Ended March 31, 2023
	Number of options			Weighted-Average Grant Date Fair Value		Number of options			Weighted-Average Grant Date Fair Value
Beginning balance		171		$	91.96		59		$	98.29
Granted		1			100.55		113			88.91
Forfeited		(1	)		83.24		(1	)		83.24
Ending balance		171		$	92.19		171		$	92.19

Woodward recognizes stock-based compensation expense on a straight-line basis over the requisite service period. Pursuant to form stock option agreements and form RSU agreements used by the Company, with terms approved by the administrator of the applicable plan, the requisite service period can be less than the four-year vesting period based on grantee’s retirement eligibility. As such, the recognition of stock-based compensation expense associated with some stock option grants and RSU grants can be accelerated to a period of less than four years, including immediate recognition of stock-based compensation expense on the date of grant.

In connection with an executive separation and release agreement entered into by the Company, Woodward recognized an additional $1,265 of stock compensation expense, before tax, during the three-months ended March 31, 2023.

At March 31, 2023, there was approximately $26,750 of total unrecognized compensation expense related to non-vested stock-based compensation arrangements, including both stock options and RSUs. The pre-vesting forfeiture rates for purposes of determining stock-based compensation expense recognized were estimated to be 0.0% for members of the Board and 7.3% for all others. The remaining unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 1.8 years.