Equity-Based Compensation

We have equity-based compensation plans that authorize the issuance of equity-based awards for shares of Class A common stock to directors, officers and key employees. Equity-based compensation grants are designed to reward long-term contributions to Moog and provide incentives for recipients to remain with Moog.

Equity-based compensation expense is based on share-based payment awards that are ultimately expected to vest. Vesting requirements vary for directors, officers and key employees. In general, options and stock appreciation rights (SARs) granted to outside directors vest one year from the date of grant, options granted to officers vest on various schedules, options granted to key employees vest in equal annual increments over a period of five years from the date of grant and SARs granted to officers and key employees vest in equal annual installments over a period of three years from the date of grant.

The fair value of equity-based awards granted was estimated on the date of grant using the Black-Scholes option-pricing model. The following table provides the range of assumptions used to value equity-based awards and the weighted-average fair value of the awards granted.



	2014			2013			2012
Expected volatility	29% - 39%			34% - 40%			40% - 42%
Risk-free rate	.7% - 2.0%			.4% - 1.1%			.5% - 1.4%
Expected dividends	—		%	—		%	—		%
Expected term	3-7 years			3-7 years			3-7 years
Weighted-average fair value of SARs granted	$	23.74		$	14.10		$	16.92

To determine expected volatility, we generally use historical volatility based on weekly closing prices of our Class A common stock over periods that correlate with the expected terms of the awards granted. The risk-free rate is based on the United States Treasury yield curve at the time of grant for the appropriate term of the awards granted. Expected dividends are based on our history and expectation of dividend payouts. The expected term of equity-based awards is based on vesting schedules, expected exercise patterns and contractual terms.

The 2008 Stock Appreciation Rights Plan (2008 Plan) authorizes the issuance of 4,000,000 SARs, which represent the right to receive shares of Class A common stock. The exercise price of the SARs, determined by a committee of the Board of Directors, may not be less than the fair market value of the Class A common stock on the grant date. The number of shares received upon exercise of a SAR is equal in value to the difference between the fair market value of the Class A common stock on the exercise date and the exercise price of the SAR. The term of a SAR may not exceed ten years from the grant date.

The 2003 Stock Option Plan (2003 Plan) authorizes the issuance of options for 1,350,000 shares of Class A common stock. The 1998 Stock Option Plan (1998 Plan) authorizes the issuance of options for 2,025,000 shares of Class A common stock. Under the terms of the plans, options may be either incentive or non-qualified. Options outstanding as of September 27, 2014 consisted of both incentive options and non-qualified options. The exercise price, determined by a committee of the Board of Directors, may not be less than the fair market value of the Class A common stock on the grant date. Options become exercisable over periods not exceeding ten years.

Options and SARs are as follows:



1998 Stock Option Plan	Stock Options/SARs		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life	Aggregate Intrinsic Value
Outstanding at October 1, 2011	306,161		$	13.81
Exercised in 2012	(148,300	)	12.07
Outstanding at September 29, 2012	157,861		15.45
Exercised in 2013	(107,237	)	13.42
Outstanding at September 28, 2013	50,624		19.74
Exercised in 2014	(50,624	)	19.74
Outstanding at September 27, 2014	—		$	—	0 years	$	—
Exercisable at September 27, 2014	—		$	—	0 years	$	—



2003 Stock Option Plan
Outstanding at October 1, 2011	1,125,724		$	32.98
Exercised in 2012	(19,852	)	28.17
Expired in 2012	(1,538	)	42.45
Outstanding at September 29, 2012	1,104,334		33.05
Exercised in 2013	(341,822	)	30.20
Expired in 2013	(20,250	)	42.45
Outstanding at September 28, 2013	742,262		34.11
Exercised in 2014	(139,974	)	32.22
Outstanding at September 27, 2014	602,288		$	34.55	1.8 years	$	20,507
Exercisable at September 27, 2014	473,227		$	35.63	1.9 years	$	15,604

Total Stock Option Plans
Outstanding at September 27, 2014	602,288		$	34.55
Exercisable at September 27, 2014	473,227		$	35.63



2008 Stock Appreciation Rights Plan
Outstanding at October 1, 2011	1,116,708		$	34.26
Granted in 2012	408,000		41.82
Exercised in 2012	(56,543	)	32.62
Outstanding at September 29, 2012	1,468,165		36.43
Granted in 2013	460,791		36.41
Exercised in 2013	(235,715	)	33.71
Outstanding at September 28, 2013	1,693,241		36.80
Granted in 2014	233,000		61.69
Exercised in 2014	(298,213	)	35.66
Forfeited in 2014	(4,000	)	39.12
Outstanding at September 27, 2014	1,624,028		$	40.57	6.3 years	$	45,516
Exercisable at September 27, 2014	1,061,406		$	37.44	5.2 years	$	33,077

The aggregate intrinsic value in the preceding tables represents the total pre-tax intrinsic value, based on our closing price of Class A common stock of $68.60 as of September 27, 2014. That value would have been effectively received by the option and SAR holders had all option and SAR holders exercised their options and SARs as of that date.

The intrinsic value of awards exercised and fair value of awards vested are as follows:



	2014		2013		2012
1998 Stock Option Plan
Intrinsic value of options exercised	$	2,134	$	2,585	$	4,254
Total fair value of options vested	$	28	$	27	$	27
2003 Stock Option Plan
Intrinsic value of options exercised	$	4,843	$	6,199	$	227
Total fair value of options vested	$	981	$	399	$	376
2008 Stock Appreciation Rights Plan
Intrinsic value of SARs exercised	$	9,534	$	3,368	$	437
Total fair value of SARs vested	$	7,633	$	5,199	$	4,563

As of September 27, 2014, total unvested compensation expense associated with stock options amounted to $159 and will be recognized over a weighted-average period of one year, and total unvested compensation expense associated with SARs amounted to $2,450 and will be recognized over a weighted-average period of two years.