In the first quarter of fiscal year 2017, Woodward’s board of directors terminated the Company’s prior stock repurchase program and replaced it with a new 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 ended in November 2019 (the “2017 Authorization”). Effective upon the expiration of the 2017 Authorization in November 2019, Woodward’s board of directors approved a new 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 will end in 2022 (the “2019 Authorization”). In the first half of fiscal year 2020, Woodward purchased 124 shares of its common stock for $13,346 under the 2019 Authorization. Woodward repurchased 456 shares of common stock for $43,253 under the 2017 Authorization in the first half of fiscal year 2019.

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 approved by Woodward’s stockholders in January 2017 and is a successor plan to the 2006 Plan. As of September 14, 2016, the effective date of the 2017 Plan, Woodward’s board of directors delegated authority to administer the 2017 Plan to the compensation committee of the board of directors (the “Committee”), including, but not limited to, the power to determine the recipients of awards and the terms of those awards. On January 29, 2020, Woodward’s stockholders approved an additional 1,000 shares of Woodward’s common stock to be made available for future grants. Under the 2017 Plan, there were approximately 2,185 shares of Woodward’s common stock available for future grants as of March 31, 2020 and 1,783 shares as of September 30, 2019.

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 using the assumptions in the following table. 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.



	Three-Months Ended						Six-Months Ended
	March 31,						March 31,
	2020		2019				2020				2019
Weighted-average exercise price per share	$	127.84	$	77.12			$	104.91			$	79.12
Weighted-average grant date market value of Woodward stock	$	127.84	$	77.12			$	104.91			$	79.12
Expected term (years)		6.5		6.5				6.4	-	8.7		6.5	-	8.7
Estimated volatility		25.7%		25.8%	-	26.0%		25.7%	-	30.1%		25.7%	-	31.0%
Estimated dividend yield		0.9%		0.7%	-	0.8%		0.6%	-	0.9%		0.7%	-	0.8%
Risk-free interest rate		1.7%		2.6%				1.6%	-	1.7%		2.6%	-	3.1%

The following is a summary of the activity for stock option awards during the three and six-months ended March 31, 2020:



	Three-Months Ended				Six-Months Ended
	March 31, 2020				March 31, 2020
	Number of options		Weighted-Average Exercise Price per Share		Number of options		Weighted-Average Exercise Price per Share
Options, beginning balance		5,766	$	$59.97		5,387	$	53.73
Options granted		3		$127.84		629		104.91
Options exercised		(137)		$37.72		(363)		35.05
Options forfeited		(9)		$86.77		(30)		83.20
Options, ending balance		5,623		$60.50		5,623		60.50

Changes in non-vested stock options during the three and six-months ended March 31, 2020 were as follows:



	Three-Months Ended				Six-Months Ended
	March 31, 2020				March 31, 2020
	Number of options		Weighted-Average Grant Date Fair Value per Share		Number of options		Weighted-Average Grant Date Fair Value Per Share
Non-vested options outstanding, beginning balance		1,905	$	$25.90		2,068	$	23.43
Options granted		3		$33.44		629		28.57
Options vested		(32)		$23.79		(800)		21.52
Options forfeited		(9)		$25.68		(30)		25.34
Non-vested options outstanding, ending balance		1,867		$25.95		1,867		25.95

Information about stock options that have vested, or are expected to vest, and are exercisable at March 31, 2020 was as follows:



	Number		Weighted- Average Exercise Price		Weighted- Average Remaining Life in Years		Aggregate Intrinsic Value
Options outstanding		5,623	$	60.50		6.0	$	56,006
Options vested and exercisable		3,755		47.67		4.8		56,006
Options vested and expected to vest		5,515		59.92		5.9		56,006

Restricted stock units

Restricted stock units have been granted to certain employees of L’Orange (at acquisition) and other current Woodward members in key management positions. Each restricted stock unit entitles the holder to one share of the Company’s common stock upon vesting. The restricted stock units were granted with a two year vesting schedule and vest on the one and two year anniversaries of the grant date at a rate of 50% per year. The restricted stock units do not participate in dividends during the vesting period. The fair value of restricted stock units granted were estimated using the closing price of Woodward common stock on the grant date.

A summary of the activity for restricted stock units for the three and six-months ended March 31, 2020:



	Three-Months Ended				Six-Months Ended
	March 31, 2020				March 31, 2020
		Number		Weighted-Average Grant Date Fair Value per Unit		Number		Fair Value per Share
Beginning balance		9	$	91.55		9	$	91.55
Units granted		-		-		-		-
Units vested		-		-		-		-
Units forfeited		-		-		-		-
Ending balance		9		91.55		9		91.55

Woodward recognizes stock-based compensation expense on a straight-line basis over the requisite service period. Pursuant to form stock option 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 can be accelerated to a period of less than four years, including immediate recognition of stock-based compensation expense on the date of grant.