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 2011, 2010 and 2009 fiscal years were:


	Year Ending September 30,
	2011		2010		2009
Dividends declared and paid	$	18,581	$	17,085	$	16,864
Dividend per share amount		0.27		0.24		0.24

Stock Repurchase Program

In September 2007, 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 ending in September 2010 (the "2007 Authorization"). Under the 2007 Authorization, Woodward has purchased a total of 55 shares with an aggregate purchase price of $1,515 and no shares of its common stock in fiscal year 2010 and fiscal year 2009, respectively.

In July 2010, the Board of Directors terminated the 2007 Authorization and approved a new stock repurchase plan that authorizes 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 will end in July 2013 (the "2010 Authorization"). Woodward purchased a total of 208 shares with an aggregate purchase price of $6,837 and 108 shares with an aggregate purchase price of $2,998 of its common stock under the 2010 Authorization in fiscal year 2011 and fiscal year 2010, respectively.

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 stock shares 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 restricted stock from treasury stock shares to eligible management employees of MPC pursuant to the 2006 Plan. There were 4,550 stock shares available for future grants as of September 30, 2011.

Stock-based compensation expense recognized was as follows:


	Year Ending September 30,
	2011		2010		2009
Employee stock-based compensation expense	$	6,590	$	6,686	$	5,499

Stock options

Stock option awards are granted with an exercise price equal to the market price of Woodward's stock at the date of grant, and generally with a four-year graded vesting schedule and term of 10 years.

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. The estimated dividend yield is based upon Woodward's historical dividend practice and the market value of it 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 Ending September 30,
	2011	2010	2009
Expected term	5.8- 8.7 years	6.5years	7years
Estimated volatility	48% - 54%	51.0%	43.0%
Estimated dividend yield	1.0% - 1.3%	1.4%	1.4%
Risk-free interest rate	1.8% - 2.6%	3.4%	3.1%
Weighted-average forfeiture rate	0% - 7.8%	7.9%	8.2%

Woodward calculates the expected term based upon historical experience of plan participants and represents the period of time that stock options granted are expected to be outstanding. Expected volatility is based on historical volatility using daily stock price observations. Historical company information is the primary basis for selection of the expected dividend yield. 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 weighted average grant date fair value of options granted follows:


	Year Ending September 30,
	2011		2010		2009
Weighted-average grant date fair value of options	$	15.00	$	11.04	$	7.73

The following is a summary of the activity for stock option awards during the fiscal year ending September 30, 2011:


				Weighted-
				Average
	Number			Exercise Price
Balance at September 30, 2010		4,011		$	16.87
Options granted		709			32.10
Options exercised		(451	)		9.75
Options expired unexercised		(2	)		32.73
Options forfeited		(39	)		26.61

Balance at September 30, 2011		4,228			20.12

Exercise prices of stock options outstanding as of September 30, 2011 range from $6.15 to $35.00.

Changes in nonvested stock options during the fiscal year ending September 30, 2011 were as follows:


				Weighted-
				Average
	Number			Exercise Price
Balance at September 30, 2010		1,256		$	23.37
Options granted		709			32.10
Options vested		(558	)		23.57
Options forfeited		(39	)		26.61

Balance at September 30, 2011		1,368			27.71

At September 30, 2011, there was $9,964 of unrecognized compensation cost related to nonvested stock options, which Woodward expects to recognize over a weighted-average period of approximately 2.5 years.

Information about stock options that have vested, or are expected to vest, and are exercisable at September 30, 2011, were as follows:


					Weighted-
			Weighted-		Average		Aggregate
			Average		Remaining Life		Intrinsic
	Number		Exercise Price		in Years		Value
Options outstanding		4,228	$	20.12		5.5	$	36,390
Options expected to vest		1,302		27.70		8.3		3,065
Options exercisable		2,860		16.44		4.2		33,130

Other information follows:


	Year Ending September 30,
	2011		2010		2009
Total fair value of stock options vested	$	5,587	$	3,786	$	4,344
Total intrinsic value of options exercised		10,145		14,083		8,695
Cash received from exercises of stock options		4,402		6,084		3,922
Excess tax benefit realized from exercise of stock options		3,558		5,115		2,695

Restricted stock

In connection with Woodward's acquisition of MPC Products, restricted stock awards were granted with a two-year graded vesting schedule. The restricted stock shares participated in dividends during the vesting period. The fair value of restricted stock granted were estimated using the closing price of Woodward common stock on the grant date. No restricted stock was issued prior to 2009.

Changes in the restricted stock awards during the fiscal year ending September 30, 2011 were as follows:


				Weighted-
				Average Grant
				Date Fair Value
	Number			per Share
Balance at September 30, 2010		70		$	33.49
Shares granted		—			n/a
Shares vested		(70	)		33.49
Shares forfeited		—			n/a
Balance at September 30, 2011		—			n/a