Stock-Based Compensation

3 Months Ended

Dec. 31, 2011

Stock-Based Compensation

Stock-Based Compensation

Note 18. Stock-based compensation

Stock options

Woodward's 2006 Omnibus Incentive Plan (the "2006 Plan"), which has been approved by Woodward's stockholders, provides for the grant of up to 7,410 stock options to its members and directors. Woodward believes that such awards better align the interest of its members 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, and generally with a four-year vesting schedule at a vesting rate of 25% per year and a 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. Woodward calculates the expected term based upon historical experience of plan participants and it 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. 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 Ending
	December 31,
	2011	2010
Expected term	5.9- 8.5 years	5.8- 8.7 years
Estimated volatility	48.9% - 52.8%	48.0% - 54.0%
Estimated dividend yield	0.8% - 1.1%	1.1% - 1.3%
Risk-free interest rate	1.3% - 1.6%	1.9% - 2.6%

The following is a summary of the activity for stock option awards during the three-months ending December 31, 2011:

	Three-Months Ending
	December 31, 2011
				Weighted-
				Average
	Number of			Exercise Price
	options			per Share
Balance at September 30, 2011		4,228		$	20.12
Options granted		825			25.59
Options exercised		(185	)		11.70
Options forfeited		(10	)		26.83
Balance at December 31, 2011		4,858		$	21.34

Changes in nonvested stock options during the three-months ending December 31, 2011 were as follows:

	Three-Months Ending
	December 31, 2011
				Weighted-
				Average
	Number of			Exercise Price
	options			per Share
Balance at September 30, 2011		1,368		$	27.71
Options granted		825			25.59
Options vested		(472	)		27.40
Options forfeited		(8	)		26.83
Balance at December 31, 2011		1,713		$	26.80

As of December 31, 2011, there was approximately $14,000 of total unrecognized compensation cost, which assumes a weighted-average forfeiture rate of 7.0%,  related to non-vested stock-based compensation arrangements granted under the 2002 Stock Option 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 3.0 years.

Information about stock options that have vested, or are expected to vest, and are exercisable at December 31, 2011 were as follows:

					Weighted-
			Weighted-		Average
			Average		Remaining Life		Aggregate
	Number		Exercise Price		in Years		Intrinsic Value
Options outstanding		4,858	$	21.34		6.1	$	95,155
Options vested and exercisable		3,145		18.37		4.6		70,954
Options vested and expected to vest		4,668		21.11		6.0		92,516