SHARE-BASED COMPENSATION

3 Months Ended

Mar. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

On May 4, 2012, the Franklin Electric Co., Inc. 2012 Stock Plan (the “Stock Plan”) was approved by the Company’s shareholders.  The Board of Directors of the Company had approved the Stock Plan on February 24, 2012. Under the Stock Plan, employees and non-employee directors may be granted stock options or awards of stock or stock units.  The Stock Plan authorizes 1,200,000 shares for issuance as follows:

	Authorized Shares
Options	840,000
Awards	360,000

The Company currently issues new shares from its common stock balance to satisfy option exercises and stock and stock unit awards under the stock plans.

Stock Options:

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model with a single approach and amortized using a straight-line attribution method over the option’s vesting period.

The assumptions used for the Black-Scholes model to determine the fair value of options granted during the first quarter ended April 2, 2011, are as follows:

	April 2, 2011
Risk-free interest rate	2.49	%
Dividend yield	1.23	%
Weighted-average dividend yield	1.07	%
Volatility factor	0.431
Weighted-average volatility	0.432
Expected term	6.3 years
Forfeiture rate	3.59	%

There were no stock options granted during the first quarter ended March 31, 2012.

A summary of the Company’s outstanding stock option activity and related information for the first quarter ended March 31, 2012 and April 2, 2011, is as follows:

(Shares in thousands)	March 31, 2012				April 2, 2011
Stock Options	Shares		Weighted-Average Exercise Price		Shares		Weighted-Average Exercise Price
Outstanding at beginning of period	1,569		$	29.66	1,817		$	27.95
Granted	—		—		113		43.43
Exercised	(97	)	26.91		(38	)	28.06
Forfeited	(16	)	48.87		—		—
Outstanding at end of period	1,456		$	29.88	1,892		$	28.87
Expected to vest after applying forfeiture rate	1,446		$	29.89	1,863		$	28.90
Vested and exercisable at end of period	1,178		$	30.35	1,336		$	29.83

A summary of the weighted average remaining contractual term and aggregate intrinsic value for the first quarter ended March 31, 2012, is as follows:

Stock Options	Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value (000’s)
Outstanding end of period	5.33	years	$	27,948
Expected to vest after applying forfeiture rate	5.31	years	$	27,741
Vested and exercisable end of period	4.75	years	$	22,049

The total intrinsic value of options exercised during the first quarter March 31, 2012 and April 2, 2011, was $2.3 million and $0.6 million, respectively.

As of March 31, 2012, there was $2.1 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plans related to stock options.  That cost is expected to be recognized over a weighted-average period of 1.61 years.

Stock Awards:

A summary of the Company’s outstanding restricted stock award activity and related information for the first quarter ended March 31, 2012 and April 2, 2011, is as follows:

(Shares in thousands)	March 31, 2012				April 2, 2011
Stock Awards	Shares		Weighted-Average Grant- Date Fair Value		Shares		Weighted-Average Grant- Date Fair Value
Non-vested at beginning of period	172		$	34.47	128		$	31.86
Awarded	4		53.52		68		43.40
Vested	(2	)	32.20		(21	)	47.53
Forfeited	(3	)	36.69		(1	)	29.89
Non-vested at end of period	171		$	34.91	174		$	34.47

As of March 31, 2012, there was $2.9 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plans related to stock awards.  That cost is expected to be recognized over a weighted-average period of 2.22 years.