SHARE-BASED COMPENSATION

3 Months Ended

Mar. 30, 2013

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

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

The Franklin Electric Co., Inc. 2012 Stock Plan (the "2012 Stock Plan") is a stock-based compensation plan that provides for discretionary grants of stock options, stock awards, stock unit awards and performance awards to key employees and non-employee directors. Shares and per share data below have been adjusted for all periods presented to reflect the two-for-one stock split effective March 18, 2013.

The 2012 Stock Plan authorizes 2,400,000 shares for issuance as follows:

2012 Stock Plan	Authorized Shares
Stock Options	1,680,000
Stock/Stock Unit Awards	720,000

The Company also maintains the Amended and Restated Franklin Electric Co., Inc. Stock Plan (the “Stock Plan”) which, as amended in 2009, provided for discretionary grants of stock options and stock awards. The Stock Plan authorized 4,400,000 shares for issuance as follows:

Stock Plan	Authorized Shares
Stock Options	3,200,000
Stock Awards	1,200,000

All options in the Stock Plan have been awarded. The Company currently issues new shares from its common stock balance to satisfy option exercises and stock and stock unit awards under the Stock Plan. The Company currently issues options, restricted stock/stock unit and performance awards under the 2012 Stock Plan.

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 March 30, 2013, are as follows:

	March 30, 2013
Risk-free interest rate	1.03	%
Dividend yield	0.89	%
Volatility factor	0.394
Expected term	6.0 years
Forfeiture rate	4.52	%

There were 176,168 stock options granted during the first quarter ended March 30, 2013. 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 quarters ended March 30, 2013 and March 31, 2012 is as follows:

(Shares in thousands)	March 30, 2013				March 31, 2012
Stock Options	Shares		Weighted-Average Exercise Price		Shares		Weighted-Average Exercise Price
Outstanding at beginning of period	2,184		$	16.69	3,138		$	14.83
Granted	176		32.53		—		—
Exercised	(307	)	13.43		(194	)	13.46
Forfeited	—		—		(32	)	24.44
Outstanding at end of period	2,053		$	18.54	2,912		$	14.94
Expected to vest after applying forfeiture rate	2,022		$	18.39	2,892		$	14.95
Vested and exercisable at end of period	1,457		$	15.82	2,356		$	15.18

A summary of the weighted average remaining contractual term and aggregate intrinsic value for the first quarter ended March 30, 2013 is as follows:

Stock Options	Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value (000's)
Outstanding end of period	5.94 years	$	30,874
Expected to vest after applying forfeiture rate	5.89 years	$	30,691
Vested and exercisable end of period	4.72 years	$	25,861

The total intrinsic value of options exercised during the first quarter ended March 30, 2013 and March 31, 2012, was $4.8 million and $2.3 million, respectively.

As of March 30, 2013, there was $2.6 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the 2012 Stock Plan and the Stock Plan related to stock options.  That cost is expected to be recognized over a weighted-average period of 2.74 years.

Stock/Stock Unit Awards:

A summary of the Company’s restricted stock/stock unit award activity and related information for the first quarters ended March 30, 2013 and March 31, 2012 is as follows:

(Shares in thousands)	March 30, 2013				March 31, 2012
Stock/Stock Unit Awards	Shares		Weighted-Average Grant- Date Fair Value		Shares		Weighted-Average Grant-Date Fair Value
Non-vested at beginning of period	458		$	20.90	344		$	17.24
Awarded	141		32.53		8		26.76
Vested	(35	)	17.21		(4	)	16.10
Forfeited	(1	)	18.89		(6	)	18.35
Non-vested at end of period	563		$	24.04	342		$	17.46

As of March 30, 2013, there was $8.9 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the 2012 Stock Plan and Stock Plan related to stock awards.  That cost is expected to be recognized over a weighted-average period of 3.14 years.