SHARE-BASED COMPENSATION

The Company maintains the Franklin Electric Co., Inc. 2012 Stock Plan (the "2012 Stock Plan"), which 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 authorized 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 "2009 Stock Plan") which, as amended in 2009, provided for discretionary grants of stock options and stock awards. The 2009 Stock Plan authorized 4,400,000 shares for issuance as follows:



2009 Stock Plan	Authorized Shares
Stock Options	3,200,000
Stock Awards	1,200,000

All options in the 2009 Stock Plan have been awarded.

The Company currently issues new shares from its common stock balance to satisfy option exercises and the settlement of stock awards and stock unit awards made under the 2009 Stock Plan and/or 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 29, 2014, are as follows:



	March 29, 2014		March 30, 2013
Risk-free interest rate	1.68	%	1.03	%
Dividend yield	0.70	%	0.89	%
Volatility factor	0.387		0.394
Expected term	5.6 years		6.0 years
Forfeiture rate	3.81	%	4.52	%

There were 92,946 and 176,168 stock options granted during the first quarters ended March 29, 2014 and March 30, 2013, respectively.

A summary of the Company’s outstanding stock option activity and related information for the first quarters ended March 29, 2014 and March 30, 2013 is as follows:



(Shares in thousands)	March 29, 2014				March 30, 2013
Stock Options	Shares		Weighted-Average Exercise Price		Shares		Weighted-Average Exercise Price
Outstanding at beginning of period	1,476		$	19.01	2,184		16.69
Granted	93		43.27		176		32.53
Exercised	(34	)	18.57		(307	)	13.43
Forfeited	(2	)	26.95		—		—
Outstanding at end of period	1,533		$	20.48	2,053		18.54
Expected to vest after applying forfeiture rate	1,511		$	20.31	2,022		$	18.39
Vested and exercisable at end of period	1,070		$	16.34	1,457		$	15.82

A summary of the weighted-average remaining contractual term and aggregate intrinsic value for the first quarter ended March 29, 2014 is as follows:



(In millions)	Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value (000's)
Outstanding at end of period	5.81 years	$	32,598
Expected to vest after applying forfeiture rate	5.76 years	32,426
Vested and exercisable at end of period	4.61 years	27,068

The total intrinsic value of options exercised during the first quarters ended March 29, 2014 and March 30, 2013, was $0.8 million and $4.8 million, respectively.

As of March 29, 2014, there was $2.2 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements related to stock options granted under the 2012 Stock Plan and the 2009 Stock Plan. That cost is expected to be recognized over a weighted-average period of 2.81 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 29, 2014 and March 30, 2013 is as follows:



(Shares in thousands)	March 29, 2014				March 30, 2013
Stock/Stock Unit Awards	Shares		Weighted-Average Grant- Date Fair Value		Shares			Weighted-Average Grant- Date Fair Value
Non-vested at beginning of period	551		$	24.75	$	458		$	20.90
Awarded	172		43.37		141			32.53
Vested	(110	)	15.75		(35		)	17.21
Forfeited	(56	)	27.81		(1		)	18.89
Non-vested at end of period	557		$	31.96	$	563		$	24.04

As of March 29, 2014, there was $12.8 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements related to stock awards granted under the 2012 Stock Plan and the 2009 Stock Plan.. That cost is expected to be recognized over a weighted-average period of 2.91 years.