Holders of Woodward’s common stock are entitled to receive dividends when and as declared by Woodward’s board of directors and have the right to one vote per share on all matters requiring stockholder approval.

	Year Ended September 30,
	2020		2019		2018
Dividends declared and paid	$	37,664	$	39,066	$	34,003
Dividend per share amount		0.6050		0.6300		0.5525

In the first quarter of fiscal year 2017, Woodward’s board of directors terminated the Company’s prior stock repurchase program and replaced it with a new program for the repurchase of up to $500,000 of Woodward’s outstanding shares of common stock on the open market or in privately negotiated transactions over a three year period that ended in November 2019 (the “2017 Authorization”). Effective upon the expiration of the 2017 Authorization in November 2019, Woodward’s board of directors approved a new program for the repurchase of up to $500,000 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 2022 (the “2019 Authorization”). In fiscal year 2020, Woodward purchased 124 shares of its common stock for $13,346 under the 2019 Authorization. In fiscal year 2019, Woodward repurchased 1,102 shares of common stock for $110,311 under the 2017 Authorization. Woodward repurchased no common stock in fiscal year 2018 under the 2017 Authorization.

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 in the individual stock option agreements. 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 outstanding stock option awards are included in the 2017 Omnibus Incentive Plan, as amended from time to time (the “2017 Plan”) and the 2006 Omnibus Incentive Plan (the “2006 Plan”), as applicable.

The 2017 Plan was approved by Woodward’s stockholders in January 2017 and is a successor plan to the 2006 Plan. As of September 14, 2016, the effective date of the 2017 Plan, Woodward’s board of directors delegated authority to administer the 2017 Plan to the compensation committee of the board of directors (the “Committee”), including, but not limited to, the power to determine the recipients of awards and the terms of those awards. On January 29, 2020, Woodward’s stockholders approved an additional 1,000 shares of Woodward’s common stock to be made available for future grants. Under the 2017 Plan, there were approximately 1,972 shares of Woodward’s common stock available for future grants as of September 30, 2020.

Woodward believes that stock options align the interests of its employees and directors with the interests of its stockholders. Stock option awards are granted with an exercise price equal to the market price of Woodward’s stock at the date the grants are awarded, a ten year term, and generally have a four year vesting schedule at a rate of 25% per year.

The fair value of options granted is estimated as of the grant date using the Black-Scholes-Merton option-valuation model using the assumptions in the following table. Woodward calculates the expected term, which represents the average period of time that stock options granted are expected to be outstanding, based upon historical experience of plan participants. 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.

	Year Ended September 30,
	2020							2019						2018
Weighted-average exercise price per share	$	90.52						79.84						78.91
Weighted-average grant date market value of Woodward stock	$	90.52						79.84						78.91
Expected term (years)			6.4		-	8.7			6.5		-	8.7			6.4		-	8.7
Estimated volatility			25.7	%	-	35.1	%		25.7	%	-	31.0	%		29.1	%	-	32.7	%
Estimated dividend yield			0.4	%	-	0.9	%		0.6	%		0.8	%		0.6	%	-	0.8	%
Risk-free interest rate			0.4	%	-	1.7	%		1.5	%	-	3.1	%		2.1	%	-	2.8	%

The following is a summary of the activity for stock option awards during the fiscal year ended September 30, 2020:

	Number			Weighted- Average Exercise Price Per Share
Balance at September 30, 2019		5,387		$	53.73
Options granted		912			90.52
Options exercised		(756	)		33.26
Options forfeited		(94	)		95.55
Options expired		(6	)		72.79
Balance at September 30, 2020		5,443			62.00

Exercise prices of stock options outstanding as of September 30, 2020 range from $25.57 to $127.84.

Changes in non-vested stock options during the fiscal year ended September 30, 2020 were as follows:

	Number			Weighted- Average Grant Date Fair Value Per Share
Balance at September 30, 2019		2,068		$	23.43
Options granted		912			25.41
Options vested		(808	)		21.57
Options forfeited		(94	)		26.84
Balance at September 30, 2020		2,078			24.69

Information about stock options that have vested, or are expected to vest, and are exercisable at September 30, 2020 was as follows:

	Number		Weighted- Average Exercise Price		Weighted- Average Remaining Life in Years		Aggregate Intrinsic Value
Options outstanding		5,443	$	62.00		6.0	$	114,139
Options vested and exercisable		3,365		49.63		4.6		103,059
Options vested and expected to vest		5,362		61.72		5.9		113,399

	Year Ended September 30,
	2020		2019		2018
Total fair value of stock options vested	$	17,423	$	15,863	$	13,944
Total intrinsic value of options exercised		50,059		70,866		16,690
Cash received from exercises of stock options		24,969		36,044		9,132
Excess tax benefit realized from exercise of stock options		9,399		13,416		3,524

Restricted stock units have been granted to certain employees of L’Orange (at acquisition) and other current Woodward members in key management positions. Each restricted stock unit entitles the holder to one share of the Company’s common stock upon vesting. The restricted stock units were granted with a two year vesting schedule and vest on the one and two year anniversaries of the grant date at a rate of 50% per year. The restricted stock units do not participate in dividends during the vesting period. The fair value of restricted stock units granted were estimated using the closing price of Woodward common stock on the grant date.

A summary of the activity for restricted stock units in the fiscal year ended September 30, 2020:

	Number			Weighted- Average Grant Date Fair Value per Unit
Balance at September 30, 2019		9		$	91.55
Units granted		—		n/a
Units vested		(7	)		87.30
Units forfeited		—		n/a
Balance at September 30, 2020		2			103.53

Woodward recognizes stock-based compensation expense on a straight-line basis over the requisite service period. Pursuant to form stock option agreements used by the Company, with terms approved by the administrator of the applicable plan, the requisite service period can be less than the four year vesting period based on grantee’s retirement eligibility. As such, the recognition of stock-based compensation expense associated with some stock option grants can be accelerated to a period of less than four years, including immediate recognition of stock-based compensation expense on the date of grant.

At September 30, 2020, there was approximately $10,302 of total unrecognized compensation expense related to non-vested stock-based compensation arrangements, including both stock options and restricted stock awards. The pre-vesting forfeiture rates for purposes of determining stock-based compensation expense recognized were estimated to be 0% for members of Woodward’s board of directors and 9% for all others. The remaining unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 1.9 years.

On April 5, 2020, the Board declared a dividend distribution of one right (a “Right”) for each outstanding share of common stock of the Company to stockholders of record as of the close of business on April 16, 2020 (the “Record Date”). Each Right entitles the registered holder, upon the occurrence of specified events, to purchase from the Company one one thousandth of a share of Series B Participating Preferred Stock, par value $0.003 per share (the “Preferred Stock”), of the Company at an exercise price of $480.00 (the “Exercise Price”). In addition, each Right entitles the registered holder (other than any person or group that acquires 15% or more of the Company’s common stock without the approval of the Board), following the occurrence of other specified events, to purchase common stock of the Company or stock of any acquirer of the Company at a substantial discount. The complete terms of the Rights are set forth in a Preferred Stock Rights Agreement (the “Rights Agreement”), dated as of April 5, 2020, between the Company and American Stock Transfer & Trust Company, LLC, as rights agent.

The Board adopted the Rights Agreement to protect stockholders from coercive or otherwise unfair takeover tactics. In general terms, it works by imposing a significant penalty upon any person or group that acquires 15% or more of the common stock of the Company without the approval of the Board. As a result, the overall effect of the Rights Agreement and the issuance of the Rights may be to render more difficult or discourage a merger, tender or exchange offer or other business combination involving the Company that is not approved by the Board. However, neither the Rights Agreement nor the Rights should interfere with any merger, tender or exchange offer, or other business combination approved by the Board.

The Rights expire on the earliest of (i) on April 5, 2021 (unless such date is extended) or (ii) the redemption or exchange of the Rights pursuant to the Rights Agreement.