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Stockholders' Equity | 6 Months Ended
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Mar. 31, 2024
Equity [Abstract] |
Stockholders' Equity | Note 20. Stockholders’ equity Common stock and treasury stock Activity in common stock and treasury stock share are as follows:
|  | Common Stock |  |  | Treasury Stock |  |  | Treasury stock held for deferred compensation |
Balances as of January 1, 2023 |  |  | 72,960 |  |  |  | (13,460 | ) |  |  | (122 | )
Sales of treasury stock |  |  | — |  |  |  | 251 |  |  |  | — |
Common shares issued for benefit plans |  |  | — |  |  |  | 187 |  |  |  | — |
Purchases of stock by deferred compensation |  |  | — |  |  |  | — |  |  |  | — |
Distribution of stock from deferred compensation |  |  | — |  |  |  | — |  |  |  | 55 |
Balances as of March 31, 2023 |  |  | 72,960 |  |  |  | (13,022 | ) |  |  | (67 | )
Balances as of January 1, 2024 |  |  | 72,960 |  |  |  | (12,823 | ) |  |  | (54 | )
Sales of treasury stock |  |  | — |  |  |  | 479 |  |  |  | — |
Common shares issued for benefit plans |  |  | — |  |  |  | 159 |  |  |  | — |
Purchases of stock by deferred compensation |  |  | — |  |  |  | — |  |  |  | — |
Distribution of stock from deferred compensation |  |  | — |  |  |  | — |  |  |  | 1 |
Balances as of March 31, 2024 |  |  | 72,960 |  |  |  | (12,185 | ) |  |  | (53 | )
|  | Common Stock |  |  | Treasury Stock |  |  | Treasury stock held for deferred compensation |
Balances as of September 30, 2022 |  |  | 72,960 |  |  |  | (13,207 | ) |  |  | (139 | )
Sales of treasury stock |  |  | — |  |  |  | 270 |  |  |  | — |
Purchase of treasury stock |  |  | — |  |  |  | (274 | ) |  |  | — |
Common shares issued for benefit plans |  |  | — |  |  |  | 189 |  |  |  | — |
Purchases of stock by deferred compensation |  |  | — |  |  |  | — |  |  |  | (1 | )
Distribution of stock from deferred compensation |  |  | — |  |  |  | — |  |  |  | 73 |
Balances as of March 31, 2023 |  |  | 72,960 |  |  |  | (13,022 | ) |  |  | (67 | )
Balances as of September 30, 2023 |  |  | 72,960 |  |  |  | (13,070 | ) |  |  | (55 | )
Sales of treasury stock |  |  | — |  |  |  | 726 |  |  |  | — |
Common shares issued for benefit plans |  |  | — |  |  |  | 159 |  |  |  | — |
Purchases of stock by deferred compensation |  |  | — |  |  |  | — |  |  |  | (1 | )
Distribution of stock from deferred compensation |  |  | — |  |  |  | — |  |  |  | 3 |
Balances as of March 31, 2024 |  |  | 72,960 |  |  |  | (12,185 | ) |  |  | (53 | )
Stock repurchase program In January 2022, the Woodward board of directors (the "Board") authorized a program for the repurchase of up to $800,000 of Woodward’s outstanding shares of common stock on the open market or in privately negotiated transactions over a two-year period ending in January 2024 (the “2022 Authorization”). During the first six months of fiscal year 2023, Woodward repurchased 274 shares of its common stock for $26,369. In January 2024, the Board terminated the 2022 Authorization, which was nearing expiration, and concurrently authorized a new program for the repurchase of up to $600,000 of Woodward’s outstanding shares of common stock on the open market or in privately negotiated transactions over a three-year period ending in January 2027 (the “2024 Authorization”). During the first six months of fiscal year 2024, Woodward repurchased no shares of its common stock. Stock-based compensation Provisions governing outstanding stock option awards, restricted stock units ("RSUs"), and performance restricted stock units ("PSUs") are included in the 2017 Omnibus Incentive Plan, as amended from time to time (the “2017 Plan”) and, with respect to outstanding stock options awarded in or prior to 2016, the 2006 Omnibus Incentive Plan (the “2006 Plan”). The 2017 Plan was first approved by Woodward’s stockholders in January 2017 and is the successor plan to the 2006 Plan. The Board has delegated authority to administer the 2017 Plan to the Compensation Committee of the Board, including, but not limited to, the power to determine the recipients of awards and the terms of those awards. On January 25, 2023, Woodward’s stockholders approved an additional 500 shares of Woodward’s common stock to be made available for future grants. Under the 2017 Plan, there were approximately 2,209 shares of Woodward’s common stock available for future grants as of March 31, 2024 and 2,689 shares as of September 30, 2023. Stock options 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. 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. The following is a summary of the activity for stock option awards:
|  | Three Months Ended March 31, 2024 |  |  | Six Months Ended March 31, 2024 |
|  | Number of options |  |  | Weighted-Average Exercise Price per Share |  |  | Number of options |  |  | Weighted-Average Exercise Price per Share |
Beginning balance |  |  | 4,611 |  |  | $ | 80.99 |  |  |  | 4,842 |  |  | $ | 80.48 |
Granted |  |  | 81 |  |  |  | 137.76 |  |  |  | 87 |  |  |  | 137.36 |
Exercised |  |  | (475 | ) |  |  | 67.93 |  |  |  | (710 | ) |  |  | 69.19 |
Forfeited |  |  | (4 | ) |  |  | 91.51 |  |  |  | (6 | ) |  |  | 91.84 |
Ending balance |  |  | 4,213 |  |  | $ | 83.54 |  |  |  | 4,213 |  |  | $ | 83.54 |
Changes in non-vested stock options were as follows:
|  | Three Months Ended March 31, 2024 |  |  | Six Months Ended March 31, 2024 |
|  | Number of options |  |  | Weighted-Average Grant Date Fair Value per Share |  |  | Number of options |  |  | Weighted-Average Grant Date Fair Value Per Share |
Beginning balance |  |  | 858 |  |  | $ | 35.37 |  |  |  | 1,393 |  |  | $ | 33.96 |
Granted |  |  | 81 |  |  |  | 58.15 |  |  |  | 87 |  |  |  | 58.34 |
Vested |  |  | (9 | ) |  |  | 31.78 |  |  |  | (549 | ) |  |  | 32.01 |
Forfeited |  |  | (4 | ) |  |  | 35.54 |  |  |  | (5 | ) |  |  | 35.24 |
Ending balance |  |  | 926 |  |  | $ | 37.40 |  |  |  | 926 |  |  | $ | 37.40 |
Information about stock options that have vested, or are expected to vest, and are exercisable at March 31, 2024 was as follows:
|  | Number of options |  |  | Weighted-Average Exercise Price |  |  | Weighted-Average Remaining Life in Years |  |  | Aggregate Intrinsic Value |
Options outstanding |  |  | 4,213 |  |  | $ | 83.54 |  |  |  | 5.5 |  |  | $ | 297,376 |
Options vested and exercisable |  |  | 3,287 |  |  |  | 79.53 |  |  |  | 4.8 |  |  |  | 245,191 |
Options vested and expected to vest |  |  | 4,177 |  |  |  | 83.37 |  |  |  | 5.5 |  |  |  | 295,556 |
R estricted stock units The Company generally grants RSUs to eligible employees under its form RSU agreement for employees (the “Standard Form RSU Agreement”). RSUs granted under the Standard Form RSU Agreement prior to November 14, 2023, generally have a four-year vesting schedule at a rate of 25% per year, and RSUs granted after November 14, 2023 have a three-year vesting schedule at a rate of 33.3% per year, in each case generally subject to continued employment. The Company has also granted RSUs to certain employees under its form attraction and retention RSU agreement (the “Form Attraction and Retention RSU Agreement”), which has from time to time been used for new hires and specific retention purposes. RSUs granted under the Form Attraction and Retention Agreement are generally scheduled to fully vest on the third or fourth anniversary of the respective grant dates, and in each case, subject to continued employment. A summary of the activity for RSUs:
|  | Three Months Ended March 31, 2024 |  |  | Six Months Ended March 31, 2024 |
|  | Number of units |  |  | Weighted-Average Grant Date Fair Value |  |  | Number of units |  |  | Weighted-Average Grant Date Fair Value |
Beginning balance |  |  | 170 |  |  | $ | 96.95 |  |  |  | 177 |  |  | $ | 93.46 |
Granted |  |  | 155 |  |  |  | 137.76 |  |  |  | 167 |  |  |  | 137.33 |
Released |  |  | (5 | ) |  |  | 89.03 |  |  |  | (24 | ) |  |  | 86.59 |
Forfeited |  |  | (1 | ) |  |  | 111.78 |  |  |  | (1 | ) |  |  | 108.48 |
Ending balance |  |  | 319 |  |  | $ | 116.90 |  |  |  | 319 |  |  | $ | 116.90 |
Performance restricted stock units In November 2023, the Company granted PSUs to certain employees under its form PSU agreement that generally will vest subject to a market condition and a service condition through the performance period. The market condition associated with the awards is based on the Company's relative total shareholder return ("TSR") compared to the TSR generated by the other companies that comprise the S&P 400 Midcap Index over a three-year performance period. Performance at target will result in vesting and issuance of the number of PSUs granted, equal to 100% payout. Performance below or above target can result in an issuance of between 0% - 150% of the target number of PSUs granted. Expense is recognized based on the weighted average grant date fair value on a straight line basis over the service period, irrespective as to whether the market condition is achieved. The fair value of the PSUs for the November 2023 grant was determined based upon a Monte Carlo valuation method. The assumptions used in the Monte Carlo method to value the PSUs granted, which includes the grant date fair value outcome from the Monte Carlo method, were as follows:
|  | March 31, 2024 |
Expected volatility |  |  | 30.2 | %
Risk free interest rate |  |  | 4.5 | %
Expected life |  | 3 years |
Grant date fair value |  | $ | 146.47 |
The PSUs granted receive dividend equivalent units; therefore, no discount was applied for Woodward’s dividends. A summary of the activity for PSUs:
|  | Three Months Ended March 31, 2024 |  |  | Six Months Ended March 31, 2024 |
|  | Number of units |  |  | Weighted-Average Grant Date Fair Value |  |  | Number of units |  |  | Weighted-Average Grant Date Fair Value |
Beginning balance |  |  | 66 |  |  | $ | 146.47 |  |  |  | — |  |  | $ | — |
Granted |  |  | — |  |  |  | — |  |  |  | 66 |  |  |  | 146.47 |
Forfeited |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Ending balance |  |  | 66 |  |  | $ | 146.47 |  |  |  | 66 |  |  | $ | 146.47 |
Stock-based compensation expense Woodward recognizes stock-based compensation expense on a straight-line basis over the requisite service period. Pursuant to form stock option agreements, form RSU agreements, and form PSU agreements used by the Company, with terms approved by the administrator of the applicable plan, the requisite service period can be less than the vesting period defined in the applicable award agreement based on grantee’s retirement eligibility. As such, the recognition of stock-based compensation expense associated with some stock option grants, RSU grants, and PSU grants can be accelerated to a period of less than the vesting period, including immediate recognition of stock-based compensation expense on the date of grant. In connection with an executive separation and release agreement entered into by the Company during the second quarter of fiscal year 2024, Woodward recognized an additional $1,682 of stock compensation expense, before tax. At March 31, 2024, there was approximately $39,926 of total unrecognized compensation expense related to non-vested stock-based compensation arrangements, including stock options, RSUs, and PSUs. The pre-vesting forfeiture rates for purposes of determining stock-based compensation expense recognized were estimated to be 0.0% for members of the Board and 7.3% for all others. The remaining unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 1.6 years.

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- Definition The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 505 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//505/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 718 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//718/tableOfContent + Details
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