SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934

Filed by the Registrant    ☑

Filed by a Party other than the Registrant    ☐

Check the appropriate box:

WOODWARD, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

		Woodward, Inc. 1081 Woodward Way Fort Collins, Colorado 80524 Tel:970-482-5811 Fax:970-498-3050

WOODWARD, INC.

NOTICE OF 20182019 ANNUAL MEETING OF STOCKHOLDERS

AND PROXY STATEMENT

December 18, 201813, 2019

Dear Stockholder:

You are cordially invited to join our Board of Directors and senior leadership at Woodward, Inc.’s Annual Meeting of stockholdersStockholders at 8:00 a.m., Mountain Standard Time, on Wednesday, January 30, 2019,29, 2020, at The Elizabeth Hotel located at 111 Chestnut Street, Fort Collins, Colorado. Please follow posted signs directing you to the registration table. We also invite you to join our directors and members of our management team for a continental breakfast at 7:30 a.m. The formal meeting will begin promptly at 8:00 a.m.

Garage parking is available on site for a fee, and nearby two hour street parking is available at no charge. A map is located on the back of this proxy statement.

Your vote is very important to us and to the continued success of our Company. Please complete and return your proxy card by mail, or vote via telephone or the Internet,internet, as soon as possible regardless of whether you plan to attend in person. Thank you in advance for your continuing commitment to Woodward.

Sincerely yours,

WOODWARD, INC.

Thomas A. Gendron

Chairman, Board of Directors

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

Important Notice Regarding the Availability of Proxy Materials for ourThe Annual Meeting of Stockholders of Woodward, Inc. will be held at the date, time and place below. At the Annual Meeting, stockholders will be asked to be Held on January 30, 2019:

This Proxy Statementconsider and our Annual Report on Form10-K forvote upon the fiscal year ended September 30, 2018, including consolidated financial statements, are available to you atwww.proxydocs.com/wwd.matters set forth in this notice.

Date and Time:

Wednesday, January 30, 201929, 2020

8:00 a.m., Mountain Standard Time

Place:

The Elizabeth Hotel

111 Chestnut Street

Fort Collins, Colorado

The purpose of our Annual Meeting is to:

Stockholders who owned Woodward, Inc. common stock at the close of business on the record date, December 3, 2018,2, 2019, are entitled to vote at the meeting, or any postponement or adjournment thereof.

This proxy statement and our Annual Report on Form10-K for the fiscal year ended September 30, 2019, including consolidated financial statements, are available to you at www.proxydocs.com/wwd.

Important Notice of Internet Availability of Proxy Materials

The Securities and Exchange Commission’s “Notice and Access” rule enables us to deliver a Notice of Internet Availability of Proxy Materials to stockholders in lieu of a paper copy of the proxy statement, related materials, and our Annual Report. It contains instructions on how to access our proxy statement and 2019 Annual Report and how to vote online.

Shares cannot be voted by marking, writing on, and/or returning the Notice of Internet Availability. Any Notices of Internet Availability that are returned will not be counted as votes.

By Order of the Board of Directors,

WOODWARD, INC.

A. Christopher Fawzy

Corporate Secretary

December 18, 201813, 2019

YOUR VOTE IS IMPORTANT

Even if you plan to attend the meeting in person, please date, sign, and return your proxy card in the enclosed envelope, or vote via telephone or the internet as instructed on the proxy card or Notice of Internet Availability, prior to the meeting and as soon as possible. Your prompt response is helpful and your cooperation will be appreciated.

TABLE OF CONTENTS

ANNUAL REPORT ON FORM10-K 

ABOUT THE ANNUAL MEETING AND VOTING

Woodward, Inc. (“Woodward” or the “Company”), on behalf of its Board of Directors (the “Board”), is soliciting your proxy to vote at our Annual Meeting of Stockholders to be held on January 30, 201929, 2020 (or at any postponement or adjournment of the meeting) (the “Annual Meeting”). This proxy statement summarizes the information you need to know to vote at the meeting.

We began mailing this proxy statement and the enclosed proxy cardA Notice of Internet Availability (the “Notice”) will be first mailed on or about December 18, 2018,20, 2019 to all stockholders entitled to vote at the Annual Meeting. The Woodward, Inc.of record as of December 2, 2019 (the “Record Date”). These proxy solicitation materials, combined with our Annual Report which includeson Form10-K for the fiscal year ended September 30, 2019 including our most recent audited financial statements, were first made available on the internet on or about December 13, 2019. Our principal executive offices are located at 1081 Woodward Way, Fort Collins, Colorado 80524, and our telephone number at that location is970-482-5811. We maintain a website at www.woodward.com. The information on our website is also being distributed withnot incorporated by reference into this proxy statement.

Who Can Vote at the Meeting?

Stockholders who owned Woodward common stock at the close of business on the record date,Record Date, December 3, 2018,2, 2019, are entitled to vote at the meeting. As of the record date,Record Date, there were 61,834,97362,012,208 shares of Woodward common stock outstanding.

Registered Stockholders. If your shares are registered directly in your name with Woodward’s transfer agent, you are considered the stockholder of record with respect to those shares, and the Notice was provided to you directly by Woodward. As the stockholder of record, you have the right to grant your voting proxy directly to the individuals listed on the proxy card or to vote in person at the Annual Meeting.

Street Name Stockholders. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in street name and the Notice was forwarded to you by your broker or nominee, who is considered, with respect to those shares, the stockholder of record. As the beneficial owner, you have the right to direct your broker or nominee how to vote your shares. If you request a printed copy of the proxy materials by mail, your broker or nominee will provide a voting instruction card for you to use. Beneficial owners are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you follow your broker’s procedures for obtaining a legal proxy.

How many votes do I get per share?

Each share of Woodward common stock that you own entitles you to one vote on each matter to be presented at the Annual Meeting, except for the election of directors, for which you may cumulate your votes. Since fourthree directors are standing for election, you will be entitled to fourthree director votes for each share of stock you own. Of this total, you may choose how many votes you wish to cast for each director. The Board is not soliciting discretionary authority to cumulate votes with respect to the election of directors.

Why did I receive a one-page notice in the mail about the internet availability of proxy materials instead of a full set of printed proxy materials?

Under Securities and Exchange Commission (the “SEC”) rules, we are making our proxy materials available via the internet, beginning this year. Instead of mailing printed copies of the proxy materials to all of our stockholders, the SEC rules allow us to send you, our stockholders as of the Record Date, a Notice containing instructions on how to access the proxy materials via the internet and how to request a printed copy by mail if you prefer. Sending you the Notice and using the internet instead of mailing printed proxy materials also saves costs and natural resources.

ABOUT THE ANNUAL MEETING AND VOTING (continued)

How can I get electronic access to the proxy materials?

The Notice provides you with instructions about how to:

If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. If you choose to receive future proxy materials by mail, you will receive a paper copy of those materials, including a form of proxy. Your election to receive proxy materials by mail or email will remain in effect until you notify us that you are terminating your request.

How do I vote?

Woodward offersRegistered Stockholders. Registered stockholders the opportunity tomay vote by mail, by telephone, or via the Internet. Instructions to use these methods are set forth on the enclosed proxy card. We urge you to vote promptly, even if you plan to attendin person at the Annual Meeting in person.or by one of the following methods:

Please note that the internet and telephone voting facilities for registered stockholders will close at 11:59 p.m. Eastern Standard Time on January 28, 2020.

Street Name Stockholders. If your shares are held by a broker, bank or other nominee, you should have received instructions on how to vote or instruct the broker to vote your shares from your broker, bank or other nominee. Please follow their instructions carefully. Also, please note that if the holder of record of your shares is a broker, bank or other nominee and you wish to vote in person at the Annual Meeting, you must request a legal proxy from the bank, broker or other nominee that holds your shares and present that proxy and proof of identification at the Annual Meeting to vote your shares. Street name stockholders may generally vote by one of the following methods:

If you properly fill in your proxy card and send it to us in time to vote, or if you vote by internet or telephone before the polls close, your shares will be voted as you have directed. If you sign the proxy card or vote by

ABOUT THE ANNUAL MEETING AND VOTING (continued)

internet or telephone but do not make specific choices, your shares will be voted in accordance with the Board’s recommendation as follows:

“FOR” the election of each of the Board’s nominees to the Board;

“FOR” the ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm;

“FOR” the advisory resolution regarding the compensation of the Company’s named executive officers; and

“FOR” the approval of the amendmentsan amendment to the Amended and Restated Woodward, Inc. 2017 Omnibus Incentive Plan including anto increase in the number of shares reserved for issuance by 1,400,000.1,000,000.

If any other matter is presented at the meeting, your shares will be voted in accordance with the proxyholder’s best judgment. At the time this proxy statement was printed, we were not aware of any additional matters to be acted on at the meeting.

If you hold your shares through a broker, bank or other nominee, please follow the instructions regarding how to vote on the Voting Instruction Form you receive from your broker.

How do I change my vote or revoke my proxy?

You may revoke your proxy by:

SUMMARY OF PROPOSALS SUBMITTED FOR VOTE

Proposal 1: Election of Directors

Director Nominees: At the Annual Meeting, you will be asked to elect to the Board the fourthree nominees for director identified in this proxy statement. Each director will be elected to serve a three-year term and will hold office until the 20212022 Annual Meeting held in or about January 20222023 and until a successor is elected and qualified.

Vote Required: Because this is an uncontested election, directors are elected by a majority vote. A nominee for director in an uncontested election will be elected if the votes cast “for” that nominee’s election exceed the votes cast “against” that nominee’s election. Abstentions and brokernon-votes will not be considered in the calculation. We have adopted a director resignation policy. Accordingly, each director has submitted an irrevocable resignation contingent upon not receiving a majority of votes in an uncontested election and acceptance of the resignation by the Board.

Proposal 2: Ratification of the Appointment of Independent Registered Public Accounting Firm

Independent Registered Public Accounting Firm: At the Annual Meeting, you will be asked to ratify the Audit Committee’s appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2019.2020.

Vote Required: The affirmative vote of the holders of a majority of shares of Woodward common stock present in person or by proxy and entitled to vote on the matter at the Annual Meeting will be required to ratify the Audit Committee’s appointment of the independent registered public accounting firm. Abstentions will count as a vote “against” the proposal. Brokernon-votes will have no effect on the outcome of the vote.

Proposal 3: Approval of Advisory Resolution Regarding the Compensation of the Named Executive Officers

Compensation of the Company’s Named Executive Officers: At the Annual Meeting, you will be asked to approve an advisory resolution regarding the compensation of the Company’s named executive officers.

Vote Required: The affirmative vote of the holders of a majority of shares of Woodward common stock present in person or by proxy and entitled to vote on the matter at the Annual Meeting will be required for the approval of the advisory resolution regarding the compensation of the Company’s named executive officers. Abstentions will count as a vote “against” the proposal. Brokernon-votes will have no effect on the outcome of the vote.

This proposal 3, commonly referred to as a“say-on-pay” proposal, is not binding on the Board or the Compensation Committee. However, the Board and the Compensation Committee will review and consider the voting results when evaluating our executive compensation program.

Proposal 4: Approval of Amendmentsan Amendment to the Woodward Omnibus Incentive Plan

Amendments to the Woodward Omnibus Incentive Plan: At the 2016 Annual Meeting, stockholders of the Company approved the Woodward, Inc. 2017 Omnibus Incentive Plan, as further amended and restated at the 2017 Annual Meeting (theand further amended at the 2018 Annual Meeting (as amended, the “Woodward Omnibus Incentive Plan” or the “Omnibus Incentive Plan”). At the 20182019 Annual Meeting, you will be asked to approve additional amendmentsan amendment to the Woodward Omnibus Incentive Plan including anto increase in the number of shares reserved for issuance thereunder by 1,400,000.1,000,000.

SUMMARY OF PROPOSALS SUBMITTED FOR VOTE (continued)

Vote Required: The affirmative vote of a majority of the votes cast on Proposal 4 at the Annual Meeting will be required for the approval of the amendments to the Omnibus Incentive Plan. With respect to Proposal 4,

BOARD OF DIRECTORS

Woodward’s certificate of incorporation provides for the Board to be divided into three classes, designated Class I, Class II and Class III, with directors in each class serving a three-year term. Woodward’s certificate of incorporation further provides that the Board must consist of no less than six directors. The exact number of directors serving on the Board, and the exact number of directors in each class, is determined from time to time by resolution of the Board. If the number of directors changes, any increase or decrease must be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible. The Company’s Bylaws and Director Guidelines provide that directors are elected by a majority of the votes cast and we have a corresponding resignation policy for uncontested director elections. Contested elections are determined by a plurality vote.

Changes During Fiscal Year 2019

On January 7, 2019, Jonathan W. Thayer joined the Company as an executive officer. In connection with his appointment, Mr. Thayer resigned from (i) the Audit Committee of the Board effective immediately upon joining the Company and (ii) the Board effective as of January 31, 2019. In light of Mr. Thayer’s resignation, the Board reduced the number of directors from ten to nine, effective on January 31, 2019 (the effective date of Mr. Thayer’s resignation from the Board). Mr. Thayer’s biographical information appears in our annual report.

As described more fully in the “Director Retirement Policy” section below, our Director Guidelines provide that individuals age 70 or above generally will not be nominated by the Board, unless the Board determines in its sole discretion that circumstances exist that would support any such nomination.

In anticipation of the retirement of Paul Donovan, who will be 72 at the upcoming Annual Meeting, the Nominating and Governance Committee has been in the process of recruiting a replacement director but a replacement director has not yet been identified. Thus, the Board determined that circumstances exist for Mr. Donovan to continue serving on the Board beyond the expiration of his current term, taking into consideration in particular Mr. Donovan’s financial expertise and substantial knowledge of the Company and its markets. The Board, therefore, has nominated Mr. Donovan for election at the 2019 Annual Meeting.

The Company’s Bylaws require each class of directors to be as nearly equal as possible. On May 1, 2019, the Board approved a mandatory director resignation policy, which is included in our Director Guidelines, relating to the rebalancing of director classes (the “Rebalancing Policy”). The Rebalancing Policy authorizes the Nominating and Governance Committee to recommend an automatic rebalancing of the Company’s director classes in accordance with the process outlined in the Rebalancing Policy. As a result of Mr. Thayer’s resignation from the Board, the Board classes were unbalanced. Therefore, on November 14, 2019, upon a class rebalancing recommendation by the Nominating and Governance Committee and in compliance with the Rebalancing Policy, James R. Rulseh, a Class II director, tendered his resignation from the Board effective as of the date of the 2019 Annual Meeting, and the Board nominated him for election in Class III at such meeting.

Following the rebalancing described above, the Board’s three classes are currentlywill be comprised of three Class I directors, fourthree Class II directors, and three Class III directors. Each of the four directorsdirector identified in this proxy statement as standing for election at the 20182019 Annual Meeting of Stockholders has been nominated by the Board at the recommendation of the Nominating and Governance Committee to hold office for a three-year term expiring in January 2022,2023, or when a successor is elected and qualified. Ms. Drake is standing for election by stockholders for the first time.Petrovich and Messrs. Cohn,Donovan and Rulseh and Sengstack are incumbents. Directors identified in this proxy statement who are not standing for election at this meeting will continue in office for the remainder of their respective terms.terms, subject to the Company’s policies.

If a nominee is unavailable for election, proxy holders will vote for another nominee proposed by the Nominating and Governance Committee.

We identify below certain biographical information of each of our directors and the director nominees for election, including his or her principal occupation, public company directorships currently held or held during the past five years and other business affiliations. We also describe the specific experience, qualifications, attributes and skills of each director and director nominee that led the Board to conclude that he or she should serve as a member of the Board.

BOARD OF DIRECTORS (continued)

PROPOSAL 1 — ELECTION OF DIRECTORS

Directors Standing for Election at This Meeting for Terms Expiring in 2022:2023:

BOARD OF DIRECTORS (continued)

BOARD OF DIRECTORS (continued)

Directors Remaining in Office Until 2021:

BOARD OF DIRECTORS (continued)

BOARD OF DIRECTORS (continued)

Directors Remaining in Office Until 2022:

BOARD OF DIRECTORS (continued)

GOVERNANCE

Governance Documents

Woodward’s policies and practices reflect corporate governance initiatives that are compliant with the listing requirements of the NASDAQ Stock Market (“NASDAQ”), SEC rules and regulations, and the applicable corporate governance requirements of the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). We maintain a corporate governance page on our website at www.woodward.com that can be accessed by clicking on “Investors” and then on “Corporate Governance.”http://www.woodward.com/about/corporate-governance. Included on this site are a message from our Chairman and Chief Executive Officer and the following documents adopted by our Board:

A link to EthicsPoint, our third-party help-line reporting system provider, is also provided. Charters for our Audit Committee, Compensation Committee, Executive Committee, and Nominating and Governance Committee can also be found by clicking on “Investors,” then selecting “Board of Directors,” and then clicking on the “Board Committees and Charters” link.our corporate governance page, as well as a link to EthicsPoint, our third-party help-line reporting system provider.

Sustainability

Woodward’s mission is to set the global standard in energy control solutions for the aerospace and industrial markets and promote sustainable solutions by optimizing energy use through improved efficiency and lower emissions. Woodward’s commitment to sustainability extends to several aspects of our business, including:

Woodward’s sustainability report outlines our present and future commitment to sustainability. Our sustainability report is available on our website and can be accessed by clicking on “Our Company” and then on “Social Responsibility.”at http://www.woodward.com/en/about/social-responsibility.

INDEPENDENT DIRECTORS

The Board, during its annual review of the independence of its members, has determined that each member of the Board, other than Mr. Gendron, is independent under the criteria established by current NASDAQ listing requirements for independent directors. In addition, the Board has determined that each member of the Audit Committee and each member of the Compensation Committee meets the additional independence criteria required for audit committee and compensation committee members, as applicable, established by SEC rules and regulations and NASDAQ listing requirements.

BOARD LEADERSHIP STRUCTURE

Mr. Gendron serves as our Chairman of the Board and Chief Executive Officer. Because one individual serves as both Chairman and CEO, the Board appoints an independent director to serve as “Lead Director.” Our Lead Director is Mr. Cohn, who was appointed to that position by the Board in 2017. TheIn 2018, the Board recently adopted a Lead Director charter that provides a clear and formal delineation of the duties and responsibilities of the Lead Director. The independent Lead Director, among other duties, chairs separate executive sessions of the independent directors following regularly scheduled Board meetings. The duties and responsibilities of the Lead Director are more fully set forth under the “Board Meetings and Committees – Lead Director” section below. The Board believes the combined Chairman/CEO position, together with an independent Lead Director, has certain advantages over other board leadership structures and best meets the Company’s current needs. Mr. Gendron’s leadership as Chairman and CEO provides our Board with detailed andin-depth knowledge of the Company’s strategy, markets, operations and financial condition, and enhances our ability to communicate a clear and consistent strategy to our stockholders, employees and business partners. This leadership structure differentiates the oversight role of the Lead Director and other independent directors from the oversight role of the Chairman/CEO and other management, enabling the Board and the Chairman/CEO to have greater clarity and focus on their respective leadership roles.

The Board is responsible for, among other things, overseeing the management of the business and affairs of the Company; selecting and recommending to stockholders appropriate candidates for election to the Board; reviewing and, where appropriate, approving the business plans, major strategies and financial objectives of the Company; evaluating Board processes and performance and the overall effectiveness of the Board; evaluating the performance of the Company and of senior management; requiring, approving and overseeing the implementation of the Company’s succession plans; reviewing compliance with applicable laws and regulations and adopting and overseeing policies of corporate conduct to assure compliance with applicable laws and regulations, a corporate culture that reflects the Company’s values, and maintenance of necessary accounting, financial and other controls.

The Board understands there is no single“one-size fits all” approach to providing Board leadership in the competitive and changing environment in which we operate. The optimal Board leadership structure may vary as circumstances warrant. At present, the Board believes its current structure effectively maintains independent oversight and management. Consistent with our Director Guidelines, the Board reviews and considers whether the positions of Chairman and CEO should be combined or separated as part of a regular review of the effectiveness of the Company’s governance structure.

BOARD MEETINGS AND COMMITTEES

The Board met ninefive times in fiscal year 2018.2019. All directors attended at least 8090 percent of the aggregate of the total meetings of the Board and all committees on which they served. Directors are encouraged, but are not required, to attend annual meetings of stockholders. The Company’s last annual meeting of stockholders was attended by all directors.

The Board has the following standing committees: Audit Committee; Compensation Committee; Nominating and Governance Committee; and Executive Committee. All actions by committees are reported to the Board at the next regularly scheduled meeting. As part of its ongoing corporate governance review, the Board reviews its assignment of committee memberships annually and madeannually. Except for the resignation of Mr. Thayer from the Audit Committee as described above in “Board of Directors”, no changes were made in fiscal year 20182019 to thosecommittee assignments as reported in last year’s proxy statement.

BOARD MEETINGS AND COMMITTEES (continued)

The following table reflects the committee memberships as of the filing date of this proxy statement:

NAME

AUDIT

COMPENSATION

NOMINATING & GOVERNANCE

EXECUTIVE

John D. Cohn

Paul Donovan

Eileen P. Drake

Thomas A. Gendron

Daniel G. Korte

Mary L. Petrovich

James R. Rulseh

Ronald M. Sega

Gregg C. Sengstack

Jonathan W. Thayer

= Committee Member; = Chair

Audit Committee

The Audit Committee oversees and monitors the Company’s accounting and financial reporting processes, including the quality of internal controls over those processes and audits of the Company’s financial statements and internal controls over financial reporting. The Audit Committee also retains, oversees, and evaluates the Company’s independent registered public accounting firm, and is involved in the selection of the lead audit partner. The Audit Committee also reviews and approves the selection and tenure of the Company’s internal audit lead, and periodically assesses the quality of internal audit activity. The Audit Committee also assists the Board with overseeing the Company’s processes for risk mitigation and with monitoring compliance with laws, regulations and the Company’s Code of Business Conduct and Ethics. The Audit Committee is also responsible for reviewing the Company’s financial reporting risk exposure and the Company’s risk assessment and risk management processes. In addition, the Audit Committee oversees compliance of the Company’s financial statements with applicable rules and regulations and recommends to the Board, based on reviews and discussion with management and the Company’s independent registered public accounting firm, that the audited financial statements of the Company be included in the Company’s Annual Report on Form10-K. The Audit Committee also retains, oversees, and evaluates the Company’s independent registered public accounting firm, and is involved in the selection of the lead audit partner. The Audit Committee also reviews and approves the selection and tenure of the Company’s internal audit lead, and periodically assesses the quality of internal audit activity. The Audit Committee operates under a charter that more fully describes the responsibilities of the Audit Committee. The Audit Committee reviews its charter at least annually and recommends to the Board such revisions as it deems necessary or appropriate.

The Audit Committee charter is availablecan be found on our website at http://www.woodward.com/Charter-Audit-Committee.about/corporate-governance.

Consistent with SEC rules and regulations and NASDAQ’s listing standards, and in accordance with the Audit Committee charter, all members of the Audit Committee are independent directors and meet all enhanced independence requirements for Audit Committee members. The Board of Directors determined that Messrs.Mr. Sengstack and Thayer areis an audit committee financial experts,expert, within the meaning of Item 407(d) of RegulationS-K under the Securities Act of 1933, as amended, and havehas experience resulting in “financial sophistication” as defined under NASDAQ listing requirements.

The Audit Committee meets as often as necessary to perform its duties and responsibilities.

The Audit Committee held six meetings in fiscal year 2018.

BOARD MEETINGS AND COMMITTEES (continued)

Committee reviews and approves the compensation of all of our executive officers. The Compensation Committee has oversight responsibility for the Company’s (i) annual short-term incentive compensation under the Woodward Variable Incentive Plan (the “WVIP”), (ii) long-term incentive program, which includes a both a cash component (Woodward’s Cash Long-Term Incentive Plan (the “Cash LTI”)) and an equity component, and (iii) Omnibus Incentive Plan. Except as described under the “Delegation of Authority” section, the Compensation Committee determines and takes all action, including granting of all incentives and/or equity compensation to eligible recipients, in accordance with the terms of the Omnibus Incentive Plan, and serves as administrator and oversees compliance with the terms of the plan.The Compensation Committee reviews performance against targets for both the annual incentive compensation plan and the long-term incentive compensation plan. In addition, the Compensation Committee produces the annual report required by SEC rules, and recommends to the Board the inclusion of the Compensation Discussion and Analysis (“CD&A”) in the Company’s Annual Report on Form10-K and its proxy statement.

The Compensation Committee reviews and approves the compensation of all ofcharter can be found on our executive officers. The Compensation Committee has oversight responsibility for the Company’s annual and long-term incentive plans, which includes Woodward’s Cash Long-Term Incentive Plan (the “Cash LTI”), and the Omnibus Incentive Plan (as may be amended from time to time). Except as described under the “Delegation of Authority” section, the Compensation Committee determines and takes all action, including granting of all incentives and/or stock options to eligible recipients, in accordance with the terms of the plans, and serves as administrator of the plans and oversees compliance with the terms of the plans.The Compensation Committee reviews performance against targets for both the annual incentive compensation plan and the long-term incentive compensation plan. The Compensation Committee’s written charter, which describes the specific duties of the Compensation Committee, is availablewebsite at http://www.woodward.com/Charter-Compensation-Committee.about/corporate-governance.

Consistent with NASDAQ’s listing requirements, and in accordance with the Compensation Committee charter, all members of the Compensation Committee are independent directors and meet the heightened standards for independence of Compensation Committee members under the NASDAQ listing rules. The Compensation Committee charter provides that the Compensation Committee may, after reviewing certain specified independence criteria, retain or obtain the advice of compensation advisers. The Compensation Committee charter also provides that the Compensation Committee is responsible for the appointment, compensation and oversight of the work of any such compensation advisers, and that the Company will provide for appropriate funding for payment of reasonable compensation to any compensation advisers retained by the Compensation Committee.

The Compensation Committee meets as often as necessary to perform its duties and responsibilities. The Compensation Committee held foursix meetings in fiscal year 2018.2019.

In making its decisions and completing its annual review of our executive compensation program, the Compensation Committee routinely examines a variety of factors which typically include the following (among others):

BOARD MEETINGS AND COMMITTEES (continued)

Delegation of Authority

The Compensation Committee charter provides authority to the Compensation Committee to delegate its role and responsibilities to subcommittees entirely made up of Compensation Committee members. The Compensation Committee delegated to the Chairman of the Compensation Committee the authority to approve any and all option exercises when the optionee seeks to pay for the cost of the option and/or the taxes associated with the transaction with stock previously owned and held by the optionee for at least six months. The Chairman of the Compensation Committee is authorized to further delegate these responsibilities to any other member of the Compensation Committee. The Compensation Committee alsohas delegated, to a subcommittee comprised of the Compensation Committee Chairperson and one other Compensation Committee member, the authority to review and approve the grant of options, restricted stock units and/or restricted stock to officers and other employees of the Company, members of the Board, or consultants of the Company in the interval between regularly scheduled meetings of the Compensation Committee, subject to the pool for awards as identified and approved by the Compensation Committee in advance on an annual basis (such grants, “interim grants”). Additionally, the Board has (i) delegated to the Chief Executive Officer thelimited authority to make certain interim grants and (ii) delegated to the Compensation Committee all of the Board’s rights to impose restrictions on such authority of the Chief Executive Officer. In accordance with such delegation by the Board, the Compensation Committee has prohibited theThe Chief Executive Officer from making interimis not permitted to make grants to any member of the Board, any Section 16 officer, or any other elected officer of the Company, and has placed limits on the sizeCompany. The Chief Executive Officer otherwise is authorized to make interim grants of any interim grant the CEO may awardnot more than 15,000 nonqualified stock options or 5,000 shares of Restricted Stock Units or Restricted Stock Awards to any single individual.individual during any fiscal year. The Compensation Committee delegated to the Chairman of the Compensation Committee the authority to approve any and all option exercises when the optionee seeks to pay for the cost of the option and/or the taxes associated with the transaction with stock previously owned and held by the optionee for at least six months. The Chairman of the Compensation Committee is authorized to further delegate these responsibilities to any other member of the Compensation Committee.

Risk Assessment

The Compensation Committee regularly reviews the Company’s compensation policies and practices, and believes they are robust and effective. The Company also conducted a review of its compensation plans and related risk to the Company. The Company and the Compensation Committee, with the input of Aon, the Company’s compensation consultant, have concluded that any risks arising from its employee compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.

Nominating and Governance Committee

The Nominating and Governance Committee recommends qualified individuals to fill any vacancies on the Board, develops and administers the Director Guidelines and the Company’s guidelines for corporate governance, establishes other guidelines, such as stock ownership guidelines for officers and directors, reviews and reassesses the Company’s programs and policies related to its codes of conduct, oversees an annual Board self-evaluation, establishes other governance related policies and guidelines, such as stock ownership guidelines for officers and directors, and addresses other governance related matters. In addition, the Nominating and Governance Committee periodically evaluates the compensation and benefits of the Company’snon-employee members of the Board and recommends any changes to the Board for approval.

The Nominating and Governance Committee charter can be found on our website at http://www.woodward.com/about/corporate-governance.

In accordance with NASDAQ listing requirements and the Nominating and Governance Committee’s charter, all members of the Nominating and Governance Committee are independent directors. The Nominating and Governance Committee meets as often as necessary to perform its duties and responsibilities.

The Nominating and Governance Committee held five meetings in fiscal year 2018. The Nominating and Governance Committee charter is available athttp://www.woodward.com/Charter-Nominating-and-Governance-Committee.2019.

Executive Committee

The Executive Committee exercises all the powers and authority of the Board in the management of the business when the Board is not in session, and when, in the opinion of the Chairman of the Board, a particular

BOARD MEETINGS AND COMMITTEES (continued)

matter should not be postponed until the next regularly scheduled Board meeting. The Executive Committee mayhas been delegatednon-exclusive authority to declare cash dividends. The Executive Committee may not authorize certain major corporate actions such as amending the certificate of incorporation, amending the bylaws, adopting an agreement of merger or consolidation, or recommending the sale, lease, or exchange of substantially all of the assets of the Company.

The Executive Committee meets as often as necessary to perform its duties and responsibilities. charter can be found on our website at http://www.woodward.com/about/corporate-governance.

The Executive Committee held no meetings in fiscal year 2018. The Executive Committee charter is available at http://www.woodward.com/Charter-Executive-Committee.2019.     

Director Nomination Process

The Nominating and Governance Committee considers candidates for Board membership as recommended by directors, management, or stockholders. The Nominating and Governance Committee uses the same criteria to evaluate all candidates for Board membership, whether recommended by directors, management, or stockholders. As it deems necessary, the Nominating and Governance Committee may engage consultants or third-party search firms to assist in identifying and evaluating potential nominees. The Nominating and Governance Committee engaged a third-party consultant in fiscal year 2019 to assist in identifying and evaluating director candidates.

The Nominating and Governance Committee recommends qualified director candidates for nomination by the Board based on the skills and characteristics that the Board seeks in its members as well as consideration of the diversity of the Board as a whole. This review includes an assessment of, among other things, a candidate’s knowledge, education, experience, cultural background, including race,ethnicity, gender and age, and skills in areas critical to understanding the Company and its business, with a commitment to enhancing shareholder value. The Nominating and Governance Committee seeks candidates with the highest professional and personal ethics and values, that are aligned with the philosophy and concepts as expressed in the Company’s Constitution, and who will operate in accordance with the Company’s Code of Business Conduct and Ethics. The Nominating and Governance Committee also assesses a candidate’s ability to make independent analytical inquiries, and willingness to devote adequate time to Board duties.

Director nominees should possess the following experience, qualifications, attributes and skills:

Prospective directors should be committed to representing the long-term interests of the stockholders. A potential director must exhibit an inquisitive and objective perspective, an ability to think strategically, an ability to identify practical problems, and an ability to assess alternative courses of action that contribute to the long-term success of the business. Director candidates must have industry expertise and/or commit to understanding the Company’s industry as a basis to address strategic and operational issues of importance to the Company. Directors are also expected to commit substantial time and energy to the Board and should ensure that other existing and future time commitments do not materially interfere with their service as a director. DirectorsUnless otherwise approved in advance by the Nominating and Governance Committee,non-employee directors shall limit their board service to a maximum of four other public companies, and in the case of employee directors shall limit their board service to a maximum of one other public company.

The Nominating and Governance Committee considers other relevant factors, as it deems appropriate, including the current composition of the Board and the need for expertise on various Board committees. Every

BOARD MEETINGS AND COMMITTEES (continued)

effort is made to complement and supplement skills within the Board and strengthen identified areas of need. The Nominating and Governance Committee considers the ability of candidates to meet independence and other requirements of the SEC, NASDAQ, or other regulatory bodies exercising authority over the Company.

The Nominating and Governance Committee’s process for evaluating potential director candidates normally requires one or more members of the Nominating and Governance Committee, and others as appropriate, to interview prospective nominees in person or by telephone. Upon identification of a qualified candidate, the Nominating and Governance Committee will recommend a candidate for consideration by the full Board.

Director Retirement Policy

Under the Director Guidelines, no individual will be nominated by the Board forre-election if such individual will

BOARD MEETINGS AND COMMITTEES (continued)

Board Composition and Diversity

The Board meets periodically with the Nominating and Governance Committee to review Board composition for diversity of knowledge, experience, cultural background, race,ethnicity, gender, and age which, when taken together, enables the Board to ensure that board members possess the skills, perspectives and expertise necessary to effectively oversee the Company’s business. In this regard, the Nominating and Governance Committee considers, for each incumbent director and potential nominee, the various factors described in the below table. The Nominating and Governance Committee reviews the assessment and its recommendations with the Board.

BOARD MEETINGS AND COMMITTEES (continued)

Chief Executive Officer’s performance. The Lead Director then meets with the Chief Executive Officer to review items discussed at the meeting and to provide feedback from the Board with regard to his overall performance as CEO. The Lead Director then reports to the independent directors regarding each such feedback meeting with the Chief Executive Officer. Additionally, the Lead Director (together with the Chairperson of the Compensation Committee) presents to the Chief Executive Officer his annual performance review as conducted by the Compensation Committee with input from the independent members of the Board of Directors, and the Lead Director (together with the Chairperson of the Nominating and Governance Committee) reviews and reports on the results of the Board’s annual self-evaluation, discussed below. The Lead Director also

BOARD MEETINGS AND COMMITTEES (continued)

The Compensation Committee is responsible for monitoring risks associated with the design and administration of the Company’s compensation programs and equity compensation plans, and performs the annual performance review of the CEO and ensures the independence of the compensation consultants.

The Nominating and Governance Committee oversees risks relating to the Company’s corporate governance processes, compliance with the SEC and NASDAQ rules and regulations, and other state and federal laws and regulations relating to corporate governance, and reviews and reassesses the adequacy of the Company’s Code of Business Conduct and Ethics.

BOARD MEETINGS AND COMMITTEES (continued)

Woodward is not currently engaged in any Interested Transactions.Transactions, and there are no known proposed Interested Transactions, that would require disclosure under the RPT Policy.

Compensation Committee Interlocks and Insider Participation

Ms. Petrovich and Messrs. Rulseh, Cohn, and Donovan served as members of the Compensation Committee during fiscal year 2018.2019. The Compensation Committee members have no interlocking relationships required to be disclosed under SEC rules and regulations.

BOARD MEETINGS AND COMMITTEES (continued)

Cash compensation fornon-employee directors wasremained as follows in fiscal year 2018:2019:

In fiscal year 2019, the Nominating and Governance Committee commissioned Aon to conduct a competitive assessment of the Company’s Board of Director compensation program. Aon analyzed board of director compensation practices of the Company’s fiscal year 2020 peer group, and compared Woodward’s Board compensation program to the practices of the peer group. Based on the results of this assessment, the Nominating and Governance Committee determined it was appropriate and in line with market practice to increase certain Board cash compensation for fiscal year 2020, effective October 1, 2019. Specifically, (i) the annual director cash retainer was increased by $7,500 to $82,500, and (ii) the annual lead director cash retainer was increased by $12,500 to $25,000. No other changes to Board of Director compensation for fiscal year 2020 were made.

Our directors are eligible to participate in anon-qualified deferred compensation plan, the Woodward Executive Benefit Plan (“EBP”). Under the EBP, our directors are able to defer up to 100% of their cash

BOARD MEETINGS AND COMMITTEES (continued)

Option awards outstanding as of September 30, 20182019 are as follows:

STOCK OWNERSHIP OF MANAGEMENT

Directors and Named Executive Officers

The following table shows how much Woodward common stock was beneficially owned, as of November 26, 2018,25, 2019, by each director, each named executive officer of the Company, and all directors and executive officers as a group:

STOCK OWNERSHIP OF MANAGEMENT (continued)

Table to footnote (2) above:

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Based upon a review of our records, all reports required to be filed pursuant to Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) were filed on a timely basis, with the exception of a Form 4 filed by the Company on behalf of Mr. RulsehPreiss related to a single saledistribution of Company stock.phantom stock units from the Company’s Executive Benefit Plan. The untimely Form 4 was filed outside the Section 16 filing requirement and was primarily due to an administrative oversight by the transaction broker.Company.

PERSONS OWNING MORE THAN FIVE PERCENT OF WOODWARD STOCK

The following table shows how many shares of Woodward common stock were owned by each person known to us to own more than five percent of our common stock as of November 26, 2018:25, 2019:

COMPENSATION DISCUSSION AND ANALYSIS

The following Compensation Discussion and Analysis (“CD&A”) provides an overview of our compensation philosophy, strategy, objectives and structure for fiscal year 2018.2019. This section is intended to be read in conjunction with the tables that immediately follow, which provide further historical compensation information for the NEOs.

For fiscal year 2018,2019, our NEOs were:

Executive Summary

Our executive compensation program has been designedis intended to (1) provide a competitive total compensation program that enables us to attract, retain, and motivate a high-performance executive management team, and (2) link the total compensation program payouts to Company and stockholder interests. We believe that proper administration of this program should result in a compensation program that is aligned with, and motivates improvement in, our fundamental financial performance and supports the long-term interests of the Company and its stockholders.

Our executive compensation program is based on the overall financial performance of the Company and is structured as a total compensation package comprised of the following elements:

In addition, the executive compensation program for NEOs includes health and welfare benefits, a deferred compensation program, defined contribution plans, change in control agreements, and other ancillary benefits.

On November 7, 2018, weWoodward adopted the FASB Accounting Standards UpdateNo. 2014-09 “Revenue from Contracts with Customers” (“ASC 606”), effective October 1, 2018. Fiscal year 2019 results were reported on the basis of ASC 606 in accordance with GAAP (generally accepted accounting principles), as well as on the basis of the prior applicable accounting standard (“ASC 605”). However, Woodward’s fiscal year 2019 profit plan was established

COMPENSATION DISCUSSION AND ANALYSIS (continued)

in accordance with ASC 605 only. Therefore, all applicable WVIP metrics for fiscal year 2019 were established and measured on the basis of ASC 605 rather than ASC 606. In contrast, the fiscal year 2019 portion of the 2017-2019 performance cycle for Cash LTI, which uses relative metrics in comparison to our peer group, was measured on the basis of ASC 606. Accordingly, our below summary reflects financial results for fiscal year 2019 both on the basis of ASC 606 and ASC 605; fiscal year 2018 which included the following highlights:results are reflected only under ASC 605:

The net earnings results are reflected in the compensation paid in fiscal year 2018,2019, particularly through the WVIP.

Changes Within Executive Group

On January 7, 2019, the Company announced that Mr. Weber, Vice Chairman and Chief Financial Officer, notified the Company of his intention to retire effective in 2020, and that as part of the Company’s succession planning for the Chief Financial Officer role, Mr. Thayer joined the Company as Vice Chairman, Corporate Operations, reporting to Mr. Gendron. Mr. Thayer resigned from the Board and as a member of the Audit Committee in connection with joining the Company as an executive officer.

On October 1, 2019, the first day of the Company’s fiscal year 2020, Mr. Weber resigned from his position as Chief Financial Officer and was succeeded by Mr. Thayer as planned. Mr. Weber remains an officer of the Company as Vice Chairman, providing general support to Mr. Gendron. Mr. Thayer is now Vice Chairman, Corporate Operations and Chief Financial Officer.

Effective February 20, 2019, Mr. Cromwell was appointed to the newly created position of Vice Chairman, Chief Operating Officer, reporting to Mr. Gendron.

On April 8, 2019, the Company reorganized its business group reporting structure into site-based “business units”. As part of the reorganization, the Company’s Aircraft Turbine Systems (“ATS”) business group unit was restructured. Mr. Patel, previously the President of ATS, was appointed as Business Unit President, Fuel Systems and Controls. Mr. Patel’s responsibilities did not substantially change in the reorganized structure, and thus no changes were made to his compensation in fiscal year 2019. The Compensation Committee established the 2019 WVIP design prior to the reorganization, and the Compensation Committee determined to make no changes to such design after the reorganization. For this reason, Mr. Patel’s fiscal year 2019 WVIP payout was calculated using the performance metrics established for the former ATS business group.

Executive Compensation Mix

For our NEOs, we believe it is important to provide a significant portion of total compensation tied to incentives that can fluctuate, up or down, based on our financial and operational performance to align with stockholder

COMPENSATION DISCUSSION AND ANALYSIS (continued)

The charts below reflect the target mix pay between fixed and variable compensation components based on FY18 target compensation for our NEOs during fiscal year 2018,2019, which reflects ourpay-for-performance philosophy:

Compensation Philosophy and Strategy

Our compensation philosophy and strategy is to establish total compensation (base salary, annual short-term cash incentives, and long-term incentives) for each NEO that is competitive with total compensation for executives in comparable positions at companies in our peer comparator group. Our compensation approach reflects multiple factors such as (i) the individual’s performance, knowledge, skills, abilities and potential, (ii) significant contributions to the Company and impact to shareholder value, and (iii) our ability to achieve our goals to attract and retain industry leading talent.

Our philosophy places a strong focus onpay-for-performance, with an emphasis on variable compensation, and in particular, long-term incentive compensation that directly ties to Company performance. Our variable compensation plans (annual short-term incentives and long-term incentives), which for fiscal year 20182019 represented between 66%67% and 84% of our NEOs’ target total compensation opportunities, are designed so that the payout opportunity is directly linked to the achievement ofpre-determined financial performance metrics, with upside opportunity for exceeding thepre-determined goals. Our variable compensation plans also include equity-based compensation to align NEO and stockholder interests. With the variable incentive components of our executive compensation program, we strive to align the interests of the NEOs with the interests of our stockholders in different ways by focusing on both short-term and long-term performance goals, by promoting ownership of the Company, and by linking reward outcomes to our financial performance. As a result of Woodward’s total compensation approach, which includes base pay and variable pay (annual incentive

COMPENSATION DISCUSSION AND ANALYSIS (continued)

Woodward’s overall executive compensation approach and the related actions described in its 20172018 proxy statement, and further determined that current practices and processes did not require any significant modifications to achieve the desired results or to address any stockholder concerns. In addition, at the 2016 Annual Meeting held in January 2017, our stockholders indicated their preference for an annual say on pay vote in an advisory resolution regarding the frequency of say on pay proposals, which the Board adopted. Accordingly, a say on pay proposal is again being submitted to our stockholders for consideration at the 20182019 Annual Meeting, which is included as Proposal 3 in this proxy statement. The Compensation Committee will continue to consider the outcome of these advisory votes when evaluating future executive compensation arrangements.

The Compensation Committee’s Interaction with Management

In order to design compensation programs that are aligned with appropriate Company performance goals and strategic direction, the Compensation Committee works closely with management, including the Chief Executive Officer, the Corporate Vice President, Human Resources, and the Corporate Vice President, General Counsel & Corporate Secretary. Specifically, management facilitates the alignment process by:

All decisions regarding executive compensation are ultimately made by the Compensation Committee.

The Company’s Corporate Vice President, Human Resources, works with the Compensation Committee Chair to establish the agenda for Compensation Committee meetings. At the Compensation Committee’s request, the Chief Executive Officer regularly attends the meetings and provides background information regarding the Company’s strategic objectives, evaluation of the performance of the executive officers, and compensation recommendations as to executive officers other than himself. The Compensation Committee may also seek input from the Corporate Vice President, General Counsel & Corporate Secretary, as necessary and appropriate, to carry out its duties. The Corporate Vice President, Human Resources, provides input on executive compensation structure, performance assessment process and data, potential promotions, talent management and succession planning, and compensation associated with promotions. No employee is present during the discussion of his or her compensation.

COMPENSATION DISCUSSION AND ANALYSIS (continued)

target total compensation. In carrying out its assignment, the consultant may interact with members of management, including but not limited to the Chief Executive Officer, the Corporate Vice President, Human Resources, the Corporate Vice President, General Counsel & Corporate Secretary, and the Vice President & Corporate Controller.Controller, and the Director, Global Total Rewards.

In addition to their services with respect to compensation for the NEOs, Aon acts as a global compensation and benefits consultant for the Company and provides total compensation data for the Company’s key leadership group. Management also utilizes Aon’s benefits index and compensation and benefits survey data to benchmark compensation and benefits for the Company’snon-NEOs.

During fiscal year 2018,2019, in accordance with SEC rules and regulations and NASDAQ listing requirements, the Compensation Committee considered various factors relating to compensation consultant independence, including the following six factors established by the SEC:

As a result of the interactions with the Compensation Committee and management, the Company believes Aon has a well-developed understanding of our business, and is well positioned to provide objective guidance on compensation and benefit plans that are aligned with and reinforce our strategies and goals, and has determined that Aon is independent and free from any conflict of interest.

Compensation Consultant Fees

For fiscal year 2018,2019, the Company paid Aon $829,628$765,649 for advice and services provided to the Compensation Committee and the Company. Of this amount, $445,551$544,323 was paid as a result of the work Aon performed for the Compensation Committee related to executive compensation advice and services, and $384,077$221,326 was paid as a result of the work Aon performed for the Company that was not related to executive compensation, including broad compensation benchmarking data applicable tonon-executive employees, including international benchmarking data and services, and other health, welfare and retirement plan consulting services.

The decision to use Aon for advice and services not related to executive compensation was made by management. While neither the Compensation Committee, nor the Boardpre-approves thesenon-executive compensation services, the Compensation Committee annually reviews Aon’s internal guidelines and practices

COMPENSATION DISCUSSION AND ANALYSIS (continued)

Measurement database on the basis of competition for business or talent, global and publicly-traded holding structure, level of operational complexity, similar revenue size, market capitalization, markets and industries served, and manufacturing profile.

Based on its annual review, effective for fiscal year 2018, the Compensation Committee determined it was appropriate to make changes to the companies comprising the peer group for pay and performance comparisons. Accordingly, CLARCOR, Inc., Roper Technologies, Inc., Valmont Industries, Inc., and Kaman Corporation were removed from the peer group. CLARCOR was removed due to its acquisition by Parker Hannifin. Roper Technologies, Valmont Industries, and Kaman Corporation were removed based on a difference in business operations and strategy, markets served, and/or customers relative to Woodward. Nordson Corporation and Hexcel Corporation were added to the peer group as a result of being similar in size (as measured by revenues, market capitalization and profitability), scope of operations, markets served, and customers. Based on the changes made effective for fiscal year 2018, the Compensation Committee determined that the composition of the revised peer group, as well as the number of companies comprising the revised peer comparator group for fiscal year 2018 remained appropriate for pay and performance comparisons in fiscal year 2019. Accordingly, no changes were made to the peer comparator group that was appropriate to benchmark competitiveused for fiscal year 2019 compensation levels and performance.determinations.

Compensation data from our peer comparator group identified in the table below was reviewed as part of the Compensation Committee’s process of determining target total compensation opportunities for each NEO for fiscal year 2018.2019. We also reference this data across each component of compensation for our NEOs, including base salary, annual short-term incentive compensation, and long-term incentive compensation. At the time the peer group below was approved by the Compensation Committee, the peer group was comprised of companies that had revenues equalranging from 0.5x to 0.6x to 2.6x3.3x the Company’s revenues, which, basedwith average revenues equal to 1.3x the Company’s revenues. Based on Aon’s recommendation, the Compensation Committee determined this to be an appropriate range. Revenues servedserve as a key evaluation criteria because we believe that it is a reasonable reflection of the scope and complexity of an organization, as well as the duties and responsibilities of the NEO positions being compared. To a lesser extent, operating income and market capitalization are also evaluated.

In fiscal year 2018,2019, the Compensation Committee continued to use the same approach to competitive data to assess the NEOs’ compensation levels as that which was used in fiscal year 2017.prior years. Accordingly, the Compensation Committee used raw competitive data (as compared to size adjusted data) to establish the

COMPENSATION DISCUSSION AND ANALYSIS (continued)

group, which we refer to as the benchmark position. These matches facilitate pay comparisons based on functional matches, job duties, responsibilities, level of impact, and organizational level.

When analyzing market data from our peer group, Aon presents data to the Compensation Committee at the 25th, 50th and 75th percentiles for reference points. However, we do not target any percentile or percentile range as a specific objective for the compensation we pay. Rather, our compensation decisions are based on the full consideration of all of the above mentioned elements that provide input into our deliberations and inform our decisions. As a result of evaluating compensation based on the criteria described above, total target compensation for our NEOs may in certain circumstances be above or below the reference points provided by Aon.

Compensation Arrangements for Messrs. Thayer and Cromwell

As more fully described above in “Changes Within Executive Group”, both Mr. Thayer and Mr. Cromwell joined the Company as executive officers during the Company’s fiscal year 2019. The Compensation Committee, in consultation with Aon, determined the target total compensation for Messrs. Thayer and Cromwell (including their base salary, target annual short-term incentive compensation, and target annual long-term incentive compensation) after a review of market competitive pay data for positions of similar responsibility atsimilarly-sized manufacturing organizations. The compensation details for Messrs. Thayer and Cromwell are discussed in the applicable sections below.

ELEMENTS OF COMPENSATION

Base Salary

Base salary is an important compensation component we must pay to remain competitive in our industry and the marketplace in general. The Compensation Committee generally sets base salary and annual adjustments at levels considered appropriate for comparable NEO positions at companies in our peer comparator group. Base salaries are reviewed by the Compensation Committee on an annual basis in the fourth quarter of the fiscal year preceding the effective date of the change. Specifically, base salaries are reviewed and approved in September of each year and are effective January 1st of the following year, which is a consistent practice for all employees of the Company as part of our Leading Performance Management Process.

Base salaries for the NEOs are assessed and set using a blend of quantitative and qualitative factors. Quantitative data in our peer comparator group is considered in determining our NEOs’ base salaries, and is presented to the Compensation Committee by Aon. We also consider qualitative performance data and factors to determine an NEO’s base salary, including an individual NEO’s performance, experience, responsibilities, management, leadership skills, and salary increase progression. For additional information, see the market data comparisons under the caption “Compensation Decisions Compared to Market Data.”

The Compensation Committee determined the base salary for Messrs. Thayer and Cromwell based on a review of market competitive base pay data for positions of similar responsibility atsimilarly-sized manufacturing organizations.

Base salary is found in the Summary Compensation Table in the Salary column.

Annual Short-Term Incentive Compensation

Annual short-term incentive compensation is a key component of the total compensation package. The Omnibus Incentive Plan, which sets forth the material terms of any awards intended to qualify as performance-

COMPENSATION DISCUSSION AND ANALYSIS (continued)

internal annual financial and operational performance againstpre-determined metrics. The WVIP is designed to provide short-term incentive compensation that is competitive with compensation offerings in our peer comparator group and to align compensation with financial performance drivers that are intended to benefit stockholders.

As with other components of variable compensation, quantitative data in our peer comparator group is considered in determining our NEOs’ annual short-term incentive compensation opportunity, and is presented to the Compensation Committee by Aon. We also consider other qualitative performance data and factors as described above. Based on these quantitative and qualitative factors, the Compensation Committee determined that the fiscal year 20182019 annual incentive award opportunities for the NEOs would remain unchanged, as their annual incentive award opportunities were aligned with competitive levels. For additional information, see the market data comparisons under the caption “Compensation Philosophy and Strategy — Compensation Decisions Compared to Market Data.”

In fiscal year 2015, Company management finalized the Company’s strategic plan for the next five years, which the Company refers to as “Woodward 150”, as 2020 will mark the 150th anniversary of the Company’s establishment. Similar to prior years, to help ensure that the Company’s short-term incentive plan was aligned with the key focus areas that support Woodward 150, Company management worked with Aon to assess the performance metrics comprising the WVIP, and where appropriate, to identify other potential performance metrics for consideration that would support Woodward 150.150 and drive continued performance. Based on the outcome of that assessment, and on the recommendation of management of the Company, identified and recommended to the Compensation Committee for its consideration certainmade no modifications to the design of the WVIP including changes in certain performance metrics for fiscal year 2018. At the September and November 2017 meetings of the Compensation Committee, the Committee determined that it would be appropriate to make the proposed changes to the design of the fiscal year 2018 WVIP to further align it with remaining objectives and targets under Woodward 150. Specifically, the Compensation Committee replaced aftermarket revenue with working capital improvement as a performance metric to enhance focus on improved free cash flow, which is a critical metric of business performance.2019.    

The Compensation Committee believes that the modifications to the fiscal year 20182019 WVIP willwas (i) designed to continue to drive the successful execution of Woodward 150, align pay and performance, enhance visibility for participants, and(ii) appropriately motivate performance in key areas of the business that are tiedcritical to the Company’s long-term strategy and stockholder value creation.creation, including operational excellence, (iii) align pay and performance, and (iv) enhance visibility for participants.

For fiscal year 2018,2019, actual Company achievement of the overarching performance goal of net earnings determined each NEO’s maximum possible WVIP incentive payout: up to a maximum WVIP payout of 1.0% of net earnings for the Chairman & CEO,Mr. Gendron, 0.4% of net earnings for the CFO,Messrs. Weber, Thayer and Cromwell, and 0.33% of net earnings for the Presidents of ATS and ICS, and 0.3% for the GC.Mr. Patel. Setting maximum WVIP incentive payouts in this manner motivates achievement of net earnings, which strongly ties to stockholder value creation. The Compensation Committee had the discretion to reduce, but not increase, actual WVIP payouts from the maximum that became available based on the overarching performance goals.

At the time that the overarching and specific performance metrics were set, the Compensation Committee expected that each NEO’s actual fiscal year 20182019 WVIP payout would be lower than the maximum payment permitted upon achievement of the overarching performance goals. In particular, the specific performance metrics were intended to guide the Compensation Committee’s use of negative discretion to determine WVIP payout amounts that were less than the maximum available based on the overarching performance goals.

COMPENSATION DISCUSSION AND ANALYSIS (continued)

For fiscal year 2018,2019, the specific performance metrics are outlined in the table below and were designed using financial metrics as well as other performance metrics by business group.

For fiscal year 2018,2019, the Compensation Committee used a similar approach to establishing the threshold and maximum Adjusted EPS objective as that which was used in prior years. For fiscal 2018,2019, the threshold Adjusted EPS performance goal was set at 90% of the target goal and the maximum performance goal was set at 110% of target. The Compensation Committee determined that this approach continues to incentivize stretch levels of performance, balances pay and performance, represents a reasonable range of financial performance, and is in line with peer group practices.

With respect to the approach used by the Compensation Committee to establish the threshold, target, and maximum performance goals for the other specific performance metrics, the Committee considered multiple factors that included, but were not limited to, historical performance, budgeted performance for fiscal 2018,2019, and targeted levels of performance or improvement over multiple years. All of these metrics are established at a level that focuses on key business success factors that drive performance and challenge our management to achieve higher operational performance. Such targets are considered challenging, yet attainable, to achieve at the time they are set.

For purposes of WVIP metrics applicable to all employees, including NEOs, for fiscal year 2018,2019, the Compensation Committee established performance targets based on adjusted earnings per share for 2018.2019. “Adjusted EPS”, “Adjusted EBITDA”, and “Adjusted OEAB” mean the Company’s reported diluted earnings per share, the Company’s earnings before interest, taxes, depreciation and amortization, andor a Business Group’s operating earnings after bonus respectively,(as applicable), in each case calculated (a) on the basis of the FASB Accounting Standard ASC 605, and (b) without consideration to unusualnon-operational income, gains, expenses or losses

COMPENSATION DISCUSSION AND ANALYSIS (continued)

totaling in excess of 3% of the Company’s net earnings, the Company’s EBITDA, or the Business Group’s OEAB (as applicable) for the fiscal year, including but not limited to any such items that are related to or associated with any:

COMPENSATION DISCUSSION AND ANALYSIS (continued)

Adjusted EPS was $3.39,$4.77, and the payout for the portion of the WVIP that pertains to the Adjusted EPS performance metric was 94.3%160% of target. Adjusted EBITDA Margin was equal to 17.6%19.3%, and the payout for the portion of the WVIP that pertains to the Adjusted EBITDA performance metrics was 40%64% of target. After giving effect to all WVIP performance metrics, the 20182019 target and actual payout for each NEO under the WVIP are detailed in the following table:

Long-Term Incentive Compensation

The LTI Plan is a key component of the total compensation package. The Omnibus Incentive Plan authorizes the grant of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, cash-based awards, and other stock-based awards.

We generally issue two forms of awards under the LTI Plan – equity grants (typically in the form of stock optionsoptions) and cash. We have determined that these two award forms are most appropriate for our NEOs due to their performance orientation and alignment with shareholder interests, as measured by stock price and financial performance, over the long-term. More specifically, we believe that stock options are aligned with shareholder interests because the awards do not convey value to recipients unless there is shareholder value creation after the date of grant. To balance long-term incentives based strictly on share price growth and to drive financial performance, we also grant cash awards under the Cash LTI Plan that are based on Woodward’s3-year financial performance. Specifically, the Cash LTI plan is based on two key financial metrics: Return on Capital and Net Earnings Per Share Growth, each of which is measured relative to companies of comparable size. In tandem, stock options and the Cash LTI Plan incent long-term financial performance that support the Company’s stock price.

These awards are intended to offer competitive incentive opportunities to our executives and to align their interests with increasing shareholder value. The aggregate value of these awards equals the sum of the total delivered value of the stock options (as determined using the Black-Scholes methodology) plus the target cash award opportunity, and represents the total long-term incentive compensation for each NEO. As with short-term incentive compensation, quantitative data in our peer comparator group is considered in determining our NEOs’ long-term incentive compensation, and is presented to the Compensation Committee by Aon as discussed in “Compensation Decisions Compared to Market Data” above. We also consider other qualitative performance data and factors, including an individual NEO’s performance, knowledge, skills, abilities, and significant contributions to the Company and shareholder value when establishing an award opportunity. In

COMPENSATION DISCUSSION AND ANALYSIS (continued)

particular, in establishing fiscal year 2019 long-term incentive award opportunities, the Compensation Committee considered certain executives’ significant leadership roles in connection with the L’Orange acquisition. In recognition of such contributions by Mr. Weber, the Compensation Committee granted Mr. Weber incremental shares as part of his stock option award for fiscal year 2019. Based on the considerations noted above, the Compensation Committee approved fiscal year 20182019 long-term incentive award opportunities for the NEOs. For additional information, see the market data comparisons under the captions “Compensation Philosophy and Strategy” and “Compensation Decisions Compared to Market Data.”

At its regularly scheduled September meeting, the Compensation Committee approves a target delivered value for the stock option awards. The target value of each of the stock option awards is approved individually at this meeting. Typically oneOne business day before the effective grant date of the award (such effective grant date generally being the first business day of the fiscal year), the Compensation Committee meets to establishestablishes the specific number of individual and aggregate awards based on the target delivered value and using a Black-Scholes value

COMPENSATION DISCUSSION AND ANALYSIS (continued)

The Cash LTI performance metrics and corresponding payouts are based on our ranking within the S&P Mid Cap 400 Index for all performance cycles that are currently outstanding, and are as follows:

The above payout formula applies to each measure weighted equally. If performance is below the 50th percentile, no award will be earned or paid as it relates to that measure. Award amounts are interpolated for performance results between the above percentiles. Performance at the 60th percentile is necessary to earn a payout of 100% of target as it relates to that measure. We believe having a target payout at the 60th percentile sets a higher standard and is consistent with plan designs of other high performing companies in our peer group. The maximum award that can be earned for performance at or above the 75th percentile is 200% of target as it relates to that measure.

COMPENSATION DISCUSSION AND ANALYSIS (continued)

For fiscal year 2019, Mr. Thayer’s total annual target compensation under the LTI Plan was $1,855,000. Specifically, Mr. Thayer received a grant of 71,700non-qualified stock options, representing a targeted delivered value equal to $1,855,000, with an exercise price equal to the closing price of the Company’s stock as quoted on NASDAQ on his start date of January 7, 2019. This option grant will vest over four years at a rate of 25% per year.

For fiscal year 2019, Mr. Cromwell’s total annualized target compensation under the LTI Plan was $1,500,000, prorated to $1,000,000 based on the portion of the fiscal year in which Mr. Cromwell was an employee of the Company. Thus, Mr. Cromwell received a grant of 38,700non-qualified stock options, representing a targeted delivered value equal to $1,000,000, with an exercise price equal to the closing price of the Company’s stock as quoted on NASDAQ on his start date of February 20, 2019. This option grant will vest over four years at a rate of 25% per year.

Option grants to Messrs. Thayer and Cromwell are reflected both in (i) the Summary Compensation Table under Option Awards and (ii) the Outstanding Equity Grants at Fiscal Year End table. Messrs. Thayer and Cromwell will begin to accrue Cash LTI benefits in fiscal year 2020.

Sign-On Incentives for Messrs. Thayer and Cromwell

In addition, the Compensation Committee approvedone-timesign-on incentives for Messrs. Thayer and Cromwell. In determining the value of such incentives, the Compensation Committee evaluated market practice, target total compensation at former employers, and their status as highly sought after executives.

Mr. Thayer’ssign-on incentive consisted of anon-qualified stock option grant of 116,000 options, representing a targeted delivered value of approximately $3 million, with an exercise price equal to the closing price of the Company’s stock as quoted on NASDAQ on January 7, 2019. With respect to this grant, 50% of the options will vest on the second anniversary of the grant date, 25% will vest on the third anniversary of the grant date, and the remaining 25% of the options will vest on the fourth anniversary of the grant date. Thisone-timesign-on incentive option grant is reflected in both the Summary Compensation Table under Option Awards and in the Outstanding Equity Grants at Fiscal Year End table.

Mr. Cromwell’ssign-on incentive consisted of (i) aone-time $500,000 cash payment and (ii) aone-time $500,000 Company contribution to the Executive Benefit Plan (the “EBP”), both designed to offset amounts foregone by Mr. Cromwell upon his departure from his former employer. Mr. Cromwell will be required to repay the Company the $500,000 cash payment if he voluntarily leaves the Company within one year of his start date. The respectivesign-on incentives are reflected in the Summary Compensation Table under “Bonus” and “Other Compensation”.

Offer Letters with Messrs. Thayer and Cromwell

During fiscal year 2019, Messrs. Thayer and Cromwell each signed offer letters from the Company in connection with their initial employment at the Company (respectively, the “Thayer Offer Letter” and the “Cromwell Offer Letter” and, collectively, the “Offer Letters”). The Offer Letters set forth (i) the initial compensation arrangements for Messrs. Thayer and Cromwell, as described in the applicable sections above, (ii) participation in the Company’s employee benefit programs, including the EBP, and (iii) payment of certain relocation benefits and commuting expenses for a specified transition period.

In connection with Mr. Cromwell’s employment, and as an inducement to join Woodward and relocate to Fort Collins, Colorado, the Cromwell Offer Letter guaranteed to Mr. Cromwell an offer on his primary residence in Plymouth, Wisconsin equal to the average appraised value of the home. Woodward purchased the residence from Mr. Cromwell in June 2019 for such value and sold the residence in October 2019 at a loss of $87,500. This amount is attributed to Mr. Cromwell in the “Other Compensation” column in the Summary Compensation Table.

COMPENSATION DISCUSSION AND ANALYSIS (continued)

Other Compensation Programs

The NEOs are eligible to participate in the same health, welfare, and retirement benefits as all of our U.S. employee membership. These benefits include a group health insurance program; life insurance, inclusive of employee life, additionalbuy-up employee life, optional spouse life, and optional child life; Accidental Death & Dismemberment insurance; Short-Term Disability; Long-Term Disability; Woodward Retirement Savings Plan, inclusive of employee contributions and Company contributions (100% match on the first 3% of employee contributions, 50% on the next 3% of employee contributions, maxing at 4.5%); Woodward Stock Plan (Company contribution of 5% of eligible wages); and Retirement Income Plan (Company contribution of 1.5% of eligible wages, and 0.1% for each year of additional service). The Retirement Income Plan was closed to new participants as of September 30, 2003, with prior participants grandfathered.

Our NEOs are also eligible to participate in a deferred compensation plan, the Executive Benefit Plan (the “EBP”).EBP. The EBP is also available to other key members of management and to members of the Board. Employee participants are able to defer up to 50% of base salary, and up to 100% of any incentive (WVIP and/or Cash LTI) payments.

All plans are subject to applicable limitations set by the Internal Revenue Service (“IRS”). Supplemental contributions to the EBP (as more fully described below) are made for the Retirement Savings Plan, the Woodward Stock Plan, and the grandfathered Retirement Income Plan and are solely to restore for IRS limitations.

The benefits described in this section are paid to remain competitive in the marketplace. Amounts relating to certain of these benefits may be found in the “All Other Compensation” column of the Summary Compensation Table.

COMPENSATION DISCUSSION AND ANALYSIS (continued)

As one of the factors in our evaluation of compensation matters, we have considered the anticipated tax treatment to the Company and to the executive officers of various payments and benefits. Through the end of our fiscal year 2018, Section 162(m) of the Code placedgenerally places a limit of $1,000,000 on the amount of compensation that we may deduct in any one year with respect to our CEO, and each ofCFO, the next three most highly compensatedother executive officers other thanlisted in the CFO. CertainSummary Compensation Table in this proxy statement and certain former executive officers. Prior to our fiscal year 2019, certain performance-based compensation approved by stockholders was not subject to this limit in accordance with the “qualified performance-based compensation” exemption under Section 162(m) of the Code. The Omnibus Incentive Plan permits the payment of compensation, including stock options and cash-based performance awards, thatperformance-based exception is intended to qualify as performance-based under Section 162(m). However, to maintain flexibility in compensating our key executives, it is not a stated requirement under the Omnibus Incentive Plan that all compensation must be deductible.now generally eliminated. The Company and the Compensation Committee has and will continue to consider various approaches regarding the deductibility of compensation payments (including paying compensation that is not fully tax deductible) to the extent reasonably practicable and to the extent consistent with our other compensation goals. However, the enactment of the Tax Cuts and Jobs Act of 2017 (the “TCJA”) effective for the first tax year commencing after December 31, 2017, which will apply to the Company beginning with the 2019 fiscal year, repealed the “qualified performance-based compensation” exemption and also expands somewhat the number of executive officers subject to the $1,000,000 limit.

Stock Ownership Guidelines

The Board has established stock ownership guidelines fornon-employee directors and executives to align their interests and objectives with those of our stockholders.Non-employee directors are committed to minimum ownership of our common stock of a value equal to 5 times the annual base retainer paid at the date of election

COMPENSATION COMMITTEE REPORT

Notwithstanding anything to the contrary set forth in any of the Company’s previous or future filings under the Securities Act of 1933, or the Exchange Act, that might incorporate this Proxy Statement,proxy statement, in whole or in part, the following Woodward, Inc. Compensation Committee Report on Compensation Discussion and Analysis shall not be deemed to be “soliciting material” or “filed” with the SEC or incorporated by reference into any such previous or future filings.

The Compensation Committee is charged with certain responsibilities relating to compensation of the Company’s executive officers. The Compensation Committee evaluates and approves all compensation of executive officers, including base salaries, short-term and long-term incentive compensation, and any perquisite programs of the Company. Compensation Committee determinations are presented to the Board.

The Compensation Committee also fulfills its duties with respect to the Compensation Discussion and Analysis and Compensation Committee Report portions of the proxy statement, as described in the Compensation Committee’s charter.

The Compensation Discussion and Analysis was prepared by management of the Company. The Company is responsible for the Compensation Discussion and Analysis and for the disclosure controls relating to executive compensation. The Compensation Discussion and Analysis is not a report or disclosure of the Compensation Committee.

The Compensation Committee met with management of the Company and the Compensation Committee’s outside consultant to review and discuss the Compensation Discussion and Analysis.

The Compensation Committee of the Board of Directors of the Company has reviewed and discussed the Compensation Discussion and Analysis included in this proxy statement and the 20182019 Annual Report on Form10-K with the management of the Company. Based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and the Company’s 20182019 Annual Report on Form10-K, and the Board approved that recommendation.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following tables set forth compensation information for the NEOs for services rendered in all capacities to the Company and its subsidiaries in fiscal year 2018.2019.