EXHIBIT 4.1

WOODWARD GOVERNOR COMPANY
1996 LONG-TERM INCENTIVE COMPENSATION PLAN
(EFFECTIVE JANUARY 1, 1996)

The 1996 Long-Term Incentive Compensation Plan (the "Plan"), effective January
1, 1996, is established to further the long-term growth and profitability of 
the Woodward Governor Company (the "Company") by offering long-term incentives
in addition to current compensation to certain key management worker members 
of the Company and to provide such participating worker members with an equity 
position in the Company to further align their interests with those of the 
shareholders of the Company. It is believed that the Plan will stimulate such 
worker members' efforts on the Company's behalf, will tend to maintain and
strengthen their desire to remain with the Company, will be in the interest of 
the Company and its shareholders, and will encourage such worker members to 
have a greater personal financial investment in the Company through ownership 
of its Common Stock.
1.	Administration
The Plan shall be administered by the Stock Option Committee or any successor 
thereto of the Board of Directors of the Company (the "Committee") as shall be
determined by the Board of Directors. The Committee shall consist of not less 
than two members of the Board of Directors, each of whom shall qualify as a 
"disinterested person" to administer the Plan as contemplated by Rule 16b-3,
as amended, or other applicable rules under Section 16(b) of the Securities 
Exchange Act of 1934, as amended (the "Exchange Act"). So long as the members
of the Compensation Committee of the Board of Directors qualify as 
"disinterested persons" as herein provided, the Compensation Committee may
also serve as the Stock Option Committee from time to time. The Committee is 
authorized, subject to the provisions of the Plan, to establish such rules and 
regulations as it deems necessary for the proper administration of the Plan, 
and to make such determinations and to take such action in connection 
therewith or in relation to the Plan as it deems necessary or advisable, 
consistent with the Plan.
The Committee shall report to the Board of Directors of the Company the 
eligible participants and, in general terms, the terms and conditions of their 
participation.
2.	Eligibility
Key management worker members of the Company, its subsidiaries and its 
affiliates, whether or not directors of the Company, shall be eligible to 
participate in the Plan ("Eligible Worker Members") if designated by the
Committee. Those directors who are not regular worker members are not 
eligible.
3.	Incentives
Incentives under the Plan may be granted in any one or a combination of (a) 
Incentive Stock Options and (b) Nonqualified Stock Options (together 
"Incentives"). All Incentives shall be subject to the terms and conditions set
forth herein and to such other terms and conditions as may be established by 
the Committee. Determinations by the Committee under the Plan including 
without limitation, determinations of the Eligible Worker Members, the form, 
amount and timing of Incentives, the terms and provisions of Incentives, and 
the agreements evidencing Incentives, need not be uniform and may be made 
selectively among Eligible Worker Members who receive, or are eligible to 
receive, Incentives hereunder, whether or not such Eligible Worker Members are 
similarly situated. Incentives granted shall be based primarily upon the 
attainment of objective performance goals established in writing by the 
Committee and such other factors as the Committee deems appropriate. The 
performance goals may be expressed in terms of financial, operating, or other 
criteria as deemed appropriate. It is the intent of the Plan that the goals 
established by the Committee can be expected to result in current or future 
increase in shareholder value.
4.	Shares Available for Incentives
(a) 	Shares Subject to Issuance or Transfer. Subject to adjustment as 
provided in Section 4(b) hereof, there is hereby reserved for issuance 
under the Plan 200,000 shares of the Company's Common Stock ("Common
Stock"); provided, however, that the maximum number of shares available for
granting Incentives for the following periods shall be limited as set forth 
below:
	Period	Maximum Shares Available
01/01/96 TO 12/31/98	100,000
01/01/99 TO 12/31/01	100,000
 
The shares available for granting Incentives for any such period described 
above shall be increased by the number of shares to which options granted 
under the Plan during such period have lapsed, expired, terminated or been 
canceled for any reason, including by reason of the failure to obtain 
performance targets applicable thereto. Shares under this Plan may be 
delivered by the Company from its authorized but unissued shares of Common 
Stock or from Common Stock held in the Treasury.
(b) 	Maximum Shares to any Eligible Worker Member. Subject to adjustment as 
provided in Section 4(c) hereof, during the period from January 1, 1996 
through December 31, 2001, no Eligible Worker Member shall receive 
Incentives covering more than 80,000 shares of the Common Stock.
(c)	Recapitalization Adjustment. In the event of a reorganization, 
recapitalization, stock split, stock dividend, combination of shares, 
merger, consolidation, rights offering, or any other change in the 
corporate structure or shares of the Company, the Committee shall make such 
adjustment, if any, as it may deem appropriate in the number and kind of 
shares authorized by the Plan, in the number and kind of shares covered by 
Incentives granted, and in the option price.
5.	Stock Options
The Committee may grant options qualifying as Incentive Stock Options under 
the Internal Revenue Code of 1986, as amended, or any successor statute 
thereto (the "Code") and Nonqualified Stock Options (collectively "Stock
Options"). Such Stock Options shall be subject to the following terms and
conditions and such other terms and conditions as the Committee may prescribe:
(a) 	Option Price. The option price per share with respect to each Stock 
Option shall be determined by the Committee and shall not be less than 100% 
of the fair market value of the Common Stock, as determined by the 
Committee, on the October 1 coincident with or immediately preceding the 
date the Stock Option is granted. Notwithstanding the preceding sentence, 
in the case of Incentive Stock Options or options for which the Company 
desires to preserve the Company's tax deduction pursuant to Section 162(m)
of the Code for compensation paid, the purchase price shall not be less 
than 100% of the fair market value of the Common Stock on the date the 
Stock Option is granted, as determined by the Committee.
(b)	 Period of Option. The period of each Stock Option shall be fixed by 
the Committee but shall not exceed ten years.
(c) 	Payment. The option price shall be payable in cash or, if permitted by 
the Committee, in shares of Common Stock previously owned by the grantee or 
in shares of the Common Stock that otherwise would be distributed to such 
grantee upon exercise of the Stock Option. Such payment shall be made at 
the time the Stock Option is exercised. No shares shall be issued until 
full payment therefor has been made. A grantee of a Stock Option shall have 
none of the rights of a shareholder until the shares are issued.
(d) 	Exercise of Option. The shares covered by a Stock Option may be 
purchased in such installments, on such exercise dates and during such 
periods as the Committee may determine.
(e) 	Performance Targets. The Committee may require that specified 
performance targets be attained before a Stock Option becomes exercisable.
(f) 	Termination of Membership. Upon the termination of a Stock Option 
grantee's membership (for any reason other than retirement, death,
disability or cause), Stock Option privileges shall be limited to the 
shares which were immediately exercisable at the date of such termination. 
The Committee, however, in its discretion, may provide that any Stock 
Options outstanding but not yet exercisable upon the termination of a Stock 
Option grantee's membership may become exercisable in accordance with a
schedule to be determined by the Committee. Such Stock Option privileges 
shall expire unless exercised within such period of time after the date of 
termination of membership as may be established by the Committee, but in no 
event later than the expiration date of the Stock Option. If a Stock Option 
grantee's membership is terminated for cause, as defined by the Committee,
the Committee may provide that all rights under the Stock Option shall 
expire upon receipt of the notice of such termination.
(g) 	Retirement. Upon retirement, as defined by the Committee, of a Stock 
Option grantee, Stock Option privileges shall apply to those shares 
immediately exercisable at the date of retirement. The Committee, however, 
in its discretion, may provide that any Stock Options outstanding but not 
yet exercisable upon the retirement of a Stock Option grantee may become 
exercisable in accordance with a schedule to be determined by the 
Committee. Stock Option privileges shall expire unless exercised within 
such period of time as may be established by the Committee, but in no event 
later than the expiration date of the Stock Option.
(h) 	Death.  Upon the death of a Stock Option grantee, Stock Option 
privileges shall apply to those shares which were immediately exercisable 
at the time of death. The Committee, however, in its discretion, may 
provide that any Stock Options outstanding but not yet exercisable upon the 
death of a Stock Option grantee may become exercisable in accordance with a 
schedule to be determined by the Committee. Such privileges shall expire 
unless exercised by legal representatives within a period of time as 
determined by the Committee but in no event later than the expiration date 
of the Stock Option.
(i)     Disability. Upon termination of a Stock Option grantee's membership by
reason of disability, as defined by the Committee, Stock Option privileges 
shall apply to those shares which were immediately exercisable at the time 
of the termination on account of disability. The Committee, however, in its 
discretion, may provide that any Stock Options outstanding but not yet 
exercisable upon the termination of a Stock Option grantee's membership by
reason of disability may become exercisable in accordance with a schedule 
to be determined by the Committee. Such privileges shall expire unless 
exercised within such period of time as may be established by the 
Committee, but in no event later than the expiration date of the Stock 
Option.
(j)	Change of Control. Notwithstanding anything in the Plan to the 
contrary, the Committee, in its discretion, may provide that any Stock 
Option outstanding but not yet exercisable may become exercisable upon a 
change in control of the Company, as defined by the Committee.
(k)	Limits on Incentive Stock Options. Except as may otherwise be permitted 
by the Code, the Committee shall not grant to an Eligible Worker Member 
Incentive Stock Options that, in the aggregate, are first exercisable 
during any one calendar year to the extent that the aggregate fair market 
value of the Common Stock, at the time the Incentive Stock Options are 
granted, exceeds $100,000.
(l)	Compliance with Securities Laws. The Stock Options shall provide that 
the Company shall not be obligated to sell or issue any shares pursuant to 
any Stock Option unless the shares with respect to which the option is 
being exercised are at that time effectively registered or exempt from 
registration under the Securities Act of 1933, as amended, and applicable 
state securities laws.
6.	Discontinuance or Amendment of the Plan
The Board of Directors may discontinue the Plan at any time and may from time 
to time amend or revise the terms of the Plan as permitted by applicable 
statues, except that it may not revoke or alter, in a manner unfavorable to 
the grantees of any Incentives hereunder, any Incentives then outstanding, nor 
may the Board amend the Plan without shareholder approval where the absence of 
such approval would cause the Plan to fail to comply with Rule 16b-3 under the 
Exchange Act, or any other requirement of applicable law or regulation. No 
Incentive shall be granted under the Plan after December 31, 2001.
7.	Nontransferability
Each Incentive Stock Option granted under the Plan shall not be transferable 
other than by will or the laws of descent and distribution or as otherwise 
permitted by the Committee in compliance with Section 422 of the Code. Each 
Nonqualified Option granted under the Plan may be transferable subject to the 
terms and conditions as may be established by the Committee in accordance with 
regulations promulgated under the Exchange Act, or any other applicable law or 
regulation.
8.	No Right of Membership
The Plan and the Incentives granted hereunder shall not confer upon any 
Eligible Worker Member the right to continued membership with the Company, its 
subsidiaries and its affiliates or affect in any way the right of such 
entities to terminate the membership of an Eligible Worker Member at any time 
and for any reason.
9.	Taxes
The Company shall be entitled to withhold the amount of any tax attributable 
to any option granted, any amount payable or shares deliverable under the Plan 
after giving the person entitled to receive such amount or shares notice as 
far in advance as practicable. Alternatively, the Committee may require the 
grantee to remit an amount in cash or in Common Stock to satisfy such tax 
withholding requirements.
10.	Written Agreements
Each award of Stock Options shall be evidenced by a written agreement, 
executed by the Eligible Worker Member and the Company, which shall contain 
such restrictions, terms and conditions as the Committee may require.
11.	Stockholder Approval
The Plan is subject to and contingent upon approval of the Plan by the 
shareholders of the Company.