STOCK-BASED COMPENSATION

3 Months Ended

Apr. 30, 2011

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

3. STOCK-BASED COMPENSATION

The following tables summarize the Company’s stock-based compensation expense (in thousands):

	Thirteen Weeks Ended
	April 30,		May 1,
	2011		2010
Deferred stock expense	$	1,985	$	2,068
Restricted stock expense	399		216
Performance award expense	359		1,541
Stock option expense	—		22
Total stock-based compensation expense (1)	$	2,743	$	3,847

(1)Approximately $0.4 million and $0.3 million were recorded in cost of goods sold for the First Quarter 2011 and the First Quarter 2010, respectively.

The Company recognized a tax benefit related to stock-based compensation expense of $1.1 million and $1.5 million for the First Quarter 2011 and the First Quarter 2010, respectively.

Awards Granted During the First Quarter 2011

As part of an amendment to the employment agreement of its Chief Executive Officer and President, on March 28, 2011 the Company granted 100,725 deferred stock awards, which vest as to 50%, 25% and 25% on the first, second and third anniversaries of the date of grant.  In addition, the Company granted performance awards that provide for the issuance of 100,725 Target Shares if the Company meets its operating income target for fiscal 2011.  The performance awards have a minimum threshold that would provide 50% of the Target Shares and a maximum target that would provide 200% of the Target Shares.  Depending on the final operating income, the percentage earned can be 0%, or any percentage including and between 50% and 200%.  Any earned performance awards cliff vest in April 2014.

On April 15, 2011, the Company granted 137,704 deferred stock awards to its employees, including new hire awards.  The awards vest as to one-third on each of the first three anniversaries of the grant date.  In addition, on April 15, 2011, the Company also granted performance awards to its employees that provide for the issuance of 108,176 Target Shares if the Company meets its operating income target for fiscal 2011.  The performance awards have a minimum threshold that would provide 50% of the Target Shares and a maximum target that would provide 200% of the Target Shares.  Depending on the final operating income, the percentage earned can be 0%, or any percentage including and between 50% and 200%.  Any earned performance awards cliff vest in April 2014.

On January 30, 2011, the Company made its annual grant of deferred stock awards to the members of its Board of Directors.  Total awards granted were 18,640 and vest after one year.

Changes in the Company’s Unvested Stock Awards During the First Quarter 2011

Deferred and Restricted Stock (“Deferred Awards”)

	Number of Shares		Weighted Average Grant Date Fair Value
	(in thousands)
Unvested Deferred Awards, beginning of period	356		$	36.91
Granted	257		50.67
Vested	(47	)	26.81
Forfeited	(22	)	38.74
Unvested Deferred Awards, end of period	544		$	44.21

Total unrecognized stock-based compensation expense related to unvested Deferred Awards approximated $19.9 million as of April 30, 2011, which will be recognized over a weighted average period of approximately 2.5 years.

Performance Awards

	Number of Performance Shares (1)		Weighted Average Grant Date Fair Value
	(in thousands)
Unvested performance shares, beginning of period	151		$	25.16
Granted	209		51.22
Vested	(141	)	23.66
Forfeited	—		—
Unvested performance shares, end of period	219		$	51.00

(1)The number of unvested performance shares is based on employees earning their Target Shares at 100% if the related performance period has not yet concluded, or at actual Target Shares earned if the related performance period has concluded.  If the maximum number of performance shares are earned, total unvested performance shares at the end of the period would be 428.

Based on the current number of performance shares expected to be earned, the total unrecognized stock-based compensation expense related to unvested performance shares approximated $10.8 million as of April 30, 2011, which will be recognized over a weighted average period of approximately 2.8 years.

Stock Options

	Number of Options		Weighted Average Grant Date Fair Value
	(in thousands)
Unvested stock options, beginning of period	16		$	11.08
Granted	—		—
Vested	(6	)	8.20
Forfeited	—		—
Unvested stock options, end of period	10		$	12.81

There is no unrecognized stock-based compensation expense related to unvested stock options.

Outstanding Stock Options

Changes in the Company’s stock options for the First Quarter 2011 were as follows:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
	(in thousands)				(in years)	(in thousands)
Options outstanding at beginning of period	351		$	33.93	4.3	$	3,311
Granted	—		—		—	—
Exercised	(74	)	32.81		N/A	1,357
Forfeited	(6	)	39.13		N/A	87
Options outstanding at end of period	271		$	34.12	4.3	$	5,149
Options exercisable at end of period	261		$	34.32	4.2	$	4,908