STOCK-BASED COMPENSATION

6 Months Ended

Jul. 30, 2011

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

3. STOCK-BASED COMPENSATION

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

	Thirteen Weeks Ended				Twenty-six Weeks Ended
	July 30,		July 31,		July 30,		July 31,
	2011		2010		2011		2010
Stock option expense	$	—	$	13	$	—	$	35
Deferred stock expense	2,572		1,476		4,557		3,544
Restricted stock expense	—		216		399		432
Performance award expense	630		1,656		989		3,197
Total stock-based compensation expense (1)	$	3,202	$	3,361	$	5,945	$	7,208

(1)Approximately $0.6 million in the Second Quarter 2011 and $0.3 million in the Second Quarter 2010 was recorded in cost of goods sold.  Approximately $1.0 million in the Year-To-Date 2011 and $0.6 million in the Year-To-Date 2010 was recorded in cost of goods sold.

The Company recognized a tax benefit related to stock-based compensation expense of $2.4 million and $2.9 million for Year-To-Date 2011 and Year-To-Date 2010, respectively.

Awards Granted During Year-To-Date 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.

Additionally, during Year-To-Date 2011, the Company granted 161,704 deferred stock awards to 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, the Company also granted performance awards to employees that provide for the issuance of 126,176 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 three years from the grant date.

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.  On May 20, 2011, the Company granted 1,376 deferred stock awards to a new member of its Board of Directors.  These awards vest after one year.

Changes in the Company’s Unvested Stock Awards During Year-To-Date 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	282		50.94
Vested	(104	)	32.08
Forfeited	(41	)	39.15
Unvested Deferred Awards, end of period	493		$	45.78

Total unrecognized stock-based compensation expense related to unvested Deferred Awards approximated $17.9 million as of July 30, 2011, which will be recognized over a weighted average period of approximately 2.4 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	227		51.45
Vested	(144	)	24.05
Forfeited	(1	)	52.70
Unvested performance shares, end of period	233		$	51.27

(1)The number of unvested performance shares is based on the Participants earning their Target Shares at 100%.  As of July 30, 2011, the Company estimates that on a weighted average basis the Participants will earn 80% of their Target Shares. The cumulative expense recognized reflects changes in estimates as they occur.

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 $8.6 million as of July 30, 2011, which will be recognized over a weighted average period of approximately 2.6 years.

Stock Options

At January 29, 2011 the Company had approximately 16,000 unvested stock options at a weighed average grant date fair value of $11.08.  All of these options vested during Year-To-Date 2011.

Outstanding Stock Options

Changes in the Company’s outstanding stock options for Year-To-Date 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	(84	)	32.68		N/A	1,518
Forfeited	(6	)	39.09		N/A	89
Options outstanding and exercisable at end of period	261		$	34.21	4.1	$	3,707