Share-Based Compensation

3 Months Ended

Nov. 21, 2012

Share-Based Compensation

Note 10. Share-Based Compensation

We have two active share based stock plans, the Employee Stock Plan and Non-employee Director Stock Plan. Both plans authorize the granting of stock options, restricted stock and other types of awards consistent with the purpose of the plans.

Of the original 0.4 million shares approved for issuance under the Non-employee Director Stock Plan, 0.5 million options, restricted stock units and restricted stock awards were granted, 0.1 million options were cancelled or expired and added back into the plan. Approximately 2,000 shares remain available for future issuance as of November 21, 2012. Compensation cost for share-based payment arrangements under the Non-employee Director Stock Plan, recognized in general and administrative expenses for the quarters ended November 21, 2012 and November 23, 2011 was approximately $27,000 and $72,000, respectively.

Of the original 2.6 million shares approved for issuance under the Employee Stock Plan, 4.6 million options and restricted stock units were granted, 2.9 million options and restricted stock units were cancelled or expired and added back into the plan. Approximately 0.9 million shares remain available for future issuance as of November 21, 2012. Compensation cost for share-based payment arrangements under the Employee Stock Plan, recognized in general and administrative expenses for the quarters ended November 21, 2012 and November 23, 2011 was approximately $0.1 million and $0.1 million, respectively.

Stock Options

Stock options granted under either the Employee Stock Plan or the Non-employee Director Stock Plan have exercise prices equal to the market price of the Company’s common stock at the date of the grant.

Option awards under the Non-employee Director Stock Plan generally vest 100% on the first anniversary of the grant date and expire ten years from the grant date. No options were granted under the Non-employee Director Stock Plan in the first quarter of fiscal year 2013. However, options to purchase 38,000 shares at option prices from $1.98 to $6.45 per share remain outstanding as of November 21, 2012.

Options granted under the Employee Stock Plan generally vest 25% on the anniversary date of each grant and expire six years from the date of the grant. However, options granted to executive officers under the Employee Stock Plan vest 50% on the first anniversary date of the grant date, 25% on the second anniversary of the grant date and the remaining 25% vest on the third anniversary of the grant date and expire ten years from the grant date. All options granted in the first quarter of fiscal year 2013 were granted under the Employee Stock Plan. Option to purchase 964,994 shares at option prices of $3.44 to $11.10 per share remain outstanding as of November 21, 2012.

A summary of the Company’s stock option activity for the quarter ended November 21, 2012 is presented in the following table:

	Shares Under Fixed Options			Weighted-Average Exercise  Price		Weighted-Average Remaining Contractual Term		Aggregate  Intrinsic Value
						(Years)		(In thousands)
Outstanding at August 29, 2012		1,175,224		$	6.31		3.8	$	1,456
Granted		109,335			5.95		0		0
Exercised		0			0		0		0
Forfeited/Expired		(281,565	)		0		0		0
Outstanding at November 21, 2012		1,002,994		$	5.17		5.1	$	1,527
Exercisable at November 21, 2012		642,895		$	5.25		4.4	$	1,055

The intrinsic value for stock options is defined as the difference between the current market value, or closing price on November 21, 2012, and the grant price.

Restricted Stock Units

Grants of restricted stock units consist of the Company’s common stock and generally vest after three years. All restricted stock units are cliff-vested. Restricted stock units are valued at the closing market price of the Company’s common stock at the date of grant.

A summary of the Company’s restricted stock unit activity during the first quarter of fiscal year 2013 is presented in the following table:

	Restricted Stock Units			Weighted Average Fair Value		Weighted-Average Remaining Contractual Term
				(Per share)		(In years)
Unvested at August 29, 2012		163,946		$	4.83		1.8
Granted		214,290			5.95		—
Vested		(14,000	)		3.46		—
Unvested at November 21, 2012		364,236		$	5.54		2.4

At November 21, 2012, there was approximately $1.6 million of total unrecognized compensation cost related to unvested restricted stock units that is expected to be recognized over a weighted-average period of 2.7 years.

Restricted Stock Awards

Under the Non-Employee Director Stock Plan, directors are granted restricted stock in lieu of cash payments, for all or a portion of their compensation as directors. Directors may opt to receive 20% more shares of restricted stock awards by accepting more than the minimum required stock instead of cash. The number of shares granted is valued at the closing market price of the Company’s stock at the date of the grant. Restricted stock awards vest when granted because they are granted in lieu of a cash payment. However, directors are restricted from selling their shares until after the third anniversary of the date of the grant.