STOCK-BASED COMPENSATION PLANS

6 Months Ended

Jul. 23, 2011

Stock-Based Compensation Plans [Abstract]

Stock-Based Compensation Plans

NOTE 8  - STOCK-BASED COMPENSATION PLANS

At July 23, 2011, the Company had outstanding awards under various stock-based employee compensation plans, which are described more fully in Note 13 of the Notes to Consolidated Financial Statements in the Company's 2010 Annual Report on Form 10-K.

On July 17, 2008, the stockholders approved the CPI Corp. Omnibus Incentive Plan (the "Plan").  Total shares of common stock approved for delivery pursuant to awards under the Plan as approved on July 17, 2008, and amended on August 11, 2010, were 1.1 million shares.  The Company has reserved these shares under its authorized, unissued shares.  At July 23, 2011, 497,654 of these shares remained available for future grants.

The Company accounts for stock-based compensation plans in accordance with ASC Topic 718, "Compensation - Stock Compensation" ("ASC Topic 718") which requires companies to recognize the cost of awards of equity instruments, such as stock options and restricted stock, based on the fair value of those awards at the date of grant.

The following table summarizes the changes in stock options during the 24 weeks ended July 23, 2011:

						Weighted-Average		Aggregate
				Weighted-Average		Remaining Contractual		Intrinsic Value (1)
	Shares			Exercise Price		Life (Years)		(in thousands)
Options outstanding, beginning of period		169,166		$	13.09		5.79	$	-
Exercised		(22,500	)		13.58				248
Options outstanding, end of period		146,666		$	13.02		5.06	$	-
Options exercisable at end of period		10,001		$	12.21		2.17	$	-

(1)  Intrinsic value for activities other than exercises is defined as the difference between the Company's closing stock price on the last trading day of the fiscal 2011 second quarter and the exercise price, multiplied by the number of in-the-money options.  These amounts change based on the quoted market price of the Company's stock.  For exercises, intrinsic value is defined as the difference between the Company's closing stock price on the exercise date and the exercise price, multiplied by the number of options exercised.

Share proceeds received from the exercise of stock options for the 24 weeks ended July 23, 2011, were valued at $306,000 and tax benefits realized from exercised stock options for the 24 weeks ended July 23, 2011, were $94,000.

The Company estimates the fair value of its stock options with market-based performance conditions under the Plan using Monte Carlo simulations.  Weighted-average assumptions used in calculating the fair value of these stock options are included in Note 13 of the Notes to Consolidated Financial Statements in the Company's 2010 Annual Report on Form 10-K.

The Company recognized stock-based compensation expense of $43,000, resulting in a deferred tax benefit of $16,000, for the 24 weeks ended July 23, 2011, based on the grant-date fair values of stock options previously granted and the derived service periods.  As of July 23, 2011, total unrecognized compensation cost related to nonvested stock options granted under the Plan was $135,000.  This unrecognized compensation cost will be recognized over a weighted-average period of 1.2 years.

Issuances of nonvested stock in the 24 weeks ended July 23, 2011, include grants to executive management and certain other management members and employees for fiscal year 2010 performance and/or as part of a long-term incentive plan and issuances to the Executive Chairman of the Board and non-employee Board of Director members for their services to the Company.  All nonvested stock is valued based on the fair market value of the Company's common stock on the grant date and the value is recognized as compensation expense over the service period.

Changes in nonvested stock are as follows:

	24 Weeks Ended July 23, 2011
				Weighted-Average
	Shares			Grant-Date Value
Nonvested stock, beginning of period		76,121		$	14.26
Granted		82,101			18.73
Forfeited		(321	)		21.61
Nonvested stock, end of period		157,901		$	16.57
Stock-based compensation expense related
to nonvested stock	$	621,000

For the 24 weeks ended July 23, 2011, total unrecognized compensation cost related to nonvested stock was $1.6 million.  This unrecognized compensation cost will be recognized over a weighted-average remaining period of approximately 1.4 years.