(13) Stock Options, Other Stock Awards and Warrants

Hasbro has reserved 14,849 shares of its common stock for issuance upon exercise of options and other awards granted or to be granted under stock incentive plans for employees and for non-employee members of the Board of Directors (collectively, the "plans"). These options and other awards generally vest in equal annual amounts over three to five years. The plans provide that options be granted at exercise prices not less than the market value of the underlying common stock on the date the option is granted and options are adjusted for such changes as stock splits and stock dividends. Generally, options are exercisable for periods of no more than ten years after date of grant. Upon exercise in the case of stock options, grant in the case of restricted stock or vesting in the case of performance based contingent stock grants, shares are issued out of available treasury shares. The Company's current plan permits the granting of awards in the form of stock, stock appreciation rights, stock awards and cash awards in addition to stock options.

The Company on occasion will issue restricted stock or grant restricted stock units to certain key employees. These shares or units are nontransferable and subject to forfeiture for periods prescribed by the Company. These awards are valued at the market value of the underlying common stock at the date of grant and are subsequently amortized over the periods during which the restrictions lapse, generally between three and five years. During 2012, 2011 and 2010, the Company recognized compensation expense, net of forfeitures, on these awards of $2,328, $1,761 and $1,209, respectively. At December 30, 2012, the amount of total unrecognized compensation cost related to restricted stock units is $7,317 and the weighted average period over which this will be expensed is 33 months. Of the shares vested in 2011, the receipt of 58 shares has been deferred to the date upon which the recipient is no longer employed by the Company.

Information with respect to Restricted Stock Awards and Restricted Stock Units for 2012, 2011 and 2010 is as follows:

	2012			2011			2010

Outstanding at beginning of year		232			196			70
Granted		92			97			138
Forfeited		(27	)		(3	)		-
Vested		(1	)		(58	)		(12	)
Outstanding at end of year		296			232			196

Weighted average grant-date fair value:
Granted	$	36.01			39.81			41.93
Forfeited	$	40.80			40.98			-
Vested	$	32.90			34.61			27.96
Outstanding at end of year	$	39.53			41.06			39.77

In 2012, 2011 and 2010, as part of its annual equity grant to executive officers and certain other employees, the Company issued contingent stock performance awards (the "Stock Performance Awards"). These awards provide the recipients with the ability to earn shares of the Company's common stock based on the Company's achievement of stated cumulative diluted earnings per share and cumulative net revenue targets over the three fiscal years ended December 2014, December 2013, and December 2012 for the 2012, 2011 and 2010 awards, respectively. Each Stock Performance Award has a target number of shares of common stock associated with such award which may be earned by the recipient if the Company achieves the stated diluted earnings per share and revenue targets. The ultimate amount of the award may vary, depending on actual results. Awards may vary from 0% to 200% of the target number of shares.

Information with respect to Stock Performance Awards for 2012, 2011 and 2010 is as follows:

	2012			2011			2010

Outstanding at beginning of year		1,627			1,878			1,639
Granted		695			456			883
Forfeited		(144	)		(86	)		(64	)
Cancelled		(682	)		-			-
Vested		(477	)		(621	)		(580	)
Outstanding at end of year		1,019			1,627			1,878

Weighted average grant-date fair value:
Granted	$	36.14			45.66			33.44
Forfeited	$	37.54			32.53			26.75
Cancelled	$	33.76			-			-
Vested	$	22.31			27.10			28.74
Outstanding at end of year	$	39.57			33.52			28.61

Stock Performance Awards granted during 2011 and 2010 include 23 and 80 shares related to the 2009 and 2008 awards, respectively, reflecting an increase in the ultimate amount of the awards issued or expected to be issued based on the Company's actual results during the performance period. These shares are excluded from the calculation of the weighted average grant-date fair value of Stock Performance Awards granted during 2011 and 2010. Shares cancelled in 2012 represent the cancellation of the Stock Performance Awards granted during 2010 based on the minimum targets for these awards not being met.

During 2012, 2011 and 2010, the Company recognized $3,628, $(3,558) and $17,144, respectively, of (income) expense relating to these awards. Awards are valued at the market value of the underlying common stock at the dates of grant and are expensed over the performance period. On a periodic basis the Company reviews the actual and forecasted performance of the Company against the stated targets for each award. The total expense is adjusted upward or downward based on the expected amount of shares to be issued as defined in the agreement. If minimum targets as detailed under the award are not met, no additional compensation expense will be recognized and any previously recognized compensation expense will be reversed. In the fourth quarter of 2011, it was determined that it was no longer probable that the minimum targets would be met for certain Stock Performance Award grants and, as a result, all previously recognized expense totaling $16,332 related to these awards was reversed. At December 30, 2012, the amount of total unrecognized compensation cost related to these awards is approximately $8,043 and the weight average period over which this will be expensed is 24 months.

Total compensation expense related to stock options, restricted stock units and Stock Performance Awards for the years ended December 30, 2012, December 25, 2011 and December 26, 2010 was $17,875, $10,903 and $31,952, respectively, and was recorded as follows:

	2012		2011		2010

Cost of sales	$	146		51		349
Product development		1,854		556		2,576
Selling, distribution and administration		15,874		10,296		29,027
		17,874		10,903		31,952
Income tax benefit		5,827		3,637		10,658
	$	12,047		7,266		21,294

Information with respect to stock options for the three years ended December 30, 2012 is as follows:

	2012			2011			2010

Outstanding at beginning of year		11,004			11,392			13,347
Granted		1,730			1,080			2,420
Exercised		(3,126	)		(1,267	)		(4,107	)
Expired or forfeited		(325	)		(201	)		(268	)
Outstanding at end of year		9,283			11,004			11,392

Exercisable at end of year		6,094			7,494			6,256

Weighted average exercise price:
Granted	$	36.14			45.66			33.96
Exercised	$	21.23			23.55			22.78
Expired or forfeited	$	35.19			29.35			25.92
Outstanding at end of year	$	31.25			27.75			25.61
Exercisable at end of year	$	27.84			24.35			23.03

With respect to the 9,283 outstanding options and 6,094 options exercisable at December 30, 2012, the weighted average remaining contractual life of these options was 3.57 years and 2.63 years, respectively. The aggregate intrinsic value of the options outstanding and exercisable at December 30, 2012 was $51,521 and $49,939, respectively.

The Company uses the Black-Scholes valuation model in determining the fair value of stock options. The weighted average fair value of options granted in fiscal 2012, 2011 and 2010 was $6.29, $9.84 and $7.24, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in the fiscal years 2012, 2011 and 2010:

	2012	2011	2010
Risk-free interest rate	0.69%	1.64%	2.17%
Expected dividend yield	3.99%	2.63%	2.97%
Expected volatility	31%	30%	30%
Expected option life	5 years	5 years	5 years

The intrinsic values, which represent the difference between the fair market value on the date of exercise and the exercise price of the option, of the options exercised in fiscal 2012, 2011 and 2010 were $49,225, $26,308 and $80,783, respectively.

At December 30, 2012, the amount of total unrecognized compensation cost related to stock options was $14,000 and the weighted average period over which this will be expensed is 22 months.

In 2011 and 2010, the Company granted awards to certain employees consisting of cash settled restricted stock units. Under these awards, the recipients are granted restricted stock units that vest over three years. At the end of the vesting period, the fair value of those units based on Hasbro's stock price will be paid in cash to the recipient. The Company accounts for these awards as a liability and marks the vested portion of the award to market through the statement of operations. In 2012, 2011 and 2010, the Company recognized expense of $1,348, $804 and $1,004, respectively related to these awards.

In 2012, 2011 and 2010, the Company granted 44, 33 and 36 shares of common stock, respectively, to its non-employee members of its Board of Directors. Of these shares, the receipt of 33 shares from the 2012 grant, 27 shares from the 2011 grant and 30 shares from the 2010 grant has been deferred to the date upon which the respective director ceases to be a member of the Company's Board of Directors. These awards were valued at the market value of the underlying common stock at the date of grant and vested upon grant. In connection with these grants, compensation cost of $1,560, $1,560 and $1,440 was recorded in selling, distribution and administration expense in 2012, 2011 and 2010, respectively.