(13) Stock Options, Other Stock Awards and Warrants

Hasbro has reserved 14,766 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 awards generally vestand are expensed 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 seven 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 and restricted stock unit 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.

Total compensation expense related to stock options, restricted stock units, including those awards made to non-employee members of its Board of Directors, and stock performance awards for the years ended December 29, 2013, December 30, 2012 and December 25, 2011 was $21,272, $19,434 and $12,463, respectively, and was recorded as follows:

	2013		2012		2011

Cost of sales	$	152		146		51
Product development		1,767		1,854		556
Selling, distribution and administration		19,353		17,434		11,856
		21,272		19,434		12,463
Income tax benefit		7,065		6,392		4,202
	$	14,207		13,042		8,261

Restricted Stock Units

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 2013, 2012 and 2011, the Company recognized compensation expense, net of forfeitures, on these awards of $8,732, $2,328 and $1,761, respectively. At December 29, 2013, the amount of total unrecognized compensation cost related to restricted stock units is $37,482 and the weighted average period over which this will be expensed is 40 months.

In October 2012, as part of an Amended and Restated Employment Agreement, the Company's Chief Executive Officer was awarded 587 shares to be granted in two tranches across 2013 and 2014. As of May 2013, both tranches met the accounting definition for grant date and, as such, are being expensed from 2013 through 2017. The expense related to 2013 is included in the aforementioned recognized and unrecognized compensation costs related to restricted stock units. 468 shares of this award are considered granted in 2013 and included in the table below. The remaining shares were granted in February 2014. These awards provide the recipient with the ability to earn shares of the Company's common stock based on the Company's achievement of four stated stock price hurdles and continued employment through December 31, 2017. At the completion of the service period, the recipient will receive one quarter of the award for each stock price hurdle achieved after April 24, 2013. The four stock price hurdles are $45, $52, $56 and $60 which must be met for a period of at least thirty days using the average closing price over such period.

The Company used a Monte Carlo simulation valuation model to determine the fair value of these awards. The following inputs were used in the simulation that resulted in an average grant date fair value for this award of $35.56:

	Inputs
Grant date stock price	$	47.28
Stock price volatility		26.12	%
Risk-free interest rate		0.65	%
Dividend yield		3.38	%

Excluding the aforementioned award for 468 shares, information with respect to the remaining Restricted Stock Awards and Restricted Stock Units for 2013, 2012 and 2011 is as follows:

	2013			2012			2011

Outstanding at beginning of year		296			232			196
Granted		451			92			97
Forfeited		(44	)		(27	)		(3	)
Vested		(1	)		(1	)		(58	)
Outstanding at end of year		702			296			232

Weighted average grant-date fair value:
Granted	$	45.16			36.01			39.81
Forfeited	$	40.40			40.80			40.98
Vested	$	33.62			32.90			34.61
Outstanding at end of year	$	43.10			39.53			41.06

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.

Stock Performance Awards

In 2013, 2012 and 2011, 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 2015, December 2014, and December 2013 for the 2013, 2012 and 2011 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.

Furthermore, on October 2012, as part of an Amended and Restated Employment Agreement, Stock Performance Awards awarded to the Company's Chief Executive Officer in 2013 may be adjusted at the time of vesting dependent on the Company's total shareholder return compared to Standard & Poor's 500 return for the applicable performance period. This additional adjustment will vary from 75% to 200%.

Information with respect to Stock Performance Awards for 2013, 2012 and 2011 is as follows:

	2013			2012			2011

Outstanding at beginning of year		1,019			1,627			1,878
Granted		358			695			456
Forfeited		(101	)		(144	)		(86	)
Cancelled		(333	)		(682	)		-
Vested		-			(477	)		(621	)
Outstanding at end of year		943			1,019			1,627

Weighted average grant-date fair value:
Granted	$	47.21			36.14			45.66
Forfeited	$	40.24			37.54			32.53
Cancelled	$	45.66			33.76			-
Vested	$	-			22.31			27.10
Outstanding at end of year	$	40.24			39.57			33.52

Stock Performance Awards granted during 2011 include 23 shares related to the 2009 awards, reflecting an increase in the ultimate amount of the awards 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. Shares cancelled in 2013 and 2012 represent the cancellation of the Stock Performance Awards granted during 2011 and 2010, respectively, based on the minimum targets for these awards not being met.

During 2013, 2012 and 2011, the Company recognized $815, $3,628 and $(3,558), 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 2013 and 2011, it was determined that it was no longer probable that the minimum targets would be met for certain Stock Performance Awards grants and, as a result, all previously recognized expense totaling $7,046 and $16,332, respectively, related to these awards was reversed. At December 29, 2013, the amount of total unrecognized compensation cost related to these awards is approximately $13,350 and the weighted average period over which this will be expensed is 24 months.

Stock Options

Information with respect to stock options for the three years ended December 29, 2013 is as follows:

	2013			2012			2011

Outstanding at beginning of year		9,283			11,004			11,392
Granted		776			1,730			1,080
Exercised		(4,377	)		(3,126	)		(1,267	)
Expired or forfeited		(139	)		(325	)		(201	)
Outstanding at end of year		5,543			9,283			11,004

Exercisable at end of year		3,144			6,094			7,494

Weighted average exercise price:
Granted	$	47.21			36.14			45.66
Exercised	$	26.99			21.23			23.55
Expired or forfeited	$	39.59			35.19			29.35
Outstanding at end of year	$	36.63			31.25			27.75
Exercisable at end of year	$	33.22			27.84			24.35

With respect to the 5,543 outstanding options and 3,144 options exercisable at December 29, 2013, the weighted average remaining contractual life of these options was 3.85 years and 2.87 years, respectively. The aggregate intrinsic value of the options outstanding and exercisable at December 29, 2013 was $98,498 and $66,586, respectively. Substantially all unvested outstanding options are expected to vest.

The Company uses the Black-Scholes valuation model in determining the fair value of stock options. The expected life of the options used in this calculation is the period of time the options are expected to be outstanding and has been determined based on historical exercise experience. The weighted average fair value of options granted in fiscal 2013, 2012 and 2011 was $6.94, $6.29 and $9.84, 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 2013, 2012 and 2011:

	2013			2012			2011
Risk-free interest rate		0.62	%		0.69	%		1.64	%
Expected dividend yield		3.39	%		3.99	%		2.63	%
Expected volatility		26	%		31	%		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 2013, 2012 and 2011 were $89,534, $49,225 and $26,308, respectively.

At December 29, 2013, the amount of total unrecognized compensation cost related to stock options was $9,514 and the weighted average period over which this will be expensed is 19 months.

Non-Employee Awards

In 2013, 2012 and 2011, the Company granted 33, 44 and 33 shares of common stock, respectively, to its non-employee members of its Board of Directors. Of these shares, the receipt of 28 shares from the 2013 grant, 33 shares from the 2012 grant and 27 shares from the 2011 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 was recorded in selling, distribution and administration expense for each year in the three-year period ended December 29, 2013.

Cash-Settled Restricted Stock Units

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 which is marked to market through the consolidated statements of operations based on the current market price and lapsed portion of the vesting period. In 2013, 2012 and 2011, the Company recognized expense of $1,316, $1,348 and $804, respectively related to these awards.