2. Stock-Based Compensation

As approved by the Company's shareholders, the Company established the Amended and Restated 2001 Equity Incentive Plan (the "2001 Equity Incentive Plan") and the Second Amended and Restated 2008 Equity Incentive Plan (the "2008 Equity Incentive Plan" and collectively with the 2001 Equity Incentive Plan, the "Equity Incentive Plans") to reward, retain and attract key personnel. The Equity Incentive Plans provide for grants of nonqualified or incentive stock options, stock appreciation rights ("SARs"), performance shares or units, stock units and stock grants. To fund the 2001 and 2008 Equity Incentive Plans, 12,375,000 and 4,550,000 shares of the Company's common stock were reserved for issuance upon exercise of awards, respectively.

The following table summarizes stock-based compensation expense by type of grant for each period (in thousands):

	Thirteen Weeks Ended						Twenty-Six Weeks Ended
	July 28, 2012			July 30, 2011			July 28, 2012			July 30, 2011
Stock options and SARs	$	673		$	1,097		$	1,540		$	2,123
Non-vested stock		827			685			1,455			1,094
Performance shares		611			515			441			862
Total compensation expense		2,111			2,297			3,436			4,079
Related tax benefit		(794	)		(853	)		(1,292	)		(1,521	)
	$	1,317		$	1,444		$	2,144		$	2,558

As of July 28, 2012, the Company had unrecognized compensation cost of $18.7 million related to stock-based compensation awards granted. That cost is expected to be recognized over a weighted average period of 2.7 years.

Stock Options and SARs

The Company historically granted shares of stock options and SARs to its employees and members of management. The right to exercise stock options and SARs generally vests over four years from the date of grant, with 25% vesting at the end of each of the first four years following the date of grant. Stock options and SARs are settled by issuance of common stock. Stock options issued prior to January 29, 2005 will generally expire, if not exercised, within ten years from the date of the grant, while stock options and SARs granted after that date generally expire, if not exercised, within seven years from the date of grant. No stock options or SARs were granted during the twenty-six weeks ended July 28, 2012. The weighted average grant date fair value for SARs granted during the twenty-six weeks ended July 30, 2011 was $8.69.

The following table provides the significant weighted average assumptions used in determining the estimated fair value, at the date of grant under the Black-Scholes option-pricing model, of SARs granted during the twenty-six weeks ended July 30, 2011:

	Twenty-Six Weeks Ended
	July 30, 2011

Expected volatility	63.4% - 63.7%
Weighted average volatility	63.6%
Risk-free rate	1.5% - 1.9%
Expected life (in years)	4.3
Expected dividend yield	1.6% - 1.9%

The expected volatility was based on historical volatility for a period equal to the award's expected life. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected life (estimated period of time outstanding) was estimated using the historical exercise behavior of employees. The expected dividend yield was based on the current dividend payout activity and the market price of the Company's stock.

The following table summarizes information about stock options and SARs outstanding under the Equity Incentive Plans as of July 28, 2012 and changes during the twenty-six weeks ended July 28, 2012:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (in thousands)
Outstanding at January 28, 2012		4,004,257		$	16.10
Exercised		(641,170	)		12.24
Forfeited		(625,562	)		16.70
Outstanding at July 28, 2012		2,737,525		$	16.87		3.2	$	6,779

Vested or expected to vest at July 28, 2012		2,565,322		$	16.93		3.1	$	6,286

Exercisable at July 28, 2012		1,876,511		$	17.28		2.4	$	4,314

The following table summarizes information about non-vested stock option awards and SARs outstanding as of July 28, 2012 and changes during the twenty-six weeks ended July 28, 2012:

Stock Options/SARs	Number of Shares			Weighted Average Grant Date Fair Value
Non-vested at January 28, 2012		1,794,350		$	6.72
Vested		(627,711	)		6.22
Forfeited		(305,625	)		6.16
Non-vested at July 28, 2012		861,014		$	7.28

The aggregate intrinsic value of stock options and SARs, defined as the amount by which the market price of the underlying stock on the date of exercise exceeds the exercise price of the award, exercised during the twenty-six weeks ended July 28, 2012 and July 30, 2011, was $2.9 million and $4.1 million, respectively.

Non-vested Stock

The Company grants shares of non-vested stock to its employees, members of management and independent directors. The non-vested stock converts one for one to common stock at the end of the vesting period at no cost to the recipient to whom it is awarded. The vesting period of the non-vested stock ranges from one to four years from the date of grant.

The following table summarizes information about non-vested stock granted by the Company as of July 28, 2012 and changes during the twenty-six weeks ended July 28, 2012:

Non-vested Stock	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at January 28, 2012		376,965		$	16.68
Granted		467,320			15.84
Vested		(130,038	)		16.27
Forfeited		(63,573	)		18.91
Outstanding at July 28, 2012		650,674		$	15.94

The aggregate intrinsic value of non-vested stock that vested during the current year was $2.1 million. The payment of the employees' tax liability for a portion of the vested shares was satisfied by withholding shares with a fair value equal to the tax liability. As a result, the actual number of shares issued was 115,406.

Performance Shares

The Company grants performance shares to members of senior management, at no cost to the recipient, as a means of rewarding them for the Company's long-term performance based on shareholder return performance measures. The actual number of shares that could be issued ranges from zero to a maximum of two times the number of granted shares outstanding as reflected in the table below. The actual number of shares issued is determined by the Company's shareholder return performance relative to a specific group of companies over a three-year performance cycle. Compensation expense, which is recorded ratably over the vesting period, is based on the fair value at grant date and the anticipated number of shares of the Company's common stock, which is determined on a Monte Carlo probability model. Grant recipients do not have any shareholder rights until the granted shares have been issued.

The following table summarizes information about the performance shares that remain outstanding as of July 28, 2012:

	Target Shares		Target Shares		Target Shares			Target Shares		Weighted Average
	Outstanding		Granted		Forfeited			Outstanding		Grant Date
Period	at		During		During			at		Fair Value
Granted	January 28, 2012		Current Year		Current Year			July 28, 2012		Per Share
2010		107,000		-		(25,000	)		82,000	$	19.75
2011		64,225		-		(22,500	)		41,725		25.00
2012		-		243,100		-			243,100		18.04
Total		171,225		243,100		(47,500	)		366,825

During the current year, 40,314 shares, with an aggregate intrinsic value of $0.7 million, vested related to the 2009 performance share grant. The payment of the recipients' tax liability of approximately $0.2 million was satisfied by withholding shares with a fair value equal to the tax liability. As a result, the actual number of shares issued was 29,650.