Stock-Based Awards

Under our Company’s 1991 Executive Stock Incentive Plan (the “1991 Incentive Plan”) and our 1991 Executive Cash Bonus Plan (together with the 1991 Incentive Plan, the “1991 Executive Plans”), the Board of Directors was authorized to grant awards to key employees of cash, restricted and unrestricted shares of our Common Stock, retirement units (stock equivalents) or such other awards as the Board of Directors deemed appropriate. Effective April 27, 2010, our 2010 Incentive Compensation Plan (the “2010 Incentive Plan”) was approved by our Company’s stockholders and replaced the 1991 Executive Plans.

Our 2004 Non-Employee Directors’ Stock Incentive Plan (the “2004 Directors’ Plan”) provides for the issuance of up to 500,000 shares of Common Stock in the form of stock options or restricted stock awards. Prior to 2012, under our 2004 Directors’ Plan, each non-employee director of our Company received annual grants of non-qualified stock options with 10-year terms to purchase 4,000 shares of Common Stock from our Company at the average market price of such shares on the date of grant. No such grants were made in 2012. Restricted stock has not been awarded under the 2004 Directors’ Plan for the purpose of stock-based compensation.

We recognize stock-based compensation expense for outstanding stock-settled restricted stock units, stock options, stock appreciation rights, cash-settled restricted stock units, LTIP awards and Common Stock under our ESPP (together, “Stock-Based Awards”). Stock-based compensation expense was $5.0 million in 2012, $8.1 million in 2011 and $7.7 million in 2010.

Stock-based compensation expense is recognized over the period from the date of grant to the date when the award is no longer contingent on the employee providing additional service. Our Company’s 1991 Incentive Plan, 2010 Incentive Plan and 2004 Directors’ Plan provide that awards generally vest over a stated vesting period or upon the retirement of an employee or director, as the case may be.

Our pool of excess tax benefits (“APIC Pool”) available to absorb tax deficiencies was approximately $21 million as of December 30, 2012.

Stock Options

Our Company’s 1991 Incentive Plan provided, and the 2010 Incentive Plan provides, for grants of both incentive and non-qualified stock options at an exercise price equal to the market value of our Common Stock on the date of grant. Stock options have generally been granted with a 3-year vesting period and a 10-year term and vest in equal annual installments.

Our 2004 Directors’ Plan provides for grants of stock options to non-employee Directors at an exercise price equal to the market value of our Common Stock on the date of grant. Prior to 2012, stock options were granted with a 1-year vesting period and a 10-year term. No such grants were made in 2012. Our Company’s Directors are considered employees for purposes of stock-based compensation.

Changes in our Company’s stock options in 2012 were as follows:



	December 30, 2012
(Shares in thousands)	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value $(000s)
Options outstanding at beginning of year	17,500		$	30	4	$	6,522
Granted	1,144		8
Exercised	(176	)	4
Forfeited/Expired	(4,886	)	43
Options outstanding at end of period	13,582		$	24	4	$	7,124
Options expected to vest at end of period	13,479		$	24	4	$	7,124
Options exercisable at end of period	11,980		$	26	4	$	6,314

The total intrinsic value for stock options exercised was $0.9 million in 2012, $0.6 million in 2011 and $1.7 million in 2010.

The fair value of the stock options granted was estimated on the date of grant using a Black-Scholes valuation model that uses the assumptions noted in the following table. 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) of stock options granted was determined using the average of the vesting period and term. Expected volatility was based on historical volatility for a period equal to the stock option’s expected life, ending on the date of grant, and calculated on a monthly basis. The fair value for stock options granted with different vesting periods and on different dates are calculated separately.



	December 30, 2012							December 25, 2011						December 26, 2010
Term (In years)	10			10				10			10			10			10
Vesting (In years)	3			3			⁽¹⁾	3			1			3			1
Risk-free interest rate	1.39		%	0.98		%		2.90		%	2.25		%	3.19		%	2.69		%
Expected life (In years)	6			6				6			5			6			5
Expected volatility	47.67		%	49.35		%		43.79		%	47.93		%	41.60		%	45.93		%
Expected dividend yield	0		%	0		%		0		%	0		%	0		%	0		%
Weighted-average fair value	$	3.35		$	3.89			$	4.81		$	3.78		$	4.99		$	4.68

(1) Stock options granted to Mark Thompson, our President and Chief Executive Officer, in November 2012 under the terms of his employment agreement.

Restricted Stock Units

Our 1991 Incentive Plan provided, and the 2010 Incentive Plan provides, for grants of other awards, including restricted stock units. Restricted stock units granted in 2012 and 2011 were “stock-settled,” while restricted stock units granted in 2010 were “cash-settled.” For “stock-settled” restricted stock units, each restricted stock unit represents our obligation to deliver to the holder one share of Common Stock upon vesting. For “cash-settled” restricted stock units, each restricted stock unit represents our obligation to deliver to the holder cash, equivalent to the market value of the underlying shares of Common Stock, upon vesting.

In 2012 and 2011, we granted stock-settled restricted stock units with a 3-year vesting period. The fair value of “stock-settled” restricted stock units is the average market price at date of grant. Changes in our Company’s stock-settled restricted stock units in 2012 were as follows:



	December 30, 2012
(Shares in thousands)	Restricted Stock Units		Weighted Average Grant-Date Fair Value
Unvested stock-settled restricted stock units at beginning of period	666		$	11
Granted	638		7
Vested	(157	)	8
Forfeited	(136	)	9
Unvested stock-settled restricted stock units at end of period	1,011		$	9
Unvested stock-settled restricted stock units expected to vest at end of period	914		$	9

The intrinsic value of stock-settled restricted stock units vested was $1.2 million in 2012, $3.3 million in 2011 and $3.3 million in 2010.

In 2010, we granted cash-settled restricted stock units with a 3-year vesting period. The fair value of “cash-settled” restricted stock units is the average market price at date of grant. “Cash-settled” restricted stock units are classified as liability awards because we incur a liability, payable in cash, based on our stock price. The cash-settled restricted stock unit is measured at its fair value at the end of each reporting period and, therefore, will fluctuate based on the fluctuations in our stock price.

Changes in our cash-settled restricted stock units in 2012 were as follows:



	December 30, 2012
(Shares in thousands)	Restricted Stock Units		Weighted Average Grant-Date Fair Value
Unvested cash-settled restricted stock units at beginning of period	758		$	6
Granted	—		—
Vested	(504	)	4
Forfeited	(89	)	9
Unvested cash-settled restricted stock units at end of period	165		$	11
Unvested cash-settled restricted stock units expected to vest at end of period	150		$	11

The intrinsic value of cash-settled restricted stock units vested was $3.7 million in 2012, $80,000 in 2011 and $0.3 million in 2010.

LTIP Awards

Our 1991 Executive Plans provided for grants of cash awards to key executives payable at the end of a multi-year performance period. There were payments of approximately $12 million in 2012, $4 million in 2011 and $7 million in 2010.

For the award granted for the cycle beginning in 2005 paid in 2010, the total payment was based on a key performance measure, Total Shareholder Return (“TSR”), which was calculated as stock appreciation plus reinvested dividends. For the award granted for the cycle beginning in 2006 paid in 2011, 50% of the payment was based on TSR.

The LTIP awards based on TSR were classified as liability awards because we incurred a liability, payable in cash, indexed to our stock price. The LTIP award liability was measured at its fair value at the end of each reporting period and, therefore, fluctuated based on the operating results and the performance of our TSR relative to the peer group’s TSR. The fair value of the LTIP awards was calculated by comparing our TSR against a predetermined peer group’s TSR over the performance period. The payout of the LTIP awards was based on relative performance; therefore, correlations in stock price performance among the peer group companies also factored into the valuation.

For awards granted for the cycle beginning in 2007 and subsequent periods, the actual payment, if any, does not have a performance measure based on TSR. Therefore, these awards are not considered stock-based compensation.

As of December 30, 2012, unrecognized compensation expense related to the unvested portion of our Stock-Based Awards was approximately $4 million and is expected to be recognized over a weighted-average period of 1.6 years.

We generally issue shares for the exercise of stock options, stock-settled restricted stock units granted since 2011 and shares under our ESPP from unissued reserved shares and issue shares for stock-settled restricted stock units granted prior to 2011 and our Company stock match under a 401(k) plan from treasury shares.

Shares of Class A Common Stock reserved for issuance were as follows:



(In thousands)	December 30, 2012	December 25, 2011
Stock options, stock–settled restricted stock units, retirement units and other awards
Outstanding	14,593	18,166
Available	5,300	6,771
Employee Stock Purchase Plan
Available	6,410	6,410
401(k) Company stock match
Available	3,348	3,838
Total Outstanding	14,593	18,166
Total Available	15,058	17,019