Under the 2005 Equity Compensation Plan adopted by Cintas in fiscal 2006, Cintas may grant officers and key employees equity compensation in the form of stock options, stock appreciation rights, restricted and unrestricted stock awards, performance awards and other stock unit awards up to an aggregate of 14,000,000 shares of Cintas' common stock. At May 31, 2011, 9,713,983 shares of common stock are reserved for future issuance under the 2005 Equity Compensation Plan. The compensation cost was $15.2 million, $15.3 million and $12.0 million for the fiscal years ended May 31, 2011, 2010 and 2009, respectively. The total income tax benefit recognized in the consolidated income statement for share-based compensation arrangements was $4.5 million, $3.9 million and $2.8 million for the fiscal years ended May 31, 2011, 2010 and 2009, respectively.

Stock options are granted at the fair market value of the underlying common stock on the date of grant. The option terms are determined by the Compensation Committee of the Board of Directors, but no stock option may be exercised later than 10 years after the date of the grant. The option awards generally have 10-year terms with graded vesting in years 3 through 10 based on continuous service during that period. Cintas recognizes compensation expense for these options using the straight-line recognition method over the vesting period.

The fair value of these options was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions:



	2011		2010		2009
Risk-free interest rate	2.5	%	3.9	%	4.5	%
Dividend yield	1.5	%	1.3	%	1.0	%
Expected volatility of Cintas' common stock	30.0	%	30.0	%	30.0	%
Expected life of the option in years	7.5		7.5		7.5

The risk-free interest rate is based on U.S. government issues with a remaining term equal to the expected life of the stock options. The determination of expected volatility is based on historical volatility of Cintas' common stock over the period commensurate with the expected term of stock options, as well as other relevant factors. The weighted average expected term was determined based on the historical employee exercise behavior of the options. The weighted-average fair value of stock options granted during fiscal 2011, 2010 and 2009 was $8.01, $8.23 and $10.02, respectively.

The information presented in the following table relates primarily to stock options granted and outstanding under either the 2005 Equity Compensation Plan or under previously adopted plans:



	Shares			Weighted Average Exercise Price
Outstanding, May 31, 2008 (2,041,837 shares exercisable)	6,648,768		$	39.85
Granted	539,039			23.62
Canceled	(828,383	)		36.47
Exercised	—			—

Outstanding, May 31, 2009 (1,914,710 shares exercisable)	6,359,424			38.91
Granted	1,070,798			28.52
Canceled	(963,016	)		35.98
Exercised	—			—

Outstanding, May 31, 2010 (1,838,530 shares exercisable)	6,467,206			37.63
Granted	2,030,764			25.70
Canceled	(833,267	)		38.76
Exercised	—			—

Outstanding, May 31, 2011 (1,945,207 shares exercisable)	7,664,703		$	34.34

The fair value of stock options vested was $9.0 million, $6.8 million and $3.5 million for the fiscal years ended May 31, 2011, 2010 and 2009, respectively.

The following table summarizes the information related to stock options outstanding at May 31, 2011:


		Outstanding Options			Exercisable Options

Range of Exercise Prices	Number Outstanding	Average Remaining Option Life		Weighted Average Exercise Price	Number Exercisable		Weighted Average Exercise Price

$ 20.29 – $ 25.88	2,912,715	9.56	$	25.33	10,564	$	22.66
26.00 – 39.29	1,916,197	5.04		33.48	517,564		37.55
39.43 – 42.06	1,617,358	3.20		41.49	778,370		41.77
42.30 – 51.40	1,218,433	2.86		45.29	638,709		46.25

$ 20.29 – $ 51.40	7,664,703	6.02	$	34.34	1,945,207	$	42.02

At May 31, 2011, the aggregate intrinsic value of stock options outstanding and exercisable was $12.2 million and $0.1 million, respectively.

The weighted-average remaining contractual term of stock options exercisable is 2.1 years.

Restricted stock awards consist of Cintas' common stock that is subject to such conditions, restrictions and limitations as the Compensation Committee of the Board of Directors determines to be appropriate. The vesting period is generally three years after the grant date. The recipient of restricted stock awards will have all rights of a shareholder of Cintas, including the right to vote and the right to receive cash dividends, during the vesting period.

The information presented in the following table relates to restricted stock awards granted and outstanding under the plan adopted in fiscal 2006:



	Shares			Weighted Average Grant Price
Outstanding, unvested grants at May 31, 2008	533,631		$	34.01
Granted	502,821			26.66
Canceled	(52,583	)		32.99
Vested	(2,500	)		36.08

Outstanding, unvested grants at May 31, 2009	981,369			30.29
Granted	597,514			24.63
Canceled	(53,278	)		27.85
Vested	(118,254	)		36.57

Outstanding, unvested grants at May 31, 2010	1,407,351			27.45
Granted	712,721			31.59
Canceled	(66,754	)		25.54
Vested	(135,936	)		39.26

Outstanding, unvested grants at May 31, 2011	1,917,382		$	28.22

The remaining unrecognized compensation cost related to unvested stock options and restricted stock at May 31, 2011, was $51.8 million and the weighted-average period of time over which this cost will be recognized is 3.0 years.