STOCK-BASED COMPENSATION

As of

May 27, 2018,

the Company had a

2002

Stock Option Plan (the “Plan”), and

other stock-based compensation plan. The Plan was approved by the Company’s shareholders and provided for the grant of stock options to directors and key employees of the Company. All options granted under the Plan have exercise prices equal to the fair market value of the underlying common stock of the Company at the time of grant, which, pursuant to the terms of the Plan, is the reported closing price of the common stock on the New York Stock Exchange on the date preceding the date the option is granted. Options granted under the Plan become exercisable

25%

one

year after the date of grant, with an additional

25%

exercisable each succeeding anniversary of the date of grant, and expire

years after the date of grant.

The Plan terminated on

May 21, 2018,

and authority to grant additional options under the Plan expired on that date. All options granted under the Plan will expire in

April 2028

or earlier. The Board of Directors of the Company has adopted a

2018

Stock Option Plan subject to approval by the shareholders of the Company at the Annual Meeting of Shareholders of the Company to be held on

July 24, 2018.

During the

weeks ended

May 27, 2018,

the Company granted options to purchase a total of

2,650

shares of common stock to certain of its employees. The future compensation expense to be recognized in earnings before income taxes was

$10

and will be recorded on a straight-line basis over the requisite service period. The fair value of the granted options was

$3.66

per share using the Black-Scholes option pricing model with the following assumptions: risk free interest rate of

2.83%;

expected volatility factor of

24.7%;

expected dividend yield of

2.32%;

and estimated option term of

5.2

years.

The risk-free interest rates were based on U.S. Treasury rates at the date of grant with maturity dates approximately equal to the estimated terms of the options at the date of the grant. Volatility factors were based on historical volatility of the Company’s common stock. The expected dividend yields were based on the regular quarterly cash dividend per share most recently declared by the Company and on the exercise price of the options granted during the

weeks ended

May 27, 2018.

The estimated term of the options was based on evaluations of the historical and expected future employee exercise behavior.

The following is a summary of option activity for the

weeks ended

May 27, 2018:

	Outstanding Options			Weighted Average Exercise Price	Weighted Average Remaining Contractual Term (in years)

Balance, February 25, 2018	885,554		$	17.55
Granted	2,650			17.75
Exercised	(2,987	)		15.80
Terminated or expired	(9,963	)		17.49
Balance, May 27, 2018	875,254		$	17.56	4.72
Vested and exercisable, May 27, 2018	744,917		$	18.25	4.30