STOCK-BASED COMPENSATION

As of

November 25, 2018,

the Company had a

2018

Stock Option Plan (the

“2018

Plan”), and

other stock-based compensation plan. The

2018

Plan was adopted by the Board of Directors of the Company on

May 8, 2018

and approved by the shareholders of the Company at the Annual Meeting of Shareholders of the Company on

July 24, 2018.

options have been granted under the

2018

Plan. Prior to the

2018

Plan, the Company had the

2002

Stock Option Plan (the

“2002

Plan”) which had been 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

2002

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

2002

Plan, was the reported closing price of the common stock on the New York Stock Exchange on the date preceding the date the option was granted. Options granted under the

2002

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.

During the

weeks ended

November 25, 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

November 25, 2018.

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

The

2002

Plan terminated on

May 21, 2018,

and authority to grant additional options under the

2002

Plan expired on that date. All options granted under the

2002

Plan will expire in

April 2028

or earlier.

The following is a summary of option activity for the

weeks ended

November 25, 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		(37,837	)		17.50
Terminated or expired		(101,463	)		19.59
Balance, November 25, 2018		748,904		$	17.28		4.78
Vested and exercisable, November 25, 2018		627,935		$	18.00		4.41