Share-based Payment Arrangements

6 Months Ended

Jun. 25, 2011

Share-based Payment Arrangements

Share-based Payment Arrangements

(3) Share-based Payment Arrangements

As of June 25, 2011, the Company had two employee equity incentive plans, the 2002 employee stock option and stock incentive plan (the "ESOSIP") and the 2011 equity incentive plan (the "2011 EIP"). The Company also has a stock compensation plan for members of its Board of Directors (the "Directors Stock Compensation Plan") (each of the ESOSIP, 2011 EIP and Directors Stock Compensation Plan, a "Plan," and collectively, the "Plans"). In May 2011, the Company's shareholders approved the 2011 EIP. The provisions of the 2011 EIP, which replaces the ESOSIP, are substantially similar to the provisions of the ESOSIP. 6,000,000 shares of the Company's common stock were authorized for issuance under the 2011 EIP. No further grants can be made under the ESOSIP, including 2,239,117 shares of the Company's common stock previously reserved for issuance under the ESOSIP. Amounts recognized in the financial statements with respect to these Plans are as follows (in thousands):

	Twenty Six Weeks Ended				Thirteen Weeks Ended
	June 25, 2011		June 26, 2010		June 25, 2011		June 26, 2010
Total cost of the Plans during the period	$	2,473	$	2,368	$	1,268	$	1,183
Amount of related income tax benefit recognized during the period		638		621		333		322
Net cost of the Plans during the period	$	1,835	$	1,747	$	935	$	861

The fair value of each option grant on its grant date was calculated using the Black-Scholes option pricing model with the following weighted average assumptions for grants made in the 2011 and 2010 twenty-six-week periods:

	2011			2010
Expected volatility		35.0	%		37.0	%
Expected dividend yield		0.450	%		0.400	%
Risk-free interest rate		1.75	%		2.50	%
Expected lives (in years)		4.0			4.2

The Company utilizes historical data, including exercise patterns and employee departure behavior, in estimating the term that options will be outstanding. Expected volatility was based on historical volatility and other factors, such as expected changes in volatility arising from planned changes to the Company's business, if any. The risk-free interest rate was based on the yield of zero coupon U.S. Treasury bonds for terms that approximated the terms of the options granted. The weighted average grant date fair value of stock options granted during the twenty-six-week periods ended June 25, 2011 and June 26, 2010 was $12.05 and $11.98, respectively.

The following table summarizes information regarding the Company's stock options granted under the Plans:

						Weighted Average
	Number of			Weighted Average Exercise Price		Remaining Contractual		Aggregate Intrinsic
	Options			per Share		Term (years)		Value (000s)
Options outstanding at December 25, 2010		2,295,831		$	39.73
Granted		271,000		$	41.81
Exercised		(94,299	)	$	35.09
Forfeited		(118,700	)	$	41.59
Options outstanding at June 25, 2011		2,353,832		$	40.06		6.5	$	11,602
Options exercisable at June 25, 2011		1,117,599		$	39.61		5.2	$	6,012

The total intrinsic value of stock options exercised during the twenty-six-week periods ended June 25, 2011 and June 26, 2010 was $871,000 and $7,920,000, respectively.

As of June 25, 2011, there was $10,474,000 of total unrecognized compensation cost related to non-vested stock options granted under the Plans. The unrecognized compensation cost related to these non-vested options is expected to be recognized over a weighted average period of 3.0 years.

The fair value of each share of non-vested restricted stock issued under the Plans is based on the fair value of a share of the Company's common stock on the date of grant. The following table summarizes information regarding the Company's non-vested restricted stock under the Plans:

	Number of			Weighted Average Grant Date
	Shares			Fair Value
Non-vested restricted stock outstanding at December 25, 2010		29,854		$	39.49
Granted		22,410		$	44.82
Vested		(6,056	)	$	42.41
Forfeited		(2,938	)	$	37.13
Non-vested restricted stock outstanding at June 25, 2011		43,270		$	42.00

As of June 25, 2011, there was $1,559,000 of total unrecognized compensation cost related to non-vested shares of restricted stock granted under the Plans. The unrecognized compensation cost related to these non-vested shares of restricted stock is expected to be recognized over a weighted average period of 2.6 years.

As of June 25, 2011, there were 118,959 shares of the Company's common stock reserved for issuance under the Directors' Stock Compensation Plan and 8,341,832 shares of the Company's common stock reserved for issuance in the aggregate under the Company's other Plans.