Share-based Payment Arrangements

9 Months Ended

Sep. 24, 2011

Share-based Payment Arrangements

Share-based Payment Arrangements

(3) Share-based Payment Arrangements

As of September 24, 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"). The ESOSIP, 2011 EIP and Directors Stock Compensation Plan are each referred to herein as a "Plan," and, collectively, as 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):

	Thirty Nine Weeks Ended				Thirteen Weeks Ended
	September 24, 2011		September 25, 2010		September 24, 2011		September 25, 2010
Total cost of the Plans during the period	$	3,783	$	3,567	$	1,310	$	1,199
Amount of related income tax benefit recognized during the period		992		906		354		285
Net cost of the Plans during the period	$	2,791	$	2,661	$	956	$	914

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 thirty-nine-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 thirty-nine-week periods ended September 24, 2011 and September 25, 2010 was $12.06 and $12.00, respectively.

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

	Number of Options			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (000s)
Options outstanding at December 25, 2010		2,295,831		$	39.73
Granted		273,000		$	41.79
Exercised		(99,555	)	$	34.24
Forfeited		(118,700	)	$	41.59
Options outstanding at September 24, 2011		2,350,576		$	40.11		6.2	$	—
Options exercisable at September 24, 2011		1,110,143		$	39.70		4.9	$	—

As of September 24, 2011, there were 1,788,462 stock options outstanding that were out-of-the-money based on that day's per share closing market price of $38.51 as reported on the NASDAQ Global Select Market. The remaining stock options outstanding as of September 24, 2011 that were in-the-money had an aggregate intrinsic value of $2,805,000. As of September 24, 2011, there were 800,429 exercisable stock options outstanding that were out-of-the-money. The remaining exercisable stock options outstanding as of September 24, 2011 that were in-the-money had an aggregate intrinsic value of $2,412,000. The total intrinsic value of stock options exercised during the thirty-nine-week periods ended September 24, 2011 and September 25, 2010 was $983,000 and $9,115,000, respectively.

As of September 24, 2011, there was $9,349,000 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 2.8 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 Shares			Weighted Average Grant Date 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 September 24, 2011		43,270		$	42.00

As of September 24, 2011, there was $1,400,000 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 2.3 years.

As of September 24, 2011, there were 118,959 shares of the Company's common stock reserved for issuance under the Directors' Stock Compensation Plan and 8,336,576 shares of the Company's common stock reserved for issuance in the aggregate under the Company's other Plans.