Share-Based Compensation Plans

6 Months Ended

Jul. 28, 2012

Share-Based Compensation Plans

Share-Based Compensation Plans

8.     Share-Based Compensation Plans

We maintain several equity plans under which we may grant stock options, stock appreciation rights, restricted stock, deferred stock units and performance based awards to full-time key employees and non-employee directors.  We account for share-based awards in accordance with the FASB standard regarding share-based payments, which requires the compensation cost resulting from all share-based payment transactions be recognized in the financial statements. The amount of compensation cost is measured based on the grant-date fair value of the instrument issued and is recognized over the vesting period.  Share-based compensation expense recognized for the three and six months ended July 28, 2012 was $4.2 million and $8.3 million, respectively.  Share-based compensation expense recognized for the three and six months ended July 30, 2011 was $3.5 million and $6.5 million, respectively.

Stock Options

The following table summarizes stock option activity for the six months ended July 28, 2012:

	Shares		Weighted-  Average  Exercise  Price
Outstanding at January 28, 2012	1,314,422		$	22.61
Granted	100,349		40.13
Exercised	(143,298	)	18.65
Forfeited	(7,000	)	22.72
Expired	(322	)	17.62
Outstanding at July 28, 2012	1,264,151		$	24.45
Exercisable at July 28, 2012	703,761		$	21.76

The weighted-average grant date fair value of the 100,349 stock options granted during the six months ended July 28, 2012 was $17.21 per share. The following table summarizes the weighted average assumptions used to fair value stock options at the date of grant using the Black-Scholes option pricing model for the six months ended July 28, 2012.

	For the Six Months Ended July 28, 2012
Risk-free interest rate	1.09	%
Expected lives	5.0 years
Dividend yield	2.07	%
Expected volatility	58.67	%

The assumptions presented in the table above represent the weighted average of the applicable assumptions used to fair value stock options.  The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant.  The expected lives represents the period of time the options are expected to be outstanding after their grant date.  The dividend yield is based on the average of the annual dividend divided by the market price of our common stock at the time of declaration. Expected volatility is based on historical volatility of our common stock.

As of  July 28, 2012, we have unrecognized compensation expense related to nonvested stock options of approximately $5.4 million which is expected to be recognized over a weighted average period of 2.2 years.

Nonvested Deferred Stock Units and Restricted Stock Shares

The following table summarizes deferred stock unit activity for the six months ended July 28, 2012:

	Shares		Weighted-  Average  Grant-Date  Fair Value
Nonvested at January 28, 2012	539,749		$	28.10
Granted	330,284		40.13
Vested (1)	(383,588	)	28.00
Forfeited	(5,894	)	30.24
Nonvested at July 28, 2012	480,551		$	36.43

(1) Includes 123,566 shares relinquished for tax payments related to vested deferred stock units for the six months ended July 28, 2012.

The following table summarizes restricted stock activity for the six months ended July 28, 2012:

	Shares		Weighted-  Average  Grant-Date  Fair Value
Nonvested at January 28, 2012	119,081		$	28.45
Granted	10,962		31.92
Vested	(25,632	)	27.80
Forfeited	—		—
Nonvested at July 28, 2012	104,411		$	28.98

As of July 28, 2012, we have unrecognized compensation expense related to nonvested deferred stock units and shares of restricted stock of approximately $15.5 million, which is expected to be recognized over a weighted average period of 1.3 years.

Employee Stock Purchase Plan

The Employee Stock Discount Plan (“ESDP”) allows employees to authorize after-tax payroll deductions to be used for the purchase of up to 2,137,500 shares of our common stock at 85% of the lesser of the fair market value on the first day of the offering period or the fair market value on the last day of the offering period.  We make no contributions to this plan but pay all brokerage, service and other costs incurred.  The plan, as amended, allows participants to purchase no more than 125 shares during any calendar quarter.

During the six months ended July 28, 2012, employees purchased 49,724 shares under the ESDP, which had a weighted-average share price of $25.52 per share.  As of July 28, 2012, 903,378 shares were reserved for future issuance under the ESDP.