10. Share-Based Compensation Plans

For a discussion of our share-based compensation plans refer to Note 9 in our Annual Report on Form 10-K for the fiscal year ended February 2, 2013.

We account for share-based awards in accordance with the authoritative guidance 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 nine months ended November 2, 2013 was $3.6 million and $12.7 million, respectively. Share-based compensation expense recognized for the three and nine months ended October 27, 2012 was $3.9 million and $12.2 million, respectively.

Non-Vested Deferred Stock Units and Restricted Stock Shares

The following table summarizes the activity of time-based and performance-based deferred stock units for the nine months ended November 2, 2013:

	Shares				Weighted-Average Grant-Date Fair Value
	Time- Based		Performance- Based		Time- Based		Performance- Based
Non-Vested at February 2, 2013	471,369		—		$	36.22	$	—
Granted	455,448		97,668		33.10		33.09
Vested (1)	(325,763	)	—		38.19		—
Forfeited	(26,883	)	(15,110	)	32.58		33.09
Non-Vested at November 2, 2013	574,171		82,558		$	32.81	$	33.09

(1) Includes 110,740 shares relinquished for tax payments related to vested deferred stock units for the nine months ended November 2, 2013.

On April 3, 2013, our Board approved a change in the form of award agreements to be issued for grants of deferred stock units (“DSUs”) to participants under our 2004 Long-Term Incentive Plan. As revised, the award agreements provide that dividend equivalents, if any, will be accrued during the vesting period for such DSU awards and paid out only upon vesting of the underlying DSUs. As such, grants of DSU awards on or after April 3, 2013 earn dividends throughout the vesting period which are subject to the same vesting terms as the underlying share award. Grants of DSUs generally vest over a period of from one to three years. DSU awards granted prior to April 3, 2013 are entitled to receive non-forfeitable dividend equivalents, if any, when and if paid to shareholders of record at the payment date. Included in the non-vested time-based awards as of November 2, 2013 are 142,428 deferred stock units granted prior to April 3, 2013.

The performance-based DSUs represent a contingent right to receive one share of common stock and generally vest in one-third tranches over a three-year period, subject to our achievement of a performance target during an applicable performance period. Any unvested performance-based DSUs at the end of the performance period are rolled over and become eligible to vest in subsequent performance periods. Any performance-based DSUs that are unvested at the end of all vesting periods will lapse and be forfeited as of such time. The performance-based DSUs earn dividends throughout the vesting period and are subject to the same vesting terms as the underlying performance-based awards.

The following table summarizes the activity of restricted stock for the nine months ended November 2, 2013:

	Shares		Weighted- Average Grant-Date Fair Value
Non-Vested at February 2, 2013	99,847		$	28.55
Granted	19,417		38.63
Vested	(37,369	)	29.77
Forfeited	—		—
Non-Vested at November 2, 2013	81,895		$	30.38

Restricted stock awards receive non-forfeitable dividends, if any, when and if paid to shareholders of record at the payment date.

As of November 2, 2013, we have unrecognized compensation expense related to non-vested deferred stock units and shares of restricted stock of approximately $14.4 million, which is expected to be recognized over a weighted-average period of 1.3 years.

Stock Options

The following table summarizes the activity of stock options for the nine months ended November 2, 2013:

	Shares		Weighted- Average Exercise Price
Outstanding at February 2, 2013	1,024,768		$	25.54
Granted	19,080		33.09
Exercised	(299,231	)	20.29
Forfeited	(25,012	)	19.58
Expired	(5	)	7.97
Outstanding at November 2, 2013	719,600		$	28.13
Exercisable at November 2, 2013	410,453		$	27.41

The weighted-average grant date fair value of the 19,080 stock options granted during the nine months ended November 2, 2013 was $13.10 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 nine months ended November 2, 2013.

		For the Nine Months Ended
		November 2, 2013

Risk-free interest rate		0.76%
Expected lives		5.0 years
Dividend yield		2.20%
Expected volatility		55.00%

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 November 2, 2013, we have unrecognized compensation expense related to non-vested stock options of approximately $2.8 million which is expected to be recognized over a weighted-average period of 2.0 years.

Employee Stock Discount 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 nine months ended November 2, 2013, employees purchased 80,043 shares under the ESDP, which had a weighted-average share price of $27.71 per share. As of November 2, 2013, 768,405 shares were reserved for future issuance under the ESDP.