Stock-Based Compensation

12 Months Ended

Dec. 31, 2011

Stock-Based Compensation [Abstract]

Stock-Based Compensation

Note 12 – Stock-Based Compensation

In May 2009, the Company's stockholders approved the 2009 Stock Incentive Plan (2009 Plan).  The 2009 Plan authorizes the award of stock-based incentives to employees and non-employee directors.  Awards include restricted stock, stock appreciation rights, and options to purchase stock at specified prices during specified time periods.  The 2009 Plan reserved 750 thousand shares of common stock, which may be issued or transferred upon exercise of stock options.

During the years ended December 31, 2011, December 25, 2010, and December 26, 2009, the Company recognized stock-based compensation, as a component of selling, general, and administrative expense, in its Consolidated Statements of Income of $3.5 million, $2.9 million, and $2.6 million, respectively.  The related tax benefit was $0.9 million in 2011, $0.7 million in 2010, and $0.6 million in 2009.

The fair value of the restricted stock awards equals the fair value of the Company's stock on the grant date and is amortized into compensation expense evenly over the vesting period of each award.  At December 31, 2011 and December 25, 2010, 229 thousand and 132 thousand restricted stock awards were outstanding and unvested, respectively.  During 2011, the Company granted 132 thousand restricted stock awards and 35 thousand restricted stock awards vested.  The aggregate intrinsic value of outstanding and unvested awards was $7.4 million at December 31, 2011.  Total compensation for restricted stock awards not yet recognized was $5.7 million with an average recognition period of four years.

Under existing plans, the Company may grant options to purchase shares of common stock at prices not less than the fair market value of the stock on the date of grant.  Generally, the options vest annually in equal increments over a five-year period beginning one year from the date of grant.  Any unexercised options expire after not more than ten years.  The fair value of each grant is estimated as a single award and amortized into compensation expense on a straight-line basis over its vesting period.  The weighted average grant-date fair value of options granted during 2011, 2010, and 2009 were $12.53, $7.63, and $7.60, respectively.

The Company estimates the fair value of all stock option awards as of the grant date by applying the Black-Scholes-Merton option pricing model.  The use of this valuation model in the determination of compensation expense involves certain assumptions that are judgmental and/or highly sensitive including the expected life of the option, stock price volatility, risk-free interest rate, and dividend yield.  Additionally, forfeitures are estimated at the time of valuation and reduce expense ratably over the vesting period.  The forfeiture rate, which was estimated at 17 percent for 2011, 2010, and 2009, is adjusted periodically based on actual forfeitures.  The weighted average of key assumptions used in determining the fair value of options granted and a discussion of the methodology used to develop each assumption are as follows:

	2011			2010			2009
Expected term	6.3 years			6.3 years			6.3 years
Expected price volatility		0.358			0.353			0.334
Risk-free interest rate		1.7	%		2.4	%		3.3	%
Dividend yield		1.1	%		1.6	%		1.7	%

Expected term – This is the period of time estimated based on historical experience over which the options granted are expected to remain outstanding.  An increase in the expected term will increase compensation expense.

Expected price volatility – This is a measure of the amount by which a price has fluctuated or is expected to fluctuate.  The Company uses actual historical changes in the market value of its stock to calculate the volatility assumption.  Daily market value changes from the date of grant over a past period representative of the expected term of the options are used.  An increase in the expected price volatility rate will increase compensation expense.

Risk-free interest rate – This is the U.S. Treasury rate for the week of the grant, having a term representative of the expected term of the options.  An increase in the risk-free rate will increase compensation expense.

Dividend yield – This rate is the annual dividends per share as a percentage of the Company's stock price.  An increase in the dividend yield will decrease compensation expense.

The Company generally issues treasury shares when options are exercised.  A summary of the stock option activity and related information follows:

(Shares in thousands)	Options			Weighted Average Exercise Price
Outstanding at December 27, 2008		2,084		$	26.43
Granted		226			23.79
Exercised		(477	)		19.16
Cancelled		(80	)		28.42
Expired		(149	)		32.50
Outstanding at December 26, 2009		1,604			27.56
Granted		233			24.70
Exercised		(148	)		19.26
Expired		(24	)		30.78
Outstanding at December 25, 2010		1,665			27.85
Granted		31			37.54
Exercised		(464	)		27.91
Outstanding at December 31, 2011		1,232			28.07

At December 31, 2011, the aggregate intrinsic value of all outstanding options was $13.2 million with a weighted average remaining contractual term of 5.8 years.  Of the outstanding options, 747 thousand are currently exercisable with an aggregate intrinsic value of $7.3 million, a weighted average exercise price of $29.07, and a weighted average remaining contractual term of 4.6 years.  The total intrinsic value of options exercised was $6.6 million, $1.3 million, and $1.4 million in 2011, 2010, and 2009, respectively.  The total compensation expense not yet recognized related to non-vested awards at December 31, 2011 was $8.5 million with an average expense recognition period of 3.4 years.

Approximately 746 thousand shares were available for future stock incentive awards at December 31, 2011.