Stock-Based Compensation

6 Months Ended

Jul. 30, 2011

Stock-Based Compensation

Stock-Based Compensation

Note 4.  Stock-Based Compensation

For the twenty-six weeks ended July 30, 2011 and July 31, 2010, stock-based compensation expense was $8.4 million and $6.0 million, respectively, and for the thirteen weeks ended July 30, 2011 and July 31, 2010, stock-based compensation expense was $4.7 million and $3.1 million, respectively.  The total tax benefit associated with stock-based compensation for the twenty-six weeks ended July 30, 2011 and July 31, 2010 was $3.2 million and $2.3 million, respectively, and for the thirteen weeks ended July 30, 2011 and July 31, 2010, the total tax benefit associated with stock-based compensation was $1.8 million and $1.2 million, respectively.  We recognize stock-based compensation costs, net of a forfeiture rate, for only those shares expected to vest and on a straight-line basis over the requisite service period of the award. 

We use the Black-Scholes option-pricing model to value our stock options. The weighted average assumptions relating to the valuation of our stock options for the twenty-six and thirteen weeks ended July 30, 2011 and July 31, 2010 were as follows:

	Twenty-Six Weeks Ended		Thirteen Weeks Ended
	July 30, 2011	July 31, 2010	July 30, 2011	July 31, 2010
Weighted average fair value of grants	$6.70	$6.89	$6.66	$5.91
Expected volatility	66%	66%	64%	66%
Expected term (years)	4.5	4.5	4.5	4.5
Risk-free interest rate	1.9%	2.1%	1.6%	1.8%
Expected dividend yield	1.5%	1.0%	1.4%	1.3%

Stock-Based Awards Activity

            As of July 30, 2011, 6,611,081 nonqualified options are outstanding at a weighted average exercise price of $13.03 per share, and approximately 5.3 million shares remain available for future grants of either stock options, restricted stock or restricted stock units, stock appreciation rights ("SARs") or performance shares. 

            The following table presents a summary of our stock options activity for the twenty-six weeks ended July 30, 2011:

	Number of Shares	Weighted Average Exercise Price
Outstanding, beginning of period	6,033,101	$12.87
Granted	1,531,000	13.72
Exercised	(405,161)	5.70
Canceled or expired	(547,859)	18.68
Outstanding, end of period	6,611,081	13.03
Exercisable at July 30, 2011	3,681,315	14.59

The following table presents a summary of our restricted stock activity for the twenty-six weeks ended July 30, 2011:

	Number of Shares	Weighted Average Grant Date Fair Value
Nonvested, beginning of period	1,430,335	$9.27
Granted	761,427	13.76
Vested	(246,305)	10.69
Canceled	(136,397)	10.62
Nonvested, end of period	1,809,060	10.86

Performance-based Awards

In the first quarter of fiscal 2011, a performance-based stock award was granted to our President and Chief Executive Officer, Mr. Dyer.  Under this performance award, Mr. Dyer is eligible to receive up to 133,333 shares, with a target of 100,000 shares, contingent upon the achievement of certain Company-specific performance goals during fiscal 2011.  Any shares earned as a result of the achievement of such goals (whether issued at the time of grant or as additional shares earned at the end of the performance measurement period) will vest 1 year from the date of grant.  We are recording compensation expense, based on the number of shares ultimately expected to vest, recognized on a straight-line basis over the 1-year service period.  Additionally, we reevaluate the amount of compensation expected to be earned at the end of each reporting period and record an adjustment, if necessary.

In the first quarter of fiscal 2011, certain of our executive officers were granted a restricted stock award of which a performance condition was attached to 50% of the award, contingent upon the achievement of certain Company-specific performance goals during fiscal 2011.  Any shares earned as a result of the achievement of such goals will vest over 3 years from the date of grant.  We are recording compensation expense based on the number of shares ultimately expected to vest, recognized on a straight-line basis over the 3-year service period.