14. Compensation Plans

Stock Option Plans

The grant-date fair value of employee stock options and similar instruments is estimated using the Black-Scholes option-pricing model with the following assumptions for grants issued during the twenty-six weeks ended March 30, 2013 and March 24, 2012:

	Twenty-six weeks ended
	March 30, 2013			March 24, 2012
Average expected life	6 years			6 years
Average volatility	81		%	67		%
Dividend yield	—			—
Risk-free interest rate	1.02		%	1.39		%
Weighted average fair value	$	31.02		$	32.93

Restricted Stock Units and Other Awards

The Company awards restricted stock units (“RSUs”), restricted stock awards (“RSAs”) and performance stock units (“PSUs”) to eligible employees (“Grantee”) which entitle a Grantee to receive shares of the Company’s common stock. RSUs and PSUs are awards denominated in units that are settled in shares of the Company’s common stock upon vesting. RSAs are awards of common stock that are restricted until the shares vest. In general, RSUs and RSAs vest based on a Grantee’s continuing employment. The vesting of PSUs is conditioned on the achievement of both a Grantee’s service and the Company’s performance requirements. The fair value of RSUs, RSAs and PSUs is based on the closing price of the Company’s common stock on the grant date. Compensation expense for RSUs and RSAs is recognized ratably over a Grantee’s service period. Compensation expense for PSUs is also recognized over a Grantee’s service period, but only if and when the Company concludes that it is probable (more than likely) the performance condition(s) will be achieved. The assessment of the probability of achievement is performed each period based on the relevant facts and circumstances at that time, and if the estimated grant-date fair value changes as a result of that assessment, the cumulative effect of the change on current and prior periods is recognized in the period of change. In addition, the Company awards deferred cash awards (“DCAs”), to Grantees which entitle a Grantee to receive cash paid over time upon vesting. The vesting of DCAs is conditioned on the achievement of a Grantee’s continued employment. All awards are reserved for issuance under the Company’s 2006 Incentive Plan and vest over periods determined by the Board of Directors, generally in the range of three to four years for RSUs, RSAs and DCAs, and three years for PSUs.

Employee Stock Purchase Plan

The grant-date fair value of employees’ purchase rights under the Company’s Employee Stock Purchase Plan is estimated using the Black-Scholes option-pricing model with the following assumptions for the purchase rights granted during the twenty-six weeks ended March 30, 2013 and March 24, 2012:

	Twenty-six weeks ended
	March 30, 2013			March 24, 2012
Average expected life	6 months			6 months
Average volatility	114		%	53		%
Dividend yield	—			—
Risk-free interest rate	0.14		%	0.03		%
Weighted average fair value	$	10.82		$	13.98

Income before income taxes in the Unaudited Consolidated Statements of Operations includes compensation expense related to the plans described above of $9.0 million and $5.7 million for the thirteen weeks ended March 30, 2013 and March 24, 2012, respectively; and $15.1 million and $9.2 million for the twenty-six weeks ended March 30, 2013 and March 24, 2012, respectively.

Deferred Compensation Plan

The Company also maintains a Deferred Compensation Plan (“Plan”) which allows participants to defer compensation until a future date. Only directors and certain highly compensated employees of the Company selected by the Company’s Board of Directors are eligible to participate in the Plan. Compensation expense recorded under the Plan was $0.1 million and $0.04 million for the thirteen weeks ended March 30, 2013 and March 24, 2012, respectively; and $0.1 million for each of the twenty-six weeks ended March 30, 2013 and March 24, 2012.