Share-Based Compensation

3 Months Ended

Apr. 30, 2011

10. Share-Based Compensation

The Company accounts for share-based compensation under the provisions of ASC 718, Compensation - Stock Compensation (“ASC 718”), which requires companies to measure and recognize compensation expense for all share-based payments at fair value. Total share-based compensation expense included in the Consolidated Statements of Operations for the 13 weeks ended April 30, 2011 and May 1, 2010 was $2.5 million ($1.5 million, net of tax) and $12.1 million ($7.4 million, net of tax), respectively.

Stock Option Grants

The Company grants both time-based and performance-based stock options under its 2005 Plan. Time-based stock option awards vest over the requisite service period of the award or to an employee’s eligible retirement date, if earlier. Performance-based stock option awards vest over three years and are earned if the Company meets pre-established performance goals during each year.

A summary of the Company’s stock option activity for the 13 weeks ended April 30, 2011 follows:


						Weighted- Average
						Remaining
				Weighted- Average		Contractual		Aggregate
	Options			Exercise Price		Term (in years)		Intrinsic Value
	(In thousands)							(In thousands)
Outstanding — January 29, 2011		12,124		$	15.25
Granted		47		$	15.02
Exercised (1)		(241	)	$	10.52
Cancelled		(44	)	$	21.58

Outstanding — April 30, 2011		11,886		$	15.32		3.3	$	38,701

Vested and expected to vest — April 30, 2011		11,759		$	15.34		3.3	$	38,332

Exercisable — April 30, 2011		4,043		$	7.12		2.3	$	34,110


(1)		Options exercised during the 13 weeks ended April 30, 2011 had exercise prices ranging from $4.54 to $11.66.

The weighted-average grant date fair value of stock options granted during the 13 weeks ended April 30, 2011 and May 1, 2010 was $4.73 and $5.31, respectively. The aggregate intrinsic value of options exercised during the 13 weeks ended April 30, 2011 and May 1, 2010 was $1.2 million and $9.3 million, respectively.

Cash received from the exercise of stock options was $2.5 million for the 13 weeks ended April 30, 2011 and $3.6 million for the 13 weeks ended May 1, 2010. The actual tax benefit realized from stock option exercises totaled $0.3 million for the 13 weeks ended April 30, 2011 and $13.9 million for the 13 weeks ended May 1, 2010.

The fair value of stock options was estimated based on the closing market price of the Company’s common stock on the date of the grant using a Black-Scholes option pricing model with the following weighted-average assumptions:


	13 Weeks Ended
	April 30,			May 1,
Black-Scholes Option Valuation Assumptions	2011			2010
Risk-free interest rate (1)		2.1	%		2.3	%
Dividend yield		2.6	%		2.1	%
Volatility factor (2)		42.7	%		40.2	%
Weighted-average expected term (3)	5.0 years			4.5 years
Expected forfeiture rate (4)		8.0	%		8.0	%


(1)		Based on the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected life of our stock options.

(2)		Based on a combination of historical volatility of the Company’s common stock and implied volatility.

(3)		Represents the period of time options are expected to be outstanding, based on historical experience.

(4)		Based upon historical experience.

As of April 30, 2011, there was $2.9 million of unrecognized compensation expense related to non-vested stock option awards that is expected to be recognized over a weighted average period of 1.5 years.

Restricted Stock Grants

Time-based restricted stock awards are comprised of time-based restricted stock units. These awards vest over three years; however, they may be accelerated to vest over one year if the Company meets pre-established performance goals in the year of grant. Time-based restricted stock units receive dividend equivalents in the form of additional time-based restricted stock units, which are subject to the same restrictions and forfeiture provisions as the original award.

Performance-based restricted stock awards include performance-based restricted stock units. These awards cliff vest at the end of a three year period based upon the Company’s achievement of pre-established goals throughout the term of the award. Performance-based restricted stock units receive dividend equivalents in the form of additional performance-based restricted stock units, which are subject to the same restrictions and forfeiture provisions as the original award. The grant date fair value of restricted stock awards is based on the closing market price of the Company’s common stock on the date of grant.

A summary of the Company’s restricted stock activity is presented in the following tables:


	Time-Based Restricted Stock Units					Performance-Based Restricted Stock Units
	13 Weeks Ended					13 Weeks Ended
	April 30, 2011					April 30, 2011
				Weighted-Average Grant					Weighted-Average Grant
(Shares in thousands)	Shares			Date Fair Value		Shares			Date Fair Value
Nonvested — January 29, 2011		877		$	17.45		630		$	12.59
Granted		1,356			15.03		1,222			15.03
Vested		(372	)		17.45		—			—
Cancelled		(45	)		16.27		(97	)		12.07

Nonvested — April 30, 2011		1,816		$	15.76		1,755		$	14.24

As of April 30, 2011, there was $26.8 million of unrecognized compensation expense related to non-vested time-based restricted stock unit awards that is expected to be recognized over a weighted average period of 2.7 years.

As of April 30, 2011, the Company had 24.9 million shares available for all equity grants.