NOTE 9 – STOCK-BASED COMPENSATION

Until February 2009, we had stock-based compensation plans comprised of stock options, restricted stock and stock awards, which could be granted to officers, employees, non-employee directors and consultants. In February 2009, stockholders approved a new equity compensation plan, the 2009 Omnibus Equity Plan (Omnibus Plan). The new plan resulted in one pool of reserved shares that will be used for equity grants, totaling 5,229,684 shares as of April 2009 and included the authorization to grant cash-settled restricted stock units. These reserved shares are equal to the total reserved shares that were remaining under the previous equity compensation plans at the time the Omnibus Plan was approved. In February 2010, stockholders approved a 3,000,000 increase in the reserve. Under the Omnibus Plan, equity compensation awarded through restricted stock or stock awards reduces the pool of reserved shares at a multiple of 2.53 times the actual number of shares awarded. Stock option awards reduce the reserved shares pool at a rate equal to the number of options granted. Options generally have a contractual term of 10 years, vest ratably over three years or five years for employees and vest immediately upon grant for non-employee directors. Restricted shares vest after three or five years. Stock awards are issued and outstanding upon date awarded. The table below summarizes the stock option and restricted stock activity for the three years ended October 28, 2011. The table below presents the shares reserved in one pool for options and awards, which includes predecessor plans and the Omnibus Plan.


	Shares Reserved			Shares Outstanding
Balance, October 31, 2008		5,006,414			12,259,457
Granted – restricted stock		(131,792	)		112,990
Granted – stock options		(1,776,650	)		1,776,650
Vested – restricted stock		—			(101,559	)
Exercised – stock options		—			(1,426,341	)
Canceled – stock options		384,590			(384,590	)
Balance, October 30, 2009		3,482,562			12,236,607
Reserve increase ¹		3,000,000			—
Granted – restricted stock		(851,421	)		336,530
Granted – stock options		(705,500	)		705,500
Issued – stock awards		(55,260	)		—
Vested – restricted stock		—			(50,224	)
Exercised – stock options		—			(2,232,383	)
Forfeited – restricted stock		26,770			(10,581	)
Canceled – stock options		94,789			(94,789	)
Balance, October 29, 2010		4,991,940			10,890,660
Granted – restricted stock		(609,159	)		240,774
Granted – stock options		(752,500	)		752,500
Issued – stock awards		(53,783	)		—
Vested – restricted stock		—			(149,379	)
Exercised – stock options		—			(2,122,962	)
Forfeited – restricted stock		32,087			(15,083	)
Canceled – stock options		76,507			(76,507	)
Balance, October 28, 2011		3,685,092			9,520,003

¹	On June 9, 2010, we filed an S-8 registration statement to add 3,000,000 shares to the shares reserved for issuance under the Omnibus Plan.

Stock Options: Total stock-based compensation expense included in our Consolidated Statements of Operations in fiscal 2011, 2010 and 2009 was $8,370, $9,011 and $9,385, respectively. Awards to retirement-eligible employees are expensed at the grant date.

As of October 28, 2011, there was $5,600 of total unrecognized pre-tax compensation cost related to non-vested awards that are expected to be recognized over a weighted-average period of 1.9 years.

Stock option activity for the three years ended October 28, 2011 is summarized as follows:


	Options Outstanding			Weighted Average Exercise Price per share		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Balance, October 31, 2008		12,011,718		$	21.06		5.9 years	$	17,036
Granted		1,776,650			26.34
Exercised		(1,426,341	)		17.55				10,140
Canceled		(384,590	)		20.75
Balance, October 30, 2009		11,977,437		$	22.27		6.1 years	$	41,073
Granted		705,500			31.48
Exercised		(2,232,383	)		19.26				24,073
Canceled		(94,789	)		24.99
Balance, October 29, 2010		10,355,765		$	23.52		6.0 years	$	88,858
Granted		752,500			32.42
Exercised		(2,122,962	)		20.94				30,676
Canceled		(76,507	)		24.15
Balance, October 28, 2011		8,908,796		$	24.88		6.0 years	$	97,560
Exercisable		7,132,818			23.62		5.3 years		87,064

Options exercisable of 7,784,429 at October 29, 2010 and 8,576,291 at October 30, 2009 had weighted average exercise prices of $22.68 and $21.69, respectively.

The total intrinsic value at October 28, 2011 is based on our closing stock price on the last trading day of the year for in-the-money options. The exercise prices of the options granted during these periods are equal to the market price of the underlying stock on the date of grant. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. The following table sets forth the weighted average fair values and assumptions on which the fair values are determined:


	2011			2010			2009
Expected dividend yield		2.2	%		2.0	%		2.3	%
Expected stock price volatility		28.9	%		28.0	%		30.0	%
Risk-free interest rate		1.7	%		2.0	%		2.9	%
Expected life of options		7.4 years			7.4 years			6 years
Weighted average fair value on the date of grant	$	8.06		$	8.02		$	6.89

Restricted Stock and Cash-Settled Restricted Stock Units: We grant restricted stock to certain employees through our Omnibus Plan. Previously, we granted restricted stock to certain employees through share reserves under our Key Employee Bonus Plan and our 2001 Stock Incentive Plan. In February 2009, the share reserves under the Omnibus Plan replaced those reserves.

In fiscal year 2011, we granted cash-settled restricted stock units to certain employees through our Omnibus Plan. Since the compensation expense is payable in cash, these restricted stock units are classified as liabilities within other long-term liabilities and are marked-to-market each period. Stock based compensation expense included in our Consolidated Statements of Operations for these restricted stock units was $1,413 in fiscal year 2011.

The following table sets forth a reconciliation of restricted shares (equity classified) and cash-settled restricted stock units (liability classified) for the three years ended October 28, 2011:


	Equity Classified							Liability Classified
	Shares Outstanding		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value			Units Outstanding		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Balance, October 31, 2008	247,739		$	24.44	$	5,066		—		$	—	$	—
Granted	112,990			18.66		2,109		—			—		—
Vested	(101,559	)		24.35		1,902		—			—		—
Balance, October 30, 2009	259,170		$	21.95	$	6,575		—		$	—	$	—
Granted	336,530			27.54		9,268		—			—		—
Vested	(50,224	)		25.60		1,522		—			—		—
Forfeited	(10,581	)		27.66		(293	)	—			—		—
Balance, October 29, 2010	534,895		$	25.01	$	17,170		—		$	—	$	—
Granted	240,774			34.34		8,268		221,066			36.21		8,005
Vested	(149,379	)		24.30		5,420		(1,459	)		34.27		56
Forfeited	(15,083	)		27.32		(412	)	(8,141	)		34.27		(279	)
Balance, October 28, 2011	611,207		$	28.80	$	21,900		211,466		$	36.30	$	7,577