NOTE 9 – STOCK-BASED COMPENSATION

Until February 2009, we had stock-based compensation plans permitting the issuance 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 the 2009 Omnibus Equity Plan (Omnibus Plan). The Omnibus 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 share 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 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 26, 2012. 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 30, 2009		3,482,562			12,236,607
Reserve increase¹		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
Granted – restricted stock		(196,943	)		77,843
Granted – stock options		(516,058	)		516,058
Issued – stock awards		(29,973	)		—
Vested – restricted stock		—			(214,130	)
Exercised – stock options		—			(2,315,413	)
Forfeited – restricted stock		559			(221	)
Canceled – stock options		9,663			(9,663	)
Balance, October 26, 2012		2,952,340			7,574,477

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: Stock-based compensation expense included in our Consolidated Statements of Operations for stock options was $7,801, $8,370 and $9,011 in fiscal year 2012, 2011 and 2010, respectively. Awards to retirement-eligible employees are expensed at the grant date.

As of October 26, 2012, there was $5,512 of total unrecognized pre-tax compensation cost related to non-vested awards that are expected to be recognized over a weighted-average period of 2.1 years.

Stock option activity for the three years ended October 26, 2012 is summarized as follows:


	Options Outstanding			Weighted Average Exercise Price per share		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
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
Granted		516,058			55.64
Exercised		(2,315,413	)		23.01				57,466
Canceled		(9,663	)		26.37
Balance, October 26, 2012		7,099,778		$	27.73		6.1 years	$	194,442
Exercisable		5,823,529			24.87		5.5 years		175,214

Options exercisable of 7,132,818 at October 28, 2011 and 7,784,429 at October 29, 2010 had weighted-average exercise prices of $23.62 and $22.68, respectively.

The total intrinsic value at October 26, 2012 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:


	2012			2011			2010
Expected dividend yield		1.5	%		2.2	%		2.0	%
Expected stock price volatility		29.0	%		28.9	%		28.0	%
Risk-free interest rate		1.2	%		1.7	%		2.0	%
Expected life of options		7.4 years			7.4 years			7.4 years
Weighted average fair value on the date of grant	$	15.10		$	8.06		$	8.02

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 2012 and 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 $6,551 and $1,413 in fiscal year 2012 and 2011, respectively.

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 26, 2012:


	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 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
Granted		77,843			40.03		3,116			243,753			41.52		10,119
Vested		(214,130	)		26.08		8,033			(3,685	)		37.30		169
Forfeited		(221	)		27.59		(6	)		(6,281	)		35.97		(226	)
Balance, October 26, 2012		474,699		$	31.87	$	26,089			445,253		$	39.15	$	24,471