NOTE 10 – STOCK-BASED COMPENSATION

We issue stock-based compensation through our 2009 Omnibus Equity Plan (Omnibus Plan), which permits the issuance of stock options, restricted stock, stock awards, and restricted stock units which can be granted to officers, employees, non-employee directors and consultants. Restricted stock grants awarded through the Omnibus Plan reduce the pool of reserved shares at a multiple of 2.53 times the actual number of shares awarded. Stock options awarded through the Omnibus Plan reduce the reserved shares pool at a rate equal to the number of options granted. Cash-settled restricted stock units do not impact the reserved shares pool. Restricted shares vest after three to five years. Options generally have a contractual term of 10 years, vest ratably over three to five years for employees and vest immediately upon grant for non-employee directors. 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 25, 2013. The table below presents the shares reserved for options and awards, which includes predecessor plans and the Omnibus Plan.


	Shares		Shares
	Reserved		Outstanding
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
Granted – restricted stock	(191,840	)	75,826
Granted – stock options	(463,900	)	463,900
Issued – stock awards	(32,783	)	—
Vested – restricted stock	—		(182,659	)
Exercised – stock options	—		(1,500,661	)
Forfeited – restricted stock	27,686		(10,943	)
Canceled – stock options	200		(200	)
Balance, October 25, 2013	2,291,703		6,419,740

Stock Options: Stock-based compensation expense included in our Consolidated Statements of Operations for stock options was $7,189, $7,801, and $8,370 in fiscal year 2013, 2012, and 2011, respectively. Awards to retirement-eligible employees are expensed at the grant date.

As of October 25, 2013, there was $7,012 of total unrecognized pre-tax compensation cost related to non-vested awards that are expected to be recognized over a weighted-average period of 2.4 years.

Stock option activity for the three years ended October 25, 2013 is summarized as follows:


				Weighted	Weighted
				Average	Average		Aggregate
	Options			Exercise Price	Remaining		Intrinsic
	Outstanding			per share	Contractual Life		Value
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
Granted	463,900			64.36
Exercised	(1,500,661	)		24.32			61,042
Canceled	(200	)		17.50
Balance, October 25, 2013	6,062,817		$	31.37	5.9 years	$	235,887
Exercisable	5,068,438			26.81	5.3 years		220,331

Options exercisable of 5,823,529 at October 26, 2012 and 7,132,818 at October 28, 2011 had weighted-average exercise prices of $24.87 and 23.62, respectively.

The total intrinsic value at October 25, 2013 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:


		2013			2012			2011
Expected dividend yield		1.4	%		1.5	%		2.2	%
Expected stock price volatility		30.0	%		29.0	%		28.9	%
Risk-free interest rate		2.0	%		1.2	%		1.7	%
Expected life of options		7.4 years			7.4 years			7.4 years
Weighted average fair value on the date of grant	$	19.12		$	15.10		$	8.06

Restricted Stock and Cash-Settled Restricted Stock Units: We grant restricted stock to certain employees through our Omnibus Plan. As of October 25, 2013, there was $2,292 of total unrecognized pre-tax compensation cost related to restricted stock that is expected to be recognized over a weighted-average period of 2.8 years. Stock-based compensation expense included in our Consolidated Statements of Operations for restricted stock was $1,998 and $8,488 in fiscal year 2013 and 2012, respectively.

In fiscal year 2013 and 2012, 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. These awards do not impact the shares reserved under the Omnibus Plan. As of October 25, 2013, there was $12,318 of total unrecognized pre-tax compensation cost related to restricted stock units that is expected to be recognized over a weighted-average period of 2.2 years. Stock-based compensation expense included in our Consolidated Statements of Operations for these restricted stock units was $13,618 and $6,551 in fiscal year 2013 and 2012, 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 25, 2013:


	Equity Classified							Liability Classified
				Weighted							Weighted
				Average		Aggregate					Average		Aggregate
	Shares			Grant Date		Intrinsic		Units			Grant Date		Intrinsic
	Outstanding			Fair Value		Value		Outstanding			Fair Value		Value
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
Granted	75,826			63.32		4,801		190,609			63.72		12,145
Vested	(182,659	)		29.35		11,727		(15,219	)		51.49		942
Forfeited	(10,943	)		41.62		(455	)	(22,120	)		46.03		(1,018	)
Balance, October 25, 2013	356,923		$	39.54	$	25,085		598,523		$	46.41	$	42,064