Note 7 - Shareholders' Equity

12 Months Ended

Jul. 28, 2012

Notes

Note 7 - Shareholders' Equity

NOTE 7 — SHAREHOLDERS’ EQUITY

The Company has two classes of common stock. Class A common stock is entitled to one vote per share and to cash dividends as declared 54% greater than those paid on Class B common stock. Class B common stock is entitled to 10 votes per share. Class A and Class B common stock share equally on a per share basis in any distributions in liquidation. Shares of Class B common stock are convertible on a share-for-share basis for Class A common stock at any time. Class B common stock is not transferable except to another holder of Class B common stock or by will or under the laws of intestacy or pursuant to a resolution of the Board of Directors of the Company approving the transfer. As a result of this voting structure, the holders of the Class B common stock control greater than 50% of the total voting power of the shareholders of the Company and control the election of the Board of Directors. 

The Company has authorized 10,000 shares of preferred stock. No shares have been issued. The Board of Directors is authorized to designate series, preferences, powers and participations of any preferred stock issued.

Village has three share-based compensation plans, which are described below. The compensation cost charged against income for these plans was $3,180, $3,007, and $2,929 in fiscal 2012, 2011, and 2010, respectively. Total income tax benefit recognized in the consolidated statements of operations for share-based compensation arrangements was $1,126, $1,001, and $1,042 in fiscal 2012, 2011, and 2010, respectively. 

The 1997 Incentive and Non-Statutory Stock Option Plan (the “1997 Plan”) provided for the granting of options to purchase up to 1,000 shares of the Company’s Class A common stock by officers, employees and directors of the Company as designated by the Board of Directors. The Plan requires incentive stock options to be granted at exercise prices equal to the  fair value of Village’s stock at the date of grant (110% if the optionee holds more than 10% of the voting stock of the Company), while nonqualified options may be granted at an exercise price less than fair value. All options granted under this plan were at fair value, vest over a one-year service period and are exercisable up to ten years from the date of grant. There are no shares remaining for future grants under the 1997 Plan.

The Village Super Market, Inc. 2004 Stock Plan (the “2004 Plan”) provides for awards of incentive and nonqualified stock options and restricted stock. There are 1,200 shares of Class A common stock authorized for issuance to employees and directors under the 2004 Plan. Terms and conditions of awards are determined by the Board of Directors. Option awards are primarily granted at the fair value of the Company’s stock at the date of grant, cliff vest three years from the grant date and are exercisable up to ten years from the date of grant. Restricted stock awards primarily cliff vest three years from the grant date. There are no shares remaining for future grants under the 2004 Plan.

On December 17, 2010, the shareholder’s of the Company approved the Village Super Market, Inc. 2010 Stock Plan (the “2010 Plan”) under which awards of incentive and non qualified stock options and restricted stock may be made. There are 1,200 shares of Class A common stock authorized for issuance to employees and directors under the 2010 Plan. Terms and conditions of awards are determined by the Board of Directors. Option awards granted to date were granted at the fair value of the Company stock on the date of grant, primarily cliff vest three years from the grant date and are exercisable up to ten years from the grant date. Restricted stock awards primarily cliff vest three years from the date of grant.

The following table summarizes option activity under all plans for the following years:

	2012		2011		2010
	Shares	Weighted-average exercise price	Shares	Weighted-average exercise price	Shares	Weighted-average exercise price
Outstanding at beginning of year	555	$23.34	404	$19.56	417	$18.21
Granted	0	0	218	27.51	29	27.43
Exercised	(69)	19.50	(59)	12.32	(42)	11.64
Forfeited	(12)	18.40	(8)	27.58	0	0
Outstanding at end of year	474	$24.03	555	$23.34	404	$19.56
Options exercisable at end of year	234	$20.48	297	$19.82	177	$11.69

As of July 28, 2012, the weighted-average remaining contractual term of options outstanding and options exercisable was 6.7 years and 4.8 years, respectively. As of July 28, 2012, the aggregate intrinsic value of options outstanding and options exercisable was $5,161 and $3,385, respectively. The weighted-average grant date fair value of options granted was $5.78 and $5.18 per share in fiscal 2011 and 2010, respectively. The total intrinsic value of options exercised was $685, $1,009, and $671 in fiscal 2012, 2011, and 2010, respectively. The fair value of each option award is estimated on the date of grant using the Black-Scholes Option Pricing Model using the weighted-average assumptions in the following table. The Company uses historical data for similar groups of employees in order to estimate the expected life of options granted. Expected volatility is based on the historical volatility of the Company’s stock for a period of years corresponding to the expected life of the option. The risk free interest rate is based on the U.S. Treasury yield curve at the time of grant for securities with a maturity period similar to the expected life of the option.

	2011		2010
Expected life (years)	5.0		5.0
Expected volatility	32.2	%	28.0	%
Expected dividend yield	3.6	%	3.5	%
Risk-free interest rate	2.0	%	2.5	%

The following table summarizes restricted stock activity under the 2004 and 2010 Plans for fiscal 2012, 2011, and 2010:

	2012		2011		2010
	Shares	Weighted-average grant date fair value	Shares	Weighted-average grant date fair value	Shares	Weighted-average grant date fair value
Nonvested at beginning of year	293	$27.56	257	$25.65	267	$25.61
Granted	9	29.46	292	27.55	3	27.58
Vested	(3)	32.25	(256)	25.64	(13)	25.25
Forfeited	0	0	0	0	0	0
Nonvested at end of year	299	$27.57	293	$27.56	257	$25.65

The total fair value of restricted shares vested during fiscal 2012, 2011, and 2010 was $89, $7,328, and $371, respectively.  As of July 28, 2012, there was $5,183 of total unrecognized compensation costs related to nonvested stock options and restricted stock granted under the above plans. That cost is expected to be recognized over a weighted-average period of 1.6 years.

Cash received from option exercises under all share-based compensation arrangements was $1,353, $727, and $486 in fiscal 2012, 2011, and 2010, respectively. The actual tax benefit realized for tax deductions from option exercises under share-based compensation arrangements was $280, $385, and $287 in fiscal 2012, 2011, and 2010, respectively.

The Company declared and paid cash dividends on common stock as follows:

	2012	2011	2010
Per share:
Class A common stock	$0.850	$1.700	$ 0.970
Class B common stock	0.553	1.105	0.631
Aggregate:
Class A common stock	$6,247	$12,040	$6,795
Class B common stock	3,511	7,046	4,025
	$9,758	$19,086	$10,820

Dividends paid in fiscal 2011 include special dividends totaling $14,005 paid in the second quarter, comprised of $1.25 per Class A common share and $.8125 per Class B common share.