NOTE 13 – STOCK-BASED COMPENSATION

As approved by the Company's shareholders, the Company established the Amended and Restated 2001 Equity Incentive Plan (the "2001 Equity Incentive Plan") and the Amended and Restated 2008 Equity Incentive Plan (the "2008 Equity Incentive Plan" and collectively with the 2001 Equity Incentive Plan, the "Equity Incentive Plans") to reward, retain and attract key personnel. The Equity Incentive Plans provide for grants of nonqualified or incentive stock options, stock appreciation rights ("SARs"), performance shares or units, stock units and stock grants. To fund the 2001 and 2008 Equity Incentive Plans, 12,375,000 and 4,550,000 shares of the Company's common stock were reserved for issuance upon exercise of awards, respectively.

The following table summarizes the stock compensation expense by type of grant for 2012, 2011 and 2010 (in thousands, except per share amounts):

	Fiscal Year
	2012			2011			2010

Stock options and SARs	$	3,034		$	4,244		$	3,779
Non-vested stock		3,198			2,027			1,353
Performance shares		1,571			1,419			1,643

Total compensation expense		7,803			7,690			6,775
Related tax benefit		(2,869	)		(2,653	)		(2,446	)
	$	4,934		$	5,037		$	4,329

Earnings per share:
Basic	$	0.16		$	0.15		$	0.11
Diluted		0.16			0.15			0.11

As of February 2, 2013, the Company had unrecognized compensation cost of $14.8 million related to stock-based compensation awards granted. That cost is expected to be recognized over a weighted average period of 2.3 years.

Stock Options and SARs

The Company historically granted stock options and SARs to its employees and members of management. The right to exercise stock options and SARs generally vests over four years from the date of grant, with 25% vesting at the end of each of the first four years following the date of grant. Stock options and SARs are settled by issuance of common stock. Options issued prior to January 29, 2005, will generally expire, if not exercised, within ten years from the date of the grant, while options and SARs granted after that date generally expire, if not exercised, within seven years from the date of grant. No stock options or SARs were granted during 2012. The weighted average grant date fair value for SARs granted during 2011 and 2010 was $8.69 and $6.76, respectively.

The following table provides the significant weighted average assumptions used in determining the estimated fair value, at the date of grant under the Black-Scholes option-pricing model, of SARs granted in 2011 and 2010:

	Fiscal Year
	2011	2010

Expected volatility	63.4% - 63.7%	62.1% - 63.7%
Weighted average volatility	63.6%	62.2%
Risk-free rate	1.5% - 1.9%	1.2% - 2.3%
Expected life of options (in years)	4.3	4.3
Expected dividend yield	1.6% - 1.9%	1.3% - 2.3%

The expected volatility was based on historical volatility for a period equal to the award's expected life. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected life (estimated period of time outstanding) of awards granted was estimated using the historical exercise behavior of employees. The expected dividend yield is based on the current dividend payout activity and the market price of the Company's stock.

The following table summarizes information about stock options and SARs outstanding under the Equity Incentive Plans as of February 2, 2013 and changes during the fifty-three weeks ended February 2, 2013:

	Number of Outstanding Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (in thousands)
Outstanding at January 28, 2012		4,004,257		$	16.10
Exercised		(1,420,742	)		15.00
Forfeited		(706,100	)		16.74
Outstanding at February 2, 2013		1,877,415		$	16.69		3.2	$	11,770

Vested or expected to vest at
February 2, 2013		1,719,382		$	16.75		3.0	$	10,671

Exercisable at February 2, 2013		1,087,251		$	17.19		2.2	$	6,275

The following table summarizes information about non-vested stock options and SARs outstanding as of February 2, 2013 and changes during the fifty-three weeks ended February 2, 2013:

Stock Options/ SARs	Number of Shares			Weighted Average Grant Date Fair Value
Non-vested at January 28, 2012		1,794,350		$	6.72
Vested		(648,961	)		6.24
Forfeited		(355,225	)		6.30
Outstanding at February 2, 2013		790,164			7.31

The aggregate intrinsic value of stock options and SARs, defined as the amount by which the market price of the underlying stock on the date of exercise exceeds the exercise price of the option, exercised during 2012, 2011 and 2010 was $6.9 million, $4.2 million and $6.0 million, respectively.

Non-vested Stock

The Company grants shares of non-vested stock to its employees, members of management and independent directors. The non-vested stock converts one for one to common stock at the end of the vesting period at no cost to the recipient to whom it is awarded. The vesting period of the non-vested stock ranges from one to four years from the date of grant.

The following table summarizes information about non-vested stock granted by the Company as of February 2, 2013 and changes during the fifty-three weeks ended February 2, 2013:

Non-vested Stock	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at January 28, 2012		376,965		$	16.68
Granted		493,665			16.10
Vested		(141,060	)		16.04
Forfeited		(87,161	)		17.86
Outstanding at February 2, 2013		642,409			16.21

The aggregate intrinsic value of non-vested stock that vested during 2012, 2011 and 2010 was $2.3 million, $2.3 million and $0.8 million, respectively. The weighted-average grant date fair value for non-vested shares granted in 2012, 2011 and 2010 was $16.10, $17.88 and $12.68, respectively. The payment of the employees' tax liability for a portion of the non-vested shares that vested during 2012 was satisfied by withholding shares with a fair value equal to the tax liability. As a result, the actual number of shares issued was 123,782.

Performance Shares

The Company grants performance shares to members of senior management, at no cost to the recipient, as a means of rewarding them for the Company's long-term performance based on shareholder return performance measures. The actual number of shares that could be issued ranges from zero to a maximum of two times the number of granted shares outstanding ("Target Shares"), as reflected in the table below. The actual number of shares issued is determined by the Company's shareholder return performance relative to a specific group of companies over a three-year performance cycle. Compensation expense, which is recorded ratably over the vesting period, is based on the fair value at grant date and the anticipated number of shares of the Company's common stock, which is determined on a Monte Carlo probability model. Grant recipients do not have any shareholder rights until the granted shares have been issued.

The following table summarizes information about the performance shares that remain outstanding as of February 2, 2013:

										Weighted
	Target Shares							Target Shares		Average
	Outstanding at		Target		Target			Outstanding		Grant Date
Period	Beginning		Shares		Shares			at End		Fair Value per
Granted	of Year		Granted		Forfeited			of Year		Share

2010		107,000		-		(30,000	)		77,000	$	19.75
2011		64,225		-		(24,425	)		39,800		25.00
2012		-		243,100		(5,000	)		238,100		18.04

Total		171,225		243,100		(59,425	)		354,900

During 2012, 40,314 shares, with an aggregate intrinsic value of $0.7 million, vested related to the 2009 performance share grant. The payment of the recipients' tax liability of approximately $0.2 million was satisfied by withholding shares with a fair value equal to the tax liability. As a result, the actual number of shares issued was 29,650.