The 2009 Incentive Award Plan (the 2009 Plan) approved by shareholders in September 2009 replaced our four former equity compensation plans that provided share-based awards to employees and officers of the company (the 1977 Stock Option Plan, the 2007 Employees Equity Plan (EEP), the 2005 Executive Officer Equity Plan (EOEP) and the Executive Officer Stock Option Plan) and no further awards will be made to employees and officers under those plans. While new options can no longer be granted, there are options that are still outstanding under those plans. The 2009 Plan authorizes 16,000,000 shares of our common stock for issuance to eligible individuals in the form of stock options, restricted stock, restricted stock units, stock appreciation rights, performance awards, dividend equivalents, stock payments, deferred stock, other stock-based awards and performance-based awards. In addition to employees and officers of the company, members of our Board of Directors and consultants to the company are eligible to participate, as determined by the Compensation Committee of the Board of Directors. As of May 29, 2011, up to 10.4 million shares were available for future issuance under the 2009 Plan.

The 2009 Plan provides for the grant of both nonqualified stock options and incentive stock options (as defined in the U.S. tax code). The 2009 Plan provides for the grant of stock options at fair market value on the date of grant. The term and vesting period of the stock options are set by the Compensation Committee of our Board of Directors. To date, options granted under the terms of the 2009 Plan expire no later than six years and one day after the date of grant and vest one-fourth of the total grant one year after grant and the rest in equal monthly installments over the next three years. The terms of stock options granted under the former equity compensation plans were similar to the 2009 Plan.

We have a director stock option plan that was approved by shareholders in fiscal 1998 which authorized the grant of up to 2,000,000 shares of common stock to eligible directors who are not employees of the company. Options were granted automatically upon approval of the plan by shareholders and were granted automatically to eligible directors upon their appointment to the board and subsequent election to the board by shareholders. In connection with the approval of amendments to the director stock plan in fiscal 2006, the director stock option plan was frozen and no new options can be granted under the plan. Options issued to directors under this plan vested in full after six months. Under this plan, options to purchase 250,000 shares of common stock with a weighted-average per share exercise price of $13.18 and weighted-average remaining contractual life of 1.9 years were outstanding and exercisable as of May 29, 2011. The aggregate intrinsic value of these fully vested shares was $2.9 million at May 29, 2011.

In fiscal 2011, our executive officers were granted options to purchase 531,000 shares of common stock under the 2009 Plan. In fiscal 2010 and 2009, our executive officers were granted stock options under the former EOEP. Options to purchase 1,280,000 shares of common stock were granted in fiscal 2010 and options to purchase 565,000 shares of common stock were granted in fiscal 2009. These shares are included in the amounts presented in the table that summarizes stock option activity. Grants will no longer be made under the EOEP.

As of May 29, 2011, under all equity compensation plans for stock options there were 27.0 million shares reserved for issuance. The following table summarizes the activity of common stock shares related to stock options granted during fiscal 2011, 2010 and 2009 under our equity plans (excluding the director stock option plan under which new options can no longer be granted):

				Weighted-Average Exercise Price


Outstanding at May 25, 2008		54.5		$	19.76
	Granted	7.9		$	18.35
	Exercised	(3.9	)	$	9.82
	Forfeited	(2.2	)	$	23.40
	Expired	(2.5	)	$	23.64

Outstanding at May 31, 2009		53.8		$	19.95
	Granted	6.4		$	13.12
	Exercised	(4.4	)	$	11.42
	Forfeited	(13.5	)	$	23.60
	Expired	(11.4	)	$	26.69

Outstanding at May 30, 2010		30.9		$	15.64
	Granted	0.8		$	14.57
	Exercised	(10.3	)	$	13.32
	Forfeited	(0.6	)	$	14.53
	Expired	(4.4	)	$	19.66

Outstanding at May 29, 2011		16.4		$	16.01

Expiration dates for options outstanding at May 29, 2011 range from June 19, 2011 to July 13, 2016.

The total intrinsic value of options exercised was $76.5 million in fiscal 2011, $7.9 million in fiscal 2010 and $27.8 million in fiscal 2009. Total unrecognized compensation cost related to stock option grants as of May 29, 2011 was $12.3 million, which is expected to be recognized over a weighted-average period of 1.9 years.

The following table provides additional information about total options outstanding at May 29, 2011 under the stock option plans (excluding the director stock option plan):

		Weighted-Average Exercise Price		Aggregate Intrinsic Value (In Millions)


Fully vested and expected to vest	16.2	$	16.06	$	141.8	2.6
Currently exercisable	11.0	$	16.96	$	87.8	2.0

We have an employee stock purchase plan approved by shareholders that authorizes the issuance of up to 16,000,000 shares to eligible employees worldwide. Our stock purchase plan uses a captive broker and we deposit shares purchased by the employee with the captive broker. In addition, for international participants, the National subsidiary that the participant is employed by is responsible for paying to us the difference between the purchase price set by the terms of the plan and the fair market value at the time of the purchase. This plan allows employees to purchase shares of the company's common stock at 85 percent of the lower of the common stock's fair market value at the time of enrollment in one of two six-month purchase periods in a one-year offering period or the end of the purchase period.

Under the terms of our stock purchase plan, we issued 1.8 million shares in fiscal 2011, 1.8 million shares in fiscal 2010 and 2.2 million shares in fiscal 2009 to employees for $19.7 million, $19.2 million and $24.0 million, respectively. As of May 29, 2011 there were 3.0 million shares reserved for future issuance under the stock purchase plan.

The 2009 Plan provides for the grant of restricted stock and restricted stock units that are subject to restrictions which may be based exclusively on the passage of time or may also include performance conditions as determined by the Compensation Committee of our Board of Directors. Vesting for both restricted stock and restricted stock units can begin to occur six months after grant and the minimum full vesting period for non-performance contingent restricted shares is three years. The minimum vesting period for any performance contingent restricted shares is one year. Restricted stock and restricted stock units granted under the former EEP and restricted stock plan were also subject to restrictions based exclusively on the passage of time or included performance conditions and have similar vesting requirements. We use restricted stock awards as a retention vehicle for employees with technical skills and expertise that are important to us.

The following table provides a summary of activity during fiscal 2011, 2010 and 2009 for grants of restricted stock not yet vested and restricted stock units under the restricted stock plan, the EEP and the 2009 Plan (excluding units granted with performance based restrictions):

				Weighted-Average Grant-Date Fair Value


Outstanding at May 25, 2008		0.5		$	23.21
	Granted/Issued	0.8		$	11.64
	Vested	(0.1	)	$	19.46
	Forfeited	(0.1	)	$	16.50

Outstanding at May 31, 2009		1.1		$	15.59
	Granted/Issued	2.1		$	13.75
	Vested	(0.1	)	$	24.24
	Forfeited	(0.1	)	$	12.70

Outstanding at May 30, 2010		3.0		$	13.96
	Granted/Issued	1.9		$	13.40
	Vested	(0.9	)	$	13.65
	Forfeited	(0.4	)	$	13.94

Outstanding at May 29, 2011		3.6		$	13.74

The total fair value of restricted shares that vested in fiscal 2011, 2010 and 2009 was $12.8 million, $2.1 million and $1.6 million, respectively. Total unrecognized compensation cost related to non-vested restricted stock shares and restricted stock units outstanding as of May 29, 2011 was $28.8 million, which is expected to be recognized over a weighted-average period of 2.7 years.

We have a director stock plan, which has been approved by shareholders, that authorizes the issuance of up to 900,000 shares of common stock to eligible directors who are not employees of the company. The stock is issued automatically to eligible new directors upon their appointment to the board and to all eligible directors on their subsequent election to the board by shareholders. Directors may also elect to take their annual retainer fees for board membership and committee chairmanship in stock under the plan. The shares issued to the directors under the plan are restricted from transfer for between six and thirty-six months. We granted 104,626 shares of common stock in fiscal 2011, 139,102 shares of common stock in fiscal 2010 and 90,716 shares of common stock in fiscal 2009 to our directors under the plan. The weighted-average grant-date fair value of those shares was $12.69 per share in fiscal 2011, $14.66 per share in fiscal 2010 and $17.32 per share in fiscal 2009. As of May 29, 2011 we had 23,327 shares reserved for future issuances. Total unrecognized compensation cost related to non-vested shares under the director stock plan as of May 29, 2011 was $0.7 million, which is expected to be recognized over a weighted-average period of 2.0 years. We will continue to grant awards to members of our Board of Directors under the existing director stock plan until all remaining authorized shares have been used. At that time, future awards will then be granted under the 2009 Plan.

We grant performance share units to our executive officers based on their achievement of certain performance targets during a specified performance period under the 2009 Plan for performance periods established since September 2009. Performance share units related to performance periods established prior to September 2009 are granted under the former EOEP. In fiscal 2011, targets for a sixth two-year performance period were established in June 2010 under the 2009 Plan to be measured after the end of fiscal 2012. Upon completion in July 2010 of the fourth two-year performance period under the EOEP, no shares were issued because minimum performance thresholds were not achieved. In fiscal 2010, targets for a fifth two-year performance period were established in July 2009 under the EOEP to be measured after the end of fiscal 2011. In addition, targets for a one-year performance period were also established under the EOEP, which were measured after the end of fiscal 2010, but requires a two-year vesting period. Upon completion in July 2009 of the third two-year performance period, a total of 259,375 shares were issued to our executive officers. Of those shares, 251,875 were issued under the EOEP and 7,500 were issued under the former restricted stock plan. In fiscal 2009, no shares were issued upon completion in July 2008 of the second two-year performance period under the EOEP because minimum performance thresholds were not achieved. Total unrecognized compensation cost related to unvested performance share units as of May 29, 2011 was $2.4 million, which is expected to be recognized over a weighted-average period of 1.0 years.

After the end of fiscal 2011, 1,192,500 shares were issued in June 2011 under the EOEP upon the completion of the fifth two-year performance period. In addition, 850,000 shares were issued in June 2011 under the EOEP upon completion of the required vesting period for the one-year performance period that was measured after the end of fiscal 2010.

On November 29, 2010, we paid a one-time cash payment of an aggregate of $14.6 million to our executive officers in connection with the special retention incentive program approved by our Compensation Committee in fiscal 2009. To receive the payment, the officer must have been providing services to the company on the payment date. The amount of each cash award was determined based upon the average daily closing price of our common stock for the second quarter of fiscal 2011 ended November 28, 2010, which was $13.06 per share.

We completed a stock option exchange program in November 2009. Like many companies, we had experienced a significant decline in our stock price during calendar 2008 and 2009 as a result of the global financial and economic crisis. Our employees held stock options with exercise prices significantly above the trading prices of our common stock. The stock option exchange program offered our employees the opportunity to surrender certain of those outstanding stock options for cancellation in exchange for a number of restricted stock units to be granted under the 2009 Plan having a value roughly equivalent to the value of the options exchanged. Named executive officers and members of our Board of Directors were not eligible to participate in the option exchange program.

Under the exchange program, eligible stock options with an exercise price of $17.00 and above could be exchanged for restricted stock units at an exchange ratio that ranged between 5 to 1 and 10 to 1 depending on the actual exercise prices of the eligible stock options. The exchange ratios for the option exchange were determined using the Black-Scholes option pricing model with a computation of expected volatility based on a combination of historical and implied volatility. We used this model to enable us to calculate exchange ratios that would result in a fair value of the new restricted stock units to be effectively equal to the fair value of the surrendered eligible stock options and as such, incremental compensation expense was immaterial.

Under the exchange program, eligible stock options to purchase an aggregate of 12,830,732 shares held by 1,713 employees were cancelled. Of this amount, eligible options to purchase 11,988,793 shares were cancelled and exchanged for a total of 1,670,944 new restricted stock units on November 16, 2009. The aggregate fair value of the restricted stock units was $22.7 million based on the closing price of our common stock on the exchange date. These restricted stock units will vest ratably each year for four years unless the exchanged stock options were fully vested, in which case they will vest ratably each year for three years. Under the terms of the exchange program, a cash payment was offered for the surrender of eligible stock options for which application of the exchange ratios would result in the issuance of less than 100 restricted stock units. Eligible options to purchase 841,939 shares were cancelled in exchange for an aggregate $1.3 million cash payment made to employees on November 16, 2009. As a result of the cash payments, share-based compensation expense in fiscal 2010 includes an incremental expense of $1.7 million.