12. Share-based Compensation

The Company adopted a stock incentive plan (the “1996 Plan”) in November 1996 and has reserved 1,500,000 shares of Common Stock for issue under the 1996 Plan. Share-Based Awards granted under the Plan, through August 27, 2011, are at a price equal to the fair market value of the Company's Common Stock on the date of grant. Share-Based Awards granted prior to fiscal 2003 are subject to a proportional four-year vesting schedule and expire eight years from the grant date. Share-Based Awards granted beginning in fiscal 2003 and thereafter are subject to a five-year cliff-vesting schedule under which the awards become vested or exercisable after five years from date of grant and expire ten years after the grant date. Compensation expense for all Share-Based Awards, whether proportional four-year vesting or five-year cliff-vesting, is recognized ratably over the related vesting period starting in fiscal 2006. Certain Share-Based Awards were granted during fiscal 2011, 2010 and 2009 to non-employee members of the Board of Directors of the Company, which were fully vested upon grant and expire eight years after the grant date. Accordingly, compensation expense related to these option grants in fiscal 2011, 2010 and 2009 were recognized on the date of grant. In fiscal 2011 and 2010, 6,000 shares and 12,000 shares, respectively, of restricted stock were granted to the Company's non-employee directors that were subject to a one-year vesting schedule.

In fiscal 2011, certain Share-Based Awards granted by the Company under the 1996 Plan to the Company's employees were in the form of stock appreciation rights. Such stock appreciation rights become fully vested and exercisable on the fifth anniversary of the grant date, expire on the tenth anniversary of the grant date and must be settled in stock at the time of exercise. Compensation expense for all stock appreciation rights is recognized ratably over the related vesting period. In fiscal 2011, the Company granted a total of 15,000 stock appreciation rights under the 1996 Plan to the Company's non-employee directors. Such stock appreciation rights were fully vested upon grant, expire on the earlier of the eighth anniversary of the grant date or the second anniversary of the date that the director ceases to be a member of the Board of Directors and must be settled in stock at the time of exercise. Accordingly, compensation expense related to the stock appreciation rights were recognized on the date of grant.

The Company ceased granting new awards under the 1996 Plan as of January 21, 2011, and the 1996 Plan will expire in accordance with its terms on January 8, 2012.

At the Company's Annual Meeting of Shareholders held on January 11, 2011, the Company's shareholders approved the UniFirst Corporation 2010 Stock Option and Incentive Plan (the “2010 Plan”). The 2010 Plan was previously adopted by the Company's Board of Directors on October 26, 2010 upon the recommendation of the Compensation Committee. The 2010 Plan replaced the Company's 1996 Plan. The 2010 Plan permits the award of incentive and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, performance shares, dividend equivalent rights and cash-based awards. No awards may be made under the 2010 Plan after January 11, 2021. As of August 27, 2011, no awards had been made under the 2010 Plan.

On April 5, 2010, the Company entered into a Restricted Stock Award Agreement (the “Performance Criteria Restricted Stock Award Agreement”) with its Chief Executive Officer (“CEO”) pursuant to which the Company granted 350,000 shares (the “Performance Restricted Shares”) of restricted common stock to the CEO. The Performance Restricted Shares are earned if the Company achieves certain consolidated revenues and adjusted operating margins as set forth in the Performance Criteria Restricted Stock Award Agreement during certain performance periods in fiscal 2010, fiscal 2011 and fiscal 2012 as set forth in such agreement (collectively, the “Performance Criteria”). As of August 27, 2011, the performance criteria for fiscal 2010 and fiscal 2011 have been achieved and the related restricted shares have been earned. The Performance Restricted Shares earned upon achievement of the Performance Criteria will vest in four equal amounts on the third, fourth, fifth and sixth anniversaries of the grant date provided that the CEO continues to be employed by the Company on each such date. As the Company believed that it was probable that the Performance Criteria would be met, compensation expense began being recognized as of the grant date of these shares. As required by accounting rules, the Company is recognizing compensation expense for each vesting tranche of the Performance Restricted Shares ratably from the service inception date to the vesting date for each tranche. Compensation expense related to the Performance Criteria Restricted Stock Award Agreement recognized in fiscal 2011 and fiscal 2010 totaled $4.3 million and $1.8 million, respectively.

Also, on April 5, 2010, the Company entered into a Restricted Stock Award Agreement (the “Restricted Stock Award Agreement”) with the CEO pursuant to which the Company granted 50,000 shares (the “Restricted Shares”) of restricted common stock to the CEO. The Restricted Shares will vest in equal amounts on each of the first six anniversaries of the grant date provided that the CEO continues to be employed by the Company on each such date. Compensation expense related to the Restricted Shares is being recognized ratably over the vesting period. Compensation expense related to the Restricted Stock Award Agreement recognized in fiscal 2011 and fiscal 2010 totaled $0.4 million and $0.2 million, respectively.

Compensation expense for all share-based compensation, which includes Share-Based Awards and restricted stock grants, for the five fiscal years subsequent to August 27, 2011 is as follows (in thousands):

	Share-Based		Restricted
	Awards		Stock		Total
2012	$	1,184	$	4,819	$	6,003
2013		907		4,066		4,973
2014		690		2,725		3,415
2015		375		1,697		2,072
2016		47		680		727
Total	$	3,203	$	13,987	$	17,190

As of August 27, 2011, the total compensation cost not yet recognized related to non-vested share-based compensation grants was approximately $17.2 million. The weighted average periods over which compensation cost for Share-Based Awards and restricted stock will be recognized are 2.6 years and 3.1 years, respectively.

The following table summarizes the Share-Based Award activity for the fiscal year ended August 27, 2011:

	Number of Shares			Weighted Average Exercise Price
Outstanding, August 28, 2010		447,300		$	35.49

Granted		127,500			46.82
Exercised		(42,400	)		32.07
Forfeited		(5,000	)		37.83

Outstanding, August 27, 2011		527,400		$	38.48

Exercisable, August 27, 2011		122,400		$	36.36