8. Share-Based Compensation Plans

For a discussion of our share-based compensation plans refer to Note 9 in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2013.

We account for share-based awards in accordance with the authoritative guidance regarding share-based payments, which requires the compensation cost resulting from all share-based payment transactions be recognized in the financial statements. The amount of compensation cost is measured based on the grant-date fair value of the instrument issued and is recognized over the vesting period. Share-based compensation expense recognized for the quarters ended May 4, 2013 and April 28, 2012 was $4.5 million and $4.1 million, respectively.

Non-Vested Deferred Stock Units and Restricted Stock Shares

The following table summarizes the activity of time-based and performance-based deferred stock units for the quarter ended May 4, 2013:

	Shares			Weighted-Average Grant-Date Fair Value
	Time- Based		Performance- Based	Time- Based		Performance- Based
Non-Vested at February 2, 2013	471,369		—	$	36.22	$	—
Granted	449,595		97,668	33.09		33.09
Vested (1)	(292,430	)	—	38.97		—
Forfeited	(1,244	)	—	40.13		—
Non-Vested at May 4, 2013	627,290		97,668	$	32.69	$	33.09

(1) Includes 95,660 shares relinquished for tax payments related to vested deferred stock units for the quarter ended May 4, 2013.

On April 3, 2013, our Board approved a change in the form of award agreements to be issued for grants of deferred stock units (“DSUs”) to participants under the Company’s 2004 Long-Term Incentive Plan. As revised, the award agreements provide that dividend equivalents, if any, will be accrued during the vesting period for such DSU awards and paid out only upon vesting of the underlying DSUs. As such, grants of DSU awards on or after April 3, 2013 earn dividends throughout the vesting period which are subject to the same vesting terms as the underlying share award. Grants of DSUs generally vest over a period from one to three years. DSU awards granted prior to April 3, 2013 are entitled to receive non-forfeitable dividend equivalents, if any, when and if paid to shareholders of record at the payment date. Included in the non-vested time-based awards as of May 4, 2013 are 177,695 deferred stock units granted prior to April 3, 2013.

The performance-based DSUs represent a contingent right to receive one share of common stock and generally vest in one-third tranches over a three year period, subject to the Company’s achievement of a performance target during an applicable performance period. Any unvested performance-based DSUs at the end of the performance period are rolled over and become eligible to vest in subsequent performance periods. Any performance-based DSUs that are unvested at the end of all vesting periods will lapse and be forfeited as of such time. The performance-based DSUs earn dividends throughout the vesting period and are subject to the same vesting terms as the underlying performance-based awards.

The following table summarizes the activity of restricted stock for the quarter ended May 4, 2013:

	Shares		Weighted- Average Grant-Date Fair Value
Non-Vested at February 2, 2013	99,847		$	28.55
Granted	5,166		33.89
Vested	(23,938	)	29.76
Forfeited	—		—
Non-Vested at May 4, 2013	81,075		$	28.53

Restricted stock awards receive non-forfeitable dividends, if any, when and if paid to shareholders of record at the payment date.

As of May 4, 2013, we have unrecognized compensation expense related to non-vested deferred stock units and shares of restricted stock of approximately $22.7 million, which is expected to be recognized over a weighted-average period of 1.5 years.

Stock Options

The following table summarizes the activity of stock options for the quarter ended May 4, 2013:

	Shares		Weighted- Average Exercise Price
Outstanding at February 2, 2013	1,024,768		$	25.54
Granted	19,080		33.09
Exercised	(34,250	)	19.14
Forfeited	(5,000	)	22.72
Expired	(5	)	7.97
Outstanding at May 4, 2013	1,004,593		$	25.91
Exercisable at May 4, 2013	651,409		$	24.80

The weighted-average grant date fair value of the 19,080 stock options granted during the quarter ended May 4, 2013 was $13.10 per share. The following table summarizes the weighted-average assumptions used to fair value stock options at the date of grant using the Black-Scholes option pricing model for the quarter ended May 4, 2013.

	For the Quarter Ended
	May 4, 2013

Risk-free interest rate	0.76	%
Expected lives	5.0 years
Dividend yield	2.20	%
Expected volatility	55.00	%

The assumptions presented in the table above represent the weighted-average of the applicable assumptions used to fair value stock options. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected lives represents the period of time the options are expected to be outstanding after their grant date. The dividend yield is based on the average of the annual dividend divided by the market price of our common stock at the time of declaration. Expected volatility is based on historical volatility of our common stock.

As of May 4, 2013, we have unrecognized compensation expense related to non-vested stock options of approximately $3.6 million which is expected to be recognized over a weighted-average period of 2.1 years.

Employee Stock Purchase Plan

The Employee Stock Discount Plan (“ESDP”) allows employees to authorize after-tax payroll deductions to be used for the purchase of up to 2,137,500 shares of our common stock at 85% of the lesser of the fair market value on the first day of the offering period or the fair market value on the last day of the offering period. We make no contributions to this plan but pay all brokerage, service and other costs incurred. The plan, as amended, allows participants to purchase no more than 125 shares during any calendar quarter.

During the quarter ended May 4, 2013, employees purchased 26,873 shares under the ESDP, which had a weighted-average share price of $26.16 per share. As of May 4, 2013, 821,575 shares were reserved for future issuance under the ESDP.