11. STOCK COMPENSATION PLANS AND CAPITAL STOCK TRANSACTIONS:

General

Total compensation expense related to stock-based awards in fiscal 2011, 2010 and 2009 was $15.2 million, $10.5 million and $7.4 million, respectively. The total tax benefit associated with stock-based compensation for fiscal 2011, 2010 and 2009 was $5.8 million, $4.0 million and $2.8 million, respectively. We recognize stock-based compensation costs net of a forfeiture rate and on a straight-line basis over the requisite service period of the award.

In addition to stock options, we have historically issued nonvested stock awards (restricted stock) pursuant to restricted stock agreements. Shares of nonvested restricted stock have the same voting rights as common stock, are entitled to receive dividends and other distributions thereon, and are considered to be currently issued and outstanding. In general, restricted stock awards vest pro-rata over a period of three years from the date of grant.

Furthermore, we also issued performance-based restricted stock to our President and Chief Executive Officer in fiscal years 2011, 2010 and 2009. For these awards, he was eligible to receive from 0 to 133,333 shares, with a target of 100,000 shares, contingent upon the achievement of certain Company-specific performance goals over each of the 2011, 2010 and 2009 fiscal years. For the fiscal 2011 award, it was determined that he had earned 74,010 shares based on our performance, which will vest one year from the date of grant. For the fiscal 2010 and fiscal 2009 awards, it was determined that he had earned 133,333 shares based on our performance. The fiscal 2010 and 2009 awards vest two years and three years from the date of grant, respectively. All of these awards vested in early fiscal 2012. We accounted for these awards by recording compensation expense, based on the number of shares ultimately expected to vest on a straight-line basis over the respective service period. In fiscal 2011, we also granted performance-based restricted stock to certain executives contingent upon the achievement of certain Company-specific performance goals for fiscal 2011. For these awards, it was determined that the performance goals had been met and 100% of the award was earned. These awards will vest pro-rata over a period of three years from the date of grant.

Lastly, we have issued and will continue to issue Performance Stock Units ("PSU"). Each PSU award has the ability to be converted into shares upon the achievement of certain Company-specific performance goals. The PSU's are not entitled to voting rights or dividends. As of January 28, 2012, no PSU awards were outstanding.

Omnibus Stock and Incentive Plan

In April 2002, the Board approved the Chico's FAS, Inc. 2002 Omnibus Stock and Incentive Plan, which initially reserved 9,710,280 shares of common stock for future issuance. In fiscal 2008, our shareholders approved the Amended and Restated Chico's FAS, Inc. 2002 Omnibus Stock and Incentive Plan (the "Omnibus Plan"), effective as of June 26, 2008. In particular, the amendments included: (i) increasing the total number of shares of our Common Stock with respect to which awards may be granted under the plan by an additional 10,000,000 shares, (ii) expanding the permissible types of awards to include stock-based and cash-based Stock Appreciation Rights (SARs) and performance awards, and (iii) eliminating the automatic grants of stock options for both new and continuing non-employee directors. Our executive officers and directors are eligible to receive awards under the Omnibus Plan, including stock options, restricted stock, restricted stock units, SARs and performance awards, in accordance with the terms and conditions of the Omnibus Plan. Under the Omnibus Plan, options generally vest evenly over three years and have a 10-year term. As of January 28, 2012, approximately 6.3 million nonqualified stock options are outstanding under the Omnibus Plan and approximately 5.1 million shares remain available for future grants of stock-based awards.

Methodology Assumptions

We use the Black-Scholes option-pricing model to value our stock options. Using this option-pricing model, the fair value of each stock option award is estimated on the date of grant. The fair value of the stock option awards, which are subject to pro-rata vesting generally over 3 years, is expensed on a straight-line basis over the vesting period of the stock options. The expected volatility assumption is based on the historical volatility of the stock over a term equal to the expected term of the option granted. The expected term of stock option awards granted is derived from historical exercise experience under the stock option plans and represents the period of time that stock option awards granted are expected to be outstanding. The expected term assumption incorporates the contractual term of an option grant, which is ten years, as well as the vesting period of an award, which is generally pro-rata vesting over three years. The risk-free interest rate is based on the implied yield on a U.S. Treasury constant maturity with a remaining term equal to the expected term of the option granted. The expected dividend yield is based on the expected annual dividend divided by the market price of our common stock at the time of declaration.

The weighted average assumptions relating to the valuation of our stock options for fiscal 2011, 2010 and 2009 were as follows:


	Fiscal 2011			Fiscal 2010			Fiscal 2009
Weighted average fair value of grants	$	6.49		$	6.65		$	3.23
Expected volatility		66	%		66	%		63	%
Expected term (years)		4.5 years			4.5 years			4.5 years
Risk-free interest rate		1.8	%		2.0	%		1.9	%
Expected dividend yield		1.5	%		1.1	%		N/A

Stock Option Activity

Stock option activity for fiscal 2011 was as follows:


	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)




Outstanding, beginning of period	6,033,101		$	12.87
Granted	1,787,500			13.37
Exercised	(671,441	)		5.52
Canceled or expired	(845,782	)		18.16
Outstanding, end of period	6,303,378			13.09	6.34	$	13,590
Vested and expected to vest at
January 28, 2012	5,884,162			13.08	6.15		13,515
Exercisable at January 28, 2012	3,812,970			13.46	4.94		11,817

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the excess, if any, of the closing stock price on the last trading day of fiscal 2011 and the exercise price, multiplied by the number of such in-the-money options) that would have been received by the option holders had all option holders exercised their options on January 28, 2012. This amount changes based on the fair market value of our common stock. Total intrinsic value of options exercised during fiscal 2011, 2010 and 2009 (based on the difference between our stock price on the respective exercise date and the respective exercise price, multiplied by the number of respective options exercised) was $5.2 million, $4.9 million and $5.9 million, respectively.

As of January 28, 2012, there was $7.5 million of total unrecognized compensation expense related to unvested stock options. That expense is expected to be recognized over a weighted average period of 1.9 years.

Cash received from option exercises and purchases under the Employee Stock Purchase Plan for fiscal 2011 was an aggregate of $4.5 million. The actual tax benefit realized for the tax deduction from option exercises of stock option awards totaled $2.0 million for fiscal 2011.

Restricted Stock Activity

Restricted stock activity for fiscal 2011 was as follows:


	Fiscal 2011
	Number of Shares		Weighted Average Grant Date Fair Value
	Number of Shares		Weighted Average Grant Date Fair Value

Nonvested, beginning of period	1,430,335		$	9.27
Granted	1,294,427			12.53
Vested	(418,142	)		7.96
Canceled	(198,669	)		11.09
Nonvested, end of period	2,107,951		$	11.36

Total fair value of shares of restricted stock that vested during fiscal 2011, 2010 and 2009 was $5.3 million, $5.6 million and $5.4 million, respectively. As of January 28, 2012, there was $13.6 million of unrecognized stock-based compensation expense related to nonvested restricted stock awards. That cost is expected to be recognized over a weighted average period of 2.7 years.

Employee Stock Purchase Plan

We sponsor an employee stock purchase plan ("ESPP") under which substantially all full-time employees are given the right to purchase shares of our common stock during each of the two specified offering periods each fiscal year at a price equal to 85 percent of the value of the stock immediately prior to the beginning of each offering period. During fiscal 2011, 2010 and 2009, approximately 72,000, 85,000, and 60,000 shares, respectively, were purchased under the ESPP. We recognize compensation expense based on the 15% discount at purchase.

Share Repurchase Program

During fiscal 2011, we repurchased and retired 14.1 million shares, at a total cost of approximately $182.4 million. On November 17, 2011, our Board approved a new $200 million share repurchase program of our outstanding common stock, effective November 23, 2011, and cancelled in its entirety the prior $200.0 million share repurchase program, which had $24.2 million remaining. As of January 28, 2012, approximately $175.0 million remains available under our current share repurchase program. However, we have no continuing obligation to repurchase shares under this authorization, and the timing, actual number and value of any additional shares to be purchased will depend on the performance of our stock price, market conditions and other considerations.