STOCK BASED COMPENSATION AND INCENTIVE PERFORMANCE PLANS

The Company has two shareholder-approved plans, the 2002 Long-Term Incentive and Stock Award Plan and the 2000 Directors Stock Plan, under which the Company’s officers, senior management, other key employees, consultants and directors may be granted options to purchase the Company’s common stock or other forms of equity-based awards.

Compensation cost and related income tax benefits recognized in the Condensed Consolidated Statements of Income for stock based compensation plans were as follows:



	Three Months Ended September 30,
	2012		2011
Compensation cost (included in selling, general and administrative expense)	$	2,892	$	1,794
Related income tax benefit	$	1,097	$	673

Stock Options

A summary of our stock option activity for the three months ended September 30, 2012 is as follows:



	2012		Weighted Average Exercise Price	Weighted Average Contractual Life (years)	Aggregate Intrinsic Value
Options outstanding at June 30, 2012	2,580,433		$18.00
Exercised	(231,221	)	$19.10
Options outstanding at September 30, 2012	2,349,212		$17.89	3.0	$	105,970
Options exercisable at September 30, 2012	2,058,421		$18.49	2.9	$	91,628



	Three Months Ended September 30,
	2012		2011
Intrinsic value of options exercised	$	11,610	$	1,478
Cash received from stock option exercises	$	4,417	$	2,306
Tax benefit recognized from stock option exercises	$	3,583	$	576

The aggregate intrinsic value represents the total pretax intrinsic value (the difference between the closing stock price on the last day of trading in the period and the exercise price) that would have been received by the option holders had all options been exercised on September 30, 2012. This value will change based on the fair market value of the Company's common stock. At September 30, 2012 there was $506 of unrecognized compensation expense related to stock option awards, which will be recognized over a weighted average period of approximately 0.8 years.

Restricted Stock

A summary of our restricted stock and restricted share units activity for the three months ended September 30, 2012 is as follows:



	Number of Shares and Units		Weighted Average Grant Date Fair Value (per share)
Non-vested restricted stock and restricted share units at June 30, 2012	487,409		$29.94
Granted	400,000		$40.38
Vested	(3,963	)	$24.30
Forfeited	(2,550	)	$32.25
Non-vested restricted stock and restricted share units at September 30, 2012	880,896		$34.70



	Three Months Ended September 30,
	2012		2011
Fair value of restricted stock and restricted share units granted	$	16,151	$	—
Fair value of shares vested	$	388	$	147
Tax benefit recognized from restricted shares vesting	$	144	$	808

On July 3, 2012, the Company entered into a Restricted Stock Agreement (the "Agreement") with Irwin D. Simon, the Company's Chairman and Chief Executive Officer. The Agreement provides for a grant of 400,000 shares of restricted stock (the "Shares"), the vesting of which is both market and time-based. With respect to the market condition, the Shares will satisfy the market condition in increments of 100,000 Shares each based on the Company's common stock achieving four share price targets. On the last day of any forty-five (45) consecutive trading day period during which the average closing price of the Company’s common stock on the NASDAQ Global Select Market equals or exceeds the following prices: $62.50, $72.50, $82.50 and $100.00, respectively, 100,000 Shares will have satisfied the market condition. The market conditions must be satisfied prior to June 30, 2017. Once each market condition has been satisfied, a tranche of 100,000 Shares will vest in equal amounts annually over a five-year period. Except in the case of a change of control, termination without cause, death or disability (each as defined in Mr. Simon’s Employment Agreement), the unvested Shares are subject to forfeiture unless Mr. Simon remains employed through the applicable market and time vesting periods. The grant date fair value for each tranche was separately estimated based on a Monte Carlo simulation that calculated the likelihood of goal attainment and the time frame most likely for goal attainment. The total grant date fair value of the Shares was estimated to be $16,151, which is expected to be recognized over a weighted-average period of approximately 4.6 years. On September 28, 2012, the first market condition was satisfied, and as such, the first tranche of 100,000 shares is expected to vest in equal amounts through September 28, 2017.

At September 30, 2012, $21,046 of unrecognized stock-based compensation expense, net of estimated forfeitures, related to non-vested restricted stock awards, inclusive of the Shares, is expected to be recognized over a weighted-average period of approximately 3.6 years.

Long-Term Incentive Plan

The Company adopted, beginning in fiscal 2010, a long-term incentive program (the “LTI Plan”). The LTI Plan currently consists of one two-year performance-based long-term incentive plan (the “2012-2013 LTIP”) that provides for a combination of equity grants and performance awards that can be earned over the two year period spanning the 2012 and 2013 fiscal years. Participants in the LTI Plan include our executive officers, including the Chief Executive Officer, and certain other key executives.

The Compensation Committee administers the LTI Plan and is responsible for, among other items, establishing the target values of awards to participants and selecting the specific performance factors for such awards. At the end of each performance period, the Compensation Committee determines, at its sole discretion, the specific payout to each participant. Such awards may be paid in cash and/or unrestricted shares of the Company’s common stock at the discretion of the Compensation Committee, provided that any such stock-based awards shall be issued pursuant to and be subject to the terms and conditions of the 2002 Long-Term Incentive and Stock Award Plan, as in effect and as amended from time to time. Upon the adoption of the 2012-2013 LTIP, the Compensation Committee granted an initial award to each participant in the form of equity-based instruments (restricted stock), for a portion of the individual target awards (the “Initial Equity Grants”). A portion of these Initial Equity Grants are subject to time vesting requirements and a portion are also subject to the achievement of minimum performance goals. The Initial Equity Grants are expensed over the respective vesting periods on a straight-line basis. The payment of the actual awards earned at the end of the applicable performance period, if any, will be reduced by the value of the Initial Equity Grants.

The Compensation Committee determined that the target values previously set under the LTI Plan covering the 2011 and 2012 fiscal years (the "2011-2012 LTIP") were achieved and approved the payment of awards to the participants. The awards totaled $7,181 after deducting the value of the Initial Equity Grants and were settled by the issuance of 108,345 unrestricted shares of the Company’s common stock in the first quarter of fiscal 2013. The Company has determined that the achievement of certain of the performance goals for the LTI Plan is probable and, accordingly, recorded expense (in addition to the stock based compensation expense associated with the Initial Equity Grants) of $1,835 for the three months ended September 30, 2012. There was $1,728 of expense recorded for the three months ended September 30, 2011 related to the LTI Plan.