(11) Stock-based compensation

We have an incentive compensation plan for our employees. One component of this plan is restricted stock, which grants the recipient the right of ownership of our common stock, generally conditional on continued employment for a specified period. Another component is stock options. The following table presents the stock-based compensation expense included in the Consolidated Statements of Operations for the years ended December 30, 2011, December 31, 2010 and December 25, 2009 (in thousands):

	2011		2010			2009
Restricted stock	$	1,054	$	1,833		$	1,446
Stock options		769		13			--
Income tax benefit		--		(646	)		(506	)
Total after-tax stock-based compensation expense	$	1,823	$	1,200		$	940

Total stock-based compensation included in selling, general and administrative expenses		1,639		1,846			1,446
Severance, impairment and other associated costs		184		--			--

The income tax benefit for 2011 is $0 due to the establishment of a full valuation allowance on deferred tax assets in the fourth quarter of 2011.

Restricted Stock: The value of restricted stock issued is based on the market price of the stock at the award date. We retain the restricted shares until the continued employment requirement has been met. The market value of the shares at the date of grant is charged to expense on a straight-line basis over the three-year vesting period. Cash awards, which are no longer issued, but have been made in the past, were intended to assist recipients with their resulting personal tax liability. These cash awards were based on the market value of the shares and were accrued over the vesting period. If the recipient made an election under Section 83(b) of the Internal Revenue Code, the expense related to the cash award was generally fixed based on the value of the awarded stock on the grant date. If the recipient did not make the election under Section 83(b), the expense related to the cash award would fluctuate based on the current market value of the shares, subject to limitations set forth in our restricted stock plan. The Company does not expect to make cash awards in the future.

A summary of our restricted stock activity for the years ended December 30, 2011, December 31, 2010, and December 25, 2009, is as follows (in thousands, except per share data):

	2011					2010					2009
	Shares			Weighted Average Stock Grant Price (Per Share)		Shares			Weighted Average Stock Grant Price (Per Share)		Shares			Weighted Average Stock Grant Price (Per Share)
Opening nonvested restricted stock		420		$	6.69		330		$	11.92		208		$	24.59
Granted		369		$	3.47		238		$	3.76		223		$	6.11
Vested		(112	)	$	11.77		(123	)	$	15.03		(75	)	$	24.13
Forfeited/cancelled		(97	)	$	4.87		(25	)	$	5.80		(26	)	$	15.62
Ending nonvested restricted stock		580		$	3.97		420		$	6.69		330		$	11.92

As of December 30, 2011, there was approximately $1.4 million of total unrecognized compensation cost related to restricted stock grants. This unrecognized compensation is expected to be recognized over a weighted-average period of approximately 2.3 years.

Stock Options: Stock options are granted at no cost to the employee and, under our plan agreement, the exercise price of these options cannot be less than the fair market value of our common shares on the date of grant. These options expire seven years from the date of grant and generally vest pro-rata over four years. We value our stock options according to the fair value method using the Black-Scholes option pricing model.

A summary of our stock option activity for the years ended December 30, 2011, December 31, 2010, and December 25, 2009, respectively, is as follows (in thousands, except per share data):

	2011								2010							2009
	Shares			Weighted Average Option Grant Price (Per Share)		Aggregate Intrinsic Value			Shares			Weighted Average Option Grant Price (Per Share)		Aggregate Intrinsic Value		Shares			Weighted Average Option Grant Price (Per Share)		Aggregate Intrinsic Value
Opening stock options outstanding		157		$	7.41					82		$	17.53				125		$	17.99
Granted		1,269		$	4.66					480		$	4.97				--			--
Exercised		(1	)	$	3.72					--			--				--			--
Forfeited/cancelled		(173	)	$	7.25					(405	)	$	6.58				(43	)	$	18.90
Ending stock options outstanding		1,252		$	4.64		$	20		157		$	7.41		--		82		$	17.53		--
Ending stock options exercisable		16		$	4.75			--		38		$	16.55		--		82		$	17.53		--

The weighted-average fair value of all stock options issued during 2011 was calculated as $2.58 per share on the date of grant using the Black-Scholes option-pricing model. The weighted-average assumptions of our stock options issued during 2011 and 2010, based on the date of grant, are as follows:

	2011			2010
Dividend yield		1.4	%		2.0	%
Volatility		80.4	%		76.6	%
Risk-free interest rate		1.7	%		2.1	%
Expected life (years)		4.8			4.8

The exercise prices of the options outstanding as of December 30, 2011 range from $2.74 per share to $6.15 per share. As of December 30, 2011, there was approximately $2.6 million of total unrecognized compensation costs related to our outstanding stock option grants. Tax benefits from deductions in excess of the compensation cost of stock options exercised are required to be classified as cash inflows from financing activities. There was no effect on the current or prior year net cash used in or provided by operating activities or the net cash used in or provided by financing activities. In the year ended December 30, 2011, there were 900 stock options exercised, however we have not realized any excess tax benefits in connection with the exercise of these stock options due to the fact that we have recorded a net loss in the period. There were no stock options exercised in the year ended December 30, 2010. There have been no amounts of stock-based compensation cost capitalized into inventory or other assets during any period presented in the Consolidated Financial Statements.

During the year ended December 30, 2011, we issued 153,996 common shares to our CEO. He agreed to acquire these shares in lieu of cash for reimbursement of moving and relocation related expenses, which he incurred in connection with moving his family to San Diego. We have recorded $0.4 million expense in connection with these share issuances. In addition, we have recorded $0.3 million expense during the year ended December 30, 2011 for a guaranteed bonus due to our CEO under his employment agreement. He has agreed to payment of the bonus in shares that will be issued to him in March 2012.

Our Incentive Compensation Plan under which both the restricted stock plan and stock option plan were authorized, expired on December 31, 2011 and therefore no additional shares may be granted under either plan. We anticipate proposing a new plan for authorization by the shareholders during 2012.