4.                      Stock-Based Compensation

Stock Options

During the twelve weeks ended September 30, 2012, the Company issued no options. The Company issued 20,000 options with a weighted-average grant date fair value of $13.42 per share and a weighted-average exercise price of $29.98 per share during the twelve weeks ended October 2, 2011.  Compensation expense for options is recognized over the vesting period.  The weighted-average remaining vesting period for all options outstanding is approximately 1.3 years.

The Company issued 97,000 options with a weighted-average grant date fair value of $14.60 per share and a weighted-average exercise price of $35.44 per share during the forty weeks ended September 30, 2012.  During the forty weeks ended October 2, 2011, the Company issued 153,000 options with a weighted-average grant date fair value of $14.27 per share and a weighted-average exercise price of $32.38 per share.  The weighted-average remaining vesting period for all options outstanding is approximately 1.3 years.

The fair value of options at the grant date was estimated utilizing the Black-Scholes multiple option-pricing model with the following weighted-average assumptions for the periods presented:

Restricted Stock

The Company did not issue any shares of restricted stock during the twelve and forty weeks ended September 30, 2012 or during the twelve and forty weeks ended October 2, 2011.  Compensation expense for the aggregate 3,000 shares of non-vested common stock outstanding at September 30, 2012 is recognized over the weighted-average remaining vesting period, less expected forfeitures, which is approximately 0.4 years.  These awards vest in installments over four years on the anniversary dates.

Time-Based RSUs

During the twelve weeks ended September 30, 2012, the Company granted approximately 2,000 time-based restricted stock units (“RSUs”) to an employee under the Second Amended and Restated 2007 Performance Incentive Plan (the “Stock Plan”) with a weighted-average grant date fair value of $29.32.  The Company granted 26,000 RSUs under the Stock Plan with a weighted-average grant date fair value of $28.50 during the twelve weeks ended October 2, 2011.  The fair value of each RSU granted is equal to the market price of the Company’s stock at the date of grant.  Compensation expense for RSUs is recognized over the vesting period, less expected forfeitures.  The weighted-average remaining vesting period for all outstanding RSUs is approximately 1.5 years.

The Company granted 65,000 RSUs under the Stock Plan with a weighted- average grant date fair value of $33.69 during the forty weeks ended September 30, 2012.  During the forty weeks ended October 2, 2011, the Company granted 69,000 RSUs with a weighted-average grant date fair value of $31.77.

Performance-Based RSUs

During the forty weeks ended September 30, 2012 and October 2, 2011, the Company granted no performance based restricted stock units (“PSUs”) under the Stock Plan.  PSUs are subject to company performance metrics based on Total Shareholder Return and measure the overall stock price performance of the Company to the stock price performance of a selected industry peer group, thus resulting in a market condition.  The actual number of PSUs subject to the awards will be determined at the end of the performance period based on the performance metrics.  The fair value of the PSUs was calculated using the Monte Carlo valuation method.  This method utilizes multiple input variables to determine the probability of the Company achieving the market condition and the fair value of the awards.  These awards have a three-year performance period and are classified as equity because each unit is convertible into one share of the Company’s common stock upon vesting.  Compensation expense is recognized on a straight-line basis over the requisite service period (or until an employee’s eligible retirement date, if earlier).