12. Stock-Based Compensation

In February 2003, the Company adopted the 2003 Omnibus Equity Incentive Plan (the "2003 Plan") which provides for the grant of options and restricted stock to key employees, directors and consultants of the Company up to an aggregate of 2.5 million shares of common stock of the Company. The 2003 Plan is administered by the Compensation Committee of the Board of Directors, which is comprised only of independent directors, and which must approve individual awards to be granted, vesting and exercise of share conditions. The 2003 Plan replaced the 1993 Omnibus Equity Incentive Plan (the "1993 Plan") which, through January 2003, provided for the grant of options to key employees and consultants of the Company for the purchase of up to an aggregate of 4.8 million shares of common stock of the Company. Upon adoption of the 2003 plan, the Company terminated the 1993 Plan, subject to the remaining outstanding option grants. In February 2005, the Company's shareholders approved an amendment to the 2003 Plan to increase the number of shares authorized for issuance there under by 3.3 million shares, resulting in a total of 5.8 million shares authorized for issuance under the 2003 Plan.

In connection with a dividend payable in the form of two shares of the Class A Common Stock for each outstanding share of Common Stock and Class B Common Stock on February 5, 2007, the 2003 Plan was amended to include 9,734,982 shares of Class A Common Stock authorized for issuance. In February 2009, the Company's shareholders approved an increase in the number of shares authorized for issuance under the 2003 Plan by an additional 5,000,000 shares of Class A Common Stock and to authorize for issuance 500,000 shares of Preferred Stock. As a result of these amendments, there is a total of 5,800,000 shares of Common Stock, 14,734,982 shares of Class A Common Stock and 500,000 shares of Preferred Stock authorized under the 2003 Plan. If and when the Company issues any shares of Preferred Stock under the 2003 Plan, it will reduce the amount of Class A Common Stock available for future issuance in an amount equal to the number of shares of Class A Common Stock that are issuable upon conversion of such Preferred Stock. As of September 24, 2011, there were 3,367,715 shares of Common Stock, 8,742,190 shares of Class A Common Stock and no shares of Preferred Stock reserved for outstanding equity awards, and there were 1,609,232 shares of Common Stock, 4,170,487 shares of Class A Common Stock and 500,000 shares of Preferred Stock remaining for future awards.

The Company has a Nonemployee Director Stock Option Plan (the "Director Plan") which provides for the grant of options and restricted stock to nonemployee directors of the Company. The Director Plan, as amended in 2001 and 2006, provides for the granting of options equal to $200,000 divided by the fair market value of the Company's common stock on the date of each annual meeting of stockholders and a number of shares of restricted stock equal to $20,000 divided by such fair market value.

Stock Option Awards

The Company recognized share-based compensation expense of $7.4 million, $5.6 million and $10.6 million for the years ended September 24, 2011, September 25, 2010 and September 26, 2009, respectively, as a component of selling, general and administrative expenses. Share-based compensation expense in fiscal 2011, 2010 and 2009 consisted of $3.1 million, $2.5 million and $4.0 million for stock options, and $2.4 million, $1.1 million and $4.6 million for restricted stock awards. Additionally, in fiscal 2011, 2010 and 2009, share-based compensation expense includes $1.9 million, $1.9 million and $2.0 million for the Company's 401(k) matching contributions.

Prior to fiscal 2008, stock options granted were generally exercisable with a 30 month cliff vesting and 42 month expiration, but were also granted with vesting increments of 20%, 25% or 33% per year beginning two, three or four years from the date of grant and expiring one year after the last increment has vested.

In fiscal 2008, the Company began granting performance-based options under its 2003 Plan to key employees and executives whose vesting is contingent upon service and meeting various business unit, segment and company-wide performance goals, including adjusted earnings before taxes and net controllable assets. The options are granted at the then-current market price, except for 4.4 million shares that were granted at prices significantly above the grant date market price. The options contingently vest up to 20% each year over the following 5 years dependent upon the achievement of the target performance measures and have contractual lives of 6 years. Of the options granted in fiscal 2008, approximately 216,000 options scheduled to possibly vest in each of fiscal years 2009 and 2010 were amended and were only subject to service vesting conditions. If any of the options subject to the performance target measurements do not vest on any particular vesting date because the Company, segment and/or business unit performance has not been achieved, such options will vest and become exercisable if at the end of the following fiscal year, the cumulative target for that later fiscal year has been achieved. The fair value of each performance-based option granted was estimated on the date of grant using the same option valuation model used for options granted as service vesting only. We currently estimate the performance-based options are probable of achievement and are recording the related expense over the estimated service period. In fiscal 2011, 100% of the performance options granted in fiscal 2010 that were eligible to vest in fiscal 2011 had vested. In fiscal 2011, approximately 97%, on a cumulative basis, of the performance options granted in fiscal 2009 that were eligible to vest in fiscal 2011 had vested. In fiscal 2011, approximately 99%, on a cumulative basis, of the performance options granted in fiscal 2008 that were eligible to vest in fiscals 2009 through fiscal 2011 had vested. To the extent Company goals are not achieved, the amount of stock-based compensation recognized in the future will be adjusted.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. Expected stock price volatilities are estimated based on the Company's historical volatility. The expected term of options granted is based on analyses of historical employee termination rates and option exercises. The risk-free rates are based on U.S. Treasury yields, for notes with comparable terms as the option grants, in effect at the time of the grant. For purposes of this valuation model, no dividends have been assumed.

The Company's calculations were made using the Black-Scholes option pricing model with the following weighted average assumptions: expected life from the date of grant, 3.5 years in fiscal 2011, 3.5 years in fiscal 2010 and 3.5 years in fiscal 2009; stock price volatility, 36.4% in fiscal 2011, 37.3% in fiscal 2010 and 36.7% in fiscal 2009; risk free interest rates, 2.2% in fiscal 2011, 2.0% in fiscal 2010 and 1.6% in fiscal 2009; and no dividends during the expected term.

The following table summarizes option activity for the period ended September 24, 2011:

The weighted average grant date fair value of options granted during the fiscal years ended September 24, 2011, September 25, 2010 and September 26, 2009 was $2.04, $2.65 and $1.90, respectively. The total intrinsic value of options exercised during the fiscal years ended September 24, 2011, September 25, 2010 and September 26, 2009 was $2.6 million, $2.2 million and $1.5 million, respectively.

As of September 24, 2011, there was $9.8 million of total unrecognized compensation cost related to nonvested stock options, which is expected to be recognized over a remaining weighted average vesting period of 4 years.

Restricted Stock Awards

As of September 24, 2011 and September 25, 2010, there were 804,100 and 432,140 shares, respectively, of restricted stock awards outstanding. The awards generally vest in 20% or 25% increments, some after a two or three year waiting period, over a six or seven year period of employment after the grant date. In fiscal 2009, approximately $6.2 million of bonus amounts earned in fiscal 2008 were paid by granting approximately 620,000 of restricted shares that vested immediately.

Restricted stock award activity during the three fiscal years in the period ended September 24, 2011 is summarized as follows:

The weighted average grant date fair value of restricted stock awards granted during the fiscal years ended September 24, 2011, September 25, 2010 and September 26, 2009 was $9.32, $9.54 and $7.06, respectively. The aggregate fair value as of the vesting date of restricted shares that vested was $1.1 million, $1.3 million and $5.0 million for fiscal 2011, 2010 and 2009, respectively.

As of September 24, 2011, there was $5.4 million of unrecognized compensation cost related to nonvested restricted stock awards, which is expected to be recognized over a weighted average period of four years.