14. Stockholders' Equity and Benefit Plans

Common and Preferred Stock. The Company has 100,000,000 shares of common stock, par value $0.01 per share, authorized, with 68,370,020 and 67,881,522 shares issued at fiscal year end 2011 and 2010, respectively. The Company has 1,000,000 shares of preferred stock, par value $0.01 per share, authorized, with none issued or outstanding. Rights, preferences and other terms of preferred stock will be determined by the Board of Directors at the time of issuance.

Common Stock Repurchase Programs. Purchases of the Company's common stock are made from time to time, subject to market conditions and at prevailing market prices, through the open market. Repurchased shares of common stock are recorded at cost and become authorized but unissued shares which may be issued in the future for general corporate or other purposes. The Company may terminate or limit its stock repurchase program at any time. In the event the repurchased shares are cancelled, the Company accounts for retirements by allocating the repurchase price to common stock, additional paid-in capital and retained earnings. The repurchase price allocation is based upon the equity contribution associated with historical issuances. These repurchase programs were conducted pursuant to Rule 10b-18 of the Securities Exchange Act of 1934. At the end of fiscal year 2011, the Company had open authorizations to repurchase approximately $330 million of its common stock. The following table reflects the Company's common stock repurchase activity for the periods indicated (in millions):


				For the 2011 Fiscal Year				For the 2010 Fiscal Year
Fiscal year authorized	Dollar value authorized		Termination date	Number of shares repurchased		Dollar value repurchased		Number of shares repurchased		Dollar value repurchased
2010	$	30.0	None		0.0	$	0.0		0.0	$	0.0
2010	$	750.0	December 2013		3.1	$	270.9		3.1	$	179.2
2009	$	20.0	Completed						0.5	$	20.0

Noncontrolling Interest. The following table summarizes the effects of changes in the Company's ownership interest in its subsidiaries on stockholders' equity (in thousands):


Fiscal Year	2011		2010
Net income attributable to Fossil, Inc.	$	294,702	$	255,205

Transfers to noncontrolling interest:
Decrease in Fossil, Inc.'s additional paid-in capital for purchases of 371 common shares of Fossil Taiwan		0		(711	)

Net transfers to noncontrolling interest		0		(711	)

Change from net income attributable to Fossil, Inc. and transfers to noncontrolling interest	$	294,702	$	254,494

Deferred Compensation and Savings Plans. The Company has a defined contribution savings plan (the "401(k) Plan") for substantially all U.S. based full-time employees of the Company. The Company's common stock is one of several investment alternatives available under the 401(k) Plan. The Company has a discretionary match for the 401(k) Plan. After one year of service (minimum of 1,000 hours worked), the Company matches 50% of employee contributions up to 3% of their compensation and 25% of employee contributions between 4% and 6% of their compensation. Effective January 1, 2012, the Company increased its match to 50% of employee contributions up to 6% of their compensation. Matching contributions made by the Company to the 401(k) Plan totaled approximately $1.6 million, $1.3 million and $186,000 for fiscal years 2011, 2010 and 2009, respectively. In March 2009, the Company suspended the employer match portion of the 401(k) Plan and, effective January 2010, the Company reinstated the employer match program. The Company also has the right to make additional matching contributions not to exceed 15% of employee compensation. The Company did not make any additional matching contributions during fiscal years 2011, 2010 and 2009.

In December 1998, the Company adopted the Fossil, Inc. and Affiliates Deferred Compensation Plan (the "Deferred Plan"). Eligible participants may elect to defer up to 50% of their salary or up to 100% of any bonuses paid pursuant to the terms and conditions of the Deferred Plan. In addition, the Company may make employer contributions to participants under the Deferred Plan from time to time. The Company made no contributions to the Deferred Plan during fiscal years 2011, 2010 and 2009. The Company has made payments pursuant to the Deferred Plan into a Rabbi Trust. The funds held in the Rabbi Trust are directed to certain investments available through life insurance products and accounted for in accordance with ASC 710, Compensation-General ("ASC 710"). As of December 31, 2011, the Company had an asset of $2.9 million related to the Company's invested balances recorded in intangible and other assets-net and a liability of $2.0 million related to the participants' invested balances recorded in accrued expenses other.

Stock-Based Compensation Plans. The Company accounts for stock-based compensation in accordance with the provisions of ASC 718, using the Black-Scholes option pricing model to determine the fair value of stock options and stock appreciation rights at the date of grant. The Company's current stock-based compensation plans include: (i) stock options and restricted stock for its international employees, (ii) stock options and restricted stock units for its non-employee directors and (iii) stock appreciation rights, restricted stock and restricted stock units for its U.S.-based employees. As of December 31, 2011, there was approximately $22.0 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Company's incentive plans. This cost is expected to be recognized over a weighted-average period of approximately two and a half years.

Long-Term Incentive Plans. An aggregate of 4,685,030 shares of the Company's common stock were reserved for issuance pursuant to the Company's 2008 Long-Term Incentive Plan ("2008 LTIP"), adopted in March 2008. Designated employees of the Company, including officers and directors, certain contractors, and outside directors of the Company are eligible to receive (i) stock options, (ii) stock appreciation rights, (iii) restricted or non-restricted stock awards, (iv) restricted stock units, (v) cash awards, or (vi) any combination of the foregoing. The 2008 LTIP is administered by the Compensation Committee of the Company's Board of Directors (the "Compensation Committee"). Each award issued under the 2008 LTIP terminates at the time designated by the Compensation Committee, not to exceed ten years. The currently outstanding stock options, stock appreciation rights, restricted stock and restricted stock units issued under the 2008 LTIP have original vesting periods that predominately range from three to five years. All stock appreciation rights and restricted stock units are settled in shares of the Company's common stock. Effective January 1, 2010, the Company's Board of Directors approved a new equity compensation package for nonemployee directors. Each nonemployee director receives restricted stock units valued at $100,000 on the date of the Company's annual stockholders' meeting. These grants vest on the earlier of one year from the date of grant or the Company's next annual stockholders' meeting date.

Prior to the Company establishing the 2008 LTIP, stock-based compensation awards were made to employees and nonemployee directors pursuant to the Company's initial Long-Term Incentive Plan ("LTIP") and Nonemployee Director Stock Option Plan ("Nonemployee Plan"), respectively. Each award issued under the LTIP terminates at the time designated by the Compensation Committee, not to exceed ten years. The currently outstanding options, stock appreciation rights, restricted stock and restricted stock units issued under the LTIP and Nonemployee Plan have original vesting periods that predominately range from three to five years. All stock appreciation rights and restricted stock units are settled in shares of the Company's common stock. The exercise prices of stock options granted under the Nonemployee Plan were not less than the fair market value of the Company's common stock at the date of grant. Pursuant to the Nonemployee Plan, 50% of the options granted became exercisable on the first anniversary of the date of grant and in two additional installments of 25% each on the second and third anniversaries. On March 26, 2008, the Company's Board of Directors elected to terminate these prior plans, and grants to employees and nonemployee directors since the termination date have been made under the 2008 LTIP. However, the termination of the LTIP and the Nonemployee plans did not impair outstanding awards representing 524,501 shares and 63,500 shares, respectively, of the Company's common stock which continued in accordance with their original terms.

Restricted Stock Plan. The 2002 Restricted Stock Plan of the Company was intended to advance the interests of the Company, its subsidiaries and its stockholders in order to attract, retain and motivate key employees by providing them with additional incentives through the award of shares of restricted stock. Shares awarded under the Restricted Stock Plan were funded with shares contributed to the Company from a significant stockholder. During 2006, 44,200 shares of stock were contributed to the Restricted Stock Plan by the stockholder and reissued by the Company to employees. On August 29, 2007, the Company's Board of Directors elected to terminate this plan. However, the termination did not impair outstanding awards which continued in accordance with their original terms. At fiscal year end 2011, all awards issued under the 2002 Restricted Stock Plan were fully vested.

Stock Options and Stock Appreciation Rights. The fair value of stock options and stock appreciation rights granted under the Company's stock-based compensation plans was estimated on the date of grant using the Black-Scholes option-pricing model. The table below outlines the weighted average assumptions for these award grants:


Fiscal Year	2011			2010			2009
Risk-free interest rate		1.1	%		1.4	%		1.8	%
Expected term (in years)		4.7			5.8			5.9
Expected volatility		45.2	%		50.4	%		53.2	%
Expected dividend yield		0.0	%		0.0	%		0.0	%
Estimated fair value per options/stock appreciation right granted	$	33.10		$	18.60		$	13.65

The expected term of the options represent the estimated period of time until exercise and is based on historical experience of similar awards. Expected stock price volatility is based on the historical volatility of the Company's common stock. The risk-free interest rate is based on the implied yield available on U.S. Treasury issues with an equivalent remaining term.

The Company receives a tax deduction for certain stock option exercises/restricted stock vestings when the options/restricted shares are exercised/vested. Generally for stock options, the tax deduction is related to the excess of the stock price at the time the stock options are sold over the exercise price of the stock options. For restricted shares, the tax deduction is the fair market value of the Company's common stock on the date the restricted shares vest. Excess tax benefits from stock-based compensation on the consolidated statements of cash flows for fiscal years 2011, 2010 and 2009 amounted to approximately $10.0 million, $12.0 million and $1.2 million, respectively.

The following table summarizes stock option and stock appreciation rights activity:


Stock Options and Stock Appreciation Rights	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
	IN THOUSANDS							IN THOUSANDS
Outstanding at January 3, 2009		2,858		$	21.09		5.7		$	5,862
Granted		317			13.65
Exercised		(315	)		12.03					4,935
Forfeited or expired		(49	)		24.13

Outstanding at January 2, 2010		2,811			21.21		5.3			35,217
Granted		325			38.37
Exercised		(1,496	)		19.98					47,073
Forfeited or expired		(240	)		26.82

Outstanding at January 1, 2011		1,400			25.55		5.8			62,889
Granted		303			87.73
Exercised		(461	)		23.95					33,267
Forfeited or expired		(22	)		47.44

Outstanding at December 31, 2011		1,220			41.20		5.8			49,125

Exercisable at December 31, 2011		496			30.95		3.9			25,346

Nonvested at December 31, 2011		724			48.21		7.2			23,779

Expected to vest		671		$	48.21		7.2		$	22,091

The aggregate intrinsic value in the table above is before income taxes and is based on the exercise price for outstanding and exercisable options/rights at December 31, 2011 and based on the fair market value of the Company's common stock on the exercise date for options/rights that have been exercised during the fiscal year.

Stock Options and Stock Appreciation Rights Outstanding and Exercisable. The following table summarizes information with respect to options and stock appreciation rights outstanding and exercisable at December 31, 2011:


Stock Options and Stock Appreciation Rights Outstanding							Stock Options and Stock Appreciation Rights Exercisable
Range of Exercise Prices	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Number of Shares		Weighted- Average Exercise Price
	IN THOUSANDS						IN THOUSANDS
$9.22 - $12.83		43	$	11.60		1.0		43	$	11.60
$12.83 - 25.66		346		16.87		5.0		191		18.93
$25.66 - 38.49		505		33.03		5.7		198		30.06
$38.49 - 51.32		32		43.12		6.0		32		43.12
$64.15 - 76.97		6		69.53		9.0		0		0.00
$76.97 - 89.80		237		81.23		8.7		0		0.00
$89.80 - 102.63		5		93.29		9.3		0		0.00
$115.46 - 128.29		46		123.75		3.1		32		121.73

Total		1,220	$	41.20		5.8		496	$	30.95

Restricted Stock and Restricted Stock Units. The following table summarizes restricted stock and restricted stock unit activity:


Restricted Stock and Restricted Stock Units	Number of Shares			Weighted- Average Grant-Date Fair Value
	IN THOUSANDS
Nonvested at January 3, 2009		495		$	24.56
Granted		150			13.65
Vested		(142	)		23.48
Forfeited		(10	)		25.02

Nonvested at January 2, 2010		493			21.54
Granted		215			38.83
Vested		(150	)		21.66
Forfeited		(128	)		25.35

Nonvested at January 1, 2011		430			29.03
Granted		105			86.80
Vested		(172	)		29.29
Forfeited		(11	)		42.98

Nonvested at December 31, 2011		352			45.70

Expected to vest		317		$	45.70

The total fair value of shares/units vested during fiscal years 2011, 2010 and 2009 was $14.7 million, $5.8 million and $2.4 million, respectively.