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Share-based Compensation
 9 Months Ended
Sep. 30, 2012
Share-based Compensation [Abstract]  
Share-based Compensation

(9) Share-based Compensation

At its discretion, the Company grants share option awards, nonvested share awards and nonvested share unit awards to certain employees, as defined by ASC 718, Compensation—Stock Compensation, under the Company’s 2007 Equity and Performance Incentive Plan, as amended and restated on June 14, 2011 (the “Plan”), and accounts for its share-based compensation in accordance with ASC 718. The Company recognized $0.4 million and $1.3 million in share-based compensation expense for the 13 and 39 weeks ended September 30, 2012, respectively, compared to $0.4 million and $1.3 million for the 13 weeks and 39 weeks ended October 2, 2011, respectively.

Share Option Awards

Share option awards granted by the Company generally vest and become exercisable in four equal annual installments of 25% per year with a maximum life of ten years. The exercise price of the share option awards is equal to the quoted market price of the Company’s common stock on the date of grant. In the 39 weeks ended September 30, 2012 and October 2, 2011, the Company granted 15,000 share option awards and 32,000 share option awards, respectively. The weighted-average grant-date fair value per option for share option awards granted in the 39 weeks ended September 30, 2012 and October 2, 2011 was $2.12 and $2.87, respectively.

The fair value of each share option award on the date of grant is estimated using the Black-Scholes method based on the following weighted-average assumptions:

 

         
    39 Weeks Ended
    September 30,
2012		   October 2,
2011

Risk-free interest rate

   1.2%   2.1%

Expected term

   7.70 years   7.30 years

Expected volatility

   53.0%   51.0%

Expected dividend yield

   4.71%   3.80%

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected term of the option award; the expected term represents the weighted-average period of time that option awards granted are expected to be outstanding giving consideration to vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical volatility of the Company’s common stock; and the expected dividend yield is based upon the Company’s current dividend rate and future expectations.

As of September 30, 2012, there was $0.3 million of total unrecognized compensation cost related to nonvested share option awards granted. That cost is expected to be recognized over a weighted-average period of 1.2 years.

 

Nonvested Share Awards and Nonvested Share Unit Awards

Nonvested share awards and nonvested share unit awards granted by the Company vest from the date of grant in four equal annual installments of 25% per year with a maximum life of ten years. Nonvested share awards are delivered to the recipient upon their vesting. With respect to nonvested share unit awards, vested shares will be delivered to the recipient on the tenth business day of January following the year in which the recipient’s service to the Company is terminated. The total fair value of nonvested share awards which vested during the 39 weeks ended September 30, 2012 and October 2, 2011 was $0.8 million and $0.8 million, respectively.

The Company granted 145,100 and 152,100 nonvested share awards in the 39 weeks ended September 30, 2012 and October 2, 2011, respectively. The weighted-average grant-date fair value per share of the Company’s nonvested share awards granted in the 39 weeks ended September 30, 2012 and October 2, 2011 was $7.79 and $11.84, respectively.

The following table details the Company’s nonvested share awards activity for the 39 weeks ended September 30, 2012:

 

                 
    Shares     Weighted-
Average
Grant-Date
Fair Value		  

Balance at January 1, 2012

     304,700     $ 13.03  

Granted

     145,100       7.79  

Vested

     (107,675 )      12.34  

Forfeited

     (10,050 )      11.57  
   

 

 

    

 

 

  

Balance at September 30, 2012

     332,075     $ 11.01  
   

 

 

    

 

 

  

To satisfy employee minimum statutory tax withholding requirements for nonvested share awards that vest, the Company withholds and retires a portion of the vesting common shares, unless an employee elects to pay cash. In the 39 weeks ended September 30, 2012, the Company withheld 36,011 common shares with a total value of $0.3 million. This amount is presented as a cash outflow from financing activities in the accompanying interim unaudited condensed consolidated statements of cash flows.

In the 39 weeks ended September 30, 2012 and October 2, 2011, the Company granted 12,000 and 9,000 nonvested share unit awards, respectively. The weighted-average grant-date fair value per share of the Company’s nonvested share unit awards granted in the 39 weeks ended September 30, 2012 and October 2, 2011 was $6.33 and $8.26, respectively.

 

The following table details the Company’s nonvested share unit awards activity for the 39 weeks ended September 30, 2012:

 

                 
    Units     Weighted-
Average
Grant-Date
Fair Value		  

Balance at January 1, 2012

     9,000     $ 8.26  

Granted

     12,000       6.33  

Vested

     (2,250 )      8.26  

Forfeited

     —         —    
   

 

 

    

 

 

  

Balance at September 30, 2012

     18,750     $ 7.02  
   

 

 

    

 

 

  

As of September 30, 2012, there was $2.8 million and $0.1 million of total unrecognized compensation cost related to nonvested share awards and nonvested share unit awards, respectively. That cost is expected to be recognized over a weighted-average period of 2.6 years and 3.3 years for nonvested share awards and nonvested share unit awards, respectively.

The weighted-average grant-date fair value of nonvested share awards and nonvested share unit awards is the quoted market price of the Company’s common stock on the date of grant, as shown in the tables above.