notes to the Consolidated Financial Statements (cont’d) The Board of Directors of the Company approved the following changes to be made to the share option plan during the first quarter of 2011:  1) Permitted options to be granted for non-voting equity shares rather than only for Common shares; 2) Added a provision that the Company may require payment of an amount equal to the withholding and remittance obligation  imposed on the Company by recent tax law changes; and  3) Changed the calculation of “fair market value” of shares to a volume weighted average consistent with TSX policy.  1) Increased the number of shares that may be issued from treasury of the Company upon the exercise of options under the share  option plan on and after May 17, 2011 to 1,300,000; and 2) Added a cashless exercise feature whereby the participant may elect to receive the value of the option gain in the form of issued  shares instead of paying for the shares or exercising the option for cash under the SAR. In addition, the following changes were made to the share option plan by the Board of Directors with the approval of the Shareholders  at the Annual General Meeting on May 17, 2011: Where the share option plan holder may make the choice to either exercise the option or forfeit the option and receive a cash  payment under the SAR equal to the difference between the market value of the shares on the date of exercise and the exercise price,  the Company accounts for this share option plan as a cash-settled plan. The fair value of the SARs is measured at each reporting date  using a binomial option pricing model taking into account the terms and conditions upon which the instruments were granted. As  services are received, compensation expense and a corresponding liability to pay for those services is recognized over the expected  vesting period. Until the liability is settled, it is re-measured at each reporting date with changes in fair value recognized in profit or  loss over the vesting period. The carrying amount of the liability and the compensation expense recognized relating to the options as at and for each reporting  period ended were as follows:  Share based payment expense is recognized in the following line items in the consolidated statement of income: The following inputs and assumptions were used in the binomial option pricing model in calculating the fair value of each grant of options as follows:  85 AnnuAl RepoRt 2011 As at and for the fifty-two week periods ended: (Amounts in $000s) December 31, 2011 January 1, 2011  January 3, 2010 Fair value of liability  $ 4,202 $ 4,531  $  1,405  Compensation expense recognized  651 3,732 NA (Amounts in $000s)  December 31, 2011 January 1, 2011 Cost of sales resulting from:  Cash-settled options  S 110  S   209  Equity-settled options  26  – Changes in the fair value of the liability   (93)   282  Selling, general and administrative expenses resulting from:  Cash-settled options   607  430  Equity-settled options  154  –- Changes in the fair value of the liability   (153)  2,813  S 651 S   3,734  August  February  August  February February  May February December February  February  March  February 2011  2011  2010  2010  2009  2008  2008  2007  2006  2005  2004  2004 Share price at grant date  $ 14.80  $ 16.50 $ 11.67 $ 10.33 $ 6.90 $ 9.00 $ 9.45 $ 9.64 $ 8.65 $ 9.75 $ 11.10  $ 10.99  Expected life of the option (years)  7  7  6  6   6 6 6  6  6  6  6   6  Exercise  price  $ 14.80 $ 16.50 $ 11.67 $ 10.33 $ 6.90 $ 9.00 $ 9.45  $ 9.64  $ 8.65  $ 9.75  $ 11.10  $ 10.99 