Beat butter, sugar and vanilla in medium bowl with electric mixer on medium speed 2 minutes or until well blended. Gradually beat in flour on low speed until well blended. Stir in coconut. Press dough evenly with hands into a greased 13x9-inch baking pan with foil extending over edges to form handle. Pierce dough with fork at 1-inch intervals all the way through to bottom of pan.
Bake at 325°F for 25 minutes or until lightly browned. Cool in pan 5 minutes. Run knife around edges of pan to loosen shortbread from sides. Lift from pan using foil as handles. Using star-shaped cookie cutter or large sharp knife, cut warm shortbread into stars or bars. Cool completely. Decorate with melted BAKER'S Semi-Sweet Baking Chocolate Squares, if desired. Store shortbread in airtight container.