9.	Stock Options and Restricted Stock

In April 2011, the Company's stockholders approved the Strayer Education, Inc. 2011 Equity Compensation Plan (the "Plan"), which replaced the Company's 1996 equity compensation plan (the "1996 Plan") and made 300,000 new shares available for issuance as equity compensation. In addition, shares previously available for issuance under the 1996 Plan were effectively carried over and are available for issuance under the Plan, for a total of approximately 350,000 shares available for issuance as equity compensation under the Plan. The Plan provides for the granting of restricted stock, stock options intended to qualify as incentive stock options, options that do not qualify as incentive stock options, and other forms of equity compensation and performance-based awards to employees, officers and directors of the Company, or to a consultant or advisor to the Company, at the discretion of the Board of Directors. Vesting provisions are at the discretion of the Board of Directors. Options may be granted at option prices based at or above the fair market value of the shares at the date of grant. The maximum term of the awards granted under the Plan is ten years.

In April 2011, the Company's Board of Directors approved grants of 7,070 shares of restricted stock. These shares, which vest over a three-year period, were awarded to various non-employee members of the Company's Board of Directors, as part of the Company's annual director compensation program. The Company's stock price closed at $118.80 on the date of these restricted stock grants.

In February 2011, the Company's Board of Directors approved grants of 67,798 shares of restricted stock to certain employees. These shares, which vest over a three-year period, were granted to certain employees pursuant to the Company's annual equity compensation program. The Company's stock price closed at $132.23 on the date of these restricted stock grants.

Dividends paid on unvested restricted stock are reimbursed to the Company if the recipient terminates his or her employment prior to vesting in the award.

Restricted Stock

The table below sets forth the restricted stock activity for the years ended December 31, 2009, 2010 and 2011:


	Number of shares			Weighted-average grant price
Balance, December 31, 2008		122,095		$	124.06
Grants		259,912			216.67
Vested shares		(28,970	)		90.78
Forfeitures		(309	)		162.10

Balance, December 31, 2009		352,728		$	194.39
Grants		51,739			173.09
Vested shares		(51,187	)		106.68
Forfeitures		(11,840	)		176.75

Balance, December 31, 2010		341,440		$	204.89
Grants		74,868			130.96
Vested shares		(17,574	)		131.31
Forfeitures		(17,790	)		155.01

Balance, December 31, 2011		380,944		$	194.26

Stock Options

The table below sets forth the stock option activity for the years ended December 31, 2009, 2010 and 2011 and other stock option information at December 31, 2011:


	Number of shares			Weighted-average exercise price		Weighted- average remaining contractual life (yrs.)		Aggregate intrinsic value(1) (in thousands)
Balance, December 31, 2008		167,084		$	102.98		3.7	$	18,618
Grants		–			–
Exercises		(60,417	)		99.75
Forfeitures		–			–

Balance, December 31, 2009		106,667		$	104.81		2.9	$	11,489
Grants		–			–
Exercises		(6,667	)		67.84
Forfeitures		–			–

Balance, December 31, 2010		100,000		$	107.28		2.1	$	4,494
Grants		–			–
Exercises		–			–
Forfeitures		–			–

Balance, December 31, 2011		100,000		$	107.28		1.1	$	–

Vested, December 31, 2011		100,000		$	107.28		1.1		–
Exercisable, December 31, 2011		100,000		$	107.28		1.1		–

(1)

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company's closing stock price on December 31 of each year and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31 of that year. The amount of aggregate intrinsic value will change based on the fair market value of the Company's stock.

The number of shares exercisable as of December 31, 2009, 2010 and 2011 are as follows:


	Number of shares		Weighted-average exercise price
Exercisable, December 31, 2009		106,667	$	104.81
Exercisable, December 31, 2010		100,000	$	107.28
Exercisable, December 31, 2011		100,000	$	107.28

The following table summarizes information regarding share-based payment arrangements for the years ended December 31, 2009, 2010 and 2011 (in thousands):


	For the year ended December 31,
	2009		2010		2011
Proceeds from stock options exercised	$	6,027	$	452	$	–
Excess tax benefits (shortfall) related to share-based payment arrangements	$	3,011	$	2,808	$	(569	)
Intrinsic value of stock options exercised(1)	$	6,032	$	1,184	$	–

(1)	Intrinsic value of stock options exercised is estimated by taking the difference between the Company's closing stock price on the date of exercise and the exercise price, multiplied by the number of options exercised for each option holder and then aggregated.

Valuation and Expense Information Under Stock Compensation Topic ASC 718

At December 31, 2011, total stock-based compensation cost which has not yet been recognized was $43.7 million, all for unvested restricted stock. This cost is expected to be recognized over the next 64 months on a weighted-average basis.

The following table sets forth the amount of stock-based compensation expense recorded in each of the expense line items (in thousands):


	2009		2010		2011
Instruction and educational support	$	1,840	$	2,400	$	3,635
Marketing		127		80		65
Admissions advisory		–		–		–
General and administration		8,987		9,507		9,534

Stock-based compensation expense included in operating expense		10,954		11,987		13,234
Tax benefit		4,329		4,735		5,245

Stock-based compensation expense, net of tax	$	6,625	$	7,252	$	7,989