6.	Stockholders' Equity

Authorized stock

The Company has authorized 20,000,000 shares of common stock, par value $0.01, of which 11,792,456 and 11,863,940 shares were issued and outstanding as of December 31, 2011 and March 31, 2012, respectively. The Company also has authorized 8,000,000 shares of preferred stock, none of which has been issued or outstanding since 2004. Commencing in the fourth quarter of 2010, the Company increased the annual cash dividend from $3.00 to $4.00 per share, or from $0.75 to $1.00 per share quarterly.

Stock-based compensation

As required by the Stock Compensation Topic, ASC 718, the Company measures and recognizes compensation expense for all share-based payment awards, including employee stock options and employee stock purchases related to the Company's Employee Stock Purchase Plan, based on estimated fair values. Stock-based compensation expense recognized in the unaudited condensed consolidated statements of income for the three months ended March 31, 2011 and 2012, is based on awards ultimately expected to vest and, therefore, has been adjusted for estimated forfeitures. The Company is required to estimate forfeitures at the time of grant and revise, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The forfeiture rate used is based on historical experience.

Stock-based compensation plans

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 February 2012, the Company's Board of Directors approved grants of 72,013 shares of restricted stock to certain individuals. These shares, which vest over a five- to seven-year period, were granted pursuant to the Plan. The Company's stock price closed at $115.55 on the date of these restricted stock grants.

In April 2012, the Company's Board of Directors approved grants of approximately 10,700 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 $83.88 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 three months ended March 31, 2012:


	Number of shares			Weighted- average grant price
Balance, December 31, 2011		380,944		$	194.26
Grants		72,013			115.55
Vested shares		(15,806	)		217.77
Forfeitures		(529	)		132.23

Balance, March 31, 2012		436,622		$	180.45

Stock Options

The table below sets forth the stock option activity for the three months ended March 31, 2012 and other stock option information at March 31, 2012:


	Number of shares		Weighted- average exercise price		Weighted- average remaining contractual life (yrs.)		Aggregate intrinsic value ⁽¹⁾ (in thousands)
Balance, December 31, 2011		100,000	$	107.28		1.1		—
Grants		—		—
Exercises		—		—
Forfeitures		—		—

Balance, March 31, 2012		100,000	$	107.28		0.9		—

Vested, March 31, 2012		100,000	$	107.28		0.9		—
Exercisable, March 31, 2012		100,000	$	107.28		0.9		—

(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 the respective trading day 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 the respective trading day. The amount of aggregate intrinsic value will change based on the fair market value of the Company's common stock.

Valuation and Expense Information Under Stock Compensation Topic ASC 718

At March 31, 2012, total stock-based compensation cost which has not yet been recognized was $47.6 million, all for unvested restricted stock. This cost is expected to be recognized over the next 63 months on a weighted-average basis.

The following table summarizes the stock-based compensation expense recorded for the three months ended March 31, 2011 and 2012 by expense line item (in thousands):


	For the three months ended March 31,
	2011		2012
Instruction and educational support	$	852	$	671
Marketing		16		—
Admissions advisory		—		—
General and administration		2,024		1,719

Stock-based compensation expense included in operating expense		2,892		2,390
Tax benefit		1,142		944

Stock-based compensation expense, net of income tax	$	1,750	$	1,446

The following table summarizes information regarding all share-based payment arrangements for the three months ended March 31, 2011 and 2012 (in thousands):


	For the three months ended March 31,
	2011			2012
Proceeds from stock options exercised	$	—		$	—
Excess tax shortfall related to exercise of stock options and vesting of restricted stock	$	(933	)	$	(740	)
Intrinsic value of stock options exercised ⁽¹⁾	$	—		$	—

(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.