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Stock Options, Restricted Stock and Restricted Stock Units
 12 Months Ended
Dec. 31, 2013
Stock Options, Restricted Stock and Restricted Stock Units [Abstract]  
Stock Options, Restricted Stock and Restricted Stock Units
9.          Stock Options, Restricted Stock and Restricted Stock Units
 
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 that were made available for issuance as equity compensation under the Plan. The Plan provides for the granting of restricted stock, restricted stock units, 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 2013, the Company’s Board of Directors approved grants of 165,712 shares of restricted stock to certain individuals. These shares, which vest over a three- to five-year period, were granted pursuant to the Plan. The Company’s stock price closed at $62.28 on the date of these restricted stock grants. In March 2013, outstanding awards of 200,000 restricted shares were converted to restricted stock units. In May 2013, the Company’s Board of Directors approved grants of 43,659 shares of restricted stock. These shares, which vest in their entirety four years from the date of grant, were granted pursuant to the Plan. The Company’s Board of Directors also approved grants of 16,370 shares of restricted stock. These shares, which vest over a three-year period, were awarded to non-employee members of the Company’s Board of Directors, as part of Company’s annual director compensation program. The Company’s stock price closed at $45.81 on the date these restricted stock grants were awarded.
 
Dividends paid on unvested restricted stock are reimbursed to the Company if the recipient forfeits his or her shares as a result of termination of employment prior to vesting in the award, unless waived by the Board of Directors.
 
 
Restricted Stock and Restricted Stock Units
 
The table below sets forth the restricted stock activity for the years ended December 31, 2011, 2012 and 2013:
 
 
 
Number of
shares
 
 
Weighted-
average
grant price
 
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
 
Grants
 
 
82,741
 
 
 
111.44
 
Vested shares
 
 
(26,189
)
 
 
195.58
 
Forfeitures
 
 
(3,057
)
 
 
127.51
 
Balance, December 31, 2012
 
 
434,439
 
 
$
178.88
 
Grants
 
 
225,741
 
 
 
57.90
 
Vested shares
 
 
(51,916
)
 
 
164.22
 
Forfeitures
 
 
(120,491
)
 
 
140.30
 
Balance, December 31, 2013
 
 
487,773
 
 
$
131.51
 
 
Stock Options
 
The table below sets forth the stock option activity for the years ended December 31, 2011, 2012 and 2013 and other stock option information at December 31, 2013:
 
 
 
Number of
shares
 
 
Weighted-
average
exercise price
 
 
Weighted-
average
remaining
contractual
life (years)
 
 
Aggregate
intrinsic
value(1)
(in thousands)
 
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
 
 
$
–
 
Grants
 
 
–
 
 
 
–
 
 
 
 
 
 
 
 
 
Exercises
 
 
–
 
 
 
–
 
 
 
 
 
 
 
 
 
Forfeitures
 
 
–
 
 
 
–
 
 
 
 
 
 
 
 
 
Balance, December 31, 2012
 
 
100,000
 
 
$
107.28
 
 
 
0.1
 
 
$
–
 
Grants
 
 
100,000
 
 
 
51.95
 
 
 
 
 
 
 
 
 
Exercises
 
 
    
 
 
–
 
 
 
 
 
 
 
 
 
Forfeitures/Expirations
 
 
(100,000
)
 
 
107.28
 
 
 
 
 
 
 
 
 
Balance, December 31, 2013
 
 
100,000
 
 
$
51.95
 
 
 
7.0
 
 
$
–
 
Exercisable, December 31, 2013
 
 
–
 
 
$
–
 
 
 
–
 
 
 
–
 
 
(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 holder had all option been exercised on the respective trading day. The amount of intrinsic value will change based on the fair market value of the Company’s common stock.
 
The number of shares exercisable as of December 31, 2011, 2012 and 2013 are as follows:
 
 
 
Number of
shares
 
 
Weighted-
average
exercise price
 
Exercisable, December 31, 2011
 
 
100,000
 
 
$
107.28
 
Exercisable, December 31, 2012
 
 
100,000
 
 
$
107.28
 
Exercisable, December 31, 2013
 
 
-
 
 
$
51.95
 
 
 
Valuation and Expense Information under Stock Compensation Topic ASC 718
 
At December 31, 2013, total stock-based compensation cost which has not yet been recognized was $34.5 million for unvested restricted stock, restricted stock units, and stock option awards. This cost is expected to be recognized over the next 54 months on a weighted-average basis. Awards of approximately 351,000 shares of restricted stock and restricted stock units are subject to performance conditions. The accrual for stock-based compensation for performance awards is based on the Company’s estimates that such performance criteria are probable of being achieved. Such a determination involves significant judgment surrounding the Company’s ability to maintain regulatory compliance. If the performance targets are not reached during the vesting period, or it is determined it is more likely than not that the performance criteria will not be achieved, related compensation expense is adjusted. During 2012, the Company determined that it was more likely than not that certain performance criteria for 45,920 shares would not be met, and reduced stock-based compensation expense by approximately $7.0 million.
 
The following table sets forth the amount of stock-based compensation expense recorded in each of the expense line items (in thousands):

 
 
2011
 
 
2012
 
 
2013
 
Instruction and educational support
 
$
3,635
 
 
$
3,273
 
 
$
1,976
 
Marketing
 
 
65
 
 
 
–
 
 
 
–
 
Admissions advisory
 
 
–
 
 
 
–
 
 
 
–
 
General and administration
 
 
9,534
 
 
 
2,191
 
 
 
7,315
 
Stock-based compensation expense included in operating expense
 
 
13,234
 
 
 
5,464
 
 
 
9,291
 
Tax benefit
 
 
5,245
 
 
 
2,158
 
 
 
3,698
 
Stock-based compensation expense, net of tax
 
$
7,989
 
 
$
3,306
 
 
$
5,593
 
 
The following table summarizes information regarding share-based payment arrangements for the years ended December 31, 2011, 2012 and 2013 (in thousands):
 
 
 
For the year ended
December 31,
 
 
 
2011
 
 
2012
 
 
2013
 
Proceeds from stock options exercised
 
$
–
 
 
$
–
 
 
$
–
 
Excess tax benefits (shortfall) related to share-based payment arrangements
 
$
(569
)
 
$
(245
)
 
$
(3,567
)
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.