Stock Options, Restricted Stock and Restricted Stock Units

12 Months Ended

Dec. 31, 2014

Stock Options, Restricted Stock and Restricted Stock Units [Abstract]

Stock Options, Restricted Stock and Restricted Stock Units

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 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 2014, the Company’s Board of Directors approved grants of 46,064 shares of restricted stock to certain individuals. These shares, which vest 100% in February 2018, were granted pursuant to the Plan. The Company’s stock price closed at $33.65 on the date of these restricted stock grants.

In May 2014, the Company’s Board of Directors approved grants of 46,674 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 15,868 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 the Company’s annual director compensation program. The Company’s stock price closed at $42.85 on the date of these restricted stock grants.

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 and restricted stock units activity for the years ended December 31, 2012, 2013 and 2014:

			Weighted-average grant price
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
Grants	108,606			38.95
Vested shares	(69,434	)		158.97
Forfeitures	(2,729	)		93.44
Balance, December 31, 2014	524,216		$	115.67

Stock Options

The table below sets forth the stock option activity for the years ended December 31, 2012, 2013 and 2014 and other stock option information at December 31, 2014:

			Weighted-average exercise price			Aggregate intrinsic value⁽¹⁾ (in thousands)
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	$	—
Grants	—			—
Exercises	—			—
Forfeitures	—			—
Balance, December 31, 2014	100,000		$	51.95	6.0	$	2,233
Exercisable, December 31, 2014	—		$	—	—		—

(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 options 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, 2012, 2013 and 2014 are as follows:

		Weighted-average exercise price
Exercisable, December 31, 2012	100,000	$	107.28
Exercisable, December 31, 2013	—	$	51.95
Exercisable, December 31, 2014	—	$	51.95

Valuation and Expense Information under Stock Compensation Topic ASC 718

At December 31, 2014, total stock-based compensation cost which has not yet been recognized was $28.8 million for unvested restricted stock, restricted stock units, and stock option awards. This cost is expected to be recognized over the next 42 months on a weighted-average basis. Awards of approximately 398,000 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):

	2012		2013		2014
Instruction and educational support	$	3,273	$	1,976	$	1,736
Marketing		—		—		—
Admissions advisory		—		—		—
General and administration		2,191		7,315		7,717
Stock-based compensation expense included in operating expense		5,464		9,291		9,453
Tax benefit		2,158		3,698		3,734
Stock-based compensation expense, net of tax	$	3,306	$	5,593	$	5,719

The following table summarizes information regarding share-based payment arrangements for the years ended December 31, 2012, 2013 and 2014 (in thousands):

	For the year ended December 31,
	2012			2013			2014
Proceeds from stock options exercised	$	—		$	—		$	—
Excess tax benefits (shortfall) related to share-based payment arrangements	$	(245	)	$	(3,567	)	$	(2,039	)
Intrinsic value of stock options exercised	$	—		$	—		$	—

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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