8. Stock Options, Restricted Stock and Restricted Stock Units

On May 5, 2015, the Company’s shareholders approved the Strayer Education, Inc. 2015 Equity Compensation Plan (the “2015 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 2015 Plan is ten years. The number of shares of common stock reserved for issuance under the 2015 Plan is 500,000 authorized but unissued shares, plus the number of shares available for grant under the Company’s previously existing equity compensation plans at the time of stockholder approval of the 2015 Plan, and plus the number of shares which may in the future become available under any previously existing equity compensation Plan due to forfeitures of outstanding awards.

In February 2016, the Company’s Board of Directors approved grants of 176,802 shares of restricted stock and restricted stock units to certain employees. These shares, which vest over a two- to four -year period, were granted pursuant to the 2015 Plan. The Company’s stock price closed at $50.67 on the date of these restricted stock grants.

In May 2016, the Company’s Board of Directors approved grants of 11,365 shares of restricted stock. These shares, which vest annually 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 and the 2015 Plan. The Company’s stock price closed at $49.27 on the date of these restricted stock grants.

In November 2016, the Company’s Board of Directors approved a grant of 570 shares of restricted stock. These shares, which vest annually over a three-year period, were awarded to a non-employee member of the Company’s Board of Directors upon his appointment to serve on the Board of Direcrors, as part of the Company’s annual director compensation program and the 2015 Plan. The Company’s stock price closed at $65.75 on the date of this restricted stock grant.

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 each of the three years in the period ended December 31, 2016:


	Number of shares or units	Weighted- average Grant price
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
Grants	126,655		61.00
Vested shares	(13,725)		52.94
Forfeitures	(2,819)		115.55
Balance, December 31, 2015	634,327	$	104.66
Grants	188,737		50.63
Vested shares	(23,539)		50.43
Forfeitures	(72,425)		62.41
Balance, December 31, 2016	727,100	$	97.53

Stock Options

The table below sets forth the stock option activity and other stock option information for each of the three years in the period ended December 31, 2016:


				Weighted-
				average
		Weighted-		remaining	Aggregate
	Number of	average		contractual	intrinsic value(1)
	shares	exercise price		life (years)	(in thousands)
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
Grants	—		—
Exercises	—		—
Forfeitures	—		—
Balance, December 31, 2015	100,000	$	51.95	5.1	$	817
Grants	—		—
Exercises	—		—
Forfeitures/Expirations	—		—
Balance, December 31, 2016	100,000	$	51.95	4.1	$	2,868
Exercisable, December 31, 2016	100,000	$	51.95	4.1	$	2,868

(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, 2014, 2015 and 2016 are as follows:


	Number of	Weighted-average
	shares	exercise price
Exercisable, December 31, 2014	—	$	51.95
Exercisable, December 31, 2015	100,000	$	51.95
Exercisable, December 31, 2016	100,000	$	51.95

Valuation and Expense Information under Stock Compensation Topic ASC 718

At December 31, 2016, total stock-based compensation cost which has not yet been recognized was $20.9 million for unvested restricted stock, restricted stock units, and stock option awards. This cost is expected to be recognized over the next 26 months on a weighted-average basis. Awards of approximately 550,000 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 over the respective vesting periods. Such a determination involves significant judgment surrounding the Company’s ability to maintain regulatory compliance. If the performance targets are not reached during the respective 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.

The following table sets forth the amount of stock-based compensation expense recorded in each of the expense line items for the years ended December 31, 2014, 2015 and 2016 (in thousands):


	2014		2015		2016
Instruction and educational support	$	1,736	$	2,134	$	1,432
Marketing		—		—		—
Admissions advisory		—		—		—
General and administration		7,717		8,079		9,335
Stock-based compensation expense included in operating expense		9,453		10,213		10,767
Tax benefit		3,734		4,032		4,256
Stock-based compensation expense, net of tax	$	5,719	$	6,181	$	6,511

The following table summarizes information regarding share-based payment arrangements for the years ended December 31, 2014, 2015 and 2016 (in thousands):


	2014		2015		2016
Proceeds from stock options exercised	$	—	$	—	$	—
Tax shortfall related to share-based payment arrangements	$	(2,039)	$	(24)	$	(51)
Intrinsic value of stock options exercised	$	—	$	—	$	—