Sallie Mae 2007 Annual Report Download - page 183

14. Stock-Based Compensation Plans and Arrangements (Continued)
The following table summarizes RSU activity for the year ended December 31, 2007.
Number of
RSUs
Weighted
Average Grant
Date
Fair Value
Outstanding at December 31, 2006 .......................... 640,000 $39.45
Granted . . ............................................ 10,000 45.41
Canceled . ............................................ — —
Converted to common stock ............................... — —
Outstanding at December 31, 2007 .......................... 650,000 $39.54
Vested
(1)
.............................................. 650,000 $39.54
(1)
All outstanding RSUs vested in 2007 but were not converted to common stock until January 2008.
There were 39,071 dividend equivalents on outstanding RSUs at December 31, 2007.
The total fair value of RSUs that vested during the years ended December 31, 2007, 2006 and 2005 was
$26 million, $15 million and $10 million, respectively. The total intrinsic value of RSUs converted to common
stock during the year ended December 31, 2006 was $10 million. There were no RSUs converted to common
stock for the years ended December 31, 2007 and December 31, 2005.
Employee Stock Purchase Plan
Under the Company’s ESPP, employees could purchase shares of the Company’s common stock at the
end of a 24-month offering period at a price equal to the share price at the beginning of the 24-month period,
less 15 percent, up to a maximum purchase price of $10,000 plus accrued interest. The purchase price for each
offering was determined at the beginning of the offering period.
The fair values of the stock purchase rights of the ESPP offerings in the years ended December 31, 2007
and 2006 were calculated using a Black-Scholes option pricing model with the following weighted average
assumptions.
Year Ended
December 31,
2007
Year Ended
December 31,
2006
Risk free interest rate ...................................... 4.97% 4.75%
Expected volatility ........................................ 22.67% 20.41%
Expected dividend rate ..................................... 2.19% 1.92%
Expected life ............................................ 2years 2 years
The expected volatility is based on implied volatility from publicly-traded options on the Company’s
stock at the date of grant and historical volatility of the Company’s stock. The risk-free interest rate is based
on the U.S. Treasury spot rate at the date of grant consistent with the expected term. The dividend yield is
based on the projected annual dividend payment per share based on the current dividend amount at the date of
grant, divided by the stock price at the date of grant.
The weighted average fair value of the stock purchase rights of the ESPP offerings for the years ended
December 31, 2007 and 2006 was $10.41 and $11.31, respectively. The fair value was amortized to
compensation cost on a straight-line basis over a two-year vesting period. As of December 31, 2007, there was
no unrecognized compensation cost related to the ESPP.
F-62
SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts, unless otherwise stated)