Sallie Mae 2009 Annual Report Download - page 202

13. Stock-Based Compensation Plans and Arrangements (Continued)
valuation purposes. The expected volatility is based on implied volatility from publicly-traded options on the
Company’s stock at the grant date and historical volatility of the Company’s stock consistent with the expected
life of the option. The risk-free interest rate is based on the U.S. Treasury spot rate at the grant date consistent
with the expected life of the option. The dividend yield is based on the projected annual dividend payment per
share based on the dividend amount at the grant date, divided by the stock price at the grant date.
As of December 31, 2009, there was $32 million of unrecognized compensation cost related to stock
options, which is expected to be recognized over a weighted average period of 2.1 years.
The following table summarizes stock option activity for the year ended December 31, 2009.
Number of
Options
Weighted
Average
Exercise
Price per
Share
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
Outstanding at December 31, 2008 ........... 38,804,704 $33.90
Granted................................ 9,312,700 10.59
Exercised .............................. (62,600) 10.60
Canceled ............................... (4,760,084) 31.47
Outstanding at December 31, 2009
(1)
.......... 43,294,720 $28.77 6.13 yrs $—
Exercisable at December 31, 2009 ............ 24,225,317 $34.60 4.59 yrs $—
(1)
Includes gross number of net-settled options awarded. Options granted in 2009 were granted as net-settled options. Upon exer-
cise of a net-settled option, employees are entitled to receive the after-tax spread shares only. The spread shares equal the gross
number of options granted less shares for the option cost. Shares for the option cost equal the option price multiplied by the
number of gross options exercised divided by the fair market value of SLM common stock at the time of exercise.
The weighted average fair value of options granted was $5.82, $6.93 and $7.89 for the years ended
December 31, 2009, 2008 and 2007, respectively. The total intrinsic value of options exercised was $.1 million,
$.8 million and $140 million for the years ended December 31, 2009, 2008 and 2007, respectively.
Cash received from option exercises was $.1 million for the year ended December 31, 2009. The actual
tax benefit realized for the tax deductions from option exercises totaled $.02 million for the year ended
December 31, 2009.
Restricted Stock
Restricted stock vests over a minimum of a 12-month performance period, and generally vests between
one and three years based on earnings-related performance vesting criteria being met. Non-vested restricted
stock granted prior to January 25, 2007 is entitled to dividend credits; non-vested restricted stock granted on
or after January 25, 2007 is not.
The fair value of restricted stock awards is determined on the grant date based on the Company’s stock
price and is amortized to compensation cost on a straight-line basis over the related vesting periods. As of
December 31, 2009, there was $3 million of unrecognized compensation cost related to restricted stock, which
is expected to be recognized over a weighted average period of 1.6 years.
F-75
SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts, unless otherwise stated)