Sallie Mae 2011 Annual Report Download - page 176

SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. Stock-Based Compensation Plans and Arrangements (Continued)
Employee Stock Purchase Plan
Under the ESPP, employees can purchase shares of our common stock at the end of a 12-month offering
period at a price equal to the share price at the beginning of the 12-month period, less 15 percent, up to a
maximum purchase price of $7,500 plus accrued interest. The purchase price for each offering is determined at
the beginning of the offering period.
The fair values of the stock purchase rights of the ESPP offerings were calculated using a Black-Scholes
option pricing model with the following weighted average assumptions.
Years Ended December 31,
2011 2010 2009
Risk-free interest rate ......................................... .27% .33% .53%
Expected volatility ............................................ 42% 61% 103%
Expected dividend rate ........................................ 1.87% 0.00% 0.00%
Expected life of the option ..................................... 1year 1 year 1 year
Weighted average fair value of stock purchase rights ................. $3.63 $3.30 $4.88
The expected volatility is based on implied volatility from publicly-traded options on our stock at the grant
date and historical volatility of our stock consistent with the expected life. The risk-free interest rate is based on
the U.S. Treasury spot rate at the grant date consistent with the expected life. The dividend yield is based on the
projected annual dividend payment per share based on the current dividend amount at the grant date divided by
the stock price at the grant date.
The fair values were amortized to compensation cost on a straight-line basis over a one-year vesting period.
As of December 31, 2011, there was $.1 million of unrecognized compensation cost related to the ESPP net of
estimated forfeitures, which is expected to be recognized in January 2012.
During the years ended December 31, 2011 and 2010, plan participants purchased 278,266 shares and
205,528 shares, respectively, of our common stock. No shares were purchased in 2009.
12. Restructuring Activities
Restructuring expenses of $9 million, $91 million and $22 million were recorded in the years ended
December 31, 2011, 2010 and 2009, respectively. Of these amounts, $9 million, $85 million and $10 million was
recognized in continuing operations and $0 million, $6 million and $12 million was recognized in discontinued
operations, respectively. The following details our restructuring efforts:
• On March 30, 2010, President Obama signed into law H.R. 4872, HCERA, which included the SAFRA
Act. Effective July 1, 2010, the legislation eliminated the authority to provide new loans under FFELP
and requires all new federal loans to be made through the DSLP. The new law did not alter or affect the
terms and conditions of existing FFELP Loans. We have and will continue to restructure our operations
in response to this change in law which has and will continue to result in a significant reduction of
operating costs due to the elimination of positions and facilities associated with the origination of
FFELP Loans. Restructuring expenses associated with this plan for the year ended December 31, 2011
were $9 million and we expect to incur an estimated $10 million of additional restructuring expenses.
In addition, on March 31, 2011, we moved our corporate headquarters to Newark, DE from Reston,
VA.
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