Sallie Mae 2012 Annual Report Download - page 173

SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. Stock-Based Compensation Plans and Arrangements (Continued)
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,
2012 2011 2010
Risk-free interest rate ...................................... .13% .27% .33%
Expected volatility ......................................... 29% 42% 61%
Expected dividend rate ..................................... 3.27% 1.87% 0.00%
Expected life of the option .................................. 1year 1 year 1 year
Weighted average fair value of stock purchase rights .............. $ 3.01 $ 3.63 $ 3.30
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, 2012, there was $.1 million of unrecognized compensation cost related to the ESPP net of
estimated forfeitures, which is expected to be recognized in January 2013.
During the years ended December 31, 2012, 2011 and 2010, plan participants purchased 192,755 shares,
278,266 shares and 205,528 shares, respectively, of our common stock.
12. Restructuring Activities
Restructuring expenses of $13 million, $9 million and $91 million were recorded in the years ended
December 31, 2012, 2011 and 2010, respectively. Of these amounts, $12 million, $9 million and $85 million was
recognized in continuing operations and $1 million, $0 and $6 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 required 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 restructured our operations in response to
this change in law which resulted 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 were $12 million, $9 million, and $84 million for the years ended
December 31, 2012, 2011, and 2010. Restructuring costs under this plan are substantially complete at
this time.
• In response to the College Cost Reduction and Access Act of 2007 (“CCRAA”) and challenges in the
capital markets, we initiated a restructuring plan in the fourth quarter of 2007. This plan focused on
conforming our lending activities to the economic environment, exiting certain customer relationships
and product lines, winding down or otherwise disposing of our debt Purchased Paper businesses, and
significantly reducing our operating expenses. This restructuring plan was essentially completed in the
fourth quarter of 2009. Under this plan, there were $1 million, $0 and $7 million of restructuring
expenses for the years ended December 31, 2012, 2011, and 2010.
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