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Stock-Based Compensation Plans and Arrangements
 12 Months Ended
Dec. 31, 2019
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation Plans and Arrangements Stock-Based Compensation Plans and Arrangements
Plan Summaries
As of December 31, 2019, we had one active stock-based compensation plan that provides for grants of equity awards to our employees and non-employee directors. We also maintained an Employee Stock Purchase Plan (the “ESPP”). Shares issued under these stock-based compensation plans may be either shares reacquired by us or shares that are authorized but unissued.
The SLM Corporation 2012 Omnibus Incentive Plan was approved by shareholders on May 24, 2012. An amendment to the plan was approved and other material terms of the plan were re-approved by shareholders on June 22, 2017. At December 31, 2019, 17 million shares, as adjusted to reflect the effects of the Spin-Off, were authorized to be issued from this plan.
An amendment to the ESPP was approved by shareholders on May 24, 2012 that authorized the issuance of 6 million shares under the plan and kept the terms of the plan substantially the same. The number of shares authorized under the plan was subsequently adjusted to 15 million shares on June 25, 2014, to reflect the effects of the Spin-Off.

Stock-Based Compensation

The total stock-based compensation cost recognized in the consolidated statements of income for the years ended December 31, 2019, 2018 and 2017 was $31 million, $32 million and $28 million, respectively. As of December 31, 2019, there was $13 million of total unrecognized compensation expense related to unvested stock awards, which is expected to be recognized over a weighted average period of 1.4 years. We amortize compensation expense on a straight-line basis over the related vesting periods of each tranche of each award.
Stock Options
Stock options granted prior to 2012 expire 10 years after the grant date, and those granted since 2012 expire in 5 years. The exercise price must be equal to or greater than the market price of our common stock on the grant date. We have granted time-vested, price-vested and performance-vested options to our employees and non-employee directors. Time-vested options granted to management and non-management employees generally vest over three years. Price-vested options granted to management employees vest upon our common stock reaching a targeted closing price for a set number of days. Performance-vested options granted to management employees vest one-third per year for three years based on corporate earnings-related performance targets. Options granted to non-employee directors vest upon the director’s election to the Board of Directors.
There were no options granted in the years ended December 31, 2019, 2018 and 2017.
 
The following table summarizes stock option activity for the year ended December 31, 2019.
 
(Dollars in thousands, except per share data)
Number of
Options
 
Weighted
Average
Exercise
Price per
Share
 
Weighted
Average
Remaining
Contractual
Term
 
Aggregate
Intrinsic
Value(1)
Outstanding at December 31, 2018
1,391,819

 
$
10.44

 
 
 
 
Granted
—

 
—

 
 
 
 
Exercised(2)(3)
(593,806
)
 
3.63

 
 
 
 
Canceled
(8,167
)
 
3.94

 
 
 
 
Outstanding at December 31, 2019(4)
789,846

 
$
4.75

 
0.7 years
 
$
3,284

Exercisable at December 31, 2019
789,846

 
$
4.75

 
0.7 years
 
$
3,284

____________ 
(1) 
The aggregate intrinsic value represents the total intrinsic value (the aggregate difference between our closing stock price on December 31, 2019 and the exercise price of in-the-money options) that would have been received by the option holders if all in-the-money options had been exercised on December 31, 2019.
(2) 
The total intrinsic value of options exercised was $4 million, $17 million, and $16 million for the years ended December 31, 2019, 2018 and 2017, respectively.
(3) 
No cash was received from option exercises for the year ended December 31, 2019. The actual tax benefit realized for the tax deductions from option exercises totaled $1 million for the year ended December 31, 2019.
(4) 
For net-settled options, gross number is reflected.
    

Restricted Stock
Restricted stock awards generally vest over one year. Outstanding restricted stock is entitled to dividend equivalent units that vest subject to the same vesting requirements or lapse of transfer restrictions, as applicable, as the underlying restricted stock award. The fair value of restricted stock awards is based on our stock price at the grant date.
 
The following table summarizes restricted stock activity for the year ended December 31, 2019.
 
(Shares and per share amounts in actuals)
Number of
Shares
 
Weighted
Average Grant
Date
Fair Value
Non-vested at December 31, 2018
84,392

 
$
11.73

Granted
118,789

 
9.26

Vested(1)
(84,392
)
 
11.73

Canceled
—

 
—

Non-vested at December 31, 2019(2)
118,789

 
$
9.26

_________ 
(1) 
The total fair value of shares that vested during the years ended December 31, 2019, 2018 and 2017 was $1 million, $1 million and $1 million, respectively.
(2) 
As of December 31, 2019, there was $1 million of unrecognized compensation cost related to restricted stock, which is expected to be recognized over a weighted average period of 0.5 years.
Restricted Stock Units and Performance Stock Units
Restricted stock units (“RSUs”) and performance stock units (“PSUs”) are equity awards granted to employees that entitle the holder to shares of our common stock when the award vests. RSUs may be time-vested over three years or vested at grant but subject to transfer restrictions, while PSUs vest based on corporate performance targets over a three-year period.
Outstanding RSUs and PSUs are entitled to dividend equivalent units that vest subject to the same vesting requirements or lapse of transfer restrictions, as applicable, as the underlying award. The fair value of RSUs is based on our stock price at the grant date.
The following table summarizes RSU and PSU activity for the year ended December 31, 2019.
 
(Shares and per share amounts in actuals)
Number of
RSUs/
PSUs
 
Weighted
Average Grant
Date
Fair Value
Outstanding at December 31, 2018
5,338,034

 
$
10.11

Granted
3,008,102

 
10.84

Vested and converted to common stock(1)
(3,030,536
)
 
8.78

Canceled
(136,383
)
 
11.09

Outstanding at December 31, 2019(2)
5,179,217

 
$
11.28

__________ 
(1) 
The total fair value of RSUs/PSUs that vested and converted to common stock during the years ended December 31, 2019, 2018 and 2017 was $27 million, $25 million and $29 million, respectively.
(2) 
As of December 31, 2019, there was $12 million of unrecognized compensation cost related to RSUs/PSUs, which is expected to be recognized over a weighted average period of 1.4 years.
Employee Stock Purchase Plan
Employees may 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 (whole dollars). The purchase price for each offering is determined at the beginning of the offering period on August 1.
 
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,
(Dollars per share)
2019
 
2018
 
2017
Risk-free interest rate
1.87
%
 
2.44
%
 
1.22
%
Expected volatility
29
%
 
27
%
 
32
%
Expected dividend rate
1.34
%
 
—
%
 
—
%
Expected life of the option
1 year

 
1 year

 
1 year

Weighted average fair value of stock purchase rights
$
1.77

 
$
2.32

 
$
2.36


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 bill
rate at the grant date consistent with the expected life. The dividend yield was zero for the years ended December 31, 2018 and 2017, respectively, as we did not pay dividends on our common stock in 2018 and 2017.
The fair values were amortized to compensation cost on a straight-line basis over a one-year vesting period. As of December 31, 2019, there was less than $1 million of unrecognized compensation cost related to the ESPP, which is expected to be recognized by July 2020.
No shares were purchased for the year ended December 31, 2019, as our stock price on July 31, 2019 was less than the offering price for the ESPP plan. During the years ended December 31, 2018 and 2017, plan participants purchased 233,232 shares and 283,952 shares, respectively, of our common stock.