On May 25, 2006, the Human Resources and Compensation Committee ("Committee") of the Board of Directors (the "Board") of Scholastic Corporation (the "Company"), which consists entirely of independent directors, approved the acceleration of the vesting of all unvested stock options outstanding as of May 30, 2006 granted to employees (including executive officers) and outside directors of the Company, as described below (the "Acceleration"). Substantially all of the affected stock options are currently "underwater" since the fair market value of the stock underlying the awards is less than the applicable exercise price.   Except for the Acceleration, all other terms and conditions applicable to such stock options are unchanged and remain in effect. The Acceleration was made in accordance with the existing stock option plan terms of the related stock option plans and amendments thereto approved by the Committee and/or the Board, as applicable, on May 25, 2006.

The purpose of the Acceleration is to mitigate future compensation expense that the Company expects to recognize in its financial statements with respect to these options as a result of the Company's implementation of Statement of Financial Accounting Standards No. 123 (Revised 2004), "Share-Based Payment" ("SFAS 123R"), which will first apply to the Company beginning June 1, 2006.   Under SFAS 123R, the Company must recognize the compensation cost related to share-based payment transactions, including stock options, in its financial statements.

The Company currently estimates that the future expense that will be eliminated from its consolidated statement of income on a pre-tax basis as a result of the Acceleration will be approximately $23 million over the next four years: $11 million in fiscal 2007, $7 million in fiscal 2008, $4 million in fiscal 2009 and $1 million in fiscal 2010. These estimates, which are unaudited and subject to change, are based on estimated fair value calculations using the Black-Scholes methodology and current market assumptions.

The Acceleration covers the stock options described below.

A.        Stock options outstanding as of May 30, 2006 to purchase an aggregate of 582,750 shares of the Company's Class A Stock, par value $.01 per share, previously granted to Mr. Richard Robinson, Chairman of the Board, President and Chief Executive Officer of the Company, under the Company's 2004 Class A Stock Incentive Plan and having a weighted average exercise price of $33.45 per share. 166,500 of these options were scheduled to vest in each of fiscal 2007, fiscal 2008 and fiscal 2009 and 83,250 of these options were scheduled to vest in fiscal 2010.

B.        Stock options outstanding as of May 30, 2006 to purchase an aggregate of 1,380,333 shares of the Company's common stock, par value $.01 per share ("Common Stock"), having a weighted average exercise price of $31.00 per share, previously granted to employees and executive officers (other than Mr. Robinson, who did not have any unvested options to purchase Common Stock) as further described below, under the Company's 1995 Stock Option Plan and 2001 Stock Incentive Plan. Of these options, 705,060 were scheduled to vest in fiscal 2007, 442,826 were scheduled to vest in fiscal 2008, 145,947 were scheduled to vest in fiscal 2009 and 86,500 were scheduled to vest in fiscal 2010.