def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant þ
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Soliciting Material Pursuant to Section 240.14a-12 |
American Public Education, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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AMERICAN PUBLIC EDUCATION,
INC.
111 W. Congress Street
Charles Town, West Virginia 25414
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 15, 2009
To Our Stockholders:
You are cordially invited to attend our 2009 Annual Meeting of
Stockholders, which will be held on May 15, 2009, at
8:00 a.m. local time, at Westfields Marriott Washington
Dulles, 14750 Conference Center Drive, Chantilly, Virginia 20151
for the following purposes:
1. to elect nine members of the Board of Directors;
2. to ratify the appointment of McGladrey &
Pullen, LLP as the independent registered public accounting firm
for the Company for the fiscal year ending December 31,
2009; and
3. to consider any other matters that properly come before
the Annual Meeting or any adjournment or postponement thereof.
Management is presently aware of no other business to come
before the Annual Meeting.
Each outstanding share of American Public Education, Inc. common
stock (NASDAQ: APEI) entitles the holder of record at the close
of business on March 20, 2009, to receive notice of and to
vote at the Annual Meeting or any adjournment or postponement of
the Annual Meeting. Shares of our common stock can be voted at
the Annual Meeting only if the holder is present in person or by
valid proxy. We have enclosed a copy of our Proxy Statement and
our 2008 Annual Report on
Form 10-K,
which includes our audited financial statements. You are
cordially invited to attend the Annual Meeting.
IF YOU
PLAN TO ATTEND:
Please note that space limitations make it necessary to limit
attendance to stockholders and one guest. Registration and
seating will begin at 7:30 a.m. local time. Stockholders
holding stock in brokerage accounts (street name
holders) will need to bring to the meeting a letter from the
broker, bank or other nominee confirming their beneficial
ownership of the shares to be voted. Cameras, recording devices
and other electronic devices will not be permitted at the
meeting.
By Order of the Board of Directors
Wallace E. Boston, Jr.
President and Chief Executive Officer
April 15, 2009
IMPORTANT: WHETHER OR NOT YOU EXPECT TO ATTEND IN
PERSON, WE URGE YOU TO VOTE YOUR SHARES AT YOUR EARLIEST
CONVENIENCE. THIS WILL ENSURE THE PRESENCE OF A QUORUM AT THE
ANNUAL MEETING. PROMPTLY VOTING YOUR SHARES BY SIGNING,
DATING AND RETURNING THE ENCLOSED PROXY CARD WILL SAVE US THE
EXPENSE AND EXTRA WORK OF ADDITIONAL SOLICITATION. AN ADDRESSED
ENVELOPE FOR WHICH NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES IS ENCLOSED. SUBMITTING YOUR PROXY NOW WILL NOT
PREVENT YOU FROM VOTING YOUR SHARES AT THE MEETING IF YOU
DESIRE TO DO SO, AS YOUR PROXY IS REVOCABLE AT YOUR OPTION. YOUR
VOTE IS IMPORTANT, SO PLEASE ACT TODAY.
AMERICAN PUBLIC EDUCATION,
INC.
111 W. Congress Street
Charles Town, West Virginia 25414
PROXY
STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 15, 2009
This Proxy Statement (the Proxy Statement), which
was first mailed to stockholders on or about April 15,
2009, is furnished in connection with the solicitation of
proxies by the Board of Directors (the Board) of
American Public Education, Inc. (hereinafter, we
us and American Public Education), to be
voted at the Annual Meeting of Stockholders (the Annual
Meeting) and at any adjournment or postponement of the
Annual Meeting, which will be held at 8:00 a.m. local time
on May 15, 2009, at Westfields Marriott Washington Dulles,
14750 Conference Center Drive, Chantilly, Virginia 20151, for
the purposes set forth in the accompanying Notice of Annual
Meeting of Stockholders.
ABOUT THE
ANNUAL MEETING
Purpose
of the Annual Meeting
The purpose of the Annual Meeting is for our stockholders to
consider and act upon the proposals described in this Proxy
Statement and any other matters that properly come before the
Annual Meeting or any adjournment or postponement thereof.
Management is presently aware of no other business to come
before the Annual Meeting. In addition, management will report
on the performance of American Public Education and respond to
questions from stockholders.
Proposals
to be Voted Upon at the Annual Meeting
There are two proposals scheduled to be voted upon at the Annual
Meeting. The proposals for stockholders to consider and vote
upon are:
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Proposal No. 1: To elect nine
directors to the Board, each of whom will hold office until the
next annual meeting of stockholders and until his or her
successor is elected and qualified or until his or her earlier
death, resignation or removal.
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Proposal No. 2: To ratify the
selection of McGladrey & Pullen, LLP
(McGladrey & Pullen) as American Public
Educations independent registered public accounting firm
for the fiscal year ending December 31, 2009.
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In addition, any other matters that properly come before the
Annual Meeting or any adjournment or postponement thereof will
be considered. Management is presently aware of no other
business to come before the Annual Meeting.
Recommendation
of the Board
The Board recommends that you vote FOR each of the nominees to
the Board (Proposal 1) and FOR the ratification of the
appointment of McGladrey & Pullen as our independent
registered public accounting firm for the fiscal year ending
December 31, 2009 (Proposal 2).
Important Notice Regarding The Availability of Proxy
Materials for the Stockholder Meeting To Be Held on May 15,
2009
Our Annual Report to Stockholders and this Proxy Statement are
available at
http://proxy.americanpubliceducation.com.
Voting at
the Annual Meeting
Stockholders will be entitled to vote at the Annual Meeting on
the basis of each share held of record at the close of business
on March 20, 2009 (the Record Date).
If on the Record Date you hold shares of our common stock that
are registered directly in your name with our transfer agent,
American Stock Transfer & Trust Company
(AST), you are considered the stockholder of record
with respect to those shares, and AST is sending these proxy
materials directly to you on our behalf. As a stockholder of
record, you may vote in person at the meeting or by proxy.
Whether or not you plan to attend the Annual Meeting, we urge
you to fill out and return the enclosed proxy card.
If on the Record Date you hold shares of our common stock in an
account with a brokerage firm, bank, or other nominee, then you
are a beneficial owner of the shares and hold such shares in
street name, and these proxy materials are being forwarded to
you by that organization. As a beneficial owner, you have the
right to direct your broker, bank, or other nominee on how to
vote the shares held in their account, and the nominee has
enclosed or provided voting instructions for you to use in
directing it how to vote your shares. The nominee that holds
your shares, however, is considered the stockholder of record
for purposes of voting at the Annual Meeting. Because you are
not the stockholder of record, you may not vote your shares in
person at the Annual Meeting unless you bring a letter from your
broker, bank or other nominee confirming your beneficial
ownership of the shares to the Annual Meeting. Whether or not
you plan to attend the Annual Meeting, we urge you to vote by
proxy to ensure that your vote is counted. All proxies will be
voted in accordance with the instructions specified on the proxy
card. If you do not give voting instructions as to how your
shares should be voted on a particular proposal at the Annual
Meeting, your shares will be voted in accordance with the
recommendations of our Board stated in this Proxy Statement.
If you are a beneficial owner and do not vote, and your broker,
bank or other nominee does not have discretionary power to vote
your shares, your shares may constitute broker
non-votes (described below) and will not be counted in
determining the number of shares necessary for approval of
proposals. However, shares that constitute broker non-votes will
be counted for the purpose of establishing a quorum at the
Annual Meeting. Voting results will be tabulated and certified
by the inspector of elections appointed for the Annual Meeting.
If you receive more than one proxy card, it is because your
shares are registered in more than one name or are registered in
different accounts. Please complete, sign and return each proxy
card to ensure that all of your shares are voted.
You may revoke your proxy at any time before it is exercised at
the Annual Meeting by submitting a new proxy bearing a later
date, by providing written notice to our Corporate Secretary
c/o 111 W. Congress
Street, Charles Town, West Virginia 25414, or by voting in
person at the Annual Meeting. Your presence at the Annual
Meeting does not in and of itself revoke your proxy. Also, if
you are a beneficial owner and you wish to vote at the meeting,
you must bring to the meeting a letter from the broker, bank or
other nominee confirming your beneficial ownership of the shares
to be voted.
A list of stockholders of record as of the Record Date will be
available for inspection during ordinary business hours at our
offices located at 111 W. Congress Street, Charles
Town, West Virginia 25414, from May 5, 2009 to the date of
our Annual Meeting. The list will also be available for
inspection at the Annual Meeting.
Quorum
Requirement for the Annual Meeting
The presence at the Annual Meeting, whether in person or by
valid proxy, of the persons holding a majority of shares of
common stock outstanding on the Record Date will constitute a
quorum, permitting us to conduct our business at the Annual
Meeting. On the Record Date, there were 18,153,830 shares
of common stock outstanding, held by 360 stockholders of record.
Abstentions (i.e., if you or your broker mark
ABSTAIN on a proxy card) and broker
non-votes will be considered to be shares present at the
meeting for purposes of a quorum. Broker non-votes occur when
shares held by a broker for a beneficial owner are not voted
with respect to a particular proposal and generally occur
because: (1) the broker does not receive voting
instructions from the beneficial owner and (2) the broker
lacks discretionary authority to vote the shares.
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Banks, brokers and other nominees cannot vote on their
clients behalf on non-routine proposals.
Banks, brokers and other nominees can, however, vote your shares
in their discretion for the election of directors.
For the purpose of determining whether stockholders have
approved a particular proposal, abstentions are treated as
shares present and entitled to vote and broker non-votes are
treated as present and not entitled to vote.
Required
Vote
Election of Directors. The election of
directors requires a plurality of the votes cast for the
election of directors; accordingly, the nine directorships to be
filled at the Annual Meeting will be filled by the nine nominees
receiving the highest number of votes. Broker non-votes and
abstentions are not taken into account in determining the
outcome of this proposal because only a plurality of votes
actually cast is required to elect a director.
Ratification of the appointment of independent registered
public accounting firm. Approval of the proposal
to ratify the audit committees appointment of
McGladrey & Pullen as our independent registered
public accounting firm for the fiscal year ending
December 31, 2009 requires the affirmative vote of the
holders of at least a majority of the shares of common stock
present in person or represented by proxy at the Annual Meeting
and entitled to vote. Broker non-votes are not taken into
account in determining the outcome of this proposal, however,
abstentions will have the effect of a vote against this proposal.
Solicitation
of Proxies
We will bear the cost of solicitation of
proxies. This includes the charges and expenses
of brokerage firms and others for forwarding solicitation
material to beneficial owners of our outstanding common stock.
We may solicit proxies by mail, personal interview, telephone or
via the Internet through our officers, directors and other
management employees, who will receive no additional
compensation for their services.
CORPORATE
GOVERNANCE STANDARDS AND DIRECTOR INDEPENDENCE
The Board has adopted Corporate Governance Guidelines (the
Guidelines), a Code of Business Conduct and Ethics
(the Code of Ethics), and a Policy for Related
Person Transactions as part of our corporate governance
practices and in accordance with rules of the Securities and
Exchange Commission (the SEC) and the listing
standards of The NASDAQ Stock Market (NASDAQ).
Corporate
Governance Matters
The Guidelines set forth a framework to assist the Board in the
exercise of its responsibilities. The Guidelines cover, among
other things, the composition and certain functions of the
Board, director independence, stock ownership by our
non-employee directors, management succession and review, Board
committees, the selection of new directors, and director
expectations.
The Code of Ethics covers, among other things, compliance with
laws, rules and regulations, conflicts of interest, corporate
opportunities, confidentiality, protection and proper use of
company assets, and the reporting process for any illegal or
unethical conduct. The Code of Ethics is applicable to all of
our officers, directors and employees, including our Chief
Executive Officer and our Chief Financial Officer. The Code of
Ethics includes provisions that are specifically applicable to
our Chief Executive Officer, Chief Financial Officer and other
Principal Officers (as defined in the Code of Ethics).
Any waiver of the Code of Ethics for our directors, executive
officers or Principal Officers may be made only by our Board and
will be promptly disclosed as may be required by law, regulation
or rule of the SEC or NASDAQ listing standards. If we amend our
Code of Ethics or waive the Code of Ethics with respect to our
Chief Executive Officer, Chief Financial Officer or other
Principal Officer, we will post the amendment or waiver on our
corporate website.
3
The Guidelines and Code of Ethics are each available in the
Corporate Governance section of our corporate website, which is
located at www.americanpubliceducation.com. The Guidelines, Code
of Ethics and Policy for Related Person Transactions are
reviewed periodically by our nominating and corporate governance
committee, and changes are recommended to our Board for approval
as appropriate.
Certain
Relationships and Related Person Transactions
Policies
and Procedures for Related Person Transactions
Effective as of the date of our initial public offering, our
Board adopted the Code of Ethics, pursuant to which our
executive officers, directors and principal stockholders,
including their immediate family members and affiliates, are not
permitted to enter into a related person transaction with us
without the prior consent of our nominating and corporate
governance committee, or other independent committee of our
board of directors. Any request for us to enter into a
transaction with an executive officer, director, principal
stockholder or any of such persons immediate family
members or affiliates, in which the amount involved exceeds
$120,000 must first be presented to our nominating and corporate
governance committee for review, consideration and approval. All
of our directors, executive officers and employees are required
to report to our nominating and corporate governance committee
any such related person transaction. In approving or rejecting
the proposed agreement, our nominating and corporate governance
committee shall consider the facts and circumstances available
and deemed relevant to the nominating and corporate governance
committee, including, but not limited to the risks, costs and
benefits to us, the terms of the transaction, the availability
of other sources for comparable services or products, and, if
applicable, the impact on a directors independence. Our
nominating and corporate governance committee shall approve only
those agreements that, in light of known circumstances, are in,
or are not inconsistent with, our best interests, as our
nominating and corporate governance committee determines in the
good faith exercise of its discretion. Under the policy, if we
should discover related person transactions that have not been
approved, the nominating and corporate governance committee will
be notified and will determine the appropriate action, including
ratification, rescission or amendment of the transaction.
Related
Person Transactions
Set forth below is a summary of certain transactions since
January 1, 2008 among us, our directors, our executive
officers, beneficial owners of more than 5% of either our common
stock or our Class A common stock, which was outstanding
before completion of our initial public offering, and some of
the entities with which the foregoing persons are affiliated or
associated in which the amount involved exceeds or will exceed
$120,000.
In February 2008, pursuant to a public offering registered with
the SEC by us on a registration statement on
Form S-1
we sold 25,000 shares of our common stock and selling
stockholders in the offering sold additional shares of our
common stock. The selling stockholders in the offering (and the
number of shares sold) included, among others: ABS Capital
Partners IV, L.P., ABS Capital Partners IV-A, L.P., ABS Capital
Partners IV Offshore L.P. and ABS Capital Partners IV
Special Offshore L.P., which we refer to collectively as the ABS
Entities (2,500,000); Camden Partners Strategic Fund III,
L.P. and Camden Partners Strategic
Fund III-A,
L.P., which we refer to collectively as the Camden Entities
(926,460); and the following executive officers: Wallace E.
Boston, Jr. (44,000); James H. Herhusky (75,000) and Frank
B. McCluskey (25,000). Two of our directors, Philip A. Clough
and Timothy T. Weglicki, are managing members of the general
partner of the ABS Entities. One of our directors, David L.
Warnock, is a managing member of the general partner of the
Camden Entities. We did not receive any of the proceeds from the
sale of the shares of common stock by the selling stockholders
in the offering.
In December 2008, pursuant to a public offering registered with
the SEC by us on a registration statement on
Form S-3
we sold 15,000 shares of our common stock and the ABS
Entities sold 4,227,970 shares of our common stock.
In connection with the February and December 2008 offerings, we
entered into customary underwriting agreements for the offering
and incurred total costs of approximately $1.2 million.
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Board
Independence
Our Board believes, and our Guidelines require, that a majority
of its members be independent directors. In addition, the
respective charters of the audit, compensation and nominating
and corporate governance committees, currently require that each
member of such committees be independent directors. Currently,
seven of the eight current members of our Board are independent
directors, as defined in the applicable rules for companies
listed on NASDAQ. NASDAQs independence criteria includes a
series of objective tests, such as that the director is not an
employee of American Public Education and has not engaged in
various types of business dealings with us. In addition, as
further required by NASDAQ rules, the Board has made a
subjective determination as to each independent director that no
relationship exists that, in the opinion of the Board, would
interfere with the exercise of independent judgment in carrying
out the responsibilities of a director. In making these
determinations, the directors reviewed and discussed information
provided by the directors and management with regard to each
directors business and personal activities as they may
relate to us and our management. Based on this review and
consistent with our independence criteria, the Board has
affirmatively determined that all of our directors are
independent of American Public Education and our management,
with the exception of Mr. Boston, who is our President and
Chief Executive Officer.
In accordance with our Guidelines, the independent members of
our Board will hold at least two executive session
meetings each year. If the chairperson of the Board is not an
independent director, a chairperson will be selected for each
executive session. In general, these meetings are intended to be
used as a forum to discuss such topics as the independent
directors deem necessary or appropriate, the annual evaluation
of the Chief Executive Officers performance and the annual
review of the Chief Executive Officers plan for management
succession.
Meetings
of the Board of Directors and its Committees
Information concerning the Board and its three standing
committees is set forth below. Each Board committee currently
consists only of directors who are not employees of American
Public Education and who are independent as defined
in NASDAQs rules.
The Board and its committees meet regularly throughout the year,
and also hold special meetings and act by written consent from
time-to-time.
The Board held a total of six meetings during the fiscal year
ended December 31, 2008. During this time all directors
attended at least 75% of the aggregate number of meetings held
by the Board and all committees of the Board on which such
director served (during the period which such director served).
The Board does not have a formal policy with respect to Board
member attendance at annual meetings of stockholders. Our 2008
annual meeting of stockholders, was attended by all of our
directors who were then serving.
The Board has three standing committees: the nominating and
corporate governance committee; the compensation committee; and
the audit committee. The charters for the nominating and
corporate governance, compensation, and audit committees can be
accessed electronically on the Committees page of our corporate
website at www.americanpubliceducation.com.
The Board conducts, and the nominating and corporate governance
committee oversees, an annual evaluation of the Boards
operations and performance in order to enhance its
effectiveness. Recommendations resulting from this evaluation
are made by the nominating and corporate governance committee to
the full Board for its consideration.
5
BOARD
COMMITTEES AND THEIR FUNCTIONS
The following table describes which directors serve on each of
the Boards standing committees.
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Nominating and
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Corporate
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Compensation
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Audit
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Governance Committee
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Committee
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Committee
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Wallace E. Boston, Jr.
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Phillip A. Clough(3)
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J. Christopher Everett(2)
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F. David Fowler
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Jean C. Halle
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Timothy J. Landon
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David L. Warnock
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Timothy T. Weglicki
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Chair of the committee. |
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Vice-Chairperson of the Board. |
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Chairperson of the Board. |
Audit
Committee
The Board has established a separately designated standing audit
committee in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934, which met seven times during
2008. The audit committee is responsible, among its other duties
and responsibilities, for overseeing our accounting and
financial reporting processes, the audits of our financial
statements, the qualifications of our independent registered
public accounting firm, and the performance of our internal
audit function and independent registered public accounting
firm. The audit committee reviews and assesses the qualitative
aspects of our financial reporting, our processes to manage
business and financial risk, and our compliance with significant
applicable legal, ethical and regulatory requirements. The audit
committee is directly responsible for the appointment,
compensation, retention and oversight of our independent
registered public accounting firm. The members of our audit
committee are Mr. Fowler, who serves as chair of the
committee, Mr. Everett and Ms. Halle. Our Board has
determined that Mr. Fowler is an audit committee
financial expert, as that term is defined under the SEC
rules implementing Section 407 of the Sarbanes-Oxley Act of
2002. Our Board has determined that each member of our audit
committee is independent under NASDAQs listing standards
and each member of our audit committee is independent pursuant
to
Rule 10A-3
of the Securities Exchange Act. Effective after the annual
meeting, Ms. Halle is expected to become chair of the
committee.
Nominating
and Corporate Governance Committee
The nominating and corporate governance committee is responsible
for recommending candidates for election to the Board. The
committee met five times during 2008. The committee is also
responsible, among its other duties and responsibilities, for
making recommendations to the Board or otherwise acting with
respect to corporate governance policies and practices,
including board size and membership qualifications, new director
orientation, committee structure and membership, succession
planning for our Chief Executive Officer and other key executive
officers, and communications with stockholders. The members of
our nominating and corporate governance committee are
Mr. Weglicki, who serves as chair of the committee,
Mr. Everett and Mr. Warnock. Our Board has determined
that the composition of our nominating and corporate governance
committee meets NASDAQs independence requirements for
director nominations.
Compensation
Committee
The compensation committee is responsible, among its other
duties and responsibilities, for establishing the compensation
and benefits of our Chief Executive Officer and other executive
officers, monitoring
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compensation arrangements applicable to our Chief Executive
Officer and other executive officers in light of their
performance, effectiveness and other relevant considerations and
administering our equity incentive plans. The committee met
seven times during 2008. The members of our compensation
committee are Mr. Clough, who serves as chair of the
committee, Ms. Halle and Mr. Warnock. Our Board has
determined that the composition of our compensation committee
meets NASDAQs independence requirements for approval of
the compensation of our Chief Executive Officer and other
executive officers.
The compensation committee has the sole authority to retain and
terminate any compensation consultant to be used to assist in
evaluating executive officer compensation. In anticipation of
our initial public offering in November 2007, the compensation
committee retained Towers Perrin as an outside compensation
consultant to assist in evaluating our compensation programs.
The compensation committee used this information in connection
with making 2008 compensation determinations. Towers Perrin does
no work for us other than work that is authorized by the
compensation committee or its chairperson. Towers Perrin also
advised the compensation committee on the use of a peer group
for comparative purposes. The consultants role in
recommending the amount or form of executive compensation paid
to the Companys named executive officers during 2008 is
described in the Compensation Discussion and
Analysis Philosophy and Objectives of our
Compensation Programs Peer Group section below.
The compensation committee works closely with our Chief
Executive Officer, Mr. Boston, on compensation decisions
and has delegated certain aspects of the annual incentive plans
for the other executive officers, including the named executive
officers, to Mr. Boston. For a discussion of
Mr. Bostons role in determining or recommending the
executive compensation paid to the Companys named
executive officers during 2008, see the Compensation
Discussion and Analysis Role of Executives in
Executive Compensation Decisions section below.
DIRECTOR
NOMINATIONS AND COMMUNICATION WITH DIRECTORS
Criteria
for Nomination to the Board
The nominating and corporate governance committee considers
candidates submitted by American Public Education stockholders,
as well as candidates recommended by directors and management,
for nomination to the Board. It evaluates candidates submitted
by stockholders in the same manner as other candidates
identified to it. The nominating and corporate governance
committee reviews the appropriate skills and characteristics
required of directors in the context of the current composition
of the Board, our operating requirements and the long-term
interests of our stockholders. It may use outside consultants to
assist in identifying candidates.
Director Qualifications. The nominating and
corporate governance committee will consider, among other
things, the following criteria in selecting director nominees:
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compliance with applicable regulatory requirements, including
with respect to independence;
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overall Board composition;
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professional skills and background, experience in relevant
industries, age and geographic background;
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past performance of incumbent directors in light of the director
expectations set forth in the Guidelines; and
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integrity, judgment, acumen and time and ability to make a
constructive contribution to the Board.
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The nominating and corporate governance committee and, as
needed, a retained search firm, will screen Board candidates,
perform reference checks, prepare a biography for each candidate
for the nominating and corporate governance committee to review
and conduct interviews. The nominating and corporate governance
committee will interview candidates that meet our director
nominee criteria, and will recommend to the Board nominees that
best suit the Boards needs.
7
Director
Nomination Process
The nominating and corporate governance committee recommends,
and the Board nominates, candidates to stand for election as
directors. Stockholders may also nominate persons to be elected
as directors. If a stockholder wishes to nominate a person for
election as director, he or she must follow the procedures
contained in our bylaws and satisfy the requirements of
Regulation 14A of the Securities Exchange Act of 1934. To
nominate a person to stand for election as a director at the
annual meeting of stockholders for 2010, our Corporate Secretary
must receive such nominations at our principal executive offices
not more than 120 days, and not less than 90 days,
before the anniversary date of the preceding annual meeting,
except that if the annual meeting is set for a date that is not
within 30 days before or 60 days after such
anniversary, the nomination must be received no later than the
close of business on the tenth day following the notice or
public disclosure of the meeting. Each submission must include
the following information:
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the name and address of the stockholder who intends to make the
nomination and the name and address of the person or persons to
be nominated;
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a representation that the stockholder is a holder of record of
Corporation capital stock entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to
nominate the person or persons;
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if applicable, a description of all arrangements or
understandings between the stockholder and each nominee and any
other person or persons, naming such person or persons, pursuant
to which the nomination is to be made by the stockholder;
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such other information regarding each nominee to be proposed by
such stockholder as would be required to be included in a proxy
statement filed under the SECs proxy rules if the nominee
had been nominated, or intended to be nominated, by the Board;
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if applicable, the consent of each nominee to serve as a
director if elected; and
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such other information that the Board may request in its
discretion.
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The Board may require any proposed nominee to furnish such other
information as it may reasonably require to determine the
eligibility of such proposed nominee to serve as one of its
directors.
Additional information regarding requirements for stockholder
nominations for next years annual meeting is described in
this proxy statement under General Matters
Stockholder Proposals and Nominations.
Contacting
the Board of Directors
Stockholders wishing to communicate with our Board may do so by
writing to any of the Board, chairperson of the Board, or the
non-management members of the Board as a group, at:
American Public Education, Inc.
111 W. Congress Street
Charles Town, West Virginia 25414
Attn: Corporate Secretary
Complaints or concerns relating to our accounting, internal
accounting controls or auditing matters will be referred to
members of the audit committee. Other correspondence will be
referred to the relevant individual or group. All correspondence
is required to prominently display the legend Board
Communication in order to indicate to the Corporate
Secretary that it is communication subject to our policy and
will be received and processed by the Corporate Secretarys
office. Each communication received by the Corporate Secretary
will be copied for our files and will be promptly forwarded to
the addressee. The Board has requested that certain items not
related to the Boards duties and responsibilities be
excluded from its communication policy. In addition, the
Corporate Secretary is not required to forward any communication
that the Corporate Secretary, in good faith, determines to be
frivolous, unduly hostile, threatening, illegal or similarly
unsuitable. However, the Corporate Secretary will maintain a
list of each communication subject to this policy that is not
forwarded, and on a quarterly basis, will deliver the list to
the chairperson of the Board. In addition, each communication
subject to
8
this policy that is not forwarded because it was determined by
the Secretary to be frivolous shall nevertheless be retained in
our files and made available at the request of any member of the
Board to whom such communication was addressed.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Our Board of Directors is currently comprised of eight members.
However, our Board has approved, effective as of the Annual
Meeting, increasing the size of our Board to nine members. Our
nominees for the election of directors at the Annual Meeting
include eight independent non-management directors and our
Chief Executive Officer. Each director is elected to serve
a one-year term, with all directors subject to annual election.
At the recommendation of the nominating and corporate governance
committee, the Board has nominated the following persons to
serve as directors for the term beginning at the Annual Meeting
on May 15, 2009: Wallace E. Boston, Jr., Phillip A.
Clough, J. Christopher Everett, Barbara G. Fast, F. David
Fowler, Jean C. Halle, Timothy J. Landon, David L. Warnock
and Timothy T. Weglicki. All nominees with the exception of
Major General Fast (USA, Ret.) are currently serving on the
Board.
Unless proxy cards are otherwise marked, the persons named as
proxies will vote all proxies FOR the election of each nominee
named in this section. Proxies submitted for the Annual Meeting
can only be voted for those nominees named in this Proxy
Statement. If, however, any director nominee is unable or
unwilling to serve as a nominee at the time of the Annual
Meeting, the persons named as proxies may vote for a substitute
nominee designated by the Board, or the Board may reduce the
size of the Board. Each nominee has consented to serve as a
director if elected, and the Board does not believe that any
nominee will be unwilling or unable to serve. Each director will
hold office until his or her successor is duly elected and is
qualified or until his or her earlier death, resignation or
removal.
Nominees
for Director
The names of each nominee for director, their ages as of
March 20, 2009, and other information about each nominee is
shown below.
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Director
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Name
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Age
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Principal Occupation
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Since
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Wallace E. Boston, Jr.
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54
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President, Chief Executive Officer of American Public Education
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2004
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Phillip A. Clough
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47
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Managing General Partner of ABS Capital Partners
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2002
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J. Christopher Everett
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61
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Retired
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2007
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Barbara G. Fast
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55
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Vice President of Cyber Solutions for Intelligence and Security
Systems, a division of Boeings Network and Space Systems
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(Nominated for election
at 2009 Annual Meeting)
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F. David Fowler
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75
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Retired
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2007
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Jean C. Halle
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50
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Chief Executive Officer of Calvert Educational Services
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2006
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David L. Warnock
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51
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Partner with Camden Partners
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2005
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Timothy T. Weglicki
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57
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Founding Partner of ABS Capital Partners
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2002
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Timothy J. Landon
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46
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Chief Executive Officer of Landon Company
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2009
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Wallace E. Boston, Jr. joined us in September 2002
as Chief Financial Officer and, since June 2004 has served as
President, Chief Executive Officer and a member of our Board.
From August 2001 to April 2002, Mr. Boston served as Chief
Financial Officer of Sun Healthcare Group. From July 1998 to May
2001, Mr. Boston
9
served as Chief Operating Officer and later, President of
NeighborCare Pharmacies. From February 1993 to
May 1998, Mr. Boston served as VP-Finance and later,
SVP of Acquisitions and Development of Manor Healthcare
Corporation, now Manor Care, Inc. From November 1985 to
December 1992, Mr. Boston served as Chief Financial
Officer of Meridian Healthcare.
Phillip A. Clough has served on our Board since August
2002 and has been Chairman of our Board since August 2005.
Mr. Clough is a Managing General Partner of ABS Capital
Partners, a private equity firm that he joined in September
2001. Prior to joining ABS Capital Partners, Mr. Clough
served as President of Sitel Corporation from January 1997 to
May 1998, and as President and Chief Executive Officer from May
1998 to April 2001. Previously, Mr. Clough was an
investment banker with Alex. Brown & Sons from 1990 to
1997 and served in the United States Army from 1983 to 1988,
rising to the rank of Captain in 1987. Mr. Clough currently
serves on the board of directors of several of ABS Capital
Partners portfolio companies, including Rosetta Stone,
Inc., a language learning software company and publisher, and
Liquidity Services, Inc., an operator of online marketplaces for
the sale and purchase of surplus corporate and government assets.
J. Christopher Everett has served on our Board since May
2007 and was appointed Vice-Chairperson of the Board in 2009.
Mr. Everett has been an independent consultant and investor
since his retirement from PricewaterhouseCoopers in 2000.
Mr. Everett served as an Executive in Residence at the
Kogod School of Business at American University from 2000 to
2003 where he taught graduate courses in the application of
technology and strategy. Prior to his retirement in 2000,
Mr. Everett was a senior partner at PricewaterhouseCoopers
and was a leader in the firms Management Consulting
Services Practice. Mr. Everett led the
PricewaterhouseCoopers Global
E-business
practice from 1998 until 2000. Mr. Everett also served as a
member of the PricewaterhouseCoopers Global Oversight Board, the
firms board of directors, and served on the firms
Global Leadership Team from 1995 until his retirement in 2000.
Mr. Everett currently serves on the board of directors of
several private companies.
Barbara G. Fast is Vice President of Cyber Solutions for
Intelligence and Security Systems (I&SS), a division of
Boeings Network and Space Systems, which she joined in
August 2008. Major General Fast retired from the Army in July
2008 after a 32 year career. Her most recent posts
included: Deputy Director, Army Capability and Integration
Center, TRADOC, from July 2007 until June 2008; Deputy then
Commanding General for the United States Army Intelligence
Center and Fort Huachuca, Arizona from August 2004 until
June 2007; and Director of Intelligence, Multinational
Forces-Iraq, Baghdad, Iraq, from July 2003 until July 2004.
F. David Fowler has served on our Board since May 2007.
From June 2001 to 2006, Mr. Fowler served on the board of
directors of MicroStrategy, Inc. and as chairman of its Audit
Committee. Mr. Fowler also served as a member and chairman
of the board of directors of FBR Funds, an open-end management
investment company that is part of FBR Capital Markets
Corporation and the Friedman, Billings, Ramsey Group, Inc., from
1997 to 2006. Mr. Fowler was the dean of the School of
Business at The George Washington University from July 1992
until his retirement in June 1997 and a member of KPMG LLP from
1963 until his retirement in June 1992. As a member of KPMG,
Mr. Fowler served as managing partner of the
Washington, D.C. office from 1987 until 1992, as partner in
charge of human resources for the firm in New York City, as
a member of the firms board of directors, operating
committee and strategic planning committee and as chairman of
the KPMG Foundation and the KPMG personnel committee.
Mr. Fowler also serves on the board of directors of
Liquidity Services, Inc., an operator of online marketplaces for
the sale and purchase of surplus corporate and government
assets, and is chairman of its Audit Committee.
Jean C. Halle has served on our Board since March 2006.
Ms. Halle currently serves as Chief Executive Officer of
Calvert Education Services, a provider of accredited distance
education programs and educational support services. From 1999
to 2001, Ms. Halle was the Chief Financial Officer and Vice
President of New Business Development for Times Mirror
Interactive, a digital media subsidiary of the former Times
Mirror Company. From 1986 to 1999, Ms. Halle held a number
of positions with The Baltimore Sun Company, including Vice
President of New Business Development, Chief Financial Officer
and Vice President of Finance, President of Homestead
Publishing, a subsidiary of The Baltimore Sun Company, and
Director of Strategic Planning. From 1983 to 1986,
Ms. Halle was the Chief Financial Officer and Vice
President of Finance for Abell Communications, and Assistant
Treasurer of A.S. Abell Company, the former parent
10
company of The Baltimore Sun Company. Previously, from 1979 to
1983, Ms. Halle had been a Senior Management Consultant
with Deloitte, Haskins and Sells, now Deloitte &
Touche, an international accounting and professional services
firm. Ms. Halle currently serves on the board of trustees
for Calvert School and the Advisory Board for Stevenson
University.
Timothy J. Landon has served on our Board since January
2009. Since September 2008, Mr. Landon has served as Chief
Executive Officer of Landon Company, which focuses on early
stage angel investing and consulting for private equity, venture
capital and large traditional and online media companies. Since
September 2008, he has also served as the Chairman of
BlockShopper.com, LLC., a
start-up in
the online real estate news and information space.
Mr. Landon retired from the Tribune Company in February
2008, after having served in a variety of positions within the
Tribune organization, including most recently as President of
Tribune Interactive, Inc. from March 2004 until February 2008,
where he was responsible for overall interactive and classified
advertising strategy, technology and operations for the Tribune
Company, including the companys print and online
classified businesses and the interactive operations of more
than 50 news and information websites. In December 2008, the
Tribune Company filed a voluntary petition for relief under
Chapter 11 of the United States Bankruptcy Code.
David L. Warnock has served on our Board since August
2005. Since May 2007, Mr. Warnock has served as Chairman,
Chief Executive Officer and President of Camden Learning
Corporation. Mr. Warnock is also a partner with Camden
Partners, a private equity firm that he co-founded in 1995.
Prior to co-founding Camden Partners, from 1983 to 1995,
Mr. Warnock was employed with T. Rowe Price Associates,
serving as President of T. Rowe Price Strategic Partners and T.
Rowe Price Strategic Partners II and co-manager of the T.
Rowe Price New Horizons Fund. From July 1995 to December 1997,
Mr. Warnock served as a consultant to the advisory
committees of T. Rowe Price Strategic Partners and T. Rowe Price
Strategic Partners II. Mr. Warnock currently serves on the
board of directors of several of Camden Partners portfolio
companies, including Nobel Learning Communities, a
non-sectarian, for-profit provider of private pay education and
services for education entities serving the preschool through
12th grade market, New Horizons Worldwide, a computer
training company, and CIBT, a provider of post-secondary
education services in The Peoples Republic of China. He is
also Chairman and CEO of Camden Learning Corporation, a public
special purpose acquisition corporation.
Timothy T. Weglicki has served on our Board since August
2002. Mr. Weglicki is a Founding Partner of ABS Capital
Partners, a private equity firm founded in 1993. Prior to
co-founding ABS Capital Partners, from 1977 to 1993,
Mr. Weglicki was an investment banker with Alex.
Brown & Sons where he founded and headed the capital
markets group from 1989 to 1993. Mr. Weglicki currently
serves on the board of directors of Coventry Health Care, Inc.
and of several of ABS Capital Partners portfolio companies.
Required
Vote and Board Recommendation
The election of directors requires a plurality of the votes cast
for the election of directors; accordingly, the nine
directorships to be filled at the Annual Meeting will be filled
by the nine nominees receiving the highest number of votes. A
properly executed proxy marked ABSTAIN with respect
to the election of one or more directors will not be voted with
respect to the nominee or nominees indicated, although it will
be counted for purposes of determining whether there is a
quorum. A broker non-vote, discussed below, will
also have no effect on the outcome because only a plurality of
votes actually cast is required to elect a director.
Stockholders do not have the right to cumulate their votes in
the election of directors. If an incumbent nominee in an
uncontested election such as the election to be held at the
Annual Meeting fails to be elected, the incumbent nominee will
continue in office.
11
THE BOARD
RECOMMENDS A VOTE FOR ELECTION OF EACH
OF THE NINE NOMINATED DIRECTORS
2008 Director
Compensation
Pursuant to our directors compensation policy for our
non-employee directors, our non-employee directors received an
annual retainer of $32,250 and each committee chair received an
additional annual retainer of $4,500, except for the chair of
the audit committee, whose additional annual retainer was
$10,000. The annual retainers are payable in quarterly
installments, and each director has the alternative to elect
before the beginning of the applicable year to receive their
annual retainer in common stock having the same value as the
portion of the annual retainer to be paid, calculated as of the
close of business on the first business day of the year. In
connection with our annual meeting of stockholders, our
directors compensation policy also provides for an annual
grant to each director of restricted stock having a value of
$36,750 on the date of delivery. The restricted stock grant
vests on the earlier of the one year anniversary of the date of
grant and immediately prior to the next years annual
meeting of stockholders.
In adopting this policy in 2007, our compensation committee
received input from its compensation consultant, Towers Perrin,
in order to assist us in transitioning to best practices for
director compensation in anticipation of being a public company.
The compensation committee used the information from Towers
Perrin to determine the appropriate aggregate value for the
compensation of our directors. Towers Perrin did not recommend
or determine the amount or form of director compensation
provided to our directors as part of our new 2007 compensation
policy. Instead, Towers Perrin provided this comparative,
market-based information to the committee, and the committee
made all final decisions with respect to the policy.
The following table sets forth information regarding
compensation paid to directors during 2008:
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Fees
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Earned
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or Paid in
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Stock
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Option
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Cash
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Awards
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Awards
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Total
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Name(1)
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($)(2)
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($)(3)
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($)(4)
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($)
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Phillip A. Clough
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36,750
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41,347
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78,097
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J. Christopher Everett
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32,250
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41,347
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45,001
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118,598
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F. David Fowler
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42,250
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41,347
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38,690
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122,287
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Jean C. Halle
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32,250
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41,347
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25,683
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99,280
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David A. Warnock
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32,250
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41,347
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73,597
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Timothy T. Weglicki
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36,750
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41,347
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78,097
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(1) |
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See the Summary Compensation Table in the Executive Compensation
section of this Proxy Statement for disclosure related to
Mr. Boston who is one of our NEOs as of December 31,
2008. Mr. Landon did not join the Board of Directors until
2009. |
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(2) |
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Each of the directors elected to receive his or her entire 2008
annual retainer in fully-vested shares of common stock, other
than Mr. Everett, who elected to receive half of his 2008
annual retainer in cash and half in full-vested shares of common
stock. |
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(3) |
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Amounts represent the dollar amount recognized for financial
statement purposes for stock awards for each director during
2008, as computed pursuant to FAS 123R, excluding any
estimates of forfeitures relating to service-based vesting
conditions. For a discussion of the assumptions made in these
valuations, see Note 7 to our audited financial statements
included in our Annual Report on
Form 10-K
for the year ended December 31, 2008. The amounts reported
reflect the compensation expense related to the portion of the
2008 restricted stock awards that was recognized in 2008 and the
restricted stock awards made in 2007 that were recognized in
2008. |
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The full grant date fair value of each restricted stock award in
2008 was $36,750, computed in accordance with FAS 123(R). |
12
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(4) |
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Amounts represent the dollar amount recognized for financial
statement purposes for option awards for each director during
2008, as computed pursuant to FAS 123R, excluding any
estimates of forfeitures relating to service-based vesting
conditions. For a discussion of the assumptions made in these
valuations, see Note 7 to our audited financial statements
included in our Annual Report on
Form 10-K
for the year ended December 31, 2008. The amounts reported
reflect the compensation expense related to the portion of the
stock options made in previous years that were recognized in
2008. No stock options awards were made to directors in 2008. |
We also reimburse all directors for travel and other necessary
business expenses incurred in the performance of their services
for us and extend coverage to them under the our directors
and officers indemnity insurance policies.
As of December 31, 2008, the aggregate number of vested and
unvested stock awards and exercisable and unexercisable option
awards outstanding held by our non-employee directors were as
follows:
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Stock
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Options
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Name
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Awards
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Awards
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Phillip A. Clough
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933
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J. Christopher Everett
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933
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37,992
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F. David Fowler
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933
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36,992
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Jean C. Halle
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933
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33,433
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David A. Warnock
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933
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Timothy T. Weglicki
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933
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2009 Director
Compensation
In 2009, our compensation committee received input from its
compensation consultant, Towers Perrin, on comparative data for
director compensation. The compensation committee used the
information from Towers Perrin to determine the appropriate
value for the compensation of our directors. As a result, the
compensation committee approved revisions to the directors
compensation policy. Beginning with the third quarter of 2009,
the annual retainer for each committee chair, other than the
audit committee chair, will increase to $5,000. In addition, a
non-executive chairperson of the Board will be entitled to
receive an additional annual retainer of $30,000, provided,
however, that in the event that there is a vice-chairperson, the
chairperson will receive two-thirds of the additional annual
retainer and the vice-chairperson will receive one-third of the
additional annual retainer. To the extent that either the
chairperson or vice-chairperson is also the chair of a
committee, he or she will not receive the annual retainer
payable to the committee chair. The Compensation Committee also
approved increasing the value of the annual restricted stock
award to $41,750. The general retainer for board members and the
annual retainer for the chair of the audit committee will remain
the same.
At the time it adopted the revised directors compensation,
the compensation committee also adopted a stock ownership policy
applicable to our non-management directors. That policy provides
that beginning with the grants of restricted stock made in
connection with the Annual Meeting, directors will be expected
to hold a number of shares of our common stock equivalent to
one-half of all shares of restricted stock they receive in the
future.
13
COMPENSATION
OF EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
Compensation
Discussion and Analysis
The following compensation discussion and analysis provides
information regarding the objectives and elements of our
compensation philosophy and policies for the compensation of our
named executive officers, or NEOs, for 2008. These executives,
who appear in the Summary Compensation Table below, are:
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Wallace E. Boston, Jr., our President, Chief Executive
Officer, Member of our Board of Directors and Member of our
Board of Trustees;
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Harry T. Wilkins, Executive Vice President, Chief Financial
Officer
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Carol Gilbert, Executive Vice President, Programs and Marketing
(promoted from Senior Vice President to Executive Vice President
effective January 1, 2009)
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Frank B. McCluskey, Executive Vice President and
Provost; and
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Mark Leuba, Senior Vice President, Chief Information Officer.
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We determined which executives to include in this discussion and
in the Summary Compensation Table below based on the rules and
regulations of the Securities and Exchange Commission.
Philosophy
and Objectives of our Compensation Programs
Overview
Our overall company-wide compensation philosophy, which is also
applicable to our NEOs, is to provide competitive levels of
compensation that utilize variable cash compensation based on
performance metrics, reflect the level of capability and effort
required to achieve our corporate goals, encourage continuous
quality improvement and are easily understood.
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Variable Cash Compensation. We believe in
using variable cash compensation to motivate and reward good
results at all levels of the organization, and particularly for
our NEOs.
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Focus on Corporate Goals. We strive to provide
compensation that is directly related to the achievement of our
corporate goals, which we measure through individual management
objectives and through earnings results compared to budget.
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Continuous Quality Improvement. We have
developed a Student Satisfaction Quotient, or SSQ,
to encourage employees to work together across organizational
boundaries to improve the processes that we believe contribute
to our success as an organization. The SSQ is designed to
measure the quality of our efforts on behalf of our students by
utilizing a variety of metrics applicable to our business. We
use the SSQ as a component of our annual incentive plan to
reward continued improvement to our performance in various
student satisfaction metrics, often compared to prior period
performance.
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Simple and Straightforward Incentives. We seek
to minimize the complexity of our compensation policies and
practices and to maximize our employees understanding of
the elements of compensation.
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In implementing this philosophy for our NEOs, we award
compensation that (i) assists us in attracting and
retaining qualified executives, (ii) aligns executive
compensation with our SSQ goals and performance goals, and
(iii) uses equity-based awards in an effort to further
align executives and stockholders interests.
Attract
and Retain Qualified Executives
We believe that the supply of qualified executive talent is
limited and have designed our compensation programs to help us
attract and retain qualified candidates by providing
compensation that is competitive within the for-profit education
industry and the broader market for executive talent. Our
executive
14
compensation policies are designed to assist us in attracting
and retaining qualified executives by providing competitive
levels of compensation that are consistent with the
executives alternatives.
Reflect
SSQ Goals and Performance Goals
As part of our executive compensation program, we reward
achieving and surpassing corporate goals through cash bonuses
paid under our Annual Incentive Compensation Plan. This plan
offers the opportunity for employees, including our NEOs, to
earn quarterly cash bonus payments for achievement of
company-wide SSQ goals. This plan also offers the opportunity
for annual cash bonuses to be earned if both company earnings
targets and individual management objectives are met. By linking
bonus payments to achievement of student satisfaction goals,
earnings targets and individual management objectives, we
believe this plan is easily understood by employees and directly
contributes to increases in shareholder value.
Utilize
Equity-Based Awards
Our compensation program uses equity-based awards, the value of
which is contingent on our longer-term performance, in order to
provide our NEOs with a direct incentive to seek increased
stockholder returns. Our stockholders receive value when our
stock price increases, and by using equity-based awards our NEOs
also receive increased value when our stock price increases and
decreased value when it decreases. We believe that equity-based
awards exemplify our philosophy of having a straightforward
structure by reminding NEOs that a measure of long-term
corporate success is increased stockholder value over time.
Because our equity incentives are granted with time-based
vesting, we believe these awards also aid in the retention of
our NEOs.
Review
of Compensation
In anticipation of our November 2007 initial public offering,
the compensation committee commenced a review of best practices
and appropriate levels of compensation for public company
compensation. In connection with that review, the compensation
committee engaged Towers Perrin to provide services to our
compensation committee, as requested and directed by the
Committee. Towers Perrin provided information on competitive
levels of compensation, including information on base salary,
annual bonuses, equity awards and total compensation. The Towers
Perrin information was used by the compensation committee in
determining 2008 executive officer compensation.
Peer
Group
In connection with the competitive review conducted by Towers
Perrin, our compensation committee, with the assistance of
Towers Perrin, identified a group of companies against which to
compare compensation paid to our executives. These companies
were selected because the compensation committee considered them
to be similar to, and competitive with, us in the market for
executive talent, and because they are in comparable or related
businesses. This group, which we refer to as our peer group,
consisted of the following companies:
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Apollo Group Inc.
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Career Education Corporation
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Laureate Education Inc.
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Corinthian Colleges Inc.
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DeVry Inc.
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ITT Educational Services Inc.
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University Technical Institute Inc.
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Lincoln Educational Services Corporation
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Strayer Education Inc.
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Capella Education Co.
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GP Strategies Corporation
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Nobel Learning Communities Inc.
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Princeton Review Inc.
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15
Towers Perrin was only able to provide comparative information
for our chief executive officer and chief financial officer
based on the peer group. They determined that there was
insufficient information to provide meaningful peer group data
for our other NEOs. Towers Perrin provided survey data for these
other NEOs, as well as for our chief executive officer and chief
financial officer. The companies included as part of the
additional survey information were based on a compilation
prepared by Towers Perrin from proprietary databases and were
not disclosed to the compensation committee. The compensation
committee confirmed that the information from Towers Perrin took
into account appropriate regression analyses to reflect our
relative size.
As discussed below, the comparative data was used in 2008 in
connection with our determinations of base salaries and annual
incentive compensation and was used in connection with equity
incentive awards made toward the end of 2007, which, as
discussed below, were considered as part of the 2008
compensation setting process. While the compensation committee
reviewed this comparative data in connection with its
compensation decisions, the committee did not
benchmark or target a certain percentile within the
peer group or survey with respect to the compensation paid to
the NEOs. Instead, the committee used this information for
general comparative purposes and to ensure our NEO compensation
was in line with the peer group. The compensation committee
asked for this information from Towers Perrin as an additional,
objective data point for comparison purposes.
Elements
of Compensation
The compensation program for our NEOs is comprised of three
elements: base salary; annual incentive cash compensation; and
long-term equity incentives. In setting base salary and annual
incentive cash compensation for 2008, we considered the
compensation levels for our NEOs in 2007, the respective
performances of each of our NEOs in 2007, what we believed was
required based on the marketplace for executive talent and that
2008 would be our first full year as a public company. In
evaluating what was required based on the marketplace for
executive talent, in addition to the competitive review
discussed above, the members of our compensation committee used
their collective experience and judgment. For example, because
Messrs. Clough and Warnock are general partners of private
equity firms that have multiple portfolio companies, they were
able to bring their experiences working with other private
companies on executive recruitment and compensation to the
discussion on compensation for our NEOs.
Base
Salary
Base salary is an integral part of compensation for our NEOs,
and is generally set in January of each year, absent other
factors, such as promotions. In 2008, the annual base salary for
Mr. Boston was increased $60,000 to an annual base salary
amount of $360,000. In setting the annual base salary amount for
Mr. Boston, the compensation committee considered
Mr. Bostons excellent performance in 2007, the
continued success of our business, our successful initial public
offering and the competitive review by Towers Perrin. This base
salary placed Mr. Boston in the lowest quartile of the peer
group, which the committee felt appropriate given our relative
size compared to the peer group .
In 2008, the annual base salary for Mr. Wilkins was
increased $25,000 to an annual base salary of $250,000. In
setting the annual base salary amount for Mr. Wilkins, the
compensation committee considered Mr. Wilkins
excellent performance in 2007, his contributions to the success
of our initial public offering and the Towers Perrin competitive
review This base salary placed Mr. Wilkins in the lowest
quartile of the peer group, which the committee felt appropriate
given our relative size compared to the peer group .
The compensation committee generally approved a 4% increase for
our other executive officers to reflect cost of living
adjustments and nominal increases to recognize their successful
performance through 2007. The increase for Dr. McCluskey
was slightly larger to bring his base salary into line with the
other executive officers. The resulting base salary number was
$187,200 for each of Ms. Gilbert, Dr. McCluskey and
Mr. Leuba. The compensation committee considered that this
level of base salary was generally appropriate and consistent
with our status as a newly public company and our desire to
focus more of our cash
16
compensation on our strong annual incentive program. It was also
noted that the 50th percentile of the survey data for this group
of executive officers ranged from $180,000 to $205,000.
Annual
Incentive Cash Compensation
We believe annual incentive pay furthers our compensation
philosophy and objectives by focusing our NEOs on corporate
goals, encouraging continuous quality improvement and providing
straightforward incentives. The target for annual incentive pay
for our NEOs is expressed as a percentage of base salary and was
50% for all of our NEOs during 2008, except for Mr. Boston,
whose annual incentive pay target was set at 60% of his base
salary. These percentages for annual incentive pay targets
remained the same in 2008 as they were in 2007, and for
Mr. Boston, Mr. Wilkins and Dr. McCluskey reflect
the percentages set forth in their employment agreements. The
committee did not believe, in their subjective judgment, that
these amounts should be increased for 2008.
Mr. Bostons annual incentive target is set at a
higher percentage than the other NEOs as a result of the
negotiation of his employment agreement in 2004, at which time
we agreed to provide him a larger annual incentive to reflect
his greater ability as Chief Executive Officer to influence our
business success as well as his greater responsibilities as the
head of our company.
Overall, we believe that the proportion of annual incentive
target pay to total target cash compensation (base salary plus
annual incentive target pay) for our NEOs is a relatively high
percentage. We believe the high percentage of compensation tied
to incentive pay increases the focus of our NEOs on achieving
our SSQ and performance goals. To further enhance this focus in
2008, we provided an additional incentive for truly superior
financial performance and returns to our shareholders that
brought the maximum bonus potential to 100% for Mr. Boston,
80% for Mr. Wilkins and 70% for each of our other NEOs.
This additional incentive also recognized that total targeted
annual cash compensation for our NEOs was below the
50th
percentile of the survey data for Mr. Boston and
Mr. Wilkins, and below the
25th
percentile for the peer group.
Annual incentive pay is awarded to our NEOs through our Annual
Incentive Compensation Plan, in which all of our full-time
employees participate. In addition, Mr. Boston,
Mr. Wilkins and Dr. McCluskey are entitled to
participate in the plan pursuant to the terms of their
employment agreements. The target percentage for employees
differs depending on an employees position within our
company. The Annual Incentive Compensation Plan is designed to
reward our employees for meeting or exceeding our SSQ goals and
for financial performance. One half of each NEOs target award
under the Annual Incentive Plan relates to achievement and
surpassing of our SSQ goals, and one half is related to
achievement and surpassing our financial performance goal. We
determined this split between our SSQ goals and financial
performance goal in order to send a message to our employees
that they should be focused on both operational and earnings
goals. These are provided equal weight to communicate that they
are equally important to our success. The additional bonus
percentages to reach the maximum bonus potential for our NEOs
relate to our financial performance goal because that goal is
most directly reflective of superior financial performance and
returns to our shareholders.
SSQ Goals. We believe that the focus on
continuous quality improvement related to the achievement and
surpassing of our SSQ goals encourages our employees to work
together across organizational boundaries to improve the
processes involved in our operations, with a particular focus on
processes that we believe contribute to the satisfaction of our
students, which is consistent with our mission of Educating
Those Who
Servetm.
The half of each participants Annual Incentive
Compensation Plan target award related to the SSQ is divided
into four equal quarterly amounts that are paid based on
quarterly metrics that are measured monthly. Our SSQ uses over
20 metrics that are divided into the following four categories:
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student satisfaction, which includes metrics based on student
surveys;
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marketing efficiency, which includes metrics related to
applications and new students;
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retention, which includes metrics related to registrations and
course loads; and
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performance monitoring, which includes metrics related to course
drops and transfer credit evaluation processes.
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Each month we compare the performance for each metric against
the baseline for that metric. The baselines are set annually by
the committee, generally as a percentage improvement over past
results, such as the actual past performance in a prior month,
quarter or year. Results for each metric are then expressed as a
percentage of the baseline. The percentage of achievement for
each metric in a given month are then averaged. The monthly
average is then averaged with the monthly average for the other
months in a given quarter to obtain the quarterly average. If
the quarterly average is greater than 100%, one-fourth of the
maximum amount of the SSQ portion of the annual incentive plan
is then paid. If the quarterly average is not at least 100%,
then the portion of the annual incentive plan applicable to that
quarters SSQ goals is not paid.
The SSQ is based on metrics that measure objective operational
targets. This is in keeping with our compensation philosophy of
providing simple and straightforward incentives. Because of the
way that we calculate the monthly and quarterly averages, each
metric is weighted equally. As a result, we believe that no one
metric provides an incentive to our executive officers to focus
disproportionately on any area of our business. Rather, we
believe that the SSQ is structured to provide an incentive to
focus more generally on our business operations and continuous
quality improvement. Furthermore, we have structured the SSQ to
be paid on a quarterly basis based on monthly results because we
track the components of the SSQ daily, and we believe frequent
payments heightens the focus of our employees on these metrics
and continuous quality improvement. All of our employees and
NEOs have the same SSQ goals.
Financial performance. The half of the annual
incentive compensation plan target award that relates to
financial performance is paid annually based on achieving and
surpassing a specified amount of earnings before interest,
taxes, depreciation and amortization, excluding stock-based
compensation expense and other non-cash charges but including
the payment of annual incentive compensation (i.e., adjusted
EBITDA). Of the half of the target award that is tied to
financial performance, a 50% payout is earned if there is a 30%
growth in adjusted EBITDA over the prior year, and a full payout
is earned if budgeted adjusted EBITDA is achieved, with payouts
interpolated for achievement in between the 30% growth and
budget measures. For 2008, the adjusted EBITDA budgeted measure
was $24.9 million. We provided that a portion of the
targeted award would be paid out at 30% growth over the prior
year because we viewed 30% growth as representing a relatively
high level of growth for which managements performance
should be rewarded, but we wanted to emphasize that the targeted
awards should not be paid until the budgeted amounts set by our
board were achieved. The additional bonus percentages to reach
the maximum bonus potential are earned if budgeted adjusted
EBITDA is exceeded by 20%, with payouts interpolated for
achievement in between the budget and the higher target.
Payment of the half of the target award that is tied to earnings
for senior level participants in our Annual Incentive
Compensation Plan, including our NEOs, is reduced to the extent
that personal management objective, or MBO, targets are not
achieved. Thus, even if the annual financial goal is met but the
NEO does not achieve all of his or her annual MBO targets, the
NEOs payment related to the financial goal is reduced by
the relative weight of the missed MBO targets. We believe that
setting personal MBO targets for our NEOs that are tied to
company-wide goals for which they are directly responsible, or
to whose success they contribute, provide personal
accountability in addition to rewards for company performance.
We have conditioned receipt of this portion of the award on
achieving MBO targets in order to recognize that corporate
success is the most important measure and that individual
success alone will not be rewarded without meeting the financial
targets. Similarly, many MBO targets are shared between
executives to reflect that executives have to work together to
achieve results.
For 2008 our compensation committee set MBO targets for
Mr. Boston. Mr. Boston in turn set MBOs for the other
NEOs. In turn, our NEOs set MBOs for their direct reports and so
on throughout the organization for all employees eligible to
receive a bonus based on the financial performance of the
Company. MBOs for our NEOs are derived from the MBOs that are
set for Mr. Boston and our annual corporate performance
goals, including taking into account the sphere of
responsibility for achievement of those goals for the particular
NEO. We strive to have MBOs that can be objectively measured and
are time-bound, which helps to provide incentives that can be
clearly understood by our NEOs. We believe that the MBOs help to
keep management from focusing solely on the current years
financial results, because many of the MBOs represent our view
of key actions required to capture future market opportunities
and help prepare the company for continued growth
18
and improvement in the future. The Compensation Committee
actively advises Mr. Boston on the MBOs he sets for the
other NEOs.
For Mr. Boston, the compensation committee adopted the
following MBOs consistent with his role as our Chief Executive
Officer, all of which were equally weighted:
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receive Board approval by June 1, 2008 for an arrangement
that mitigates certain risks related to the Corporations
relationship with a particular vendor;
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implement a scalable Title IV process by the beginning of
the 4th quarter of 2008;
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submit a bona fide budget to the Board of at least $1.00
Earnings per Share for 2009 (budget would exclude stock based
compensation);
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be compliant with the Sarbanes Oxley Act, as measured by having
no material weaknesses under the Sarbanes Oxley Act
Section 404 review in connection with the 2008
audit; and
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complete 2 PhD programs, have them approved internally and
submitted to our accrediting body by end of 2008.
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Mr. Wilkins MBOs, consistent with his
responsibilities as our chief financial officer, included:
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successfully move the payroll function to the finance department
from the human resources department by June 2008 (weighted at
10%);
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implement a scalable Title IV process by the beginning of
the 4th quarter of 2008 (weighted at 30%);
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submit a bona fide budget to the Board of at least $1.00
Earnings per Share for 2009 (budget would exclude stock based
compensation) (weighted at 20%);
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be compliant with the Sarbanes Oxley Act, as measured by having
no material weaknesses under the Sarbanes Oxley Act
Section 404 review in connection with the 2008 audit
(weighted at 25%);
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successfully move the facilities function to the finance
department (weighted at 10%); and
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attend an SEC continuing education conference (weighted at 5%).
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Ms. Gilberts MBOs, consistent with her role as our
senior vice president for programs and marketing, included:
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implement a scalable Title IV process, with focus on
implementing the federal student aid help desk and supporting
material to manage the student interface(weighted at 10%);
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submit a bonafide budget to the Board of at least $1.00 Earnings
per Share for 2009 (budget would exclude stock based
compensation) (weighted at 20%);
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be compliant with the Sarbanes Oxley Act, as measured by having
no material weaknesses under the Sarbanes Oxley Act
Section 404 review in connection with the 2008
audit(weighted at 10%); and
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expand the number of new civilian students by a specified
percentage(weighted at 20%);
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redesign public web site and establish a web content strategy
and architecture that supports university wide communication
needs(weighted at 20%); and
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launch and effectively manage a marketing plan for new Masters
of Education programs (weighted at 20%).
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Dr. McCluskeys MBOs (all of which were equally
weighted) consistent with his role as our provost and chief
academic officer, included:
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launch a Master of Education in Counseling by September 2008;
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manage salaried professors to budgeted student targets;
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move a specified number of classes to electronic books;
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complete 2 PhD programs, have them approved internally and
submitted to our accrediting body by end of 2008;
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launch Master in Teacher Education by November 2008;
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Mr. Leubas MBOs, consistent with his role as our
chief information officer, included:
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receive Board approval by June 1, 2008 for an arrangement
that mitigates certain risks related to the Corporations
relationship with a particular vendor (weighted at 20%);
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implement a scalable Title IV process by the beginning of
the 4th quarter of 2008 (weighted at 20%);
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submit a bonafide budget to the Board of at least $1.00 Earnings
per Share for 2009 (budget would exclude stock based
compensation) (weighted at 20%);
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be compliant with the Sarbanes Oxley Act, as measured by having
no material weaknesses under the Sarbanes Oxley Act
Section 404 review in connection with the 2008 audit
(weighted at 20%);
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design new PAD websites and supporting components for new PhD
program (weighted at 10%); and
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implement certain disaster recovery steps (weighted at 10%).
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Mr. Boston and Dr. McCluskey, and many of our other
executives, had an MBO related to the development and submission
of PhD programs. Management was prepared and able to achieve
this MBO, however, the Board determined for reasons unrelated to
management performance to delay the submission. Accordingly, the
compensation committee deemed that this MBO was achieved.
Based on 2007 results, for 2008 the committee set our SSQ and
financial performance targets on what it believed to be the high
end of realistically achievable goals. Similar to the approach
that we use for setting our internal budget, the committee
determined to increase the SSQ targets and EBITDA financial
goal. In setting the SSQ goals for 2008, in keeping with our
objective of continuous improvement, the compensation committee
expected that there would be an improvement from 2007
performance for the metrics used in the SSQ, and consistent with
past practice, removed metrics from the SSQ for which the
committee determined that the company was already performing
well and there was not significant room for improvement. In
establishing our MBOs for 2008, we set goals that were
consistent with our strategic plan. Accordingly, our MBOs were
set at levels that we thought could realistically be achieved
but were at a level necessary for superior company performance.
We believe that 2008 was a year of extraordinary achievement for
the company, including an increase in revenues, profitability,
course registrations and successful operation as a public
company. As a result, in 2008 we achieved all of our SSQ goals
at an average of at least 100% and achieved our financial goal
so all of our employees, including the NEOs, were entitled to
receive the total payout available under each portion of our
annual incentive plan, and our NEOs were also entitled to
receive the additional bonus percentages related to the maximum
bonus potential. In addition, because each of our NEOs achieved
his respective MBO targets, the portion of the annual incentive
plan related to their financial goals was not reduced. We
designed our incentive plan to help produce the results we had
in 2008, and the committee was pleased that the amounts were
fully paid consistent with the terms of the plan targets set at
the beginning of the year.
Equity
Incentives
We believe that NEOs should have a significant potential to
benefit from increases in our equity value in order to align the
interests of the NEOs and our stockholders. However, due to our
nature as a private company until November 2007, including the
illiquidity of our equity, the significant size of our awards,
and the potential for significant increase in the value of the
underlying equity, we did not believe that annual equity awards
were necessary or appropriate, preferring instead to make awards
in connection with hirings, advancement decisions and other
significant events. We have used stock options as the form of
equity award because they represent a straightforward mechanism
for rewarding achievement of increases in long-term stockholder
value and because stock options require an increase in stock
price to have value to the NEO. We also believed that because
stock options are commonly used by private companies, they
helped us in attracting
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and retaining executives by giving them compensation that is
more directly comparable to positions with our competitors and
are more easily understood. We also believed that use of stock
options was consistent with compensation practices of other
for-profit education companies.
As discussed above, in connection with the compensation
committees review of compensation practices in
anticipation of our initial public offering the compensation
committee engaged Towers Perrin in July 2007 to provide the
committee with advice and comparative data for our peer group
and for comparably sized companies in general industry surveys.
After reviewing the information provided by Towers Perrin, the
compensation committee determined that our total levels of
compensation for our NEOs were not competitive with public
companies, primarily as a result of the level of our equity
awards. After reviewing the information provided by Towers
Perrin, the compensation committee also determined that the form
and terms of our equity awards were also not consistent with
best practices. The compensation committee determined that it
was appropriate to make equity awards to our chief executive
officer, chief financial officer and other NEOs in connection
with our initial public offering. These awards were in lieu of
making equity awards as part of the committees ordinary
annual review of executive officer compensation for 2008.
Beginning with the grants at the time of our initial public
offering, for the first time our equity awards were split
between stock options and restricted stock. We determined to use
a component of restricted stock in addition to options so that
the NEOs are incented to preserve as well as grow stockholder
value. The stock options and restricted stock awards granted in
connection with our initial public offering use three-year
vesting with options having seven year terms. The change in
terms was in part because we believe that this will reduce the
accounting cost of future equity grants.
For each NEOs award at the time of our initial public
offering, we calculated an aggregate award value after taking
into account the peer group and comparative survey information
requested by the committee and provided by Towers Perrin.
(Towers Perrin did not determine the amount or size of any
equity award to our NEOs.) In calculating the aggregate award
value, we considered the peer group information and survey data
provided by Towers Perrin, after applying certain regression
analyses to account for our relative size, and determined that
the award values we selected were near the mid-point of the
downward adjusted equity values. We determined that given our
expected status as a newly public company and that the awards
were in connection with our initial public offering, it was
appropriate for the time being to consider the average, on an
adjusted basis, of comparable companies. We then split the
aggregate award value for each NEO into options and restricted
stock by using 60% options and 40% restricted stock. In arriving
at the aggregate award value and number of options and
restricted stock, we used an assumed estimated fair market value
of $16 per share, which was the midpoint of the price range on
the cover of the preliminary prospectus for our initial public
offering when it was first circulated. We determined to
calculate the number of options and restricted stock in that
manner in part to facilitate disclosure of our plans to make
these grants at the time of our initial public offering. The
options and restricted stock awards were approved and effective
in connection with the pricing of our initial public offering.
The options were issued with an exercise price equal to the
price to the public in our initial public offering, in part to
align the interests of our NEOs with those stockholders who
acquired shares in the public offering. The formal issuance of
the shares of restricted stock was delayed until after the
closing of the initial public offering so that the shares of
restricted stock were not outstanding prior to the record time
of the special distribution made in connection with our initial
public offering.
The grants to our NEOs other than Mr. Boston and
Mr. Wilkins were in lieu of 2008 annual grants. The grants
for Mr. Boston and Mr. Wilkins at the time of the
initial public offering were equivalent to a three year award.
We felt it was desirable to award a larger grant to these
officers than we would have if we expected to award them a grant
every year to provide them incentive to gain from the value
created above the initial public offering price given their
importance to our success, and to align their interests most
directly with investors acquiring our shares in connection with
our initial public offering. For other NEOs, we believe that
making annual grants will assist with retention (as there will
always be unvested incentives) and there will be more parity
between our other NEOs over time as new executives are added
because longer tenured employees will not have all their options
at different prices than newer employees. In addition, this will
result in our other NEOs having equity incentives based on a
blend of prices over time. No equity incentives were granted to
our NEOs in 2008.
21
Equity
Grant Practices
Prior to our initial public offering, grants of equity awards
were not historically made on a set schedule, but rather were
made from time to time based upon events such as hirings and
promotions. Our equity awards that we consider part of our 2008
executive compensation were made at the time of our initial
public offering. Our 2009 equity awards were approved in
December 2008 with a grant date of January 1, 2009. We
expect that going forward equity awards will be made on a
consistent basis at the beginning of the year to which the award
relates.
Employment
Agreements and Post-Termination Compensation
We have entered into employment agreements with each of
Mr. Boston, Mr. Wilkins and Dr. McCluskey. These
agreements provide the executive with severance payments upon
certain terminations, including termination in connection with a
change-in-control,
which are commonly referred to as double-trigger provisions,
terminations without cause, terminations by the executive for
good reason in the event of a change of control, or if the
executives employment agreement is not assumed by a
successor entity in a change of control. We believe that these
agreements were necessary to attract some of our NEOs and help
in our retention of our NEOs due to the prevalence of similar
provisions in the market in which we compete for executives and
so that we can be competitive with our peers.
In September 2007, we entered into an amendment and restatement
of our employment agreements with Mr. Boston and
Mr. Wilkins to provide for additional severance payments
for certain terminations in connection with a change of control
and to provide that if severance payments payable by us become
subject to the excise tax on excess parachute
payments that we will reimburse him for the amount of such
excise tax (and the income and excise taxes on such
reimbursement). We agreed to provide Mr. Boston and
Mr. Wilkins with these changes in anticipation of our
initial public offering to reflect what we think are prevalent
practices in the marketplace in which we compete for executives,
because as a newly public company we want these officers to be
able to focus on our operations and not be distracted by their
personal situations in the event a change in control transaction
arises and, in the case of Mr. Boston, to reflect his
long-term commitment to us and our long-term commitment to him
as our Chief Executive Officer. For Mr. Wilkins, we
determined that in light of his shorter tenure with us, the
additional severance benefits in connection with a change of
control would not be effective until after February 28,
2009. We further amended the employment agreements for
Mr. Boston, Mr. Wilkins and Dr. McCluskey in
December 2008 to provide for technical compliance with certain
treasury regulations. Additional information regarding these
agreements, including a quantification of benefits that would be
received by these officers had termination occurred on
December 31, 2007, is found below under the heading
Potential Payments on Termination or
Change-in-Control.
Other
Amounts for Mr. Boston
In 2008, Mr. Boston enrolled in an Executive Doctorate
Program in Higher Education Management at the University of
Pennsylvania. The Compensation Committee authorized the payment
of the expenses for this program because of the Compensation
Committees belief that this course of study by
Mr. Boston would inure to our benefit. In particular, the
Compensation Committee considered our continued focus on
increasing education management expertise at the University and
the benefits we would obtain in respect of the Universitys
accreditation and academic reputation from our University
President having a doctoral degree
Effect
of Accounting and Tax Treatment on Compensation
Decisions
Section 162(m) of the Internal Revenue Code of 1986, as
amended, generally imposes a $1 million limit on the amount
that a public company may deduct for compensation paid to a
companys CEO or any of the companys three other most
highly compensated executive officers (other than the CFO) who
are employed as of the end of the year. This limitation does not
apply to compensation that meets the requirements under
Section 162(m) for qualifying performance-based
compensation (i.e., compensation paid only if the
individuals performance meets pre-established objective
goals based on performance criteria approved by stockholders)
that is established by a committee that consists only of
outside directors as defined for
22
purposes of Section 162(m). All members of our compensation
committee qualify as outside directors, and we
consider the potential long-term impact of Section 162(m)
when establishing compensation. Our Annual Incentive
Compensation Plan and the portion of our equity awards made in
options qualify as performance-based compensation within the
meaning of the Internal Revenue Code. We currently expect to
continue to qualify our compensation programs as
performance-based compensation within the meaning of the
Internal Revenue Code to the extent that doing so remains
consistent with our compensation philosophy and objectives.
Role
of Executives in Executive Compensation Decisions
Historically, each element of compensation has been recommended
to the compensation committee by our Chief Executive Officer for
compensation of executive officers other than himself, and the
compensation committee determines the target level of
compensation for each executive officer. Our Chief Executive
Officer sets the MBO targets for our other executive officers
based on his MBO targets and our annual corporate performance
goals, after taking into account the sphere of responsibility
for achievement of those goals for the particular NEO. The Chief
Executive Officer reports the MBOs of the other NEOs and other
key executives to the compensation committee for its comment
prior to the end of the first quarter.
The amount of each element of compensation for our Chief
Executive Officer is determined by the compensation committee.
Neither our Chief Executive Officer nor any of our other
executives participates in deliberations relating to his or her
own compensation.
Compensation
Committee Report
The compensation committee reviewed and discussed the above
Compensation Discussion and Analysis (CD&A)
with the Companys management. Based on its review and
discussions with the Companys management, the compensation
committee recommended that the CD&A be included in the
Companys Proxy Statement and in the Companys Annual
Report on
Form 10-K
(including by incorporation to the Proxy Statement).
Compensation Committee (March 27, 2009)
Phillip A. Clough (Chair)
Jean C. Halle
David L. Warnock
23
Compensation
Tables and Disclosures
Summary
Compensation Table
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
All
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
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|
Plan
|
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Other
|
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|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
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Awards
|
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|
Compensation
|
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Compensation
|
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Name and Principal Position
|
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Year
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Salary
|
|
|
Awards
|
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(2)
|
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(3)
|
|
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(4)
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|
|
Total
|
|
|
Wallace E. Boston, Jr.(1)
|
|
|
2008
|
|
|
|
357,692
|
|
|
|
214,700
|
|
|
|
238,391
|
|
|
|
360,000
|
|
|
|
59,157
|
|
|
|
1,229,940
|
|
President and Chief
|
|
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2007
|
|
|
|
297,885
|
|
|
|
31,640
|
|
|
|
48,787
|
|
|
|
180,000
|
|
|
|
21,174
|
|
|
|
579,486
|
|
Executive Officer
|
|
|
2006
|
|
|
|
243,077
|
|
|
|
|
|
|
|
18,348
|
|
|
|
147,000
|
|
|
|
13,691
|
|
|
|
422,116
|
|
Harry T. Wilkins
|
|
|
2008
|
|
|
|
250,000
|
|
|
|
96,620
|
|
|
|
239,577
|
|
|
|
200,000
|
|
|
|
24,277
|
|
|
|
810,475
|
|
Executive Vice President, Chief Financial Officer
|
|
|
2007
|
|
|
|
209,605
|
|
|
|
14,240
|
|
|
|
428,210
|
|
|
|
103,549
|
|
|
|
17,128
|
|
|
|
772,732
|
|
Carol S. Gilbert
|
|
|
2008
|
|
|
|
187,200
|
|
|
|
7,980
|
|
|
|
13,639
|
|
|
|
168,480
|
|
|
|
11,389
|
|
|
|
388,688
|
|
Executive Vice President, Marketing and Programs(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Frank B. McCluskey
|
|
|
2008
|
|
|
|
187,510
|
|
|
|
13,980
|
|
|
|
46,989
|
|
|
|
131,040
|
|
|
|
11,797
|
|
|
|
391,316
|
|
Executive Vice
|
|
|
2007
|
|
|
|
174,615
|
|
|
|
2,060
|
|
|
|
34,357
|
|
|
|
87,500
|
|
|
|
11,343
|
|
|
|
309,875
|
|
President, Provost
|
|
|
2006
|
|
|
|
169,517
|
|
|
|
|
|
|
|
29,542
|
|
|
|
85,000
|
|
|
|
16,754
|
|
|
|
300,813
|
|
Mark Leuba
|
|
|
2008
|
|
|
|
187,200
|
|
|
|
7,980
|
|
|
|
22,839
|
|
|
|
168,480
|
|
|
|
12,257
|
|
|
|
398,756
|
|
Senior Vice President, Chief Information Officer
|
|
|
2007
|
|
|
|
179,615
|
|
|
|
1,180
|
|
|
|
33,034
|
|
|
|
86,625
|
|
|
|
10,601
|
|
|
|
311,055
|
|
|
|
|
(1) |
|
Mr. Boston served as both our principal executive officer
and principal financial officer until February 2007 when
Mr. Wilkins became our principal financial officer when he
joined us as Chief Financial Officer. |
|
(2) |
|
Amounts reflect the dollar amount that will be recognized for
financial statement reporting purposes for 2008, as computed in
accordance with the provisions of Statement of Financial
Accounting Standards (SFAS) No. 123R,
Share-based Payments, which we refer to as
FAS 123R, other than disregarding any estimates of
forfeitures relating to service-based vesting conditions.
Note 7 to our audited financial statements included in our
Annual Report on Form
10-K for the
year ended December 31, 2008 regarding assumptions
underlying valuation of equity awards. |
|
(3) |
|
Amounts represent annual incentive payments paid pursuant to our
Annual Incentive Compensation Plan based upon the achievement of
certain performance goals established by our compensation
committee for 2008. |
|
(4) |
|
Amounts in this column consist of (i) life insurance
premiums; (ii) 401(k) contribution matches by us;
(iii) for Mr. Wilkins, fringe benefit payment in lieu
of health benefits; (iv) in 2008 for Mr. Boston,
$37,474 paid for tuition related to Mr. Bostons
Executive Doctorate in Higher Education Management, (v) in
2007 for Mr. Boston, a service anniversary gift; and
(vi) in 2006 for Dr. McCluskey, reimbursement of
relocation expenses and commuting expenses for the period after
he joined us. |
|
(5) |
|
Ms. Gilbert served as Senior Vice President, Programs and
Marketing until December 31, 2008, when she became
Executive Vice President, Programs and Marketing. |
24
2008
Grants of Plan-Based Awards
The following table sets forth information with respect to
grants of plan-based awards to our NEOs during 2008:
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|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
|
|
|
|
|
|
|
Non-Equity Incentive Plan Awards(1)
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
Name
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Wallace E. Boston, Jr.
|
|
|
3/5/2008
|
|
|
|
27,000
|
|
|
|
216,000
|
|
|
|
360,000
|
|
Harry T. Wilkins
|
|
|
3/5/2008
|
|
|
|
15,625
|
|
|
|
125,000
|
|
|
|
200,000
|
|
Carol S. Gilbert
|
|
|
3/5/2008
|
|
|
|
11,700
|
|
|
|
93,600
|
|
|
|
131,040
|
|
Dr. Frank B. McCluskey
|
|
|
3/5/2008
|
|
|
|
11,700
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|
|
|
93,600
|
|
|
|
131,040
|
|
Mark Leuba
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|
|
3/5/2008
|
|
|
|
11,700
|
|
|
|
93,600
|
|
|
|
131,040
|
|
|
|
|
(1) |
|
These columns show the range of cash payouts for 2008
performance pursuant to our Annual Incentive Compensation Plan.
As set forth in the Summary Compensation Table above, the
maximum for payments under each NEOs non-equity incentive
award was met. For a discussion of the performance goals
established by the compensation committee for these awards, see
the section titled Annual Incentive Cash
Compensation in the Compensation Discussion and Analysis.
The threshold amounts in this table represent the amounts that
would have been paid if only SSQ goals for one quarter were
achieved. |
|
(2) |
|
No equity incentive awards were made to our NEOs in 2008 because
we had previously determined that the grants made at the time of
our initial public offering in November 2007 were in lieu of
grants to be made in 2008. It is otherwise our policy to make
annual grants of equity incentive awards. |
Narrative
Disclosure to Summary Compensation Table and Grants of
Plan-Based Awards Table
Employment
Agreements
For Mr. Boston, Mr. Wilkins and Dr. McCluskey,
the amounts disclosed in the tables above are in part a result
of the terms of their employment agreements. We do not have
employment agreements with our other NEOs.
Mr. Bostons Employment
Agreement. In June 2004, we entered into an
employment agreement with Mr. Boston to serve as our
president and Chief Executive Officer with an initial term of
three years starting from June 21, 2004 and ending
June 21, 2007, which was subsequently amended to provide
for renewal until February 28, 2009 and annually thereafter
unless we give written notice of our intent not to renew at
least 30 days prior to the renewal date. In December 2008,
his employment agreement was amended to provide for technical
compliance with certain treasury regulations. Pursuant to his
agreement, Mr. Bostons initial base salary was set at
$225,000 per year, subject to annual review and adjustment by
our compensation committee. Under the agreement,
Mr. Bostons base salary may be reduced at any time as
part of a general salary reduction to all employees with annual
salaries in excess of $100,000, provided, however, that any
reduction shall be no more than the lesser of the median
percentage salary reduction applied to such employees or 20%.
Mr. Bostons employment agreement provides that he is
entitled to participate in our annual incentive plan with a
target award of up to 60% of his then base salary as determined
by our compensation committee and based upon the performance
goals set by that committee for the year.
In addition to a base salary and annual bonus, Mr. Boston
is entitled to receive such other benefits approved by our
compensation committee and made available to our other senior
executives and to participate in plans and receive bonuses,
incentive compensation and fringe benefits as we may grant or
establish from time to time. Furthermore, under
Mr. Bostons employment agreement, we are required to
pay or reimburse him for customary and reasonable moving
expenses he incurs in connection with any subsequent relocation
of our executive offices, including a
gross-up
amount in the event that the relocation expense amount is
considered taxable income to him. In his employment agreement,
Mr. Boston has agreed not to compete with us nor solicit
our employees for alternative employment during the term of his
agreement and for a period of one year after termination for any
reason.
25
Mr. Bostons base salary for 2008 was $360,000 and his
annual incentive compensation plan award for 2008 was targeted
at $216,000, with a maximum bonus potential of $360,000.
Mr. Wilkinss Employment
Agreement. Upon his hiring in February 2007, we
entered into an employment agreement with Mr. Wilkins to
serve as our executive vice president and chief financial
officer, which agreement was amended and restated on
October 10, 2007. In December 2008, his employment
agreement was amended to provide for technical compliance with
certain treasury regulations. The agreement has an initial term
of approximately three years commencing from January 29,
2007 and ending February 28, 2010 and will automatically
renew for additional one year terms unless we give written
notice of our intent not to renew at least 30 days prior to
the renewal date. Pursuant to his agreement,
Mr. Wilkinss initial base salary is set at $225,000
per year, subject to annual review and adjustment by our
compensation committee. Under the agreement,
Mr. Wilkinss base salary may be reduced at any time
as part of a general salary reduction to all employees with
annual salaries in excess of $100,000, provided, however, that
any reduction shall be no more than the lesser of the median
percentage salary reduction applied to such employees or 20%.
Pursuant to his employment agreement, Mr. Wilkins is
entitled to participate in our annual incentive plan with a
target award of up to 50% of his then base salary as determined
by our compensation committee and based upon the performance
goals set by that committee for the year.
In addition to a base salary and annual bonus, Mr. Wilkins
is entitled to receive such other benefits approved by our
compensation committee and made available to our other senior
executives and to participate in plans and receive bonuses,
incentive compensation and fringe benefits as we may grant or
establish from time to time. Furthermore, under
Mr. Wilkinss employment agreement, we are required to
pay or reimburse him for customary and reasonable moving
expenses he incurs in connection with any subsequent relocation
of our executive offices, including a
gross-up
amount in the event that the relocation expense amount is
considered taxable income to him. In his employment agreement,
Mr. Wilkins has agreed not to compete with us nor solicit
our employees for alternative employment during the term of his
agreement and for a period of one year after termination for any
reason.
Mr. Wilkinss base salary for 2008 was $250,000 and
his annual incentive compensation plan award for 2008 was
targeted at $125,000, with a maximum bonus potential of $200,000.
Dr. McCluskeys Employment
Agreements. We have an employment agreement with
Dr. McCluskey that has similar provisions to the provisions
of Mr. Bostons agreement discussed above, except with
respect to their positions, term renewal provisions and amounts
relating to their base salary and annual bonus. We entered into
the employment agreement with Dr. McCluskey to serve as
Executive Vice President and Provost (Chief Academic Officer)
beginning April 10, 2005. In December 2008, his employment
agreement was amended to provide for technical compliance with
certain treasury regulations. Under his employment agreement,
Dr. McCluskey has an initial term of employment of three
years from the date employment commenced. Pursuant to his
agreement, Dr. McCluskeys initial annual salary was
$160,000 and he was eligible for an annual bonus of 50% of his
base salary then in effect. In 2008, Dr. McCluskeys
base salary and target annual bonus was $187,200 and $93,600,
with a maximum bonus potential of $131,040.
In addition, each of the above employment agreements provides
for payments upon certain terminations of the executives
employment. For a description of these termination provisions,
whether or not following a
change-in-control,
and a quantification of benefits that would be received by these
executives see the heading Potential Payments upon
Termination or
Change-in-Control
below.
26
2008
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information with respect to the
outstanding equity awards at fiscal year-end for our NEOs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards(1)
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Market Value of
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Shares or Units
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
Option
|
|
|
Stock That
|
|
|
of Stock That
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Exercise
|
|
|
Expiration
|
|
|
Have Not
|
|
|
Have Not
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price ($)
|
|
|
Date
|
|
|
Vested (#)
|
|
|
Vested ($)(2)
|
|
|
Wallace E. Boston, Jr.
|
|
|
|
|
|
|
60,788
|
|
|
|
1.05
|
|
|
|
6/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
42,130
|
|
|
|
84,260
|
|
|
|
20.00
|
|
|
|
11/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,510
|
|
|
|
799,957
|
|
Harry T. Wilkins
|
|
|
131,780
|
|
|
|
91,175
|
|
|
|
3.96
|
|
|
|
2/8/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
18,960
|
|
|
|
37,920
|
|
|
|
20.00
|
|
|
|
11/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,680
|
|
|
|
359,999
|
|
Carol S. Gilbert
|
|
|
|
|
|
|
15,197
|
|
|
|
1.04
|
|
|
|
11/29/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
1,825
|
|
|
|
3,650
|
|
|
|
20.00
|
|
|
|
11/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
800
|
|
|
|
29,752
|
|
Dr. Frank B. McCluskey
|
|
|
15,591
|
|
|
|
30,394
|
|
|
|
1.67
|
|
|
|
4/10/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
30,394
|
|
|
|
45,591
|
|
|
|
3.30
|
|
|
|
2/27/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
2,870
|
|
|
|
5,740
|
|
|
|
20.00
|
|
|
|
11/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,400
|
|
|
|
52,066
|
|
Mark Leuba
|
|
|
|
|
|
|
18,236
|
|
|
|
1.05
|
|
|
|
1/23/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,079
|
|
|
|
7.00
|
|
|
|
5/3/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
1,825
|
|
|
|
3,650
|
|
|
|
20.00
|
|
|
|
11/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
800
|
|
|
|
29,752
|
|
|
|
|
(1) |
|
The vesting date for each service-based option award that is not
otherwise fully vested is listed in the table below by
expiration date: |
|
|
|
Expiration Date
|
|
Vesting Schedule and Date for Unvested Portion
|
|
6/20/2014
|
|
Remaining portion vests on June 21, 2009
|
11/29/2014
|
|
Remaining portion vests on May 15, 2009
|
4/10/2015
|
|
Remaining portion vests in two equal installments on April 11,
2009 and 2010
|
2/27/2016
|
|
Remaining portion vests in three equal installments on February
28, 2009, 2010 and 2011
|
2/8/2017
|
|
Remaining portion vests in two equal installments on February 9,
2009 and 2010.
|
5/3/2017
|
|
Remaining portion vests in two equal installments on May 4, 2009
and 2010.
|
11/13/2014
|
|
Remaining portion vests in two equal installments on November
14, 2009 and 2010.
|
1/23/2015
|
|
Remaining portion vests in two equal installments on January 24,
2009 and 2010.
|
|
|
|
(2) |
|
The market value of the shares of common stock that have not
vested is based on the closing price of our common stock on The
NASDAQ Global Market of $37.19 on December 31, 2008. |
27
Option
Exercises and Stock Vested
The following table sets forth information with respect to
option exercises by our NEOs during 2008 and shares of
restricted stock held by our NEOs that vested during 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
Value Realized on
|
|
|
Number of Shares
|
|
|
Value Realized on
|
|
|
|
Acquired on
|
|
|
Exercise
|
|
|
Acquired on
|
|
|
Vesting
|
|
Name
|
|
Exercise (#)
|
|
|
($)(1)
|
|
|
Vesting (#)
|
|
|
($)(2)
|
|
|
Wallace E. Boston, Jr.
|
|
|
60,788
|
|
|
|
2,331,828
|
|
|
|
10,755
|
|
|
|
494,945
|
|
Harry T. Wilkins
|
|
|
5,000
|
|
|
|
177,250
|
|
|
|
4,840
|
|
|
|
222,737
|
|
Carol S. Gilbert
|
|
|
15,197
|
|
|
|
596,634
|
|
|
|
400
|
|
|
|
18,408
|
|
Dr. Frank B. McCluskey
|
|
|
25,000
|
|
|
|
855,000
|
|
|
|
700
|
|
|
|
32,214
|
|
Mark Leuba
|
|
|
12,157
|
|
|
|
432,822
|
|
|
|
400
|
|
|
|
18,408
|
|
|
|
|
(1) |
|
The value realized on exercise is based on the difference
between the exercise price of the option and the closing price
of our common stock on The NASDAQ Global Market on the day of
exercise, multiplied by the number of shares acquired. |
|
(2) |
|
The value realized on vesting is based on the closing price of
our common stock on The NASDAQ Global Market on the day of
vesting, multiplied by the number of shares acquired. |
Potential
Payments on Termination or
Change-in-Control
The section below describes the payments that may be made to our
NEOs in connection with a
change-in-control
or pursuant to certain termination events. Other than in the
event of a corporate transaction, as that term is defined under
our equity incentive plans and as described in further detail
below, in the absence of an employment agreement or other
arrangement, our NEOs are employed at-will and are not entitled
to any payments upon termination or a
change-in-control
other than their accrued but unpaid salary or benefits.
The employment agreements for Mr. Boston, Mr. Wilkins
and Dr. McCluskey, described above, have certain provisions
that provide for payments to them in the event of the
termination of their respective employment.
Termination for cause, without good reason or by reason of
death. In the event that any of
Mr. Bostons, Mr. Wilkins or
Dr. McCluskeys employment is terminated by us for
cause, by the executive without good
reason, or by reason of death (each of cause
and good reason as defined below), we will pay to
each of them or their estate, as the case may be, their full
base salary and benefits that are otherwise payable to them
through the termination date of their employment. However, in
the event that their employment is terminated by them without
good reason or by reason of their death, we will
also pay to them or their estate any earned, but unpaid, amounts
they are entitled to under any of our incentive compensation
plans or programs, including the annual bonus under their
employment agreements (as adjusted for the period of the year
during which they served).
Termination by reason of disability. If any of
Mr. Bostons, Mr. Wilkins or
Dr. McCluskeys employment is terminated by reason of
disability, we are required to pay to them or their estates, as
the case may be, the full base salary or other benefits payable
to them, including any earned, but unpaid, amounts they are
entitled to under any of our incentive compensation plans or
programs, including the annual bonus under their employment
agreements (to the extent that performance would merit it being
paid). However, payments made to them during the time they are
disabled shall be reduced by the sum of the amounts, if any,
payable to them at or prior to the time of any payment under our
disability benefit plans and which amounts were not previously
applied to reduce any payment.
28
Termination without cause or for good
reason. In the event that we terminate any of
Mr. Bostons, Mr. Wilkins or
Dr. McCluskeys employment without cause
or they terminate their employment for good reason,
we are required to pay, or provide, to them:
|
|
|
|
|
in a lump sum, the sum of (a) their full base salary
through the date of their termination, (b) a pro-rata
amount of their annual bonus for the current fiscal year,
provided that the necessary performance requirements were
satisfied, adjusted for the shorter period, through their
termination date, and (c) any compensation previously
deferred by them and any accrued vacation pay;
|
|
|
|
for a period of 12 months following their termination date,
an amount equal to the sum of their base salary and their annual
bonus, to the extent that their and our performance was
satisfying the relevant performance targets, adjusted for the
short period, after their termination date through the end of
the calendar year and, as to the remainder of the 12 month
period following the termination date, only if our net income
has increased from the same period in the prior year and the
performance targets established for the NEOs successor are
being satisfied in that period;
|
|
|
|
for a period of 12 months following their termination date
or any longer period provided for under the terms of any
benefit, a continuation of benefits to them or their family at a
level and in an amount that is at least equal to that which
would have been provided by us to them had they continued their
employment, provided, however, that if they become reemployed
and are eligible to receive any of the benefits that had been
provided by us, then the benefits we provide shall be
secondary; and
|
|
|
|
to the extent not otherwise paid or provided, for a period of
12 months following their termination date, any other
amounts or benefits required to be paid or provided or which
they are eligible to receive under any of our other existing
benefit schemes.
|
In addition, for Mr. Boston, to the extent that less than
331/3%
of all stock options granted to him are outstanding and
unexercisable on their termination date, such additional
options, if any, shall immediately accelerate and vest and
become exercisable. Pursuant to an amendment and restatement of
his employment agreement in August 2007, if we terminate
Mr. Bostons employment without cause or
he terminates his employment for good reason in
connection with a change of control, we will calculate the
amounts referred to in the last three bullet points above for a
24-month
period instead of a
12-month
period, will pay the amount in respect of the annual bonus for
that period based on his and our prior performance and not with
respect to future performance and will pay the amount in respect
of his base salary and annual bonus in a lump sum instead of in
accordance with our regular payroll practices. The amendment and
restatement of Mr. Bostons employment agreement also
provides that if severance payments payable by us become subject
to the excise tax on excess parachute payments
imposed by Section 4999 of the Internal Revenue Code
(IRC) or additional tax under Section 409A of
the IRC, we will reimburse him for the amount of such excise tax
(and the income and excise taxes on such reimbursement). We
entered into a similar amendment and restatement of
Mr. Wilkins agreement in August 2007, provided that
the provisions related to the termination of his employment in
connection with a change in control were not effective until
after February 28, 2009.
Acceleration of options upon change of
control. Under Mr. Bostons,
Mr. Wilkins and Dr. McCluskeys employment
agreements, immediately prior to a change of control (as defined
below), all stock options granted to them on or prior to the
date of their respective employment agreements that are
outstanding immediately prior to a change of control shall vest
and become fully exercisable.
Our equity incentive plans provide that, upon a corporate
transaction, all outstanding shares of restricted stock and all
stock units shall vest in full. All outstanding stock options
and stock appreciation rights shall either (i) become
immediately exercisable for a period of fifteen days prior to
the scheduled consummation of the corporate transaction or
(ii) our Board may elect, in its sole discretion, to cancel
any outstanding awards of stock options, restricted stock, stock
units and/or
stock appreciation units and pay to the holder, in the case of
restricted stock or stock units, an amount equal to the per
share corporate transaction consideration or, in the case of
stock options or stock appreciation rights, an amount equal to
the number of shares of stock subject to
29
the stock option or stock appreciation right multiplied by the
difference of the per share corporate transaction consideration
and the exercise price of the stock option or stock appreciation
price.
For this purpose, a corporate transaction is
generally defined as:
|
|
|
|
|
our dissolution or liquidation or a merger, consolidation, or
reorganization between us and one or more other entities in
which we are not the surviving entity;
|
|
|
|
a sale of substantially all of our assets to another person or
entity; or
|
|
|
|
any transaction that results in any person or entity, other than
persons who are stockholders or affiliates immediately prior to
the transaction, owning 50% or more of the combined voting power
of all classes of our stock.
|
Accelerated vesting upon a corporate transaction
will not occur to the extent that provision is made in writing
in connection with the corporate transaction for the assumption
or continuation of the outstanding awards, or for the
substitution of such outstanding awards for similar awards
relating to the stock of the successor entity, or a parent or
subsidiary of the successor entity, with appropriate adjustments
to the number of shares of stock that would be delivered and the
exercise price, grant price or purchase price relating to any
such award. For awards made under our 2007 Omnibus Incentive
Plan, if an award is assumed or substituted in connection with a
corporate transaction and the holder is terminated without cause
within a year following a change in control, the award will
fully vest and may be exercised in full, to the extent
applicable, beginning on the date of such termination and for
the one-year period immediately following such termination or
for such longer period as the compensation committee shall
determine.
Terms defined in employment agreements. For
purposes of Mr. Bostons, Mr. Wilkins and
Dr. McCluskeys employment agreements, the following
definitions apply:
|
|
|
|
|
refusal by the NEO to follow a written order of the Chairman of
our Board or of the Board;
|
|
|
|
the NEOs engagement in conduct materially injurious to us
or our reputation;
|
|
|
|
dishonesty of a material nature that relates to the performance
of the NEOs duties under their employment agreement; the
NEOs conviction for any crime involving moral turpitude or
any felony; and
|
|
|
|
the NEOs continued failure to perform his duties under his
employment agreement (except due to the NEOs incapacity as
a result of physical or mental illness) to the satisfaction of
our Board for a period of at least 30 consecutive days after
written notice is delivered to the NEO specifically identifying
the manner in which the NEO has failed to perform his duties.
|
|
|
|
|
|
Change of Control means:
|
|
|
|
|
|
our dissolution or liquidation, or a merger, consolidation or
reorganization of us with one or more other entities in which we
are not the surviving entity;
|
|
|
|
a sale of substantially all of our assets to another person or
entity; or
|
|
|
|
any transaction (including without limitation a merger or
reorganization in which we are the surviving entity) which
results in any person or entity owning 50% or more of the
combined voting power of all classes of our stock.
|
|
|
|
|
|
the assignment to the NEO of duties inconsistent in any material
respect with the NEOs position as set forth in, or in
accordance with, their employment agreement, excluding an
isolated, insubstantial and inadvertent action that we remedy
promptly after receipt of notice from the NEO;
|
30
|
|
|
|
|
any failure by us to comply with any provisions of the
NEOs employment agreement, excluding an isolated,
insubstantial and inadvertent action that we remedy promptly
after receipt of notice from the NEO;
|
|
|
|
there is a merger, acquisition or other similar affiliation with
another entity and the NEO does not continue in his position, or
any other office he holds at the time of the transaction, of the
most senior resulting entity succeeding to our business; and
|
|
|
|
any failure by us to require any successor or any party that
acquires control of us, whether directly or indirectly, by
purchase, merger, consolidation or otherwise, or all or
substantially all of our business
and/or
assets to assume expressly and agree to perform the NEOs
employment agreement in the same manner and to the same extent
that we would be required to perform it if no succession had
taken place.
|
Provided, however, that none of the foregoing constitute Good
Reason if the executive consents in writing to such event, and
none of the foregoing constitute Good Reason unless we fail to
cure the asserted grounds for Good Reason within 30 days of
receipt of notice from the executive. In order to terminate his
employment for Good Reason, the executive must terminate
employment within 30 days of the end of the cure period if
the breach has not been cured.
31
Payment
and Benefit Estimates
The table below was prepared to reflect the estimated payments
that would have been made pursuant to the agreements and
arrangements described above. The estimated payments were
calculated as though the applicable triggering event occurred,
and the NEOs employment was terminated, or the applicable
change in control occurred, on December 31, 2008, using the
closing price of our common stock on the NASDAQ Global Market of
$37.19 on December 31, 2008. As discussed in the narrative
above, upon termination for cause, by the NEO without good
reason or upon death or disability, the NEO is generally only
entitled to receive amounts he is owed as of the termination
date (e.g., salary, benefits and, in limited cases, any
previously earned, but unpaid, annual incentive compensation).
Assuming a termination date of December 31, 2008, these
amounts are set forth in the tables above, and we have not
included any such amounts below. We have not included these
earned, but unpaid amounts, in the termination events included
in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
Accelerated
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
Vesting
|
|
|
Vesting
|
|
|
Welfare
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
of Stock
|
|
|
of Restricted
|
|
|
Benefits
|
|
|
|
|
|
|
|
|
|
Pay(1)
|
|
|
Options
|
|
|
Stock
|
|
|
Continuation
|
|
|
|
|
|
|
|
|
|
($)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)
|
|
|
Gross-Up
|
|
|
Total ($)
|
|
|
Wallace E. Boston, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination without Cause or by executive for Good Reason
|
|
|
576,000
|
|
|
|
732,305
|
|
|
|
|
|
|
|
12,000
|
|
|
|
|
|
|
|
1,320,305
|
|
Termination without cause or by executive for Good Reason in
connection with a
Change-in-Control(2)
|
|
|
1,152,000
|
|
|
|
3,645,308
|
|
|
|
799,957
|
|
|
|
24,000
|
|
|
|
644,874
|
|
|
|
6,266,139
|
|
Occurrence of a
Change-in-Control(2)
|
|
|
|
|
|
|
3,645,308
|
|
|
|
799,957
|
|
|
|
|
|
|
|
|
|
|
|
4,445,265
|
|
Harry T. Wilkins
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination without Cause or by executive for Good Reason
|
|
|
375,000
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
|
|
|
|
387,000
|
|
Occurrence of a
Change-in-Control(2)
|
|
|
|
|
|
|
3,681,590
|
|
|
|
359,999
|
|
|
|
|
|
|
|
|
|
|
|
4,041,589
|
|
Carol S. Gilbert
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occurrence of a
Change-in-Control(2)
|
|
|
|
|
|
|
612,115
|
|
|
|
29,752
|
|
|
|
|
|
|
|
|
|
|
|
641,867
|
|
Dr. Frank B. McCluskey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination without Cause or by executive for Good Reason
|
|
|
280,800
|
|
|
|
|
|
|
|
|
|
|
|
4,323
|
|
|
|
|
|
|
|
285,123
|
|
Occurrence of a
Change-in-Control(2)
|
|
|
|
|
|
|
2,723,344
|
|
|
|
52,066
|
|
|
|
|
|
|
|
|
|
|
|
2,775,410
|
|
Mark Leuba
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occurrence of a
Change-in-Control(2)
|
|
|
|
|
|
|
905,318
|
|
|
|
29,752
|
|
|
|
|
|
|
|
|
|
|
|
935,070
|
|
|
|
|
(1) |
|
We have assumed for purposes of calculating the aggregate
severance pay that our net income and the NEOs
successors performance would be sufficient for the NEO to
receive the maximum payout. |
|
(2) |
|
Except for stock options for Mr. Boston, Mr. Wilkins
and Dr. McCluskey, which accelerate upon a change in
control pursuant to the terms of their employments, we have
assumed for purposes of calculating the acceleration of equity
awards that a Corporate Transaction as defined in our equity
incentive plans had occurred and that equity awards are not
assumed or substituted. |
Compensation
Committee Interlocks and Insider Participation
No member of our compensation committee has ever been an
executive officer or employee of ours. None of our executive
officers currently serves, or has served during the last
completed fiscal year, on the compensation committee or board of
directors of any other entity that has one or more executive
officers serving as a member of our board of directors or
compensation committee.
32
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
We are asking our stockholders to ratify the audit
committees selection of McGladrey & Pullen, LLP
(McGladrey & Pullen) as our independent
registered public accounting firm for the fiscal year ending
December 31, 2009. Although ratification is not required by
our bylaws or otherwise, the Board is submitting the selection
of McGladrey & Pullen to our stockholders for
ratification as a matter of good corporate practice. If the
selection is not ratified, the audit committee will consider
whether it is appropriate to select another registered public
accounting firm. Even if the selection is ratified, the audit
committee in its discretion may select a different registered
public accounting firm at any time during the year if it
determines that such a change would be in the best interests of
American Public Education and our stockholders.
The Board first approved McGladrey & Pullen as our
independent auditors in October 2007, and McGladrey &
Pullen audited our financial statements for the fiscal years
ended December 31, 2008 and 2007. Representatives of
McGladrey & Pullen are expected to be present at the
meeting. They will be given an opportunity to make a statement
at the meeting if they desire to do so, and they will be
available to respond to appropriate questions.
Principal
Accountant Fees and Services
We regularly review the services and fees of our independent
accountants. These services and fees are also reviewed by the
audit committee on an annual basis. The aggregate fees billed
for the fiscal years ended December 31, 2008 and 2007 for
each of the following categories of services are as follows:
|
|
|
|
|
|
|
|
|
Fee Category
|
|
2008
|
|
|
2007
|
|
|
Audit Fees
|
|
$
|
536,000
|
|
|
$
|
220,000
|
|
Audit-Related Fees
|
|
|
146,245
|
|
|
|
346,000
|
|
Tax Fees
|
|
|
60,532
|
|
|
|
70,000
|
|
All Other Fees
|
|
|
0
|
|
|
|
0
|
|
Total Fees
|
|
$
|
742,777
|
|
|
$
|
636,000
|
|
Audit Fees. Consist of fees billed for
professional services rendered for the audit of our annual
financial statements and services provided in connection with
our securities offerings and registration statements.
Audit-Related Fees. Consist of fees billed for
assurance and related services that are reasonably related to
the performance of the audit or review of our financial
statements and are not reported under Audit Fees.
Includes fees filled for SAS No. 100 and public offering
related services.
Tax Fees. Consist of fees billed for tax
compliance, tax advice and tax planning. Includes fees for tax
return preparation.
All Other Fees. Consist of fees billed for
products and services, other than those described above under
Audit Fees, Audit-Related Fees and Tax Fees.
During the fiscal years ended December 31, 2008 and 2007,
McGladrey & Pullen has provided various services, in
addition to auditing our financial statements. The audit
committee has determined that the provision of such services is
compatible with maintaining McGladrey & Pullens
independence. In 2008 and 2007, all fees paid to
McGladrey & Pullen were pre-approved pursuant to the
policy described below.
Audit
Committees Pre-Approval Policies and Procedures
The audit committee reviews with McGladrey & Pullen
and management the plan and scope of McGladrey &
Pullens proposed annual financial audit and quarterly
reviews, including the procedures to be utilized and
McGladrey & Pullens compensation. The audit
committee also pre-approves all auditing services, internal
control related services and permitted non-audit services
(including the fees and terms thereof) to be performed for us by
McGladrey & Pullen, subject to the de minimus
exception for non-audit services that are approved by the audit
committee prior to the completion of an audit. The audit
committee may delegate pre-
33
approval authority to one or more members of the audit committee
consistent with applicable law and listing standards, provided
that the decisions of such audit committee member or members
must be presented to the full audit committee at its next
scheduled meeting.
Audit
Committee Report
THE FOLLOWING REPORT OF THE AUDIT COMMITTEE DOES NOT CONSTITUTE
SOLICITING MATERIAL AND SHOULD NOT BE DEEMED FILED OR
INCORPORATED BY REFERENCE INTO ANY OTHER FILING BY US UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934,
EXCEPT TO THE EXTENT WE SPECIFICALLY INCORPORATE THIS REPORT.
During 2008, the Audit Committee of the Board of Directors of
American Public Education, Inc. consisted of Mr. Fowler,
who serves as the chairperson, Mr. Everett and
Ms. Halle. The Audit Committee operates under a written
charter adopted by the Board, which is available in the
Corporate Governance Committees section of our
corporate website, which is www.americanpubliceducation.com. The
Audit Committee reviews the charter and proposes necessary
changes to the Board on an annual basis.
During the fiscal year ended December 31, 2008, the Audit
Committee fulfilled its duties and responsibilities generally as
outlined in its charter. The Audit Committee has:
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reviewed and discussed with management American Public
Educations audited financial statements for the fiscal
year ended December 31, 2008;
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discussed with McGladrey & Pullen, LLP
(McGladrey), American Public Educations
independent auditors for fiscal 2008, the matters required to be
discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended, as adopted by
the Public Company Accounting Oversight Board in
Rule 3200T; and
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received the written disclosures and the letter from McGladrey
required by applicable requirements of the Public Company
Accounting Oversight Board regarding McGladreys
communications with the Audit Committee concerning independence,
and has discussed with McGladrey its independence.
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On the basis of the reviews and discussions referenced above,
the Audit Committee recommended to the Board that the audited
financial statements be included in American Public
Educations Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008 for filing with
the Securities and Exchange Commission.
AUDIT
COMMITTEE (March 6, 2009)
F. David
Fowler, Chairperson
J. Christopher Everett
Jean C. Halle
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires our directors, executive officers and 10% stockholders
to file reports of ownership of our equity securities. To our
knowledge, based solely on review of the copies of such reports
furnished to us related to the year ended December 31,
2008, all such reports were made on a timely basis.
BENEFICIAL
OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of
March 20, 2009 (unless otherwise specified), with respect
to the beneficial ownership of our common stock by each person
who is known to own beneficially more than 5% of the outstanding
shares of common stock, each person currently serving as a
director, each
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nominee for director, each NEO (as set forth in the Summary
Compensation Table above), and all directors and executive
officers as a group:
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Shares of Common
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Stock Beneficially
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Name of Beneficial Owner
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Owned(1)
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Percentage of Class
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5% Stockholders:
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FMR, LLC(2)
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1,101,900
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6.1
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%
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Next Century Growth Investors, LLC(3)
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1,111,093
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6.1
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%
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Directors and Named Executive Officers
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Wallace E. Boston, Jr.(4)
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374,827
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2.1
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%
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Phillip A. Clough
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12,233
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*
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J. Christopher Everett(5)
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30,162
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*
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Barbara G. Fast
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*
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F. David Fowler(6)
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27,728
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*
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Jean C. Halle(7)
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27,681
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*
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Timothy J. Landon
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361
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*
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David L. Warnock
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933
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*
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Timothy T. Weglicki(8)
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13,836
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*
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Harry T. Wilkins(9)
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346,796
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1.9
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%
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Carol S. Gilbert(10)
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58,183
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*
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Dr. Frank B. McCluskey(11)
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67,348
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*
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Mark L. Leuba(12)
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21,344
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*
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All of our directors and executive officers as a group
(13 persons)
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997,833
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5.4
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%(13)
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Represents beneficial ownership of less than 1%. |
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(1) |
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Beneficial ownership is determined in accordance with the rules
of the SEC and generally includes voting or investment power
with respect to securities. Shares of common stock subject to
options or warrants currently exercisable or exercisable within
60 days of March 20, 2009 are deemed outstanding for
purposes of computing the percentage ownership of the person
holding such options, but are not deemed outstanding for
purposes of computing the percentage ownership of any other
person. Except where indicated otherwise, and subject to
community property laws where applicable, the persons named in
the table above have sole voting and investment power with
respect to all shares of common stock shown as beneficially
owned by them. |
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(2) |
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Based solely on a Schedule 13G filed by FMR LLC on
February 17, 2009. Based on such Schedule 13G: |
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Fidelity Management & Research Company
(Fidelity), 82 Devonshire Street, Boston,
Massachusetts 02109, a wholly- owned subsidiary of FMR LLC and
an investment adviser registered under Section 203 of the
Investment Advisers Act of 1940, is the beneficial owner of
1,046,900 shares or 5.8% of our common stock as a result of
acting as investment adviser to various investment companies
registered under Section 8 of the Investment Company Act of
1940. Edward C. Johnson 3d and FMR LLC, through its control of
Fidelity, and the funds each has sole power to dispose of the
1,046,900 shares owned by the Funds. Members of the family
of Edward C. Johnson 3d, Chairman of FMR LLC, are the
predominant owners, directly or through trusts, of Series B
voting common shares of FMR LLC, representing 49% of the voting
power of FMR LLC. The Johnson family group and all other
Series B shareholders have entered into a
shareholders voting agreement under which all
Series B voting common shares will be voted in accordance
with the majority vote of Series B voting common shares.
Accordingly, through their ownership of voting common shares and
the execution of the shareholders voting agreement,
members of the Johnson family may be deemed, under the
Investment Company Act of 1940, to form a controlling group with
respect to FMR LLC. |
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(3) |
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Based solely on a Schedule 13G/A filed by Next Century
Growth Investors, LLC on March 18, 2009. Based solely on
such Schedule 13G/A: |
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Next Century Growth Investors, LLC beneficially owns the shares
as a registered investment adviser. The shares of stock are held
in investment advisory accounts of Next Century Growth
Investors, LLC. The Schedule 13G/A is also filed by Thomas
L. Press, who serves as Director, Chairman and Chief Executive
Officer of Next Century Growth Investors, LLC and Donald M.
Longlet, who serves as Director and President of Next Century
Growth Investors, LLC. Mr. Press owns in excess of 25% of
Next Century Growth Investors, LLC and is a controlling person
of Next Century Growth Investors, LLC. |
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(i) Includes 22,814 shares of common stock held
of record by The Boston Family LLC, which is 98% owned by trusts
for the benefit of the Mr. Bostons family members.
Mr. Boston is the managing member of The Boston Family LLC
and has voting and dispositive power over the shares.
Mr. Boston disclaims beneficial ownership of the shares
except to the extent of his pecuniary interest therein.
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(ii) Includes 42,130 shares of common stock issuable
upon exercise of options that are exercisable within
60 days of March 20, 2009.
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(5) |
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Includes 25,328 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
March 20, 2009. |
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(6) |
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Includes 24,328 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
March 20, 2009. |
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(7) |
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Includes 19,250 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
March 20, 2009. |
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(8) |
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Includes 5,192 shares owned by The Timothy T. Weglicki
Irrevocable Trust dated March 11, 1999 (the
Trust), which shares Mr. Weglicki disclaims
beneficial ownership of except to the extent of his pecuniary
interest therein. |
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Includes: |
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(i) 196,326 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
March 20, 2009; and
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(ii) 46,611.5 shares of common stock held of record by
Wilkins Asset Management, Inc., in which company
Mr. Wilkins has an interest. Mr. Wilkins disclaims
beneficial ownership of the shares except to the extent of his
pecuniary interest therein; and
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Includes 17,022 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
March 20, 2009. |
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(11) |
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Includes 64,249 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
March 20, 2009. |
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(12) |
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Includes 3,039 shares of common stock issuable upon
exercise of options that are exercisable within 60 days of
March 20, 2009. |
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(13) |
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The shares of common stock shown as beneficially owned by all
directors and executive officers as a group include
391,672 shares of common stock issuable upon exercise of
options that are exercisable within 60 days of
March 20, 2009. |
36
GENERAL
MATTERS
Availability
of Certain Documents
A copy of our 2008 Annual Report on
Form 10-K
has been mailed concurrently with this Proxy Statement to all
stockholders entitled to notice of and to vote at the Annual
Meeting. We will mail without charge, upon written request, a
copy of our 2008 Annual Report on
Form 10-K
excluding exhibits. Please send a written request to our
Corporate Secretary at:
American Public Education, Inc.
111 W. Congress Street
Charles Town, West Virginia 25414
Attention: Corporate Secretary
These documents are also available in the Financial Information
section of our corporate website, which is located at
www.americanpubliceducation.com, and can be requested through
the Contact Us section of our corporate website.
The charters for our audit, compensation and nominating and
corporate governance committees, as well as our Guidelines and
our Code of Ethics, are in the Committees section of our
corporate website, which is located at
www.americanpubliceducation.com, and are also available in print
without charge by writing to the address above.
Stockholders residing in the same household who hold their stock
through a bank or broker may receive only one set of proxy
materials in accordance with a notice sent earlier by their bank
or broker. This practice will continue unless instructions to
the contrary are received by your bank or broker from one or
more of the stockholders within the household.
If you hold your shares in street name and reside in
a household that received only one copy of the proxy materials,
you can request to receive a separate copy in the future by
following the instructions sent by your bank or broker. If your
household is receiving multiple copies of the proxy materials,
you may request that only a single set of materials be sent by
following the instructions sent by your bank or broker.
Stockholder
Proposals and Nominations
Requirements for Stockholder Proposals to be Considered for
Inclusion in our Proxy Materials. To be
considered for inclusion in next years proxy statement,
stockholder proposals must be received by our Corporate
Secretary at our principal executive offices no later than the
close of business on December 16, 2009.
Requirements for Stockholder Proposals to be Brought Before
an Annual Meeting. Our bylaws provide that, for
stockholder nominations to the Board or other proposals to be
considered at an annual meeting, the stockholder must have given
timely notice thereof in writing to the Corporate Secretary at
American Public Education, Inc., 111. W. Congress Street,
Charles Town, West Virginia 25414, Attn: Corporate Secretary. To
be timely for the 2010 annual meeting, the stockholders
notice must be delivered to or mailed and received by us not
more than 120 days, and not less than 90 days, before
the anniversary date of the preceding annual meeting, except
that if the annual meeting is set for a date that is not within
30 days before or 60 days after such anniversary date,
we must receive the notice not later than the close of business
on the tenth day following the day on which we provide notice or
public disclosure of the date of the meeting. Such notice must
provide the information required by our bylaws with respect to
each matter the stockholder proposes to bring before the 2010
annual meeting.
Other
Matters
As of the date of this Proxy Statement, the Board does not
intend to present any matters other than those described herein
at the Annual Meeting and is unaware of any matters to be
presented by other parties. If other matters are properly
brought before the meeting for action by the stockholders,
proxies returned to us in
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the enclosed form will be voted in accordance with the
recommendation of the Board or, in the absence of such a
recommendation, in accordance with the judgment of the proxy
holder.
Directions
to Annual Meeting
Directions to the 2009 Annual Meeting of Stockholders, to be
held at the Westfields Marriott Washington Dulles, 14750
Conference Center Drive, Chantilly, Virginia 20151 are set forth
below:
From Washington DC/Dulles
IAD: Exit Dulles International Airport Toll Road.
Take Route 28 South, 7 Miles to Westfields Blvd. Bear Right onto
Westfields Blvd, West exit. Turn Right onto Stonecroft Blvd.
Turn Left onto Conference Center Drive. Entrance 1 Block on Left.
From I-66 West (From Washington
D.C.): From I-66 West, take Exit 53B, Route
28 North - Dulles Airport. Drive North on Route 28,
1.5 miles to Westfields Blvd. Bear Right onto Westfields
Blvd, West Exit to first intersection, Stonecroft Blvd. Turn
right onto Stonecroft Blvd. to first traffic light. Turn left
onto Conference Center Dr. Entrance to Westfields is one
block on left.
By Order of the Board of Directors
Wallace E. Boston, Jr.
President and Chief Executive Officer
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AMERICAN PUBLIC EDUCATION, INC.
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 15, 2009
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Wallace E. Boston, Jr. and Phillip A. Clough as proxies, each
with full power of substitution, to represent and vote as designated on the reverse side, all the
shares of Common Stock of American Public Education, Inc. held of record by the undersigned on
March 20, 2009, at the Annual Meeting of Stockholders to be held at 8:00 a.m. located at Westfields
Marriott Washington Dulles, 14750 Conference Center Drive, Chantilly, Virginia 20151, on May 15,
2009, or any adjournment or postponement thereof.
(Continued and to be signed on the reverse side)
ANNUAL MEETING OF STOCKHOLDERS OF
AMERICAN PUBLIC EDUCATION, INC.
May 15, 2009
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
â Please detach along perforated line and mail
in the envelope provided. â
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20930000000000000000 3
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION
OF DIRECTORS AND FOR PROPOSAL 2. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
x
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FOR |
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AGAINST |
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ABSTAIN |
1. Election of
directors: |
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To ratify the appointment of McGladrey & Pullen, LLP
as the independent registered public accounting firm for the Company for the fiscal year ending December 31, 2009. |
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NOMINEES: |
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FOR ALL NOMINEES |
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Wallace E. Boston, Jr. |
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Phillip A. Clough |
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In their discretion, the proxies are authorized
to vote upon such other business as may properly come before the meeting.
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WITHHOLD AUTHORITY FOR ALL NOMINEES |
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J. Christopher Everett Barbara G. Fast |
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F. David Fowler |
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This proxy is solicited on behalf of the Board of Directors of the Company. This proxy, when
properly executed, will be voted in accordance with the instructions given above. If no instructions are given, this
proxy will be voted FOR election of the Directors and FOR proposal 2. |
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FOR ALL EXCEPT (See instructions below) |
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Jean C. Halle Timothy J. Landon |
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David L. Warnock |
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Timothy T. Weglicki |
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INSTRUCTIONS:
To withhold authority to vote for any individual nominee(s), mark FOR ALL
EXCEPT and fill in the circle next to each nominee you wish to withhold,
as shown here: = |
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To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the
registered name(s) on the account may not be submitted via this method. |
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Signature of
Stockholder |
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Date: |
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Signature of Stockholder
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Date: |
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Note: |
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each
holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is
a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign
in partnership name by authorized person. |
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