DEF 14A of Perdoceo Education Corp
Filed Apr 12, 2024 · FY20230000950170-24-044074
What happens if a director nominee does not receive sufficient votes to be elected to the Board of Directors?
What happens if a director nominee does not receive sufficient votes to be elected to the Board of Directors? Under Delaware law, an incumbent director who fails to receive the required vote “holds over,” or continues to serve as a director, until his or her successor is elected and qualified. The Company’s Corporate Governance Guidelines provide that the Board expects a director to tender his or her resignation if he or she fails to receive the required number of votes for re-election and that if an incumbent director fails to receive the required vote for re-election, the Nominating and Governance Committee will act on an expedited basis to determine whether to accept the director’s resignation and will submit such recommendation for prompt consideration by the Board. The Board expects the director whose resignation is under consideration to abstain from participating in any decision regarding that resignation. The Nominating and Governance Committee and the Board may consider any factors they deem relevant in deciding whether to accept a director’s resignation. If the failure of a nominee to be elected at the 2024 Annual Meeting results in a vacancy on the Board, the Board may act to fill that vacancy.
Committees of the Board of Directors
Committees of the Board of Directors The Board of Directors has established a standing Audit Committee, Compensation Committee, Compliance and Risk Committee and Nominating and Governance Committee (each, a “Committee”), each composed entirely of directors who are “independent,” as defined in the Nasdaq listing standards. Each Committee has a written charter that is posted on our website, www.perdoceoed.com, in the Investor Relations section. Each Committee reports to the full Board of Directors regarding carrying out the Committee responsibilities set forth in its charter. In 2023, the Audit Committee held eight meetings, the Compensation Committee held six meetings, the Compliance and Risk Committee held three meetings and the Nominating and Governance Committee held five meetings. The Board determines Committee assignments annually following the election of directors at the Annual Meeting of Stockholders and at other times as circumstances warrant, in each case upon the recommendation of the Nominating and Governance Committee. The current Committee assignments of the independent directors are shown in the table below.
Committees of the Board of Directors
| Director | Audit | Compensation | Compliance and Risk | Nominating and Governance | | Dennis H. Chookaszian | X | | X | X | | Kenda B. Gonzales | X (Chairperson) | | X | | | Patrick W. Gross | X | X | X (Chairperson) | | | William D. Hansen | | X (Chairperson) | | X | | Gregory L. Jackson * | | X | | X | | Leslie T. Thornton | X | | X | X (Chairperson) | | Alan D. Wheat | | X | | X |
Committees of the Board of Directors
*Mr. Jackson was appointed Chairman of the Board on November 15, 2023.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION For 2023, each independent director, other than the Chairman of the Board, received an annual retainer of $80,000 and the independent Lead Director received an additional retainer of $20,000, payable in quarterly installments. The Chairman of the Board receives an annual retainer of $130,000. In addition, each independent director who serves as a Board Committee chairperson also receives an additional annual retainer of $15,000, payable in quarterly installments. An individual meeting fee of $1,500 is paid to the independent directors, including an independent Chairman of the Board with respect to meetings of the full Board, for each Board and Committee meeting commencing with the 18th such Board or 18th such Committee meeting in the 12-month period following the annual meeting of the Company’s stockholders. In addition, under the director compensation program, each independent director received an annual grant of restricted stock units under the 2016 Plan on the date of our 2023 Annual Meeting with a $100,000 target value at grant, and new directors who join the Board during the year receive a pro rata equity award for their partial year of service. For the 2023-2024 director term, each independent director elected at the 2023 Annual Meeting was granted 7,827 restricted stock units, with each unit representing the contingent right to receive one share of Company common stock on June 14, 2024, subject to continued Board service through the 2024 Annual Meeting of Stockholders. The Nominating and Governance Committee has the responsibility to review independent director compensation on a periodic basis and to recommend changes to the Board of Directors. In August 2023, the Nominating and Governance Committee reviewed a 2023 Board Pay Competitiveness Study prepared by its independent compensation consultant, which concluded that the Company's board pay was at the lower end of the competitive range. Based on this study, the Nominating and Governance Committee recommended to the Board of Directors, and the Board of Directors approved, the following changes to independent director compensation: (i) increase the additional annual retainer of each independent director who serves as a Board Committee chairperson for the Compensation, Compliance & Risk, and Nominating & Governance Committees to $20,000; (ii) increase the additional annual retainer of the independent director who serves as the Audit Committee chairperson to $25,000; and (iii) increase the directors' annual equity award target value to $125,000. The annual retainer for Independent Chairman of the Board remained at $130,000, and the additional annual retainer for Lead Director remained at $20,000. All changes were effective as of July 1, 2023, except for the annual equity award, which will be awarded at the 2024 Annual Meeting. The final quarterly payment with respect to a calendar year is contingent on the director having attended at least 75% of the aggregate of the total number of Board meetings (held during the portion of the year for which such individual has been a director) plus the total number of meetings held by all Committees on which such person served (during the portion of the year that the person served on such Committee). In the event the director has not achieved such attendance level, the director will forfeit the entire amount of the final quarterly retainer payment. This forfeiture provision does not apply to (1) Board or Committee meeting fees payable when the Board or Committee holds 18 or more meetings during the calendar year, or (2) equity awards (described below). All directors are reimbursed for their reasonable out-of-pocket expenses incurred in attending Board and Committee meetings and associated with Board or Committee responsibilities, including attendance at one director education program each year. We do not believe the reimbursement of expenses related to attendance at such director education programs to be perquisites as directors are expected to attend such programs, which are integrally and directly related to their service as directors. Todd Nelson is an employee director and therefore does not receive any additional compensation as a member of the Board. The compensation of Mr. Nelson for 2023 is addressed under the headings “Executive Officers and Executive Compensation—Compensation Discussion and Analysis” and “Executive Officers and Executive Compensation—Compensation Tables.” Each director is covered by our directors’ and officers’ insurance policy and also has an indemnification agreement providing indemnification and advancement of expenses to the fullest extent permitted by Delaware law. The total compensation of our independent directors for the year ended December 31, 2023 is shown in the table below.
2023 Director Compensation
2023 Director Compensation
2023 Director Compensation
| Name | Fees Earned in Cash | Stock Awards(1) | Total | | Dennis H. Chookaszian (2) | $80,000 | $94,002 | $174,002 | | Kenda B. Gonzales (3) | $100,000 | $94,002 | $194,002 | | Patrick W. Gross (4) | $97,500 | $94,002 | $191,502 | | William D. Hansen (5) | $97,500 | $94,002 | $191,502 | | Gregory L. Jackson (6) | $110,082 | $94,002 | $204,084 | | Thomas B. Lally (7) | $84,643 | $— | $84,643 | | Leslie T. Thornton (8) | $97,500 | $94,002 | $191,502 | | Alan D. Wheat (9) | $80,000 | $94,002 | $174,002 |
2023 Director Compensation
Stock Awards represent time-based, stock - settled restricted stock units. Amounts were calculated as the aggregate grant date fair value, excluding the effect of estimated forfeitures, and utilizing the provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 718—Compensation—Stock Compensation (“FASB ASC 718”). See Note 14 of the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 for information regarding the assumptions used in the valuation of our equity awards. (2) As of December 31, 2023, Mr. Chookaszian held options to purchase 73,075 shares of Company common stock, 7,827 restricted stock units and 14,619 deferred stock units. The deferred stock units are vested and represent the right to receive one share of the Company’s common stock upon termination of service to the Company. (3) Chairperson of the Audit Committee. As of December 31, 2023, Ms. Gonzales held options to purchase 34,590 shares of Company common stock and 7,827 restricted stock units. (4) Chairperson of the Compliance and Risk Committee. As of December 31, 2023, Mr. Gross held options to purchase 73,075 shares of Company common stock, 7,827 restricted stock units and 14,619 deferred stock units. The deferred stock units are vested and represent the right to receive one share of the Company’s common stock upon termination of service to the Company. (5) Chairperson of the Compensation Committee. As of December 31, 2023, Mr. Hansen held options to purchase 19,179 shares of Company common stock and 7,827 restricted stock units. (6) Chairman of the Board since November 16, 2023. Lead Director from May 25, 2023 until November 15, 2023. As of December 31, 2023, Mr. Jackson held options to purchase 73,075 shares of Company common stock, 7,827 restricted stock units and 14,619 deferred stock units. The deferred stock units are vested and represent the right to receive one share of the Company’s common stock upon termination of service to the Company. (7) On May 25, 2023, Mr. Lally retired from the Board of Directors. (8) Chairperson of the Nominating and Governance Committee. As of December 31, 2023, Ms. Thornton held options to purchase 73,075 shares of Company common stock, 7,827 restricted stock units and 14,619 deferred stock units. The deferred stock units are vested and represent the right to receive one share of the Company’s common stock upon termination of service to the Company. (9) As of December 31, 2023, Mr. Wheat held 7,827 restricted stock units.
2023 Compensation Highlights
2023 Compensation Highlights The above business update provides context for these 2023 compensation highlights: Effective November 15, 2023, our then Chief Executive Officer, Andrew Hurst, departed as President and Chief Executive Officer and as a director of the Company and, effective November 16, 2023, Todd Nelson was appointed as President and Chief Executive Officer of the Company and transitioned from his position of Executive Chairman to fill such offices. In connection with this transition, the Compensation Committee and the Board approved the following compensation arrangements for Mr. Nelson: (i) an increase in base salary to $800,000, (ii) an annual incentive target value of 125% of base salary and an annual long-term incentive target value of 300% of base salary, each of which were unchanged from the compensation arrangements for Mr. Nelson while he served as Executive Chairman, (iii) accelerated vesting of unvested long-term incentive equity awards granted to Mr. Nelson after November 16, 2023 upon certain qualifying terminations of employment and (iv) the right to receive the cash severance Mr. Nelson is currently eligible to receive under Mr. Nelson’s employment letter agreement entered into on July 30, 2015 when he joined the Company (as amended and restated on January 19, 2022 and November 16, 2023, the “Nelson Letter Agreement”) upon a voluntary termination of employment with advance written notice of a minimum of six (6) months to the Company (in addition to other certain qualifying terminations of employment), in each case for the items described in clauses (iii) and (iv), as more fully described below in “Compensation Tables—Potential Payments Upon a Termination or Change in Control— Severance Arrangements Pursuant to Nelson Letter Agreement”. • The financial performance measure used for 2023 annual and long-term incentive changed from adjusted earnings before income, taxes, depreciation and amortization ("EBITDA") to adjusted operating income ("AOI"). This change had no substantive or economic impact but will make the documentation and nomenclature more consistent with our external reporting measure and internal discussion of the operating plan. • The Compensation Committee approved revised compensation arrangements for certain executive officers to better align with competitive market levels, and in the case of Mr. Hurst, due to his promotion to CEO, including the following base salaries: $650,000 (18.2% increase) for Mr. Hurst, $386,750 (10.5% increase) for Ms. Baskel, $489,720 (5.0% increase) for Mr. Ghia, $388,773 (5.0% increase) for Mr. Kline and $388,500 (5.0% increase) for Mr. Jansen. ▪ In addition, effective for 2023, Mr. Hurst’s AIP (as defined below) target value was increased from 85% to 100% of base salary, and Mr. Ghia’s AIP target value was increased from 80% to 90% of base salary. • The design of our 2023 compensation programs were otherwise consistent with 2022. • Our annual incentive plan ("AIP") paid out at 200% of target award opportunities for our named executive officers based on overachievement of our financial objectives. • The performance-based restricted stock units awarded in 2021 vested in March 2024 at the 100% target level because the defined adjusted EBITDA performance goal for 2021-2022 and the adjusted EBITDA performance goal for 2023 were both achieved.
Compensation Philosophy and Pay for Performance Objective
| 2023 Compensation Component | Base Salary | Annual Incentive (AIP) | Long-Term Incentive | | | Type | Cash | Cash | Performance-Based Restricted Stock Units – 50% | Restricted Stock Units – 50% | | Performance Link and/or Key Feature | Fixed, based on peer companies and third-party survey data | 80% based on company- wide adjusted operating income financial performance , 20% based on individual performance, with a 200% payout cap | Settle in stock and cliff vest after three years with the level of vesting between 0% and 200% of target, based on a two-year defined adjusted operating income performance measure; further, the level of vesting will be reduced by 50% if the adjusted operating income performance for the third year does not satisfy a minimum threshold level of performance which was established to reduce the level of vesting in the event of a fundamental decline in Company performance in the third year | Value depends on future stock price Vests annually in four equal installments | | | Provides a competitive level of fixed compensation needed to attract and retain talented executives; designed to provide a level of financial security | Aligns executives in achieving short-term business objectives through Company financial performance results and individual performance goals | Aligns executives’ interests with long-term interests of our stockholders and to build an ownership culture through supporting organizational objectives and goals | Provides for leadership continuity and encourages long-term commitment to the Company |
2023 Target Total Direct Compensation Mix
2023 Target Total Direct Compensation Mix The long-term incentive mix for our CEO and other named executive officers for 2023 remained at 50% time-based stock settled restricted stock units and 50% performance-based stock settled restricted stock units, consistent with market practices.
Compensation Best Practices
| | | | Double trigger change-in-control provisions for both cash and equity awards. | No excessive change in control severance. | | Stock options are priced at date of grant. | No reload, re-pricing or options issued at discount. Options issued will not be re-priced, replaced or migrated through cancellation or by lowering the option price of a previously granted award. | | Required minimum vesting periods for all awards payable in shares with limited exceptions. | No liberal share recycling on appreciation or full-value awards. | | Stock ownership guidelines, which include retention ratios for all executive officers and directors. | No tax gross-ups, except in the case of tax reimbursement related to certain relocation expenses. | | Ability to claw back certain annual and long-term performance-based incentive compensation from executive officers in compliance with SEC requirements. | Limited benefits or perquisites for executive officers. | | Compensation Committee uses an outside independent compensation consulting firm that does not consult on any other matters for the Company. | No hedging or pledging of Company stock by executive officers or directors. | | Annual review of peer group market data by the Compensation Committee when making executive compensation decisions. | |
III. Competitive Positioning
III. Competitive Positioning For 2023, compensation determinations were made primarily against a comparison group of 17 publicly traded companies in private sector higher education services, other diversified consumer services, professional services, internet and direct marketing retail and software services industries as selected by Pay Governance, the Company’s independent compensation consultant engaged by the Compensation Committee, based on input from management and the Compensation Committee and as approved by the Compensation Committee. The comparison group selection criteria focus on companies that have similar business characteristics, including in terms of sourcing students, student acquisition and retention, online marketing and technology-enabled service business models. The selection criteria also focus on company size, generally utilizing companies with annual revenues between $263 million and $3.2 billion (approximately 1/3 to 5x the Company’s latest four quarters of revenue) that are within a reasonable size range in various measures, such as revenue, total assets, total equity and total employees. The companies in the 2022 comparison group used to assist the Compensation Committee with setting 2023 target compensation include those listed below:
III. Competitive Positioning
| 17-Company Comparison Group | | | | | 2U, Inc. | Grand Canyon Education, Inc. | Korn Ferry | Stride, Inc.(f/k/a K12, Inc.) | | Adtalem Global Education Inc. | Heidrick & Struggles International, Inc. | Lincoln Educational Services Corporation | Universal Technical Institute, Inc. | | American Public Education, Inc. | Huron Consulting Group, Inc. | Skillsoft Corp. | Weight Watchers, International | | Chegg, Inc. | Kforce, Inc. | Strategic Education, Inc. | Zovio Inc.* | | Graham Holding Company | | | |
III. Competitive Positioning
* Zovio Inc. has since been removed from the Company's peer group due to its liquidation and dissolution. Given the strong correlation between revenue and executive pay within the comparison group, Pay Governance reconciles (i.e. “size-adjusts”) the competitive market by using the median pay of the comparison group, where Perdoceo is positioned near the median of the group in terms of company size (as measured by a combination of revenues, market cap, and EBITDA), blended with median third-party survey data, regressed based on Perdoceo’s corporate and segment revenue scopes. Third-party survey data used reflects size appropriate comparators from Radford’s 2022 Global Compensation database and Willis Towers Watson’s 2022 Executive Compensation database. The median comparison group data, if meaningful for a particular executive officer, and the size-adjusted third-party survey data are used to set a targeted range for our pay elements, which is referred to as the market median range. These targeted ranges are within 10% of median for base salaries, 15% of median for annual cash incentive targets, and 20% of median for both long-term incentive targets and for target total direct compensation. In making compensation decisions, the Compensation Committee reviews these targeted ranges; however, individual executive officers’ target total direct compensation, or elements thereof, may vary above or below the market median range due to an executive’s skills, experience in their current role, tenure with the Company and individual performance. Based on the comparison group and third-party survey data described above, target total direct compensation for 2023 for our named executive officers, excluding the CEO position, is generally competitive with market consensus compensation levels, with some variation by individual compensation component. Pay Governance reported that the target total compensation mix for our executive officers, including the CEO, was generally representative of competitive practices. The Company’s practice of using a portfolio of grant types is consistent with the practice at the majority of the comparison companies.
Annual Incentive Plan
Annual Incentive Plan The Compensation Committee uses an annual performance-based incentive award payable in cash to align the compensation of senior management with the Company’s short-term business objectives and financial performance. Target award size for each named executive officer is reviewed for competitiveness versus executives in similar positions and with similar responsibilities as the organizations in the Company’s comparison group. Employees subject to the Department incentive compensation regulations are not eligible to participate in this program. Based on their strategic and policy-making responsibilities, none of the Company’s named executive officers are subject to these regulations. Target Awards. The Compensation Committee reviews the annual incentive target value (expressed as a percent of base salary) established for our executive officers in connection with its annual compensation review in the first quarter of each calendar year. The annual incentive target value established for each of the named executive officers, as well as the 2023 AIP payout opportunity for achievement of the 2023 target operating plan performance, is set forth in the chart below. Actual 2023 AIP payouts are discussed below under the heading “2023 Performance Results and Actual Payouts.”
Annual Incentive Plan
| Named Executive Officer | 2022 AIP Target Value as a Percent of Base Salary | 2023 AIP Target Value as a Percent of Base Salary | 2023 AIP Target $ Value (000’s)* | Commentary | | Todd S. Nelson | 125% | 125% | $875.0 | Mr. Nelson’s AIP Target was within the market median range and was left unchanged. | | Andrew H. Hurst | 85% | 100% | $650.0 | Mr. Hurst was appointed President and Chief Executive Officer on January 20, 2022, and served as such until November 15, 2023. The increase for 2023 placed Mr. Hurst’s AIP Target within the market median range for his new role. | | Ashish R. Ghia | 80% | 90% | $440.7 | The increase for 2023 placed Mr. Ghia's AIP Target within the market median range for his role. | | Elise L. Baskel | 65% | 65% | $251.4 | Ms. Baskel's AIP Target was within the market median range and was left unchanged. | | Greg E. Jansen | 65% | 65% | $252.5 | Mr. Jansen's AIP Target was within the market median range and was left unchanged. | | John R. Kline | 65% | 65% | $252.7 | Mr. Kline’s AIP Target was within the market median range and was left unchanged. |
Annual Incentive Plan
* AIP Target $ Value is calculated using base salary times AIP percentage. Non-Equity incentive Plan Compensation in the Summary Compensation Table is calculated using an employee's eligible earnings times AIP percentage times the AIP payout percentage, as described below. Performance Measures and Payout Scales. The financial performance measure used for 2023 AIP changed from adjusted EBITDA to AOI. This change had no substantive or economic impact but will make the documentation and nomenclature more consistent with our external reporting measure and internal discussion of the operating plan. Therefore, the 2023 AIP maintained a single financial performance component, based on AOI, weighted at 80%, and an individual goals performance component, weighted at 20%, for the most senior level participants. Financial Performance—Adjusted Operating Income (80% Weighting): The financial performance component was based solely on a company-wide AOI performance measure. The Company determined that an AOI performance measure was a good indicator of the Company’s operating performance and focused participants on supporting and further enhancing student retention and academic outcomes, operating and achieving results in a compliant and ethical manner and maintaining academic quality and integrity. Participants are able to understand the impact they have on operating performance, which impacts their AIP payout. The performance target was based in principle on our operating plan. Our operating plan, and the AIP performance target, is the result of an extensive process which takes into consideration factors such as the industry and competitive environment, the regulatory landscape and the Company’s current operating margins and expectations regarding key performance indicators and metrics. The operating plan is designed to support the long-term success of the Company and achieve responsible growth. It therefore contemplates academic, student technology and other investments in our universities and is designed to be realistic yet challenging. Year over year comparability of performance targets and prior year results may be impacted by the inclusion or exclusion of factors such as the incorporation of expenses not included in the prior year results. Individual Goals (20% Weighting): The individual goals performance component consisted of individual performance goals related to the key strategic objectives for the applicable function/education group and were based on the individual’s job responsibilities. Goals were developed for each participant in partnership with the participant’s manager, which is the Compensation Committee for the President and Chief Executive Officer, and is generally the President and Chief Executive Officer for the other named executive officers. The individual performance goals for our named executive officers are often qualitative goals which enhance focus on important strategic, departmental or corporate culture initiatives. Although these goals require a subjective performance determination, they are used to address a broader range of topics than those that can be quantitatively measured, and they help balance the quantitative financial performance goals applicable to the Company’s performance-based long-term incentive awards and the remaining 80% portion of the annual cash incentive. The payout opportunity for the individual goals performance component also varies based on the level of achievement of the AOI performance measure to further support the achievement of the Company’s business objectives. Payout for performance above and below target is clearly defined. The following chart contains more information about the payout scale for the 2023 AIP.
Annual Incentive Plan
| Actual 2023 Performance Above/Below Targeted AIP AOI | Resulting Payout as Percent of Target Value | | | | Financial Performance Component | Individual Goals Performance Component | | More than $28 million below target | 30% | 30% | | $18 million below target | 60% | 60% | | TARGET ($163.0 Million) | 100% | 100% | | $11 million above target | 165% | 165% | | $15 million above target | 185% | 185% | | $20 million above target | 200% | 200% |
Annual Incentive Plan
General Calculation Methodology. The annual cash incentive payable to any eligible participant is calculated generally by multiplying (1) eligible earnings by (2) the specified target award percent of the individual’s eligible earnings, by (3) the extent to which the applicable performance measures were met (i.e., the payout percent based on the pre-established payout scale), with the level of achievement of the AOI performance component also impacting the individual performance factor based on achievement of individual goals. In no event, however, may the annual cash incentive payable to any eligible participant exceed 200% of the participant’s target value. Eligible earnings are based on base salary and exclude other payments made during the performance period such as allowances, incentive payments, bonuses, equity grants, reimbursements and similar items. 2023 Performance Results and Actual Payouts. In the first quarter of 2024, the Compensation Committee reviewed and certified the Company’s operating results and performance against the established AOI performance measure target and determined payments for each performance component as set forth in the chart below. 2023 actual AOI results for AIP reflect better than expected improvement in student retention and engagement. The Company also experienced operating efficiencies within marketing and other processes partially due to short term operational changes at AIU. The amount reported below for 2023 actual AOI performance varies from reported financial results due to plan design.
Annual Incentive Plan
| Performance Measure | 2023 Targeted AIP | 2023 Actual AIP | AIP Payout Percent | | Adjusted Operating Income (as calculated for AIP)* | $163.0 million | $199.2 million | 200% |
Annual Incentive Plan
* AOI for purposes of the 2023 AIP (“AIP AOI”) is defined as consolidated operating income of the total Company (and its affiliates) for the year ended December 31, 2023, determined before (a) depreciation, amortization and asset impairments, and (b) legal fee expense associated with (i) responses to the Department relating to borrower defense to repayment applications from former students, and (ii) acquisition efforts.
Annual Incentive Plan
| Named Executive Officer | 2023 AIP Target $ Value (000’s)(1) | Financial Performance 80% Weighting Payout Percent | Individual Performance 20% Weighting Payout Percent* | 2023 AIP Payout (000’s) | Individual Performance Goals | | Todd S. Nelson | $875.0 | 200% | 200% | $1,781.3 | • Work with the Board and the Company’s Chief Executive Officer to review and update Perdoceo's strategy, including a presentation at the October 2023 Board meeting providing updates regarding the vision of what Perdoceo as a company will be by 2025 • Identify with the CEO opportunities for value-enhancing strategic initiatives including acquisitions, joint ventures, and strategically important relationships • Work with the CEO on critical issues related to government relationships and strategic alliances | | Andrew H. Hurst | $650.0 | ---% (2) | ---% (2) | $--- (2) | • Continue to build on and execute Perdoceo's 3 to 5 year strategic plan • Update and present a 3 to 5 year real estate plan for Perdoceo and its institutions • Update and present detailed succession plan for all Executive Committee members | | Ashish R. Ghia | $440.7 | 200% | 200% | $874.5 | • Assist CEO and the Board with development and execution of the Company’s long-term strategic plan • Support a diverse approach to capital allocation that enhances stockholder value • Lead the corporate accounting and finance departments to operate in a compliant and ethical manner • Promote a culture of coaching and leadership accountability | | Elise L. Baskel | $251.4 | 200% | 200% | $494.8 | • Support student learning and satisfaction • Support the continued growth of CTU, including its recent acquisitions • Support the strategic planning process of CTU • Operate in a compliant and ethical manner • Promote a culture of coaching and leadership accountability | | Greg E. Jansen | $252.5 | 200% | 200% | $501.0 | • Support acquisitions and support integration efforts effectively • Manage Attorney General matters effectively • Provide cost effective legal and regulatory support • Promote a culture of coaching and leadership accountability | | John R. Kline | $252.7 | 200% | 200% | $501.4 | • Support student retention and academic outcomes • Ensure delivery of outcomes that support AIU's mission statement • Support operating efficiencies in executing on our strategic goals • Operate and achieve results in a compliant and ethical manner • Promote a culture of coaching and leadership accountability |
Annual Incentive Plan
(1) AIP Target $ Value is calculated using base salary times AIP percentage. Non-Equity incentive Plan Compensation in the Summary Compensation Table is calculated using an employee's eligible earnings times AIP percentage times the AIP payout percentage, as described below. (2) Mr. Hurst was no longer an employee of the Company on March 1, 2024, and was therefore ineligible to receive this payout. * When calculating the 20% portion of the AIP payout relating to the individual goals performance component, the individual performance payout percent is a factor applied after the financial performance payout percent subject to a 200% payout cap and is based on the named executive officer’s performance against their individual performance goals for 2023. Based on management’s recommendation, the Compensation Committee determined that each of the named executive officers achieved their pre-determined individual objectives and therefore each has a 200% individual performance payout percentage applied.
Long-Term Incentive Compensation Awards
Long-Term Incentive Compensation Awards The Compensation Committee uses long-term incentive ("LTI") awards to align executives’ interests with the long-term interests of our stockholders and to build an ownership culture among our senior management, including the named executive officers, based on its belief that stock ownership encourages senior management to achieve long-term Company business objectives. The Compensation Committee generally grants long-term incentive awards annually to eligible employees, including our named executive officers, during the first quarter of each calendar year. New hire grants for executive officers and other leadership roles may be made in connection with offers of employment. The 2016 Plan permits the grant of stock options, stock appreciation rights, restricted shares, restricted stock units, performance shares, performance units and other awards. The 2016 Plan requires a minimum vesting period of one year for all awards payable in shares, subject to certain exceptions. No dividend equivalents accrue or are paid on stock options. Prior to the third quarter of 2023, the Board had neither declared nor paid dividends, and no dividends had been paid on or accrued for restricted stock or unit awards. Beginning in the third quarter of 2023, the Board began declaring and paying quarterly dividends, on the Company's outstanding common stock, and these dividends also accrue in the form of dividend equivalents for unvested time-based restricted stock units and unvested performance-based restricted stock units, each of which are settled in stock, although no payments were made in 2023 on the accrued dividends for unvested restricted stock units. The Compensation Committee’s guidelines for equity awards specify procedures and timing of granting equity awards relative to publicly available information about the Company, establish the exercise price of stock option awards at the grant date closing price of our common stock as reported on Nasdaq, and, by delegation of authority, allow our President and Chief Executive Officer to make stock grants to new and existing employees (except those who are executive officers under Section 16 of the Exchange Act). 2023 Annual Long-term Incentive Awards. In March 2023, the Compensation Committee awarded annual long-term incentive awards to our named executive officers and other eligible employees under the 2016 Plan. The 2023 awards to the named executive officers were made in accordance with a target value split between time-based restricted stock units settled in stock weighted 50%, and performance-based restricted stock units settled in stock weighted 50%. In setting the target dollar value of these annual awards, the Compensation Committee considered long-term award data provided by Pay Governance, the Compensation Committee’s philosophy of providing a competitive pay package as compared to our comparison group, the FASB ASC 718 expense to the Company of the awards, the grant date fair value of the awards, and other matters discussed in Section VIII below. The Compensation Committee’s goal is emphasizing the balance of stockholder interests with the need to retain and attract leadership talent and ensure continuity of Company leadership in order to support the Company’s objectives. The following table summarizes the annual long-term incentive awards granted to our named executive officers in 2023.
Long-Term Incentive Compensation Awards
| Named Executive Officer | 2022 Target Value as a Percent of Base Salary | 2023 Target Value as a Percent of Base Salary | 2023 LTI $ Target Value (000’s) | 2023 Time- Based Restricted Stock Unit Grants (# of RSUs) | 2023 Performance- Based Restricted Stock Unit Grants (# of RSUs) | | Todd S. Nelson | 300% | 300% | $2,100.0 | 73,140 | 73,140 | | Andrew H. Hurst | 200% | 200% | $1,300.0 | 45,276 | 45,278 | | Ashish R. Ghia | 140% | 160% | $783.6 | 27,292 | 27,290 | | Elise L. Baskel | 125% | 125% | $483.4 | 16,836 | 16,838 | | Greg E. Jansen | 125% | 125% | $485.6 | 16,912 | 16,914 | | John R. Kline | 125% | 125% | $486.0 | 16,924 | 16,926 |
Long-Term Incentive Compensation Awards
The annual 2023 time-based restricted stock units granted to the named executive officers are settled in stock and vest in four equal annual installments provided that the award recipient remains our employee on the applicable date of vesting. The number of restricted stock units awarded is generally derived first by multiplying the grantee’s base salary by the long-term incentive target value percentage from the table above times the 50% weight noted above to determine the target grant value. This value is then divided by the 30-trading day average closing stock price as of one calendar week prior to the relevant grant date to determine the number of restricted stock units. The number of restricted stock units was further adjusted so that fractional units are not vested. Consistent with investors’ desire for significant performance-based compensation, 50% of the target dollar value of annual long-term incentive awards are subject to a performance condition utilizing performance-based restricted stock units settled in stock that are subject to defined AOI performance goals over a three-year period. The performance-based restricted stock units cliff vest after three years only if a two-year defined AOI performance measure is achieved and the AOI performance for the third year satisfies a minimum threshold level of performance which was established to reduce the level of vesting in the event of a fundamental decline in Company performance in the third year; ultimately, the level of vesting will be between 0% and 200% depending on above conditions. An AOI performance measure is a good indicator of the Company’s operating performance and focuses participants on achieving long-term sustainable and responsible growth while balancing the desire of stockholders for performance-based compensation while providing motivation to participants. The number of performance-based restricted stock units awarded is derived in the same manner as described in the preceding paragraph for time-based restricted stock units, but reflecting the 50% weight noted above for performance-based restricted stock units. The 2023 long-term incentive awards to named executive officers generally included one or two-year, post-termination restrictive covenants covering non-solicitation, non-disclosure and non-competition. Additional 2023 Cash Awards to Certain Named Executive Officers. At the time of making the annual long-term incentive awards in March 2023, the Compensation Committee also awarded certain additional and retention bonus awards to certain named executive officers. Mr. Kline was awarded an additional bonus award in the amount of $240,670, payable in cash in two equal installments on each of March 1, 2024 and March 1, 2025, and Ms. Baskel was awarded an additional bonus award in the amount of $227,500, payable in cash in two equal installments on each of June 30, 2023 and March 1, 2024, in each case subject to each executive’s then-employment on the applicable vesting date. These awards were made in recognition of Mr. Kline’s and Ms. Baskel’s contributions and as a retention tool given their critical role within the organization. Mr. Jansen was awarded a performance bonus of $60,000, payable in cash on June 30, 2023, subject to Mr. Jansen’s then-employment on the vesting date, in recognition for his efforts in overseeing recent acquisitions and managing the Company’s response to critical regulatory matters.
Outstanding Performance-Based Awards
Outstanding Performance-Based Awards 2021 Performance-Based Restricted Stock Units. Performance-based restricted stock units were granted in March 2021. These performance-based restricted stock units cliff vested after three years based on achievement of a two-year defined adjusted EBITDA performance measure. Further, the level of vesting was 50% or 100% depending on whether adjusted EBITDA performance for the third year satisfied a minimum threshold level of performance which was established to reduce the level of vesting in the event of a fundamental decline in Company performance in the third year. Targeted LTI EBITDA (as defined below) for 2021-22 and 2023 were established at the time the awards were made in March 2021. The Compensation Committee reviewed and certified the Company’s operating results and performance against the established adjusted EBITDA performance targets and accordingly determined that the restricted stock units would vest on March 14, 2023 at the 100% level and not be forfeited. The chart below sets forth the targeted and actual LTI EBITDA applicable to the performance-based restricted stock units granted in March 2021. The amounts reported below for actual LTI EBITDA performance vary from reported financial results due to plan design.
Outstanding Performance-Based Awards
| Performance Measure | Targeted 2021- 2022 LTI EBITDA | 2021-2022 Actual | Targeted 2023 LTI EBITDA | 2023 Actual | | LTI EBITDA* | $300.0 | $344.1 | $87.0 | $193.3 | | | million | million | million | million |
Outstanding Performance-Based Awards
| Named Executive Officer | Vested on March 14, 2024 based on 2021-2023 performance (# of RSUs) | | Todd S. Nelson | 136,082 | | Andrew H. Hurst | —(1) | | Ashish R. Ghia | 29,730 | | Elise L. Baskel | 5,360 | | Greg E. Jansen | 7,414 | | John R. Kline | 25,018 |
VII. Other Compensation and Benefits
VII. Other Compensation and Benefits Executive officers are entitled to the same employee benefits available to all full-time employees (subject to the satisfaction of minimum service and other eligibility requirements). Such benefits include health and welfare benefits, vacation and other time off, and our 401(k) plan, including a Company matching contribution. Certain executive officers, including the named executive officers, also receive additional benefits and perquisites, including an executive severance plan for those executive officers designated by the Compensation Committee to participate, which is described below in “Compensation Tables—Potential Payments Upon a Termination or Change in Control—Executive Severance Plan;” an executive relocation plan; coverage under our directors’ and officers’ insurance policy; and indemnification agreements providing indemnification of, and advancing of expenses to, our named executive officers and certain other designated employees to the fullest extent permitted by Delaware law. When the Compensation Committee reviews our executive compensation programs to ensure a competitive position against our comparison group, it generally does not compare and review benefits and perquisites relative to the comparison group, as it considers these benefits and perquisites to be relatively immaterial when compared to the other components of our executive compensation program, although essential for a competitive compensation package needed to attract and retain talented executives.
2023 Summary Compensation Table
2023 Summary Compensation Table The following table shows compensation of our principal executive officers and our principal financial officer as of December 31, 2023 and the three other most highly compensated executive officers who were serving as our executive officers as of December 31, 2023. These officers are our 2023 named executive officers. Information regarding amounts in certain columns follows the table.
2023 Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($)(3)(4) | Stock Awards ($)(5) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | | Todd S. Nelson | 2023 | $712,500 | | $2,004,036 | $1,781,250 | $6,600 | $4,504,386 | | President & Chief Executive | 2022 | $703,712 | | $2,043,087 | $1,759,280 | $6,100 | $4,512,179 | | Officer (1) | 2021 | $770,000 | | $2,297,832 | $1,925,000 | $5,800 | $4,998,632 | | Andrew H. Hurst | 2023 | $587,083 | | $1,240,590 | $—(6) | $2,258,442(7) | $4,086,115 | | Former President & Chief | 2022 | $541,280 | | $1,070,169 | $920,176 | $6,100 | $2,537,725 | | Executive Officer (2) | 2021 | $385,560 | | $467,079 | $501,228 | $5,800 | $1,359,667 | | Ashish R. Ghia | 2023 | $485,833 | $176,000 | $747,773 | $874,500 | $6,600 | $2,290,706 | | Senior Vice President, Chief | 2022 | $462,000 | | $635,260 | $739,200 | $6,100 | $1,842,560 | | Financial Officer & Treasurer | 2021 | $433,333 | | $537,455 | $693,333 | $5,800 | $1,669,921 | | John R. Kline | 2023 | $385,688 | $77,755 | $463,745 | $501,394 | $6,600 | $1,435,182 | | Senior Vice President—American | 2022 | $370,260 | | $450,295 | $481,338 | $6,100 | $1,307,993 | | InterContinental University System | 2021 | $370,260 | | $449,609 | $481,338 | $5,800 | $1,307,007 | | Elise L. Baskel | 2023 | $380,625 | $191,100 | $461,334 | $494,812 | $6,600 | $1,534,471 | | Senior Vice President – Colorado | 2022 | $346,774 | | $425,644 | $450,806 | $6,100 | $1,229,324 | | Technical University | | | | | | | | | Greg E. Jansen | 2023 | $385,417 | $257,950 | $463,416 | $501,042 | $6,600 | $1,614,425 | | Senior Vice President, General | 2022 | $359,583 | | $449,962 | $467,458 | $6,100 | $1,283,103 | | Counsel & Corporate Secretary | | | | | | | |
2023 Summary Compensation Table
(1) Mr. Nelson served as Executive Chairman of the Board of Director through November 15, 2023, at which time he was appointed President and Chief Executive Officer, effective November 16, 2023. (2) Mr. Hurst served as President and Chief Executive Officer through November 15, 2023. (3) For Mr. Ghia, the amount in this column includes 50% of a $352,000 retention bonus award granted on March 8, 2022, which vested and paid 50% on March 14, 2023, and will vest 50% on March 14, 2024. For Ms. Baskel, the amount in this column includes 50% of a $227,500 retention bonus award granted on March 7, 2023, which vested and paid 50% on June 30, 2023, and will vest 50% on March 1, 2024. For Mr. Jansen, the amount in this column includes 50% of a $240,500 retention bonus award granted on March 8, 2022, which vested and paid 50% on March 14, 2023, and will vest 50% on March 14, 2024, plus a performance bonus award granted on March 7, 2023 in the amount of $60,000, which was vested and paid on June 30, 2023. (4) In December 2023, the Company announced a broad based one-time cash payment to all eligible employees to promote employee retention, which included Mr. Kline, Ms. Baskel and Mr. Jansen. All eligible employees received a one-time payment on December 15, 2023. Mr. Kline received $77,755, Ms. Baskel received $77,350 and Mr. Jansen received $77,700. The Chief Executive Officer and Chief Financial Officer did not participate in this one-time cash payment. The amounts in this column show the aggregate grant date fair value of the time-based restricted stock unit awards and performance-based restricted stock unit awards granted to our named executive officers, in each case, which has been computed in accordance with FASB ASC 718 and excludes the effect of actual or estimated forfeitures. See Note 14 of the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 for more information regarding the assumptions used in the valuation of equity-based awards. The amounts do not reflect the value actually realized or that ultimately may be realized by our named executive officers. The grant date fair value of the performance-based restricted stock unit awards granted in 2023, assuming achievement of the maximum performance level of 200%, would have been: Mr. Nelson, $2,004,036; Mr. Ghia, $747,746; Mr. Kline, $463,772; Ms. Baskel, $461,361 and Mr. Jansen, $463,444. Because Mr. Hurst will not be employed on March 14, 2026, as required under the applicable award agreement, he will be ineligible to receive the performance-based restricted stock unit award granted to him on March 7, 2023. Mr. Hurst did not receive 2023 AIP, as he was no longer an employee of the Company on March 1, 2024, as required under the 2023 AIP. For Mr. Hurst, the amount shown in this column includes the Company’s matching 401(k) plan contribution for 2023 in the amount of $6,600, the lump-sum separation payment of $2,250,000 made pursuant to the separation agreement and general release the Company entered into with Mr. Hurst (the “Hurst Separation Agreement”) on November 15, 2023 (the “Hurst Separation Date”) and $1,842 for COBRA reimbursements made in 2023, also made pursuant to the Hurst Separation Agreement. Stock Awards. Awards included in the Stock Awards column that are subject to time-based vesting conditions are the time-based restricted stock units awarded in 2021, 2022 and 2023, which generally vest in four equal annual installments provided that the award recipient remains our employee on the applicable date of vesting, and the performance-based vesting conditions are the performance-based restricted stock unit awards awarded in 2021, 2022 and 2023. The grant date fair value of the performance-based restricted stock unit awards is based upon the probable outcome of the performance conditions as determined at the date of grant and, for all such awards included, that grant date fair value is based upon achieving the target level of performance. These performance-based restricted stock unit awards vest based on achievement of a two-year performance measure with the level of vesting (50% through 200%) determined based on a year three performance measure. The probable outcome of the performance conditions for these performance-based restricted stock unit awards as determined at the date of grant was that the performance conditions would be achieved. See “Compensation Discussion and Analysis—IV. 2023 Compensation Decisions—Long-Term Incentive Compensation Awards” for more information about the 2023 time-based vesting restricted stock unit awards and performance-based restricted stock unit awards. . Non-Equity Incentive Plan Compensation. The amounts in this column show the cash awards granted to our named executive officers in 2023 under the 2023 AIP and paid to the named executive officers in the first quarter of 2024. See “Compensation Discussion and Analysis—IV. 2023 Compensation Decisions—Annual Incentive Award Program” for more information regarding these amounts. All Other Compensation. The amounts in this column show the Company’s matching 401(k) plan contributions for 2023. Information regarding non-discriminatory group welfare benefit plans is excluded from the Summary Compensation Table as permitted by Item 402(a)(6)(ii) of Regulation S-K of the Exchange Act.
Grants of Plan-Based Awards in 2023
Grants of Plan-Based Awards in 2023 The following table provides information concerning the awards made to our named executive officers during 2023. Information regarding amounts in certain columns follows the table. All awards were made under the 2016 Plan.
Grants of Plan-Based Awards in 2023
| | Type of | Grant | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards; Number of Shares of Stock | Grant Date Fair Value of Stock and Option | | Name | Award | Date | Threshold ($) | Target ($) | Maximum ($) | Threshold ($) | Target ($) | Maximum ($) | or Units | Awards | | Todd S. Nelson | AIP | N/A | $142,500 | $890,625 | $1,781,250 | | | | | | | | RSU | 03/07/23 | | | | | | | 73,140 | $1,002,018 | | | PSU | 03/07/23 | | | | 36,570 | 73,140 | 146,280 | | $1,002,018 | | Andrew H. Hurst | AIP | N/A | $93,934 | $587,083 | $1,174,167 | | | | | | | | RSU | 03/07/23 | | | | | | | 45,276 | $620,281 | | | PSU | 03/07/23 | | | | 22,639 | 45,278 | 90,556 | | $620,309 | | Ashish R. Ghia | AIP | N/A | $69,960 | $437,250 | $874,500 | | | | | | | | RSU | 03/07/23 | | | | | | | 27,292 | $373,900 | | | PSU | 03/07/23 | | | | 13,645 | 27,290 | 54,580 | | $373,873 | | John R. Kline | AIP | N/A | $40,112 | $250,697 | $501,394 | | | | | | | | RSU | 03/07/23 | | | | | | | 16,924 | $231,859 | | | PSU | 03/07/23 | | | | 8,463 | 16,926 | 33,852 | | $231,886 | | Elise L. Baskel | AIP | N/A | $39,584 | $247,406 | $494,812 | | | | | | | | RSU | 03/07/23 | | | | | | | 16,836 | $230,653 | | | PSU | 03/07/23 | | | | 8,419 | 16,838 | 33,676 | | $230,681 | | Greg E. Jansen | AIP | N/A | $40,084 | $250,521 | $501,042 | | | | | | | | RSU | 03/07/23 | | | | | | | 16,912 | $231,694 | | | PSU | 03/07/23 | | | | 8,457 | 16,914 | 33,828 | | $231,722 |
Grants of Plan-Based Awards in 2023
Estimated Future Payouts Under Non-Equity Incentive Plan Awards. AIP General: The amounts in these columns for each of the named executive officers show estimated possible future payouts of awards granted under our 2023 annual cash incentive award program. Amounts provided are calculated on a full year basis using the 2023 annual base salary for each officer. The performance measures and attainment are discussed in “Compensation Discussion and Analysis—IV. 2023 Compensation Decisions—Annual Incentive Award Program” above. Amounts actually earned by the named executive officers are included in the 2023 Summary Compensation Table under the column “Non-Equity Incentive Plan Compensation.” AIP Threshold Amounts: The threshold amounts provided are the amounts payable for achieving threshold performance levels under the program. For purposes of calculating the threshold amounts, the individual component of the program has been assumed to be $0 because there is no threshold level of performance specified which will provide a minimum amount payable for the individual component. AIP Target Amounts: The program established payout amounts for achievement of target Company and individual performance. AIP Maximum Amounts: The maximum payouts are the 200% maximum amount payable with respect to each component of the program. Estimated Future Payouts Under Equity Incentive Plan Awards. The amounts in these columns for each of the named executive officers show possible future payouts in shares subject to the 2023 performance-based restricted stock unit awards, which vest if a two-year performance measure is achieved, with the level of vesting (50% through 200%) determined based on whether a year three minimum level of performance is achieved. Failure to achieve the two-year performance measure will result in no payout. The performance-based restricted stock unit awards granted in 2023 provide that overachievement of the two-year adjusted operating income performance measure can result in up to a 200% payout if the third-year threshold level of performance is achieved. The performance conditions and vesting provisions for the 2023 performance-based restricted stock unit awards are discussed above in “Compensation Discussion and Analysis – IV. 2023 Compensation Decisions-Long-Term Incentive Compensation Awards.” All Other Stock Awards. This column shows the number of shares subject to time-vesting restricted stock units granted to each of the named executive officers during 2023. These awards vest 25% per year over four years, subject to continued employment with the Company. Grant Date Fair Value of Stock and Option Awards. This column shows the aggregate grant date fair value of the 2023 time-based restricted stock unit awards and performance-based restricted stock unit awards granted to our named executive officers, in each case, which has been computed in accordance with FASB ASC 718 and excludes the effect of actual or estimated forfeitures. For the portion of the restricted stock unit awards that are subject to performance conditions, that grant date value is based upon the probable outcome of such conditions. Amounts are calculated in accordance with the provisions of FASB ASC 718. See Note 14 of the notes to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 for information regarding the assumptions used in the valuation of equity awards.
Outstanding Equity Awards at Year End 2023
Outstanding Equity Awards at Year End 2023 The following table includes information as of December 31, 2023, about all unexercised options to purchase shares of our common stock and unvested time-based restricted stock and performance-based restricted stock units held by the named executive officers.
Outstanding Equity Awards at Year End 2023
| | | Option Awards | | | | Stock Awards | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options— Exercisable (#)(1) | Number of Securities Underlying Unexercised Options— Unexercisable (#)(1) | Option Exercise Price($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested(#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | | Todd S. Nelson | 03/07/23 | — | — | — | — | 73,140(3) | $1,284,338 | 73,140(4) | $1,284,338 | | | 03/08/22 | — | — | — | — | 73,599(5) | $1,292,398 | 98,130(6) | $1,723,163 | | | 03/08/21 | — | — | — | — | 29,160(7) | $512,050 | 136,082(8) | $2,389,600 | | | 03/05/20 | — | — | — | — | 10,601(9) | $186,154 | — | — | | | 03/06/18 | 117,972 | — | $13.80 | 03/06/2028 | — | $— | — | $— | | Andrew H. Hurst (10) | — | — | — | — | — | — | — | — | — | | Ashish R. Ghia | 03/07/23 | — | — | — | — | 27,292(3) | $479,248 | 27,290(4) | $479,212 | | | 03/08/22 | — | — | — | — | 22,884(5) | $401,843 | 30,512(6) | $535,791 | | | 03/08/21 | — | — | — | — | 7,870(7) | $138,197 | 29,730(8) | $522,059 | | | 03/05/20 | — | — | — | — | 2,106(9) | $36,981 | — | $— | | | 03/06/18 | 12,472 | — | $13.80 | 03/06/2028 | — | $— | — | $— | | John R. Kline | 03/07/23 | — | — | — | — | 16,924(3) | $297,185 | 16,926(4) | $297,221 | | | 03/08/22 | — | — | — | — | 16,221(5) | $284,841 | 21,628(6) | $379,788 | | | 03/08/21 | — | — | — | — | 6,510(7) | $114,316 | 25,018(8) | $439,316 | | | 03/05/20 | — | — | — | — | 1,911(9) | $33,557 | — | $— | | | 03/06/18 | 24,148 | — | $13.80 | 03/06/2028 | — | $— | — | $— | | Elise L Baskel | 03/07/23 | — | — | — | — | 16,836(3) | $295,640 | 16,838(4) | $295,675 | | | 03/08/22 | — | — | — | — | 15,333(5) | $269,247 | 20,444(6) | $358,997 | | | 03/08/21 | — | — | — | — | 4,820(7) | $84,639 | 5,360(8) | $94,122 | | | 03/05/20 | — | — | — | — | 1,808(9) | $31,748 | — | $— | | Greg E. Jansen | 03/07/23 | — | — | — | — | 16,912(3) | $296,975 | 16,914(4) | $297,010 | | | 03/08/22 | — | — | — | — | 16,209(5) | $284,630 | 21,612(6) | $379,507 | | | 03/08/21 | — | — | — | — | 5,560(7) | $97,634 | 7,414(8) | $130,190 | | | 03/05/20 | — | — | — | — | 2,896(9) | $50,854 | — | $— |
Outstanding Equity Awards at Year End 2023
(1) Unless otherwise indicated, stock options become exercisable 25% per year over four years. (2) The dollar value of these awards is calculated using the closing market price of $17.56 per share of our common stock on December 29, 2023, which was the last trading day of the fiscal year ended December 31, 2023, as reported on Nasdaq. (3) One-fourth of these restricted stock units vest on each of March 14, 2024, 2025, 2026, and 2027. (4) These restricted stock units vest on March 14, 2026, subject to achievement of the applicable adjusted operating income performance measures. (5) One-third of these restricted stock units vest on each of March 14, 2024, 2025 and 2026. (6) These restricted stock units vest on March 14, 2025, subject to the achievement of the applicable adjusted EBITDA performance measures. (7) One-half of these restricted stock units vest on each of March 14, 2024 and 2025. (8) These restricted stock units vest on March 14, 2024, subject to the achievement of the applicable adjusted EBITDA performance measures. (9) These restricted stock units vest on March 14, 2024. Mr. Hurst did not hold any unexercised options to purchase shares of common stock, nor any unvested time-based restricted stock and performance-based restricted stock units, as of December 31, 2023.
Option Exercises and Stock Vested for 2023
Option Exercises and Stock Vested for 2023 The following table includes information regarding option exercises by our named executive officers and vesting of restricted stock units held by them during the year ended December 31, 2023.
Option Exercises and Stock Vested for 2023
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise(#) | Value Realized on Exercise($)(1) | Number of Shares Acquired on Vesting(#) | Value Realized on Vesting($)(2) | | Todd S. Nelson | 46,629 | $361,789 | 158,445 | $2,118,410 | | Andrew H. Hurst | 158,862 | $1,628,399 | 39,364 | $526,297 | | Ashish R. Ghia | — | $— | 36,143 | $483,232 | | John R. Kline | — | $— | 30,920 | $413,400 | | Elise L. Baskel | — | $— | 15,083 | $201,660 | | Greg E. Jansen | — | $— | 18,761 | $250,835 |
Option Exercises and Stock Vested for 2023
(1) The aggregate dollar value realized on exercise was calculated by multiplying the number of shares acquired upon vesting of the applicable option by the difference between the market price of the Company’s common stock as reported on Nasdaq at exercise and the exercise price. (2) The aggregate dollar value realized on vesting was calculated by multiplying the number of restricted stock units which vested by the closing price of the Company’s common stock as reported on Nasdaq on the vesting date.
Employment Arrangements and Potential Payments upon Termination or Change in Control
Employment Arrangements and Potential Payments upon Termination or Change in Control None of our current named executive officers has a fixed term employment contract and all are “at will” employees. However, we have entered into certain agreements and maintain certain plans that require us to provide compensation to the named executive officers in the event of certain terminations of their employment or if the Company experiences a change in control. The amount of compensation payable to each named executive officer employed by the Company on December 31, 2023 for such potential terminations is shown in the tables below under the heading “Potential Payments.” Executive Severance Plan. The Company’s executive officers are eligible to participate in the Perdoceo Education Corporation Executive Severance Plan (the “Severance Plan”) and may be eligible to receive benefits thereunder in the event an executive officer’s employment is involuntarily terminated. The Employee Benefits Committee, as the plan administrator, or its authorized designee, is responsible for determining whether an executive officer’s employment is terminated involuntarily by the Company and, if so, whether such executive officer will be eligible to receive benefits under the Severance Plan, in accordance with the terms thereof. Involuntary terminations do not include terminations for cause (as defined under the Severance Plan); terminations due to agreements between the Company and the employee under which the employee becomes a consultant or independent contractor; terminations due to death, disability, or retirement (including voluntary retirement under any special early retirement incentive program); or any form of voluntary termination. Termination for “cause” for purposes of the Severance Plan means that the employee is discharged by us for poor performance, nonperformance, or misconduct. Misconduct includes, but is not limited to, insubordination, dishonesty, theft, violation of Company rules and willful destruction of Company property. To receive severance benefits under the Severance Plan, the executive whose employment is terminated must sign a release of claims against the Company and enter into a non-solicitation, non-competition and confidentiality agreement with the Company to the extent permitted by governing law and allowed under the ethical rules of any applicable professional licensing organizations that will last for at least one year following termination of employment (such agreement, a “Separation Agreement”). The Severance Plan is intended to provide benefits that are exempt from the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”) but provides that to the extent any benefit payable is determined to be subject to Section 409A, benefits will be paid in accordance with Section 409A. Severance benefits under the Severance Plan include base pay, target cash incentive payments under the Company’s annual incentive program and certain benefits coverage, as follows: A lump sum payment equal to the sum of (1) the terminating executive’s annual salary at the time of termination, plus (2) an amount equal to the terminating executive’s target bonus for the year in which termination occurs. • For those executives who participate in our health, dental and vision plans and timely elect to continue that coverage under federal COBRA law, partially subsidized COBRA insurance premiums so that the executive pays the same cost that similarly situated active employees of the Company pay for such coverage for a period of time beginning immediately after the employment termination and lasting for the number of weeks of pay for which the executive is eligible (i.e. one year thereafter). • Outplacement assistance from a Company-selected provider that is reimbursed or paid for by the Company. If due and payable under the Severance Plan, the severance amount is paid in a lump sum following termination of employment and will be made on or before March 15 of the year following the year in which the executive officer’s employment is terminated. Severance Arrangements Pursuant to Nelson Letter Agreement. Pursuant to the Nelson Letter Agreement, Mr. Nelson is entitled to certain enhanced severance benefits under the Severance Plan, as modified by the Nelson Letter Agreement. Mr. Nelson is entitled to receive the following payments and benefits if his employment is terminated by the Company without “cause,” if he resigns for “good reason” or if he resigns without “good reason” with a minimum of six (6) months’ advance written notice of such termination without “good reason” (each as defined in the Nelson Letter Agreement), subject to his execution and non-revocation of a Separation Agreement: (i) a lump sum payment equal to the sum of (a) two times his annual base salary at the time of termination and (b) two times his target cash annual incentive for the year in which termination occurs, (ii) a pro rata portion of the cash annual incentive for the year in which the termination occurs, based on actual performance, which amount is payable no sooner than such time bonuses are paid by the Company to senior executives pursuant to the terms of the then-applicable annual incentive plan, (iii) partially subsidized COBRA insurance premiums so that Mr. Nelson pays the same cost that similarly situated active employees of the Company pay for such coverage for a period of time beginning immediately after the employment termination and lasting for 18 months thereafter and (iv) accelerated vesting for the long-term incentive awards granted under the 2016 Plan (or such other plan then in effect) to Mr. Nelson following November 16, 2023 as of the effective date of employment termination (and to the extent that any such awards are subject to performance-based vesting with a multi-year performance period, if termination occurs within the first year of an open performance period, the performance criteria for such award will be deemed achieved at the “target” level of performance (as set forth in the applicable equity award agreement) and if termination occurs following the first year of an open performance period, the performance criteria for such award will be deemed achieved at the actual level of performance, measured as of the effective date of employment termination in substantially the same manner as contemplated by the applicable equity award agreement following the completion of the applicable performance period, as determined by the Board or the Compensation Committee in its sole discretion). If due and payable under the Nelson Letter Agreement, the severance amount described in clause (i) above will be paid in a lump sum on the first day of the seventh month following Mr. Nelson’s qualifying termination of employment. Pursuant to the Nelson Letter Agreement, Mr. Nelson is subject to confidentiality and non-disparagement covenants during his employment with the Company and after his employment with the Company terminates. Mr. Nelson is also subject to non-competition and employee and customer non-solicitation covenants both during his employment with the Company and for a period of two years following termination of his employment with the Company.
Employment Arrangements and Potential Payments upon Termination or Change in Control
Severance Arrangements Pursuant to Hurst Separation Agreement. Pursuant to the Hurst Separation Agreement, Mr. Hurst’s termination of employment was treated as an involuntary termination of employment without cause for purposes of the Severance Plan, the Perdoceo Education Corporation 2008 Incentive Compensation Plan (the “2008 Plan”), the 2016 Plan and the award agreements between Mr. Hurst and the Company granted under the 2008 Plan and the 2016 Plan. Pursuant to the Hurst Separation Agreement, Mr. Hurst received the following payments and benefits: (i) a lump-sum separation payment of $2,250,000, which was comprised of the sum of (a) Mr. Hurst’s annual base salary as of the Hurst Separation Date (i.e., $650,000), (b) the value of Mr. Hurst’s annual performance-based cash incentive award for the 2023 AIP based on recent historical performance (i.e., 200% of Mr. Hurst’s annual base salary or $1,300,000) and (c) an additional amount of $300,000, all of which was paid on December 6, 2023; (ii) fully subsidized COBRA health and/or dental insurance premiums (i.e., both the Company’s portion and Mr. Hurst’s portion of the applicable premiums for such insurance coverage will be paid by the Company) until the earliest of (x) the expiration of the eighteen (18) month period following the Hurst Separation Date and (y) the date Mr. Hurst becomes covered under another employer’s health plan; and (iii) reimbursement of up to $25,000 for outplacement services. Pursuant to the Hurst Separation Agreement, Mr. Hurst is subject to ongoing confidentiality and non-disparagement covenants, a non-competition covenant for a period of one year following the Hurst Separation Date and an employee and customer non-solicitation covenant for a period of two years following the Hurst Separation Date. 2016 Plan Termination of Employment Provisions. Under the 2016 Plan, outstanding restricted stock unit awards immediately vest and become non-forfeitable in the case of death or disability but are forfeited in the event of other forms of employment termination. For outstanding stock option awards if the termination is due to: Death or disability, options become fully exercisable and remain exercisable from the date of termination due to death or disability until the first to occur of (a) the expiration date of the option and (b) one year after the date of termination. Any options not exercised within the allowed time period are automatically forfeited. • Retirement, options continue to vest for three years (but not longer than the option’s term) and any vested and exercisable options are exercisable from the date of retirement until the first to occur of (a) the expiration date of the option and (b) three years after the retirement date; any options that have not become exercisable are automatically forfeited. Any options not exercised within the allowed time period also are automatically forfeited. Retirement is defined in the 2016 Plan as termination after age 55 with at least five years of service. • Involuntary termination for reasons other than “cause”, (as defined in the 2016 Plan) options that are exercisable on the date of termination remain exercisable from that termination date until the first to occur of (a) the expiration date of the option and (b) 90 days from the termination date. Any options that have not become exercisable are automatically forfeited. Any options not exercised within the allowed time period are automatically forfeited. • Voluntary termination (for reasons other than retirement, death, or disability), options that are exercisable on the date of termination remain exercisable from that termination date until the first to occur of (a) the expiration date of the option and (b) 30 days after the termination date. Any unexercisable options on the termination date are automatically forfeited. Any options not exercised within the allowed time period also are automatically forfeited. • Termination for cause, the participant immediately and automatically forfeits all options (whether vested or unvested) to purchase shares of our stock. 2016 Plan Change in Control Provisions. Under the 2016 Plan, a change in control is deemed to have occurred if any of the following events occur: • Any corporation, person or other entity (other than us, our majority-owned subsidiary or any of its subsidiaries, or an employee benefit plan (or related trust) sponsored or maintained by us), including persons or entities acting as a group, becomes the beneficial owner of stock representing more than 35% of our common stock. • Our merger or consolidation with or into another corporation other than a majority-owned subsidiary, or an agreement to sell or otherwise dispose of all or substantially all of our assets, and the members of the Board prior to that approval do not represent a majority of the directors of the surviving, resulting or acquiring entity or the parent of that entity. • The consummation of a plan of liquidation. • Within any period of 24 consecutive months, the members of the Board immediately prior to the 24-month period, together with any persons first elected as directors (other than as a result of any settlement of a proxy or consent solicitation contest or any action taken to avoid a contest) during the 24-month period by or on the recommendation of the Board immediately prior to that 24-month period and who constituted a majority of the Board at the time of election, cease to constitute a majority of the Board. The 2016 Plan is a “double-trigger” plan that provides that upon both (1) a change in control and (2) an involuntary termination of the award holder’s employment or service by us or our successor other than for cause (as defined in the 2016 Plan) during the 24-month period following the change in control, that award holder’s stock options shall become fully exercisable and restricted stock units shall become fully vested. All performance goals in respect of performance-based restricted stock units shall be deemed to have been met at target level. Potential Payments. The following tables describe the benefits to which the named executive officers who were employed by the Company at December 31, 2023 would have been entitled under the applicable arrangements described above (1) if the named executive officer had terminated employment pursuant to (a) a voluntary termination, (b) retirement, (c) an involuntary termination other than for “cause”, (as defined in the applicable plan or any applicable employment letter agreement), (d) death or disability, or (e) a termination for “cause”, in any such case on December 31, 2023, or (2) upon a change in control of the Company and a concurrent involuntary termination of the named executive officer’s employment on December 31, 2023. For Mr. Nelson, the voluntary termination scenario in the table below assumes Mr. Nelson provides written notice of a minimum of six (6) months to the Company and the involuntary termination other than for “cause” scenario in the table below also includes a resignation by Mr. Nelson for “good reason” (each such term as defined in the Nelson Letter Agreement). Information regarding the calculation of certain amounts is provided below the tables. For Mr. Hurst, because his employment terminated on November 15, 2023, the table below for Mr. Hurst reflects the actual compensation paid or payable to Mr. Hurst in connection with his termination of employment. Information regarding the calculation of certain amounts is provided below the tables. Information regarding non-discriminatory group welfare benefit plans is excluded from the tables below as permitted by Item 402(a)(6)(ii) of Regulation S-K of the Exchange Act.
Todd S. Nelson
| Executive Benefits and Payments Upon Termination | Voluntary Termination | Normal Retirement | Involuntary Not for Cause Termination | Death or Disability | For Cause Termination | Change in Control | | Compensation: | | | | | | | | Lump Sum Severance | $3,381,250 | $— | $3,381,250 | $— | $— | $3,381,250 | | Annual Incentive | $1,781,250 | $— | $1,781,250 | $— | $— | $1,781,250 | | Restricted Stock Units | $— | $— | $— | $11,679,542 | $— | $11,679,542 | | Stock Options | $— | $— | $— | $— | $— | $— | | Benefits and Perquisites: | | | | | | | | COBRA Benefits | $22,963 | $— | $22,963 | $— | $— | $22,963 | | Outplacement | $7,500 | $— | $7,500 | $— | $— | $7,500 | | Total: | $5,192,963 | $— | $5,192,963 | $11,679,542 | $— | $16,872,505 |
Ashish R. Ghia
| Executive Benefits and Payments Upon Termination | Voluntary Termination | Normal Retirement | Involuntary Not for Cause Termination | Death or Disability | For Cause Termination | Change in Control | | Compensation: | | | | | | | | Lump Sum Severance | $— | $— | $926,970 | $— | $— | $926,970 | | Annual Incentive | $— | $— | $— | $— | $— | $— | | Restricted Stock Units | $— | $— | $— | $3,608,334 | $— | $3,608,334 | | Stock Options | $— | $— | $— | $— | $— | $— | | Benefits and Perquisites: | | | | | | | | COBRA Benefits | $— | $— | $7,118 | $— | $— | $7,118 | | Outplacement | $— | $— | $7,500 | $— | $— | $7,500 | | Total: | $— | $— | $941,588 | $3,608,334 | $— | $4,549,922 |
John R. Kline
| Executive Benefits and Payments Upon Termination | Voluntary Termination | Normal Retirement | Involuntary Not for Cause Termination | Death or Disability | For Cause Termination | Change in Control | | Compensation: | | | | | | | | Lump Sum Severance | $— | $— | $639,470 | $— | $— | $639,470 | | Annual Incentive | $— | $— | $— | $— | $— | $— | | Restricted Stock Units | $— | $— | $— | $2,523,232 | $— | $2,523,232 | | Stock Options | $— | $— | $— | $— | $— | $— | | Benefits and Perquisites: | | | | | | | | COBRA Benefits | $— | $— | $21,182 | $— | $— | $21,182 | | Outplacement | $— | $— | $7,500 | $— | $— | $7,500 | | Total: | $— | $— | $668,152 | $2,523,232 | $— | $3,191,384 |
Elise L. Baskel
| Executive Benefits and Payments Upon Termination | Voluntary Termination | Normal Retirement | Involuntary Not for Cause Termination | Death or Disability | For Cause Termination | Change in Control | | Compensation: | | | | | | | | Lump Sum Severance | $— | $— | $634,156 | $— | $— | $634,156 | | Annual Incentive | $— | $— | $— | $— | $— | $— | | Restricted Stock Units | $— | $— | $— | $2,084,741 | $— | $2,084,741 | | Stock Options | $— | $— | $— | $— | $— | $— | | Benefits and Perquisites: | | | | | | | | COBRA Benefits | $— | $— | $13,452 | $— | $— | $13,452 | | Outplacement | $— | $— | $7,500 | $— | $— | $7,500 | | Total: | $— | $— | $655,108 | $2,084,741 | $— | $2,739,849 |
Greg E. Jansen
| Executive Benefits and Payments Upon Termination | Voluntary Termination | Normal Retirement | Involuntary Not for Cause Termination | Death or Disability | For Cause Termination | Change in Control | | Compensation: | | | | | | | | Lump Sum Severance | $— | $— | $639,021 | $— | $— | $639,021 | | Annual Incentive | $— | $— | $— | $— | $— | $— | | Restricted Stock Units | $— | $— | $— | $2,213,315 | $— | $2,213,315 | | Stock Options | $— | $— | $— | $— | $— | $— | | Benefits and Perquisites: | | | | | | | | COBRA Benefits | $— | $— | $21,194 | $— | $— | $21,194 | | Outplacement | $— | $— | $7,500 | $— | $— | $7,500 | | Total: | $— | $— | $667,715 | $2,213,315 | $— | $2,881,030 |
Andrew H. Hurst
| Executive Benefits and Payments Upon Termination | Voluntary Termination | Normal Retirement | Involuntary Not for Cause Termination | Death or Disability | For Cause Termination | Change in Control | | Compensation: | | | | | | | | Lump Sum Severance | $— | $— | $2,250,000 | $— | $— | $— | | Annual Incentive | $— | $— | $— | $— | $— | $— | | Restricted Stock Units | $— | $— | $— | $— | $— | $— | | Stock Options | $— | $— | $— | $— | $— | $— | | Benefits and Perquisites: | | | | | | | | COBRA Benefits | $— | $— | $33,159 | $— | $— | $— | | Outplacement | $— | $— | $7,500 | $— | $— | $— | | Total: | $— | $— | $2,290,659 | $— | $— | $— |
2023 Pay Ratio Disclosure
2023 Pay Ratio Disclosure As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K promulgated by the SEC, the Company has calculated the mandated ratio of the median of the 2023 annual total compensation of all employees to the 2023 annual total compensation of Mr. Nelson, our President and Chief Executive Officer (our “CEO”), in accordance with the requirements of the SEC’s rule. Additionally, given the Company’s significant part-time workforce, a supplemental ratio that excludes both adjunct faculty and federal work-study student workers has also been calculated. As these part-time employees may work varying schedules and times throughout the year to support our students, the supplemental ratio provides another perspective on the median employee and ratio. The pay ratios were calculated as follows:
2023 Pay Ratio Disclosure
| Pay Ratio = | Annual Total Compensation of CEO | | | Annual Total Compensation of median employee |
2023 Pay Ratio Disclosure
With respect to the mandated ratio calculation, the Company identified the median employee by comparing the amount of total taxable wages for federal income tax purposes as reflected in our payroll records as reported to the Internal Revenue Service in “Box 1” on Form W-2 for 2023 for 4,145 individuals, excluding the CEO, who were employed by the Company on December 31, 2023. This includes all full-time and part-time employees, including adjunct faculty and federal work-study student workers, but does not include independent contractors and leased workers. Compensation was annualized for 244 employees who were hired by the Company in 2023 but did not work for the Company for the entire year. No annualization was applied to any adjunct faculty or federal work-study student workers due to their varying work schedules throughout the year. After identifying the median employee, 2023 annual total compensation was calculated in the same manner as reflected in the 2023 Summary Compensation Table above for our CEO. The same methodology was used to calculate the supplemental ratio, except that compensation for 1,839 adjunct faculty and federal work-study student workers was excluded when determining the median employee. The following table shows the mandated ratio between the 2023 annual total compensation of our CEO, as reflected in the “Total” column of the 2023 Summary Compensation Table above, and the median of the 2023 annual total compensation of all employees, as well as the supplemental ratio resulting from the exclusion of adjunct faculty and federal work-study student workers when determining the median compensation. These pay ratios are reasonable estimates calculated in a manner consistent with Item 402(u) of Regulation S-K based on our payroll records and the methodology described above.
2023 Pay Ratio Disclosure
| Pay Ratio | Median Annual Total Compensation | CEO to Median Pay Ratio | | Mandated Ratio (Includes all employees other than our CEO) | $42,491 | 45.5 | | Supplemental Ratio (Excludes adjunct faculty and federal work-study student workers) | $62,740 | 30.8 |
2023 Pay Ratio Disclosure
As permitted by, and in accordance with, Instruction 10 to Item 402(u) of Regulation S-K, for 2023, we used the total compensation for Mr. Hurst, our former President and Chief Executive Officer (our “Prior CEO”), from January 1, 2023 through November 15, 2023, during which time he served as President and Chief Executive Officer, plus the total compensation for our CEO who is currently serving in such capacity, Mr. Nelson from November 16, 2023 through December 31, 2023. The total compensation for Mr. Hurst during this time period was $1,834,273, which includes salary, stock awards and the Company's matching 401(k) contributions from the Summary Compensation Table. This amount does not include any separation payment or COBRA reimbursement listed under “All Other Compensation” in the Summary Compensation Table as such payment and reimbursement are not considered (and were not paid as) compensation provided to our Prior CEO during the time in which he served as President and Chief Executive Officer. The total compensation for Mr. Nelson during this time period was $98,630, which includes 45 days of his base salary for 2023. Adding these two amounts, we arrive at a value of $1,932,903, used for the ratio of annual total compensation for our CEO to the annual total compensation for our median employee. Based on this information, for 2023, the reasonable estimated ratio of annual total compensation of our CEO to the median of the annual total compensation of all employees was 45.5. For a description of the components of 2023 annual total compensation of our CEO, the Company’s executive officer compensation philosophy and factors impacting 2023 CEO annual total compensation and year over year comparability, see the “Executive Officers and Executive Compensation—Compensation Discussion and Analysis” section above as well as the 2023 Summary Compensation Table and accompanying narrative above. The SEC’s pay ratio rule permits a variety of methodologies and assumptions when calculating the mandated ratio. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio the Company has reported. Pay ratios may vary significantly among companies, within the same industry and more broadly, as a result of these different methodologies and assumptions used to identify the median employee. In addition, pay ratios may vary significantly among companies due to differences in business strategies and workforce composition. For example, one company may outsource certain business functions whereas another may perform the same functions in-house. These and other factors can significantly impact the pay ratio reported by each company.
Pay Versus Performance Disclosure
Pay Versus Performance Disclosure In accordance with Item 402(v) of Regulation S-K of the Exchange Act adopted by the Securities and Exchange Commission, we provide the following disclosure regarding executive compensation for our principal executive officer (“PEO”) and Non-PEO named executive officers (“NEOs”) and Company performance for the fiscal years listed below. The table below does not necessarily reflect value actually earned, realized, or received by our PEO and Non-PEO NEOs. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.
Pay Versus Performance Disclosure
| | | | | | | | Value of Initial | | | | | | Summary | Summary | | | Average Summary | Average | Fixed $100 Investment Based on:4 | | | Adjusted | | | Compensation | Compensation | Compensation | Compensation | Compensation | Compensation | Total | Peer | | Operating | | | Table Total for | Table Total for | Actually Paid to | Actually Paid to | Table Total for | Actually Paid to | Shareholder | Group | Net Income | Income5 | | Year | Todd S. Nelson1 | Andrew H. Hurst1 | Todd S. Nelson1,2,3 | Andrew H. Hurst1,2,3 | Non-PEO NEOs1 | Non-PEO NEOs1,2,3 | Return ("TSR") | TSR | ($ Millions) | ($ Millions) | | (a) | (b) | (b) | (c) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | $4,504,386 | $4,086,115 | $7,541,502 | $1,090,971 | $1,718,696 | $2,441,329 | $96.74 | $89.58 | $147.7 | $199.2 | | 2022 | $4,512,179 | $2,537,725 | $5,745,977 | $3,004,639 | $1,415,745 | $1,659,444 | $75.58 | $73.31 | $95.9 | $175.8 | | 2021 | $4,998,632 | - | $4,575,611 | - | $1,425,824 | $1,283,784 | $63.95 | $93.43 | $109.6 | $183.6 | | 2020 | $4,870,453 | - | $(35,983) | - | $1,319,620 | $99,805 | $68.68 | $111.02 | $124.3 | $170.6 |
Pay Versus Performance Disclosure
(1) Todd S. Nelson was our PEO from 2020 through January 20, 2022, then again from November 16, 2023 to present. Andrew H. Hurst was our PEO from January 20, 2022 through November 15, 2023. The individuals comprising the Non-PEO named executive officers for each fiscal year presented are listed below.
Pay Versus Performance Disclosure
| 2020 | 2021 | 2022 | 2023 | | Andrew H. Hurst | Andrew H. Hurst | Ashish R. Ghia | Ashish R. Ghia | | Ashish R. Ghia | Ashish R. Ghia | Greg E. Jansen | Greg E. Jansen | | Jeffrey D. Ayers | Jeffrey D. Ayers | John R. Kline | John R. Kline | | John R. Kline | John R. Kline | Elise L. Baskel | Elise L. Baskel |
Pay Versus Performance Disclosure
(2) The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the Company’s NEOs. These amounts reflect the Summary Compensation Table Total with certain adjustments as described in footnote 3 below. (3) Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEO and the Non-PEO NEOs as set forth below, calculated in accordance with SEC rules. Equity values are calculated in accordance with FASB ASC Topic 718.
Pay Versus Performance Disclosure
| Year | Summary Compensation Table Total for Todd S. Nelson | Exclusion of Stock Awards for Todd S. Nelson | Inclusion of Equity Values for Todd S. Nelson | Compensation Actually Paid to Todd S. Nelson | | 2023 | $4,504,386 | $2,004,036 | $5,041,152 | $7,541,502 | | 2022 | $4,512,179 | $2,043,087 | $3,276,885 | $5,745,977 | | 2021 | $4,998,632 | $2,297,832 | $1,874,811 | $4,575,611 | | 2020 | $4,870,453 | $2,169,753 | $(2,736,682) | $(35,983) |
Pay Versus Performance Disclosure
| Year | Summary Compensation Table Total for Andrew H. Hurst | Exclusion of Stock Awards for Andrew H. Hurst | Inclusion of Equity Values for Andrew H. Hurst | Compensation Actually Paid to Andrew H. Hurst | | 2023 | $4,086,115 | $1,240,590 | $(1,754,554) | $1,090,971 | | 2022 | $2,537,725 | $1,070,169 | $1,537,083 | $3,004,639 |
Pay Versus Performance Disclosure
| Year | Average Summary Compensation Table Total for Non-PEO NEOs | Average Exclusion of Stock Awards Non-PEO NEOs | Average Inclusion of Equity Values Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs | | 2023 | $1,718,696 | $534,067 | $1,256,700 | $2,441,329 | | 2022 | $1,415,745 | $490,290 | $733,989 | $1,659,444 | | 2021 | $1,425,824 | $480,891 | $338,851 | $1,283,784 | | 2020 | $1,319,620 | $409,676 | $(810,138) | $99,805 |
Pay Versus Performance Disclosure
| Year | Fiscal Year-end Fair Value of Equity Awards Granted During Fiscal Year That Remained Unvested as of Last Day of Fiscal Year for Todd S. Nelson | Change in Fair Value from Last Day of Prior Fiscal Year to Last Day of Fiscal Year for Todd S. Nelson | Vesting Date Fair Value of Equity Awards Granted During Fiscal Year that Vested During Fiscal Year for Todd S. Nelson | Change in Fair Value from Last Day of Prior Fiscal Year to Vesting Date of Unvested Equity Awards that Vested During Fiscal Year for Todd S. Nelson | Fair Value at Last Day of Prior Fiscal Year of Equity Awards Forfeited During Fiscal Year for Todd S. Nelson | Total Inclusion of Equity Values for Todd S. Nelson | | 2023 | $3,853,015 | $1,272,113 | $0 | $(83,976) | $0 | $5,041,152 | | 2022 | $2,728,042 | $662,876 | $0 | $(114,033) | $0 | $3,276,885 | | 2021 | $2,286,168 | $(238,435) | $0 | $(63,793) | $(109,129) | $1,874,811 | | 2020 | $1,785,276 | $(2,879,354) | $0 | $(1,642,604) | $0 | $(2,736,682) |
Pay Versus Performance Disclosure
| Year | Fiscal Year-end Fair Value of Equity Awards Granted During Fiscal Year That Remained Unvested as of Last Day of Fiscal Year for Andrew H. Hurst | Change in Fair Value from Last Day of Prior Fiscal Year to Last Day of Fiscal Year for Andrew H. Hurst | Vesting Date Fair Value of Equity Awards Granted During Fiscal Year that Vested During Fiscal Year for Andrew H. Hurst | Change in Fair Value from Last Day of Prior Fiscal Year to Vesting Date of Unvested Equity Awards that Vested During Fiscal Year for Andrew H. Hurst | Fair Value at Last Day of Prior Fiscal Year of Equity Awards Forfeited During Fiscal Year for Andrew H. Hurst | Total Inclusion of Equity Values for Andrew H. Hurst | | 2023 | $0 | $0 | $0 | $(20,863) | $(1,733,691) | $(1,754,554) | | 2022 | $1,428,948 | $131,156 | $0 | $(23,021) | $0 | $1,537,083 |
Pay Versus Performance Disclosure
| Year | Average Fiscal Year-end Fair Value of Equity Awards Granted During Fiscal Year That Remained Unvested as of Last Day of Fiscal Year for Non-PEO NEOs | Average Change in Fair Value from Last Day of Prior Fiscal Year to Last Day of Fiscal Year for Non-PEO NEOs | Average Vesting Date Fair Value of Equity Awards Granted During Fiscal Year that Vested During Fiscal Year for Non-PEO NEOs | Average Change in Fair Value from Last Day of Prior Fiscal Year to Vesting Date of Unvested Equity Awards that Vested During Fiscal Year for Non-PEO NEOs | Average Fair Value at Last Day of Prior Fiscal Year of Equity Awards Forfeited During Fiscal Year for Non-PEO NEOs | Total Average Inclusion of Equity Values for Non-PEO NEOs | | 2023 | $1,026,821 | $243,249 | $0 | $(13,370) | $0 | $1,256,700 | | 2022 | $654,662 | $95,423 | $0 | $(16,096) | $0 | $733,989 | | 2021 | $478,450 | $(46,861) | $0 | $(75,925) | $(16,813) | $338,851 | | 2020 | $337,082 | $(893,953) | $0 | $(253,267) | $0 | $(810,138) |
Pay Versus Performance Disclosure
(4) The Peer Group TSR set forth in this table utilizes the companies used as a peer group for purposes of the Company’s disclosures under Item 402(b) of Regulation S-K. The returns of each component issuer of the group have been weighted according to their stock market capitalization at the beginning of each period. The comparison assumes $100 was invested for the period starting December 31, 2019, through the end of the listed year in the Company and in the companies used as a peer group, respectively. The companies used as a peer group for 2020, 2021, and 2022, are as follows: 2U, Inc., Adtalem Global Education Inc., American Public Education, Inc., Bright Horizons Family Solutions Inc., Chegg, Inc., Cornerstone OnDemand, Inc., Graham Holdings Company, Grand Canyon Education, Inc., Heidrick & Struggles International, Inc., Houghton Mifflin Harcourt Company, Huron Consulting Group Inc., Kforce Inc., Korn Ferry, Lincoln Educational Services Corporation, Strategic Education, Inc., Stride, Inc., Universal Technical Institute, Inc., WW International, Inc., and Zovio Inc. In 2023, the Company removed Zovio Inc. due to their dissolution, with no other changes.. (5) We determined Adjusted Operating Income to be the most important financial performance measure used to link Company performance to Compensation Actually Paid to our PEOs and Non-PEO NEOs in 2023. Adjusted Operating Income is defined, for purposes of the annual incentive plan, as set forth above in the “Compensation Discussion and Analysis” section. For years 2020, 2021, and 2022, the most important financial measure was Adjusted EBITDA; the change from Adjusted EBITDA to Adjusted Operating Income did not involve a substantive or economic value change and was made for more consistent nomenclature. We may determine a different financial performance measure to be the most important financial performance measure in future years. For a reconciliation of adjusted operating income to operating income, the most directly corresponding GAAP financial measure, see Appendix A. Tabular List of Most Important Financial Performance Measure. The following presents the financial performance measure that the Company considers to have been the most important in linking Compensation Actually Paid to our PEOs and other NEOs for 2023 to Company performance. The financial performance component of AIP and the performance condition used for performance-based restricted stock units were based solely on a company-wide Adjusted Operating Income performance measure. Adjusted Operating Income Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company Total Shareholder Return (“TSR”). The following chart sets forth the relationship between Compensation Actually Paid to our PEOs, the average of Compensation Actually Paid to our Non-PEO NEOs, and the Company’s cumulative TSR over the four most recently completed fiscal years. Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income. The following chart sets forth the relationship between Compensation Actually Paid to our PEOs, the average of Compensation Actually Paid to our Non-PEO NEOs, and our Net Income during the four most recently completed fiscal years. Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Adjusted Operating Income. The following chart sets forth the relationship between Compensation Actually Paid to our PEOs, the average of Compensation Actually Paid to our Non-PEO NEOs, and our Adjusted Operating Income during the four most recently completed fiscal years. Description of Relationship Between Company TSR and Peer Group TSR. The following chart compares our cumulative TSR over the four most recently completed fiscal years to the TSR of each component issuer of the applicable peer group, weighted according to their market capitalization at the beginning of each period for which a return is indicated.
PROPOSAL 1: Election of Directors
PROPOSAL 1: Election of Directors The Board of Directors has nominated the eight director candidates named below for election to the Board. Each of the nominees is currently serving as a director of Perdoceo Education Corporation and is running for re-election. If elected, the nominees for election as directors will each serve for a one-year term expiring at the Company’s 2025 Annual Meeting of Stockholders. The Board of Directors recommends that stockholders vote in favor of the election of all of the nominees named in this Proxy Statement below to serve as directors of Perdoceo. The Board of Directors has affirmatively determined that each director nominee, except for Mr. Nelson, our current President and Chief Executive Officer, is an “independent director” under Nasdaq’s listing standards and is independent under Nasdaq’s listing standards applicable to his or her Board Committee memberships. The Board used Rule 5605(a)(2) of Nasdaq’s corporate governance listing requirements applicable to its listed companies and Rule 10A-3(b)(1) of the Exchange Act as guides in its independence determination. If any of the Board of Directors’ nominees is unable or declines to serve at the time of the Annual Meeting, the persons named as proxies may vote for a substitute nominee or nominees recommended by the Board of Directors. The Board of Directors has no reason to believe that any of the nominees will be unable or will decline to serve as a director if elected. The Board of Directors recommends that stockholders vote FOR all of the Board of Directors’ nominees for election as directors.
PROPOSAL 1: Election of Directors
| Dennis H. Chookaszian | Director since October 2002 |
PROPOSAL 1: Election of Directors
Mr. Chookaszian, age 80, served as Chairman of the Financial Accounting Standards Advisory Council, which advises the Financial Accounting Standards Board (“FASB”), from January 2007 to December 2011. Mr. Chookaszian was formerly the Chairman and Chief Executive Officer of CNA Financial Corporation (“CAN”). During his 27-year career with CNA, Mr. Chookaszian held several management positions at CNA’s business unit and corporate levels. In 1992, he was named Chairman and Chief Executive Officer of CNA Insurance Companies, and in 1999 he became Chairman of CNA’s executive committee. Mr. Chookaszian retired from CNA in 2001. Mr. Chookaszian is currently a board member of publicly-held and Pillarstone Capital REIT, a Maryland real estate investment trust engaged in investing in, owning and operating commercial properties. He also served as a director of publicly-held CME Group Inc. (formerly known as Chicago Mercantile Exchange Holdings Inc.), a U.S. financial exchange, from January 2004 to May 2023; Allscripts Healthcare Solutions, Inc., a provider of clinical, financial, connectivity and information solutions and related professional services for hospitals, physicians and post-acute organizations, from September 2010 to May 2016; LoopNet, Inc., an information services provider to the commercial real estate industry, from July 2006 to April 2012; Maxar Technologies Ltd. (formerly known as MacDonald Dettwiler), a global communications and information company, from July 2005 to May 2019; Prism Technologies Group, Inc., an on-line insurance provider, from April 2003 to December 2017; and Sapient Corporation, a global services firm providing digital marketing and business and information technology services, from January 2003 to August 2007. Mr. Chookaszian has a Bachelor of Science in chemical engineering from Northwestern University, a Master of Business Administration in finance from the University of Chicago and a Master’s degree in economics from the London School of Economics. He received certification as a public accountant in 1971 and also is a Chartered Property Casualty Underwriter.
PROPOSAL 1: Election of Directors
| Expertise | Attributes and Skills | | Strategic Planning and Growth Initiatives | Mr. Chookaszian assists the Board and Company in assessing its growth strategies by providing transaction structuring alternatives, negotiating strategies and assessments of strategic value regarding potential Company acquisitions and dispositions. These skills were developed during his tenure at CNA, through his service on the advisory boards of a number of private equity firms, and through his involvement in the purchase or sale of more than 100 companies throughout his career. | | Investment Management and Other Financial Expertise | Mr. Chookaszian provides in-depth financial expertise to the Audit Committee of the Board that is augmented by his knowledge of trends in financial reporting, financial regulation standard-setting and related global regulations. A national leader in the financial regulatory area, he served as the chairman of FASAC (Financial Accounting Standards Advisory Council) from January 1, 2007 to December 31, 2011. FASAC advises on issues related to projects on the FASB agenda. He is also a member of the Financial Crisis Advisory Group (“FCAG”), which advises the FASB and the International Accounting Standards Board about standard-setting implications of the global financial crisis and potential changes to the global regulatory environment. |
PROPOSAL 1: Election of Directors
| Expertise | Attributes and Skills | | | FCAG members are drawn from senior leaders throughout the world with broad experience in international financial markets and an interest in the transparency of financial reporting information. He has also served on many other accounting bodies, including the AICPA Group of 100, the FAS 95 Task Force, the FASB Financial Instruments Task Force, and the AICPA Insurance Industry Committee. Mr. Chookaszian also served as CFO of CNA for 15 years. | | Marketing | Mr. Chookaszian has an in-depth background in Internet marketing and has served on the board of directors of a number of firms involved in marketing to consumers and businesses. He has also been involved with a number of firms that provide consulting services to assist with Internet marketing. | | Governance | Mr. Chookaszian brings to the Board in-depth knowledge and trend information regarding corporate governance, gained both from his experience on boards of very large and smaller public companies and his academic interest in corporate governance. He teaches corporate governance at the University of Chicago Booth School of Business, at Cheung Kong University in Beijing, China, and at IIPM University in India, and also teaches director education courses at Northwestern University’s Kellogg Graduate School of Management. | | Digital Business and Information Technology | Mr. Chookaszian brings a wealth of information technology business experience to the Board which he gained throughout his career from his experience as a management consultant for eight years with Deloitte where he worked on the design and development of major computer systems with a heavy emphasis on system controls and integration with enterprise financial systems, his role as chief information officer at CNA where he was directly involved in the selection of database technology and computer control infrastructure and his service on the board of directors of a number of firms involved in information technology services, as well as additional positions. This experience provides additional insight regarding the strengths and potential risks related to the Company’s online programs and technology infrastructure. | | Cybersecurity | Mr. Chookaszian’s experience as chief information officer and chief executive officer of CNA and as chief executive officer of an Internet based financial advice provider where he was deeply involved in the design and development on the Internet infrastructure and security systems of the application, coupled with additional insight gained from service on the board of directors of a number of information technology services companies, provides the Board with assistance in recognizing and developing strategies and processes to protect against security threats relating to the Company’s technology infrastructure and the personally identifiable information maintained in the Company’s systems. |
PROPOSAL 1: Election of Directors
| Kenda B. Gonzales | Director since October 2016 |
PROPOSAL 1: Election of Directors
Ms. Gonzales, age 66, served as Chief Financial Officer of Harrison Properties LLC, a Phoenix based industrial real estate management company, from June 2007 until August 2017. Ms. Gonzales served as Chief Financial Officer of Apollo Group, Inc. (now known as Apollo Education Group, Inc.) from October 1998 to November 2006, as Senior Executive Vice President and Chief Financial Officer of UDC Homes Inc. from July 1996 to August 1998, and as Senior Vice President and Chief Financial Officer of Continental Homes Holding Corp. from May 1985 to July 1996. Ms. Gonzales began her career as a certified public accountant with Peat, Marwick, Mitchell and Company. She serves as a member of Gigi’s Playhouse of Phoenix board of directors and formerly served as an independent member and Chair of the Audit Committee of the board of directors of Main Street Restaurant Group, Inc., a former public company restaurant operator, from 2003 to 2006 and as the Chair of the Audit Committee (from 2010 to 2013) and Community Expert member (from 2009 to 2015) of the Arizona Board of Regents. Ms. Gonzales received a Bachelor of Accountancy degree from the University of Oklahoma and is a certified public accountant.
PROPOSAL 1: Election of Directors
| Expertise | Attributes and Skills | | Educational Services and Related Legal and Regulatory Experience | Ms. Gonzales’ prior experience in the for-profit education industry provides knowledge and background important to fulfilling the role of a director of the Company. | | Strategic Planning and Growth Initiatives | Ms. Gonzales is a senior financial executive with over 25 years of experience leading corporations through complex capital market transactions, mergers and acquisitions and reorganizations/turnarounds which provides additional insight and experience to the Board. | | Investment Management and Other Financial Expertise | Ms. Gonzales’ service in multiple financial roles adds significant financial and accounting expertise to the Board. |
PROPOSAL 1: Election of Directors
| Patrick W. Gross | Director since December 2005 |
PROPOSAL 1: Election of Directors
Mr. Gross, age 79, has served as Chairman of The Lovell Group, a private business and technology advisory and investment firm, since 2002. Mr. Gross also was a co-founder and principal executive officer of American Management Systems, Inc., a computer applications software and systems integration firm, from 1970 to 2002. He became chairman of its executive committee in 1982. He has served as chairman of the board of several companies owned by private equity firms. In addition, he served as Vice Chairman of Youth for Understanding International Exchange. Mr. Gross is currently the lead director of publicly-held Liquidity Services, Inc., an operator of several leading online auction marketplaces for surplus and salvage assets. He has also served on the board of directors of Capital One Financial Corporation from 1995 to 2017, Computer Network Technology Corporation from 1997 to 2005, Mobius Management System, Inc. from 2002 to 2007, Rosetta Stone from 2006 to 2020, Taleo Corporation from 2006 to 2012 and Waste Management, Inc. from 2006 to 2020. He attended Cornell University and received a Bachelor of Engineering Science degree from Rensselaer Polytechnic Institute. Mr. Gross also earned a Master of Science in engineering from the University of Michigan and a Master of Business Administration from the Stanford Graduate School of Business.
PROPOSAL 1: Election of Directors
| Expertise | Attributes and Skills | | Strategic Planning and Growth Initiatives | Mr. Gross has strong strategic planning expertise from his experience in founding and building numerous companies. He has particular expertise in leveraging information technology and advanced data analytics. | | Investment Management and Other Financial Expertise | Mr. Gross’ background in financial reporting and financing of companies, both smaller Nasdaq companies and large multi-billion NYSE companies, provides him with extensive experience in planning and implementing financial management and other ERP systems. | | Marketing | Mr. Gross brings to the Board extensive experience in direct marketing to consumers utilizing advanced data analytics. | | Governance | Mr. Gross has a keen understanding of corporate governance initiatives and trends, practical methods of implementing corporate governance processes and best practices, and a focus on fiduciary responsibilities of directors and management, arising from his service as board chairman/lead director/presiding director of NYSE, Nasdaq and private companies and as chairman of audit, compensation and governance and nominating committees for a wide range of companies. |
PROPOSAL 1: Election of Directors
| Expertise | Attributes and Skills | | Digital Business and Information Technology | Mr. Gross has been involved with the information technology business for more than four decades. He has been involved with applying evolving digital models and advanced analytics during this period. For more than 30 years, he led the application of advanced IT and analytics for major corporations and government agencies for the firm he co-founded. In addition, for the past 15 years Mr. Gross has advised and served on the boards of a number of information technology and data analytics firms providing, among others, Internet commerce applications, software as a service, security software, advanced test-and-learn analytics and propriety marketing data and analytics. | | Cybersecurity | Building on the foundation of his experience in information technology and his service on the boards of an information access security company and an email security firm, Mr. Gross has gained insight into the board oversight of cybersecurity from his service on the boards and risk committees of a major financial institution, a large national logistics and distribution firm and others. With this background, he provides the Board with insight and assistance in recognizing and developing strategies and processes to protect against security threats relating to the Company’s technology infrastructure and the personally identifiable information maintained with the Company’s databases. |
PROPOSAL 1: Election of Directors
| William D. Hansen | Director since November 2017 |
PROPOSAL 1: Election of Directors
Mr. Hansen, age 64, serves as President and Chief Executive Officer of Building Hope Holdings, Inc., a non-profit leader in charter school facilities, financing, and services. Previously, Mr. Hansen served as Chief Executive Officer and President of Strada Education Network, formerly called USA Funds, a national nonprofit dedicated to improving lives by strengthening the pathways between education and employment from July 2013 through March 2021. From July 2011 through July 2013, Mr. Hansen served as the Chief Executive Officer of Madison Education Group, LLC, an education-related consulting firm. From July 2009 to December 2010, he served as the President of Scantron Corporation, a provider of assessment and survey solutions. Mr. Hansen also served as the Chairman of Scantron Corporation from September 2010 to July 2011. Mr. Hansen held various leadership positions at Chartwell Education Group, LLC, an education-related consulting firm, from July 2005 to July 2009, including Chief Executive Officer and Senior Managing Director. Mr. Hansen served as the Deputy Secretary at the U.S. Department of Education from May 2001 to July 2003. He has served as a director of Performant Financial, a public company providing technology-enabled recovery and analytics services, since December 2011. He also served as a director of the First Marblehead Corporation, a then public specialty finance company focused on the education financing marketplace, from 2003 until that company was acquired in 2016. Mr. Hansen received a Bachelor of Science degree in Economics from George Mason University.
PROPOSAL 1: Election of Directors
| Expertise | Attributes and Skills | | Educational Services and Related Legal and Regulatory Experience | Mr. Hansen served for 15 years in the federal government, most of which was at the Department of Education where he served in key leadership positions overseeing the financial, regulatory and policy operations of the Department. This experience brings helpful regulatory perspective to the Board. | | Strategic Planning and Growth Initiatives | Serving as the principal executive officer of several education-related companies, Mr. Hansen was responsible for the success and growth of those companies. He has also served as a director on the boards of multiple education-related companies, both public and private, over the past 15 years. The Board benefits from the insight gained from these positions. | | Investment Management and Other Financial Expertise | As chief executive officer of Strada Education Network, Mr. Hansen managed a company portfolio of $1.4 billion. This experience, as well as his experience serving on public company audit committees and as assistant secretary for management and budget and chief financial officer at the Department of Education, supplements the Board’s investment management expertise. | | Governance | Mr. Hansen has obtained a variety of governance perspectives to share with the Board through his positions as president and chairman of Scantron Corporation where he was responsible to a public holding company for governance matters, chief executive officer of Strada Education Network where he was responsible for governance issues with the board of directors, chair of several governance |
PROPOSAL 1: Election of Directors
| and nominating committees, and president and chairman of several private companies where he was responsible for board and investor relations. |
PROPOSAL 1: Election of Directors
| Gregory L. Jackson | Director since November 2008 |
PROPOSAL 1: Election of Directors
Mr. Jackson, age 57, is a private investor. From January 2013 to December 2017 he was a managing partner of Jackson Park Capital, LLC and co-manager of Oakseed Opportunity Fund (an SEC registered Equity Mutual Fund). From January 2011 to April 2012, he was a senior portfolio manager with Ensign Peak Advisors. Prior to that time, Mr. Jackson was an investment partner of Blum Capital Partners, L.P. (“Blum Capital”), which he joined in 2003, and where he had served as Co-Head of its Investment Committee, a member of its affiliate, Blum Strategic GP, L.L.C., and managing member of each of the following affiliates: Blum Strategic GP II, L.L.C., Blum Strategic GP III, L.L.C., and Blum Strategic GP IV, L.L.C. His responsibilities at Blum Capital included sourcing new investment opportunities, managing Blum Capital’s investment portfolios, and overseeing the investment research process. Prior to joining Blum Capital, Mr. Jackson spent six years at Harris Associates LP where he was the co-portfolio manager of the Oakmark Global Fund (which received a Morningstar 5-star rating during his tenure) from its inception in August 1999 through October 2003. He also was a partner at Harris Associates LP and an investment analyst of domestic equities. Prior to joining Harris Associates LP, he was a partner, portfolio manager and investment analyst with Yacktman Asset Management. Mr. Jackson received a Bachelor of Science degree from the University of Utah and his Master of Business Administration from the University of Chicago.
PROPOSAL 1: Election of Directors
| Expertise | Attributes and Skills | | Educational Services and Related Legal and Regulatory Experience | Mr. Jackson has an extensive background in analyzing and investing in the for-profit education industry, having worked closely with the managements and boards of directors of Blum Capital’s portfolio companies to increase stockholder value by partnering with these companies to implement various financial, operational and governance initiatives. This experience enables him to bring to the Board deep knowledge of the industry and insights into linkages between various aspects of the Company’s business and stockholder value creation. | | Strategic Planning and Growth Initiatives | Mr. Jackson’s role as a director at portfolio companies has focused on strategic growth and planning for public companies, which experience Mr. Jackson uses to assist the Board in its strategic planning activities. Mr. Jackson also has an extensive background in analyzing and investing in the for-profit education industry and provides the Board with investors’ views on education industry fundamentals and increasing stockholder value. | | Investment Management and Other Financial Expertise | Mr. Jackson, as a career investment manager, brings the perspective of investors and his experience in analyzing businesses and developing investment strategy to the Board. |
PROPOSAL 1: Election of Directors
| Todd S. Nelson | Director since August 2015 |
PROPOSAL 1: Election of Directors
Mr. Nelson, age 65, has served as President and Chief Executive Officer of the Company since November 2023. He served in the role of Executive Chairman of the Board from January 2022 until November 23, and he previously served as President and Chief Executive Officer of the Company from August 2015 until January 2022. Prior to joining the Company, Mr. Nelson served as a director of Education Management Corporation from February 2007 through November 2013, including serving as Chairman of the Board of Directors from August 2012 until November 2013. He was also Education Management Corporation’s Chief Executive Officer from February 2007 to August 2012, and its President from February 2007 to December 2008. Mr. Nelson worked as an independent consultant from January 2006 through January 2007 after departing Education Management Corporation. Mr. Nelson worked for Apollo Group, Inc. (now known as Apollo Education Group, Inc.) from 1987 through January 2006. Mr. Nelson served in various roles with Apollo Group, Inc., including serving as President from February 1998 until January 2006, Chief Executive Officer from August 2001 until January 2006, and Chairman of the Board from June 2004 until January 2006. Mr. Nelson was a member of the faculty at the University of Nevada at Las Vegas from 1983 to 1984. Mr. Nelson received a Bachelor of Science degree in marketing from Brigham Young University and his Master of Business Administration from the University of Nevada.
PROPOSAL 1: Election of Directors
| Expertise | Attributes and Skills | | Educational Services and Related Legal and Regulatory Experience | Mr. Nelson’s career has focused on the for-profit education industry for nearly 30 years, including serving as the Company’s President and Chief Executive Officer from August 2015 until January 2022, and then again since November 2023, which brings the Board his valuable and comprehensive understanding of the Company and the industry in which it operates. | | Strategic Planning and Growth Initiatives | Mr. Nelson has experienced and led strategic growth initiatives during his prior industry positions, which provides insight and perspective as the Company implements its transformation strategy and seeks a return to sustainable growth. | | Investment Management and Other Financial Expertise | Having served as chief executive officer of several public and private companies, Mr. Nelson brings significant financial expertise to the Board. This experience, as well as his experience serving as director for different public and private companies, supplements the Board's investment management expertise. | | Marketing | Mr. Nelson's prior industry experience provides the Board with strong knowledge, perspective and insight into marketing at a private postsecondary education institution. | | Governance | Mr. Nelson is knowledgeable and experienced in governance, having served on several public and private company Boards. |
PROPOSAL 1: Election of Directors
| Leslie T. Thornton | Director since December 2005 |
PROPOSAL 1: Election of Directors
Ms. Thornton, age 65, served as Vice President and General Counsel of WGL Holdings, Inc. (“WGL”) and Washington Gas Light Company, a wholly-owned subsidiary of WGL, from January 2012 until November 2018, having joined WGL as Counsel to the Chairman in November 2011. WGL, a public retail gas and electric marketing firm and a design-build energy company, operates a regulated natural gas utility serving more than one million customers throughout metropolitan Washington, D.C., Virginia, Maryland and Pennsylvania. Prior to joining WGL, Ms. Thornton served as a partner with the law firm of Dickstein Shapiro LLP in Washington D.C. from 2004 until 2011 and as a partner with the law firm of Patton Boggs, LLP from 2000 to 2004. Beginning with the presidential transition of 1992 and until 2000, Ms. Thornton worked with U.S. Secretary of Education Richard W. Riley, first as Deputy Chief of Staff and Counselor, and then as Chief of Staff at the U.S. Department of Education. Ms. Thornton was also in charge of Continuity of Operations of Government for the Department of Education. Ms. Thornton is currently a board member of publicly-held Southwest Gas Holdings, Inc., a multi-state provider of natural gas service and a comprehensive utility infrastructure services enterprise dedicated to delivering a diverse array of solutions to North America’s gas and electric providers. Ms. Thornton holds a Bachelor of Arts degree from the University of Pennsylvania and a law degree from Georgetown University Law Center. In 2016, Ms. Thornton received her LLM in National Security Law at Georgetown University Law Center.
PROPOSAL 1: Election of Directors
| Expertise | Attributes and Skills | | Educational Services and Related Legal and Regulatory Experience | Ms. Thornton is knowledgeable in the legislative and regulatory aspects of postsecondary education from the policy and legal perspectives. She provides insight and strategic advice regarding trends and issues involved in the federal oversight of both public and private postsecondary educational institutions and providers. | | Governance | Ms. Thornton provides the Board with expertise in governance from the standpoint of corporate legal compliance and corporate process controls to assist in assuring such compliance. She developed that expertise in her legal practice, which focused on counseling large corporations in complex internal corporate investigations, federal agency and congressional investigations, regulatory matters before federal government agencies, state attorneys’ general investigations and high-level executive branch policy and political work. She continued to develop such expertise in her capacity as general counsel of WGL. In addition, Ms. Thornton is a National Association of Corporate Directors (“NACD”) Board Leadership Fellow. She has demonstrated her commitment to boardroom excellence by completing NACD’s comprehensive program of study for corporate directors. | | Cybersecurity | In her position at WGL, Ms. Thornton gained experience regarding cyber threats and other cybersecurity matters, including data breaches, which provides the Board with a valuable resource on these topics. Ms. Thornton |
PROPOSAL 1: Election of Directors
| co-authored a treatise chapter on privacy and security in the 2013 Thomson Reuters/WestLaw series entitled Successful Partnering Between Inside and Outside Counsel, is a requested speaker on these issues and has been quoted in news outlets on the topic. She also completed her Master of Laws degree in National Security Law (with a cybersecurity focus) at Georgetown Law School in 2016. Further, she has participated in several NACD panels as a subject matter expert in cybersecurity. |
PROPOSAL 1: Election of Directors
| Alan D. Wheat | Director since March 2021 |
PROPOSAL 1: Election of Directors
Mr. Wheat, age 72, is a former Congressman and currently serves as chair of Wheat Shroyer Government Relations, where he manages a bi-partisan team of public policy professionals. In 1982, he was elected to the United States House of Representatives, where he became part of the House leadership as the youngest member in Congressional history to be appointed to the Rules Committee. While in Congress from January 1983 to January 1994, he was one of the nation’s first African-Americans to represent a district with a white majority. Congressman Wheat left the House in 1994 to run for a seat in the United States Senate. He was the first minority candidate selected as a major party nominee for statewide office in Missouri. After his unsuccessful Senate race, in March 1995 Mr. Wheat became Vice President of Public Policy and Government Relations with CARE, an international relief and development organization. After CARE, he served as deputy campaign manager for the 1996 Clinton-Gore campaign and later formed Wheat Government Relations which he headed from 1998 until 2013 and later joined the law firm Polsinelli LLC in September 2013 where he served as chair of their Public Policy Practice until November 2021. Mr. Wheat holds a Bachelor of Arts degree from Grinnell College.
PROPOSAL 1: Election of Directors
| Expertise | Attributes and Skills | | Educational Services and Related Legal and Regulatory Experience | Given the Company’s highly regulated industry, Mr. Wheat’s government relations experience and skill in building coalitions brings valuable experience and insight to the Board. Further, his various positions have allowed him to develop an extensive and bipartisan network of contacts in Washington, DC. |