DEF 14A of American Public Education Inc
Filed Apr 4, 2024 · FY20230001140361-24-017936
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
| CEO Pay Ratio | 70 | | 2023 CEO Target Compensation versus Realizable Pay | 71 | | Pay Versus Performance | 72 | | Equity Compensation Plan Information | 76 | | PROPOSAL NO. 2 – ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS | 77 | | PROPOSAL NO. 3 – RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 79 | | Principal Accountant Fees and Services | 79 | | Audit Committee’s Pre-Approval Policies and Procedures | 80 | | AUDIT COMMITTEE REPORT | 81 | | DELINQUENT SECTION 16(A) REPORTS | 82 | | BENEFICIAL OWNERSHIP OF COMMON STOCK | 83 | | GENERAL MATTERS | 85 | | Availability of Certain Documents | 85 | | Stockholder Proposal and Nominations | 85 | | Other Matters | 86 |
Item 1: Election of Directors
Item 1: Election of Directors Our director nominees bring a diverse mix of backgrounds, experience, and perspectives. The Board recommends a vote FOR each nominee. See page 24.
Nominee Highlights
Nominee Highlights
Nominee Highlights
| • | 50% are diverse based on racial or gender identity and 38% are female, and 25% are diverse based on race or ethnicity | • | 100% have strategy or operational experience | | • | 75% have technology or cybersecurity expertise | • | Average tenure of independent director nominees: 4.8 years | | | | • | Average age of nominees: 55 years old |
Nominee Highlights
| | 1 | POWERING POTENTIAL AND PROSPERITY |
Director Nominees
Director Nominees
Director Nominees
| | | | Current Committee Memberships | | | | Nominee | Age | Director Since | AUD | MDC | NCG | | Eric C. Andersen, Independent(1) Operating Executive, PeakEquity Partners | 62 | 2012 | | X | | | Granetta B. Blevins, Independent Independent Consultant | 65 | 2020 | X(2) | | C | | Michael D. Braner, Independent Managing Member and Chief Compliance Officer, 325 Capital LLC | 54 | 2023 | | X | | | Anna M. Fabrega, Independent Former Chief Executive Officer, Local Bounti Corp. | 45 | 2022 | X | | | | James Kenigsberg, Independent Senior Strategic Advisor, 2U Inc. | 48 | 2022 | | | X | | Daniel S. Pianko, Independent Co-Founder and Managing Director, Achieve Partners | 47 | 2020 | | | X | | William G. Robinson, Jr., Independent President, Broadgate Human Capital, LLC | 59 | 2016 | | C | X | | Angela K. Selden President and Chief Executive Officer of the Company | 58 | 2019 | | | |
Director Nominees
| AUD | Audit Committee(1) | Chairperson of the Board | | MDC | Management Development & Compensation Committee(2) | Audit Committee Financial Expert | | NCG | Nominating and Corporate Governance Committee | | | C | Committee Chair | | | X | Committee Member | |
Director Nominees
Ms. Blevins is expected to be appointed as chair of the Audit Committee and Mr. Kenigsberg as chair of the NCG Committee immediately following the Annual Meeting.
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS The Board is currently comprised of 10 directors. Our nominees for the election of directors at the Annual Meeting include seven independent non-employee directors and our Chief Executive Officer. Jean C. Halle and Dr. Barbara “Bobbi” Kurshan have decided to not stand for reelection at the Annual Meeting, and the size of the Board will be reduced to eight directors. Each director is elected to serve a one-year term, with all directors subject to annual election. At the recommendation of the NCG Committee, the Board has nominated the following persons to serve as directors for the term beginning at the Annual Meeting on May 17, 2024: Eric C. Andersen; Granetta B. Blevins; Michael D. Braner, Anna M. Fabrega; James Kenigsberg; Daniel S. Pianko; William G. Robinson, Jr.; and Angela K. Selden. All of the nominees are currently serving on the Board. Proxies received in response to this solicitation will be voted FOR the election of each nominee named in this section unless otherwise stated in the proxy or in the case of a broker non-vote with respect to the proposal. Proxies submitted for the Annual Meeting can only be voted for those nominees named in this Proxy Statement. If, however, any director nominee is unable or unwilling to serve as a nominee at the time of the Annual Meeting, the persons named as proxies may vote for a substitute nominee designated by the Board, or the Board may reduce the size of the Board. Each nominee has consented to serve as a director if elected, and the Board does not believe that any nominee will be unwilling or unable to serve. Each director will hold office until his or her successor is duly elected and is qualified or until his or her earlier death, resignation, or removal.
Criteria for Evaluating Director Nominees
Criteria for Evaluating Director Nominees The Board provides strategic direction to the Company and oversees the performance of our business and management. The NCG Committee periodically identifies and reviews with the Board desired skills and attributes of both individual Board members and the Board overall within the context of current and future needs. Among the Committee’s responsibilities is the development of general criteria, subject to approval by the full Board, for use in identifying, evaluating, and selecting qualified candidates for election or re-election to the Board. The Committee reviews the appropriate skills and characteristics required of directors in the context of the current composition of the Board, our operating requirements, and the long-term interests of our stockholders. It may use outside consultants to assist in identifying candidates. In determining whether to recommend candidates to serve on the Board, the Committee considers (i) whether candidates meet regulatory and independence requirements, (ii) the Board’s overall composition in light of current and future needs, (iii) the past performance of incumbent directors, and (iv) whether candidates have the qualities of integrity, judgment, acumen, and the time and ability to make a constructive contribution to the Board. In reviewing the composition of the Board, the Committee considers professional skills and background, experience in relevant industries, diversity, age, tenure, and geographic background, and any applicable rules and regulations regarding the composition of the Board, including those of Nasdaq and the SEC. The Committee maintains a commitment to include candidates with a diversity of backgrounds, including women and minorities, in the pool from which the Committee selects director candidates, and considers candidates submitted by directors and management, as well as candidates recommended by stockholders, which are evaluated in the same manner as other candidates identified to it. Final approval of director candidates is determined by the full Board. As a part of our continued process of Board refreshment and succession planning, the NCG Committee and the Board regularly considers adding additional candidates to the Board. In connection with the decision to appoint Mr. Braner to the Board in 2023, we entered into a Cooperation Agreement with 325 Capital LLC. Other than the Cooperation Agreement, which contemplated that Mr. Braner would be nominated for election to the Board at the 2023 Annual Meeting, there are no arrangements or understandings between a director and any other person pursuant to which such person was elected as director or is being nominated as a director.
Criteria for Evaluating Director Nominees
| | 24 | POWERING POTENTIAL AND PROSPERITY |
Criteria for Evaluating Director Nominees
The Board has determined that all of our director nominees are qualified to serve as directors of the Company. Set forth below are some of the experiences, qualifications, attributes, and skills possessed by these nominees.
Criteria for Evaluating Director Nominees
| Qualifications and Experience | Andersen | Blevins | Braner | Fabrega | Kenigsberg | Pianko | Robinson | Selden | | Business Strategy Experience | • | • | • | • | • | • | • | • | | Finance, Investment and Accounting Experience | • | • | • | • | | • | | • | | Corporate Governance Experience | • | • | • | | | • | • | • | | Operational Experience | • | • | • | • | • | • | • | • | | Education Sector Experience | • | • | | | • | • | • | • | | Risk Management Experience | • | • | • | • | • | • | | • | | Sales & Marketing Expertise | | | | • | | | | • | | Talent Management Expertise | • | • | | • | • | • | • | • | | Technology or Cybersecurity Expertise | • | | | • | • | • | • | • |
Criteria for Evaluating Director Nominees
| | 25 | POWERING POTENTIAL AND PROSPERITY |
Criteria for Evaluating Director Nominees
The demographic makeup of our current Board, as disclosed by the Board members themselves, is as follows:
Board Nominee Diversity Matrix (as of March 21, 2024)
Board Nominee Diversity Matrix (as of March 21, 2024)
Board Nominee Diversity Matrix (as of March 21, 2024)
| Total Number of Directors: 10 | Female | Male | Did not Disclose Gender | | Part I: Gender Identity | | | | | Directors | 3 | 4 | 1 | | Part II: Demographic Background | | | | | African American or Black | — | 1 | — | | White | 2 | 2 | — | | Hispanic or Latinx | | — | — | | Two or More Races or Ethnicities | 1 | — | — | | Did Not Disclose Demographic Background | — | 1 | — |
Board Nominee Diversity Matrix (as of March 21, 2024)
Information for each nominee for director, including names, ages as of March 21, 2024, terms of office, principal occupations, and business experience is set forth below. In addition, for each nominee, we have included additional information regarding the experiences, qualifications, attributes, or skills that caused the NCG Committee and the Board to determine that the person should serve as a director for the Company.
Board Nominee Diversity Matrix (as of March 21, 2024)
| | 26 | POWERING POTENTIAL AND PROSPERITY |
Board Nominee Diversity Matrix (as of March 21, 2024)
| Eric C. Andersen | | | Director since June 2012 • Chairperson of the Board • Management Development & Compensation Committee Age: 62 Independent: Yes | Biography Mr. Andersen has served as Chairperson of the Board since May 2020. Since 2015, Mr. Andersen has been with PeakEquity Partners, a lower middle market private equity firm that specializes in making investments in enterprise software companies, where he served as a general partner and investment committee member from 2015 until January 2022 and now serves as an operating executive. Prior to joining PeakEquity, Mr. Andersen was a partner at Milestone Partners, a private equity firm, from 2011 to 2015. From 2006 to 2011 Mr. Andersen served as a Managing Director of private equity firm Silver Lake Partners, before which he worked in the consulting industry with IBM Business Consulting Services (“IBM BCS”), serving as Managing Partner, Asia Pacific responsible for IBM’s business solutions and business process outsourcing business across Asia Pacific. Before working with IBM BCS, Mr. Andersen was a senior partner at PwC Consulting, where he served in a variety of positions. Mr. Andersen has served as a director of Vertex (Nasdaq: VERX), a software company focused on delivering comprehensive tax solutions, since January 2008, and currently serves as Vertex’s lead independent director. Mr. Andersen also currently serves on the board of directors of a private company that is a portfolio company of PeakEquity, as well as an Adjunct Professor at the Villanova School of Business. Skills and Qualifications • Experience as a principal in several private equity firms • Expertise in outsourcing, information technology and software, and international operations |
Board Nominee Diversity Matrix (as of March 21, 2024)
| | 27 | POWERING POTENTIAL AND PROSPERITY |
Board Nominee Diversity Matrix (as of March 21, 2024)
| Granetta B. Blevins | | | Director since June 2020 • Nominating and Corporate Governance Committee (Chair) • Audit Committee Age: 65 Independent: Yes | Biography Ms. Blevins has worked as an independent consultant/contractor since January 2000, working in a variety of capacities for non-profit and for-profit start-ups to mid-size businesses in multiple industries. From October 2018 to September 2019, Ms. Blevins served as Chief of Staff, LRNG at Southern New Hampshire University, where she was responsible for managing strategy, budget and resources for the LRNG learning platform. She also served as Chief Financial Officer and Chief of Staff of the non-profit social enterprise Collective Shift, which created the LRNG platform, from January 2015 until its acquisition by Southern New Hampshire University in October 2018. In addition, she served as Chief Financial Officer of Education Design Studio, a fund investor and business incubator for education technology start-up companies, from December 2012 until December 2019, and Chief Financial Officer of GlassLab, Inc., a non-profit that creates digital games for learning and assessment, from May 2014 to December 2016. Prior to 2000, Ms. Blevins held senior level finance and corporate planning positions with both public and privately held companies. Ms. Blevins currently serves on the Board of Trustees of Georgetown College in Georgetown, Kentucky and Chairs the Finance Committee and is a member of the Executive Committee. Ms. Blevins is also on the Board of Directors for CHI Saint Joseph Health, part of CommonSpirit Health, and chairs the Audit and Compliance Committee and serves on the Credentials Committee. Ms. Blevins has previously served on and chaired boards of other non-profits and been a board member of another for-profit privately held company. Skills and Qualifications • Significant experience serving in senior management positions for a range of corporations and non-profits • Extensive experience in financial management, financial planning and analysis, strategic planning, strategy execution and governance • Expertise in the education industry, including with respect to technology |
Board Nominee Diversity Matrix (as of March 21, 2024)
| Michael D. Braner | | | Director since March 2023 • Management Development & Compensation Committee Age: 54 Independent: Yes | Biography Mr. Braner has served as a founding Managing Member and as Chief Compliance Officer at 325 Capital LLC, a long-term, significant, minority owner of small public companies, since March 2019, where he is involved in investment research and overseeing compliance. Previously, Mr. Braner served as a Partner at Sagard Capital Partners LP, pursuing a similar investment strategy to 325 Capital, from 2005 to May 2016. Prior to that, Mr. Braner served as a Partner in JB Investment Partners, an investment company he founded in 2003, from 2003 to 2004. Earlier in his career, Mr. Braner served for more than 10 years at Bain & Company Inc., a management consulting company, where he consulted large corporations and private equity investors. Mr. Braner also currently serves as a Board Trustee and Chairman Emeritus of the board of directors of the New York Landmarks Conservancy, an organization dedicated to celebrating, preserving, and protecting the iconic buildings and unique neighborhoods of New York City, since May 2014, and as Board Trustee of Arbor Rising, a non-profit dedicated to funding promising social entrepreneurs to secure a path out of poverty, since 2014. Skills and Qualifications • Experience in executive-level investment and business consulting • Experience as a significant shareholder of the Company • Expertise in executive leadership and corporate governance |
Board Nominee Diversity Matrix (as of March 21, 2024)
| | 28 | POWERING POTENTIAL AND PROSPERITY |
Board Nominee Diversity Matrix (as of March 21, 2024)
| Anna M. Fabrega | | | Director since May 2022 • Audit Committee Age: 45 Independent: Yes | Biography Ms. Fabrega served as Chief Executive Officer of Local Bounti Corp. from June 2023 to December 2023. In addition, from October 2021 to November 2022, Ms. Fabrega served as Chief Executive Officer of fresh prepared food subscription service company Freshly, LLC, after joining Freshly as Chief Commercialization Officer in January 2021. Prior to Freshly, Ms. Fabrega spent nine years in roles of increasing seniority with Amazon, most recently as Managing Director, Amazon Convenience Stores, which includes Amazon Go, Amazon’s cashless convenience and grocery stores, from January 2020 through January 2021, and previously as Director, Amazon Go, from 2014 through January 2020. During her Amazon Go tenure, Ms. Fabrega helped launch Amazon Go Grocery, the first “Just Walk Out” grocery store, and scale the business to 28 stores across four cities. She earlier served as Senior Manager, Marketing and Third Party Marketplace, Sporting Goods, and General Manager, Sports and Outdoors, Amazon’s $4 billion sports and outdoors business, after joining Amazon in 2011. Before Amazon, Ms. Fabrega served as a Senior Product Manager, Brand Management and Relationship Marketing, and then Senior Manager, Global Brand Strategy, at Microsoft from 2008 through 2011, Director, Brand Management and Financial Services, for Stripes Convenience Stores, a convenience store chain then owned by Susser Holdings Corporation, from 2004 through 2008, and Inventory Control Manager at J&L Industrial, an industrial distribution and supply company then owned by Kennemetal, from 2002 to 2003. Ms. Fabrega began her career in distribution and operations at McMaster-Carr Supply Company, a hardware, tools, and materials supplier, in 1999. Skills and Qualifications • Experience in marketing, including digital marketing, and business management roles • Leadership at accelerated growth and technology companies |
Board Nominee Diversity Matrix (as of March 21, 2024)
| James Kenigsberg | | | Director since June 2022 • Nominating and Corporate Governance Committee Age: 48 Independent: Yes | Biography Mr. Kenigsberg serves as a technologist for Epic Staffing Group and as a member of its board since 2022. He also has served as a Senior Strategic Advisor to 2U Inc., a leading education technology company, since January 2022, and before that served as 2U’s Chief Technology Officer, a role in which he was integral in starting and growing the company from a start-up to a global, publicly traded company, since 2008. Mr. Kenigsberg has since August 2022 also served as a Venture Partner with Emerge Education, a European seed fund investing in startup education companies. Prior to 2U, Mr. Kenigsberg’s served as a Product Development Manager and later Vice President of Application Development at The Princeton Review, an education services company, from 2000 to 2008, where he led technology and product development teams. He was also formerly a part of technology and product development teams at Thomson Reuters and Ogilvy & Mather, and has served and continues to serve as an outside advisor to a number of education and technology companies: Skills and Qualifications • Experience in education technology across multiple decades • Experience in advising education and technology companies |
Board Nominee Diversity Matrix (as of March 21, 2024)
| | 29 | POWERING POTENTIAL AND PROSPERITY |
Board Nominee Diversity Matrix (as of March 21, 2024)
| Daniel S. Pianko | | | Director since June 2020 • Nominating and Corporate Governance Committee Age: 46 Independent: Yes | Biography Mr. Pianko is the founder of and currently serves as an investor and Managing Director for Achieve Partners, since January 2019. Since April 2011, he has served as an investor and Managing Director for University Ventures, which he also founded. He also serves on the boards of directors of Education Excellence Corporation, Tiber Health, Yellowbrick Learning, and Ro Health Inc. Mr. Pianko is a frequent commentator on higher education and his insights have been featured in national media outlets including The Wall Street Journal, CNBC, TechCrunch, Inside Higher Ed, and The Chronicle of Higher Education. Prior to founding University Ventures, Mr. Pianko established a student loan fund, served as chief of staff for the public/private investments in the Philadelphia School District, and worked as a hedge fund analyst. Mr. Pianko began his career in investment banking at Goldman Sachs. He currently serves on the Board of Trustees of Harlem Village Academies. Skills and Qualifications • Experience as an investor in the higher education sector • Expertise related to higher education |
Board Nominee Diversity Matrix (as of March 21, 2024)
| William G. Robinson, Jr. | | | Director since June 2016 • Management Development & Compensation Committee (Chair) • Nominating and Corporate Governance Committee Age: 59 Independent: Yes | Biography October 2018, Mr. Robinson has served as president of Broadgate Human Capital, LLC, a human resources consulting firm. From December 2013 through September 2017, Mr. Robinson served as executive vice president and chief human resources officer of Sabre Corporation, a travel technology company, where he was responsible for leading Sabre’s global human resources organization, including talent management, organizational leadership, and culture. Prior to joining Sabre in December 2013, Mr. Robinson served as the senior vice president and chief human resources officer at Coventry Health Care, a diversified managed health care company that then had 14,000 employees, from 2012 to 2013. From 2010 to 2011, Mr. Robinson served as senior vice president for human resources at Outcomes Health Information Solutions, a healthcare analytics and information company specializing in the optimization and acquisition of medical records. Prior to that, from 1990 to 2010, he worked for General Electric, where he held several human resources leadership roles in diverse industries including information technology, healthcare, energy, and industrial, including as the human resources leader within the GE Enterprise Solutions division, where he led a global team in an organization of 20,000 employees in 200 locations worldwide. Mr. Robinson has served as a director of Clover Health Investments, Corp. (Nasdaq: CLOV), a health technology company focused on improving health outcomes for America’s seniors, since March 2021. Mr. Robinson also supports non-profits, previously serving as a director on the board of directors of MUST Ministries and currently serving as a director of the Wake Forest University Demon Deacon Club. Skills and Qualifications • Experience in human capital management • Experience as an executive officer and director of public companies |
Board Nominee Diversity Matrix (as of March 21, 2024)
| | 30 | POWERING POTENTIAL AND PROSPERITY |
Board Nominee Diversity Matrix (as of March 21, 2024)
| Angela K. Selden | | | Director since September 2019 • President and Chief Executive Officer Age 57 Independent: No | Biography Ms. Selden has served as President and Chief Executive Officer and a member of the Board since September 2019. Ms. Selden previously served as Chief Executive Officer and a member of the board of DIGARC, LLC, an education technology provider to higher education institutions, from 2016 to 2019. From July 2015 until April 2016, Ms. Selden was Interim Chief Executive Officer of Skybridge Americas, a global contact center and provider of fulfillment solutions, and served as a member of its board of directors from July 2015 through December 2018. Prior to Skybridge Americas, Ms. Selden served as Chief Executive Officer of Workforce Insight, LLC, a global provider of strategic workforce management, from 2014 to April 2015, after Workforce Insight’s acquisition by Baird Capital Partners, where Ms. Selden served as Executive in Residence from April 2013 to April 2014 and led the acquisition of Workforce Insight. Prior to her role at Baird, Ms. Selden served as Chief Executive Officer and Executive Co-Chairman of Arise Virtual Solutions, Inc., a virtual workforce solutions outsourcer. Earlier in her career, Ms. Selden spent 18 years at Accenture, including serving as the Managing Partner, leading Accenture’s North American Consumer and Industrial Products group to significant growth. Ms. Selden co-founded and served as Chairman of DinerIQ, a provider of a mobile marketing technology platform for the hospitality industry, from August 2015 to December 2021, served on the board of directors of Talent Wave, a provider of independent contractor compliance and workforce solutions, from July 2015 to June 2021, and on the University of St. Thomas, Opus College of Business’ Strategic Board of Governors from April 2012 to September 2019. From July 2013 to March 2015, Ms. Selden served as Executive Chairman and Director of Call Assistant/Strategic Fundraising, Inc., a global call center platform and services business. Skills and Qualifications • Close to 20 years’ of leadership and management experience within the education and technology-enabled solutions industries and within private-equity and publicly-traded environments • Experience delivering workforce solutions to enterprise customers and executing large-scale business transformation programs |
Board Nominee Diversity Matrix (as of March 21, 2024)
THE BOARD RECOMMENDS A VOTE FOR ELECTION OF EACH OF THE EIGHT NOMINATED DIRECTORS.
Board Nominee Diversity Matrix (as of March 21, 2024)
| | 31 | POWERING POTENTIAL AND PROSPERITY |
2023 DIRECTOR COMPENSATION
2023 DIRECTOR COMPENSATION Pursuant to our non-employee director compensation policy, for 2023, directors received an annual retainer of $70,000. The chairs of the Audit, MDC, and NCG Committees were entitled to receive an additional annual retainer of $15,000, $10,000, and $8,000, respectively. The non-employee Chairperson of the Board was entitled to receive an additional annual retainer of $50,000. The Chairperson was not entitled to receive any additional annual retainers for also serving as chair of any of the Board’s standing committees. Members of the Board may also be asked to serve as a representative of the Board on the board of one of our wholly owned subsidiaries and received a flat additional retainer of $65,000 for service with respect to APUS or RU. The annual retainers are payable in quarterly installments, and each director may, before the beginning of the applicable year, elect to receive his or her annual retainer in common stock having the same value as the portion of the annual retainer to be paid, calculated as of the close of business on the first business day of the year. In connection with our annual meeting of stockholders, our non-employee director compensation policy for 2023 also provided for an annual grant to each director of restricted stock having a value of $80,000 on the grant date. Consistent with past practice, the restricted stock grant vests on the earlier of the one-year anniversary of the date of grant or immediately prior to the next year’s annual meeting of stockholders. We also reimburse all directors for travel and other necessary business expenses incurred in the performance of their services for us and extend coverage to them under the directors’ and officers’ indemnity insurance policies. The following table sets forth information regarding compensation earned by our non-employee directors during 2023:
2023 DIRECTOR COMPENSATION
| Name(1) | Fees Earned or Paid in Cash | Stock Awards(2) | Total | | Eric C. Andersen | $120,000 | $79,995 | $199,995 | | Granetta B. Blevins | $78,000 | $79,995 | $157,995 | | Michael Braner(3) | $53,278 | $91,611 | $144,889 | | Anna M. Fabrega | $70,000 | $79,995 | $149,995 | | Jean C. Halle | $85,000 | $79,995 | $164,995 | | James Kenigsberg | $70,000 | $79,995 | $149,995 | | Dr. Barbara L. Kurshan | $70,000 | $79,995 | $149,995 | | Daniel S. Pianko | $135,000 | $79,995 | $214,995 | | William G. Robinson | $145,625 | $79,995 | $225,620 |
2023 DIRECTOR COMPENSATION
| 1) | See the Summary Compensation Table in the “Compensation Tables and Disclosures” section of this Proxy Statement for disclosure related to Ms. Selden, who is one of our named executive officers. |
2023 DIRECTOR COMPENSATION
| 2) | The grant date fair value per share of the restricted stock awards in 2023 was $6.28 for each of the other non-employee directors, each as computed in accordance with FASB ASC Topic 718.2) |
2023 DIRECTOR COMPENSATION
| 3) | Mr. Braner also received a prorated equity retainer consisting of 2,405 restricted shares on March 28, 2023, with a grant date fair value of $4.83 pursuant to his appointment to the Board of Directors. |
2023 DIRECTOR COMPENSATION
| | 32 | POWERING POTENTIAL AND PROSPERITY |
2023 DIRECTOR COMPENSATION
As of December 31, 2023, there were no exercisable or unexercisable option awards held by our 2023 non-employee directors. The aggregate number of unvested stock awards outstanding held as of that date by our 2023 non-employee directors were as follows:
2023 DIRECTOR COMPENSATION
| Name | Stock Awards | | Eric C. Andersen | 12,738 | | Granetta B. Blevins | 12,738 | | Michael Braner | 12,738 | | Anna M. Fabrega | 12,738 | | Jean C. Halle | 12,738 | | James Kenigsberg | 12,738 | | Dr. Barbara L. Kurshan | 12,738 | | Daniel S. Pianko | 12,738 | | William G. Robinson | 12,738 |
2023 DIRECTOR COMPENSATION
In 2023, Willis Towers Watson presented to the MDC Committee information on non-employee director compensation, providing comparative information on the same peer group that the MDC Committee uses for executive compensation, as well as general industry levels. Although the comparative information indicated that the Company’s non-employee director compensation remained below the 50th percentile of peers and survey data, the Board determined, including in consideration of the Company’s financial performance, to retain the existing non-employee director compensation policy.
2023 DIRECTOR COMPENSATION
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Compensation Discussion and Analysis
This Compensation Discussion and Analysis describes our executive compensation program and decisions for 2023. This section details the compensation framework applied by the Management Development & Compensation Committee (the “MDC Committee”) and, in particular, our compensation philosophy and objectives, elements of compensation, compensation decisions, and the link between executive compensation and performance. The year 2023 was a year of acceleration and rebuilding for APEI. We reported revenue of $600.5 million, marking a slight decrease compared to the previous year, but signifying further stabilization of our business. Additionally, we recorded a net loss of $2.93 per diluted share, marking a notable improvement compared to the previous year’s loss. Adjusted EPS achievement, as measured in the Annual Incentive Plan was $0.16, slightly above the threshold performance goal of $0.15. In the last two quarters of 2023, there was positive momentum across our subsidiary institutions, and we surpassed our revenue and Adjusted EBITDA expectations, which is consistent with our belief that the Company ended 2023 well positioned to move into 2024. Our commitment to educating active-duty military, veterans, nurses, and other service-minded students gives us confidence in our long-term business strategy and market position. APUS saw full-year net course registrations increased by 5% year-over-year, demonstrating continued momentum in active-duty and veteran registrations, a testament to the strong military franchise that American Military University (AMU), a part of APUS, has built. RU’s targeted programmatic marketing efforts are driving improved enrollment by streamlining processes for identifying and attracting new students. In addition, both RU and HCN made significant improvements in pre-licensure NCLEX student outcomes in 2023 – demonstrating the effectiveness of our nursing programs. Even with the positive momentum, particularly in the second half of the year, and the position in which the Company ended 2023, the overall financial performance for 2023 was uneven across the Company and neither the financial performance nor stock price performance met our expectations. As a result, under our annual incentive plan, which is designed to reward subsidiary institution and enterprise performance, all of our NEOs received below-target payouts in 2023, with the exception of Mr. Fernandes. Ms. Selden’s total payout under our 2023 annual incentive plan represented 56% of her target opportunity (or 53% of her base salary), less than her total opportunity of 147% of target (or 140% of her base salary). In addition, for our performance-based deferred stock units (“PSUs”) granted in 2023 were earned by NEOs at 81.2% of the target opportunity, less than the total opportunity of 200% of target.
Executive Compensation Best Practices
| What We Do | | How We Do It | | We Pay for Performance | | We tie a significant portion of our executives’ annual compensation opportunity to objective performance metrics and continue to monitor our compensation mix to ensure the performance-based portion is consistent with that of our peers. | | We Target Pay Competitively | | We generally seek to target compensation within a competitive range of the market median and only deliver greater compensation when warranted by actual superior performance. Conversely, we seek to deliver lower compensation when performance results do not meet our threshold expectations. We review our compensation and performance alignment as compared to our peers annually to understand where our programs are working and where we can continue to make improvements. | | We Maintain Executive Stock Ownership Guidelines | | Each of our executives is expected to own shares of our common stock with a value ranging from one to six times the executive’s base salary, depending on position. | | We Utilize Meaningful Vesting Conditions for Equity Awards | | Equity awards, including performance-based awards, have three-year ratable vesting periods. |
Executive Compensation Best Practices
| What We Do | | How We Do It | | We Incorporate ESG into Pay Decisions | | Our short-term annual incentive cash compensation program contains a range of achievement tied to satisfaction of individual objectives consistent with important strategic, financial, and operational goals, including our environmental, social, and governance (“ESG”) goals. In 2023, these included objectives related to our ESG strategy and development, cybersecurity goals and initiatives, internal controls, and employee engagement, talent assessment, retention, and development. | | We Impose a “Clawback Policy” | | We adopted a new incentive compensation recoupment policy (the “Clawback Policy”) that requires us to recover erroneously awarded incentive-based compensation previously paid to certain executive officers in the event of an accounting restatement due to our material noncompliance with financial reporting requirements. In addition, pursuant to previously existing plans and agreements, we can recover any performance-based cash or equity award made to any recipient where, as a result of an accounting restatement, performance goals were later determined not to have been achieved. We can also recover equity awards made to an employee in cases where we are required to prepare an accounting restatement due to our material noncompliance with financial reporting requirements and the restatement is the result of misconduct that resulted from the employee knowingly having engaged in that misconduct, the employee’s gross negligence, or the employee knowingly or through gross negligence having failed to prevent misconduct. | | We Utilize an Independent Compensation Consulting Firm | | The MDC Committee utilizes Willis Towers Watson, an independent compensation consulting firm, to assist the Committee in determining compensation. |
Executive Compensation Best Practices
| What We Don’t Do | | How We Prohibit It | | We Don’t Permit Hedging | | We prohibit our directors and employees, including our NEOs, from engaging in short sales, transactions in derivative securities (including put and call options), or other forms of hedging and monetization transactions, such as zero-cost collars, equity swaps, exchange funds, and forward sale contracts, that allow the holder to limit or eliminate the risk of a decrease in the value of our securities. | | We Don’t Permit Pledging | | We prohibit our directors and officers, including our NEOs, from holding our securities in margin accounts, pledging our securities as collateral or maintaining an automatic rebalance feature in savings plans, deferred compensation, or deferred fee plans, to avoid sales of our securities on behalf of an individual related to margin calls, loan defaults, and automatic rebalances, which may occur when the individual has material nonpublic information about us. | | We Don’t Offer Single-Trigger “Change of Control” Payments | | For those NEOs who have employment agreements, the agreements provide that in the case of a “change of control” the NEO only receives severance payments in connection with a termination of their employment. | | We Don’t Provide Tax Gross-Ups | | We do not provide our NEOs with tax gross-up payments for a change of control in employment agreements, or for other benefits. |
Executive Compensation Best Practices
| COMPETITIVE COMPENSATION |
Assessing Competitive Practice
Assessing Competitive Practice For 2023, the MDC Committee continued its prior engagement of Willis Towers Watson as an independent consultant to the Committee, including to assist the Committee with a competitive assessment of base salary, annual incentives, long-term equity incentives, and total direct compensation. The MDC Committee assesses the independence of its consultant annually, considering, among other factors, the independence factors established by Nasdaq. Specifically, Willis Towers Watson provides no services to the Company or its management other than the services provided to the MDC Committee in its capacity as the MDC Committee’s independent adviser on executive compensation matters. Willis Towers Watson affirmed that no member of the consulting team has any business or personal relationship with any member of the MDC Committee. Willis Towers Watson also affirmed that neither Willis Towers Watson nor any member of the consulting team serving the MDC Committee owns any stock of the Company. In addition, the MDC Committee evaluated the work of Willis Towers Watson and determined that its work raised no conflict of interest, including under the applicable independence assessment set forth in Nasdaq rules. Considering all of these factors, the MDC Committee concluded Willis Towers Watson was independent. For the Committee’s assessment of its compensation program, Willis Towers Watson provides comparative data that includes survey data for each of the NEOs and data from a group of publicly traded companies against which we compare compensation, which we refer to as our peer group. For those executives for whom both survey data and peer group data are available, the MDC Committee uses the survey data for its primary comparisons because we believe, consistent with the advice of Willis Towers Watson, that the survey data is more robust and provides a better comparison for the Company than the peer group data. This is in part because peer group data is more limited and typically cannot be size-adjusted to account for revenue responsibilities. Consistent with the advice of Willis Towers Watson, when reviewing compensation for executive positions, the MDC Committee generally considers compensation to be competitive if it falls within the following ranges relative to the 50th percentile of the comparative survey data:
Survey Data and Peer Group
Survey Data and Peer Group For 2023 compensation decisions, Willis Towers Watson provided data from the following published surveys as a primary source: the 2022 Willis Towers Watson General Industry Executive Compensation U.S. Survey Report and the 2019-2020 College and University Professionals Association for Human Resources Administrators in Higher Education Annual Survey Report. Because of the variance in size
Survey Data and Peer Group
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Survey Data and Peer Group
among the companies included in the databases for the published surveys, Willis Towers Watson informed the MDC Committee that, to the extent possible, it had assessed the published survey data in the context of APEI’s and its subsidiary institutions’ projected fiscal 2023 revenue, as revenue responsibility is typically one of the most reliable predictors of executive pay. The review of survey data for setting initial 2023 compensation included competitive analysis for Ms. Selden, Mr. Sunderland, Mr. Fernandes, Mr. MacGibbon, Mr. Beckett, and Mr. Tognola, as well as a number of other members of our management team. The review determined that the base salary and total cash compensation was generally within the competitive range, but target total direct compensation was generally below the competitive range, as was Mr. Beckett’s base salary. While the MDC Committee uses survey data as the primary source of comparative information, we believe our peer group is still an important element of the review of the competitive market for executive talent. Prior to making compensation decisions for 2023, as in years past, the MDC Committee, with the assistance of Willis Towers Watson, updated the peer group after screening for public companies within the education services, consumer services, commercial and professional services, and software and services industry that were similar in size (revenue, net income, total assets, and number of employees), were peers of our peers, and that we had selected or proxy advisory firms had identified as our peers. As a result of this evaluation process, the MDC Committee removed GP Strategies because it was acquired and Zovio Inc. because it ceased operations in 2022 and replaced them with 2U, Inc. and Laureate Education, Inc. The 2023 peer group consisted of the following companies:
Survey Data and Peer Group
| • | 2U, Inc. (TWOU) |
Survey Data and Peer Group
| • | Adtalem Global Education Inc. (ATGE) |
Survey Data and Peer Group
| • | Grand Canyon Education, Inc. (LOPE) |
Survey Data and Peer Group
| • | Laureate Education, Inc. (LAUR) |
Survey Data and Peer Group
| • | Lincoln Educational Services Corporation (LINC) |
Survey Data and Peer Group
| • | Perdoceo Education Corporation (PRDO) |
Survey Data and Peer Group
| • | Strategic Education, Inc. (STRA) |
Survey Data and Peer Group
| • | Stride, Inc. (LRN) |
Survey Data and Peer Group
| • | Universal Technical Institute, Inc. (UTI) |
Survey Data and Peer Group
The review of our peer group for setting initial 2023 compensation resulted in comparative information for Ms. Selden and Mr. Sunderland. Comparative information was not available for the remaining NEOs due to the more limited sample size of peer group data as compared to survey data.
Survey Data and Peer Group
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Survey Data and Peer Group
| ELEMENTS OF COMPENSATION |
Survey Data and Peer Group
The compensation program for our NEOs is comprised of three core elements: base salary, annual incentive cash compensation, and long-term equity incentives.
Survey Data and Peer Group
| Pay Element | | How It Links To Performance | | | BASE SALARY | | | | | • | Regular, fixed compensation element | • | Informed by the 50th percentile of the survey data received from the MDC Committee’s independent compensation consultant | | • | Reviewed annually | • | Intended to be part of a competitive total compensation package | | • | Reflects each NEO’s individual role and responsibility | | | | SHORT-TERM ANNUAL INCENTIVE CASH COMPENSATION | | | | | • | Provides cash incentives for achieving and surpassing corporate and individual goals | • | Provides compensation for annual performance, with a quarterly element for individual objectives | | • | Offers the opportunity for NEOs to earn: | • | Helps focus executives on corporate financial, strategic, and operational plans and goals that are expected to lead to increased stockholder value | | | ○ annual payments for achievement of earnings, revenue, and enrollment targets; and ○ annual payments for satisfaction of individual objectives | • | This focus is enhanced through the stretch portion of the annual incentive plan, an additional incentive that pays an additional amount to NEOs for superior performance | | • | Generally structured so that target total cash (base salary plus annual incentives) is competitive with the 50th percentile of the survey data when target performance goals under the annual incentive plan are achieved | | | | LONG-TERM EQUITY INCENTIVE COMPENSATION | | | | | • | Annual grants of equity awards consisting of time-based restricted stock units (“RSUs”) and PSUs | • | Intended to align the interests of the NEOs with those of our stockholders | | • | All awards vest over three years | • | Time-based vesting aids in the retention of NEOs | | • | PSUs tied to fiscal year achievement of revenue and Adjusted EBITDA | • | Revenue and Adjusted EBITDA performance measures align with metrics that are relevant to the achievement of our long-term strategic goals | | • | Generally selected so that total target compensation is competitive with the 50th percentile of the survey data received from the MDC Committee’s independent consultant | • | The MDC Committee retains the right to adjust equity awards downward | | • | Provides compensation that is tied to longer-term performance | | |
Survey Data and Peer Group
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Survey Data and Peer Group
| 2023 COMPENSATION DECISIONS |
Survey Data and Peer Group
In setting base salary, annual incentive cash compensation, and long-term equity incentives for 2023, the MDC Committee considered, among other factors, the compensation levels for our NEOs in 2022, the respective performances of each of our continuing NEOs in 2022, an enhanced focus on differentiation and pay-for-impact based on a culture of performance and accountability, internal fairness and equity consistent with role, and what the Committee believed was required based on the marketplace for executive talent, including based on the market information provided by Willis Towers Watson.
Annual Incentive Cash Compensation
Annual Incentive Cash Compensation Overall Opportunity. We believe annual incentive cash compensation furthers our compensation philosophy and objectives by focusing our NEOs on performance goals that measure corporate strategic, financial, and operational objectives. The total opportunity for annual cash incentive compensation for our NEOs under our annual incentive plan (“AIP”) is expressed as a target percentage of base salary. We further enhance the focus on performance goals through a stretch incentive opportunity under the AIP that pays an additional amount to our NEOs for superior performance, which we refer to as the stretch portion of the AIP. The following table sets forth the target and stretch incentives under the AIP, expressed as a percentage of base salary.
Annual Incentive Cash Compensation
| Named Executive Officer | Target Incentive | Stretch Incentive (% of Base Salary) | Total Maximum Potential | | Angela K. Selden | 95 | 45 | 140 | | Richard W. Sunderland, Jr. | 50 | 30 | 80 | | Nuno S. Fernandes | 65 | 30 | 95 | | Craig S. MacGibbon | 50 | 30 | 80 | | Thomas A. Beckett | 50 | 20 | 70 | | Jeffrey C. Tognola | 50 | 30 | 80 |
Annual Incentive Cash Compensation
The target and stretch percentages for Ms. Selden, and Mr. Sunderland reflect the minimum target and stretch percentages set forth in their employment agreements. The target and stretch percentages for Mr. Fernandes, Mr. MacGibbon, and Mr. Tognola were set in connection with their appointments to their respective positions, and Mr. Beckett’s target and stretch percentages reflect the percentages set for all executives at a similar level. After considering the survey data and the individual performance of the executives, the MDC Committee determined that the percentages for all continuing NEOs should remain the same for 2023. We believe that the proportion of target annual incentive compensation to target total cash compensation (base salary plus target annual incentive pay) for our NEOs should be a relatively high percentage. It is also the Committee’s general intent, as discussed above, that target annual incentives should be structured so that target total cash compensation approximates the 50th percentile of the survey data for achievement of target performance goals under the AIP. We believe that positioning to be competitive with the 50th percentile is appropriate for target total cash compensation because of the high level of performance that we believe is required from our executives in order for us to achieve our performance goals. We believe the high percentage of compensation tied to incentive compensation increases the focus of our NEOs on achieving our performance goals. Mr. Tognola’s departure on July 22, 2023, was treated as a termination by the Company without cause under the American Public Education, Inc. Executive Severance Plan (the “Executive Severance Plan”), and he was therefore eligible for a prorated annual incentive plan payout for 2023. Performance Measures. The MDC Committee intended that performance under the NEOs’ AIP at both the target and stretch incentive levels should be measured based on our achievement of our financial performance goals and individual achievement of individual objectives and key results (“OKRs”). We view this split among goals as an important reflection of our belief that our NEOs should be focused on the overall performance of the business and also on individualized objectives that are consistent with important strategic, financial, and operational goals. We also believe this split encourages a focus on multiple performance metrics rather than focusing on one particular metric to the exclusion of others that are also important to our results. For 2023, the Committee determined to maintain a structure with 80% of the target award based on business performance and 20% of the target award based on achievement of individual OKRs. OKRs are
Annual Incentive Cash Compensation
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Annual Incentive Cash Compensation
enterprise- or subsidiary institution-wide annual objectives with individualized component goal results, or “key results,” that are consistent with our strategic, financial, and operational goals. The OKR structure includes quarterly targets toward each key result that can be adjusted over the course of the year and serve as milestones toward achievement and help to measure progress. OKRs are developed through collaborative goal-setting and are designed to be challenging, ambitious goals with measurable results. In setting OKRs, objectives are first defined by either Ms. Selden or the applicable subsidiary institution leadership, and key results are then established along with the quarterly milestones. OKRs for subsidiary institution leaders are approved by Ms. Selden, and Ms. Selden’s OKRs are recommended by the Chairperson of the Board, in consultation with Ms. Selden, and approved by the MDC Committee. Business Performance Measures (80% of the AIP target opportunity). The MDC Committee determined that the portion of each NEO’s 2023 AIP award that relates to business performance would be based on achieving and surpassing specified EPS, enrollment, and revenue metrics. The Committee initially selected EPS as a performance measure because of its strong alignment with stockholder value creation and enrollment as a way to focus on the importance of growth and determined to retain EPS and enrollment as the performance metrics for 2023 for the same reasons. Given the relative size of Graduate School USA (“GSUSA”) and HCN to the consolidated enterprise, for NEOs at the APEI level, the Committee determined to combine the performance of these two businesses into one measure that was based on combined revenue. The Committee selected the revenue metric to further underscore its importance across all subsidiary institutions in addition to bottom-line results. For those executives employed at the APEI level, the AIP opportunity related to business performance measures was allocated 25% to APEI EPS performance, 33% to each of APUS and RU enrollment, and 9% to a combination of GSUSA and HCN revenue. Mr. Fernandes’ AIP opportunity related to business performance was allocated 25% to APEI EPS and 37.5% to each of APUS EPS and enrollment performance. In selecting consolidated and institution-specific business performance goals, the Committee’s intention was to focus executives at the APEI level both on APEI’s overall business and also the business of the Company’s subsidiary institutions, and to focus executives employed at our subsidiary institutions on both the subsidiary institution where they were employed and the larger overall context of the Company. The following table shows the business performance goals for the APEI-level executives and for Mr. Fernandes expressed as a percentage of the portion of the AIP award at target that relates to business performance.
Annual Incentive Cash Compensation
| | EPS Weighting | | Enrollment Weighting | | | Revenue Weighting | | | Company | APUS | APUS | Rasmussen | Total | (Hondros and GSUSA) | | APEI Executives | 25% | N/A | 33% | 33% | 66% | 9% | | Mr. Fernandes | 25% | 37.5% | 37.5% | N/A | N/A | N/A |
Annual Incentive Cash Compensation
Earnings Per Share. The MDC Committee used the target EPS for consolidated financial performance for the APEI-level executives, and used APUS EPS performance for Mr. Fernandes, in each case as was included in our budget when approved by the Board. For 2023, the Committee also specified that 50% of the target amount would be paid if earnings per share thresholds were attained that reflected 80% achievement of the target levels, which the Committee determined was at a level of achievement that would require effort for the Company to achieve. The Committee determined that it was appropriate to provide an incentive at a threshold level because it would provide an annual incentive that reflected the positive performance of the Company and the contributions of our employees and NEOs. The Committee provided that the stretch portion of the AIP related to financial performance would be payable on earnings per share that reflected 110% achievement of the target levels. This level of achievement was viewed as representing exceptional performance for which management should be rewarded. In setting the 80% and 110% levels,
Annual Incentive Cash Compensation
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Annual Incentive Cash Compensation
the Committee also considered analysis from Willis Towers Watson, including a review of market practice and historical achievements, which reflected that achievement at these levels was neither certain at the threshold level or likely to be achieved at the stretch level. The tables below show the goals for consolidated APEI EPS and achievement against APEI EPS and APUS EPS goals.
Annual Incentive Cash Compensation
| | 2023 EPS Goals | | | | | | | APEI EPS | Threshold | Target | Stretch | 2023 Result | Achievement | Earned | | Goal | $0.15 | $0.19 | $0.21 | $0.16 | Above Threshold | 63% of target |
Annual Incentive Cash Compensation
| | Achievement(1) | Earned | | APUS EPS | 171% of Target | Target + 100% of Stretch |
Annual Incentive Cash Compensation
| (1) The specific targets for APUS EPS are not disclosed because they relate to amounts that are not publicly disclosed and disclosure would result in competitive harm. |
Annual Incentive Cash Compensation
APEI 2023 EPS achievement for 2023 was assessed to be above threshold, but below target, resulting in earning a payout of 63% of the APEI EPS target. Mr. Fernandes earned 100% of the target and 100% of the stretch goal for the APUS EPS metric. As a result, Mr. Fernandes earned 100% of the target portion and 100% of the stretch portion of the AIP opportunity associated with APUS performance. For 2023, the MDC Committee adjusted APEI EPS to exclude the impact of an impairment of goodwill, an equity investment loss, loss on an assets held for sale, and loss on disposals. The Committee concluded that these adjustments are consistent with its historical practice, market practices, and provided an incentive to leadership to focus on results they control. Enrollment and Revenue. In addition to EPS, for 2023, the MDC Committee used total enrollment at each of APUS and RU as elements of the AIP in order to motivate NEOs to focus on enrollment. For Mr. Fernandes, they only used total enrollment at APUS. The MDC Committee set the target enrollment number based on the number of enrollments anticipated by our budget as approved by the Board. Additionally, for 2023, for NEOs other than Mr. Fernandes, the MDC Committee added a combined budgeted revenue metric for HCN and GSUSA that reflects the budgeted amounts for those businesses approved by the Board of Directors. For 2023, the Committee also specified that 50% of the target amount would be paid if enrollment thresholds were attained at 95% and revenue thresholds were attained at 80% of the target levels, which the Committee believed was a level of achievement that would still require effort to achieve. As with EPS, the Committee determined that it was appropriate to provide an incentive at a threshold level because it would provide an annual incentive that reflected the positive performance of the Company and the contributions of our employees and NEOs. The Committee provided that the stretch portions of the AIP related to enrollment and revenue would be payable for achievement at 103% and 110% of the respective target levels. This level of achievement was viewed as representing exceptional performance for which management should be rewarded. For 2023, APUS had total enrollment of 367,599 and RU had total enrollment of 57,097. As a result of APUS enrollment, our NEOs earned 100% of the target portion of the AIP associated with APUS enrollment, or approximately 26% of the total target AIP opportunity for NEOs other than Mr. Fernandes. Because the APEI EPS target was not achieved, NEOs other than Mr. Fernandes were not eligible for the APUS enrollment stretch payments. Because the APUS target EPS was achieved, Mr. Fernandes received the APUS enrollment stretch payment, and the portion of the payout of his AIP associated with APUS enrollment represented 47% of his total target AIP opportunity. Additionally, our NEOs earned 100% of the target portion of the AIP associated with GSUSA and HCN revenue, or approximately 7% of the total target AIP opportunity for NEOs other than Mr. Fernandes.
Annual Incentive Cash Compensation
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Annual Incentive Cash Compensation
The tables below show the goals for APUS and RU enrollment and achievement against each of the enrollment goals.
Annual Incentive Cash Compensation
| Enrollment | Threshold | Target | Stretch | 2023 Results | Achievement | Earned | | APUS | 337,798 | 355,577 | 366,244 | 367,599 | 100% of Stretch | 100% of Target | | RU | 57,751 | 60,791 | 62,615 | 57,097 | Below Threshold | None |
Annual Incentive Cash Compensation
Objectives and Key Results (20% of the AIP target opportunity). OKRs are annual objectives with individualized, component goals, or “key results” set for each NEO and are consistent with our strategic, financial, and operational goals. OKRs are designed to be challenging, ambitious goals with measurable results. In setting OKRs, the annual objectives are first defined, the key results within those objectives are established, and the narrower quarterly targets toward each key result are then formulated. In 2023, the Chairperson of the Board met with Ms. Selden to discuss developing OKRs for Ms. Selden and the other executive officers to facilitate alignment between the Board and the executives on the strategic direction for the Company. The Chairperson of the Board then recommended Ms. Selden’s OKRs to the MDC Committee, which subsequently approved her OKRs. Ms. Selden approved the OKRs for the other corporate-level executives, as well as the OKRs for Mr. Fernandes. On a quarterly basis commencing after the completion of the second quarter, in addition to a self-assessment, Ms. Selden, assessed achievement for the other NEOs against the milestones and determined whether the next quarter’s previously established milestones remained relevant. We believe that this structure encourages management to focus on not only the current year’s financial and business results, which are covered by other parts of the AIP, but also operational successes that will help prepare the Company for growth and improvement. By focusing on goals consistent with our strategic, financial, and operational plans, OKRs are intended to focus the executives on goals that will deliver long-term stockholder value. OKRs provide personal accountability and reward for Company performance because executives are directly responsible for or contribute to their achievement and are assessed on an individualized basis. In addition, the establishment of quarterly milestones encourages NEOs to work toward objectives throughout the fiscal year, allows for better tracking of progress toward those objectives, and provides us with the ability to flexibly adjust key results as conditions warrant. The MDC Committee set overlapping objectives for all executives to reflect that executives must work together to achieve results. NEOs shared a combination of the following objectives for 2023, each with corresponding, individualized component goals and quarterly key results:
Annual Incentive Cash Compensation
| • | Drive Growth – including with respect to enrollment, retention, referrals, and integrating and assessing future acquisitions and products; |
Annual Incentive Cash Compensation
| • | Win With Students – including with respect to redefining tailored learning experiences, student satisfaction, marketing, and brand awareness; |
Annual Incentive Cash Compensation
| • | Win With Employees – including with respect to training, efficiency, recruitment, and engagement; |
Annual Incentive Cash Compensation
| • | Drive Efficiency – including through shared services, streamlined workstreams, real estate, culture of performance and growth, and prioritizing cybersecurity; and |
Annual Incentive Cash Compensation
| • | Maintain Top Performing Regulatory and Public Company Compliance – including by regularly reviewing and updating governance policies and practices to reflect best practices, updating and evaluating the Enterprise Risk Management process, and a focus on ESG priorities. |
Annual Incentive Cash Compensation
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Annual Incentive Cash Compensation
OKR Achievement To assist in determining the extent to which OKRs were met, each NEO was required at the end of the year to self-assess their performance and Ms. Selden also provided her assessment of each NEO after reviewing their self-assessments. Each NEO, other than Ms. Selden, was awarded a percentage payout for OKRs based on Ms. Selden’s assessment. Ms. Selden also assessed her own individual OKR achievement by considering her contributions to organizational success in 2023. Notwithstanding that she self-assessed her performance at a higher percentage, Ms. Selden made the decision to cap her self-assessment at 50% of OKR achievement, significantly below the achievement of other NEOs and her own self-assessment, in order to take accountability for the inconsistent financial performance of parts of the organization in 2023. The MDC Committee then independently assessed Ms. Selden’s OKR performance. After consideration, the MDC Committee then adopted the capped assessment recommended by Ms. Selden, which was below the actual level of achievement and resulted in Ms. Selden’s 2023 short-term incentive being 56% of her target opportunity (or 53% of her base salary), significantly less than her total opportunity of 147% of target (or 140% of her base salary) and below the payout percentages achieved by other NEOs and members of senior leadership. Annual Incentive Plan Payout The following tables show the target opportunities and payouts for each element of the AIP for each NEO, as well as total target opportunities and payouts.
Ms. Selden
| | Target AIP Opportunity | | Stretch AIP Opportunity | | Total AIP Opportunity | | Actual AIP Payout | | | Base Salary | Percent of Base Salary | Dollar Amount | Percent of Base Salary | Dollar Amount | Percent of Base Salary | Dollar Amount | Percent of Target | Dollar Amount | | $795,000 | 95% | $755,250 | 45% | $357,750 | 140% | $1,113,000 | 56% | $423,997 |
Ms. Selden
| Goal Category | | Goal | Target Opportunity | Achievement | Payout | | Business Performance | 80% | | $604,200 | | $348,472 | | Earnings Per Share | | APEI EPS | $151,050 | Above threshold | $94,708 | | Enrollment | | APUS Enrollment | $199,386 | Target | $199,386 | | | | RU Enrollment | $199,386 | Below threshold | $0 | | Revenue | | GSUSA/HCN Revenue | $54,378 | Target | $54,378 | | Objectives and Key Results | 20% | | $151,050 | 50%(1) | $75,525 | | TOTAL | 100% | | $755,250 | | $423,997 |
Mr. Sunderland
| | Target AIP Opportunity | | Stretch AIP Opportunity | | Total AIP Opportunity | | Actual AIP Payout | | | Base Salary | Percent of Base Salary | Dollar Amount | Percent of Base Salary | Dollar Amount | Percent of Base Salary | Dollar Amount | Percent of Target | Dollar Amount | | $475,000 | 50% | $237,500 | 30% | $142,500 | 80% | $380,000 | 63% | $149,483 |
Mr. Sunderland
| Goal Category | | Goal | Target Opportunity | Achievement | Payout | | Business Performance | 80% | | $190,000 | | $109,583 | | Earnings Per Share | | APEI EPS | $47,500 | Above threshold | $29,783 | | Enrollment | | APUS Enrollment | $62,700 | Target | $62,700 | | | | RU Enrollment | $62,700 | Below threshold | $0 | | Revenue | | GSUSA/HCN Revenue | $17,100 | Target | $17,100 | | Objectives and Key Results | 20% | | $47,500 | 84%(1) | $39,900 | | TOTAL | 100% | | $237,500 | | $149,483 |
Mr. Fernandes
| | Target AIP Opportunity | | Stretch AIP Opportunity | | Total AIP Opportunity | | Actual AIP Payout | | | Base Salary | Percent of Base Salary | Dollar Amount | Percent of Base Salary | Dollar Amount | Percent of Base Salary | Dollar Amount | Percent of Target | Dollar Amount | | $475,000 | 65% | $308,750 | 30% | $142,500 | 95% | $451,250 | 126% | $388,270 |
Mr. Fernandes
| Goal Category | | Goal | Target Opportunity | Achievement | Payout | | Business Performance | 80% | | $247,000 | | $330,843 | | Earnings Per Share | | APEI EPS | $61,750 | Above threshold | $38,717 | | | | APUS EPS | $92,625 | Stretch | $146,063 | | Enrollment | | APUS Enrollment | $92,625 | Stretch | $146,063 | | Objectives and Key Results | 20% | | $61,750 | 93%(1) | $57,428 | | TOTAL | 100% | | $308,750 | | $388,270 |
Mr. MacGibbon
| | Target AIP Opportunity | | Stretch AIP Opportunity | | Total AIP Opportunity | | Actual AIP Payout | | | Base Salary | Percent of Base Salary | Dollar Amount | Percent of Base Salary | Dollar Amount | Percent of Base Salary | Dollar Amount | Percent of Target | Dollar Amount | | $390,000 | 50% | $195,000 | 30% | $117,000 | 80% | $312,000 | 65% | $127,413 |
Mr. MacGibbon
| Goal Category | | Goal | Target Opportunity | Achievement | Payout | | Business Performance | 80% | | $156,000 | | $89,973 | | Earnings Per Share | | APEI EPS | $39,000 | Above threshold | $24,453 | | Enrollment | | APUS Enrollment | $51,480 | Target | $51,480 | | | | RU Enrollment | $51,480 | Below threshold | $0 | | Revenue | | GSUSA/HCN Revenue | $14,040 | Target | $14,040 | | Objectives and Key Results | 20% | | $39,000 | 96%(1) | $37,440 | | TOTAL | 100% | | $195,000 | | $127,413 |
Mr. Beckett
| | Target AIP Opportunity | | Stretch AIP Opportunity | | Total AIP Opportunity | | Actual AIP Payout | | | Base Salary | Percent of Base Salary | Dollar Amount | Percent of Base Salary | Dollar Amount | Percent of Base Salary | Dollar Amount | Percent of Target Bonus | Dollar Amount | | $376,139 | 50% | $188,070 | 20% | $75,228 | 70% | $263,297 | 65% | $122,038 |
Mr. Beckett
| Goal Category | | Goal | Target Opportunity | Achievement | Payout | | Business Performance | 80% | | $150,456 | | $86,775 | | Earnings Per Share | | APEI EPS | $37,614 | Above threshold | $23,584 | | Enrollment | | APUS Enrollment | $49,650 | Target | $49,650 | | | | RU Enrollment | $49,650 | Below threshold | $0 | | Revenue | | GSUSA/HCN Revenue | $13,541 | Target | $13,541 | | Objectives and Key Results | 20% | | $37,614 | 94%(1) | $35,263 | | TOTAL | 100% | | $188,070 | | $122,038 |
Mr. Tognola
| | Target AIP Opportunity | | Stretch AIP Opportunity | | Total AIP Opportunity | | Actual AIP Payout | | | Pro-Rated Base Salary | Percent of Base Salary | Dollar Amount | Percent of Base Salary | Dollar Amount | Percent of Base Salary | Dollar Amount | Percent of Target Bonus | Dollar Amount | | $231,000 | 50% | $115,500 | 30% | $69,300 | 80% | $184,800 | 61% | $70,617 |
Mr. Tognola
| Goal Category | | Goal | Target Opportunity | Achievement | Payout | | Business Performance | 80% | | $92,400 | | $53,292 | | Earnings Per Share | | APEI EPS | $23,100 | Above threshold | $14,484 | | Enrollment | | APUS Enrollment | $30,492 | Target | $30,492 | | | | RU Enrollment | $30,492 | Below threshold | $0 | | Revenue | | GSUSA/HCN Revenue | $8,316 | Target | $8,316 | | Objectives and Key Results | 20% | | $23,100 | 75%(1) | $17,325 | | TOTAL (prorated for 2023 service) | 100% | | $115,500 | | $70,617 |
2023 Equity Incentives
2023 Equity Incentives We believe that a significant portion of our NEOs’ total compensation should be in the form of long-term equity incentive awards in order to align the priorities of the NEOs with the interests of our stockholders. To further emphasize performance and ensure that management’s objectives are aligned with those of our stockholders, the 2023 annual equity awards for our continuing NEOs were split 50% as RSUs and 50% as PSUs. Consistent with historical practice, both the RSUs and PSUs each vest in three equal installments on the first three anniversaries of the grant date, subject to achievement of performance metrics for the PSUs. The size of the equity incentive awards for our NEOs were discussed at the same time the MDC Committee met to set the other elements of compensation so that all elements of compensation were set taking into account the total target compensation opportunity. In determining the appropriate annual equity incentive grants for our NEOs, the Committee reviewed the comparative survey data provided by Willis Towers Watson. The Committee determined to generally make awards so that total target compensation for our executives generally did not exceed amounts that would be considered competitive with the 50th percentile of the survey data, with exceptions for certain executives based on their roles and competitive and other factors. In setting the equity awards, the MDC Committee also continued to consider equitable treatment among executives but recognized that the market for competitive talent varies among executives and that it is appropriate for equity awards to vary among executives. The MDC Committee’s process to set equity awards in 2023 resulted in an increased award size for Ms. Selden in 2023. The MDC Committee thought this increase was appropriate in light of her and the Company’s 2022 performance, the anticipated business momentum in 2023 at the time of setting target compensation in January 2023, and the decision not to increase her base salary for 2023 but rather to increase the portion of her total target compensation aligned with financial and stock performance. The resulting total target compensation for Ms. Selden was consistent with the survey market median and below the competitive market range, as described on page 38, compared to our peer group. Because
2023 Equity Incentives
| | 49 | POWERING POTENTIAL AND PROSPERITY |
2023 Equity Incentives
2023 equity grants were made at the beginning of the year, the MDC Committee was not able to take into account 2023 performance when making the awards. However, because 50% of each award is performance based, 2023 performance does have an impact on the value ultimately realized for the 2023 awards. Actions taken with respect to equity incentive awards as a result of the Company’s performance in 2023 are discussed in the “2024 Equity Incentives and Compensation Decisions” section below. After determining the dollar value of equity incentive awards, consistent with its historical practice, the Committee calculated the number of shares to be subject to the awards using a 60-day trailing average for our stock price as of a date shortly before the Committee met to approve the grants. We believe that doing so removes some of the variability that can impact awards if the Committee were to use the stock price on only one date. The 60-day trailing average stock price for the 2023 equity awards issued to the NEOs was $12.91. The stock award values reported in the Summary Compensation Table reflect the February 7, 2023, grant date closing price of $13.41, calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. For 2023, the following chart shows the value of the equity awards for each NEO, and also shows the resulting numbers of RSUs and of PSUs at the target level of performance. Consistent with the terms of our equity award agreements, amounts are not shown for Mr. Tognola, whose 2023 equity awards were forfeited upon his departure, prior to vesting.
2023 Equity Incentives
| | Equity Awards | | | | | | NEO | Base Salary ($) | Calculated Value ($) | Value (% of Salary) | RSUs (#) | PSUs (#) | | Ms. Selden | $795,000 | $2,800,000 | 352% | 108,443 | 108,443 | | Mr. Sunderland | $475,000 | $715,000 | 151% | 27,692 | 27,692 | | Mr. Fernandes | $475,000 | $400,000 | 84% | 15,492 | 15,492 | | Mr. MacGibbon | $390,000 | $300,000 | 77% | 11,619 | 11,619 | | Mr. Beckett | $376,139 | $325,000 | 86% | 12,587 | 12,587 |
2023 Equity Incentives
In order to reflect the importance of overall financial performance and also the importance of growth for the Company, for 2023, the Committee determined to continue to use revenue and Adjusted EBITDA as the performance metrics for the PSUs, each weighted at 50%. Revenue is defined as the Company’s accounting principles generally accepted in the United States’ (“GAAP”) revenue as reported. Adjusted EBITDA, which is a non-GAAP measure, was defined for the purposes of the PSU awards as income from operations before income taxes plus interest expense, depreciation and amortization, stock-based compensation expense, and loss on disposal of assets, and the Committee had the authority and stated expectation it would also make adjustments for unbudgeted or unusual items, such as impairments, effects of acquisitions and legal settlements. For 2023, the MDC Committee adjusted for impairment of goodwill and intangible assets, expenses associated with merger and acquisition and integration activities, and other one-time costs, and gains (losses) on acquisitions. The Committee concluded that these adjustments are consistent with its historical practice and market practice and provided an incentive to leadership to focus on results they control. The award earned is further subject to time-based vesting, in order to continue to provide a retention element and to encourage executives to focus on the long-term performance of the Company.
2023 Equity Incentives
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2023 Equity Incentives
The MDC Committee set targets for the PSUs and RSUs reflecting the approved budget. The threshold level for the PSUs was established at 50% of the target level and the maximum level was set at 200% of the target level in 2023, consistent with 2022 levels. These numbers reflected the MDC Committee’s view of appropriate performance. For levels of revenue and Adjusted EBITDA between the applicable dollar amounts set forth below, the percentage of the award earned would be prorated accordingly.
2023 Equity Incentives
| | | Revenue (50% of Target Number of PSUs) | | Adjusted EBITDA (50% of Target Number of PSUs) | | | | Earnout (% of Target) | % of Budget Amount | Goal | % of Budget Amount | Goal | | Threshold | 50 | 90 | $556.4 million | 85 | $49.1 million | | Target | 100 | 100 | $618.2 million | 100 | $57.8 million | | Maximum | 200 | 110 | $680.0 million | 115 | $66.4 million | | Actual Result | | | $600.5 million | | $53.7 million |
2023 Equity Incentives
Our 2023 revenue was $600.5 million, or approximately 97% of the target goal, and Adjusted EBITDA was $53.7 million, approximately 93% of target goal, resulting in approximately 81% of the target PSU awards being earned.
2024 Equity Incentives and Compensation Decisions
2024 Equity Incentives and Compensation Decisions The MDC Committee considered the Company’s overall stock price and financial performance in 2023 when making compensation decisions for 2024, including when making decisions with respect to 2024 annual equity incentive awards. As a result of a lower stock performance than expected in 2023, the Committee determined that there were fewer shares available for issuance under its 2017 Omnibus Incentive Plan, as amended (the “Stock Incentive Plan”) than would be required for typical grant sizes in the ordinary course of business. Rather than seek additional shareholder approval in 2024 to increase the number of shares available for issuance under the American Public Education, Inc. 2017 Omnibus Incentive Plan, the MDC Committee determined to lower the size of awards to be made to its executive officers in 2024. The Committee’s decision was made in part in reflection of the stock price performance being lower than what was desired for the Company, to reflect an alignment of pay versus performance, to minimize the dilutive effects of equity awards and because executives and shareholders should be aligned with respect to equity. The MDC Committee further reduced the 2024 long-term incentive award to Ms. Selden to reflect that while she and the other executive officers benefited from certain adjustments in determining the earned number of PSUs for 2023, the Company’s stock price performance was significantly lower than desired in 2023, and that while she had received an increase to her equity award in 2023, it was appropriate to provide a decrease in 2024. Ms. Selden’s 2024 equity awards granted on January 31, 2024 were valued at approximately $1.2 million, compared to the 2023 equity award value of approximately $2.8 million. The overall approach to considering 2023 performance in the context of 2024 compensation decisions also resulted in Ms. Selden’s base salary not increasing in 2024, for the second year in a row. Similar to its approach with respect to executive compensation, the MDC Committee recommended, and the Board approved, maintaining non-employee director compensation for 2024, including the annual equity award, at the same level for the fourth consecutive year.
Cash Sign-On Bonus
Cash Sign-On Bonus In connection with his appointment to the role of our Chief Experience Officer in January 2022, Mr. Tognola received a sign-on bonus of $100,000, which was paid in two installments, the second of which was paid in January 2023 on the first anniversary of Mr. Tognola’s start date.
Employment Agreements and Post-Termination Compensation
Employment Agreements and Post-Termination Compensation We have entered into employment agreements with Ms. Selden and Mr. Sunderland. These agreements provide the executive with severance payments upon certain terminations, including termination without cause, termination by the executive for good reason, or upon certain triggering events following a change of control. The agreements provide for certain payments in connection with a termination of the executives’ employment within 60 days prior to or 365 days following a change of control of the Company, in the case of Ms. Selden or within 180 days with respect to Mr. Sunderland. We believe that these agreements were necessary to attract some of our NEOs and help to retain these NEOs due to the prevalence of similar arrangements in the market in which we compete for executives. In 2014, the MDC Committee (then the Compensation Committee) authorized negotiating an employment agreement with Mr. Sunderland on substantially the same terms as the agreements with our other then-serving NEOs. The Committee determined it was appropriate to have an employment agreement with Mr. Sunderland in an effort to retain Mr. Sunderland, treat him similarly to other executives, and to ensure his agreement would be subject to post-employment non-competition and non-solicitation terms with which he otherwise would not have had to comply. In 2019, we entered into an employment agreement with Ms. Selden in connection with Ms. Selden’s appointment as our President and Chief Executive Officer. The MDC Committee determined that entering into the employment agreement with Ms. Selden was appropriate in order to attract her to the Company and provide her with employment on terms similar to our other executives and in line with what we concluded were appropriate terms for a Chief Executive Officer for a company of our size and in our industry and commensurate with her responsibilities. In September 2020, Ms. Selden’s employment agreement was amended to extend certain relocation benefits. In 2017, at the recommendation of the MDC Committee, our Board adopted the Executive Severance Plan. The MDC Committee recommended the adoption of the Executive Severance Plan in order to provide severance benefits to Senior Vice Presidents of the Company that are designated by the MDC Committee without having to adopt individual employment or severance agreements. The MDC Committee concluded that a severance arrangement for the designated participants was appropriate in order to help retain these executives. In concluding it was appropriate to adopt the Executive Severance Plan, the MDC Committee considered practices in industry generally and among our peer group, as well as the advice of Willis Towers Watson. The MDC Committee also considered that the Executive Severance Plan requires, as a condition to receiving benefits, that each participant must comply with covenants not to compete with us and our affiliates and not to solicit our employees or those of our affiliates, in each case during the term of employment and for a period of 12 months thereafter. In addition, in order to receive severance benefits, a participant must agree to release all claims against us and our affiliates and their respective officers and directors. For additional information regarding these agreements, including a quantification of benefits that would be received by these officers had termination occurred on December 31, 2023, and the benefits that Mr. Tognola received in connection with his departure effective July 22, 2023, see the section titled “Potential Payments upon Termination or Change in Control” below.
Employment Agreements and Post-Termination Compensation
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Non-Qualified Deferred Compensation
Non-Qualified Deferred Compensation We maintain a non-qualified deferred compensation plan in which our executive officers are permitted to participate. The Internal Revenue Code limits the amounts of matching contributions that we can contribute to our traditional 401(k) plan for the benefit of our executives. The deferred compensation plan provides that we will make an annual matching contribution to plan participants in an amount equal to the difference between the matching contribution that the participant would have received under our 401(k) plan if those limitations under the Internal Revenue Code did not apply and the matching contribution that the employee actually received under our 401(k) plan. The balances in the plan are only available for investment in investment options that are also available under our 401(k) plan. We believe that it is fair to provide this plan to our executives because absent the limitations under the Internal Revenue Code, they would have otherwise received these amounts. The plan also permits us, but does not require us to, make additional, discretionary contributions. We did not make any discretionary contributions in 2023.
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| Name and Principal Position(1) | Year | Salary(2) | Bonus(3) | Stock Awards(4) | Non-Equity Incentive Plan Compensation(5) | All Other Compensation(6) | Total | | Angela K. Selden President and Chief Executive Officer | 2023 | $795,000 | — | $2,908,441 | $423,997 | $48,636 | $4,176,075 | | | 2022 | $825,577 | — | $2,327,339 | $125,613 | $80,644 | $3,359,173 | | | 2021 | $675,000 | — | $1,573,656 | $668,661 | $76,735 | $2,994,052 | | Richard W. Sunderland, Jr. Executive Vice President, Chief Financial Officer | 2023 | $475,000 | — | $742,699 | $149,483 | $34,328 | $1,401,510 | | | 2022 | $493,269 | — | $614,749 | $39,501 | $37,714 | $1,185,233 | | | 2021 | $436,220 | $10,000 | $467,837 | $275,773 | $37,621 | $1,227,451 | | Nuno S. Fernandes President, American Public University System | 2023 | $475,000 | — | $415,495 | $388,270 | $36,112 | $1,314,877 | | Craig S. MacGibbon Executive Vice President, Chief Information Officer | 2023 | $390,000 | — | $311,622 | $127,413 | $28,586 | $857,620 | | Thomas A. Beckett Senior Vice President and General Counsel | 2023 | $366,407 | — | $337,583 | $122,038 | $21,133 | $847,161 | | | 2022 | $355,096 | — | $317,128 | $28,436 | $24,138 | $724,799 | | | 2021 | $310,944 | — | $188,484 | $177,080 | $22,516 | $699,023 | | Jeffery C. Tognola Former Executive Vice President, Chief Marketing Officer | 2023 | $239,885 | $50,000 | $311,622 | $70,617 | $190,012 | $862,135 | | | 2022 | $424,647 | $50,000 | $369,569 | $33,779 | $20,683 | $898,678 |
Summary Compensation Table
| (1) Information is provided for 2023 only for Mr. Fernandes and Mr. MacGibbon because they were not NEOs in 2022 or 2021. |
Summary Compensation Table
| (2) Values reflect the amounts actually paid to the NEOs for each year. For Mr. Tognola, the 2023 amount reflects his annual salary paid in 2023 through his July 22, 2023 termination date. In addition, for fiscal 2022, salary for certain NEOs includes a one-time payout of accumulated vacation time resulting from a change in policy relating to vacation accrual for all Vice President and above-level employees, as follows: $30,577 for Ms. Selden; $18,269 for Mr. Sunderland; $16,154 for Mr. Tognola; $14,423; and $13,152 for Mr. Beckett. |
Summary Compensation Table
| (3) Amount shown for Mr. Tognola reflects a signing bonus paid to him in 2023 in connection with his hire in 2022. |
Summary Compensation Table
| (4) Amounts reflect the aggregate grant date fair value, computed in accordance with FASB ASC Topic 718, of RSUs and PSUs, as applicable, excluding estimates of forfeiture. Mr. Tognola forfeited his 2023 awards upon termination from service. A discussion of the relevant assumptions used in calculating these equity awards can be found in Notes 1 and 13 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2023. PSUs are valued assuming achievement at target, which was the probable outcome determined for accounting purposes at the time of grant. The target and maximum grant date values of PSUs for 2023 are as follows: |
Summary Compensation Table
| Name | Grant Date Value at Target Performance | Grant Date Value at Maximum Performance | | Angela K. Selden | $1,454,221 | $2,908,441 | | Richard W. Sunderland, Jr. | $371,350 | $742,699 | | Nuno S. Fernandes | $207,748 | $415,495 | | Craig S. MacGibbon | $155,811 | $311,622 | | Thomas C. Beckett | $168,792 | $337,583 |
Summary Compensation Table
| | 55 | POWERING POTENTIAL AND PROSPERITY |
Summary Compensation Table
| (5) Amounts reflect payments made pursuant to our annual incentive compensation plan based upon the achievement of performance goals established by our MDC Committee. |
Summary Compensation Table
| (6) Amounts for 2023 include, but are not limited to, (i) $13,200 of 401(k) contribution matches made by us to Ms. Selden, Mr. Sunderland, Mr. Fernandes, and Mr. MacGibbon, $9,871 paid to Mr. Beckett, and $13,043 paid to Mr. Tognola, (ii) non-qualified deferred compensation plan matching contributions made by us of $23,625 for Ms. Selden, $7,380 for Mr. Sunderland, $8,837 for Mr. Fernandes, $3,697 for Mr. MacGibbon, and $2,594 for Mr. Beckett. For Mr. Tognola, amounts also include those paid in connection with the termination of his employment, comprising (x) $149,476 in severance in 2023, and (y) $20,245 for the difference between monthly COBRA premium paid by Mr. Tognola and the monthly premium amount paid by Mr. Tognola immediately prior to the Termination Date for the same coverage. For more information about payments related to Mr. Tognola’s departure, see “Potential Payments Upon Termination or Change of Control.” |
Summary Compensation Table
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2023 Grants of Plan-Based Awards
2023 Grants of Plan-Based Awards
2023 Grants of Plan-Based Awards
| Name | Award Type | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Stock or Units(3) | Grant Date Fair Value of Stock and Option Awards(4) | | | | | Threshold | Target | Maximum | Threshold | Target | Maximum | | | | Angela K. Selden | RSUs | 2/7/2023 | | | | | | | 108,443 | $1,454,221 | | | PSUs | 2/7/2023 | | | | 27,111 | 108,443 | 216,886 | | $1,454,221 | | | Annual Incentive Plan | | $27,189 | $755,250 | $1,113,000 | | | | | | | Richard W. Sunderland, Jr. | RSUs | 2/7/2023 | | | | | | | 27,692 | $371,350 | | | PSUs | 2/7/2023 | | | | 6,923 | 27,692 | 55,384 | | $371,350 | | | Annual Incentive Plan | | $8,550 | $237,500 | $380,000 | | | | | | | Nuno S. Fernandes | RSUs | 2/7/2023 | | | | | | | 15,492 | $207,748 | | | PSUs | 2/7/2023 | | | | 3,873 | 15,492 | 30,984 | | $207,748 | | | Annual Incentive Plan | | $30,875 | $308,750 | $451,250 | | | | | | | Craig S. MacGibbon | RSUs | 2/7/2023 | | | | | | | 11,619 | $155,811 | | | PSUs | 2/7/2023 | | | | 2,905 | 11,619 | 23,238 | | $155,811 | | | Annual Incentive Plan | | $7,020 | $195,000 | $312,000 | | | | | | | Thomas A. Beckett | RSUs | 2/7/2023 | | | | | | | 12,587 | $168,792 | | | PSUs | 2/7/2023 | | | | 3,147 | 12,587 | 25,174 | | $168,792 | | | Annual Incentive Plan | | $6,771 | $188,070 | $263,297 | | | | | | | Jeffery C. Tognola | RSUs | 2/7/2023 | | | | | | | 11,619 | $155,811 | | | PSUs | 2/7/2023 | | | | 2,905 | 11,619 | 23,238 | | $155,811 | | | Annual Incentive Plan | | $7,560 | $210,000 | $336,000 | | | | | |
2023 Grants of Plan-Based Awards
| (1) These columns show the range of possible cash payouts for 2023 performance pursuant to our annual incentive plan. Actual amounts paid out pursuant to the plan are included in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table above. For a discussion of the performance goals established by the MDC Committee for these awards, see the section titled “Annual Incentive Cash Compensation” in the Compensation Discussion and Analysis. |
2023 Grants of Plan-Based Awards
| (2) These columns show the range of PSUs that could be earned based on 2023 performance pursuant to the performance-based awards granted in 2023. PSUs earned vest over a three-year period. For a discussion of the performance goals established by the MDC Committee for these awards, see the section titled “2023 Compensation Decisions — Equity Incentives” in the Compensation Discussion and Analysis. |
2023 Grants of Plan-Based Awards
| (3) This column shows the number of RSUs granted, which vest ratably over three years. |
2023 Grants of Plan-Based Awards
| (4) Amounts reflect the grant date fair value, computed in accordance with FASB ASC Topic 718, and will likely vary from the amount actually realized by any NEO based on a number of factors, including the number of shares that are earned and ultimately vest, the timing of vesting, the timing of any sale of shares, and the market price of our common stock at that time. PSUs are valued assuming achievement at target, which was the probable outcome determined for accounting purposes at the time of grant. For RSUs, we calculate grant date fair value by multiplying the number of shares granted by the closing market price per share of our common stock on the grant date. |
2023 Grants of Plan-Based Awards
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2023 Outstanding Equity Awards at Fiscal Year-End
2023 Outstanding Equity Awards at Fiscal Year-End The following table sets forth information with respect to the outstanding equity awards at December 31, 2023 for our NEOs:
2023 Outstanding Equity Awards at Fiscal Year-End
| | Option Awards | | | | Stock Awards | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Options Exercise Price ($) | Options Expiration Date | Number of Shares or Units of Stock That Have Not Vested(1) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | | Angela K. Selden | 43,134 | — | $23.77 | 9/23/2029 | 267,605 | $2,582,391 | | Richard W. Sunderland, Jr. | — | — | — | — | 69,632 | $671,952 | | Nuno S. Fernandes | 7,519 | 15,037(3) | $10.66 | 8/29/2032 | 44,386 | $428,320 | | Craig S. MacGibbon | 3,487 | 6,973(3) | $15.74 | 8/8/2032 | 29,769 | $287,267 | | Thomas A. Beckett | — | — | — | — | 32,163 | $310,373 |
2023 Outstanding Equity Awards at Fiscal Year-End
| (1) Includes the number of shares underlying PSUs that were earned pursuant to the achievement of the 2023 performance metrics, as adjusted. Of the numbers of shares of stock shown, for the officers indicated, the following numbers of shares have vested or will vest on the dates indicated: |
2023 Outstanding Equity Awards at Fiscal Year-End
| Name | Grant Date | Award Type | Vest Date | Number of Shares or Units of Stock That Have Not Vested | | Angela K. Selden | 01/22/2021 | PSU | 01/22/2024 | 11,393 | | | 01/22/2021 | RSU | 01/22/2024 | 8,866 | | | 01/31/2022 | PSU | 01/31/2024 | 7,290 | | | 01/31/2022 | RSU | 01/31/2024 | 18,134 | | | 02/07/2023 | PSU | 02/07/2024 | 29,352 | | | 02/07/2023 | RSU | 02/07/2024 | 36,148 | | | 01/31/2022 | PSU | 01/31/2025 | 7,290 | | | 01/31/2022 | RSU | 01/31/2025 | 18,134 | | | 02/07/2023 | PSU | 02/07/2025 | 29,352 | | | 02/07/2023 | RSU | 02/07/2025 | 36,148 | | | 02/07/2023 | PSU | 02/07/2026 | 29,351 | | | 02/07/2023 | RSU | 02/07/2026 | 36,147 | | Richard W. Sunderland, Jr. | 01/22/2021 | PSU | 01/22/2024 | 3,387 | | | 01/22/2021 | RSU | 01/22/2024 | 2,636 | | | 01/31/2022 | PSU | 01/31/2024 | 1,926 | | | 01/31/2022 | RSU | 01/31/2024 | 4,790 | | | 02/07/2023 | PSU | 02/07/2024 | 7,496 | | | 02/07/2023 | RSU | 02/07/2024 | 9,231 | | | 01/31/2022 | PSU | 01/31/2025 | 1,926 | | | 01/31/2022 | RSU | 01/31/2025 | 4,790 | | | 02/07/2023 | PSU | 02/07/2025 | 7,496 | | | 02/07/2023 | RSU | 02/07/2025 | 9,231 | | | 02/07/2023 | PSU | 02/07/2026 | 7,495 | | | 02/07/2023 | RSU | 02/07/2026 | 9,230 |
2023 Outstanding Equity Awards at Fiscal Year-End
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2023 Outstanding Equity Awards at Fiscal Year-End
| Name | Grant Date | Award Type | Vest Date | Number of Shares or Units of Stock That Have Not Vested | | Nuno S. Fernandes | 02/07/2023 | PSU | 02/07/2024 | 4,193 | | | 02/07/2023 | RSU | 02/07/2024 | 5,164 | | | 08/29/2022 | RSU | 08/29/2024 | 8,157 | | | 02/07/2023 | PSU | 02/07/2025 | 4,193 | | | 02/07/2023 | RSU | 02/07/2025 | 5,164 | | | 08/29/2022 | RSU | 08/29/2025 | 8,157 | | | 02/07/2023 | PSU | 02/07/2026 | 4,193 | | | 02/07/2023 | RSU | 02/07/2026 | 5,164 | | Craig S. MacGibbon | 02/07/2023 | PSU | 02/07/2024 | 3,145 | | | 02/07/2023 | RSU | 02/07/2024 | 3,873 | | | 08/08/2022 | RSU | 08/08/2024 | 4,358 | | | 02/07/2023 | PSU | 02/07/2025 | 3,145 | | | 02/07/2023 | RSU | 02/07/2025 | 3,873 | | | 08/08/2022 | RSU | 08/08/2025 | 4,357 | | | 02/07/2023 | PSU | 02/07/2026 | 3,145 | | | 02/07/2023 | RSU | 02/07/2026 | 3,873 | | Thomas A. Beckett | 01/22/2021 | PSU | 01/22/2024 | 1,365 | | | 01/22/2021 | RSU | 01/22/2024 | 1,062 | | | 01/31/2022 | PSU | 01/31/2024 | 993 | | | 01/31/2022 | RSU | 01/31/2024 | 2,471 | | | 02/07/2023 | PSU | 02/07/2024 | 3,407 | | | 02/07/2023 | RSU | 02/07/2024 | 4,196 | | | 01/31/2022 | PSU | 01/31/2025 | 993 | | | 01/31/2022 | RSU | 01/31/2025 | 2,471 | | | 02/07/2023 | PSU | 02/07/2025 | 3,407 | | | 02/07/2023 | RSU | 02/07/2025 | 4,196 | | | 02/07/2023 | PSU | 02/07/2026 | 3,406 | | | 02/07/2023 | RSU | 02/07/2026 | 4,195 |
2023 Outstanding Equity Awards at Fiscal Year-End
| (2) The market value of the shares of common stock that have not vested is based on the closing price of our common stock on Nasdaq on December 29, 2023 (the last trading day of 2023), $9.65. |
2023 Outstanding Equity Awards at Fiscal Year-End
| (3) Relates to an option award granted to Mr. Fernandes on August 29, 2022 the remaining portion of which will vest in two equal annual installments on August 29, 2024 and August 29, 2029 and to Mr. MacGibbon on August 8, 2022 the remaining portion of which will vest in two equal annual installments on August 8, 2024 and August 8, 2029. |
Option Exercises and Stock Vested
Option Exercises and Stock Vested There were no option exercises by our NEOs during 2023. The following table sets forth information with respect to shares of restricted stock held by our NEOs that vested during 2023.
Option Exercises and Stock Vested
| Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | | Angela K. Selden | 74,327 | $919,921 | | Richard W. Sunderland, Jr. | 23,225 | $290,270 | | Nuno S. Fernandes | 8,157 | $45,108 | | Craig S. MacGibbon | 4,358 | $23,402 | | Thomas A. Beckett | 10,229 | $127,147 | | Jeffery A. Tognola | 5,628 | $68,155 |
Option Exercises and Stock Vested
| (1) The value realized on vesting is based on the closing price of our common stock on Nasdaq on the day of vesting multiplied by the number of shares acquired. |
Option Exercises and Stock Vested
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Non-qualified Deferred Compensation
Non-qualified Deferred Compensation The following table sets forth information with respect to each defined contribution or other plan that provides for the deferral of compensation on a basis that is not tax-qualified during 2023:
Non-qualified Deferred Compensation
| Name | Registrant Contributions for Last FY(1) | Aggregate Earnings in Last FY(2) | Aggregate Balance at Last FYE(3) | | Angela K. Selden | $23,625 | $16,091 | $152,054 | | Richard W. Sunderland, Jr. | $7,380 | $13,816 | $121,983 | | Nuno S. Fernandes | $8,837 | — | $8,837 | | Craig S. MacGibbon | $3,697 | — | $3,697 | | Thomas A. Beckett | $2,594 | $5,341 | $44,041 | | Jeffery A. Tognola | — | $968 | $7,439 |
Non-qualified Deferred Compensation
| (1) Includes amounts contributed by the Company in 2023 with respect to 2023 as matching contributions. All amounts are reported in the Summary Compensation Table on page 55. |
Non-qualified Deferred Compensation
| (2) Amounts reflected in this column include changes in plan values during 2023, as well as any dividends and interest earned by the plan participant with regard to the investment funds chosen by such participant during the fiscal year. |
Non-qualified Deferred Compensation
| (3) All amounts have been reported in the Summary Compensation Table or in previous years. |
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control The employment agreements for Ms. Selden and Mr. Sunderland described beginning on page 58, include provisions providing for payments to them in the event of certain terminations of their respective employment. The other NEOs, do not have employment agreements but are covered by our Executive Severance Plan. Mr. Tognola departed his position effective July 22, 2023. See the section “Mr. Tognola’s Termination Benefits” below for further information. Termination for cause, without good reason or by reason of death. In the event that Ms. Selden’s or Mr. Sunderland’s employment is terminated by us for “cause,” by the executive without “good reason,” or by reason of death (each of “cause” and “good reason” as defined below), we will pay to each of them or their estate, as the case may be, (i) his or her full base salary through the date of termination, (ii) any previously deferred and unpaid compensation and any unpaid accrued vacation pay, and (iii) any earned, but unpaid, amounts the executive is entitled to as of the date of termination in connection with any fringe benefits or under any of our incentive compensation plans or programs, including the annual incentive bonus (together, the “Base Amounts”). In the event that Mr. Beckett’s, Mr. Fernandes’, or Mr. MacGibbon’s service to the Company is terminated by us for “cause,” by the executive without “good reason,” or by reason of death (each of “cause” and “good reason” as defined below), we will pay him or his estate, as the case may be, (i) his full base salary through the date of termination, (ii) any unpaid accrued vacation pay and unreimbursed business expenses accrued through the date of termination, (iii) any benefits provided under our employment benefit plans upon or following a termination of employment (together, the “Accrued Amounts”), and (iv) the bonus, if any, earned with respect to the calendar year ending on or preceding the termination date, to the extent not previously paid (the “Earned Bonus”). Termination by reason of disability. If Mr. Sunderland’s employment is terminated by reason of disability, we are required to pay to him, in a lump sum within 30 days of the date of termination, an amount equal to (i) his base salary through the date of termination, (ii) his annual incentive bonus, to the extent the Company and Mr. Sunderland’s were then satisfying applicable performance targets, adjusted for the short period through the date of termination, for such bonus, prorated for the period of Mr. Sunderland’s service during the applicable year, and (iii) any previously deferred and unpaid compensation and unpaid accrued
Potential Payments Upon Termination or Change in Control
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Potential Payments Upon Termination or Change in Control
vacation pay (together, the “Accrued Obligations”). In addition, subject to Mr. Sunderland’s timely execution of a release of claims, we are further required to pay to Mr. Sunderland’s an amount equal to the sum of (i) Mr. Sunderland’s annual base salary paid in installments in accordance with our normal payroll practices for a period of 18 months (the “Salary Continuation Payments”) and (ii) Mr. Sunderland’s annual incentive bonus, to the extent the Company and Mr. Sunderland were then satisfying applicable performance targets, adjusted for the short period, after the date of termination to the end of the calendar year for such bonus and as to the remainder of the 18-month period following the date of termination (the “Bonus Period”), if net income increased from the same period in the prior year and the performance targets established for the successor executive were being satisfied for that period, paid in installments in accordance with our normal payroll practices over the Bonus Period, and the second within 60 days after the end of the Bonus Period (the “Bonus Continuation Payments”). If Ms. Selden’s employment is terminated by reason of disability, we are required to pay to her, (i) in a lump sum within 30 days of the date of termination, an amount equal to the Accrued Obligations, (ii) an amount equal to two times Ms. Selden’s annual base salary paid in installments in accordance with our normal payroll practices for a period of 24 months (the “Selden Salary Continuation Payments”), and (iii) an amount equal to two times Ms. Selden’s annual incentive bonus, to the extent the Company and the executive were then satisfying applicable performance targets, adjusted for the short period, after the date of termination to the end of the calendar year for such bonus and as to the remainder of the 24-month period following the date of termination (the “Selden Bonus Period”), if net income increased from the same period in the prior year and paid in two installments, one within 60 days after the end of the year in which the termination occurred, and the second within 60 days after the end of the Selden Bonus Period (the “Selden Bonus Continuation Payments”), in the case of (ii) and (iii), subject to Ms. Selden’s timely release of claims. These payments shall be reduced by the sum of the amounts, if any, payable to the executive at or prior to the time of any payment under our disability benefit plans and which amounts were not previously applied to reduce any payment, all in a manner that complies with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). If Mr. Beckett’s, Mr. Fernandes’, or Mr. MacGibbon’s employment is terminated by reason of disability, we are required pursuant to the terms of the Executive Severance Plan to pay to the executive the Accrued Amounts and Earned Bonus. Termination other than for cause or disability or for good reason. In the event that we terminate Ms. Selden’s or Mr. Sunderland’s employment other than for cause or disability or they terminate their employment for good reason, we are required to pay, or provide, to the executive (subject to the NEO’s timely execution of a release of claims in respect of all but the first item below), as applicable:
Potential Payments Upon Termination or Change in Control
| • | in a lump sum within 30 days of the date of termination, the Accrued Obligations; |
Potential Payments Upon Termination or Change in Control
| • | the Salary Continuation Payments or the Selden Salary Continuation Payments, as applicable; |
Potential Payments Upon Termination or Change in Control
| • | the Bonus Continuation Payments or the Selden Bonus Continuation Payments, as applicable; |
Potential Payments Upon Termination or Change in Control
| • | for a period of 24 months following the date of termination (for Ms. Selden) or 12 months following the date of termination (for Mr. Sunderland) or for any longer period provided for under the terms of the appropriate plan, program, practice or policy, a continuation of benefits to the executive and/or his or her family at a level and in an amount that is at least equal to that which would have been provided by us to them had the executive continued his employment, provided, however, that we may elect to pay the executive a payment equal to 24 or 12 months’ premiums (as applicable) under our benefit plans in lieu of the continuation of such benefits, and provided, further, that if the executive becomes reemployed with another employer and is eligible to receive any of the benefits that had been provided by us, then the benefits we provide shall be secondary; and |
Potential Payments Upon Termination or Change in Control
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Potential Payments Upon Termination or Change in Control
| • | to the extent not otherwise paid or provided, for a period of 24 months following the date of termination (for Ms. Selden) or 12 months following the date of termination (for Mr. Sunderland), any other amounts or benefits required to be paid or provided or which the executive is eligible to receive under any of our other existing benefit plans; provided, however, if Ms. Selden terminates her employment after we have delivered to her a written notice of intent not to renew, or a notice of Nonrenewal Termination (as defined in Ms. Selden’s employment agreement), prior to the beginning of a change in control termination period (as defined in Ms. Selden’s employment agreement), then the Selden Salary Continuation Payments shall be for a period of 18 months, the Selden Bonus Continuation Payments shall be equal to 1.5 times the Annual Bonus, and the continuation of benefits shall apply for only 18 months. |
Potential Payments Upon Termination or Change in Control
In the event that Ms. Selden’s employment is terminated by the Company without cause or by her for good reason, Ms. Selden will become vested in a prorated portion of each of her then-unvested outstanding equity awards, determined by multiplying the number of shares of our common stock scheduled to vest at the vesting date immediately following her termination of employment by a fraction, the numerator of which is the number of days following the last vesting date (or the grant date if no portion of the award has vested) that she was employed and the denominator of which is the number of days from the last vesting date or the grant date, as applicable, to the date the next tranche of such outstanding equity award would have vested, rounded to the nearest whole share, subject, however, in the case of performance-vesting awards to the attainment of the applicable performance criteria. In the event that we terminate Mr. Beckett’s, Mr. Fernandes’, or Mr. MacGibbon’s employment other than for cause or disability or they terminate their employment for good reason, we are required to pay, or provide, to the executive (subject to the executive’s timely execution of a release of claims and other certain restrictive covenants): (i) the Accrued Amounts; (ii) the Earned Bonus; (iii) an amount equal to his base salary in effect immediately prior to the date of termination plus the product of (x) the annual cash bonus that would have been earned for the entire calendar year in which the date of termination occurs based on the actual level of achievement of any Company performance goals for such year and the higher of the actual or target level of achievement of any individual performance goals for such year; and (y) a fraction, the numerator of which is the number of days the executive was employed by the Company during the calendar year in which the date of termination occurs and the denominator of which is the number of days in such year, paid on the date that annual bonuses are paid to our executives or the 61st day following the date of termination; and (iv) any amount, determined in the sole discretion of the MDC Committee, equal to 12 times the difference between (x) the monthly COBRA premium paid by the executive for group health plan coverage and (y) the monthly premium amount paid by the executive immediately prior to the date of termination for the same coverage, payable in a single lump sum on the 61st day following the date of termination. Termination following a change of control. If within 60 days prior to or one year after a change in control (as defined below), we terminate Ms. Selden’s employment or if within 180 days after a change of control or we terminate Mr. Sunderland’s employment, other than for cause or disability or the executive terminates his or her employment for good reason, we are required to pay, or provide, to the executive (subject to the NEO’s timely execution of a release of claims in respect of all but the first item below):
Potential Payments Upon Termination or Change in Control
| • | in a lump sum within 30 days of the effective date of termination, the Accrued Obligations; |
Potential Payments Upon Termination or Change in Control
| • | an amount equal to the sum of (i) two times the executive’s annual base salary and (ii) two times the executive’s annual incentive bonus, to the extent the Company and the executive were then satisfying applicable performance targets, adjusted for the short period, in a lump sum within 60 days of the effective date of termination; |
Potential Payments Upon Termination or Change in Control
| • | for a period of 24 months following the date of termination (for Ms. Selden) or 12 months following the date of termination (for Mr. Sunderland) or for any longer period provided for under the terms of the appropriate plan, program, practice, or policy, a continuation of benefits to the executive and/or |
Potential Payments Upon Termination or Change in Control
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Potential Payments Upon Termination or Change in Control
his or her family at a level and in an amount that is at least equal to that which would have been provided by us to them had the executive continued his or her employment, provided, however, that we may elect to pay the executive a payment equal to 24 or 12 months’ (as applicable) premiums under our benefit plans in lieu of the continuation of such benefits, and provided, further, that if the executive becomes reemployed with another employer and is eligible to receive any of the benefits that had been provided by us, then the benefits we provide shall be secondary; and
Potential Payments Upon Termination or Change in Control
| • | to the extent not otherwise paid or provided, for a period of 24 months following the date of termination (for Ms. Selden) or 12 months following the date of termination (Mr. Sunderland), any other amounts or benefits required to be paid or provided or which the executive is eligible to receive under any of our other existing benefit schemes. |
Potential Payments Upon Termination or Change in Control
In the event that any amounts payable or benefits to be provided to the executive under the employment agreement or otherwise would be nondeductible to us by reason of Section 280G of the Code and would subject the executive to the excise tax imposed by Section 4999 of the Code, then such payments and/or benefits will be reduced to the extent necessary so that such payments or benefits will no longer be ineligible for deduction by reason of Section 280G of the Code or subject to the excise tax imposed by Section 4999 of the Code unless the executive would receive at least $50,000 more on a net after-tax basis if such payments and benefits were not reduced. If within six months after a change of control, we terminate Mr. Beckett’s, Mr. Fernandes’, or Mr. MacGibbon’s employment without cause or the executive terminates his employment for good reason (as defined below), the executive shall be entitled to receive the Accrued Amounts and the Earned Bonus. In addition, we are required to pay to the executive (subject to the executive’s timely execution of a release of claims and other certain restrictive covenants):
Potential Payments Upon Termination or Change in Control
| • | an amount equal to the 1.5 times the sum of the base salary in effect, plus the executive’s target annual bonus for the year in which the date of termination occurs, payable in a single lump sum on the 61st day following the date of termination; and |
Potential Payments Upon Termination or Change in Control
| • | an amount, determined in the sole discretion of the Committee, equal to 18 times the difference between (x) the monthly COBRA premium paid by the executive for group health plan coverage for the executive, and (y) the monthly premium amount paid by the executive immediately prior to the date of termination for the same coverage, payable in a single lump sum on the 61st day following the date of termination. |
Potential Payments Upon Termination or Change in Control
Acceleration of equity awards upon termination for death, for disability or following a change of control. Under Ms. Selden’s or Mr. Sunderland’s employment agreements, all equity awards granted to the NEO under any of our equity incentive plans that are outstanding immediately prior to the following events will vest and become fully exercisable as follows: (i) upon termination of the executive’s employment by the executive’s death; (ii) upon our termination of the executive’s employment for disability; or (iii) upon termination of the executive’s employment, in the 12-month period following a change of control, or in the 60-day period prior to or one year period after a change of control, in the case of Ms. Selden (a) by us for any reason other than for disability or cause, or for no reason at all, or (b) by the executive for good reason in the 12-month period following a change of control. However, for purposes of clauses (i) and (ii) above, any equity awards that are subject to performance conditions for a performance period not yet completed will be deemed to be vested and exercisable in a pro-rated amount equivalent to the portion of the performance period that has passed and assuming achievement of the performance conditions for that period at the “target” level, and, for purposes of clause (iii) above, any equity awards that are subject to performance conditions for a performance period not yet completed will be deemed to be vested and exercisable in full at the “target” level. The Executive Severance Plan does not affect the term of any outstanding equity awards. In the event Mr. Beckett’s, Mr. Fernandes’, or Mr. MacGibbon’s employment is terminated, the treatment of any outstanding equity awards is determined in accordance with the terms of the Company equity plan or plans
Potential Payments Upon Termination or Change in Control
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Potential Payments Upon Termination or Change in Control
under which they were granted and any applicable award agreements. The 2017 Plan provides that equity awards will vest in full upon the termination of an awardee without cause within one year of a change in control in which the awards are assumed, continued, or substituted. Terms defined in employment agreements. For purposes of Ms. Selden’s and Mr. Sunderland’s employment agreements, the following definitions apply: “Cause” means:
Potential Payments Upon Termination or Change in Control
| • | refusal by the executive to follow a lawful written order of the Chair of our Board, the Board, or for Mr. Sunderland, our President and Chief Executive Officer; |
Potential Payments Upon Termination or Change in Control
| • | refusal by the executive to follow a lawful written order of the Chair of our Board, the Board, or for Mr. Sunderland, our President and Chief Executive Officer; |
Potential Payments Upon Termination or Change in Control
| • | the executive’s engagement in conduct materially injurious to us or our reputation; |
Potential Payments Upon Termination or Change in Control
| • | dishonesty of a material nature that relates to the performance of the executive’s duties under his or her employment agreement; |
Potential Payments Upon Termination or Change in Control
| • | the executive’s conviction for any crime involving moral turpitude or any felony; or |
Potential Payments Upon Termination or Change in Control
| • | the executive’s continued failure to perform his or her duties under his or her employment agreement (except due to the executive’s incapacity as a result of physical or mental illness) to the satisfaction of the Board for a period of at least 30 consecutive days after written notice is delivered to the executive specifically identifying the manner in which the NEO has failed to perform his or her duties. |
Potential Payments Upon Termination or Change in Control
“Change of control” generally means:
Potential Payments Upon Termination or Change in Control
| • | our dissolution or liquidation, or a merger, consolidation, or reorganization of us with one or more other entities in which we are not the surviving entity; |
Potential Payments Upon Termination or Change in Control
| • | a sale of substantially all of our assets to another person or entity; or |
Potential Payments Upon Termination or Change in Control
| • | any transaction (including without limitation a merger or reorganization in which we are the surviving entity) which results in any person or entity owning 50% or more of the combined voting power of all classes of our stock. |
Potential Payments Upon Termination or Change in Control
“Good reason” generally means:
Potential Payments Upon Termination or Change in Control
| • | the assignment to the executive of duties inconsistent in any material respect with the NEO’s position as set forth in, or in accordance with, his or her employment agreement, excluding an isolated, insubstantial, and inadvertent action that we remedy promptly after receipt of notice from the executive; |
Potential Payments Upon Termination or Change in Control
| • | any material failure by us to comply with any provisions of the executive’s employment agreement, excluding an isolated, insubstantial, and inadvertent failure that we remedy promptly after receipt of notice from the executive; |
Potential Payments Upon Termination or Change in Control
| • | there is a change of control and the executive does not continue in his or her position, or any other office he or she holds at the time of the transaction, of the most senior resulting entity succeeding to our business; |
Potential Payments Upon Termination or Change in Control
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Potential Payments Upon Termination or Change in Control
| • | any material failure by us to require any successor or any party that acquires control of us, whether directly or indirectly, by purchase, merger, consolidation or otherwise, or all or substantially all of our business and/or assets to assume expressly and agree to perform the executive’s employment agreement in the same manner and to the same extent; |
Potential Payments Upon Termination or Change in Control
| • | with respect only to Ms. Selden, any material reduction in her base salary or annual bonus opportunity; |
Potential Payments Upon Termination or Change in Control
| • | with respect only to Ms. Selden, after her initial relocation, any requirement that her primary workplace be located more than 50 miles from our current headquarters; and |
Potential Payments Upon Termination or Change in Control
| • | with respect only to Ms. Selden, her election to terminate employment after the end of the term or any renewal term if we have delivered to her a written notice of intent not to renew. |
Potential Payments Upon Termination or Change in Control
None of the foregoing constitute good reason if the executive consents in writing to such event, and none of the foregoing constitute good reason unless the executive provides notice to us within 90 days of the initial existence of such grounds and we fail to cure the asserted grounds for good reason within 30 days of receipt of such notice from the executive. In order to terminate his or her employment for good reason, the executive must terminate employment within 30 days of the end of the cure period if the breach has not been cured. Terms defined in the Executive Severance Plan. For purposes of the Executive Severance Plan, which currently only applies to Mr. Beckett, Mr. Fernandes, and Mr. MacGibbon, the following definitions apply: “Cause” means:
Potential Payments Upon Termination or Change in Control
| • | gross negligence or willful misconduct in connection with the performance of duties; |
Potential Payments Upon Termination or Change in Control
| • | conviction of, or pleading guilty or nolo contendere to, a criminal offense (other than minor traffic offenses); or |
Potential Payments Upon Termination or Change in Control
| • | material breach of any term of any employment, consulting or other services, confidentiality, intellectual property, or non-competition agreements, if any, between such executive and the Company or an affiliate. |
Potential Payments Upon Termination or Change in Control
“Change of control” generally means:
Potential Payments Upon Termination or Change in Control
| • | the dissolution or liquidation of the Company or a merger, consolidation, or reorganization of the Company with one or more other entities in which the Company is not the surviving entity; |
Potential Payments Upon Termination or Change in Control
| • | a sale of substantially all of the assets of the Company to another person (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act); or |
Potential Payments Upon Termination or Change in Control
| • | any transaction (including without limitation a merger or reorganization in which the Company is the surviving entity) which results in any person owning 50% or more of the combined voting power of all classes of common stock of the Company. |
Potential Payments Upon Termination or Change in Control
“Good reason” generally means:
Potential Payments Upon Termination or Change in Control
| • | a material diminution in the executive’s authority, duties, or responsibilities; |
Potential Payments Upon Termination or Change in Control
| • | a material reduction in the executive’s base salary; or |
Potential Payments Upon Termination or Change in Control
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Potential Payments Upon Termination or Change in Control
| • | a material change in the geographic location at which the executive must perform services, including a required relocation of the executive’s principal place of employment of more than 50 miles. |
Potential Payments Upon Termination or Change in Control
Equity Retirement Policy. In July 2016, the MDC Committee approved the Equity Retirement Policy, effective January 1, 2017. The Equity Retirement Policy provides for accelerated vesting at retirement of any (i) time-based awards and (ii) subject to the achievement of the applicable performance measure, performance-based awards, that were granted at least one year prior to the date of retirement. The Equity Retirement Policy applies to employees who have voluntarily terminated service, reached an age of 62 years, and provided at least 10 years of continuous service to the Company as of and through the date of their retirement. Mr. Sunderland was the only NEO eligible for the Equity Retirement Policy in 2023. Payment and Benefit Estimates. The table below reflects the potential termination or change in control payments pursuant to the employment agreements and arrangements described above, calculated as though the applicable triggering event occurred, (i.e. the NEO’s employment was terminated, or the applicable change in control occurred) on December 29, 2023 (the last trading day of 2023), using the closing price of our common stock on Nasdaq of $9.65 on December 29, 2023. As discussed in the narrative above, upon termination for cause or by the NEO without good reason, the NEO is generally only entitled to receive amounts they are owed as of the termination date (e.g., salary, benefits, and, in limited cases, any previously earned, but unpaid, annual incentive compensation). These accrued amounts are described in the narrative above, and we have not included these earned, but unpaid amounts, in the termination events included in the table below.
Potential Payments Upon Termination or Change in Control
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Potential Payments Upon Termination or Change in Control
| | Aggregate Severance Pay(1) ($) | Accelerated Vesting of Equity Awards ($) | Welfare Benefits Continuation ($) | Total ($) | | Angela K. Selden | | | | | | Termination by Reason of Disability | 3,100,500 | 1,557,915 | — | 4,658,415 | | Termination other than for Cause or Disability or by Executive for Good Reason | 3,100,500 | 1,557,915 | 57,705 | 4,716,120 | | Termination other than for Cause within 60 days before or 1 year after a Change in Control | 3,100,500 | 2,582,391 | 57,705 | 5,740,596 | | Termination by Executive for Good Reason 12 months after a Change in Control | 3,100,500 | 2,582,391 | 57,705 | 5,740,596 | | Nonrenewal of employment agreement by Company prior to a Change in Control | 2,325,375 | — | 43,279 | 2,368,654 | | Termination by Reason of Death | — | 1,557,915 | — | 1,557,915 | | Richard W. Sunderland, Jr | | | | | | Termination by Reason of Disability | 1,068,750 | 671,952 | | 1,740,702 | | Termination by Executive for Good Reason | 1,068,750 | — | 23,125 | 1,763,827 | | Termination by Executive other than for Good Reason | 1,068,750 | — | | 1,068,750 | | Termination other than for Cause or Disability | 1,068,750 | | 23,125 | 1,091,875 | | Termination other than for Cause or by Executive for Good Reason within 180 days of a Change in Control | 1,425,000 | 671,952 | 23,125 | 2,120,077 | | Termination other than for Cause or by Executive for Good Reason within between 180 days and 12 months of a Change in Control | 1,068,750 | 671,952 | 23,125 | 1,763,827 | | Termination by Reason of Death | | 671,952 | | 671,952 | | Termination due to Retirement | | 187,735 | | | | Nuno S. Fernandes | | | | | | Termination without Cause or by Executive for Good Reason | 783,750 | — | 14,784 | 798,534 | | Termination without Cause or by Executive for Good Reason within six months of a Change in Control | 1,021,250 | — | 22,176 | 1,043,426 | | Termination without Cause within one year of a Change in Control in which awards are assumed, continued, or substituted | — | 428,320 | — | 428,320 | | Craig S. MacGibbon | | | | | | Termination without Cause or by Executive for Good Reason | 585,000 | — | 26,780 | 611,780 | | Termination without Cause or by Executive for Good Reason within six months of a Change in Control | 780,000 | — | 40,170 | 820,170 | | Termination without Cause within one year of a Change in Control in which awards are assumed, continued, or substituted | — | 287,267 | — | 287,267 | | Thomas A. Beckett | | | | | | Termination without Cause or by Executive for Good Reason | 564,209 | — | 26,998 | 591,207 | | Termination without Cause or by Executive for Good Reason within six months of a Change in Control | 752,278 | — | 40,498 | 792,776 | | Termination without Cause within one year of a Change in Control in which awards are assumed, continued, or substituted | — | 310,373 | — | 310,373 |
Potential Payments Upon Termination or Change in Control
| (1) We have assumed for purposes of calculating the aggregate severance pay that (a) our financial performance and, if applicable, the NEO’s successor’s performance would be sufficient for the NEO to receive the maximum payout and (b) in the case of a termination due to Disability, amounts are not reduced by any payment under our disability benefit plans. |
Potential Payments Upon Termination or Change in Control
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CEO Pay Ratio
CEO Pay Ratio As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are presenting the ratio of our Chief Executive Officer’s annual total compensation to our median employee’s annual total compensation. In order to identify our median employee for purposes of calculating the ratio, we used total annual earnings as reported in our payroll system for our 5,830 employees other than our Chief Executive Officer as of November 1, 2023, and then annualized the total compensation of all permanent employees that were employed for less than the full year. As set forth in the Summary Compensation Table in this Proxy Statement, the 2023 annual total compensation as determined under Item 402 of Regulation S-K for our Chief Executive Officer was $4,176,075. The 2023 annual total compensation for our median employee, who is a part-time faculty member at APUS, was $28,425. The ratio of our Chief Executive Officer’s annual total compensation to our median employee’s total compensation for 2023 is approximately 147 to 1. This ratio was determined using reasonable estimates as permitted by the SEC’s rules and should not be used as a comparison with pay ratios disclosed by other companies.
CEO Pay Ratio
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Pay Versus Performance
Pay Versus Performance In accordance with SEC rules, this section provides information with respect to compensation actually paid (“CAP”) to our NEOs and Company performance. This information does not necessarily align with how the Company, or the MDC Committee views the link between the Company’s performance and its NEO’s pay. CAP is an SEC-defined term and neither CAP nor the amount reported in the Summary Compensation Table (“SCT”) necessarily reflect the amounts earned, received, or realized by the NEOs. Unvested awards remain subject to vesting conditions and fluctuations in value based on changes in the price of our common stock, and the ultimate value realized by our NEOs from unvested equity awards will not be determined until the awards vest. In addition, a significant portion of CAP relates to changes in fair value of unvested awards over the course of each year. For a more detailed discussion of how we view our executive compensation structure, including alignment with our performance, see the Compensation Discussion and Analysis (“CD&A”) and the 2023 CEO Target Compensation versus Realizable Pay sections.
Pay Versus Performance
| Year | Summary Compensation Table Total for CEO(1) | Compensation Actually Paid to CEO(3,4) | Average Summary Compensation Table Total for Other NEOs(2) | Average Compensation Actually Paid to Other NEOs(3,4) | Value of Initial Fixed $100 Investment Based On(5): | | Net Income (in millions)(6) | Revenue (in millions)(7) | | | | | | | Total Shareholder Return | Peer Group Total Shareholder Return | | | | 2023 | $4,176,075 | $2,982,563 | $1,056,661 | $778,190 | $35 | $119 | ($53.3) | $600.5 | | 2022 | $3,359,173 | $827,908 | $864,041 | $359,072 | $45 | $88 | ($115.0) | $606.3 | | 2021 | $2,994,052 | $1,963,734 | $953,983 | $673,074 | $81 | $71 | $17.8 | $418.8 | | 2020 | $2,996,393 | $4,376,919 | $1,566,715 | $1,614,207 | $111 | $84 | $18.8 | $321.8 |
Pay Versus Performance
| (1) Ms. Selden was the CEO for each of the covered years. |
Pay Versus Performance
| (2) The other NEOs for each covered year were: In 2023, Mr. Sunderland, Mr. Beckett, Mr. Fernandes, Mr. MacGibbon, and Mr. Tognola; in 2022, Mr. Sunderland, Mr. Beckett, Mr. Wilkins, Mr. Tognola, Mr. Dyberg, and Mr. Slagle; in 2021, Mr. Sunderland, Mr. Beckett, Dr. Dyke, Mr. Dyberg, and Dr. Smith; and in 2020, Mr. Sunderland, Mr. Beckett, Dr. Dyke, Mr. Dyberg, and Dr. Boston. Dr. Boston served as APEI CEO until September 30, 2019, at which time he was appointed President of APUS. Therefore, equity awards Dr. Boston received as CEO prior to September 30, 2019 are included in the 2020 Other NEOs covered year. |
Pay Versus Performance
| (3) The following tables disclose the amounts deducted from and added to SCT total compensation for the applicable year pursuant to Item 402(v) of Regulation S-K to determine CAP: |
Pay Versus Performance
Adjustments made to NEO SCT to calculate CAP
Pay Versus Performance
| Year | Reported SCT total | minus reported value of equity awards | plus equity award adjustments | equals CAP | | CEO | | | | | | 2023 | $4,176,075 | $2,908,441 | $1,714,929 | $2,982,563 | | Other NEOs | | | | | | 2023 | $1,056,661 | $423,804 | $145,334 | $778,190 |
Pay Versus Performance
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Pay Versus Performance
| (4) Adjustments made to NEO equity awards |
Pay Versus Performance
| Year | Year-end FMV awards granted during the year | Year over year FMV change of outstanding and unvested awards as of year end | Year over year FMV change of awards granted in prior years that vested during the year | Deduction of FMV for prior awards granted prior to year that were forfeited during year | Total equity award adjustments | | CEO | | | | | | | 2023 | $1,896,213 | $6,442 | ($187,725) | $0 | $1,714,929 | | Other NEOs | | | | | | | 2023 | $235,674 | ($27,008) | ($35,666) | ($27,666) | $145,334 |
Pay Versus Performance
| • | Fair market value (“FMV”) used to determine the equity award adjustments is consistent with the calculations used to account for share-based payments in the Company’s financial statements in accordance with GAAP, although the assumptions are materially different from those disclosed with respect to valuation at the time of grant including: |
Pay Versus Performance
| • | Restricted Stock Unit Awards (RSUs): The FMV of RSU awards was calculated using the closing price of our common stock as of the last day of the applicable year or on the date of vesting, as applicable. |
Pay Versus Performance
| • | Performance Share Unit Awards (PSUs): The number of “earned” units was calculated by multiplying the target units by the applicable performance achievement percentage for a given year. The FMV of PSU awards was calculated using the closing price of our common stock as of the last day of the applicable year or on the date of vesting, as applicable, multiplied by the number of “earned” units. |
Pay Versus Performance
| • | Stock Option Awards: Option awards use a model consistent with the fair value methodology used to account for share-based payments in the Company’s financial statements in accordance with GAAP. The FMV value of the options was estimated using the Black-Scholes option pricing model that reflect for each award and valuation date, adjustments for expected volatility, risk-free interest rate, dividend yield, and expected term. Declining stock price served as the primary driver of change in the fair value of option awards, none of which were in the money as of any valuation date applicable to the equity adjustment used to determine CAP. |
Pay Versus Performance
| (5) Reflects total shareholder return (“TSR”) for the Company and the Company’s customized peer group of companies as reported in the Company’s Annual Reports on Form 10-K for 2023. Historical stock performance is not necessarily indicative of future stock performance. |
Pay Versus Performance
| (6) Represents the amount of net income reflected in our audited financial statements for each applicable fiscal year. |
Pay Versus Performance
| (7) SEC rules require us to designate a “company-selected measure” that in our assessment represents the most important financial performance measure (other than TSR, stock price, or net income) used by the Company to link the CAP of our NEOs, for the most recently completed fiscal year, to our performance. We selected revenue as the most important financial performance measurement due to the alignment with the Company’s long-term strategic goals, including its direct linkage to enrollments. Revenue is defined as the Company’s GAAP revenue as reported. |
Pay Versus Performance
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