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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

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October 27, 201725, 2019

Dear Fellow Stockholders:

            On behalf of our Board of Directors, I cordially invite you to attend the 20172019 Annual Meeting of Stockholders of K12 Inc. ("Annual Meeting") to be held at the law firm of Latham & Watkins LLP, 555 Eleventh Street, N.W., Suite 1000, Washington, D.C. 20004-1304, on December 14, 2017,13, 2019, at 10:00 A.M., Eastern Time. The matters to be considered by the stockholders at the Annual Meeting are described in detail in the accompanying proxy materials.

            IT IS IMPORTANT THAT YOU BE REPRESENTED AT THE ANNUAL MEETING REGARDLESS OF THE NUMBER OF SHARES YOU OWN OR WHETHER OR NOT YOU ARE ABLE TO ATTEND THE ANNUAL MEETING IN PERSON.

            We urge you to vote promptly, even if you plan to attend the Annual Meeting. Please vote electronically via the Internet or by telephone, if permitted by the broker or other nominee that holds your shares, or if you receive a paper copy of the proxy materials, please complete, sign, date and return the accompanying proxy card. Voting electronically, by telephone or by returning your proxy card in advance of the Annual Meeting does not deprive you of your right to attend the Annual Meeting. Thank you for your continued support of K12.

		Sincerely,
		Nathaniel A. Davis
		Executive Chairman of the Board of Directors and Chief Executive Officer

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K12 INC.

NOTICE OF 20172019 ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON
DECEMBER 14, 201713, 2019

The annual meeting of stockholders of K12 Inc., a Delaware corporation ("Company"), will be held at the law firm of Latham & Watkins LLP, 555 Eleventh Street, N.W., Suite 1000, Washington, D.C. 20004-1304, on Thursday,Friday, December 14, 2017,13, 2019, at 10:00 A.M., Eastern Time ("Annual Meeting").

At the Annual Meeting, stockholders will be asked to:

1.

Elect eightnine (9) directors to the Company's Board of Directors each to serve for a one-year term;



2.

Consider and vote upon a non-binding advisory resolution approving the compensation of the named executive officers of the Company ("Say on Pay");



3.

Consider and vote upon a non-binding advisory vote on the frequency of Say on Pay in future years;



4.

Consider and vote upon the ratification of the appointment of BDO USA, LLP, as the Company's independent registered public accounting firm for the fiscal year ending June 30, 2018;2020; and



5.4.

Act upon such other matters as may properly come before the Annual Meeting or any adjournments or postponements of the Annual Meeting.

Stockholders of record at the close of business on October 20, 2017,18, 2019, the record date, will receive notice of and be allowed to vote at the Annual Meeting. The foregoing matters are described in more detail in the Proxy Statement. In addition, financial and other information about the Company is contained in the Annual Report to Stockholders on Form 10-K ("Annual Report") for the fiscal year ended June 30, 20172019 ("Annual Report"), which includes our Annual Report on Form 10-K for the fiscal year ended June 30, 2019 ("fiscal 2017"2019"), as filed with the U.S. Securities and Exchange Commission ("SEC") on August 9, 2017.7, 2019.

This year weWe have elected to distribute our proxy materials primarily over the Internet rather than mailing paper copies of those materials to each stockholder, which will decrease our printing and distribution costs and allow for convenient access to and delivery of materials in an easily searchable format. If you would prefer to receive paper copies of our proxy materials, please follow the instructions included in the Notice of Internet Availability of Proxy Materials that was mailed to our stockholders on or about October 27, 2017.25, 2019.

For admission to the Annual Meeting, stockholders should come to the stockholder check-in table. Those who own shares in their own names should provide identification and have their ownership verified against the list of registered stockholders as of the record date. Those who have beneficial ownership of stock through a bank or broker must bring account statements or letters from their banks or brokers indicating that they owned the Company's common stockCommon Stock as of the close of business on October 20, 2017.18, 2019. To vote at the meeting, those who have beneficial ownership of stock through a bank or broker must bring a legal proxy, which can be obtained only from the broker or bank.

Your vote is important to us. We encourage you to read the Proxy Statement and then vote by Internet, by phone or sign, date and return your proxy card (if you request a paper copy) at your earliest convenience. Sending in your proxy card will not prevent you from voting your shares at the Annual Meeting, if you desire to do so.

Herndon, VA
October 27, 201725, 2019

IMPORTANT NOTICE ABOUT THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 14, 201713, 2019

The 20172019 Proxy Statement and the 20172019 Annual Report are available at: www.edocumentview.com/LRN.

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PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
DECEMBER 14, 201713, 2019

We are providing access to our proxy materials primarily over the Internet rather than mailing paper copies of those materials to each stockholder. On or about October 27, 201725, 2019 we mailed a Notice of Internet Availability of Proxy Materials ("Notice") to all stockholders entitled to vote at the Annual Meeting. The Notice tells you how to:

•

View our proxy materials for the Annual Meeting, including this Proxy Statement and the K12 Inc. Annual Report to Stockholders for the fiscal year ended June 30, 2017,2019, on the Internet and vote; and



•

Instruct us to send proxy materials to you by mail or email.

This Proxy Statement is provided in connection with the solicitation of proxies by and on behalf of the Board of Directors of K12 Inc., a Delaware corporation, for use at the annual meeting of stockholders to be held at the law firm of Latham & Watkins LLP, 555 Eleventh Street, N.W., Suite 1000, Washington, D.C. 20004-1304, on Thursday,Friday, December 14, 2017,13, 2019, at 10:00 A.M., Eastern Time, and any adjournments or postponements thereof ("Annual Meeting"). "K12," "we," "our," "us" and the "Company" each refer to K12 Inc. The mailing address of our principal executive offices is 2300 Corporate Park Drive, Herndon, VA 20171. This Proxy Statement will be made available on or about October 27, 2017,25, 2019, to holders of record as of the close of business on October 20, 201718, 2019 of our common stock, par value $0.0001 per share ("Common Stock").

VOTING SECURITIES

Record Date; Outstanding Shares; Shares Entitled to Vote

Our Board of Directors has fixed the close of business on October 20, 201718, 2019 as the record date ("Record Date") for determining the stockholders entitled to notice of, and to vote at, the Annual Meeting. On the Record Date, we had 41,332,77440,955,110 shares of Common Stock outstanding and entitled to vote.

Holders of record of Common Stock on the Record Date will be entitled to one vote per share on any matter that may properly come before the Annual Meeting and any adjournments or postponements of the Annual Meeting.

Quorum and Vote Required

The presence, in person or by duly executed proxy, of stockholders representing a majority of all the votes entitled to be cast at the Annual Meeting will constitute a quorum. If a quorum is not present at the Annual Meeting, we expect that the Annual Meeting will be adjourned or postponed to solicit additional proxies.

If a quorum is present: (i)present, a plurality of votes present in person or represented by proxy at the Annual Meeting and entitled to vote on the election of directors is required to elect the members of the Board of Directors; and an affirmative vote of a majority of the votes present in person or represented by proxy at the Annual Meeting is required for (ii)(i) the non-binding advisory resolution approving the executive compensation of the named executive officers of the Company, (iii) the non-binding advisory vote on the frequency of Say on Pay in future years, (iv)(ii) the ratification of the appointment of BDO USA, LLP as the Company's independent registered public accounting firm for the fiscal year ending

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accounting firm for the fiscal year ending June 30, 20182020 ("fiscal 2018"2020"), and (v)(iii) such other matters as may properly come before the Annual Meeting or any adjournments or postponements of the Annual Meeting.

Voting; Proxies; Revocation

Shares of our Common Stock represented at the Annual Meeting by properly executed proxies received prior to or at the Annual Meeting, and not revoked prior to or at the Annual Meeting, will be voted at the Annual Meeting, and at any adjournments, continuations or postponements of the Annual Meeting, in accordance with the instructions on the proxies.

If a proxy is duly executed and submitted without instructions, the shares of Common Stock represented by that proxy will be voted:

•

FOR the election of each of the Board of Director nominees named in Proposal 1;



•

FOR Proposal 2, the approval, on a non-binding advisory basis, of the compensation of the named executive officers of the Company;



•

ForONE YEAR as the non-binding, advisory frequency of Say on Pay in future years in Proposal 3;



•

FOR Proposal 4,3, the ratification of the appointment of BDO USA, LLP as the Company's independent registered public accounting firm for fiscal 2018;2020; and



•

In the discretion of the proxy holders regarding any other matters properly presented for a vote at the Annual Meeting or any adjournments or postponements of the Annual Meeting.

A record holder who executes a proxy may revoke it before or at the Annual Meeting by: (i) delivering to our corporate secretary a written notice of revocation of a previously delivered proxy, with such notice dated after the previously delivered proxy; (ii) duly executing, dating and delivering to our corporate secretary a subsequent proxy; or (iii) attending the Annual Meeting and voting in person. Attendance at the Annual Meeting will not, in and of itself, constitute revocation of a proxy. Any written notice revoking a proxy should be delivered to K12 Inc., Attn: General Counsel and Secretary, 2300 Corporate Park Drive, Herndon, VA 20171. If your shares of Common Stock are held in a brokerage account, you must follow your broker's instructions to revoke a proxy.

Abstentions and Broker Non-Votes

Broker non-votes occur when a nominee holding shares of voting securities for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power on that item and has not received instructions from the beneficial owner. Abstentions, withheld votes, and broker non-votes are included in determining whether a quorum is present but are not deemed a vote cast "For" or "Against" a given proposal, and therefore, are not included in the tabulation of the voting results. As such, abstentions, withheld votes and broker non-votes do not affect the voting results with respect to the election of directors. Abstentions and broker non-votes will have the effect of a vote against the approval of any items requiring the affirmative vote of the holders of a majority or greater of the outstanding common stockCommon Stock entitled to vote.

Proxy Solicitation

We are soliciting proxies for the Annual Meeting from our stockholders and we will bear the entire cost of soliciting proxies from our stockholders. Copies of solicitation materials will be furnished to brokerage houses, fiduciaries and custodians holding Common Stock for the benefit of others so that such brokerage houses, fiduciaries and custodians may forward the solicitation materials to such beneficial

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owners. We may reimburse persons representing beneficial owners of Common Stock for their expenses in forwarding solicitation materials to those beneficial owners. Original solicitation of proxies by mail may

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be supplemented by telephone or personal solicitation by our directors, officers or other regular employees of the Company. No additional compensation will be paid to our directors, officers or other regular employees for these services.

The Company has retained D. F. King & Co. ("DF King") to assist in obtaining proxies from stockholders for the Annual Meeting. The estimated cost of such services is $17,500, plus out-of-pocket expenses. DF King may be contacted at (800) 431-9633 (banks and brokers may call (212) 269-5550) or via email at K12@dfking.com.

Business; Adjournments

We do not expect that any matter other than the proposals presented in this Proxy Statement will be brought before the Annual Meeting. However, if other matters are properly presented at the Annual Meeting or any adjournments or postponements of the Annual Meeting, then the proxy holders will vote in their discretion with respect to those matters.

If a quorum is not present at the Annual Meeting, the Annual Meeting may be adjourned from time to time upon the approval of the holders of shares representing a majority of the votes present in person or by proxy at the Annual Meeting, until a quorum is present. Any business may be transacted at the adjourned meeting which might have been transacted at the meeting originally noticed. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. We do not currently intend to seek an adjournment of the Annual Meeting.

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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND THESE PROXY MATERIALS

The following addresses some questions you may have regarding the matters to be voted upon at the Annual Meeting. These questions and answers may not address all questions that may be important to you as a stockholder of the Company. Please refer to the more detailed information contained elsewhere in this Proxy Statement and the documents referred to or incorporated by reference in this Proxy Statement for additional information.

Why am I receiving this Proxy Statement?

The Company is soliciting proxies for the Annual Meeting. You are receiving a Proxy Statement because you owned shares of Common Stock at the close of business on October 20, 2017,18, 2019, the Record Date for the Annual Meeting, which entitles you to vote at the Annual Meeting. By use of a proxy, you can vote whether or not you attend the Annual Meeting. This Proxy Statement describes the matters on which we would like you to cast a vote and provides information on those matters so that you can make an informed decision.

Why is K12 calling the Annual Meeting?

We are calling the Annual Meeting and submitting proposals to stockholders of the Company to consider and vote upon Annual Meeting matters, including (i) the election of directors, (ii) a non-binding advisory resolution approving the compensation of the Company's named executive officers, a non-binding advisory vote on the frequency of Say on Pay in future years, and (iii) the ratification of the appointment of our independent registered public accounting firm.

How does the Board of Directors recommend that I vote?

Our Board of Directors recommends that you voteFOR the election of each of the Board of Director nominees named in Proposal 1 andFOReach of Proposals 1, 2 and 4 and for "ONE YEAR" as the frequency of Say on Pay in future years for Proposal 3.

What do I need to do now?

After carefully reading and considering the information in this Proxy Statement, please vote electronically via the Internet or by telephone by following the instructions provided by your bank or broker or complete, date, sign and promptly mail the proxy card (if you request a paper copy) in the envelope provided, which requires no postage if mailed in the United States.

May I vote in person?

Yes. If you were a stockholder of record as of the close of business on October 20, 2017,18, 2019, you may attend the Annual Meeting and vote your shares in person instead of voting by Internet or telephone or returning your signed proxy card (if you request a paper copy). However, we urge you to vote in advance even if you are planning to attend the Annual Meeting.

How do I vote if my shares are held in "street name" by my bank, broker or agent?

If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you should have received voting instructions with these proxy materials from that organization rather than from us. Simply complete and mail your voting instructions as directed by your broker or bank to ensure that your vote is counted. To vote in person at the Annual Meeting, you must obtain a valid proxy from

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your broker, bank, or other agent. Follow the instructions from your broker or bank included with these proxy materials, or contact your broker or bank to request a proxy form.

If my shares are held in "street name" by a broker, will my broker vote my shares for me even if I do not give my broker voting instructions?

Under the rules that govern brokers who have record ownership of shares that are held in "street name" for their clients, brokers may vote such shares on behalf of their clients with respect to "routine" matters (such as the ratification of auditors in Proposal 4)3), but not with respect to non-routine matters (such as Proposals 1 2 and 3)2). If the proposals to be acted upon at the Annual Meeting include both routine and non-routine matters, the broker may turn in a proxy card for uninstructed shares that votes on the routine matters, but expressly states that the broker is not voting on non-routine matters. This is called a "broker non-vote" as to non-routine matters. Broker non-votes on non-routine matters will be counted for the purpose of determining the presence or absence of a quorum, but will not be counted for the purpose of determining the number of votes cast. We encourage you to provide specific instructions to your broker by returning your proxy card or by voting electronically via the Internet or by telephone, if permitted by the broker or other nominee that holds your shares. This ensures that your shares will be properly voted at the Annual Meeting.

Can I revoke my proxy and change my vote?

Yes. You have the right to revoke your proxy at any time prior to the time your shares are voted at the Annual Meeting. If you are a stockholder of record, your proxy can be revoked in several ways: by timely delivery of a written revocation to our corporate secretary, by submitting another valid proxy bearing a later date or by attending the Annual Meeting and voting your shares in person, even if you have previously voted using one of the available methods.

When and where is the Annual Meeting?

The Annual Meeting will be held on December 14, 201713, 2019 at 10:00 A.M., Eastern Time, at the law firm of Latham & Watkins LLP, 555 Eleventh Street, NW,N.W., Suite 1000, Washington, DC 20004-1304.

Who can help answer my questions regarding the Annual Meeting or the proposals?

You may contact K12 to assist you with questions about the Annual Meeting. You may reach K12 at:

K12 Inc.
Attention: Investor Relations
2300 Corporate Park Drive
Herndon, VA 20171
(703) 483-7000

You may also contact DF King to assist you with questions about proxies or voting. You may reach DF King at:

D.F. King & Co.,Inc.,
48 Wall Street, 22nd Floor
New York, New York 10005
(800) 431-9633
Banks and brokers may call (212) 269-5550

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CORPORATE GOVERNANCE AND BOARD MATTERS

Corporate Governance Guidelines and Code of Business Conduct and Ethics

Our Board of Directors oversees the management of the Company and its business for the benefit of our stockholders in order to enhance stockholder value over the long-term and to achieve its educational mission. The Board of Directors also has adopted Corporate Governance Guidelines to assist it in the exercise of its responsibilities. The Guidelines are reviewed annually and periodically amended as the Board of Directors enhances the Company's corporate governance practices. The Board of Directors has also adopted a Code of Business Conduct and Ethics that applies to all directors, officers and employees. The purpose of this code is to promote honest and ethical conduct for conducting the business of the Company, consistent with the highest standards of business ethics. The Corporate Governance Guidelines and Code of Business Conduct and Ethics are available on our website at www.K12.com under theK12 Corporate-Investor Relations-Governance section.

Our corporate governance and business conduct best practices include:

•

Regular executive sessions of non-management directors;



•

AllIndependent directors are independent except our Executive Chairman of the Board and our Chief Executive Officer;Officer ("CEO");



•

An over-boarding policy limiting other board service;



•

A Lead Independent Director with delineated authority and responsibility;



•

Director and executive officer stock ownership guidelines; and



•

A policy prohibiting hedging, pledging and short sales of our stock by directors and employees.stock.

We intend to satisfy the disclosure requirements under the Securities Exchange Act of 1934, as amended, ("Exchange Act") regarding any amendment to, or waiver from a material provision of our Code of Business Conduct and Ethics involving our principal executive, financial or accounting officer or controller by posting such information on our website.

Board of Directors

Term of Office.    All directors of the Company serve terms of one year and until the election and qualification of their respective successors.

Attendance at Board and Committee Meetings and the 20162018 Annual Meeting.    Our Board of Directors met sevennine times in person or telephonically during fiscal 2017.2019. Each director attended at least 75% of the total Board and committee meetings to which they were assigned. Our policy with respect to director attendance at the annual meeting of stockholders is to encourage, but not require, director attendance. Two membersMr. Davis was the only member of our Board of Directors attendedto attend our 2016 Annual Meeting2018 annual meeting of Stockholders: Mr. Davis and Mr. Udell.stockholders. Our director attendance policy is included in our Corporate Governance Guidelines, which is available on our website at www.K12.com.

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Communication with Directors.    Stockholders and other interested parties may communicate directly with our Board of Directors, individually or as a group, by sending an email to our General Counsel at OGC@K12.com, or by mailing a letter to K12 Inc., 2300 Corporate Park Drive, Herndon, VA 20171, Attention: General Counsel and Secretary. Our General Counsel will monitor these communications and provide summaries of all received communications to our Board of Directors at its regularly scheduled meetings. Where the nature of a communication warrants, our General Counsel may decide to seek the more immediate attention of the appropriate committee of the Board of Directors or an individual director, or our management or independent advisors and will determine whether any response is necessary.

Director Independence

Our Board of Directors has affirmatively determined that each of our non-employee directors is "independent" as defined in the currently applicable listing standards of the New York Stock Exchange ("NYSE") and the rules and regulations of the Securities and Exchange Commission ("SEC"). Messrs.Mr. Davis and Udell areis not independent under either NYSE or SEC rules because they are eachhe is an executive officer of the Company. If the nominees for the Board of Directors are duly elected at the Annual Meeting, then each of our directors, other than Messrs.Mr. Davis, and Udell, will serve as an independent director.

Board of Directors Leadership Structure

Our Board of Directors is comprised of independent, accomplished and experienced directors who provide advice and oversight of management to further the interests of the Company and its stockholders. Our governance framework provides the Board of Directors with the flexibility to determine an optimal organizational structure for leadership and engagement while ensuring appropriate insight into the operations and strategic issues of the Company. The Board of Directors has evaluated its leadership structure and determined that Mr. Davis should serve as Executive Chairman of the Board and that Dr. Craig Barrett should serve as Lead Independent Director.

Chairman.    Our Board of Directors elects a chairman from among the directors and determines whether to separate or combine the roles of chairman and chief executive officer based on what it believes best serves the needs of the Company and its stockholders at any particular time. Both approaches have been taken depending on the circumstances. The determination to appoint Mr. Davis as Executive Chairman was based on a number of factors that made him particularly well-suited for the role. These factors included his prior position as Executive Chairman and Chief Executive Officer,CEO, his prior service on the Board of Directors and its Compensation Committee, and his understanding of the Company's business and day-to-day operations, growth opportunities, challenges and risk management practices. This combination of Company experience and expertise enables Mr. Davis to provide strong and effective leadership to the Board of Directors and to ensure that the Board of Directors is informed of important issues. Additional factors supporting the current leadership structure are described on page 27. In consultation with our Lead Independent Director, and the Chief Executive Officer, the Executive Chairman sets the agenda for the regular and special meetings of the Board of Directors, presides at the annual meeting of stockholders and performs such other functions and responsibilities as set forth in the Corporate Governance Guidelines, or as requested by the Board of Directors.

Lead Independent Director.    The role of the Lead Independent Director is to facilitate communications between the Executive Chairman and CEO and the independent directors and the committees of the Board of Directors. In doing so, the Lead Independent Director, Dr. Barrett, serves as the liaison between the Board of Directors and the Executive Chairman and CEO, thereby giving guidance to management in meeting the objectives set by the Board of Directors and monitoring compliance with corporate governance policies. Additionally, the Lead Independent Director serves as a liaison between the Board of Directors and stockholders. The Lead Independent Director has the authority to call meetings of the independent

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information that he can use to assist the Executive Chairman and CEO to function in the most effective manner. The Board of Directors believes the Lead Independent Director provides additional independent oversight of executive management and Board matters.

Executive Sessions of the Board.    Our Board of Directors holds executive sessions without management directors or management present at each regularly scheduled meeting of the Board of Directors. The independent directors also may also meet without management present at other times as requested by any independent director. As Lead Independent Director, Dr. Barrett chairs the executive sessions of the Board of Directors.

Committees of the Board of Directors

The standing committees of our Board of Directors are the Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee and Academic Committee. As of the date of this Proxy Statement, membership on the Committees of the Board of Directors is as follows:

Audit Committee

The Audit Committee, which was established in accordance with Section 3(a)(58)(A) of the Exchange Act, consists of Mr. Fink, who serves as the Chairman, Ms. Alvarez and Mr. Bron.Cohen. Our Board of Directors has determined that each of Messrs. FinkCohen and BronFink and Ms. Alvarez qualify as independent directors under the applicable NYSE listing requirements and SEC regulations.

The Audit Committee met ninesix times during fiscal 2017.2019. The meetings to review the Company's quarterly and annual periodic filings with the SEC each include at least two separate sessions (which together count as only one meeting). Mr. Fink engaged in routine separate communications with the Company's external auditors and Chief Financial Officer, held the required executive sessions at each meeting, and requested participation by outside counsel, as needed. The Audit Committee has a charter, available on our website at www.K12.com, setting forth its structure, powers and responsibilities. Pursuant to the charter, the Audit Committee is comprised of at least three members appointed by our Board of Directors, each of whom satisfies the requirements of independence and financial literacy. In addition, our Board of Directors has determined that Messrs. FinkCohen and BronFink and Ms. Alvarez are each an audit committee financial expert

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financial expert, as that term is defined under the Exchange Act. Under its charter, the responsibilities of the Audit Committee include:

•

discussing with our independent registered public accounting firm the conduct of the annual audit, the adequacy and effectiveness of our accounting, the effectiveness of internal control over financial reporting, and applicable requirements regarding auditor independence;



•

approving the audited financial statements of the Company to be included in our Annual Report on Form 10-K;



•

reviewing and recommendingselecting annually to our Board of Directors the selection of an independent registered public accounting firm;



•

pre-approving all audit and non-audit services and fees associated with our independent registered public accounting firm; and



•

reviewing and discussing with management significant accounting matters and disclosures.

In addition, our Corporate Governance Guidelines provide that members of the Audit Committee may not serve on the audit committees of more than two other companies at the same time as they serve on our Audit Committee.

Compensation Committee

The Compensation Committee consists of Mr. Engler,Knowling, who serves as the Chairman, and Messrs. FinkEngler and Tisch.Fink. Our Board of Directors has determined that each of Messrs. Engler, Fink and TischKnowling qualify as independent directors within the meaning of the applicable NYSE listing requirements and SEC regulations.

The Compensation Committee met sevensix times during fiscal 2017.2019. The Compensation Committee has a charter, available on our website at www.K12.com, setting forth its structure, powers and responsibilities. These include:

•

reviewing the compensation philosophy of our Company;



•

reviewing, approving and recommending corporate goals and objectives relating to the compensation of our Executive Chairman and our CEO and, based upon an evaluation of the achievement of these goals, recommending to the Board of Directors our Executive Chairman'sChairman and our CEO's total compensation;



•

reviewing and approving salaries, bonuses and other forms of compensation for our other executive officers, including without limitation stock options, restricted shares, and other forms of equity compensation;



•

considering and adopting changes to our compensation structure as applicable to all non-executive officer employees, including, but not limited to, salaries and benefits; and



•

performing such duties and exercising such authority as may be assigned by the Board of Directors, including under the terms of our equity incentive and bonus plans.

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Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee consists of Mr. Tisch,Ms. McFadden, who serves as the Chairman, and Messrs. Bron and Engler and Ms. McFadden.Engler. Our Board of Directors has determined that each of

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Ms. McFadden and Messrs. Tisch, Bron and Engler and Ms. McFadden qualify as independent directors within the meaning of the applicable NYSE listing requirements and SEC regulations. Our Board of Directors has adopted Corporate Governance Guidelines which are available on our website at www.K12.com.

The Nominating and Corporate Governance Committee met fourfive times during fiscal 2017.2019. The Nominating and Corporate Governance Committee has a charter, available on our website at www.K12.com, setting forth its structure, powers and responsibilities. Under its charter, the Nominating and Corporate Governance Committee has the authority to nominate persons to stand for election and to fill vacancies on our Board of Directors. The Nominating and Corporate Governance Committee may consider the following criteria, as well as any other factors it deems appropriate, in recommending candidates for election to our Board of Directors:

•

personal and professional integrity, ethics and values;



•

experience in corporate management, such as serving as an officer or former officer of a publicly-tradedpublicly traded company, and a general understanding of marketing, finance, operations, governance and other elements relevant to the success of the Company in today's business and regulatory environment;



•

experience in the field of education policy and administration;



•

service as a board member of another publicly-tradedpublicly traded company; and



•

practical and mature business judgment, including the ability to make independent analytical inquiries.inquiries; and



•

diversity of the Board of Directors, which includes gender, racial and ethnic diversity, as well a diversity of backgrounds and experiences.

In fiscal 2017, theThe Board amended its Corporate Governance Guidelines to expressly include consideration of diversity in identifying director nominees. The BoardDirectors strives to nominate directors with a variety of complementary skills so that, as a group, the Board of Directors will possess a mix of the appropriate backgrounds, talent, gender, race, perspectives, skills and expertise to oversee the Company's business. Currently, theour nine member Board has a male and female director oftwo Hispanic descent and andirectors, two African American director, one of which we added in fiscal 2017.directors, and two female directors. The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders, provided such recommendations are submitted in writing not later than the close of business on the 90^th day, or earlier than the close of business on the 120^th day, prior to the anniversary of the preceding year's annual meeting of the stockholders. Such recommendations should include the name and address and other pertinent information about the candidate as is required to be included in the Company's proxy statement. Recommendations should be submitted to the corporate secretary of the Company at K12 Inc., 2300 Corporate Park Drive, Herndon, VA 20171, Attention: General Counsel and Secretary. The Nominating and Corporate Governance Committee will consider the criteria set forth above and other relevant information when evaluating director candidates recommended by stockholders.

Mses. AlvarezOn the recommendation of the Nominating and McFadden wereCorporate Governance Committee, Mr. Cohen was appointed to the Board of Directors, during 2017 to fill vacancies on the Board of DirectorsAudit Committee and therefore arethe Academic Committee. Accordingly, he is standing for election as directorsa director for the first time. Our directors as a group, recommended Mses. Alvarez and McFaddenMr. Cohen to the Nominating and Corporate Governance Committee, which vetted themevaluated him prior to theirhis appointment to the Board of Directors.

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Academic Committee

The Academic Committee consists of Dr. Barrett, who serves as the Chairman, and Messrs. DavisCohen and Engler. The primary role of the Academic Committee is to make recommendations and assist

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management in discharging its responsibility to ensure continuous improvement in academic outcomes for the students and schools we serve.

The Academic Committee has a charter, available on our website at www.K12.com, setting forth the structure, powers and responsibilities of the Academic Committee. Members of the Academic Committee participated in threefour meetings of the Company's Educational Advisory Committee ("EAC") during fiscal 2017.2019. Under its charter, the responsibilities of the Academic Committee include:

•

monitoring the effectiveness of the Company's education products and services;



•

participating in the meetings of the Company's EAC;



•

obtaining information, data, and recommendations from the Company's Chief Academic Officer to assist in its decision making;



•

evaluating and implementing, recommendationsas necessary, the proposals of the Company's Educational Advisory Committee;EAC; and



•

making recommendationsreporting and recommending to the Board of Directors and management to ensure continuous improvementmaximize the Company's ability to provide an effective education to students enrolled in academic outcomes for the public and private schools served by the Company.

Risk Management

Our Board of Directors believes full and open communication with management is essential for effective enterprise risk management and oversight. Members discuss strategy and risks facing the Company with our Executive Chairman ourand CEO and our senior management at meetings of our Board of Directors or when members of our Board of Directors seek to focus on a particular area of risk, such as meeting state academic accountability standards at the schools we manage, ensuring the privacy of student information, compliance with state regulatory and reporting requirements, or information technology cyber-securitycybersecurity protections and preparedness. Because our Executive Chairman and our CEO also setsets the agenda for the Board of Directors' meetings, each functional division of the Company can identify risk-related topics that may require added attention, such aswhich have included evolving state curriculum standards, student engagement and retention, education technology, legal and policy matters, information security, and information security.succession planning. Each quarter, our Executive Chairman and our CEO also presentpresents an assessment of the strategic, financial and operational issues facing the Company, which frequently includes a review of associated risks and opportunities.

Management is responsible for identifying, prioritizing, remediating and monitoring the day-to-day management of risks that the Company faces, while our Board of Directors, as a whole and through its committees, is responsible for the oversight of enterprise risk management. In fiscal 2017,2019, the Audit Committee continued to work directly with a major independent accounting firm to support the Company's internal audit function in risk management. This combination provides us with the focus, scope, expertise and continuous attention necessary for effective risk management.

While our Board of Directors is ultimately responsible for risk oversight, three of its committees concentrate on specific risk areas.areas:

•

The Audit Committee oversees financial reporting and internal controls, school and corporate compliance, cybersecurity, and operations risk and discusses with management the Company's policies with respect to those matters. This includesOur internal audit department prepares various risk management reports prepared by our internal audit department andthat are provided to ourthe Audit Committee on a quarterly basis.basis, or as needed. The reports to the Audit Committee also include an evaluation by our Chief Information Officer regarding the security of our information systems and the initiatives we undertake to continually assess vulnerabilities and take preventative

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measures. The Audit Committee reports on our cybersecurity measures in its regular reports to the Board of Directors. In addition, ourthe Audit Committee assists the Board of Directors in the oversight of legal risk management. A Legal Compliance and Ethics Committee (consisting of senior management members) maintains a Legal Compliance and




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Ethics Program, which includes a Chief School Compliance Officer within the Office of the General Counsel. The Legal Compliance and Ethics Committee provides semi-annual reports to the Audit Committee on the Company's legal risks and compliance-related matters in the schools we serve.serve and at the corporate level.

•

Our Compensation Committee assists our Board of Directors in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs, and retains outside compensation and legal experts for that purpose, as further explained in the Compensation Committee Report which begins on page 58.47.



•

Finally, our Nominating and Corporate Governance Committee assists our Board of Directors in fulfilling its oversight responsibilities with respect to the management of risks associated with the organization, membership and structure of the Board of Directors, succession planning for our directors and corporate governance.

Director Compensation for Fiscal 20172019


In fiscal 2017,2019, pursuant to our Amended Non-Employee Directors Compensation Plan ("Directors Compensation Plan"), our non-employee directors receivedwere eligible to receive annual cash retainers for service on the Board of Directors and assigned committees and annual restricted stock awards. Messrs.Mr. Davis, and Udell, our Executive Chairman and Chief Executive Officer, respectively,CEO, received no additional compensation for theirhis service on our Board of Directors.

Pursuant to the terms of the Directors Compensation Plan, each non-employee director receives an annual cash retainer of $60,000$70,000 and an additional amount for each committee on which the non-employee director serves, as shown below:

		Additional Cash Retainer
Committee		Chair		Member
​	​	​	​	​	​	​
Audit Committee		$35,000		$10,000
​	​	​	​	​	​	​
Compensation Committee		$15,000		$5,000
​	​	​	​	​	​	​
Nominating and Corporate Governance Committee		$10,000		$5,000
​	​	​	​	​	​	​
Academic Committee		$5,000		$5,000
​	​	​	​	​	​	​

The Directors Compensation Plan also provides for annual restricted stock awards for each non-employee director, valued at $100,000$120,000 as of the grant date (prorated for a partial year of service), with the shares underlying such awards vesting fully one year from the date of the grant. The annual cash retainer, including the committee fees, and the annual restricted stock awards were granted on January 3, 2017 to all non-employee directors who held such positions at the beginning of the calendar year.award may be deferred under our Deferred Compensation Plan for Non-Employee Directors ("Directors Deferred Compensation Plan").




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The following table sets forth the compensation paid to our non-employee directors for their services during fiscal 2017:2019, including amounts that were deferred under the Directors Deferred Compensation Plan:

Name		Fees Earned or Paid in Cash ($)		Stock Awards ($) (1)		Total ($)				Fees Earned or Paid in Cash ($)		Stock Awards ($) (1)		Total ($)
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Aida M. Alvarez (2)		15,385		72,059		87,444				75,000		120,000		195,000
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Craig R. Barrett (3)		62,691		100,000		162,691				70,000		120,000		190,000
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Guillermo Bron (4)		67,500		100,000		167,500				80,000		120,000		200,000
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fredda J. Cassell (5)		28,278		—		28,278
Robert L. Cohen (5)										25,795		103,874		129,669
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Kevin P. Chavous (6)		29,333		98,623		127,956
John M. Engler (6)										85,000		120,000		205,000
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Adam L. Cohn (7)		32,500		—		32,500
Steven B. Fink (7)										105,000		120,000		225,000
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
John M. Engler (8)		72,500		100,000		172,500
Robert E. Knowling, Jr. (8)										75,000		120,000		195,000
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Steven B. Fink (9)		87,500		100,000		187,500
Liza McFadden (9)										75,000		120,000		195,000
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Liza McFadden (10)		—		—		—
​	​	​	​	​	​	​	​	​
Jon Q. Reynolds (11)		60,000		100,000		160,000
​	​	​	​	​	​	​	​	​
Andrew H. Tisch (12)		65,000		100,000		165,000
​	​	​	​	​	​	​	​	​

(1)

Represents the aggregate grant date fair values of stock awards computed in accordance with FASB ASC Topic 718. On January 3, 2017,2, 2019, each non-employee director who held such position at the beginning of the calendar year, other than Ms. Cassell, receivedwas eligible to receive an award of 5,7145,006 shares of restricted stock. Mr. Bron, Mr. Knowling and Ms. McFadden elected to receive their awards in deferred stock that vestsunits under the Directors Deferred Compensation Plan. The restricted stock and deferred stock units vest on January 3, 2018.2, 2020.



(2)

Ms. Alvarez joined the Board of Directors in April 2017. The amounts shown represent a pro-rated portion of her annual director compensation based on her partial year of service in fiscal 2017. As of June 30, 2017,2019, Ms. Alvarez held 3,8705,006 unvested restricted shares.



(3)

As of June 30, 2017,2019, Mr. Barrett held 16,3615,006 unvested restricted shares.



(4)

As of June 30, 2017,2019, Mr. Bron held 16,3615,006 unvested restricted shares.deferred stock units.



(5)

On January 4, 2017, Ms. Cassell resigned fromMr. Cohen joined the Board of Directors.Directors in February 2019. The amount of fees shown represents a pro-rated portion of Ms. Cassell's annual retainer based on her partial year of service. Ms. Cassell was not granted a restricted stock award for fiscal 2017.



(6)

Mr. Chavous was a member of our Board of Directors from January 2017 to October 2017. Accordingly, the amounts shown represent a pro-rated portion of hisMr. Cohen's annual director compensation based on his partial year of service in fiscal 2017. As of June 30, 2017, Mr. Chavous held 5,668 unvestedretainer and annual restricted shares.



(7)

Mr. Cohn did not stand for re-election at the 2016 Annual Meeting of Stockholders and his term on the Board of Directors ended at the conclusion of such Annual Meeting. The amount of fees shown represents a pro-rated portion of Mr. Cohn's annual retainerstock award based on his partial year of service. Mr. Cohn was not granted aCohen elected to receive his restricted stock award for fiscal 2017. Mr. Cohn continues to servein deferred stock units under the Company as a consultant.Directors Deferred Compensation Plan. As of June 30, 2017,2019, Mr. CohnCohen held 10,6473,240 unvested deferred stock units.



(6)

As of June 30, 2019, Mr. Engler held 5,006 unvested restricted shares.



(7)

As of June 30, 2019, Mr. Fink held 5,006 unvested restricted shares.



(8)

As of June 30, 2017,2019, Mr. EnglerKnowling held 16,3615,006 unvested restricted shares.deferred stock units.



(9)

As of June 30, 2017, Mr. Fink held 16,361 unvested restricted shares.




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(10)

2019, Ms. McFadden was appointed to the Board of Directors on August 2, 2017, after the end of fiscal 2017.



(11)

On August 7, 2017, Mr. Reynolds resigned from the Board of Directors. As of June 30, 2017, Mr. Reynolds held 16,3615,006 unvested restricted shares.



(12)

As of June 30, 2017, Mr. Tisch held 16,361 unvested restricted shares.deferred stock units.

Please see the Security Ownership of Certain Beneficial Owners and Management table starting on page 6653 for additional information on the beneficial ownership of the Company's common stockCommon Stock by each of our directors.

Director Stock Ownership Guidelines

The Company encourages each director to purchase shares of the Company's common stockCommon Stock and to maintain a minimum ownership level during his or her tenure to foster alignment with our investing stockholders. To reinforce this objective, in early fiscal 2017, we adopted minimum director stock




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ownership guidelines for all of our non-employee directors. Pursuant to those guidelines, these directors must hold shares of the Company's stockCommon Stock equal to the lesser of: (i) three times the annual cash retainer and (ii) 15,000 shares. Non-employee directors must be in compliance with this policy by September 28, 2021 or five years after they begin Board service, whichever date is later. As of the date of this Proxy Statement, all of our non-employee directors are in compliance with this policy.

Deferred Compensation Plan for Non-Employee Directors

Our non-employee directors may elect, pursuant to our Directors Deferred Compensation Plan, to defer payment of all or a portion of their cash and equity compensation for service on the Board of Directors. In the case of a deferral of an equity award, the non-employee director is granted an equal amount of deferred stock units in lieu of restricted stock. Deferred stock units granted in lieu of a restricted stock award are subject to the same vesting requirements or other restrictions that would have applied to such restricted stock award.

In the case of a deferral of cash compensation, the director receives a number of deferred stock units equal to the amount of the cash compensation being deferred, divided by the per-share closing price of a share of our Common Stock on the date that the cash compensation would have been paid but for the deferral. Deferred stock units credited in lieu of cash compensation are fully vested.

Deferred stock units generally become payable, in a lump sum, within 90 days of the date the director no longer serves on the Board of Directors. Deferred stock units are settled in shares of Common Stock or cash, at the Company's discretion.




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PROPOSAL 1:
ELECTION OF DIRECTORS


Our Board of Directors currently has nine members: Aida M. Alvarez, Craig R. Barrett, Guillermo Bron, Robert L. Cohen, Nathaniel A. Davis, John M. Engler, Steven B. Fink, Robert E. Knowling, Jr. and Liza McFadden, Andrew H. Tisch and Stuart J. Udell. In October 2017, Mr. Tisch expressed his intention to retire from the Board of Directors and accordingly his term will end at the conclusion of the 2017 annual meeting.McFadden.

The term of office of each member of our Board of Directors expires at the Annual Meeting, or in any event at such time as their respective successors are duly elected and qualified or their earlier resignation, death, or removal from office. Each year, the stockholders will elect the members of our Board of Directors to a one-year term of office.

Upon the recommendation of our Nominating and Corporate Governance Committee, the Board of Directors has approved the nomination of eightnine directors, Aida M. Alvarez, Craig R. Barrett, Guillermo Bron, Robert L. Cohen, Nathaniel A. Davis, John M. Engler, Steven B. Fink, Robert E. Knowling, Jr. and Liza McFadden, and Stuart J. Udell, for election at the Annual Meeting to serve until the next annual meeting of the stockholders (or until such time as their respective successors are elected and qualified or their earlier resignation, death, or removal from office).

Our Board of Directors has no reason to believe that the persons listed below as nominees for directors will be unable or decline to serve if elected. In the event of death or disqualification of any nominee or the refusal or inability of any nominee to serve as a director, proxies cast for that nominee may be voted with discretionary authority for a substitute or substitutes as shall be designated by the Board of Directors. Nominees for election to the Board of Directors shall be elected by a plurality of votes present in person or by proxy at the annual meetingAnnual Meeting and entitled to vote.


OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" ALL OF THE NOMINEES LISTED BELOW.


NOMINEES FOR ELECTION AT THE ANNUAL MEETING


Set forth below are the names and other information pertaining to each person nominated to the Board of Directors.

Aida M. Alvarez, Age 6870

Ms. Alvarez joined us a director in April 2017 and is a member of our Audit Committee. She currently serves as Chair of the Latino Community Foundation. As Administrator of the U.S. Small Business Administration, she was a member of President Clinton's Cabinet from 1997-2001.1997 to 2001. Previously, Ms. Alvarez served as the Director of the Office of Federal Housing Enterprise Oversight from 1993-1997,1993 to 1997, where she was charged with financial oversight of the secondary housing market, the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac"). Prior to that, she worked for the New York City Health and Hospitals Corporation, Bear Stearns & Company, Inc. and the First Boston Corporation. She has served on the boards of directors of Fastly, Inc. since August 2019; Oportun, Inc. (formerly Progress Financial Corporation) since 2011; Zoosk, Inc. since 2015;2014; and HP Inc. since February 2016. From 2006 to June 2016, Ms. Alvarez served on the board of Wal-Mart Stores Inc., and from 2004 to 2014, served on the boards of MUFG Americas Holdings Corporation (formerly UnionBanCal Corporation) and MUFG Union Bank N.A. (formerly Union Bank N.A.). Ms. Alvarez holds a Bachelor's DegreeB.A. from Harvard College. Ms. Alvarez was selected as a director because of her financial expertise, government experience, and ability to bring diverse perspectives to the Board.Board of Directors.




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Craig R. Barrett, Age 7880

Dr. Barrett joined us as a director in September 2010, currently serves as Chairman of our Academic Committee and became our Lead Independent Director in September 2017. He served as Chairman and Chief Executive Officer of Intel Corporation from 1998, until his retirement in 2009, havingand was also Chairman of the Board of Intel from 2005 to 2009. He previously served in various roles at Intel Corporation, including Chief Operating Officer, since joining Intel Corporation in 1974. Prior to Intel Corporation, Dr. Barrett was a member of the Department of Materials Science and Engineering faculty of Stanford University. Dr. Barrett currently serves as Co-Chairman of Achieve, Inc., an independent, bipartisan, non-profit education reform organization; Chairman of Change the Equation, an organization promoting widespread literacy in science, technology, engineering and math (STEM); President and Chairman of BASIS Schools, Inc.; Vice Chair of the Science Foundation Arizona; and Co-Chairman of the Business Coalition for Student Achievement. Dr. Barrett holds a B.S., M.S. and Ph.D. in Materials Science from Stanford University. Dr. Barrett was selected as a director because of his deep knowledge and experience in information technology innovation, as well as his global, operational, and leadership experience as Chairman and Chief Executive Officer of Intel Corporation. He also brings a unique perspective to the Board of Directors from his tenure as a professor and his volunteer work and support of numerous educational organizations.

Guillermo Bron, Age 6567

Mr. Bron joined us as a director in July 2007 and currently serves as a member of our Nominating and Corporate Governance Committee and our Audit Committee. Mr. Bron was Managing Director at Pine Brook Road Partners, LLC, an investment firm, from December 2013 to June 2017, and served as a Managing Director of Acon Funds Management LLC, a private equity firm, from 20062005 to 2012. Mr. Bron has also served as Chairman and a director of United Pan Am Financial Corp. (UPFC) since 1994, and he served as a director of Pan American Bank, FSB (Pan American), a former wholly-ownedwholly owned subsidiary of UPFC, from 1994 to 2005. Mr. Bron has served as Chairman of idX Corporation sincefrom 2008 to 2018, and from 2000 to 2002, Mr. Bron was a director of Telemundo Group, Inc. From 1994 to 2003, Mr. Bron was an officer, director and principal stockholder of a general partner of Bastion Capital Fund, L.P., a private equity investment fund primarily focused on the Hispanic market. Previously, Mr. Bron was a Managing Director of Corporate Finance and Mergers and Acquisitions at Drexel Burnham Lambert. Mr. Bron holds a B.S. degrees in Electrical Engineering and Management Science from Massachusetts Institute of Technology and an M.B.A. from Harvard University. Mr. Bron was selected as a director because of his extensive executive leadership and international experience, as well as his expertise in investment banking and capital markets, which enables him to bring valuable insights to the Board of Directors in the areas of finance and strategy. The Board of Directors also benefits from his prior experience as a public company director and audit committee member.

Robert L. Cohen, Age 54

Mr. Cohen joined us as a director in February 2019. Mr. Cohen currently serves in various roles including strategic advisor, investor, and board observer to high growth education technology companies including 2U Inc. and Zybooks. Mr. Cohen served as President and Chief Operating Officer of 2U through January 2016. He was appointed President in November 2013 and Chief Operating Officer in April 2012. In addition, Mr. Cohen was 2U's founding Chief Financial Officer beginning in June 2008. From 2001 to 2008, Mr. Cohen held several senior roles at The Princeton Review, including executive vice president of strategic development and executive vice president and general manager of K12 Services. From 1983 to 2001, Mr. Cohen founded and operated the largest network of franchises of The Princeton Review before selling them back to that company. Mr. Cohen attended Princeton University. He was selected as a director because of his deep knowledge and experience in the education technology industry, as well as his operational and leadership experience as Chief Operating Officer of 2U.




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Nathaniel A. Davis, Age 6365

Mr. Davis joined us as a director in July 2009 and has served as our Chairman since June 2012. In January 2013, he became our Executive Chairman, and in January 2014, Mr. Davis was appointed to be our Chief Executive Officer,CEO, serving in that role through February 2016. He also is a member of our Academic Committee.2016 and again beginning in March 2018. Prior to joining the Company, he served as the managing director of RANND Advisory Group from 2003 until December 2012. Previously, Mr. Davis worked for XM Satellite Radio from June 2006 to November 2008, serving as President and then Chief Executive Officer until the company's merger with Sirius Radio. He also served on the XM Satellite Radio board from 1999 through 2008. From 2000 to 2003, Mr. Davis was President and Chief Operating Officer and a board member of XO Communications Inc. Mr. Davis has also held senior executive positions at Nextel Communications (EVP, Network and Technical Service), MCI Telecommunications (Chief Financial Officer) and MCI Metro (President and Chief Operating Officer). Since 2011, Mr. Davis has served as a director of Unisys Corporation and RLJ Lodging Trust. Mr. Davis has also previously served on the board of several public




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and private firms including Mutual of America Capital Management Corporation, Charter Communications and Telica, Switching.Inc. Mr. Davis receivedholds an M.B.A. from the Wharton School of the University of Pennsylvania, an M.S. in Engineering Computer Science at the Moore School of the University of Pennsylvania, and a B.S. in Engineering from Stevens Institute of Technology. Mr. Davis was selected as a director based on his strong record of executive management, finance and systems engineering skills, as well as his insight into the considerations necessary to run a successful, diverse global business. The Board of Directors also benefits from his previous service on other public company boards and his experience in accounting and financial reporting.

John M. Engler, Age 6971

Mr. Engler joined us as a director in October 2012 and is Chairman of our Compensation Committee and a member of our Nominating and Corporate Governance Committee and our Academic Committee. He served as President of the Business Roundtable from January 2011 to JulyFebruary 2017. From 2004 to 2011, Mr. Engler was the President and Chief Executive Officer of the National Association of Manufacturers. He was President of State and Local Government and Vice President of Government Solutions for North America for Electronic Data Systems Corporation from 2003 to 2004. Mr. Engler served as Michigan's 46^th governor for three terms from 1991 to 2003. He hasalso served on the boardas Interim President of directorsMichigan State University from February 2018 to January 2019. Previously, Mr. Engler was a director of Universal Forest Products Inc. sincefrom 2003 and is a member of its Compensation Committee. He is also a director of Munder Capital Management. Previously, Mr. Engler wasto 2019, a director of Northwest Airlines from 2003 to 2008, a director of Dow Jones & Company, Inc. from 2005 to 2007, and a director of Delta Airlines from 2008 to 2012.2012, and he was also a director of Munder Capital Management. Mr. Engler holds a B.S. in Agricultural Economics from Michigan State University and a J.D. from the Thomas M. Cooley Law School. Mr. Engler was selected as a director because of his executive and legislative expertise as a state governor, including working with state education budgets, and for his business experience. The Board of Directors also benefits from Mr. Engler's perspective as a director of numerous public companies and as a member of their audit committees.

Steven B. Fink, Age 6668

Mr. Fink joined us as a director in October 2003, currently serves as Chairman of our Audit Committee and is a member of our Compensation Committee. Mr. Fink is the Deputy ChairmanCo-Chairman of Heron International and a Director of the Foundation of the University of California, Los Angeles. Mr. FinkInternational. He served as a director of Nobel Learning Communities, Inc. from 2003 to 2011 and as Chairman of the Board of Life Storage, LLC from 2013 to 2016. In addition, Mr. Fink is a member of the Boards of Podium Data,the Jackson Laboratory, City of Hope, the Smithsonian National Museum of American HistorySt. Helena Hospital, Ole Health and the Herb Ritts Foundation, and is a member of The J. Paul Getty Photographs Council. From 1999 to 2009, Mr. Fink served as a director of Leapfrog Enterprises, Inc. and was its Chairman from 2004 to 2009. From 2000 to 2008, Mr. Fink was the Chief Executive Officer of Lawrence Investments, LLC. Mr. Fink has also previously served as Chairman and Chief Executive Officer of Anthony Manufacturing, Chairman and Managing Director of Knowledge




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Universe and Chairman and Chief Executive Officer of Nextera.Nextera Enterprises, Inc. Mr. Fink holds a B.S. in Psychology from the University of California, Los Angeles and a J.D. and an L.L.M. from New York University. Mr. Fink was selected as a director based on his significant experience in operations and financial oversight gained as serving as director or chairman for various public and private companies in addition to his membership on various company audit committees which enables him to contribute significantly to the financial oversight, risk oversight and governance of the Company.

Robert E. Knowling, Jr., Age 64

Mr. Knowling joined us as a director in January 2018 and is a member of our Compensation Committee. Since May 2009, he has served as Chairman of Eagles Landing Partners, which specializes in helping senior management formulate strategy, lead organizational transformations, and re-engineer businesses. From 2002 to 2005 he served as Chief Executive Officer of the NYC Leadership Academy, an independent non-profit corporation created by Chancellor Joel I. Klein and Mayor Michael R. Bloomberg that is chartered with developing the next generation of principals in the New York City public school system. Mr. Knowling has also held roles as Chief Executive Officer of Telwares, Chairman and Chief Executive Officer of SimDesk Technologies, Inc. and Chairman, President and Chief Executive Officer of Covad Communications. He was awarded the Wall Street Project's Reginald Lewis Trailblazers Award by President Clinton and the Reverend Jesse Jackson in 1999. Mr. Knowling serves on the board of directors for Roper Technologies, Inc., Rite Aid Corporation and Stream Companies. He also previously served on the board of Heidrick & Struggles, Inc. from 2010 to 2015 and Convergys Corporation from 2017 to 2018. He holds a B.A. in theology from Wabash College and an M.B.A. from Kellogg School of Management, Northwestern University. Mr. Knowling was selected as a director based on his experience in public education, public company leadership roles, technology and organizational development.

Liza McFadden, Age 5456

Ms. McFadden joined us as a director in August 2017 and is a member of our Nominating and Corporate Governance Committee. Ms. McFadden iscurrently leads LIZA and Partners LLC. Previously, she was President and Chief Executive Officer of the Barbara Bush Foundation for Family Literacy a position she has held since 2012.from 2012 to 2018. She is a former high school teacher, Florida Department of Education administrator, and served in Governor Jeb Bush's administration.




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Additionally, Ms. McFadden was appointed by President George W. Bush to serve on the National Institute for Literacy Board. She holds a Master's degreean M.A. from Florida State University and a Bachelor's DegreeB.A. from Fitchburg State University. Ms. McFadden was selected as a director because of her dedication to the education community and expertise in literacy.

Stuart J. Udell, Age 50

Mr. Udell joined us as a director and as Chief Executive Officer in February 2016. Mr. Udell brings significant strategic and operational experience to K12 in the education industry. Most recently, Mr. Udell served as Executive Chairman (from 2015-2016) and Chief Executive Officer (from 2010-2016), of Catapult Learning, LLC, a privately-held provider of instructional services, professional development, and operator of schools. Prior to joining Catapult Learning, from 2009-2010, Mr. Udell was the President of Postsecondary Education at The Princeton Review. He was concurrently, from 2007-2010, the Chief Executive Officer of Penn Foster Inc., a global leader in high school and career-focused online learning, which was acquired by The Princeton Review. Mr. Udell spent 11 years at Kaplan, most recently as President of Kaplan K12 Learning Services (from 2002-2007), where he built the K-12 school division. From 1997-2001, Mr. Udell was President of the School Renaissance Institute, the training, publishing, and research subsidiary of Renaissance Learning Inc. Mr. Udell has served the last 13 years on the board of directors of the National Dropout Prevention Center/Network at Clemson University. Mr. Udell holds a MBA from Columbia University and a BS from Bucknell University.

RETIRING DIRECTOR


Mr. Tisch has expressed his intention not to stand for re-election to the Board of Directors at the 2017 annual meeting. We express our appreciation to Mr. Tisch for his service to the Company.

Andrew H. Tisch, Age 68

Mr. Tisch joined us as a director in August 2001 and served as Chairman of the Board of Directors from May 2007 to June 2012. He currently is Chairman of our Nominating and Corporate Governance Committee and a member of our Compensation Committee. Since 1985, Mr. Tisch has been a director of Loews Corporation, where he currently serves as Co-Chairman of its board, Chairman of its executive committee and, since 1999, as a member of its Office of the President. Mr. Tisch has also served as a director of three subsidiaries of Loews Corporation: Diamond Offshore Drilling, Inc. since 2011, CNA Financial Corporation since 2006, and Boardwalk Pipeline Partners, LP since 2005. Mr. Tisch previously served as a director of Bulova Corporation from 1979 to 2008 and as a director of Lord & Taylor from 2006 to 2008. Mr. Tisch engages in numerous public service activities including serving as a member of the Board of Overseers and executive committee member of Weill Cornell Medicine, trustee of the Brookings Institution, and as a member of the Dean's Advisory Board at the Harvard Business School. Mr. Tisch holds a B.S. in Hotel Administration from Cornell University and an M.B.A. from Harvard University. Mr. Tisch was selected as a director because of his extensive experience having served as president or chairman of various multinational companies over his career in addition to his membership on various boards of public companies which allows him to provide the Board of Directors with leadership and a variety of perspectives on important strategic and governance issues. The Board of Directors also benefits from his involvement in higher education and non-profit organizations.

Executive Officers


Set forth below is biographical information for each of our current executive officers who is not also a director.




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Kevin P. Chavous, President, Academics, Policy & Schools Group, Age 6163

Mr. Chavous joined us in January 2017 and currently serves as President, Academics, Policy & Schools Group. He was a directormember of our Board of Directors from January 2017 to October 2017 andbefore resigning to take his current position. Previously, he was a member of our Nominating and Corporate Governance Committee and Academic Committee until October 2017. He is the Founder and Chief Executive Officer of The Chavous Group, an educational consulting firm, a position he has held sincefrom January 2012 until January 2018 and iswas a founding Board Member of the American Federation for Children ("AFC"). He served as AFC's Executive Counsel from 2012-2016.2012 to 2016. Previously, Mr. Chavous was a partner at the SNR Denton law firm from 2002-20122002 to 2012 and served as a member of the Council of the District of Columbia from 1992-2004,1993 to 2005, where he was Chair of the Council's Education Committee. He also has served on the board of various charter




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schools across the country including the Friendship Charter Schools in Washington, DC.D.C. Mr. Chavous hasholds a B.A. from Wabash College and holds a J.D. from the Howard University School of Law.

Allison B. Cleveland, Executive Vice President of School Management and Services, Age 44

Ms. Cleveland joined us in October 2002 and currently serves as Executive Vice President of School Management and Services. During her time at K12, Ms. Cleveland has been instrumental in building the managed public school line of business. Prior to her role as Executive Vice President, she served as the Senior Vice President of School Services, overseeing academic and operational services in the managed public schools. Prior to that, Ms. Cleveland was the Regional Vice President of the Southern Region, responsible for schools in the Southeast portion of the United States. In her early years at K12, Ms. Cleveland worked in support of new school start-up and school operations, where she was responsible for the successful launch of K12 Virtual Academies throughout the country. Ms. Cleveland began her career at Andersen Consulting, where she focused on clients in the telecommunications industry and government. She holds a BSE in Biomedical and Electrical Engineering from Duke University and an MBA and MA in Education from Stanford University. Ms. Cleveland also currently serves as a director for the Foundation for Blended and Online Learning.

Howard D. Polsky,Vincent W. Mathis, Executive Vice President, General Counsel and Secretary, Age 6655

Mr. PolskyMathis joined us in June 2004September 2018 and serves as Executive Vice President, General Counsel and Secretary. In this role, he has executive responsibility for providing comprehensive legal counsel for our business, including matters relating to securities, litigation, regulatory compliance, intellectual property, contracts and licensing, and corporate governance. Mr. Polsky previously heldMathis has more than 20 years of legal experience counseling diverse global businesses. Prior to joining the positionCompany, Mr. Mathis served as Senior Vice President Corporate Affairs, Corporate Secretary and Chief of Staff to the CEO at The AES Corporation where he earlier was Vice President and Deputy General Counsel. Prior to his roles at The AES Corporation, Mr. Mathis was an Executive Vice President and General Counsel of Lockheed Martin Global Telecommunications from 2000 to 2002. Prior to its acquisition by Lockheed Martin,at ContourGlobal, LLC, a private international energy company. Previously, Mr. Polsky was employed by COMSAT Corporation from 1992 to 2000, initially serving as Vice PresidentMathis worked for Venable, LLP, Shearman and General Counsel of COMSAT's largest operating division,Sterling, LLP and subsequently servingthe United States Securities and Exchange Commission. Mr. Mathis formerly served on the executive management team as Vice PresidentBoard of Federal PolicyDirectors of Indianapolis Power and Regulation. From 1983 to 1992, Mr. Polsky was a partnerLight Company Enterprises, Inc., AES Tietê Energia S.A., and AES Elpa S.A. In addition, he previously served on the Board of Directors at Wiley, Rein & Fielding,IPALCO Enterprises, Inc., DPL Inc. and The Dayton Power and Light Company and was an associate at Kirkland & EllisChairman of Eletropaulo Metropolitana Eletricidade de São Paulo S.A. Mr. Mathis holds a J.D. from 1979 to 1983. Mr. Polsky began his legal career at the Federal Communications Commission. He receivedUniversity of Virginia and a B.A. in GovernmentEconomics and Political Science from LehighThe University of Richmond.

Shaun E. McAlmont, President, Career Readiness Education, Age 53

Dr. McAlmont joined us in August 2018 and serves as President, Career Readiness Education. In this role, he has executive responsibility for managing all aspects of K12's career readiness education programs, including development of the Destinations Career Academies and Programs, and related market expansion. Prior to joining the Company, Dr. McAlmont served as President and CEO of Neumont College of Computer Science, which included Helio Training, LLC, a software development bootcamp. Previously, Dr. McAlmont served as President and CEO of Lincoln Educational Services (NASDAQ: LINC), a national provider of career training programs, where he earlier was President and Chief Operating Officer. Prior to his roles at Lincoln, Dr. McAlmont served as President of the Online Learning Division at Alta Colleges following a role as regional vice president over multiple school campuses. Dr. McAlmont holds an Ed.D. in Higher Education Management, with distinction, from the University of Pennsylvania, an M.A. in Education Administration from the University of San Francisco, and a J.D.B.S. from IndianaBrigham Young University. Mr. Polsky currently serves as a member of the Advisory Board to the Lehigh University College of Arts and Science.

James J. Rhyu, Executive Vice President and Chief Financial Officer and President, Product and Technology, Age 4749

Mr. Rhyu joined us in June 2013 and serves as Executive Vice President and Chief Financial Officer.Officer and President, Product and Technology. Prior to joining the Company, Mr. Rhyu served as Chief Financial Officer and Chief Administrative Officer of Match.com, a subsidiary of publicly traded IAC/InterActiveCorp, since June 2011. In those roles, he was responsible for overseeing a broad range of functions, including finance, human resources, legal, information technology and operations, certain international operations and product development. Prior to his roles at Match.com, Mr. Rhyu was a Senior Vice President of Finance at Dow Jones & Company from January 2009 until May 2011, where he ran the global financial function. Previously, Mr. Rhyu served for three years as the Corporate Controller of Sirius XM Radio Inc. and its predecessor company, XM Satellite Radio, as well as serving in the same role for Graftech International. Mr. Rhyu also served six




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years as an auditor with Ernst & Young LLP in the United States and South America. Mr. Rhyu holds a B.S. from the Wharton School of Business at the University of Pennsylvania and an M.B.A. from the London Business School.

Joseph P. Zarella, Executive Vice President, Business Operations, Age 58

Mr. Zarella joined us in October 2014, and serves as Executive Vice President, Business Operations, leading the Company's marketing organization, information technology organization, enrollment and customer care operations, as well as contract provisioning, billing and collections functions. Mr. Zarella has more than 20 years of customer service, sales and marketing operations, and information technology management experience. Prior to joining the Company, Mr. Zarella served as Chief Service Officer for SiriusXM Satellite Radio and its predecessor company, XM Satellite Radio, since 2006. In this role, he led the Company's sales, marketing, customer service and retention operations. Before joining XM Satellite Radio, he served at Constellation NewEnergy as Managing Director of Operations, where he was responsible for setting the corporate operations consolidation strategy. Prior to that, he was Vice President of Revenue Operations for XO Communications for six years, which followed after more than ten years of experience at MCI Communications serving as Vice President of Financial Operations and holding several executive operations leadership positions. Mr. Zarella holds a B.S. in Information Systems from the University of Massachusetts and an M.B.A. in International Finance from the University of Dallas.




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COMPENSATION DISCUSSION AND ANALYSIS


This Compensation Discussion and Analysis provides information about our fiscal 20172019 compensation for the following named executive officers ("NEOs"):

•

Nathaniel A. Davis, Executive Chairman



•

Stuart J. Udell, and Chief Executive Officer



•

James J. Rhyu, Executive Vice President and Chief Financial Officer and President, Product and Technology



•

Allison B. Cleveland, Executive ViceKevin P. Chavous, President, School ManagementAcademics, Policy and ServicesSchools



•

Joseph P. Zarella,Shaun E. McAlmont, President, Career Readiness Education



•

Vincent W. Mathis, Executive Vice President, Business OperationsGeneral Counsel and Secretary

Executive Summary


We continued to deliver strong financial and operational performance during fiscal 2019 and the results of our 2018 vote to approve named executive officer compensation evidenced our stockholders' overwhelming approval of our executive compensation programs, which are designed to link compensation to performance, stockholder interests and student success.

From our inception in 1999, we have offered online curriculum, educationalinstructional support services, software and softwareproducts designed to facilitate individualized learning for students in kindergarten through 12th grade. In 2014Although we embarked onhave undergone a multi-yearperiod of significant transformation in recent years, highlighted by a shift in our strategic business planfocus and changes in our executive leadership structure, we remain committed to ensure thatfulfilling our educational mission of helping students were provided withreach their potential through personalized learning and inspired teaching. During fiscal 2019 we actively pursued the technology, curriculum, instruction and family support services to maximize their opportunity for academic success. That plan required significant investments, including the transition to a new learning platform and creation of a next generation curriculum, as well as exiting non-strategic businesses. We shifted our early priorities for revenue and enrollment growth to focus instead on building the software, systems and productsstrategies necessary to ultimately establish schools of academic quality. In addition, this all occurred in an environment of rapidly changing education policyaccelerate our business growth and regulatory requirements. The initiatives we took, combined with these external factors, led to an expected slower rate of enrollment growth, academic challenges and operational adjustments as the strategic plan was being implemented.

During this period, whilepromote our stock price declined for a time, we sought to maintain an engaged executive team and, therefore, adopted incentive compensation arrangements necessary to successfully execute the strategic plan. Among other things, we tailorededucational mission by focusing on: (1) strengthening our compensation programs toward achieving the academic, operational and financial milestones within the plan which we believe will increase long-term stockholder value by attracting and retaining more students in better performing schools. In fiscal 2017 we saw this approach begin to yield some positive results as our student enrollment levels improved, capital expenditures tapered, free cash flow increased, and the number of schools in academic jeopardy significantly declined. We describe these successes in more detailbusiness foundation in the section below titled "Performance Highlights."managed public school programs; (2) preparing our students for the future by building a comprehensive career readiness program; (3) positioning ourselves as a trusted software services provider delivering end to end digital learning solutions; and (4) developing international opportunities by building partnership-focused relationships with in-country organizations.

In addition, we heard the concerns raised by stockholders regarding a disconnect between pay and performanceAs in prior years, andduring fiscal 2019 we took meaningful actionscontinued to address those concerns. Given our previous non-majority "Say on Pay" votes, this year we engaged much earlier in an extensive stockholder outreach effort to understand and respond to the particular issues raised byfeedback received from stockholders includingand major proxy advisory firms on our executive team's pastcompensation programs by further developing our long-term performance-oriented approach to executive compensation through the introduction of a multi-year equity incentive plan intended to encourage the creation of stockholder value over a longer three-year performance period.

Say on Pay Results and pay. In fiscal 2017 and, again in earlyStockholder Engagement


95% of the shares voted at our 2018 annual meeting of stockholders voted to approve our named executive officer compensation for fiscal 2018, reflecting significant improvement over prior years and our stockholders' strong support of our executive pay programs and practices. We recognize the significance of stockholder support of our executive compensation programs and continued our stockholder outreach efforts during fiscal 2019. This year we endeavored to makingremain responsive to stockholder feedback and ensure that the elements of our executive compensation programs effectively reflect our desire to further our strategic business objectives while tightly linking executive pay to measurable performance results.

At the beginning of fiscal 2018 compensation decisions,2019, we proactively reached out to our most significanttop 35 stockholders, to seek their input on our compensation philosophy and approach. With participation from our investor relations and human resources executives, alongspeaking with a membertotal of four stockholders that responded and in the aggregate held over 8% of our Compensation Committee, over this period we contacted over 35 stockholders and engaged in meaningful dialogue with holders of more than 20% of our outstanding shares. This stockholder feedback is summarized in the section below titled "Stockholdershares outstanding.




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Engagement"Our Investor Relations and Human Resources leaders conducted the following highlights someoutreach efforts. 100% of the stockholders that we spoke with supported our fiscal 2018 advisory vote on named executive officer compensation and several noted key decisions we made based onimprovements in our compensation practices, most notably our consolidation of the distinct roles of a separate CEO and Executive Chairman, our enhanced disclosure of stockholder outreach efforts and our continued responsiveness to stockholder and proxy advisory firm feedback. While no significant concerns were raised by stockholders during these conversations, an area for consideration involved the use of longer-term performance metrics for our equity incentive programs. In response to this and similar feedback received in prior years regarding the use of one-year performance periods for certain equity awards granted to certain of our named executive officers, for fiscal 2019 we introduced a new long-term shareholder performance plan (the "2019 SPP") designed to create stockholder value over a multi-year performance period by encouraging our NEOs to focus on executing our key strategic objectives. Awards under the 2019 SPP are based entirely on a three-year performance period and will be earned only if we realize significant stock price appreciation as of the end of the three-year period.

2019 Performance Highlights


By actively pursuing our strategic priorities during both fiscal 20172019, we realized strong financial results and 2018:our core business delivered key operational and academic achievements. Highlights include:

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No Pay Level Increases.Managed Public School Retention and Enrollments.  Pay levels forImproving student retention in our new CEO in fiscal 2016 were set below the levels previously in effect for our prior CEO, Mr. Davis, who now serves as our Executive Chairman. Neither our Executive Chairman nor our CEO receivedvirtual schools is a base salary or target bonus compensation level increase for fiscal 2017 and we have extended that "no increase" policy to the base salaries and target bonus compensation levels for allkey aspect of our executive officersbusiness strategy. Research shows that students who remain in the same school setting longer generally perform better academically. To ensure the best outcomes for students, we partner with the school boards we serve to seek to enroll and retain students who are truly engaged and ready to learn. For fiscal 2019, retention at our managed public schools improved by more than ten basis points over fiscal 2018. In part, as a result of these improvements, total average enrollments in our Managed Public School Programs increased 6.3% over fiscal 2018.



•

Elimination of Certain Bonus Payouts   We eliminated bonus payouts for achieving qualitative individual goals for our Executive Chairman and CEO. In addition, the weighting of qualitative individual goals for our other executive officers is being reduced, which we believe will maximize the attention of these executives on corporate rather than individual goals and establish a more unified executive performance culture.



•

Reduced Equity Grant Awards.   Unlike fiscal 2016, no extraordinary equity awards were granted to any of our NEOs during fiscal 2017. Our Executive Chairman and our CEO received only a single annual equity award (as provided pursuant to their employment agreements). These awards are 100% performance-based with no guaranteed vesting if performance metrics are not met. Beginning in fiscal 2017, annual equity awards granted to our other executive officers also include a significant performance-based component, thus reducing time-based awards and requiring achievement of specific performance objectives. No option awards were granted to any of our NEOs in fiscal 2017.



•

Adopted Ambitious LTIP Program.   We adopted a long-term incentive plan ("LTIP") in fiscal 2016, pursuant to which performance share units ("PSUs") were granted to our executive officers. The awards may be earned based on the achievement of pre-established school academic standing and student retention objectives at the end of two and three year performance periods. This special LTIP program was designed as a "stretch" plan requiring substantial improvement in these two categories before any portion of the award could be earned. Awards under the LTIP are not granted on an annual basis.



•

Elimination of Duplicate Performance Metrics.   For fiscal 2018 we have modernized our incentive plan framework to ensure that the same performance criteria are not duplicated across both our annual bonus and equity incentive plans. While our free cash-flow measure of EBITDA-CapEx was used in fiscal 2017 for both plans, in fiscal 2018, this measure is used only as a performance measure for equity incentive grants to ensure that executives do not receive duplicate payouts for a singular achievement.



•

Expanded Use of Stockholder Return Metrics.   To ensure that a portion of our executives' compensation is linked directly to stockholder returns, in fiscal 2016 we granted market-based restricted stock awards ("RSAs") to our Executive Chairman and our CEO that could be earned only upon our achieving stock price appreciation thresholds. This performance metric was extended to RSAs granted to our other executive officers in fiscal 2017. For fiscal 2018, a new total stockholder return modifier will be used for RSAs granted to our executive officers, other than the Executive Chairman and the CEO.




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Performance Highlights


While there is still progress remaining to fulfill our mission and achieve our full potential, we have begun to attain positive results from our redefined business strategy. For fiscal 2017, our key achievements included:

•

Strong Stock Price Performance.   From June 30, 2016 to October 20, 2017, our stock price increased by 44.4%, representing an attractive return to stockholders and a 13.4% premium over the return of the Russell 2000 index, during the same time period.



•

School Academic Improvement.   Our LTIP included a major component (70% of each PSU award) tied to academic performance at the online public schools we manage ("Managed Public Schools"). This component of the awards would be earned based on our reducing, over a 2 and 3 year performance period, the number of schools in jeopardy of being closed. As of the end of fiscal 2017, we had reduced the number of these schools from 11 to three, resulting in the first tranche of these LTIP awards being earned at the "outperform" level.



•

Industry Recognition and Student Enrollments.   We received peer and industry awards for our online education products, including an award from ComputED Gazette for our new Summit Curriculum and an award from United States Distance Learning Association (USDLA) for LearnBop, in recognition of our online learning solution from Fuel Education. Our fiscal 2017 total average student enrollments increased 0.7% over fiscal 2016, our first enrollment increase since fiscal 2014.



•

Strong Operating and Cash Flow Performance.  We set rigorous goals for the financial performance metrics under our Executive Bonus Plan and performance-based equity awards and delivered solid performanceresults for the year, as illustrated in the following table:

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			Metric				Fiscal 2016 Actual Performance				Fiscal 2017 Target Level				Fiscal 2017 Actual Performance
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
			Cash flow—Adjusted EBITDA minus CapEx				$44.9M				$55.3M				$66.5M
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
			Margin—Adjusted EBITDA Margin				12.4%				12.5%				12.9%
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
			Profit—Adjusted Operating Income				$39.6M				$40.7M				$41.8M
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
			Revenue				$872.7M				$921.7M				$888.5M
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
			Metric				Fiscal 2018 Actual Performance				Fiscal 2019 Actual Performance				% Increase over Fiscal 2018
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
			Profit—Adjusted Operating Income				$49.2M				$62.2M				26.4%
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
			Revenue				$917.2M				$1,015.8M				10.7%
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​




We exceededFor fiscal 2019 our target levels for our cash flow, margin and profit metrics which for fiscal 2017 were expressed on an "adjusted" basis to eliminate the impact of certain extraordinary and variable elements that are beyond the control of our executives. Please refer to the discussion titled Fiscal 2017"Fiscal 2019 Compensation DecisionsDecisions" beginning page 3227 for a discussion of how these non-GAAP financial measures are calculated. While we did not achieve our revenue target for the year, our performance nonetheless reflected 1.8% revenue growth over fiscal 2016 results.



•

Core Business Achievements.Continued Expanding Our Career Readiness Education Offering.  InWe continued to expand our Career Readiness offering, highlights of which included increasing the number of Destinations Career Academies ("DCAs") from 13 in school year 2018-2019 to 20 in school year 2019-2020 and launching our National Job Shadow Week offering hands-on learning experiences for the DCA students.




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2019 Compensation Highlights


While the structural changes made to our executive compensation programs and practices in recent years were continued into fiscal 2017, we successfully renewed our service agreement with one2019, the Compensation Committee (the "Committee") worked to ensure that fiscal 2019 compensation decisions reflect positive pay for performance practices in each of the key elements of our largest fully-managed online public school customersexecutive compensation programs. Highlights include:

•

No Significant Base Salary Increases.  Other than modest increases in the base salaries of Mr. Rhyu and Mr. Chavous of not more than 3%, none of our NEOs received an increase in base salary for fiscal 2019.



•

Continued to Simplify our Executive Bonus Plan.  Beginning in fiscal 2018, the Committee focused on restructuring our Executive Bonus Plan by reducing the number of corporate performance management objectives ("PMOs") for our most senior executives. The Committee built upon this approach for fiscal 2019 by further reducing the number of corporate PMOs from five to three so that our annual bonus plan is more closely tied to driving stockholder value through the achievement of key metrics related to profitability, growth and business initiatives. Again in fiscal 2019, the Executive Bonus Plan for Mr. Davis, Mr. Rhyu and Mr. Chavous was 100% tied to the achievement of pre-established objective measures and not to individual performance criteria.



•

Introduced Long-Term Shareholder Performance Plan.  Our executives previously participated in a five-year term,long-term incentive plan that was introduced in fiscal 2016 and concluded in early fiscal 2019. Following the Ohio Virtual Academy,conclusion of this 2016 plan, the Committee adopted the 2019 SPP with the intent that awards under the 2019 SPP are not granted on an annual basis. Accordingly, the size of awards granted under the 2019 SPP takes into account that additional similar performance share units ("PSUs") with overlapping performance periods and gainedmeasured based on stock price growth will not be granted in fiscal 2020 and fiscal 2021.


The 2019 SPP is a new fully-managed public schooldeparture from the Company's historical practice of tying performance-based equity awards to achieving pre-established financial goals that may not directly correlate to stock price appreciation. Instead, the 2019 SPP was designed to focus on the creation of stockholder value over a three-year performance period and enable our NEOs to participate in a percentage of that growth. Awards under the 2019 SPP are earned at the end of a three-year performance period based solely on stock price increases over the three-year period and determined as a percentage of the total stockholder value creation that has been delivered. If a minimum percentage of stock price growth of 25% (measured on an absolute basis) is not attained during the performance period, the awards will be forfeited.

•

No Supplemental Equity Grants.  We made no off-cycle or supplemental equity awards to our NEOs for fiscal 2019. Equity awards for our NEOs were limited to regular time-vesting awards, which comprise a portion of each NEO's annual equity award, and awards under our 2019 SPP. The potential award opportunities under our 2019 SPP take into account that additional similar awards with overlapping performance periods and measured based on stock price growth are not expected to be granted in fiscal 2020 and fiscal 2021.




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customer, Insight PA. These contracts demonstrate continuing interest of independent virtual charter school boards in pursuing fully-managed virtual schools.

Stockholder Engagement


As our business strategy and executive compensation programs have evolved in recent years, we have sought to provide executive compensation programs that are aligned with stockholder expectations and responsive to the extensive stockholder input we have sought and received on our executive compensation programs. We continue to engage in meaningful dialogue with our stockholders to identify and address their concerns regarding our executive pay practices. We were disappointed with the results of our annual advisory vote to approve executive compensation for fiscal 2016, where less than a majority of our stockholders voted in favor, and we increased our stockholder outreach efforts in fiscal 2017 and 2018.

In October 2017, we engaged a new proxy solicitation firm to build upon the prior stockholder outreach efforts made in November 2016 when we contacted our top 35 stockholders to seek to better understand investor concerns in this area. These outreach efforts were conducted by our investor relations and human resources executives with the assistance of Jon Q. Reynolds, Jr., who, at the time was our Lead Independent Director and a member of our Compensation Committee. We believed that among our Board members, Mr. Reynolds was best positioned to discuss executive compensation issues from a stockholder perspective due to his position as a General Partner of Technology Crossover Ventures, which together with its affiliates (collectively, "TCV"), constitute our largest investor and a holder of approximately 10% of our common shares.

These discussions covered our executive compensation programs and practices generally, and addressed the fundamental shift in our business strategy, which had impacted near term profitability. We explained to our stockholders that, in order to incentivize executives to execute on our redefined business strategies, the performance objectives and compensation program design for our executives must reflect this near-term impact in a realistic way in order to provide fair rewards for executive contributions toward achieving important milestones for our business. We also discussed our executive leadership structure, which changed in fiscal 2016, including the implementation of an engaged, full-time Executive Chairman position filled by our former CEO, Mr. Davis. We explained to our stockholders the value that our Board of Directors believes Mr. Davis continues to bring to the Company and the importance of his role, which includes fostering relationships with key industry leaders and executing on our corporate development strategies.

In fiscal 2018, we repeated this process, but commenced it much earlier in the year. In August and September 2017, we reached out to a slightly narrower group of our top 25 stockholders, with the goal of receiving meaningful feedback in advance of our making compensation decisions for fiscal 2018. Although the response rate from stockholders in fiscal 2017 and 2018 was not extremely high, we engaged in substantive discussions with nine of our largest holders over this 12 month period, which represented more than 20% of our outstanding shares.

Throughout these discussions, many of our stockholders have expressed general support for our executive compensation structure and have acknowledged favorably the many changes we have made in response to our continued discussions. But our stockholders also continued to provide constructive feedback on potential improvements to our compensation programs. We listened to these concerns and have thoughtfully considered them. During fiscal 2017, our Compensation Committee met seven times and discussed this stockholder feedback and potential corresponding design changes to our executive




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compensation programs at nearly all of these meetings. The following table summarizes this key stockholder feedback and the responsive actions we have taken to improve our compensation programs.

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		Stockholder Feedback				Responsive Actions
		Pay for performance disconnect—increased compensation with decreased Company performance.				Reduced targeted compensation level for our CEO position in fiscal 2016. Neither our Executive Chairman nor our CEO received an increase in base salary or target total compensation during fiscal 2017 and we have not increased the base salary levels for any of our executive officers for fiscal 2018.
						No extraordinary one-time equity awards were granted to any NEOs in fiscal 2017.
						We eliminated individual qualitative criteria from our annual bonus program for our Executive Chairman and CEO and decreased the weighting of individual performance management objectives ("PMOs") for other executive officers.
						Key fiscal 2017 performance targets were set above fiscal 2016 levels and key fiscal 2018 performance targets are aligned to our fiscal 2018 budget and set above actual fiscal 2017 levels.
						A strict analysis of performance against quantitative metrics was used to determine bonuses and equity award vesting for our Executive Chairman and CEO. While total bonus award potential under our Umbrella Bonus Plan was $1,950,000 and $1,200,000, respectively, actual payouts under the quantitative analysis were substantially lower.
​	​	​	​	​	​	​	​	​
		Concern over rigor associated with stock price hurdle for market-based RSAs granted to Executive Chairman and CEO in fiscal 2016.				We have not granted similar awards since early fiscal 2017 and do not intend to grant awards of this type in fiscal 2018. Stock price hurdles for these awards represented 67% to 144% stock price growth for our Executive Chairman and 65% to 141% growth for our CEO. In early fiscal 2017 (prior to receiving much of the feedback from stockholders regarding these grants), we granted similar awards to our other NEOs but provided that these awards would be earned only if our stock price remained elevated for a period of 30 calendar days following the reporting of fiscal 2017 results.
						Our stock price has risen significantly since these awards were made (and generally has remained elevated) and these awards were earned (subject to additional time-based vesting), allowing our NEOs to share in the strong returns delivered to stockholders.
						Because we believe that our stock price performance should remain a component of our compensation program, we presently intend to implement the use of relative stockholder return metrics going forward for fiscal 2018.
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		Stockholder Feedback				Responsive Actions
		Use of one year performance periods in our equity incentive award program.				We have historically used a one year financial performance metric in our performance-based equity grant program for our most senior executive officers and we believe this has played an important role in ensuring that executive performance can be measured against goals that can be reliably determined. The uncertain environment in which we operate and the significant transitions we are making in our business made projecting financial performance goals over longer periods impractical for 2017 and 2018. Therefore, we are continuing this practice in the very near team.
						However, we also established a long-term incentive plan in fiscal 2016 with longer two to three year goals focused on academics and student retention (as opposed to financial performance), which we believe are metrics that will drive stockholder value in the long-term. The Compensation Committee chose not to create an annual grant structure within this program that would result in overlapping annual goals, and, therefore, the grants were not duplicated in fiscal 2017. This program will end in August 2018 and the Compensation Committee has begun discussions on an appropriate replacement for the program in fiscal 2019. One approach under consideration is the use of smaller annual awards with longer-term (i.e., three year) performance goals. We are continuing to evaluate the appropriate goals and structure for this new program taking into account the stockholder feedback we are receiving and will continue to receive.
​	​	​	​	​	​	​	​	​
		Increase in NEO compensation levels over prior year when potential value of PSUs are included.				The size of PSU grants approved under our LTIP in fiscal 2016 took into account that additional PSUs with overlapping performance periods would not be granted in fiscal 2017 and 2018. The PSUs were also designed as a "stretch" program requiring very significant improvements in academic performance and student retention at our managed public schools.
						When we implement a new LTIP program beginning in fiscal 2019, award sizes will continue to take into account the structure of the program (i.e., whether annual grants are expected) as well as advice from our independent compensation consultant to ensure that compensation levels for our executives are aligned with peer group pay levels.
​	​	​	​	​	​	​	​	​
		Duplication of performance metric (Adjusted EBITDA-CapEx) in both our annual bonus program and our performance-based RSA awards.				Prior to engaging in our fiscal 2017 and 2018 stockholder outreach efforts, we determined to use our free cash flow metric of Adjusted EBITDA-CapEx as a performance goal in both of these programs to ensure executive focus on this key financial metric. Based on stockholder feedback and to ensure that executives do not receive duplicate payouts for a singular achievement going forward, we have eliminated this practice for fiscal 2018 and are not including this cash flow metric in the annual bonus program.
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		Stockholder Feedback				Responsive Actions
		Lack of use of relative stockholder return metrics.				Many of our largest stockholders did not indicate to us significant concerns over our not using comparative stockholder return metrics in our long-term incentive program and although we maintain a defined peer group for compensation benchmarking purposes, our business strategy means that our stock price may not fairly correlate with other companies in our peer group.
						However, because we believe that executive pay should be tied to stockholder return levels, we are adding a total stockholder return "modifier" to our performance equity award program for certain NEOs for fiscal 2018, whereby earned awards will increase or decrease in a range of 75% to 125% based on our relative total stockholder return as compared to the component companies in the Russell 2000 Index.
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		Dual leadership roles—Executive Chairman and CEO.				We restructured our executive leadership team in fiscal 2016 to include an Executive Chairman and a CEO with distinct roles, each of which are critical to the long-term success of our business. This leadership structure was implemented in connection with the elimination of our Chief Operating Officer position (thereby minimizing any aggregate increase in overall executive compensation costs) and was done with the support of TCV, our largest stockholder, and Mr. Reynolds, TCV's prior representative on our Compensation Committee.
						When it implemented this structure in 2016, our Board of Directors believed that Mr. Davis' skills and deep industry connections were important toward continuing the progress we have made in redefining our business. Therefore, while we transitioned authority over the day-to-day operations of our business to our new CEO, Mr. Udell, our Executive Chairman was given primary responsibility for building industry relations and furthering corporate and governance strategy. Mr. Davis accepted this role with a short two-year contract term to enable the Company to maintain flexibility with respect to our leadership structure. Our Board of Directors expects to continue to monitor and review the importance of this role on an ongoing basis. For now, we believe that Mr. Davis' role as an engaged, full-time executive remains important toward achieving our goals and executing on our multi-year plan. As examples of this, among many other accomplishments, during 2017, Mr. Davis successfully led diversity recruitment on our Board of Directors, personally engaged with school board leadership resulting in contract renewals with several of our managed public school customers, contributed regularly on education policy issues to the Capital Hill newspaper, Roll Call, and led our acquisition of the remaining interest in Middlebury Interactive Languages.
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Executive Compensation Principles, Policies and Practices


Principles.    Our executive compensation program isprograms are guided by basic principles that we seek to reflectincorporate in our executive pay practices:

1.

Link Compensation to Performance, Stockholder Interests and Student Success. Compensation levels should reflect actual performance, consistent with our redefined business strategy and be aligned with stockholder interests and the success of the students in the schools we serve.



2.

Maintain Competitive Compensation Levels. Levels of compensation should be competitive with those offered by comparable companies in our industry to attract, retain and reward our executives. We set base pay levels near the median of our compensation peer group and provide above-peer median compensation opportunities to executives only if performance is attained at levels above rigorously set target-level goals.



3.

Reflect our Industry Circumstances and Unique Business. As the only publicly-tradedpublicly traded company in the K-12 space, our compensation programs must be tailored to address the interests of stockholders and our unique circumstancespublic education obligations as we execute on our redefined business strategy.long-term strategy of creating schools of academic excellence with innovative technologies, inspired teaching and personalized learning.



4.

Engage Independent Compensation Consultant. We engage an independent compensation consultant to inform the Compensation Committee of our Board of Directors ("Committee," or "Compensation Committee") and evaluate the alignment of pay, and performance relative to our compensation peer group.group, and compensation risk.

Policies and Practices.    We employ certain executive compensation policies and practices to align our executives' compensation with stockholder interests. Listed below are those compensation policies and practices we employ and certain policies and practices we do not employ because we believe they would not serve the long-term interests of our stockholders.

What We Do

Pay for Performance.    A significant portion of our NEOs' potential compensation is not guaranteed but is linked to our financial and operational performance. The target total direct compensationFor fiscal 2019, only 8% of pay for our Executive Chairman and our CEO for fiscal 2017 was approximately 87% and 82% performance-based, respectively.fixed in the form of base salary.

Align Compensation to Share Price.    A significant portion of our performance-based compensation is tied to growth in our stock price which directly aligns to stockholder interests. Awards under the 2019 SPP will be earned only if we realize significant stock price appreciation as of the end of a three-year performance period.

Establish Performance Goals Aligned to Strategy.    Our Executive Bonus Plan and LTIP2019 SPP utilize objective performance-based goals that the Committee believes are rigorous and challenging.

Target Pay Competitively.    We seek to target compensation within a competitive range of the median of theour compensation peer group and seek only to deliver greater compensation only when warranted by market conditions or superior performance.

Use Meaningful Vesting Conditions on Equity Awards.to Promote Retention.    Performance based RSAsAwards under the 2019 SPP are earned and PSUs begin to vest after attainment of performance criteria and can fully vest after two and three years, depending uponand only to the award. Time based RSAsextent that we experience significant stock price appreciation over such period. Time-based restricted stock awards ("RSAs") vest over three years.




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Carefully Consider Stockholder Input.    We regularly seek and engage in dialogues with our stockholders on executive compensation matters. Recent enhancements in our executive compensation programs have been significantly influenced by these discussions.




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Maintain a Clawback Policy.    We can recover incentive compensation wrongly awarded to an executive officer where fraud or intentional misconduct led to a restatement of our financial statements.

Require Mandatory Share Ownership.    All of our executive officers, including our NEOs, and our non-employee directors are required to maintain a minimum ownership level of our common stock.Common Stock.

Perform Competitive Market Analysis.    The Committee reviews competitive market data provided by its independent compensation consultant for our executive officers prior to making annual executive compensation decisions.

Analyze Executive Compensation Risk.    We review the executive compensation programprograms annually to ensure that it doesthey do not encourage excessive or unnecessary risk taking.

What We Do Not Do

Grant Multi-Year or Guaranteed Bonuses or Equity Awards.    We do not pay guaranteed bonuses and have no guaranteed equity-based awards. This ensures that we are able to base all compensation awards on measurable performance factors, operational results and competitive market needs.

Provide Generous Executive Perquisites.    We do not provide significant perquisites to our executive officers, such as club memberships, personal income tax advisory services and similar items.

Offer Tax Gross-Ups.    We do not provide income tax gross-ups for personal or broad-based benefits nor excise tax gross-ups for change in control payments or benefits.

Offer Pension or Supplemental Retirement Plans.    We do not provide costly retirement benefits to our executive officers that reward longevity rather than contributions to Company performance.

Reprice Options.    Our 2016 Incentive Award Plan ("2016 Plan") specifically prohibits repricing of options without stockholder approval.

Increase Shares without Stockholder Approval.    Our 2016 Plan does not contain an "evergreen" provision to increase the number of shares available for grants each year. Any increase to the maximum number of shares available will require stockholder approval.

Provide Non-Performance Based Single Trigger Change in Control Payments.    We maintain a "double trigger" vesting policy with respect to our equity awards whereby accelerated vesting in connection with a change in control of the Company alsogenerally requires a qualifying termination of employment. Awards under the 2019 SPP will be earned and vest in connection with a change in control only to the extent our stock price has increased as of the transaction. Legacy "single-trigger" vesting stock option awards from prior years have been completely eliminated from our compensation program.

Allow Hedging or Pledging.    Our insider trading policy specifically prohibits short sales, hedging and margin transactions and our 2016 Plan prohibits pledging of any award granted under the plan unless otherwise determined by the plan administrator.




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Tying Executive Pay to Company Performance


Our performance assessment framework and executive compensation programprograms are designed to link pay and performance in the following ways:

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Compensation Element

Determination and Link to Performance

Purpose

Base Salary

Evaluated annually by the Committee and reviewed in light of market pay practices. Represents a lower percentage of target total direct compensation than at most peer companies, with average base salaries benchmarking near the 3550th percentile when compared to the peer group in August 2016 and the 25th percentile in June 2017.2018.

Provide a monthly income necessary to retain executives.

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Executive Bonus Plan

Annual performance determines payouts. Ties a meaningful portion of target annual cash compensation to attaining definedpre-established objective goals.

Focus executives on attaining financial and strategic performance objectives from year to year.

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Long-Term Incentives

Market-based RSAs: Equity awards earned based on sustained stock price appreciation directly link realizable pay to the creation of long-term stockholder value, subject to subsequent vesting over up to a three year period. Performance-based RSAs: One year performance targets based on cash flow metrics drives profitability and financial stability, subject to vesting over three years. Time-based RSAs: Encourages retention of executives and results in less dilution to our stockholders as compared to stock option grants,grants. RSAs are subject to vesting over three years. Not awarded to our CEO and Executive Chairman. LTIP2019 SPP PSUs: Incentivizes improved academic and student retention performance and promotes creation of stockholder value over a three-year performance period. PSUs are earned and vest based on stock price growth over the long term over two and three year performance periods.period. No PSUs will be earned if total stock price growth is below threshold levels.

Enhance retention of key executives who drive consistent performance. Motivate and reward executives for achievement of long-term goals intendedexecuting strategic changes to increaseour business that deliver concrete increases to stockholder value.

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Compensation Element

Determination and Link to Performance

Purpose

Other Compensation

Executives may participate in benefit programs on the same terms as other employees, such as health and welfare benefit plans, 401(k) plan, life insurance and executive life and disability plans. Executives may elect to participate in a non-qualified deferred compensation plan providing tax-efficient savings, but receive no additional Company contributions. Premiums for supplemental disability and life insurance benefits for executives are paid by the Company but no costly supplemental retirement programs are offered.

Provides benefits having high perceived values and offers tax advantages.

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Determining Executive Compensation


The Committee uses a performance-based framework in making compensation decisions for our executives, including our NEOs. In fiscal 2017,2019, the Committee continued to engage Compensia, an independenta national compensation consultant, to evaluate the market competitiveness of compensation for our executive officers. Compensia's work for the Committee also included an assessment of peer group companies and a subsequent executive compensation market analysis. The Committee has assessed Compensia's independence and concluded that no conflict of interest exists that would prevent Compensia from providing services to the Committee.

Assessing Comparative Market Data and Practices

In evaluating the composition of our compensation peer group, the Committee considered a number of factors, including revenue, market capitalization, number of employees, industry and status as an existing peer. Compensia also considered companies that list us as a peer as well as our peers as identified by the major proxy advisory firms. The Committee seeks to maintain as much consistency as possible in the peer group year over year and carefully considers changes. The companies in the fiscal 20172019 compensation peer group are:were:

•    ACI Worldwide, Inc. •    The Advisory Board Co.Adtalem Global Education, Inc.      (formerly DeVry Education Group) •    American Public Education, Inc. •    Blackbaud, Inc. •    Bridgepoint Education, Inc. •    Capella Education Co.		•    Career Education Corp. •    Corporate Executive Board Co. •    Chegg Inc. •    DeVry Education Group •    Graham Holdings Co. •    Grand Canyon Education, Inc.		•    Houghton Mifflin Harcourt Co.		•    Huron Consulting Group •    ITT Educational Services, Inc. •    Lionbridge Technologies, Inc.Scholastic Corporation •    Strayer Education, Inc. •    Weight Watchers International, Inc. •    Zynga, Inc. •    2U, Inc.

This peer group reflects an adjustment made in late fiscal 20162018 to remove Fair Isaac, Gartner, Inc. and Tyler Technologies, which companies no longer met the screening criteria, and Apollo Education Group, Inc. and iGate Corp., which wereThe Advisory Board Company because it was acquired. In seeking replacements for those companies removed,a replacement, the Committee considered the previously mentioned factors and added ACI Worldwide, Inc., American Public Education, Inc., Chegg Inc., Graham Holdings Co., Lionbridge Technologies, Inc. and Weight Watchers International, Inc.Huron Consulting Group.

At the beginning of fiscal 2017,2019, Compensia used this peer group to prepare an analysis for the Committee that compared the compensation levels of our executive officers to comparable executive positions.

In general, the Committee seeks to establish the range of target total direct compensation for our executive officers near the median for similar positions in our peer group, with an overemphasisa greater emphasis on variable cash compensation versus fixed cash compensation.




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Executive Chairman and CEO Pay Mix

Compensia assisted the Committee in designing competitive pay packages that focus heavily on variable pay components, with the intent that the target total direct compensation for our Executive Chairman and our CEO




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should be overwhelmingly performance-based. A graphic illustration of the basic annual target total pay mix of our Executive Chairman and our CEO, which is set forth in their respectivehis employment agreements,agreement, is depicted below:



Fiscal 20172019 Compensation Decisions


Determination of Base Salaries

In considering base salary adjustmentsBase salaries for fiscal 2017,our NEOs are generally set at levels deemed necessary to attract and retain individuals with superior talent, while taking into account the total compensation package provided to each NEO. Base salaries are reviewed annually by the Committee after reviewingand are adjusted from time to time as deemed necessary by the competitive market analysis preparedCommittee, and for executive officers other than the CEO, in conjunction with recommendations made by Compensia, recognized that the base salaries of Ms. Cleveland and Mr. Zarella were below the market median and decided to increase their base salariesCEO, to ensure that they are offered reasonable and competitive salary levels. In making the adjustment to Mr. Zarella'sour executive compensation structure remains aligned with our compensation objectives.

Other than modest base salary the Committee also considered additional responsibilities that were recently assigned to him. In addition, the Committee decided to increase the base salaryincreases for Mr. Rhyu in lightand Mr. Chavous of his strong performance.3% and 1.5% respectively, none of our NEOs received a base salary increase for fiscal 2019. The fiscal 20172019 base salaries for our NEOs are set forth in the table below:

Name		Base Salary for Fiscal 2016			Base Salary for Fiscal 2017		Percentage Increase/Decrease		Base Salary for Fiscal 2019
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Nathaniel A. Davis		$	400,000	(1)	$400,000		—%		$	735,000
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Stuart J. Udell		$	650,000	(2)	$650,000		—%
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James J. Rhyu		$	486,500		$500,000		+2.8%		$	515,000
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Allison B. Cleveland		$	396,000		$415,000		+4.8%
Kevin P. Chavous									$	497,350
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Joseph P. Zarella		$	390,000		$410,000		+5.1%
Shaun E. McAlmont									$	415,000	(1)
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Vincent W. Mathis									$	405,000	(2)
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(1)

Mr. Davis' base fiscal 2016 salary was originally increased from $700,000 to $735,000 in September 2016, but subsequently decreased to $400,000 in connection with our entering into an amended and restated employment agreement with him in his role as Executive Chairman of the Company.



(2)

Mr. UdellDr. McAlmont was hired as our Chief Executive OfficerVice President, President of Career Readiness Education effective February 2016.August 29, 2018.




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(2)

Mr. Mathis was hired as our Executive Vice President, General Counsel effective September 4, 2018.

Determination of Annual Incentive Compensation

Our Executive Bonus Plan is designed to ensure that a meaningful portion of our NEOs' target total cash compensation is "at risk" based upon Company and, for certain NEOs, individual performance. ForAs part of our continued effort to align our pay for performance practices with our redefined business strategy, the Committee has focused in recent years on restructuring the Executive Bonus Plan. This has included updating and reducing the corporate PMOs, removing performance metrics that overlap with our performance-based equity incentive awards, eliminating individual performance criteria for our most senior NEOs and decreasing the weighting of individual PMOs for our other NEOs. The Committee continued this process for fiscal 2017, metrics under2019 by further reducing the number of corporate PMOs for all of our NEOs from five in fiscal 2018 to three for fiscal 2019 so that the Executive Bonus Plan consisted of corporate PMOs based uponis more closely tied to driving stockholder value through the achievement of objectivekey financial goals and measurable student retentionmetrics and operational metrics, and individual PMOs intended to motivate our executives to produce measurable strategic achievements. For Mr. Davis and Mr. Udell, in place of qualitative individual PMOs, additional PMOs were based solely on quantitative metrics, which the Committee determined was appropriate to focus their efforts on improving Company performance and increasing stockholder value.goals.

Target bonus levels for our NEOs are reviewed by the Committee annually and set at levels that, when combined with base salary levels, are intended to provide target total cash compensation opportunities that approximate the market median. For Mr. Davis, the target bonus level is set pursuant to his employment agreement. None of our NEOs received an increase in target bonus levels under our Executive Bonus Plan for fiscal 2019. Target bonus levels for our NEOs for fiscal 20172019 were as follows:

Name		Target Bonus Level (% of Base Salary)
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Nathaniel A. Davis			150	%
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Stuart J. Udell			150	%
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James J. Rhyu			80	%
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Allison B. ClevelandKevin P. Chavous			80	%
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Shaun E. McAlmont			65	%
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Joseph P. ZarellaVincent W. Mathis			65	%
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To seek to maintain the tax deductibility of awards under our Executive Bonus Plan for certain of our key executives, we maintain a performance-based "umbrella" bonus plan based upon objective performance measures that are intended to qualify bonus payouts as "performance-based compensation" for purposes of Section 162(m) of the Internal Revenue Code. While all Executive Bonus Plan awards continue to be determined based on performance against pre-established PMOs, the Committee determined that for fiscal 2017 awards under the umbrella bonus plan would not exceed 10% of our adjusted operating income for the year, resulting in a maximum possible bonus award to Mr. Davis of $1,950,000 and to Mr. Udell of $1,200,000. The actual bonus amounts earned by Mr. Davis and Mr. Udell for fiscal 2017 were calculated based on a strict analysis of performance against the PMOs and were well-below the maximum amount possible under the umbrella bonus plan, as set forth below.

Corporate PMOs


The corporate PMOs under our Executive Bonus Plan for fiscal 2017 are set forth in the table below. The PMOs provide our NEOs with the opportunity to earn above target awards in the event they exceed the pre-established performance levels, but also provide for no awards below minimum thresholds of performance. Performance between two levels is extrapolated on a straight-line basis. In August 2017,




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the Committee reviewed our financial results, enrollment growth and actual achievement against these corporate PMOs, and the results it certified are included in the following table.

Metric		Performance Level		Achievement		Actual Results
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		Threshold		$875.6M
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Revenue		Target		$921.7M		$888.5M
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		Outperform		$945M
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Adjusted		Threshold		$35M
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Operating		Target		$40.7M		$41.8M
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Income (1)		Outperform		$44.8M
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Adjusted		Threshold		11.0%
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EBITDA		Target		12.5%		12.9%
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Margin (1) (2)		Outperform		13.5%
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		Threshold		100 bps
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Retention (3)		Target		150 bps		Improvement below 100 bps,
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		Outperform		200 bps		resulting in no payout
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		Threshold		102.1K
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Average		Target		107.5K		103.7K average enrollments
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Enrollments (4)		Outperform		110.2K
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(1)

Operating income and EBITDA are adjusted for stock-based compensation expense and exclude any acquisition related charges (which would include amortization subsequent to an acquisition transaction) and any other unusual, non-recurring gain or loss that is separately identified in our financial statements.



(2)

EBITDA is a non-GAAP financial measure that consists of net income, plus net interest expense, income tax expense, depreciation and amortization minus noncontrolling interest charges. Adjusted EBITDA margin is a measurement of Adjusted EBITDA as a percentage of total revenue. A reconciliation of EBITDA to the U.S. GAAP financial measure of operating income is provided in Item 6 of our fiscal 2017 Annual Report on Form 10-K.



(3)

Measures the overall retention rate of students that are active in our Managed Public School Programs on or after June 1st and the percent of these students that remain active at the end of the school year, or on May 31st, subject to certain exclusions for students ineligible to return or commence enrollment until the following school year.



(4)

Measures average student enrollment at our managed public schools over the school year.

Additional PMOs

The additional PMOs for Mr. Davis and Mr. Udell were based on the Company's performance against the following quantitative performance metrics. These PMOs were included in the Executive Bonus Plan for




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Mr. Davis and Mr. Udell to replace qualitative metrics used in prior years to ensure that their bonuses were earned based on attaining objective and measurable results.

Metric		Performance Level		Achievement		Actual Results
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Adjusted		Threshold		$40M
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EBITDA		Target		$55.3M		$66.5M resulting in payout at the
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minus CapEx (1)		Outperform		$65.0M		"Outperform" level
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Quarterly Guidance		Meet or exceed quarterly guidance: 10% for 1 quarter, 20% for 2 quarters and 40% for 3 quarters				Met or exceeded for 3 fiscal quarters
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Adjusted EBITDA is defined in the same manner as described in the Corporate PMOs table above. Capital expenditures excludes the cost of student computers and related equipment.

Goal Setting Process and Rationale

The Compensation Committee spentspends considerable time evaluating the appropriate metrics to be included in our Executive Bonus Plan each fiscal year. For fiscal 2019, in order to tie annual bonus planbonuses more closely to top line financial results, the Committee increased the weighting attributable to the revenue metric and eliminated the performance metrics tied to CTE and MPS enrollments. Executive Bonus Plan metrics for fiscal 2017 across multiple committee meetings and additional discussions with management during2019 generally fell into the first quarter of fiscal 2017. The Committee's focus was on driving stockholder value through achievement of key financial metrics and on academic performance. The Committee ultimately determined that executives are appropriately incentivized toward driving academic improvements through our multi-year long-term incentive plan, which focuses primarily on academic performance and retention at our managed schools. Therefore, annual bonus plan goals were focused on key financial metrics, generally falling into four categories:three categories set forth in the table below.

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		Profitability				Adjusted Operating Income and Adjusted EBITDA Margin
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		Cash Flow (for CEO and Executive Chairman)Key Business Initiatives				Adjusted EBITDA-CapExRetention
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In setting performance levels for each metric, the Committee remained committed to establishing rigorous performance goals to ensure alignment of realized pay amounts with corporate performance. Specifically, the Committee set threshold performance for the Adjusted Operating Income and Revenue metrics above the actual results for fiscal 2018 and target performance for all metrics at levels at or above fiscal 2019 budgeted performance. The threshold and target levels for the Retention metric required further improvement in student retention as compared to fiscal 2018, which saw robust student retention improvement. The threshold and target levels were set below the level of retention improvement we




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experienced in fiscal 2018 in light of the strong recovery in student retention during fiscal 2018 from the retention drop we experienced in the prior year.

Metrics under the Executive Bonus Plan for Mr. Davis, Mr. Rhyu and Mr. Chavous were based solely on the achievement of these corporate PMOs, which the Committee determined was appropriate to focus their efforts on improving Company performance and increasing stockholder value. However, for Dr. McAlmont and Mr. Mathis, the Executive Bonus Plan also included individual PMOs intended to motivate these executives to produce measurable legal, compliance and business results, mindful of their functional roles within our organization and, particularly with respect to Dr. McAlmont, to ensure that a portion of his target total direct compensation is tied directly to growth of our Career Readiness business. For these NEOs, awards under the Executive Bonus Plan for fiscal 2019 were based 70% on the achievement of the corporate PMOs and 30% on the achievement of individual PMOs.

Corporate PMOs


The corporate PMOs under our Executive Bonus Plan for fiscal 2019 are set forth in the table below. The PMOs provide our NEOs with the opportunity to earn above target awards in the event they exceed the pre-established performance levels, but also provide for no awards below minimum thresholds of performance. Achievement at the threshold level results in payout at 33% of the target level and achievement at the outperform level results in payout at 200% of the target level. Performance between two levels is extrapolated on a straight-line basis. In August 2019, the Committee reviewed our achievement against these corporate PMOs and the results are included in the following table.

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Metric		Davis Rhyu Chavous		McAlmont Mathis		Performance Levels				Actual Results
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Adjusted						Threshold		$51.8M
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Operating		40%		28%		Target		$57.5M		$62.2M
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Income (1)						Outperform		$63.3M
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						Threshold		$950M
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Revenue		40%		28%		Target		$1,000M		$1,015.8M
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						Outperform		$1,050M
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Retention (2)		20%		14%		Target		200 bps		Improvement 10 bps
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						Outperform		250 bps
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(1)

Operating income is adjusted for stock-based compensation expense and may exclude any acquisition related charges (which would include amortization subsequent to an acquisition transaction) and any other unusual, non-recurring gain or loss that is separately identified and quantified in our financial statements.



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Measures the overall improvement in retention rate of students that are active in our Managed Public School Programs on or after June 1st and the percent of these students that remain active at the end of the school year, or on May 31st, subject to certain exclusions for students ineligible to return (e.g., graduating students) or commence enrollment until the following school year.

Individual PMOs

For Dr. McAlmont and Mr. Mathis, individual PMOs accounted for 30% of the NEO's target annual bonus opportunity under the Executive Bonus Plan for fiscal 2019, although the Committee retains discretion to




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allow for individual adjustments based on factors and considerations it deems relevant. A general description of the individual PMOs for fiscal 2019 and the NEOs' achievements are provided below.

Delivering on Stockholder Commitment (for CEO and Executive Chairman)

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Shaun E. McAlmont

Develop and grow the Career Readiness business, including through the introduction of new models, acquisition targets and opening of new DCAs

Dr. McAlmont launched ten new standalone DCAs and added three new career readiness programs to existing managed schools resulting in significant growth of our Career Readiness presence for school year 2019 - 2020 and beyond; introduced the National Job Shadow Week to highlight career pathways and partnerships; and entered strategic partnership with TALLO (formerly known as Stem Premier). 124%

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Vincent W. Mathis

Achieve favorable outcomes in pending litigation; Oversee Board training programs; Ensure all public company filing requirements are satisfied; Support corporate development activities

Mr. Mathis achieved his established goals with respect to obtaining favorable outcomes in litigation; effectively oversaw the Board training programs; ensured all public company filing requirements were satisfied; and facilitated all corporate development activities. 120.1%

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For our Executive Chairman and our CEO, the Committee also focused on reducing the number of metrics in the annual bonus plan and eliminating any qualitative metrics to ensure that payouts correlate strictly to measurable performance results. In determining goal levels, the Committee reviewed our historical performance, ensuring that targets were set above prior year performance and were tied to our annual budget.




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Fiscal 20172019 Executive Bonus Plan Payments

The following tables illustrate,table sets forth, for each NEO, the Committee's approved annual bonus award under our Executive Bonus Plan for fiscal 20172019 based upon performance against the relevant corporate PMOs and, for Dr. McAlmont and Mr. Mathis, performance against the executive's individual or additional PMOs.

Mr. Davis—Target Bonus Level = 150% of Base Salary

	PMO		Performance Level Achieved		Maximum Bonus Opportunity (% of Base Salary)		% of Base Salary Earned		Amount of Bonus
​	​	​	​	​	​	​	​	​	​
	Corporate PMOs
​	​	​	​	​	​	​	​	​	​
	Revenue		Between Threshold and Target		40%		12.8%		$51,200
​	​	​	​	​	​	​	​	​	​
	Adjusted Operating Income		Between Target and Outperform		40%		25.4%		$101,480
​	​	​	​	​	​	​	​	​	​
	Adjusted EBITDA Margin		Between Target and Outperform		40%		28.0%		$112,000
​	​	​	​	​	​	​	​	​	​
	Retention		Below Threshold		40%		0%		$—
​	​	​	​	​	​	​	​	​	​
	Average Enrollments		Between Threshold and Target		40%		13.0%		$51,840
​	​	​	​	​	​	​	​	​	​
	Additional PMOs
​	​	​	​	​	​	​	​	​	​
	Adjusted EBITDA-CapEx		Outperform		60%		60.0%		$240,000
​	​	​	​	​	​	​	​	​	​
	Quarterly Guidance		Met		40%		40.0%		$160,000
​	​	​	​	​	​	​	​	​	​
	TOTAL:				300%		179.2%		$716,520
​	​	​	​	​	​	​	​	​	​

Mr. Udell—Target Bonus Level = 150% of Base Salary

	PMO		Performance Level Achieved		Maximum Bonus Opportunity (% of Base Salary)		% of Base Salary Earned		Amount of Bonus		Corporate PMOs
NEO											Adjusted Operating Income		Revenue		Retention		Individual PMOs		% of Target Bonus Earned		Amount of Bonus
​	​		​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
	Corporate PMOs
Nathaniel A. Davis											73%		52.6%		0%		—		125.6%		$1,385,277
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
	Revenue		Between Threshold and Target		40%		12.8%		$83,200
James P. Rhyu											73%		52.6%		0%		—		125.6%		$517,673
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
	Adjusted Operating Income		Between Target and Outperform		40%		25.4%		$164,905
Kevin P. Chavous											73%		52.6%		0%		—		125.6%		$499,931
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
	Adjusted EBITDA Margin		Between Target and Outperform		40%		28%		$182,000
Shaun E. McAlmont											51.1%		36.8%		0%		36%		124.0%		$334,366
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
	Retention		Below Threshold		40%		0%		$—
Vincent W. Mathis											51.1%		36.8%		0%		32.1%		120.1%		$316,042
​	​		​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
	Average Enrollments		Between Threshold and Target		40%		13.0%		$84,240
​	​		​	​	​	​	​	​	​
	Additional PMOs
​	​	​	​	​	​	​	​	​	​
	Adjusted EBITDA-CapEx		Outperform		60%		60.0%		$390,000
​	​	​	​	​	​	​	​	​	​
	Quarterly Guidance		Met		40%		40.0%		$260,000
​	​		​	​	​	​	​	​	​
	TOTAL:				300%		179.2%		$1,164,345
​	​		​	​	​	​	​	​	​




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Mr. Rhyu—Target Bonus Level = 80% of Base Salary

	PMO		Performance Level Achieved		Maximum Bonus Opportunity (% of Base Salary)		% of Base Salary Earned		Amount of Bonus
​	​	​	​	​	​	​	​	​	​
	Revenue		Between Threshold and Target		16%		5.1%		$25,600
​	​	​	​	​	​	​	​	​	​
	Adjusted Operating Income		Between Target and Outperform		16%		10.2%		$50,750
​	​	​	​	​	​	​	​	​	​
	Adjusted EBITDA Margin		Between Target and Outperform		16%		11.2%		$56,000
​	​	​	​	​	​	​	​	​	​
	Retention		Below Threshold		16%		0%		$—
​	​	​	​	​	​	​	​	​	​
	Average Enrollments		Between Threshold and Target		16%		5.2%		$25,950
​	​	​	​	​	​	​	​	​	​
	Individual		Outperform		60%		60.0%		$300,000
​	​	​	​	​	​	​	​	​	​
	Individual goals and performance results:
	• Reduce CapEx ($62M at threshold, $60M at target or $58M at outperformance): Actual result of $48.2M. • Achieve over $1M in combined revenue capture and procurement savings: $1.5M in revenue capture and $1.2M in procurement savings. • Achieve effective tax rate below 38%: Achieved tax rate of 35.6%, with allowable adjustments. • Achieve corporate selling, general and administrative expense target (less bonus, stock-based compensation, legal expenses and any other non-controllable costs): Achieved at $18.5M under budget. • Conduct three non-deal related roadshows: Met.
​	​	​	​	​	​	​	​	​	​
	TOTAL:				140%		91.7%		$458,300
​	​	​	​	​	​	​	​	​	​




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Ms. Cleveland—Target Bonus Level = 65% of Base Salary

	PMO		Performance Level Achieved		Maximum Bonus Opportunity (% of Base Salary)		% of Base Salary Earned		Amount of Bonus
​	​	​	​	​	​	​	​	​	​
	Revenue		Between Threshold and Target		9.75%		4.2%		$17,264
​	​	​	​	​	​	​	​	​	​
	Adjusted Operating Income		Between Target and Outperform		9.75%		7.3%		$30,482
​	​	​	​	​	​	​	​	​	​
	Adjusted EBITDA Margin		Between Target and Outperform		9.75%		7.8%		$32,370
​	​	​	​	​	​	​	​	​	​
	Retention		Below Threshold		9.75%		0%		$—
​	​	​	​	​	​	​	​	​	​
	Average Enrollments		Between Threshold and Target		9.75%		4.2%		$17,534
​	​	​	​	​	​	​	​	​	​
	Individual		Near Target		65%		31.3%		$130,000
​	​	​	​	​	​	​	​	​	​
	Individual goals and performance results:
	• Standardize programming across Managed Public School sector: Accomplished for Students First and Academic Excellence framework. • Improve school operations and finances: Achieved successful revenue capture improvement project. • Advance company marketing strategy: Achieved. • Service agreement and charter renewals: Many expiring service agreements renewed.
​	​	​	​	​	​	​	​	​	​
	TOTAL:				113.75%		54.86%		$227,650
​	​	​	​	​	​	​	​	​	​




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Mr. Zarella—Target Bonus Level = 65% of Base Salary

	PMO		Performance Level Achieved		Maximum Bonus Opportunity (% of Base Salary)		% of Base Salary Earned		Amount of Bonus
​	​	​	​	​	​	​	​	​	​
	Revenue		Between Threshold and Target		9.75%		4.2%		$17,056
​	​	​	​	​	​	​	​	​	​
	Adjusted Operating Income		Between Target and Outperform		9.75%		7.4%		$30,115
​	​	​	​	​	​	​	​	​	​
	Adjusted EBITDA Margin		Between Target and Outperform		9.75%		7.8%		$31,980
​	​	​	​	​	​	​	​	​	​
	Retention		Below Threshold		9.75%		0%		$—
​	​	​	​	​	​	​	​	​	​
	Average Enrollments		Between Threshold and Target		9.75%		4.2%		$17,323
​	​	​	​	​	​	​	​	​	​
	Individual		Near Target		65%		31.3%		$128,500
​	​	​	​	​	​	​	​	​	​
	Individual goals and performance results:
	• Improve operational efficiency and lower bad debt write offs: Accomplished. • Improve customer experience, conversion rates, parent self-service capability, operational expense economics, customer care and private pay enrollment operations: Met established goals in all areas. • Improve the performance and contributions of the IT leadership team: Continued success in building a new IT leadership team. • Lead the marketing organization to deliver high quality student acquisition plan: Accomplished.
​	​	​	​	​	​	​	​	​	​
	TOTAL:				113.75%		54.9%		$224,974
​	​	​	​	​	​	​	​	​	​

Determination of Long-Term Incentive Compensation

We believe that providing long-term incentive compensation opportunities in the form of equity awards promotes our philosophy of aligning executive pay with the long-term interests of our stockholders while building the value of our Company. During fiscal 2017,2019, we granted performance-basedtime-based RSAs and PSUs to Mr. Davis and Mr. Udell and market- and time- based RSAs to eachall of our other NEOs.

Mr. Davis and Mr. Udell-Performance-BasedTime-Based Restricted Stock Awards

In earlyMr. Davis.    Pursuant to Mr. Davis' employment agreement, as amended in connection with his appointment as our CEO in March 2018, beginning with fiscal 2017, the Committee approved long term incentive awards for2019 Mr. Davis is entitled to a target award level under our annual equity incentive award plans in the range of $2,700,000 to $3,300,000, which awards may be subject to such vesting criteria determined by the Board of Directors and Mr. UdellDavis, including performance-based vesting criteria. While the Board of Directors has historically granted 100% of Mr. Davis' long-term incentives in the form of performance-based restricted stockequity awards, in light of recent tax law changes (which no longer provide tax benefits for granting performance-based awards) and to more closely match customary practices among companies in our compensation peer group and among public companies in general, for fiscal 2019, the Board of Directors determined to grant a portion of Mr. Davis' annual long-term incentive award in the form of a time-based RSA with a one year cash flow goal measured by Adjusted EBITDA minus CapEx. We do not grant time-vesting equity awards to Mr. Davis and Mr. Udell because we believe that for these executives, no equity incentive award payouts should be earned if financial performance falls below expected levels. This is intended to provide strong incentive opportunities to our most senior executives to maintain realistically attainable levels of short-term profitability while also aligning compensation with long-term stock price movements and seeking to ensure the tax deductibility of equity grants (as time-based awards would not be expected to be tax deductible for these executives).

The performance-based RSAs granted to Mr. Davis and Mr. Udell had a target award value of $2 million, as set forth in their respective employment agreements, and themillion. The number of shares granted was determined based upon the fair market value of our common stockCommon Stock on the date of grant, which resulted in a targetan award of 147,058 shares each. The115,674 restricted shares are earned based upon the attainment of certain Adjusted EBITDA minus CapEx performance levels for fiscal 2017 as set forth in the table below, with any earned shares subject to additional time-based vesting in equal annual installments over a




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periodThe remainder of three years. Financial achievement falling between the specified levels would result in a proportionate adjustment to the number of shares earned.

	Performance Level		Metric: Adjusted EBITDA-CAPEX		% of Award Earned
​	​	​	​	​	​
	Below Threshold		Less than $35M		0%; entire award forfeited
​	​	​	​	​	​
	Threshold		$35M		80% of award earned
​	​	​	​	​	​
	Target		$40-55M		100% of award earned
​	​	​	​	​	​
	Outperform		$60M		133% of award earned
​	​	​	​	​	​

The Compensation Committee determined to use the cash flow metric of Adjusted EBITDA-CapEx for these awards because we view this as a critical metric for driving stockholder value and the Committee sought to focus executives on this metric as we continue to implement our multi-year plan. In setting the threshold, target and outperform levels for these awards, the Committee takes into account the fact that 100% of the equity awards for these executives are performance-based and therefore at-risk. The Committee also takes into account that this is a meaningful departure from the compensation practices of our peer companies, many of which provide at least half of their annual equityMr. Davis' long-term incentive grantsaward was granted in the form of time-based awards. As a result, the threshold award level was set slightly below the requirement for threshold-level payoutPSUs under the corresponding metric2019 SPP as described in our annual bonus plan to ensure that executives are rewardedmore detail below under "Determination of Long-Term Incentive Compensation—2019 Long-Term Shareholder Performance Plan."

Mr. Rhyu and Mr. Chavous.    For fiscal 2019, Mr. Rhyu and Mr. Chavous were granted time-based RSAs having a value of $1,000,000 for attaining a performance level thatMr. Rhyu and $700,000 for Mr. Chavous. The number of shares granted was viewed as reasonable but not intended to be viewed bydetermined based upon the executives as a "stretch" or impractical goal. The target level was then set in a range that included our budgeted performance level for the year, with the outperform level set at the same level as under our annual bonus plan. Payouts at each performance level are set in a narrower band than many programsfair market value of our peer companies to ensure that executives do not receive unreasonable payouts in the event of outperformance, taking into account the challenges we face in projecting our performance levels in our current operating environment and as we execute on transitioning our business, as we have described above.

In early fiscal 2018, the Committee determined that our fiscal 2017 Adjusted EBITDA minus CapEx was $66.5 million, which resulted in Mr. Davis and Mr. Udell each earning an award of 195,587 shares at the "Outperform" level, one-third of which vested in August 2017,Common Stock on the date of certificationgrant, which resulted in an award of achievement,60,386 restricted shares to Mr. Rhyu and the remainder of which will vest in annual installments in 2018 and 2019.42,271 restricted shares to Mr. Chavous.

Mr. Rhyu, Ms. ClevelandDr. McAlmont and Mr. Zarella—TimeMathis.    In connection with commencing employment in early fiscal 2019, Dr. McAlmont was granted a time-based RSA for 45,000 shares and Market-Based Restricted Stock AwardsMr. Mathis was granted a time-based RSA for 35,000 shares.

In August 2016,All of the Committee determinedtime-based RSAs granted to increase the percentage of variable compensation for certain of our NEOs in order to better align the interests of these executives with those of our stockholders such that 20% of the annual restricted stock awards granted to each of Mr. Rhyu, Ms. Cleveland and Mr. Zarella are "at risk" and performance-based. Time and market-based restricted stock awards were granted to each of these NEOs in the following amounts:

Name		Time RSAs (#) (1)		Market-Based RSAs (#) (2)
​	​	​	​	​
James J. Rhyu		64,000		16,000
​	​	​	​	​
Allison B. Cleveland		32,000		8,000
​	​	​	​	​
Joseph P. Zarella		32,000		8,000
​	​	​	​	​

(1)

The time-based RSAsduring fiscal 2019 vest pursuant tobased on our standard vesting schedule which is semi-annually over a three-yearthree year period, with 20% of the shares subject to the award vesting in the first year and 40% vesting in each of the next two years following the grant date.

2019 Long-Term Shareholder Performance Plan (SPP)

In early fiscal 2019, the Committee adopted and the Board of Directors approved the 2019 SPP—our new long-term shareholder performance plan under which a meaningful portion of the total long-term incentive award opportunities are provided to our NEOs in the form of PSUs designed to provide these executives with a percentage of stockholder value growth.

The 2019 SPP was adopted following the conclusion of our prior long-term incentive plan as a means of continuing our practice of providing multi-year performance-based equity incentive awards. Since awards under the 2019 SPP will not be granted on an annual basis, award amounts granted during fiscal 2019 take into account that no similar PSUs with overlapping performance periods and measured based on stock price growth are expected to be provided to our NEOs.




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(2)

Awards under the 2019 SPP were originally granted to Mr. Davis, Mr. Rhyu and Mr. Chavous in September 2018 and in January 2019 the Committee determined to expand participation in the 2019 SPP to Dr. McAlmont and Mr. Mathis to ensure that the long-term incentive compensation opportunities for our NEOs were aligned to driving long-term stockholder value. PSUs granted under the 2019 SPP will be earned and vest only based on our market capitalization growth over a completed three-year performance period ending in 2021. The market-based RSAsPSUs will be earned and vest based uponon the Company's average closing stock price over the 30 calendar day period that begins on the eighth day after the date the Company achieving an averagereleases its earnings results for fiscal 2021.

The total number of shares that would be earned at each applicable stock price hurdle was determined in order to correspond to a specified percentage of $14.35 permarket capitalization growth delivered by the stock price increases, thereby directly aligning long-term incentive awards for the NEOs with long-term stock value growth for our stockholders. This percentage amount, along with the number of shares that would be earned by each of the NEOs under the 2019 SPP at different stock price hurdles and growth outcomes is illustrated in the following chart:

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
		3-Year CAGR		Absolute Stock Price Growth		Stock Price Hurdle		Share of Market Cap Growth		# of Shares Earned
										Davis		Rhyu			Chavous			McAlmont		Mathis
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
		7.6%		25%		$21.18		1.0%		54,649			12,882			10,539		—		—
		10%		33%		$22.63		6.0%		413,331			93,885			83,257		—		—
		15%		52%		$25.86		6.5%		528,571			179,714			172,666		—		—
		20%		73%		$29.38		6.5%		596,022			243,827			243,827		—		—
		25%		95%		$33.21		7.5%		724,185			362,093			362,093		118,265		88,699
		30%		120%		$37.35		7.5%		727,673			382,433			382,433		138,606		103,954
		40%		174%		$46.65		7.5%		848,857			425,372			425,372		181,545		136,158
		50%		238%		$57.38		7.5%		939,858			425,372	(1)		425,372	(1)	181,545		136,158
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

(1)

Amounts shown for Mr. Rhyu and Mr. Chavous reflect an incremental increase in the maximum award amount approved in January 2019 to ensure share which would requirepayout levels are not reduced at greater performance levels.

No amounts will be earned if total stock price growth of approximately 10% over the averagethree-year period is below certain threshold levels, which levels are below 25% (7.6% annualized) for Mr. Davis, Mr. Rhyu and Mr. Chavous and below 95% (25% annualized) for Dr. McAlmont and Mr. Mathis. A maximum of 7.5% of total value growth will be earned if total stock price for the calendar month preceding the grant (July 2016), measured during the 30 consecutive calendar days following the reportgrowth equals or exceeds 95%. The number of fiscal 2017 earnings. Restricted shares granted upon the achievement ofPSUs earned will be interpolated on a straight line basis if the stock price appreciation threshold vest as to 20%falls between two of the shares immediately upon the date the threshold is achieved and the remaining 80% of the shares vest in four equal semi-annual installments. On September 8, 2017, the Committee certified the achievement of the stock price threshold and the shares began to vest.

Prior Year Long-Term Incentive Awards

Mr. Davis and Mr. Udell—Fiscal 2016 Market-Based Restricted Stock Awards

In fiscal 2016, Mr. Davis and Mr. Udell were granted market-based restricted stock awards that begin to vest based upon the Company achieving stock price appreciation thresholds for 30 consecutive calendar days. The stock price thresholds for these awards were achieved during fiscal 2017 and Mr. Davis and Mr. Udell began vestinglevels set forth in the restricted shares as follows:

		Date		Number of Shares (1)
​	​	​	​	​	​	​
Stock Price		Achieved		Davis		Udell
​	​	​	​	​	​	​
³ $13 per share		8-1-16		38,462		76,923
​	​	​	​	​	​	​
³ $16 per share		12-23-16		93,750		93,750
​	​	​	​	​	​	​
³ $19 per share		4-24-17		131,579		157,895
​	​	​	​	​	​	​

(1)

Restricted shares granted upontable above. In the achievementevent of a change in control during the applicable stock price appreciation threshold vest as to 50% ofperformance period, the shares immediately upon the date the applicable threshold is achieved and as to 50% of the shares in semi-annual installments until February 8, 2018 for Mr. Davis and February 8, 2019 for Mr. Udell.

All NEOs—LTIP Performance Share Units

In fiscal 2016 the Committee granted PSUs to all of our NEOs, which are earned based on academic performance, weighted at 70%, and student retention, weighted at 30%. Academic performance goals are measured over both a two and three year period and the student retention goal is measured based on performance for the third year. The first tranche of the academic goal (i.e., the tranche for the two-year fiscal 2016-2017 period) was eligible towill be earned based on reducing the number of schools in academic jeopardy status over the performance period and was to be measured based on the percentage of schools not in academic jeopardy at the end of the performance period as follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

Threshold

87% of Schools

70% of Award Earned

​

​

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​

​

​

​

​

​

​

​

​

​

Target

90% of Schools

100% of Award Earned

​

​

​

​

​

​

​

​

​

​

​

​

​

Outperform

95% of Schools

150% of Award Earned

​

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For this purpose, "academic jeopardy" is defined as a school having a high probability of being closed within 12-18 months of the measurement date if academic performance does not improve. Over the two-year performance period, we reduced the number of schools in academic jeopardy from 11 to three, resultingstock price paid or implied in the first tranche of this award beingtransaction and the earned at the outperform level. The earned sharesPSUs will vest in four quarterly installments beginning November 15, 2017.immediately.

Awards under the LTIP are not granted on an annual basis such that additional PSUs with overlapping performance periods will not be granted to our NEOs.

Fiscal 2018 Compensation Decisions


As we implemented our executive compensation program for fiscal 2018, we continued our efforts to more tightly link executive pay to measurable performance results under the guidance of a reconstituted Compensation Committee, including a new Committee Chair to bring fresh perspectives to our executive compensation programs. We also implemented several changes to our programs in response to the valuable stockholder feedback we have received over the past 12 months, as we discuss in more detail above under the heading "Stockholder Engagement." While we will describe these programs in full detail in next year's proxy statement, the following fiscal 2018 compensation highlights are important in considering the evolution of our compensation program in the context of our transitioned business strategies and execution of our multi-year plan.

•

No Compensation Increases.  None of our NEOs are receiving any increase in base salaries or target total compensation levels for fiscal 2018.



•

Rigorous Annual Bonus Plan Metrics.  For fiscal 2018, the Compensation Committee focused on streamlining our annual bonus plan, further reducing the number of metrics included for our Executive Chairman and our CEO, and reducing the weighting of individual performance metrics for our other NEOs from 50% to 30%. The Committee also removed performance metrics that overlap with our performance-based equity incentive awards, eliminated the metric tied to achieving quarterly guidance figures and added a metric tied to Career Technical Education (CTE) enrollments, a key strategic initiative for fiscal 2018, and which we believe will be a competitive differentiator and drive improvement in retention. In setting performance levels for each metric, the Compensation Committee focused on incentivizing measurable performance growth in all areas and set target performance levels well above fiscal 2017 performance, and that are tied directly to budgeted performance levels for fiscal 2018.



•

No Extraordinary or Multi-Year Equity Grants.  As with fiscal 2017, equity incentive grants for our NEOs were limited to regular annual awards with no special or extraordinary award opportunities for fiscal 2018. Fiscal 2018 will be the final year of our 3-year LTIP, which was implemented in fiscal 2016. For fiscal 2019, we expect to implement a new LTIP and continue to review and consider an appropriate structure for the program.



•

Elimination of Market-based RSA Grants.  In setting fiscal 2018 compensation, we did not grant market-based awards to NEOs that would be earned based solely on attaining stock price levels.



•

Enhanced Rigor under CEO and Executive Chairman Performance Based RSA Grants.  For our CEO and our Executive Chairman 100% of their annual equity incentive awards are performance based, with payouts tied to achievement of Adjusted EBITDA-CapEx. In setting the threshold, target and outperform levels for this program, the Compensation Committee continued to consider that the absence of time-based equity awards in our program is a meaningful departure from peer group practices and set




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performance levels accordingly. However, because we outperformed on the Adjusted EBITDA-CapEx metric in fiscal 2017, the Committee set the low end of the target range for fiscal 2018 at a level meaningfully greater than the corresponding fiscal 2017 target.

•

New Performance RSA Award Structure for Other NEOs.  For fiscal 2018, target annual equity award levels for our NEOs are maintained at levels consistent with prior years. However, a larger portion of these regular annual equity grants are now subject to attaining free cashflow goals. These performance-based grants are not additional or supplementary grants and do not increase the target total compensation levels for the NEOs, but are intended to place a larger amount of the NEOs' regular annual awards (which were previously time-based awards) "at risk" based on Company financial performance. We are also introducing a total stockholder return modifier as an element of this program for our NEOs other than our CEO and Executive Chairman. To determine payouts for the performance-based grants, we will first determine an initial payout level based on actual free cash flow results for the year and will then adjust the payout percentage level up or down in a range of 75% to 125% of the initial calculated payout level depending on the Company's total stockholder return ranking as compared to an established benchmark (if we rank at the top of the benchmark group, the payout will be 125% of the amount calculated pursuant to the free cash flow goal and if we rank at the bottom of the peer group, the payout will be 75% of the amount calculated pursuant to the free cash flow goal).

Other Compensation


Deferred Compensation Plan

We maintain a non-qualified deferred compensation plan, or the Deferred Compensation Plan, under which our NEOs are eligible to elect to defer the receipt of up to 50% of their annual base salary and up to 100% of any annual incentive bonus until retirement. Earnings are credited on deferred amounts based upon a variety of investment options that may be elected by each participant. We do not make any contributions to the Deferred Compensation Plan. Certain information with respect to amounts deferred by our NEOs under this plan is set forth below in the "Fiscal 20172019 Non-Qualified Deferred Compensation" table.




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Defined Contribution Plan

We maintain a Section 401(k) Savings/Retirement Plan, or the 401(k) Plan, in which certain of our employees, including our NEOs, are eligible to participate. All employees, including our NEOs, are automatically enrolled in the 401(k) Plan at a 3% deferral rate with the ability to opt-out. The 401(k) Plan allows participants to defer a portion of their annual compensation, subject to certain limitations imposed by the Internal Revenue Code. We currently provide matching contributions equal to $0.25 for each dollar of a participant's contributions on the first 4% of eligible salary that they contribute each pay period, subject to certain statutory limits.

Employee Benefits and Perquisites

We provide our NEOs with certain perquisites and other personal benefits, and perquisites, which we do not consider to be a significant component of our executive compensation programs but recognize to be an important factor in attracting and retaining talented executives. Our NEOs participate in the same medical, dental, vision, disability and life insurance plans as our employees generally. We also pay for supplemental long-term disability and life insurance premiums for our executive officers and provide them with the opportunity to receive annual Company-paid executive physical examinations. We provide these supplemental benefits to our executive officers due to the relatively low cost of such benefitsexaminations and the value they provide in assisting us




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in attracting and retaining talented executives. We reimburse certain executives for their relocation expenses from time to time and for temporary housing expenses they may incur in connection with their provision of services. We provide such reimbursementsthese supplemental benefits to our executives becauseexecutive officers due to the relatively low cost of such expenses are typically directly associated withbenefits and would not have been incurred but for their commencement or continued provision of services.

the value they provide in assisting us in attracting and retaining talented executives. None of our executive officers receive tax gross-ups or other tax payments in connection with our provision of any perquisites or personal benefits.

In order to incentivize Dr. McAlmont and Mr. Mathis to join the company in early fiscal 2019, each of these executives received a one-time sign-on bonus in the amount of $85,000 for Dr. McAlmont and $50,000 for Mr. Mathis. In addition, Dr. McAlmont and Mr. Mathis were provided reimbursement of relocation expenses in the amounts set forth in the "Summary Compensation Table for Fiscal 2019" below.

The value of perquisites and other personal benefits and perquisites we provided to each of our NEOs in fiscal 20172019 is set forth below in our "Summary Compensation Table for Fiscal 2017.2019."

Compensation Governance, Process Andand Incentive Decisions.Decisions


Role of Compensation Committee

The Committee is responsible for overseeing our executive compensation programs, as specified in its charter. The Committee's role includes:

•

Determining and recommending to our Board of Directors the incentive compensation and equity awards of both our Executive Chairman and our CEO and approving the compensation forof our Chairman, CEO and other executive officers, including the other NEOs;



•

Establishing and approving compensation plans for our executive officers based on the recommendations of the Chairman and CEO, with input from the Executive Chairman, and the Committee's compensation consultant; and



•

Proposing revisions to the Committee's charter for our Board of Directors' approval to ensure compliance with new SEC regulations and NYSE listing standards as enacted.

In performing its responsibilities with respect to the compensation of our executive officers, the Committee uses information from a number of sources. The information utilized by the Committee includes advice from its independent compensation consultant, market data regarding the compensation practices of competitors, advice from outside legal counsel specializing in executive compensation, tally sheets




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showing prior compensation awards, the recommendations of our Chairman and CEO with input from our Executive Chairman, and an assessment of the outstanding equity holdings of our executive officers.

Role of Management

Our management, under the leadership of our Executive Chairman and our CEO, plays an important role in establishing and maintaining our executive compensation programs. Management's role includes recommending plans and programs to the Committee, implementing the Committee's decisions and assisting and administering plans in support of the Committee. With feedback from our ExecutiveOur Chairman ourand CEO provides information on the individual performance of our other executive officers and makes annual recommendations to the Committee on compensation levels for our executive officers, including the other NEOs.NEOs (other than his own compensation). Our Executive Chairman and our CEO areis not present when the Committee discusses and determines matters regarding theirhis own compensation.

Role of Committee's Independent Compensation Consultant

The Committee's charter gives it the authority to retain and approve fees and other terms of engagement for compensation consultants and other advisors to assist it in performing its duties. In fiscal 2017,2019, the Committee continued to retain Compensia as its independent compensation consultant. Compensia reports directly to the Committee, which will annually review its performance, independence and fees.




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The Committee receives a report from Compensia on an annual basis reviewing its independence in light of SEC regulations and NYSE listing standards. In fiscal 2017, the Committee concluded that the engagement of Compensia did not raise any conflicts of interest.

Other Compensation Policies and Practices


Stock Ownership Policy

We maintain a stock ownership policy that is designed to ensure that our executive officers and non-employee directors hold a significant equity stake in our Company to align their interests with those of our stockholders. The policy has expanded over the years such that it now applies to all of our executive officers and non-employee directors.officers. The policy requires each of our Executive Chairman and our CEO to maintain ownership of our common stockCommon Stock having a value equal to three times their respectivehis base salaries,salary, our CFO to maintain ownership of our common stockCommon Stock equal to two times his base salary and each of our other executive officers to maintain common stockCommon Stock ownership equal to one time their respective base salaries. Non-employee directors are required to maintain ownership of our common stock equal to the lesser of three times the annual cash retainer or 15,000 shares. Our executive officers and non-employee directors have five years from the date the policy became applicable to them to accumulate the specified level of ownership. As of the date of this Proxy Statement, all of our NEOs and non-employee directors are in compliance with this policy.

Compensation ClawbackRecovery ("Clawback") Policy

Our Board of Directors has adopted a clawback policy pursuant to which the Company may recover from current or former executive officers the amount of previously paid incentive compensation (including both cash bonuses and equity awards) that it determines to be appropriate if a material error or inaccuracy resulted in whole or in part from the fraud or intentional misconduct of an executive that leads to a financial restatement. This policy is intended to provide enhanced safeguards against certain types of employee misconduct, and allows for recovery of significant compensation paid to an executive.

Insider Trading Policy

We maintain a Policy Statement for the Prevention of Insider Trading that applies to all securities issued by the Company, including common stock,Common Stock, options to purchase shares of common stock,Common Stock, preferred stock, and any other type of security that the Company may issue or that relates to the Company's securities. Company employees, directors and consultants are prohibited from engaging in hedging transactions, including purchasing Company stockCommon




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Stock on margin or engaging in transactions, in puts, calls or other derivative securities designed to hedge or offset any decrease in the market value of the Company's equity securities and we have not permittedsecurities. In addition, our 2016 Plan prohibits the pledging of any awards.award granted under the 2016 Plan unless otherwise determined by the plan administrator.

Tax Deductibility of Annual Compensation

Prior to the passage of the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), Section 162(m) of the Internal Revenue Code limitslimited tax deductions for certain annual compensation in excess of $1 million paid to certain individualsexecutive officers of a publicly traded corporation. Compensation that qualified as "performance-based" under Section 162(m) was exempt from this $1 million limitation. As part of the Tax Act, the ability to rely on this "qualified performance-based compensation" exception was eliminated and the limitation on deductibility was generally expanded to include all named executive officers. Although we maintained compensation arrangements that were intended to qualify as performance-based compensation under Section 162(m), following passage of the Tax Act we may no longer take a deduction for any compensation paid to our covered employees in the summary compensation tablesexcess of public company proxy statements.$1 million, subject to certain transition relief rules. The Committee considersbelieves that tax deductibility is only one of several relevant considerations when structuring compensation programs and presently expectsstrives to pursue compensation programs that are intended to be tax deductible where practicable to the extent consistent with our compensation goals and philosophies. However, if circumstances warrant, the Committee retains the discretion to grant incentive awards to NEOs that are not fully deductible as a result of Section 162(m), as the Committee must balance the effectiveness and overall goals of our executive compensation programs with the materiality of reduced tax deductions. In addition, even whereAccordingly, the Committee has approved compensation programs are intended to qualify as performance-based




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compensationamounts for purposesour executive officers that were not fully deductible because of Section 162(m), there can be no guarantee that and, in light of the requirementsrepeal of the performance-based compensation exception to Section 162(m) will be satisfied, expects in the future to approve compensation that is not deductible for federal income tax purposes in order to achieve the desired flexibility in the design and that all such compensation will be deductible.delivery of compensation.

Accounting for Stock-Based Compensation

ASC Topic 718, Compensation—Stock Compensation, requires us to recognize an expense for the fair value of equity-based compensation awards. Grants of equity-based awards under our equity incentive award plans are accounted for under ASC Topic 718. The Committee considers the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award plans and programs. As accounting standards change, the Committee may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives.

Equity Award Grant Practices

We do not have any program, plan or practice to time the grant of equity awards to our employees in coordination with the release of material non-public information. We generally grant awards at the time employment commences and annually in connection with our annual compensation review process. We do notNeither the Board of Directors nor the Committee seek to time the grant of equity awards based on our stock price. If we are in possession of material non-public information, either favorable or unfavorable, when equity awards are made, the Committee will not take the information into consideration in determining award amounts. Our practice is to determine the stock price for annual NEO equity awards on the day that incentive awards are granted.

Severance and Change in Control Arrangements

We consider severance to be an integral part of the overall compensation package for our executives. We provide severance to attract and retain individuals with superior ability and managerial talent, provide our executives with appropriate protections due to their vulnerability to terminations of employment due to a change in control, merger or acquisition and encourage our executives to focus their attention on their work duties and responsibilities in all situations.

We believe that providing the NEOs with severance payments and benefits upon certain terminations of employment are key retention tools that help us remain competitive with the companies in our compensation peer group, provide our executive officers with incentives to focus on the best interests of




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our stockholders in the context of a potential change in control, and appropriately protect our executive officers in the event of an involuntary termination of employment without creating a windfall due solely to a change in control.

Severance.    We have entered into an employment agreementsagreement with Mr. Davis and Mr. Udell and a letter agreement with Mr. Rhyu that provide for severance payments and benefits upon certain terminations of employment as further described below under the section "Potential Payments Upon Termination or Change in Control—Employment Agreements." Our other NEOs are generally entitled to receive severance pay upon a qualifying termination of employment under the Company's severance guidelines in an amount between six and 12 months of base salary, which amount is determined based on their position and tenure with the Company.Company, which for Mr. Chavous, Dr. McAlmont and Mr. Mathis is currently equal to six months of base salary. In addition, upon a termination without cause or resignation for good reason, the NEOs may be eligible to receive, subject entirely to the Committee's discretion and contingent upon signing a release of claims:claims in favor of the Company: (i) accelerated vesting of outstanding and unvested stock options that otherwise would have vested in the one year period following the date of termination (all other options to be forfeited), and (ii) accelerated vesting of outstanding and unvested restricted stock awards.

Pursuant to the terms of their outstanding award agreements, in the event the employment of Mr. Rhyu, Mr. Chavous, Dr. McAlmont or Mr. Mathis is terminated due to his death or by the Company due to disability, the executive (or his estate) would be entitled to full accelerated vesting of outstanding and unvested restricted stock awards.

Change in Control.    TheExcept as described below with respect to PSUs granted under the 2019 SPP, the NEOs are generally not entitled to receive cash payments or accelerated vesting of equity awards solely as a result of a change in control of the Company.




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We have entered into change in control agreements with our NEOs, other than Mr. Davis, and Mr. Udell, whose entitlements to payments or benefits upon a change in control areis set forth in their respectivehis employment agreements,agreement, pursuant to which, in the event the NEO is terminated without cause or resigns for good reason within 24 months following a change in control, the executive would be entitled to receive 1.5 times the cash severance amount available under the Company's standard severance guidelines as described above and reimbursement for COBRA premiums for up to 12 months following termination. In addition, all unvested equity awards would become fully vested, provided that any awards subject to performance-based vesting would generally only vest subject to the attainment of the applicable performance conditions.

With respect toUnder the 2019 SPP, in the event of a change in control during the three-year performance period, the PSUs awarded under our LTIP,will be earned based on the portion ofstock price paid or implied in the award attributable totransaction and the post-change in control period would be considered "earned" at the target level (100%), subject to remaining time-based vesting requirements.earned PSUs will vest immediately.

Risk Assessment in Compensation Programs

Consistent with SEC disclosure requirements, we periodically evaluate the risk profile associated with the Company's executive and other compensation programs. In fiscal 2017,2019, the Committee engaged Compensia to review the existing programs and assess whether theyour compensation policies and practices create risks that are reasonably likely to have a material adverse effect on the Company. Among other factors, this assessment considered the program structure, design characteristics and performance-based measures associated with our executive compensation programs and concluded that our executive compensation programs contain a number of safeguards that are expected to minimize excessive risk taking, including a reasonable mix of cash and equity compensation opportunities, a compensation claw backrecovery ("clawback") policy, the use of multiple performance measures in oura balanced annual incentive plan balanced annual incentivedesign that emphasizes top and variablebottom line performance, formal policies for the administration of our equity pay structures, multi-year vestingprogram, a




Table of long-term incentive grants, a Contents

succession plan for key executives and a stock ownership policy for our non-employee directors and executive officers.

Based on the foregoing, we believe that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company as a whole. We also believe that our incentive compensation arrangements provide incentives that do not encourage risk-taking beyond the Company's ability to effectively identify and manage significant risks, are compatible with effective internal controls and the risk management practices of our Company, and are supported by the oversight and administration of the Committee with regard to our executive compensation programs.




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COMPENSATION TABLES


Summary Compensation Table for Fiscal 20172019


The following table shows the compensation we paid to our NEOs for services rendered during fiscal 2017, 20162019, 2018 and 2015.2017.

Name		Fiscal Year		Base Salary		Bonus (1)		Stock Awards (2)		Option Awards (2)		Nonequity Incentive Plan Compensation (3)		All Other Compensation (4)		Total
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Nathaniel A. Davis		2017		$400,000		$—		$1,999,989		$—		$716,520		$15,210		$3,131,719
Executive Chairman		2016		610,178		—		3,160,796		1,500,001		1,616,972		17,885		6,905,832
		2015		700,000		—		1,702,755		1,500,899		1,407,280		14,512		$5,325,446
Stuart J. Udell, (5)		2017		$650,000		$200,000		$1,999,989		$—		$1,164,345		$19,786		$4,034,120
Chief Executive Officer		2016		256,438		200,000		3,475,390		—		539,981		68,889		4,540,698
James J. Rhyu		2017		$500,000		$—		$815,840		$—		$458,300		$9,048		$1,783,188
Executive Vice President and		2016		486,500		—		533,140		—		510,825		9,719		1,540,184
Chief Financial Officier		2015		478,500		—		2,542,050		—		584,727		8,877		3,614,154
Allison B. Cleveland		2017		$415,000		$—		$407,920		$—		$227,650		$7,011		$1,057,581
Executive Vice President, School		2016		396,000		—		491,050		—		196,650		7,380		1,091,080
Management and Services		2015		360,000		—		376,600		​		160,668		6,754		904,022
Joseph P. Zarella		2017		$410,000		$—		$407,920		$—		$224,974		$13,297		$1,056,191
Executive Vice President		2016		390,000		—		434,930		—		196,650		19,642		1,041,222
Business Operations		2015		245,702		75,000		306,250		325,200		110,055		4,166		1,066,373

Name		Fiscal Year		Base Salary		Bonus (1)		Stock Awards (2)		Nonequity Incentive Plan Compensation (3)		All Other Compensation (4)		Total
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Nathaniel A. Davis		2019		$706,731		$—		$7,676,558		$1,385,277		$17,131		$9,785,697
Chief Executive Officer and Chairman		2018		509,129		—		4,205,001		1,704,087		17,672		6,435,889
		2017		400,000		—		1,999,989		716,520		15,210		3,131,719
James J. Rhyu		2019		$495,192		$—		$3,654,349		$517,673		$9,211		$4,676,425
Chief Financial Officer		2018		500,000		—		755,967		618,263		9,549		1,883,779
President, Product and Technology		2017		500,000		—		815,840		458,300		9,048		1,783,188
Kevin P. Chavous		2019		$487,644		$—		$3,329,353		$499,931		$14,943		$4,331,871
President of Academics, Policy and		2018		317,557		85,000		1,000,017		388,439		94,303		1,885,317
Schools
Shaun E. McAlmont (5)		2019		$332,000		$85,000		$4,334,902		$334,366		$100,014		$5,186,282
President, Career Readiness Education
Vincent W. Mathis (5)		2019		$317,769		$50,000		$3,265,637		$316,042		$45,286		$3,994,734
Executive Vice President,
General Counsel and Secretary

(1)

Amounts shown for 2016fiscal 2019 represent signing bonuses Dr. McAlmont and 2017 represent a signing bonus Mr. Udell was entitled to receiveMathis received in connection with histheir commencement of employment with the Company. The second installment of the sign-on bonus was earned based on Mr. Udell's remaining employed with us through February 8, 2017.



(2)

These columns representThis column represents the aggregate grant date fair value of stock and option awards computed in accordance with FASB ASC Topic 718, which,718. For PSUs, amounts shown reflect the grant date fair values calculated using a Monte Carlo simulation model as these awards were market-based awards. The fair value was determined using a Monte Carlo simulation model and the following assumptions: the Company's Common Stock price at the date of grant of $17.29 (for Messrs. Davis, Rhyu and Chavous) and $31.51 (for Dr. McAlmont and Mr. Mathis); a three-year continuously compounded equivalent risk-free rate; an expected stock price volatility of 30% and 40%, respectively; and an expected term of approximately 3.00 and 2.75 years, respectively, for performance-based awards, are shown based on the probable outcome with respect to the applicable performance conditions. For performance-based restricted shares granted to Mr. Davison September 18, 2018 and Mr. Udell, amounts are shown based on the target award level of 147,058 shares (a maximum of 195,587 shares are eligible to be earned, which shares had a grant date value of $2,659,985).January 31, 2019, respectively.



(3)

All amounts are reported in the year earned, regardless of when they are paid.



(4)

The amounts in this column consist of 401(k) plan matching contributions, Company-paid life insurance, and long-term disability premiums, and other perquisites consisting of temporary housing and commuting allowances.premiums. The amountamounts paid to Dr. McAlmont and Mr. Udell includes $8,333Mathis also include $92,698 and $43,300, respectively, in a temporary housing allowance in 2017.moving expenses.



(5)

The base salary earned by Dr. McAlmont and Mr. Udell's compensationMathis for 2016 isfiscal 2019 was prorated for histheir partial yearyears of service.




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Grants of Plan-Based Awards During Fiscal 20172019 Table


The following table provides information regarding grants of plan-based awards to our NEOs during fiscal 2017.2019. The equity awards described in the following table were granted under our 2016 Plan, the K12 Inc. 2007 Equity Incentive Award Plan (which was replaced by the 2016 Plan) and the LTIP.Plan.

​

​

Estimated Possible Payouts under Nonequity Incentive Plan Awards (1)

​

Estimated Possible Payouts under Equity Incentive Plan Awards

​

All Other Stock Awards: Number of Shares of

​

Grant Date Fair Value of Option and Stock

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Target

​

Maximum

​

Threshold

​

Target

​

Maximum

​

Stock

​

Awards

Name

​

Grant Date

​

($)

​

($)

​

​

(#)

​

(#)

​

(#)

​

(#)

​

($)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nathaniel A. Davis

—

600,000

1,200,000

—

—

—

—

—

Executive Chairman

09/28/2016 (2

)

—

—

117,646

147,058

195,587

—

1,999,989

Stuart J. Udell

​

—

​

975,000

​

1,950,000

​

​

—

​

—

​

—

​

—

​

—

Chief Executive Officer

​

09/28/2016 (2

)

​

—

​

—

​

​

117,646

​

147,058

​

195,587

​

—

​

1,999,989

James J. Rhyu

400,000

700,000

—

—

—

—

Executive Vice President and Chief

08/24/2016 (3

)

—

—

—

16,000

—

—

79,840

Financial Officer

08/24/2016 (4

)

—

—

—

—

—

64,000

736,000

Allison B. Cleveland

​

—

​

269,750

​

472,063

​

​

—

​

—

​

—

​

—

​

—

Executive Vice President of School

​

08/24/2016 (3

)

​

—

​

—

​

​

—

​

8,000

​

—

​

—

​

39,920

Management and Services

​

08/24/2016 (4

)

​

—

​

—

​

​

—

​

—

​

—

​

32,000

​

368,000

Joseph P. Zarella

—

266,500

466,375

—

—

—

—

—

Executive Vice President

08/24/2016 (3

)

—

—

—

8,000

—

—

39,920

Business Operations

08/24/2016 (4

)

—

—

—

—

—

32,000

368,000

		​			​	Estimated Possible Payouts under Nonequity Incentive Plan Awards (1)							​	Estimated Possible Payouts under Equity Incentive Plan Awards								​	All Other Stock Awards: Number of Shares of		​	Grant Date Fair Value of Stock
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
		​			​	Target		​	Maximum				​	Threshold		​	Target		​	Maximum		​	Stock		​	Awards
Name		​	Grant Date		​	($)		​	($)		​		​	(#)		​	(#)		​	(#)		​	(#)		​	($)
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Nathaniel A. Davis			—			1,102,500			2,205,000					—			—			—			—			—
Chief Executive Officer and			9/18/2018 (2	)		—			—					54,649			413,331			939,858			—			5,676,554
Chairman			9/18/2018 (3	)		—			—					—			—			—			115,674			2,000,003
James J. Rhyu		​	​		​	412,000		​	824,000		​		​	—		​	—		​	—		​	​		​	—
Chief Financial Officer		​	9/18/2018 (2	)	​	—		​	—		​		​	12,882		​	93,885		​	413,537		​	—		​	2,448,346
President, Product and Technology		​	1/31/2019 (4	)	​	—		​	—		​		​	—		​	11,835		​	11,835		​	—		​	206,011
​		​	8/31/2018 (3	)	​	—		​	—		​		​	—		​	—		​	—		​	60,386		​	999,992
Kevin P. Chavous			—			397,880			795,760					—			—			—			—			—
President of Academics, Policy and			9/18/2018 (2	)		—			—					10,539			83,257			413,537			—			2,422,334
Schools			1/31/2019 (4	)		—			—								11,835			11,835			—			207,011
			8/31/2018 (3	)		—			—					—			—			—			42,271			700,008
Shaun E. McAlmont		​	—		​	269,750		​	581,000		​		​	—		​	—		​	—		​	—		​	—
President, Career Readiness		​	1/31/2019 (2	)	​	—		​	—		​		​	118,265		​	138,606		​	181,545		​	—		​	3,587,002
Education		​	8/29/2018 (3	)	​	—		​	—		​		​	—		​	—		​	—		​	45,000		​	747,900
Vincent W. Mathis			—			263,250			567,000					—			—			—			—			—
Executive Vice President,			1/31/2019 (2	)		—			—					88,699			103,954			136,158			—			2,690,237
General Counsel and Secretary			9/4/2018 (3	)		—			—					—			—			—			35,000			575,400

(1)

Represents the target and maximum incentive awards payable under our Executive Bonus Plan based on fiscal 20172019 base salaries for each NEO. For additional information regarding our Executive Bonus Plan, see "Fiscal 20172019 Compensation Decisions—Determination of Annual Incentive Compensation" above.



(2)

Represents performance-based RSAs granted to Mr. Davis and Mr. UdellPSUs that will be earned based on the attainment of EBITDA minus CapEx targetsstock price growth measured at the end of fiscal 2021. For more information, see "Determination of Long-Term Incentive Compensation—2019 Long-Term Shareholder Performance Plan (SPP)" above. The PSUs do not have target award levels. In accordance with the instructions to Item 402(d) of Regulation S-K, which requires disclosure of a representative amount if the target amount is not determinable, the target amount shown in the table is based on the 3-Year CAGR of 10.0% with respect to the PSUs granted to Mr. Davis, Mr. Rhyu and which will vest over 3 years.Mr. Chavous and based on the 3-Year CAGR of 30.0% with respect to the PSUs granted to Dr. McAlmont and Mr. Mathis. If the target amount were shown based on the prior fiscal year's performance, the amount shown in the table would be $0.



(3)

Represents market-based RSAs that will be earned if our average stock price over a consecutive 30 calendar day period after the release of fiscal 2017 annual earnings exceeds $14.35 per share. One-fifth of the restricted stock award vests on the achievement date and the remaining restricted stock awards vest in four equal installments semi-annually over a two year period.



(4)

Represents restricted stock awards vesting semi-annually over a three-year period, with 20% vesting in the first year and 40% vesting in each of the next two years following the grant date.



(4)

Amounts shown for Mr. Rhyu and Mr. Chavous reflect an incremental increase in the maximum award amount approved in January 2019 to ensure share payout levels are not reduced at greater performance levels. See "Fiscal 2019 Compensation Decisions—Determination of Long-Term Incentive Compensation—2019 Long-Term Shareholder Performance Plan (SPP)" for additional information.




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Outstanding Equity Awards at End of Fiscal 20172019 Table


The following table provides information regarding outstanding equity awards held by our NEOs as of June 30, 2017.2019. The section titled "Determination"Determination of Long-Term Incentive Compensation"Compensation" in the Compensation Discussion and Analysis above provides additional information regarding the outstanding equity awards set forth in this table.

		Option Awards									​	Stock Awards									Option Awards									​	Stock Awards
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Name		Number of Securities Underlying Unexercised Options Exercisable (#)		​	Number of Securities Underlying Unexercised Options Unexercisable (#)		Option Exercise Price ($)		Options Expiration Date		​	Equity Incentive Plan Awards: Amount of Unearned Shares, Units or Other Rights That Have Not Vested ($)		Equity Incentive Plan Awards: Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)		​	Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)		Number of Securities Underlying Unexercised Options Exercisable (#)		​	Number of Securities Underlying Unexercised Options Unexercisable (#)		Option Exercise Price ($)		Option Expiration Date		​	Equity Incentive Plan Awards: Amount of Unearned Shares, Units or Other Rights That Have Not Vested ($)		Equity Incentive Plan Awards: Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)		​	Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)
Nathaniel A. Davis (1)		420,000			—		$21.26		01/07/21			—		—			—		—		420,000			—		$21.26		01/07/21			—		—			—		—
Chief Executive Officer and																					97,720			—		$33.92		09/19/21			—		—			—		—
Chairman																					185,985			—		$18.17		09/04/22			—		—			—		—
		91,607			6,113	(1)	$33.92		09/19/21			—		—			—		—		227,917			15,195	(1)	$13.43		09/10/23			—		—			—		—
		127,864			58,121	(1)	$18.17		09/04/22			—		—			—		—		—			—		—		—			724,185	(2)	22,022,466			—		—
		106,361			136,751	(1)	$13.43		09/10/23			—		—			—		—		—			—		—		—			—		—			341,276	(3)	10,378,203
		—			—		—		—			252,000	(2)	4,515,840			—		—
		—			—		—		—			—		—			109,859	(3)	1,968,673
		—			—		—		—			—		—			324,653	(4)	5,817,782
Stuart J. Udell		—		​	—		—		—		​	196,058	(2)	3,513,359		​	—		—
​		—		​	—		—		—		​	—		—		​	147,216	(5)	2,638,111
​		—		​	—		—		—		​	—		—		​	297,701	(6)	5,334,802
James J. Rhyu		—			—		—		—			109,620	(2)	1,964,390			—		—		—		​	—		—		—		​	362,093	(2)	11,011,248		​	—		—
		—			—		—		—			—		—			16,000	(7)	286,720
		—			—		—		—			—		—			139,400	(8)	2,498,048
Allison B. Cleveland		—		​	—		—		—		​	91,980	(2)	1,648,282		​	—		—
​		—		​	—		—		—		​	—		—		​	8,000	(7)	143,360
​		—		​	—		—		—		​	—		—		​	53,800	(9)	964,096
Joseph P. Zarella		—			22,500	(10)	$12.25		11/03/22			—		—			—		—
		—			—		—		—			91,980	(2)	1,648,282			—		—
		—			—		—		—			—		—			8,000	(7)	143,360
		—			—		—		—			—		—			52,400	(11)	939,008
Chief Financial Officer																					—		​	—		—		—		​	—		—		​	5,124	(4)	155,821
President, Product and																					—		​	—		—		—		​	—		—		​	3,200	(5)	97,312
Technology																					—		​	—		—		—		​	—		—		​	87,649	(6)	2,665,406
Kevin P. Chavous																					—			—		—		—			362,093	(2)	11,011,248			—		—
President of Academics,																					—			—		—		—			—		—			7,251	(7)	220,503
Policy and Schools																					—			—		—		—			—		—			67,651	(8)	2,057,267
Shaun E. McAlmont																					—		​	—		—		—		​	118,265	(2)	3,596,439		​	—		—
President, Career Readiness																					—		​	—		—		—		​	—		—		​	40,500	(9)	1,231,605
Education																							​							​					​
Vincent W. Mathis																					—			—		—		—			88,699	(2)	2,697,337			—		—
Executive Vice President,																					—			—		—		—			—		—			31,500	(10)	957,915
General Counsel and
Secretary

(1)

Mr. Davis' unvested stock options vest as follows, subject to his continued employment through the applicable vesting date:



•

58,121 options vest in five equal quarterly installments of 11,624 options beginning on September 4, 2017;



•

6,113 options vest on September 19, 2017; and



•

136,751 options vest in nine equal quarterly installments of 15,195 options beginningvested on September 10, 2017.2019.



(2)

Represents PSUs granted in fiscal 2016. The PSUs vest upon achievementthat will be earned based on the attainment of the performance goals as follows:



•

30% of the PSUs vest upon the achievement of the Academic Metricstock price growth measured at August 1, 2017;



•

30%the end of the PSUs vest upon the achievementfiscal 2021. The number of the Retention Metric measured at August 1, 2018; and



•

40% of the PSUs vest upon the achievement of the Academic Metric measured at August 1, 2018.




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The Academic Metric measured at August 1, 2017 was achieved at the outperform level, which was 150% of target. These shares vest in four equal quarterly installments beginning on November 15, 2017. The August 1, 2018 Academic Metric is shown at the outperform level based on fiscal 2017 performance. The August 1, 2018 Retention Metric is shown at the threshold level.3-Year CAGR of 25.0% and a stock price hurdle of $33.21 per share.



(3)

Represents market-based RSAs that became eligible to vest when our average stock price over a consecutive 30 calendar day period reached $13 (38,462 shares), $16 (93,750 shares) and $19 (131,579 shares).



•

The $13 threshold was reached on August 26, 2016 and 50% of the restricted shares vested. The remaining 50% vests in three equal installments. The first installment vested on January 30, 2017 and the remaining 12,820 shares will vest in two equal installments on August 1, 2017 and January 30, 2018.



•

The $16 threshold was reached on January 3, 2017 and 50% of the restricted shares vested. The remaining 50% vests in three equal installments. The first installment vested on June 23, 2017 and the remaining 31,250 shares will vest in two equal installments on December 23, 2017 and February 8, 2018.



•

The $19 threshold was reached on May 1, 2017 and 50% of the restricted shares vested. The remaining 50% vests in two equal installments of 65,789 shares on October 23, 2017 and February 8, 2018.



(4)

Mr. Davis' outstanding shares of restricted stock vest as follows, subject to his continued employment through the applicable vesting date:



•

195,58779,373 restricted shares represent restricted stock granted to Mr. Davis in connection with his appointment as CEO through September 2019. The shares vested in September 2019;



•

92,600 restricted shares represent performance-based restricted stock granted to Mr. Davis in fiscal 2018. The shares were deemed earned in early fiscal 2019. 46,300 of the shares vested on August 2, 2019 and the remaining shares will vest one year later;



•

65,196 restricted shares represent performance-based restricted stock granted to Mr. Davis in fiscal 2017. TheThese shares vested on August 31, 2019; and



•

11,567 shares vested on September 18, 2019 and 92,540 shares will vest semi-annually in four equal installments beginning March 18, 2020.



(4)

Represents performance-based restricted shares granted in fiscal 2018. These shares were deemed earned in early fiscal 2018. 65,1952019 based upon the attainment of the shares vested on August 31, 2017 and the remaining two-thirds will vest in annual installments over the following two years;



•

99,032 restricted shares represent performance-based restricted stock granted to Mr. Davis in fiscal 2016 and earned based on fiscal 2016free cash flow performance as determined by the Committee in early fiscal 2017. These shares vested as to 49,516 shares on August 26, 2017 and the remaining shares will vest one year later; and



•

30,034 restricted shares represent performance-based restricted stock granted to Mr. Davis in fiscal 2015 and earned based on fiscal 2015 performance as determined by the Committee in early fiscal 2016. These shares vested on July 27, 2017.



(5)

Represents market-based RSAs that became eligible to vest when our average stock price over a consecutive 30 calendar day period reached $13 (76,923 shares), $16 (93,750 shares) and $19 (157,895 shares).



•

The $13 threshold was reached on August 26, 2016 and 50% of the restricted shares vested. The remaining 50% vests in five equal installments. The first installment vested on January 30, 2017 and the remaining 30,769 shares will vest in four equal installments on August 1, 2017, January 30, 2018, August 1, 2018 and January 30, 2019.



•

The $16 threshold was reached on January 3, 2017 and 50% of the restricted shares vested. The remaining 50% vests in five equal installments. The first installment vested on June 23, 2017 and the remaining 37,500 shares will vest in four equal installments on December 23, 2017, June 23, 2018, December 23, 2018 and February 8, 2019.




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metrics for fiscal 2018, as modified by our total stockholder return ranking as compared to companies in the Russell 2000 Index.

•

The $19 threshold was reached1,708 shares vested on MayAugust 1, 2019 and 3,416 shares will vest semi-annually in two equal installments beginning on February 1, 2020.



(5)

Represents market-based RSAs that were granted in fiscal 2017 and 50%that began to vest when we achieved an average stock price of $14.35 per share measured during the restricted30 consecutive calendar days following the report of fiscal 2017 earnings. The shares vested. The remaining 50% vests in four equal installments of 78,947 sharesvested on October 23, 2017, April 24, 2018, October 23, 2018 and FebruarySeptember 8, 2019.