TABLE OF CONTENTS This summary highlights information that is contained elsewhere in this proxy statement.Proxy Statement. It does not include all information necessary to make a voting decision and you should read this proxy statementProxy Statement in its entirety before casting your vote.
American Public Education, Inc. (“APEI”) is a leading provider of higher learning dedicatedprovides online and on-campus postsecondary education to preparingapproximately 108,400 students all over the world for excellence in service, leadership, and achievement. We offer respected, innovative, and affordable academic programs and services to students, universities, and partner organizations through our wholly owned subsidiaries:four subsidiary institutions, American Public University System (“APUS”) and National Education Seminars Inc., which we refer to asRasmussen University (“RU”), Hondros College of Nursing (“HCN”) and Graduate School USA (“GSUSA”). APEI’s goal isWe seek to drive down the cost of higher education and help students of all backgrounds maximize thea student’s return on their educational investment, in education. HEROI™ —which we call Higher Education Return on Investment — is a conceptual frameworkfor our Customers, or “HEROIC™”. In this Proxy Statement, “we,” “our,” “us,” “the Company” and similar terms refer to APEI and its educational institutions of higher learning collectively unless the context indicates otherwise. Our institutions of higher learning are purpose-built to educate the service-minded student by offering programs designed to prepare individuals for productive contributions to their profession and society and to offer opportunities that highlights our purpose.
1. Includes alumni who graduated with an associate’s, bachelor’s,may advance students in their current professions or master’s degree from APUS as of December 31, 2020. Student loan debt is defined as student loans and private education loans and considers tuition, fees, living expenses, and book costs associated with courses taken at APUS. Many APUS students receive military tuition assistance and veterans education benefits, which are not student loan debt.
2. Students starting in 2020 – military 56%, military-affiliated 43%, and non-military 32%.
help them prepare for their next career. 
1.
| Includes alumni who graduated with an associate’s, bachelor’s, or master’s degree from APUS as of December 31, 2021. Student loan debt is defined as student loans and private education loans and considers tuition, fees, living expenses, and book costs associated with courses taken at APUS. Many APUS students receive military tuition assistance and veterans education benefits, which are not student loan debt. |
Item 1: Election of Directors Our director nominees bring a diverse mix of backgrounds, experience, and perspectives. The Board recommends a vote FOR each nominee. See page 24.25.Nominee Highlights  | 1• | PURPOSE
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Director Nominees
| Nominee | Age | Director
Since | Committee Memberships | | AUD | MDC | NCG | Eric C. Andersen, Independent (1) Partner, PeakEquity | 59 | 2012 | | X | | Granetta B. Blevins, Independent Independent Consultant | 62 | 2020 | X(2) | | X | Jean C. Halle, Independent Independent Consultant | 62 | 2006 | C(2) | | | Barbara L. Kurshan, Independent Senior Fellow and Innovation Advisor, University of Pennsylvania, Graduate School of Education | 72 | 2014 | X | X | | Timothy J. Landon, Independent Partner, Ergo Ventures & Advisors, LLC | 58 | 2009 | X | | C | Daniel S. Pianko, Independent Co-Founder and Managing Director, University Ventures | 44 | 2020 | | | X | William G. Robinson, Jr., Independent President, Broadgate Human Capital, LLC | 56 | 2016 | | C | X | Angela K. Selden President and Chief Executive Officer of the Company | 55 | 2019 | | | | Vincent R. Stewart, Independent Chief Innovation and Business Intelligence Officer, Ankura Consulting Group, LLC | 62 | – | | | |
AUD | Audit Committee | (1) | Chairperson of the Board | NCG | Nominating and Corporate Governance Committee | (2) | Audit Committee Financial Expert | MDC | Management Development & Compensation Committee | | | C | Committee Chair | | | X | Committee Member | | |
Nominee Highlights
| ● | 67%78% are diverse based on racial or gender identity, 56% are female, and 33% are diverse based on race or ethnicity | | | • | | | 100% have strategy or operational experience | |
| | ●• | | | 100% have technology or cybersecurity expertise |
| ● | 100% have strategy or operational experience |
| | ●• | | | Average tenure of independent director nominees: 6.25.3 years | |
| | ● | | | | | | • | | | Average age of nominees: 58.958.1 years | |
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TABLE OF CONTENTS Director Nominees | | Eric C. Andersen, Independent(1)
Operating Executive, PeakEquity | | | 60 | | | 2012 | | | | | | X | | | | | | | Granetta B. Blevins, Independent
Independent Consultant | | | 63 | | | 2020 | | | X(2) | | | | | | X | | | | Anna M. Fabrega, Independent
Chief Executive Officer, Freshly, Inc. | | | 43 | | | — | | | | | | | | | | | | | Jean C. Halle, Independent
Independent Consultant | | | 63 | | | 2006 | | | C(2) | | | | | | | | | | Barbara L. Kurshan, Independent
Senior Fellow and Innovation Advisor, University of Pennsylvania, Graduate School of Education | | | 73 | | | 2014 | | | X | | | X | | | | | | | Daniel S. Pianko, Independent
Co-Founder and Managing Director, University Ventures | | | 45 | | | 2020 | | | | | | | | | X | | | | William G. Robinson, Jr., Independent
President, Broadgate Human Capital, LLC | | | 57 | | | 2016 | | | | | | C | | | X | | | | Angela K. Selden
President and Chief Executive Officer of the Company | | | 56 | | | 2019 | | | | | | | | | | | | | Lieutenant General (Retired) Vincent R. Stewart, Independent Chief Innovation and Business Intelligence Officer, Ankura Consulting Group, LLC | | | 63 | | | 2021 | | | | | | X | |
| | AUD | | | Audit Committee | | | (1) | | | Chairperson of the Board | | | | MDC | | | Management Development & Compensation Committee | | | (2) | | | Audit Committee Financial Expert | | | | NCG | | | Nominating and Corporate Governance Committee | | | | | | | | | | C | | | Committee Chair | | | | | | | | | | X | | | Committee Member | | | | | | | |
* Ms. Blevins is expected to be appointed as chair of the NCG Committee after the Annual Meeting. Table of Contents
** Ms. Fabrega is expected to be appointed to the NCG Committee and the Audit Committee upon her election.Item 2: Amendment to the American Public Education, Inc. 2017 Omnibus Incentive Plan We are asking our stockholders to approve an amendment to the 2017 Omnibus Incentive Plan, including, among other changes, to increase the number of shares available for issuance thereunder to enable us to continue to use equity awards to incentivize individuals for their contributions to the Company and to further align their interests with those of our stockholders. The Board recommends a vote FOR this proposal. See page 73. Item 3: Compensation of our Named Executive Officers We are holding an advisory vote on the compensation of our named executive officers as disclosed in our Proxy Statement for the Annual Meeting. The Board recommends a vote FOR this proposal. See page 73.83.
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TABLE OF CONTENTS Item 3:4: Ratification of Independent Auditors We are asking our stockholders to ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for the Company for the fiscal year ending December 31, 2021.2022. The Board recommends a vote FOR this proposal. See page 75.85. Corporate Governance and Stockholder Engagement Highlights
ü | ✔ | | | Highly independent and diverse board
▪ Eight of our nine director nominees are independent ▪ SixSeven of our nine director nominees, including our Chief Executive Officer,CEO, are diverse based on racial or gender identity, a majority are female, and three are diverse based on race or ethnicity
▪ All Board committees are 100% independent ▪ Commitment to recruitment and consideration of diverse nominees, including women and minorities
▪ Active Board refreshment; three of our eight non-employee directors joined the Board within the last three years, including one new nominee this year | ü
| | ✔ | | | Risk management oversight
▪ Board has principal responsibility for risk management oversight ▪ Board regularly meets with management to ▪ Nominating and Corporate Governance, Management Development & Compensation, and Audit Committees each have responsibility for certain risk areas as outlined under “Board’s Role in Risk Oversight” (page 16) 16) | | ü Annual elections of all directors
ü Independent Chairperson
ü Restrictions on hedging and pledging
| ü✔
| | | Equity ownership guidelines
▪ 6x annual base salary for our CEO
▪ 2x annual base salary for our executive vice presidents and 1x for all other NEOs ▪ 3x annual base retainer for non-employee directors | | | | ✔ | | | Annual elections of all directors | | | | | | | | | | ✔ | | | Independent Chairperson | | | | | | | | | | ✔ | | | Restrictions on hedging and pledging | | | | | | | |
We continue to demonstrate a strong commitment to corporate governance and our commitment to best practices. Since the 2020 Annual Meeting,beginning of 2021, we have: amended our Corporate Governance Guidelines (the “Guidelines”) and Nominating and Corporate Governance (“NCG”) Committee Charter to formalize Board oversight of our Environmental, Social, and Governance (“ESG”) strategy and activities; amended our Management Development & Compensation (“MDC”) Committee Charter to clarify oversight responsibilities relating to human capital and our policies and plans related to the recoupment of incentive compensation, or “clawback” policies; amended our Code of Business Conduct and Ethics (the “Code of Ethics”) to (i) formalize our commitment to our community, the environment, and diversity and inclusion, (ii) emphasize the importance of using the Code of Ethics as a guide to help us make decisions consistent with the highest ethical and legal standards, (iii) make clear that individuals covered by the Code of Ethics can be held accountable for not practicing high business and personal ethics, and (iv) reflect that the Code of Ethics extends to those who have joined us as a result of our acquisitions of Rasmussen University and Graduate School USA; improved cybersecurity governance by developing and beginning the implementation of a new three-year cybersecurity roadmap, implementing additional cybersecurity awareness training for all employees, and hiring a dedicated Chief Information Security Officer; | ● | amended our Corporate Governance Guidelines (the “Guidelines”) and Nominating and Corporate Governance Committee Charter to formalize Board oversight of our Environmental, Social, and Governance (“ESG”) strategy and activities; | 3
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| ● | amended our Management Development & Compensation (“MDC”) Committee Charter to clarify oversight responsibilities relating to human capital and our policies and plans related to the recoupment of incentive compensation, or “clawback” policies; and |
| ● | added two new directors to our Board and nominated a third, in alignment with our commitment to Board refreshment and a diverse mix of backgrounds, experience, and perspectives, commitments that we strengthened in amendments to our Nominating and Corporate Governance Committee Charter and the Guidelines. |
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TABLE OF CONTENTS begun the integration of RU and GSUSA into our overall corporate governance and employee policies to ensure compliance and with a focus on human capital, including to promote talent retention, engagement, and growth; and We believe regular outreach and conversations with our stockholders is an important part of our success. In 2020,2021, our management team had more than 160 individual engagementsparticipated in many meetings with current and prospective investors through a combinationvariety of a non-deal roadshow,forums. We regularly held one-on-one meetings following key company updates such as earnings releases and acquisition announcements. Management also frequently participates in investor conferences and one-on-one meetings.non-deal roadshows where we engage with both existing and prospective investors. Key topics discussed in these interactions included: | ● | recent business and operating performance; |
| ● | our enterprise transformation; |
| ● | the COVID-19 pandemic; and |
| ● | ESG topics and initiatives. |
our long-term strategy; recent business and operating performance; our enterprise transformation; our regulatory profile; and the COVID-19 pandemic. ESG Highlights
1. Located at Charles Town, WV. 2. Six of our nine directors, and sixSeven of our nine director nominees, including our Chief Executive Officer,CEO, are diverse based on racial or gender identity.identity, a majority are female, and three are diverse based on race or ethnicity. We seek to create positive environmental and social impacts that bring value to our students, employees, other stakeholders, and society. For example, since the 2020 Annual Meeting,beginning of 2021, we: | ● | formalized the Board’s responsibility to support our commitment to positive environmental and social impacts and to ensure strong governance practices through amendments to the Guidelines and the Nominating and Corporate Governance Committee’s charter; |
| ● | formed an Equity, Diversity, and Inclusion (“ED&I”) task force at APUS, dedicated to creating an ED&I strategy to address both immediate priorities and long term plans for diversity and inclusion; and |
| ● | engaged in ESG-specific outreach with our stockholders. |
formalized the Board’s responsibility to support our commitment to positive environmental and social impacts and to ensure strong governance practices through amendments to the Guidelines and the NCG Committee’s charter; engaged employees by soliciting feedback in order to understand the views of our employees and faculty, and based on the results from these engagement surveys in 2021, added insurance coverage for in vitro fertilization and extended benefits coverage to domestic partners; and made our ESG policies publicly available and released a Social Responsibility Fact Sheet. More information on our ESG policies and practices can be found in “Our Commitment to Environmental and Social Quality” and on the Corporate Responsibility section of our corporate website, www.apei.com.www.apei.com.
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TABLE OF CONTENTS Executive Compensation Highlights Our executive compensation program is designed to attract, incentivize, retain, and reward the talent that we need to maintain and strengthen our position in highercareer-minded adult education and to achieve our business objectives. We tie executive compensation to objective performance metrics to rewardhold our executives accountable for the achievement of strategic, operational, and financial success. | 4 | PURPOSE
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our actual business performance. Below are the primary components of the fiscal 20202021 executive compensation program: | ● | Base Salaries – Fixed, regular element of compensation that is reviewed annually and generally informed by the 50th percentile of survey and peer group data compiled by the MDC Committee’s independent consultant. In January 2020, the MDC Committee determined not to increase the base salary of our CEO, as she was appointed to her position in September 2019 and the comparative data presented by the independent consultant indicated that her base salary was competitive with the 50th percentile of the survey data. Each of the other continuing NEOs received a 2% salary increase, except for our SVP, General Counsel and Secretary, who received a 4.5% increase, after consideration of several factors, including survey and peer group data, performance, tenure, and the absence of factors that would lead to a more sizable increase. Our former CEO, who held the position of President of APUS until his retirement in August 2020, did not receive any change in salary for 2020. |
| ● | Annual Incentive Cash – Opportunities designed to focus our NEOs on corporate strategic, financial, and operational goals reflecting both personal and corporate performance. Our 2020 target annual incentives were set at 90% of base salary for our current President and CEO and our former President of APUS, 55% for our current President of APUS (subject to a minimum bonus of $100,000), and 50% for all other NEOs, each with an opportunity to achieve a stretch incentive for superior performance. After considering the survey data and the individual performance of the executives, the percentage for continuing NEOs was determined to be appropriate and was not increased for 2020. |
| ● | Long-Term Equity Incentives – We believe a significant portion of our NEOs’ total compensation should be in the form of long-term equity incentive awards. In 2020, to further emphasize performance and ensure management’s objectives are aligned with those of our stockholders, annual equity awards for our continuing NEOs were split 50% as time-based restricted stock units (“RSUs”) and 50% as performance-based deferred stock units (“PSUs”), and certain continuing NEOs also received one-time PSUs valued at 15% of their base salary. RSUs and PSUs vest in three equal annual installments, subject to achievement of adjusted EBITDA and revenue targets in the case of PSUs. |
program and a breakdown of the components of Ms. Selden's target compensation opportunity for 2021: Base Salaries – Fixed, regular element of compensation that is reviewed annually and generally informed by the 50th percentile of survey and peer group data compiled by the MDC Committee’s independent consultant, Willis Towers Watson Public Limited Company (“Willis Towers Watson”). In January 2021, the MDC Committee determined to increase our CEO’s salary by 7%, taking into consideration that her base salary was slightly below the 50th percentile of survey data but significantly below the 50th percentile of peer data, as well as her performance and leadership of the Company, including successfully negotiating the agreement to acquire of Rasmussen University. Each of the other NEOs received a 2% salary increase, except for our SVP, General Counsel and Secretary, who received a 4% increase, and our former President of APUS, who did not receive an increase. Annual Incentive Cash – Opportunities designed to focus our NEOs on corporate strategic, financial, and operational goals reflecting both personal and corporate performance. Our 2021 target annual incentives were set at 90% of base salary for our President and CEO, 55% for our former President of APUS, and 50% for all other NEOs, each with an opportunity to achieve a stretch incentive for superior performance. After considering the survey data and the individual performance of the executives, the percentage for continuing NEOs was determined to be appropriate and was not increased for 2021. Long-Term Equity Incentives – We believe a significant portion of our NEOs’ total compensation should be in the form of long-term equity incentive awards. In 2021, to further emphasize performance and ensure management’s objectives are aligned with those of our stockholders, annual equity awards for our continuing NEOs were split 50% as time-based restricted stock units (“RSUs”) and 50% as performance-based deferred stock units (“PSUs”). RSUs and PSUs generally vest in three equal annual installments, subject to achievement of revenue and adjusted EBITDA targets in the case of PSUs. The PSUs can be earned at 0% to 200% of the target amount based on the level of achievement. CEO Target Compensation*
*Pay mix total excludes signing bonus amount, as described in the “Summary Compensation Table” below.
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TABLE OF CONTENTS Purpose of the Annual Meeting The purpose of the Annual Meeting is for our stockholders to consider and act upon the proposals described in this Proxy Statement and any other matters that properly come before the Annual Meeting or any adjournment or postponement thereof. In addition, management will report on the performance of the Company and respond to questions from stockholders.
Proposals to be Voted Upon at the Annual Meeting At the Annual Meeting, our stockholders will be asked to consider and vote upon the following threefour proposals: | ● | Proposal No. 1: To elect to the Board the nine nominees set forth in this Proxy Statement, each of whom will hold office until the next annual meeting of stockholders and until his or her successor is elected and qualified or until his or her earlier death, resignation or removal. |
| ● | Proposal No. 2: To approve, on an advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement. |
| ● | Proposal No. 3: To ratify the appointment of Deloitte & Touche LLP (“Deloitte”) as our independent registered public accounting firm for the fiscal year ending December 31, 2021. |
Proposal No. 1: To elect to the Board the nine nominees set forth in this Proxy Statement, each of whom will hold office until the next annual meeting of stockholders and until his or her successor is elected and qualified or until his or her earlier death, resignation or removal. Proposal No. 2: To approve an amendment to the American Public Education, Inc. 2017 Omnibus Incentive Plan (the “2017 Plan”), including, among other changes, to increase the number of shares available for issuance thereunder. Proposal No. 3: To approve, on an advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement. Proposal No. 4: To ratify the appointment of Deloitte & Touche LLP (“Deloitte”) as our independent registered public accounting firm for the fiscal year ending December 31, 2022. In addition, any other matters that properly come before the Annual Meeting or any adjournment or postponement thereof will be considered. Management is presently not aware of noany other business to come before the Annual Meeting.
Recommendation of the Board The Board recommends that you vote FOR each of the nominees to the Board (Proposal No. 1); FOR approval of the amendment to the 2017 Plan (Proposal No. 2); FOR approval of the compensation of our named executive officers (Proposal No. 2)3); and FOR ratification of the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 20212022 (Proposal No. 3)4).
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting To Be Held Virtually on May 21, 202120, 2022 Pursuant to the “notice and access” rules adopted by the Securities and Exchange Commission (the “SEC”), we have elected to provide stockholders access to our proxy materials over the Internet. Accordingly, we sent a Notice of Internet Availability of Proxy Materials (the “Notice”) on or about April 9, 20211, 2022 to all of our stockholders as of the close of business on March 25, 20212022 (the “Record Date”). The Notice includes instructions on how to access our proxy materials over the Internet and how to request a printed copy of these materials. In addition, by following the instructions in the Notice, stockholders may request to receive proxy materials in printed form by mail or electronically by e-mail on an ongoing basis.
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TABLE OF CONTENTS Choosing to receive your future proxy materials by e-mail will save us the cost of printing and mailing documents to you and will reduce the impact of our annual meetings on the environment. If you choose to receive future proxy materials by e-mail, you will receive an e-mail next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by e-mail will remain in effect until you terminate it. Our Annual Report to Stockholders and this Proxy Statement are available at www.apei.com/resources/proxy-materialswww.proxyvote.com. | 6 | PURPOSE
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Attending the Annual Meeting The Annual Meeting will be a completely virtual meeting to be held over the Internet. We are again holding the Annual Meeting as a virtual meeting this year to ensure the health and safety of our stockholders, Board, and management and also because we believe that the virtual meeting platform offers expanded access to stockholders who may otherwise not attend in person. As a technology-enabled organization, a virtual meeting aligns with our commitment to innovation and our role as a provider of online education. Whether you are a shareholderstockholder of record or hold your shares in “street name,” you may participate in and vote online at the Annual Meeting by visiting www.virtualshareholdermeeting.com/APEI2021 APEI2022and using the 16-digit control number included on your Notice, on your proxy card, or on the instructions that accompanied your proxy materials to enter the Annual Meeting. The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Participants should ensure that they have a strong internet or Wi-Fi connection wherever they intend to participate in the Annual Meeting. Participants should also give themselves plenty of time to dial-in to the conference call or log in and ensure that they can hear audio prior to the start of the Annual Meeting. If you have questions regarding how to attend and participate in the Annual Meeting or encounter any technical difficulties with the virtual meeting platform on the meeting day, please call 844-986-0822 (Toll Free) or 303-562-9302 (International Toll). Technical support will be available starting at 7:45 a.m. EDT on May 21, 2021.20, 2022. If you wish to submit a question, you may do so in a few ways. If you want to submit a question before the meeting, then beginning April 9, 20218, 2022 and until 11:59 p.m. EDT on May 20, 2021,19, 2022, you may log into www.proxyvote.com and enter your 16-digit control number. Once past the login screen, click on “Question for Management,” type in your question or comment, and click “Submit.” Alternatively, if you want to submit your question or make a comment during the meeting, log into the virtual meeting platform at www.virtualshareholdermeeting.com/APEI2021APEI2022, type your question into the “Ask a Question” field, and click “Submit”. Any emailed questions or comments will need to include your 16-digit control number in order to be addressed at the meeting. Questions and comments submitted via the virtual meeting platform that are pertinent to meeting matters will be addressed during the meeting. Consistent with our approach when the annual meetings were held in person, questions or comments that are not related to the proposals under discussion, are about personal concerns not shared by stockholders generally, or use blatantly offensive language may be ruled out of order. In the unlikely event that the volume of questions increases to the point that time constraints prohibits APEIprohibit us from answering all pertinent questions, the remaining pertinent questions will be answered on our Investor Relations site. A webcast of the 20212022 Annual Meeting will be archived and accessible through May 20, 2022.19, 2023. | | | 7
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TABLE OF CONTENTS Voting at the Annual Meeting The Board is soliciting your vote at the 2022 Annual Meeting or at any later meeting should the scheduled annual meeting be adjourned or postponed for any reason. Stockholders will be entitled to vote at the Annual Meeting on the basis of each share held of record at the close of business on the Record Date. | 7 | PURPOSE
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If on the Record Date you hold shares of our common stock that are represented by stock certificates or registered directly in your name with our transfer agent, American Stock Transfer & Trust Company (“AST”), you are considered the stockholder of record with respect to those shares, and AST is sending these proxy materials directly to you on our behalf. As a stockholder of record, you may vote online at the meeting or by proxy via Internet, mail, or telephone. Whether or not you plan to attend the Annual Meeting online, you may vote over the Internet by following the instructions in the Notice. If you request printed copies of the proxy materials by mail, you may also vote by submitting your vote by telephone or by signing and submitting your proxy card. Whether or not you plan to attend the Annual Meeting, we urge you to vote by way of the Internet, by telephone, or by filling out and returning the proxy card you will receive upon request of printed materials. If you submit a proxy but do not give voting instructions as to how your shares should be voted on a particular proposal at the Annual Meeting, your shares will be voted in accordance with the recommendations of the Board stated in this Proxy Statement. Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before its use by (1) delivering a written notice of revocation addressed to American Public Education, Inc., Attn: Corporate Secretary, 111 W. Congress Street, Charles Town, West Virginia 25414, (2) submitting a duly executed proxy bearing a later date, (3) voting again by Internet or by telephone, or (4) attending the Annual Meeting and voting online. Your last vote or proxy will be the vote or proxy that is counted. Attendance at the Annual Meeting will not cause your previously granted proxy to be revoked unless you vote at the Annual Meeting or specifically so request. If on the Record Date you hold shares of our common stock in an account with a brokerage firm, bank, or other nominee, then you are a beneficial owner of the shares and hold such shares in street name, and these proxy materials will be forwarded to you by that organization or person. As a beneficial owner, you have the right to direct your broker, bank, or other nominee on how to vote the shares held in its account, and the nominee has enclosed or provided voting instructions for you to use in directing it how to vote your shares. The nominee that holds your shares, however, is considered the stockholder of record for purposes of voting at the Annual Meeting. Because you are not the stockholder of record, you may not vote your shares online at the Annual Meeting unless you use your 16-digit control number to enter the meeting. Whether or not you plan to attend the Annual Meeting, we urge you to vote by following the voting instructions provided to you to ensure that your vote is counted should you later decide not to attend the Annual Meeting. If you are a beneficial owner and do not vote, and your broker, bank or other nominee does not have discretionary power to vote your shares, your unvoted shares may constitute “broker non-votes.” Unvoted shares that constitute broker non-votes will be counted for the purpose of establishing a quorum at the Annual Meeting. Voting results will be tabulated and certified by the inspector of elections appointed for the Annual Meeting. If you receive more than one Notice, it is because your shares are registered in more than one name or are registered in different accounts. Please follow the instructions on each Notice received to ensure that all of your shares are voted. A list of stockholders of record as of the Record Date will be available for inspection during ordinary business hours at our offices located at 111 W. Congress Street, Charles Town, West Virginia 25414, from May 10, 20212022 to the date of our Annual Meeting. Stockholders may contact our Corporate Secretary and arrangements will be made to review the records in person. During the Annual Meeting, the list of stockholders will be available for examination at www.virtualshareholdermeeting.com/APEI2021.APEI2022. | | | 8
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TABLE OF CONTENTS Quorum Requirement for the Annual Meeting The presence at the Annual Meeting, whether online or by valid proxy, of the persons holding a majority of shares of common stock outstanding onentitled to vote at the Record Datemeeting will constitute a quorum, permitting us to conduct our business at the Annual Meeting. On the Record Date, there were 18,671,10118,856,352 shares of common stock outstanding, held by 445442 stockholders of record. Abstentions (i.e., if you or your broker mark “ABSTAIN” | 8 | PURPOSE
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on a proxy) and “broker non-votes” will be considered to be shares present at the meeting for purposes of a quorum.
Broker non-votes occur when shares held by a broker for a beneficial owner are not voted with respect to a particular proposal and generally occur because the broker (1) does not receive voting instructions from the beneficial owner and (2) lacks discretionary authority to vote the shares. Brokers and other nominees have discretionary authority to vote on routine matters, such as the ratification of an independent public accounting firm, for clients who have not provided voting instructions. However, without voting instructions from their clients, they cannot vote on “non-routine” proposals, including the election of directors, approval of amendments to stock plans, and matters related to executive compensation.
Election of Directors.directors. Each director will be elected by the vote of the majority of the votes cast with respect to that director’s election. For purposes of electing directors, a majority of the votes cast means that the number of shares voted “FOR” a director’s election exceeds the number of the votes cast against that director’s election. Abstentions and broker non-votes are not taken into account in determining the outcome of the election of directors.
The approval of the amendment to the 2017 Plan, the advisory vote on executive compensation, and the ratification of our independent public accounting firm.firm. The approval of the amendment to the 2017 Plan, the approval, on a non-binding advisory vote onbasis, of the compensation of our named executive officers, and the approval of the proposal to ratify the Audit Committee’s appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 20212022 each require the affirmative vote of the holders of at least a majority of the shares of common stock present or represented by proxy at the Annual Meeting and entitled to vote. Broker non-votes are not taken into account in determining the outcome of these proposals, and abstentions will have the effect of a vote against each of these proposals.
We will bear the cost of solicitation of proxies. This includes the charges and expenses of brokerage firms and others for forwarding solicitation material to beneficial owners of our outstanding common stock. We have retained Georgeson LLC to assist in the distribution of proxy materials and the solicitation of proxies from brokerage firms, fiduciaries, custodians, and other similar organizations representing beneficial owners of shares for the Annual Meeting. We have agreed to pay Georgeson a fee of approximately $11,000 plus out-of-pocket expenses. We may solicit proxies by mail, personal interview, telephone, or via the Internet through our officers, directors and other management employees, who will receive no additional compensation for their services. | 9 | | 9
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TABLE OF CONTENTS The Board has adopted Corporate Governance Guidelines (the “Guidelines”), a Code of Business Conduct and Ethics (the “Code of Ethics”), a Policy for Related Person Transactions and other policies as part of our corporate governance practices and in accordance with rules of the SEC and the listing standards of The Nasdaq Stock Market (“Nasdaq”). The Guidelines, Code of Ethics, and Policy for Related Person Transactions are reviewed periodically by our Nominating and Corporate GovernanceNCG Committee, and changes are recommended to the Board for approval as appropriate. In March 2020, our2021, the Board (i) added “Harassmentupdated the Guidelines to: add to the characteristics to be considered as part of the NCG Committee’s review of Board composition; strengthen the NCG Committee’s consideration of tenure and Discrimination”the need for Board refreshment; formalize the Board’s responsibility for establishing and “Safety” sections to our Code of Ethics to align with already-established policies set forth in our employee and faculty handbooks and to emphasizesupporting our commitment to goodpositive environmental and social impacts and for ensuring strong governance practices, (ii) expressly embeddedpractices; and add additional risk oversight language. In addition, in March 2022, the Board updated the Code of Ethics to: formalize our commitment to our community, the environment, and diversity and inclusion; emphasize the importance of using the Code of Ethics as a requirement already being followedguide to help us make decisions consistent with the highest ethical and legal standards; make clear that each individualindividuals covered by the Code of Ethics must acknowledgecan be held accountable for not practicing high business and personal ethics consistent with our commitment to ethical conduct, including following the spirit and letter of the Code of Ethics (iii) broadened provisions protectiveand the law; and make other updates, including to reflect that the Code of confidential information,Ethics extends to those who have joined us as a result of our acquisitions of RU and (iv) made additional amendments to facilitate compliance with law. GSUSA. The amended Code of Ethics did not relate to or result in any waiver, explicit or implicit, of any provision of the previous Code of Ethics. In March 2021, the Board updated the Guidelines to add to the characteristics to be considered as part of the Nominating and Corporate Governance Committee’s review of Board composition and to strengthen the Committee’s consideration of tenure and the need for Board refreshment, to formalize the Board’s responsibility for establishing and supporting our commitment to positive environmental and social impacts and for ensuring strong governance practices, and to add additional risk oversight language.
Corporate Governance Guidelines and Code of Ethics The Guidelines set forth a framework to assist the Board in the exercise of its responsibilities. The Guidelines cover, among other things, the composition and certain functions of the Board, director independence, stock ownership by our non-employee directors, management succession and review, Board committees, the selection of new directors, and director expectations. The Code of Ethics covers, among other things, compliance with laws, rules and regulations, conflicts of interest, corporate opportunities, confidentiality, protection and proper use of Company assets, and the reporting process for any illegal or unethical conduct. The Code of Ethics is applicable to all of our officers, directors and employees. We also have a separate Code of Ethics that is specifically applicable to our Chief Executive Officer, Chief Financial Officer and other Principal Officers (as defined therein). Any waiver of either Code of Ethics for our directors, executive officers, or Principal Officers may be made only by the Board and will be promptly disclosed as may be required by law, regulation, or rule of the SEC, or Nasdaq listing standards. If we further amend either Code of Ethics or waive any provision of either Code of Ethics with respect to our Chief Executive Officer, Chief Financial Officer, or other Principal Officers, we will post the amendment or waiver on our corporate website, www.apei.com. The information on our corporate website is not incorporated by reference into this Proxy Statement. The Guidelines and Codes of Ethics are each available in the Governance section of our corporate website.
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TABLE OF CONTENTS Certain Relationships and Related Person Transactions
Policies and Procedures for Related Person Transactions As a supplement to and extension of our Codes of Ethics, the Board has adopted a Policy for Related Person Transactions pursuant to which our Nominating and Corporate GovernanceNCG Committee, another independent committee of the Board or the full Board, must give prior consent before we may enter into a related person transaction with our executive officers, directors, nominees for director and principal stockholders, including their immediate family members and affiliates. Any request for us to enter into a | 10 | PURPOSE
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related person transaction with an executive officer, director, nominee for director, principal stockholder or any of such persons’ immediate family members or affiliates must first be presented to our Nominating and Corporate GovernanceNCG Committee for review, consideration and approval. A related person transaction is a transaction in which the Company is or will be a participant and in which a related person has or will have a direct or indirect material interest, other than (i) a transaction involving $120,000 or less when aggregated with all related transactions, (ii) a transaction involving compensation to an executive officer that is approved by the Board or the Committee, (iii) a transaction involving compensation to a director or director nominee that is approved by the Board, the MDC Committee or the Nominating and Corporate GovernanceNCG Committee, and (iv) any other transaction that is not required to be reported pursuant to Item 404(a) of Regulation S-K under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All of our directors, executive officers, and employees are required to report to our Nominating and Corporate GovernanceNCG Committee any such related person transaction. In approving or rejecting a proposed related person transaction, our Nominating and Corporate GovernanceNCG Committee considers the facts and circumstances available and deemed relevant to the Nominating and Corporate GovernanceNCG Committee, including, but not limited to the risks, costs and benefits to us, the terms of the transaction, the availability of other sources for comparable services or products, and, if applicable, the impact on a director’s independence. Our Nominating and Corporate GovernanceNCG Committee approves only those agreements that, in light of known circumstances, are in, or are not inconsistent with, our best interests, as our Nominating and Corporate GovernanceNCG Committee determines in the good faith exercise of its discretion. Under the policy, if we discover related person transactions that have not been approved, the Nominating and Corporate GovernanceNCG Committee will be notified and will determine the appropriate action, including ratification, rescission, or amendment of the transaction.
Related Person Transactions There have been no related person transactions since the beginning of 20202021 and there are no currently proposed related person transactions.
Stock Ownership Guidelines To further align the interests of our executive officers and directors with the interests of our stockholders, and after evaluation of best practices and consultation by the MDC Committee with Willis Towers Watson, Public Limited Company (“Willis Towers Watson”), its independent consultant, the Board has implemented stock ownership guidelines applicable to our executive officers and directors. Each executive officer is expected to hold shares of common stock with an aggregate value greater than or equal to a multiple of the executive officer’s base salary as set forth below: | ● | our Chief Executive Officer — six times base salary; |
| ● | our Executive Vice Presidents — two times base salary; and |
| ● | our Senior Vice Presidents — base salary. |
our Chief Executive Officer — six times base salary; our Executive Vice Presidents — two times base salary; and our Senior Vice Presidents — base salary. Each of our non-employee directors is expected to hold shares of common stock with an aggregate value greater than or equal to at least three times the amount of the annual retainer paid to non-employee directors for service on the Board, excluding additional committee retainers, if any. | | | 11
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TABLE OF CONTENTS Under the stock ownership guidelines, common stock held directly, including shares of common stock held in a separate brokerage account or in a 401(k) account, and common stock held indirectly ( e.g., by a spouse, minor dependent, or a trust for the benefit of the executive or director, or the executive’s or director’s spouse or minor dependent), count toward satisfaction of the levels set forth in the guidelines. For purposes of the guidelines, the “value” of the common stock is based on the closing price of the common stock on the day on which a determination under the guidelines is being made. The determination of compliance with the guidelinesmade, which is measured annually on the last business day of each year. | 11 | PURPOSE
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Ourour executives and non-employee directors areis expected to comply with thesemeet the stock ownership guidelines within five years of the date the person first became an executive, or non-employee director, as applicable. If an executive officer hasprovided that if they have not achieved the applicable stock ownership level as outlined above by that date, the executive officer will be required to retain 50% of the net shares of common stock acquired pursuant to equity awards made afteruntil the adoption of the guidelines until suchapplicable levels are achieved. “Net shares” are those shares that remain after shares are sold or withheld to pay withholding taxes and/or the exercise price of stock options, if applicable. Each of non-employee directors is expected to achieve the stock ownership levels within five years of the date such person first becomes a non-employee director. As of December 31, 2020,2021, all of our executive officers and non-employee directors were in compliance with the stock ownership guidelines to the extent required.
Restrictions on “Hedging” We have adopted a policy prohibiting our directors, officers, and employees from engaging in short sales, transactions in derivative securities (including put and call options), or other forms of hedging and monetization transactions, such as zero-cost collars, equity swaps, exchange funds, and forward sale contracts, that allow the holder to limit or eliminate the risk of a decrease in the value of our securities. We have adopted this policy in order to align the interests and objectives of individuals subject to the policy with those of our stockholders.
Restrictions on “Pledging” We have adopted a policy prohibiting our directors and officers from holding our securities in margin accounts, pledging our securities as collateral or maintaining an automatic rebalance feature in savings plans, deferred compensation or deferred fee plans. This prohibition is to avoid sales of our securities on behalf of an individual related to margin calls, loan defaults, and automatic rebalances, which may occur when the individual has material nonpublic information regarding the Company.
We believe that stockholder engagement is an important corporate governance practice. Regular dialogue with stockholders strengthens our relationship with the financial community and helps stockholders make informed investment decisions, assess our long-term financial performance, and evaluate our business practices. Through our stockholder engagement process, we receive valuable feedback that informs our decisions regarding our strategy, our executive compensation practices, and our corporate governance practice and policies, which we believe is a critical component to our success. Our meetings with investors are attended by one or more members of APEI’s management team, including our Chief Executive Officer, our Chief Financial Officer, our Senior Vice President, Chief Strategy and Corporate Development Officer, and our Associate Vice President, Investor Relations and Corporate Communications.Development. In 2020,2021, our management team had more than 160 individual engagements with current and prospective investorsparticipated in many investor meetings through a combinationvariety of a non-deal roadshow,forums. We regularly held one-on-one meetings following key company updates such as earnings releases and acquisition announcements. APEI also frequently participates in investor conferences and one-on-one meetings.non-deal roadshows where we engage with both existing and prospective investors. | | | 12
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TABLE OF CONTENTS The focus of our 20202021 meetings with investors spanned a wide variety of topics, including but not limited to, discussions about: | ● | recent business and operating performance; |
| ● | our enterprise transformation, including the proposed acquisition of Rasmussen University; |
| ● | the impact of and our response to the COVID-19 pandemic, and |
| ● | ESG topics and initiatives. |
As part of these meetings, we also shared with investors our approach to corporate governance and executive compensation. We view these engagements as opportunities to learn from our investors and better understand their concerns and expectations. We expect to increase the number of engagements with investors over time as we grow and as we seek additional feedback from
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our enterprise transformation, including the proposed acquisition of ContentsRasmussen University; In December 2020, we embarked on an ESG-focused stockholder engagement campaign that began with outreach to
our top 25 shareholders, representing approximately 74%regulatory profile; and the impact of shares outstanding. Stemming from this outreach, our Chief Financial Officer and our Vice President, Communications met with institutional investors representing approximately 23% of shares outstanding, including two of our five largest shareholders,response to discuss our progress on ESG-related matters, and additional stockholders representing approximately 6% of our shares outstanding to discuss more general strategic matters. In the ESG-focused meetings, we heard that Board involvement in ESG is increasingly important, that investors expect our website to be a primary disclosure channel for ESG-related information, and that the investors we met with were pleased with our progress but stressed that continued improvement would be important in light of emerging standards and increasing investor expectations. We have since taken several actions that were responsive to these views, including formalizing Board oversight of ESG in our governance documents and enhancing ESG disclosure on our website, including by making public several of our ESG-related policies. We plan to conduct another ESG-focused investor outreach campaign in 2021.COVID-19 pandemic. Corporate Governance Best Practices | | ✔ | ü
| | Highly independent and diverse board ◾
▪ Eight of our nine director nominees are independent◾ Six
▪ Seven of our nine director nominees, including our Chief Executive Officer,CEO, are diverse, based on racial or gender identity, ◾ a majority are female, and three are diverse based on
race or ethnicity
▪ All Board committees are 100% ▪ Commitment to recruitment and consideration of diverse nominees, including women and minoritiesü Annual elections
▪ Active Board refreshment; three of allour eight non-employee directors ü Independent Chairperson
ü Restrictions on hedgingjoined the Board within the last three years, and pledging
üwe have a new nominee this year
| | | ✔ | | | Board oversight of ESG efforts | ü
| | | ✔ | | | Risk management oversight ◾
▪ Board has principal responsibility for risk ▪ Board regularly meets with management to ▪ Nominating and Corporate Governance, Management Development & Compensation, and Audit Committees each have responsibility for certain risk areas as outlined under “Board’s Role in Risk Oversight” (page 16) ü
| | | | ✔ | | | Equity ownership guidelines ◾
▪ 6x annual base salary for our CEO◾
▪ 2x annual base salary for our executive vice presidents and 1x for all other NEOs◾
▪ 3x annual base retainer for non-employee directors | | | | ✔ | | | Annual elections of all directors | | | | ✔ | | | Independent Chairperson | | | | | | | | | | ✔ | | | Restrictions on hedging and pledging | | | | | | | |
We continue to demonstrate a strong commitment to corporate governance and our commitment to best practices: Corporate Governance Guidelines. In March 2021, our Board updated the Guidelines to expand the criteria that the NCG Committee must consider when evaluating the Board’s overall composition to include tenure and expertise, and to clarify that the existing requirement of consideration of diversity includes diversity of viewpoints, experience, race, ethnicity, and gender, as well as age and background. The amendments also set forth the responsibilities of the Board with respect to (i) risk oversight, including the responsibility to set our overall tone for risk management and to oversee management’s risk management processes, and (ii) establishing and supporting strong ESG practices and policies. Management Development & Compensation Committee Charter. In March 2021, our Board amended our MDC Committee Charter to clarify its oversight responsibilities relating to human capital, including its oversight of human capital measures and objectives, diversity, inclusion, and corporate culture, as well as our polices and plans concerning the recoupment of incentive compensation (our “clawback” policies). | ● | | Corporate Governance Guidelines. In March 2021, our Board updated the Guidelines to expand the criteria of characteristics that the Nominating and Corporate Governance Committee must consider when evaluating the Board’s overall compensation to include tenure and expertise, and to clarify that the existing requirement of consideration of diversity includes diversity of viewpoints, experience, race, ethnicity, and gender, as well as age and background. The amendments also set forth the responsibilities of the Board with respect to (i) risk oversight, including the responsibility to set our overall tone for risk management and to oversee management’s risk management processes, and (ii) establishing and supporting strong ESG practices and policies.13
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TABLE OF CONTENTS Nominating and Corporate Governance Committee Charter. In March 2021, our Board amended our NCG Committee Charter to provide that the Committee assist the full Board in the oversight of our ESG strategy and activities and to codify our existing practice of oversight of director succession planning and independence. The amendments also related to oversight of our corporate governance programs and practices, including trends and best practices related to corporate social responsibility and sustainability and related matters. TableCode of ContentsBusiness Conduct and Ethics. In March 2022, our Board updated the Code of Ethics to (i) formalize our commitment to our community, the environment, and diversity and inclusion, (ii) emphasize the importance of using the Code of Ethics as a guide to help us make decisions consistent with the highest ethical and legal standards, (iii) make clear that individuals covered by the Code of Ethics can be held accountable for not practicing high business and personal ethics, and (iv) reflect that the Code of Ethics extends to those who have joined us as a result of our acquisitions of RU and GSUSA.
| ● | Management Development & Compensation Committee Charter. In March 2021, our Board amended our MDC Committee Charter to clarify its oversight responsibilities relating to human capital, including its oversight of human capital measures and objectives, diversity, inclusion, and corporate culture, as well as our polices and plans concerning the recoupment of incentive compensation (our “clawback” policies). |
| ● | Nominating and Corporate Governance Committee Charter. In March 2021, our Board amended our Nominating and Corporate Governance Committee Charter to provide that the Committee assist the full Board in the oversight of our ESG strategy and activities and to codify our existing practice of oversight of director succession planning and independence. The amendments also related to oversight of our corporate governance programs and practices, including trends and best practices related to corporate social responsibility and sustainability and related matters. |
Focus on Cybersecurity. In 2021, we improved cybersecurity governance by developing and beginning the implementation of a new three-year cybersecurity roadmap, implementing additional cybersecurity awareness training for all employees, and hiring a dedicated Chief Information Security Officer. Integration of Rasmussen University and Graduate School USA. During 2021 and 2022, we began the integration of RU and GSUSA into our overall corporate governance and employee policies to ensure compliance and to promote talent retention, engagement, and growth. Our Commitment to Environmental and Social Quality We believe that our intrinsic value can be measured by the impact of our activities on the communities that we serve – by our ability to make a difference. We seek to create positive environmental and social impacts that bring value to our students, employees, stockholders, other stakeholders, and society. And we believe that the Board of Directors and management play a critical role in delivering on these commitments. In March 2021, we formalized the Board’s responsibility to establish and support our commitment to positive environmental and social impacts and to ensure strong governance practices through amendments to the Guidelines and our Nominating and Corporate GovernanceNCG Committee’s charter. Our Nominating and Corporate GovernanceNCG Committee is responsible for assisting the Board in overseeing this commitment, including by overseeing our strategy and activities related to corporate social responsibility, sustainability and other ESG matters. The NCG Committee is also tasked with oversight of related risks, review and evaluation of ESG-related strategy, goals, initiatives, policies and practice, and oversight of the development and use of ESG metrics as well as ESG reporting and disclosure. We also have a management-led Environmental and Social Quality Committee that reports to our Chief Executive Officer and supports management’s execution of our ESG efforts and development of our ESG strategy. This committee is comprised of a chairperson (currently, our Senior Vice President, Chief Human Resource Officer) designated by our Chief Executive Officer and members designated by our Chief Executive Officer and executive leadership team. Additionally, we have implemented, and recently made available on our website: a Human Rights Policy that outlines our support for human rights and the freedom, security and dignity of all people; a Code of Vendor Conduct Policy to facilitate vendor awareness of and commitment to standards and practices compatible with our values; a Workforce and Labor Rights Policy to foster a workplace free from discrimination or harassment; and an Enterprise Environmental Policy that outlines our commitment to sustainability. | ● | a Human Rights Policy that outlines our support for human rights and the freedom, security and dignity of all people; | 14
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TABLE OF CONTENTS | ● | a Code of Vendor Conduct Policy to facilitate vendor awareness of and commitment to standards and practices compatible with our values; |
| ● | a Workforce and Labor Rights Policy to foster a workplace free from discrimination or harassment; and |
| ● | an Enterprise Environmental Policy that outlines our commitment to sustainability. |
APUS is a charter signatory of the American College & University Presidents’ Climate Commitment, pursuant to which we committed to work toward carbon neutrality, inventory our emissions, integrate sustainability into our curriculum and make related information publicly available. We have committed to climate neutrality by 2050 and a 20 percent waste reduction by 2030. Our commitment to environmental sustainability is not just a paper commitment. Overall, we estimate that our greenhouse gas emissions were 0.148 metric tons of CO2 equivalent per full-time enrollment (FTE) in 2019. That puts APUS emissions well below the average of 4.9 metric tons among institutions that are members of Second Nature, an organization of universities committed to climate neutrality. | 14 | PURPOSE
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In addition to creating positive environmental impacts, we believe that our Company should have a positive social impact. We were built on the belief that quality education should be accessible to all, not reserved for the few. We strive for inclusiveness in our classrooms -– our goal is to build bridges, not tear them down. Informed debate focused on finding solutions is incorporated into the heart of our curriculum. For example, in our criminal justice programs, we teach de-escalation to help police officers be more effective in the communities they serve. We also believe in making a difference in the communities in which we live and work. Our many volunteer and community service projects often emerge organically from the ideas and passions of our students. In 2020, through our network of 70-plus student organizations with more than 74,000 members, APUS students, graduates, faculty and staff took part in more than 1,300 activities supporting environmental and social causes. 
 1. Located in Charles Town, West Virginia. 2. Calculated by Sundowner Sustainability Consultants LLC as of December 31, 2019. Analysis of 2020 is currently underway. 3. Universal waste as defined by Resource Conservation and Recovery.
Our Commitment to Our People Our ability to deliver on our corporate mission and to continue to transform our enterprise transformationto focus on sustainable growth is tightly aligned with our human capital strategy. Our MDC Committee is tasked with overseeingperformance largely depends on the talents, experience, and efforts of our employees, and on our ability to foster a culture and practice of high performance, innovation, cooperation, integrity, and respect. During 2021, our key human capital efforts were focused on building our leadership strength organically by hiring key executives and alignment,inorganically | | | 15
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TABLE OF CONTENTS through the acquisition of RU. We also benchmarked and harmonized our benefits programs, including at RU, to develop what we believe are a market-competitive set of programs with respectan increased scope of coverage for our employees. We continue to recruitment, development,develop processes to evaluate our reward and retention. In March 2021,recognition systems and further establish market competitive compensation and benefit practices to attract new employees and reward and retain our Board amendedexisting team. Diversity and inclusion are at the core of our MDC Committee Charter to clarify its oversight responsibilities relating to human capital, including by adding express responsibility for oversightvalues, and we believe they reflect the expectations of human capital measuresthe students we serve. To support our diversity and objectivesinclusion efforts, we have task forces at APUS and human capital efforts related toRU that focus on diversity and inclusion and corporate culture.We believe the workplace and institutions of higher education are greatly enhanced by diversity. We have committed to recruitment and consideration of diverse nominees, including women and minorities, and our Board nominees are 67% diverse from a racial, gender or ethnic standpoint. We further defined our commitment in March 2021 by updating the Guidelines to clarify that the existing requirement of consideration of diversity includes diversity of viewpoints, experience, race, ethnicity, and gender, as well as age and background.matters. As of December 31, 2020,2021, approximately 65%53% of our professional staff at the corporate level, 54% of our faculty and staff at APEIAPUS, 76% of our faculty and APUS
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December 2021, approximately 22% of the positions held at the corporate level, and 21%, 26%, and 24% of the positions held at APUS, RU, and HCN, respectively, were female,held by persons self-identifying as Black or African American, Hispanic, Asian, Native American or more than one race. We believe a diverse and 19% self-identified as ethnically diverse. We are committed to attracting additional underrepresented minorities to join our ranks. In 2020, APUS formed an Equity, Diversity,inclusive workplace results in business growth and Inclusion (“ED&I”) task force sponsored by the Presidentencourages increased innovation, retention of talent, and Provost of APUS that is dedicated to creating a more intentional ED&I strategy, including long term plansengaged workforce. Consistent with our focus on diversity and workinginclusion, we strive to address immediate priorities. create ethical, safe, and supportive workplaces where our employees thrive. We measure employee engagement on an ongoing basis by soliciting feedback in order to understand the views of our employees, faculty, and culture. The results from engagement surveys are also committedused to implement programs and processes designed to enhance employee and faculty engagement and improve the employee experience. For example, based on the results of employee surveys in 2021, we added insurance coverage for in vitro fertilization and extended benefits coverage to domestic partners. Our strategic initiatives require our management, faculty, staff, and skilled personnel to perform at a high level and to adapt and learn new skills and capabilities. We believe that the quality of faculty is critical to the healthstudent experience and well-beingstudent outcomes and is therefore vital to the success of our employees. In March 2020,institutions. As a result, faculty members are required to participate in response to the COVID-19 pandemic, we implemented our business continuity plan,annual faculty development opportunities and employees at HCN began operating in a blended model with online delivery of courses and limited in-person interaction and substantially all of our APEI and APUS employees transitioned to a remote workforce, using digital platforms and virtual collaboration tools to communicate with one another and our institutions’ students. Since then, we have cautiously allowed certain employees to return to an office work setting, following Centers for Disease Control and Prevention and local guidelines and regulations.requirements. In addition, we continue to prioritize a safe workplace, with no reported workplace injuries, arrests, assaults, fatalities, or known occupation diseases in 2020.RU and HCN train and develop new faculty through formal, structured on-boarding and orientation. Board’s Role in Risk Oversight Our management is responsible for managing risks in our business, including by developing processes to monitor and control risks. The Board views its role as one of oversight and of responsibility for setting a tone that risk management should be properly integrated with our strategy and culture. The Board focuses on understanding management’s risk management processes, the effectiveness of those processes, and the way in which management proactively manages risks. The Board regularly meets with our management, particularly our Chief Executive Officer, Chief Financial Officer, Chief Technology Officer, and General Counsel, to receive updates on how management is assessing and managing risk in particular functional areas of our business, as well as monitors risks that have been delegated to its committees. The Board and its committees also request and receive regular reports from management on particular areas of risk, such as cybersecurity or threats to technology infrastructure. The Board’s committees assist the Board in carrying out its oversight of risks, and each of the committee charters specifically address issues of risk. At the request of the full Board, from time to time the Nominating and Corporate GovernanceNCG Committee may discuss or examine in more depth specific risk areas and request presentations and information from management for that purpose. Pursuant to the Guidelines, the Board is expected to specifically consider risks that relate to our reputation and the general industry in which we operate, including with respect to privacy, information technology and cybersecurity, and threats to technology infrastructure. The Nominating and Corporate GovernanceNCG Committee considers and makes recommendations on how the Board is | | | 16
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TABLE OF CONTENTS approaching its role of risk oversight. The Nominating and Corporate GovernanceNCG Committee also has responsibility for oversight of ESG-related risks. The Audit Committee reviews and assesses the qualitative aspects of financial reporting and our processes to manage financial and financial reporting risk. The Audit Committee regularly reports its findings to the Board. While the Nominating and Corporate GovernanceNCG Committee and the Audit Committee have primary responsibility for assisting the Board with its risk oversight responsibilities, the MDC Committee also assists the Board with risk oversight. The MDC Committee is responsible for the oversight of our human capital policies, programs, initiatives, and strategies, including with respect to employee engagement, diversity and inclusion, culture, employee retention, training, and talent development. When establishing executive compensation and director compensation and in its role in implementing incentive compensation plans, the MDC Committee considers whether compensation practices properly take into account an appropriate risk-reward relationship or encourage unnecessary and excessive risks that threaten the value of the Company.risks. The MDC Committee has concluded that our compensation policies and practices are not reasonably likely to have a material adverse effect on the Company; this conclusion has been confirmed by the Board. | 16 | PURPOSE
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The performance, reliability, and security of the networks and technology infrastructure we use or rely on is critical to our operations, our institutions’ reputation, and our ability to attract and retain students. The Board regularly reviews our cybersecurity and other information technology risks, controls, and procedures, including plans to mitigate such risks and respond to any cyber incidents. The Board receives regular reports from our Chief Technology Officer on these and related topics, including management’s approach to cybersecurity and potential investments in additional cybersecurity capabilities. In 2020,2021, the Board oversaw efforts to further mature cybersecurity processes, grow and strengthen our cybersecurity organization, and increase measures for detection and prevention of threats, including asby developing and beginning the implementation of a result of remote working due to COVID-19.new three-year cybersecurity roadmap, implementing additional cybersecurity awareness training for all employees and hiring a dedicated Chief Information Security Officer. | | | 17
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TABLE OF CONTENTS The following table highlights the roles of the Board and each committee in risk oversight: | | The Board | | ● | • | | | Assesses management’s risk management processes, the effectiveness of those processes, and the way in which management proactively manages risks. | | ● | • | | | Receives and reviews regular reports provided by management, and monitors risks that have been delegated to its three standing committees. | | ● | • | | | Considers risks that relate to the reputation of our Company and the general industry in which we operate, including with respect to privacy, information technology and cybersecurity, and threats to technology infrastructure. | |
●
| • Assists the Board in overseeing management’s development and application of approach for the assessment and management of strategic, operational, regulatory, information, external and other significant risks. ●
• Assists the Board in overseeing strategy and activities related to corporate social responsibility, sustainability, and other ESG matters. ●
• Periodically communicates with the other committees of the Board with regard to their current risk oversight activities. | ●
| | • Discusses our major financial and other financial reporting risk exposures. ●
• Discusses the steps management has taken to monitor and control such exposures, including our risk assessment and risk management policies. ●
• Receives and reviews the annual report from management regarding the manner in which we are assessing and managing our exposure to financial and other financial reporting risks. | ●
| | • Considers whether our compensation policies and practices properly take into account an appropriate risk-reward relationship or encourage unnecessary and excessive risks. ●
• Oversees human capital management efforts and alignment, including any related risks.risks. | |
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TABLE OF CONTENTS COMPOSITION AND MEETINGS OF THE BOARD AND The following table details certain basic information on our current directors, the composition of the Board and its standing committees, and the number of meetings held during the year ended December 31, 2020:| Director | Age | Director Since | Committee Memberships | | AUD | MDC | NCG | Eric C. Andersen, Independent (1) Partner, PeakEquity | 59 | 2012 | | X | | Granetta B. Blevins, Independent Independent Consultant | 62 | 2020 | X(2) | | X | Barbara G. Fast*, Independent President and Chief Executive Officer, BGF Enterprises LLC | 67 | 2009 | | X | X | Jean C. Halle, Independent Independent Consultant | 62 | 2006 | C(2) | | | Barbara L. Kurshan, Independent Senior Fellow and Innovation Advisor, University of Pennsylvania, Graduate School of Education | 72 | 2014 | X | X | | Timothy J. Landon, Independent Partner, Ergo Ventures & Advisors, LLC | 58 | 2009 | X | | C | Daniel S. Pianko, Independent Co-Founder and Managing Director, University Ventures | 44 | 2020 | | | X | William G. Robinson, Jr., Independent President, Broadgate Human Capital, LLC | 56 | 2019 | | C | X | Angela K. Selden President and Chief Executive Officer of the Company | 55 | 2019 | | | | | 2020 Meetings | Board: | 23 | 5 | 12 | 5 |
2021: | | Eric C. Andersen, Independent(1)
Operating Executive, PeakEquity | | | 60 | | | 2012 | | | | | | X | | | | | | | Granetta B. Blevins, Independent
Independent Consultant | | | 63 | | | 2020 | | | X(2) | | | | | | X | | | | Jean C. Halle, Independent
Independent Consultant | | | 63 | | | 2006 | | | C(2) | | | | | | | | | | Barbara L. Kurshan, Independent
Senior Fellow and Innovation Advisor, University of Pennsylvania, Graduate School of Education | | | 73 | | | 2014 | | | X | | | X | | | | | | | Timothy J. Landon, Independent*
Partner, Ergo Ventures & Advisors, LLC | | | 59 | | | 2009 | | | X | | | | | | C | | | | Daniel S. Pianko, Independent
Co-Founder and Managing Director, University Ventures | | | 45 | | | 2020 | | | | | | | | | X | | | | William G. Robinson, Jr., Independent
President, Broadgate Human Capital, LLC | | | 57 | | | 2016 | | | | | | C | | | X | | | | Angela K. Selden
President and Chief Executive Officer of the Company | | | 56 | | | 2019 | | | | | | | | | | | | | Lieutenant General (Retired) Vincent R. Stewart, Independent
Chief Innovation and Business Intelligence Officer, Ankura Consulting Group, LLC | | | 63 | | | 2021 | | | | | | X | | | | | | | 2021 Meetings | | | Board: | | | 17 | | | 5 | | | 8 | | | 6 | |
* MG (Ret) FastMr. Landon has not been renominated and will retire fromdepart the Board upon the expiration of herhis term at the 20212022 Annual Meeting. AUD | AUD | | | Audit Committee | | | (1) | | | Chairperson of the Board | | NCG
| MDC | | | Nominating and Corporate Governance Committee | | | (2) | | | Audit Committee Financial Expert | | MDC
| NCG | | | Management Development & Compensation Committee | | | | | | | | C
| C | | | Committee Chair | | | | | | | | X
| X | | | Committee Member | | | | | | | |
Board Independence and Leadership Structure The Board believes, and the Guidelines require, that a substantial majority of its members should be independent directors. In addition, the respective charters of the Audit, MDC, and Nominating and Corporate GovernanceNCG Committees currently require that each member of such committees be independent directors. Consistent with Nasdaq’s independence criteria, the Board has affirmatively determined that all of our directors are independent, with the exception of Ms. Selden, who is our President and Chief Executive Officer. Nasdaq’s independence criteria includesinclude a series of objective tests, such as that the director is not an employee of the Company and
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TABLE OF CONTENTS has not engaged in various types | 18 | PURPOSE
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of business dealings with us. In addition, as further required by Nasdaq rules, the Board has made a subjective determination as to each independent director that no relationship exists that, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, the Board reviewed and discussed any information provided by the directors and management with regard to each director’s business and personal activities that may relate to us and our management. In accordance with the Guidelines, the independent members of the Board holdshold at least two “executive session” meetings each year. If the Chairperson of the Board were not an independent director, an independent chairperson would be selected for each executive session. These meetings serve as a forum to discuss the annual evaluation of the Chief Executive Officer’s performance, the annual review of the Chief Executive Officer’s plan for management succession, and such other topics as the independent directors deem necessary or appropriate. The Guidelines specify that the Board shall select its Chairperson based on the Board’s determination of what is then in our best interests. Historically, we have split the positions of the Chairperson of the Board and Chief Executive Officer because we believe that this structure is appropriate given the differences between the two roles in our management structure. Our Chief Executive Officer, among other duties, is responsible for implementing the strategic direction for the Company and for the day-to-day leadership and performance of the Company, while the Chairperson of the Board, among other responsibilities, provides guidance to the Chief Executive Officer and presides over meetings of the full Board. Currently, Ms. Selden serves as our Chief Executive Officer and Mr. Andersen serves as the Chairperson of the Board.
The Board of Directors and its Committees Information concerning the Board and its three standing committees is set forth below. Each Board committee consists only of directors who are not employees of the Company and who are “independent” as defined in Nasdaq’s rules. The Board and its committees meet regularly throughout the year, and also hold special meetings and act by written consent from time to time. The Board held a total of 2317 meetings during the fiscal year ended December 31, 2020.2021. During this time, all of our current directors attended at least 75% of the aggregate number of meetings held by the Board and all committees of the Board on which such director served (during the period that such director served). The Board does not have a formal policy with respect to Board member attendance at annual meetings of stockholders, but all members of the Board are encouraged to attend. Our 20202021 Annual Meeting of Stockholders was attended by all seven of our directorsdirector nominees who were then serving. The Board has three standing committees: the Audit Committee; the MDC Committee; and the Nominating and Corporate GovernanceNCG Committee. The charters for the Audit, MDC, and Nominating and Corporate GovernanceNCG Committees can be accessed electronically on the “Governance — Governance & Ethics Documents” section of our corporate website, www.apei.com. The Board conducts, and the Nominating and Corporate GovernanceNCG Committee oversees, an annual evaluation of the Board’s operations and performance in order to enhance its effectiveness. Recommendations resulting from this evaluation are made by the Nominating and Corporate GovernanceNCG Committee to the full Board for its consideration. Each committee also conducts an annual evaluation of its own performance and charter, and makes recommendations as necessary to either management, the Nominating and Corporate GovernanceNCG Committee, or the full Board, as applicable, as a result of these evaluations. | 19 | PURPOSE
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Audit Committee The Board has established a separately designated standing Audit Committee in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee is responsible, among its other duties and responsibilities, for overseeing our accounting and financial reporting processes, the audits of our financial statements, the qualifications of our independent registered public accounting firm, and the performance of | | | 20
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TABLE OF CONTENTS our internal audit function and our independent registered public accounting firm. The Audit Committee reviews and assesses the qualitative aspects of our financial reporting, our processes to manage financial reporting risk, and our compliance with significant applicable legal, ethical and regulatory requirements. The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm. The members of our Audit Committee are Ms. Halle, who serves as chair of the Committee, Ms. Blevins, Dr. Kurshan, and Mr. Landon. Each member of the Audit Committee is able to read and understand fundamental financial statements, including our balance sheet, statementand statements of operations, statement ofincome, comprehensive income, stockholders’ equity, and statement of cash flows. The Board has determined that each of Ms. Halle and Ms. Blevins is an “Audit Committee financial expert,” as that term is defined under the SEC rules implementing Section 407 of the Sarbanes-Oxley Act of 2002. The Board has determined that each member of our Audit Committee is independent under Nasdaq’s listing standards and each member of our Audit Committee is independent pursuant to Rule 10A-3 of the Exchange Act.
Management Development & Compensation Committee The MDC Committee is responsible, among its other duties and responsibilities, for establishing the compensation and benefits of our Chief Executive Officer and other executive officers, monitoring compensation arrangements applicable to our Chief Executive Officer and other executive officers in light of their performance, effectiveness, and other relevant considerations, and administering our equity incentive plans. In addition, the MDC Committee is responsible for succession planning for our Chief Executive Officer and other key executive officers and for overseeing our human capital management efforts, including with respect to recruitment, development, and retention. Pursuant to our Bylaws, the MDC Committee may create one or more subcommittees, each subcommittee to consist of one or more members of the MDC Committee, and may delegate any or all of its powers and authority to those subcommittees. The members of our MDC Committee are Mr. Robinson, who serves as chair of the Committee, Mr. Andersen, MG (Ret) Fast,LtGen (Ret.) Stewart, and Dr. Kurshan. The Board has determined that each member of our MDC Committee meets Nasdaq’s independence requirements for approval of the compensation of our Chief Executive Officer and other executive officers. The MDC Committee has the sole authority to retain and terminate any compensation consultant to assist in evaluating executive officer compensation. In 2020,2021, the MDC Committee retained Willis Towers Watson directly as an outside compensation consultant to assist in evaluating our compensation programs, as it has since 2007. The MDC Committee assessed Willis Towers Watson’s independence, considering all relevant factors, including those set forth in Nasdaq rules. In connection with this assessment, the Committee considered Willis Towers Watson’s work and determined that it raised no conflicts of interest. Willis Towers Watson does no work for the Company other than work that is authorized by the MDC Committee or its chairperson. The Committee used information provided to it by Willis Towers Watson in connection with making 20202021 compensation determinations. Willis Towers Watson also advised the MDC Committee on the use of a peer group and applicable survey data for comparative purposes. The consultant’s role in recommending the amount or form of executive compensation paid to our named executive officers during 20202021 is described in the “Compensation Discussion and Analysis — Competitive Compensation Program Philosophy and Objectives —Competitive Compensation”— Assessing Competitive Practice” section on page 38. | 20 | PURPOSE
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The MDC Committee considers the results of the annual advisory vote on the compensation of our named executive officers. See “Proposal No. 2”3” on page 7383 to review this year’s proposal. In 2020,2021, approximately 96%85% of the stockholder votes cast on this proposal were voted in favor of our executive compensation proposal.proposal, which is less than the robust 96% approval the prior year. We believe that the 2021 result reflected an “against” vote by one greater than 5% stockholder that did not respond to management’s request to discuss its voting decision. We believe that the level of support received at our 2021 Annual Meeting for this proposal affirms our approach to executive compensation, but we continued to strive to | | | 21
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TABLE OF CONTENTS expand our ongoing stockholder engagement program during 2021 to elicit further feedback and perspectives on the issues important to our stockholders, including executive compensation. Because the annual advisory vote occurred after our compensation was set for 2021, the results for the 2021 vote were not available to be considered prior to establishing our 2021 compensation program, but the MDC Committee considered and discussed the results prior to establishing our compensation program for 2022. The MDC Committee works closely with our Chief Executive Officer on compensation decisions and has delegated certain aspects of the annual incentive plans for the other executive officers, including the named executive officers, to our Chief Executive Officer. For a discussion of the role of our Chief Executive Officer in determining or recommending the executive compensation paid to our named executive officers during 2020,2021, see the “Compensation Discussion and Analysis — Other Compensation Policies and Practices — Role of Executives in Executive Compensation Decisions” section on page 55.55. None of our other executive officers participates in any deliberations related to the setting of executive compensation.
Nominating and Corporate Governance Committee The Nominating and Corporate GovernanceNCG Committee is responsible for recommending candidates for election to the Board. The Committee is also responsible, among its other duties and responsibilities, for making recommendations to the Board or otherwise acting with respect to corporate governance policies and practices, including board size and membership qualifications, recommendations with respect to director resignations tendered in the event a director fails to achieve a majority of votes cast in favor of his or her election, new director orientation, committee structure and membership, and policies and practices regarding communications with stockholders. In addition, the Nominating and Corporate GovernanceNCG Committee assists the Board in understanding and overseeing management’s processes for the assessment and management of non-financial risks of the Company and the steps that management has taken to monitor and control exposure to such risks. The members of our Nominating and Corporate GovernanceNCG Committee are Mr. Landon, who serves as chair of the Committee, Ms. Blevins, MG (Ret) Fast, Mr. Pianko, and Mr. Robinson. The Board has determined that each member of our Nominating and Corporate GovernanceNCG Committee meets Nasdaq’s independence requirements for directors that make director nominations.
Ad Hoc and Subsidiary Committees From time to time, the Board may create ad hoc committees for specific purposes. In 2018, the Board created a temporary new committee of the Board called the Transaction Review Committee, which continued its work in 2019 and 2020.2021. The Transaction Review Committee was tasked with providing the Board with additional oversight, on a regular basis, of our strategic and diversification efforts. MG (Ret) Fast, Mr. Andersen, Ms. Halle, and Mr. Pianko, as well as former director MG (Ret.) Barbara Fast, who retired from the Board upon the expiration of her term following the 2021 Annual Meeting, were the only members of the Committee during 2020.2021. Members of the Board may also be asked to serve in a committee role that involves service as a representative of the Board on the board of one of our wholly owned subsidiaries. In 2020,During 2021, Mr. Robinson and Dr. Kurshan served in this role for APUS, and during portions of 2021, LtGen (Ret.) Stewart and Dr. Kurshan also served in this role for APUS, Mr. Pianko served in this role for RU, and MG (Ret)(Ret.) Fast served in this role for HCN. | 21 | | 22
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TABLE OF CONTENTS COMMUNICATION WITH DIRECTORS
Director Nomination Process The Nominating and Corporate GovernanceNCG Committee recommends, and the Board nominates, candidates to stand for election as directors. Stockholders may also nominate persons to be elected as directors. If a stockholder wishes to nominate a person for election as director, he or she must follow the procedures contained in our Bylaws and satisfy the requirements of Regulation 14A of the Exchange Act. For a stockholder’s nomination of a person to stand for election as a director at an annual meeting of stockholders to be considered, our Corporate Secretary must receive such nominations at our principal executive offices not more than 120 days, and not less than 90 days, before the anniversary date of the prior year’s annual meeting, except that if the annual meeting is set for a date that is not within 30 days before or 60 days after such anniversary, the nomination must be received no later than the later of the 90th day prior to such annual meeting or the close of business on the tenth day following the notice or public disclosure of the meeting. Each submission must include the following information: | ● | the name and address of the stockholder who intends to make the nomination and the name and address of the person or persons to be nominated; |
| ● | a representation that the stockholder is a holder of record of Company capital stock entitled to vote at the annual meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons; |
| ● | if applicable, a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons, naming such person or persons, pursuant to which the nomination is to be made by the stockholder; |
| ● | such other information regarding each nominee to be proposed by such stockholder as would be required to be included in a proxy statement filed under the SEC’s proxy rules if the nominee had been nominated, or intended to be nominated, by the Board; |
| ● | if applicable, the consent of each nominee to serve as a director if elected; |
| ● | a statement whether each nominee, if elected, intends to tender an irrevocable resignation in the form required by the incumbent directors under the Bylaws; and |
| ● | such other information that the Board may request in its discretion. |
the name and address of the stockholder who intends to make the nomination and the name and address of the person or persons to be nominated; a representation that the stockholder is a holder of record of Company capital stock entitled to vote at the annual meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons; if applicable, a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons, naming such person or persons, pursuant to which the nomination is to be made by the stockholder; such other information regarding each nominee to be proposed by such stockholder as would be required to be included in a proxy statement filed under the SEC’s proxy rules if the nominee had been nominated, or intended to be nominated, by the Board; if applicable, the consent of each nominee to serve as a director if elected; a statement whether each nominee, if elected, intends to tender an irrevocable resignation in the form required by the incumbent directors under the Bylaws; and such other information that the Board may request in its discretion. The Board may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as one of its directors. Each director will be elected by the vote of the majority of the votes cast with respect to that director’s election, provided, however, that if, as of the tenth day preceding the date we first mail notice of the meeting for such meeting to our stockholders, the number of nominees exceeds the number of directors to be elected, which we refer to as a “Contested Election,” the directors shall be elected by the vote of a plurality of the votes cast. Under plurality voting, the director nominee with the most votes for a particular seat is elected for that seat. Our Bylaws require that the Board or a committee of the Board shall not nominate any incumbent director who, as a condition to such nomination, does not submit a conditional and, in the case of an uncontested election, irrevocable letter of resignation to the Chairperson of the Board. If an incumbent nominee is not elected in an uncontested election, the Nominating and Corporate GovernanceNCG Committee will promptly consider such director’s conditional resignation and make a | 22 | PURPOSE
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recommendation to the Board regarding the resignation. Each incumbent director nominated for election to the Board at the Annual Meeting as described under “Proposal No. 1” on page 2425 has submitted the conditional letter of resignation as required by our Bylaws.
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TABLE OF CONTENTS In the event an incumbent director fails to receive a majority of the votes cast in an election that is not a Contested Election, the Nominating and Corporate GovernanceNCG Committee, or such other committee designated by the Board pursuant to our Bylaws, shall make a recommendation to the Board as to whether to accept or reject the resignation of such incumbent director, or whether other action should be taken. The Board shall act on the resignation, taking into account the Committee’s recommendation, and publicly disclose (by a press release and filing an appropriate disclosure with the SEC) its decision regarding the resignation and, if such resignation is rejected, the rationale behind the decision, within 90 days following certification of the election results. The Committee in making its recommendation and the Board in making its decision each may consider any factors and other information that it considers appropriate and relevant. Additional information regarding requirements for stockholder nominations for next year’s annual meeting is described in this Proxy Statement in the section titled “General Matters — Stockholder Proposals and Nominations” on page 81.91. Contacting the Board of Directors Stockholders wishing to communicate with the Board may do so by writing to the Board, the Chairperson of the Board, or the non-employee members of the Board as a group, at: American Public Education, Inc.
Charles Town, West Virginia 25414
Attn: Corporate Secretary Complaints or concerns relating to our accounting, internal accounting controls, or auditing matters will be referred to members of the Audit Committee. Other correspondence will be referred to the relevant individual or group. All correspondence is required to prominently display the legend “Board Communication” in order to indicate to the Corporate Secretary that it is a communication subject to our policy and will be received and processed by the Corporate Secretary’s office. Each communication received by the Corporate Secretary will be copied for our files and in most cases will be promptly forwarded to the addressee. The Board has requested that certain items not related to the Board’s duties and responsibilities be excluded from the communications so forwarded under the policy. In addition, the Corporate Secretary is not required to forward any communication that the Corporate Secretary, in good faith, determines to be frivolous, unduly hostile, threatening, illegal or similarly unsuitable. However, the Corporate Secretary will maintain a list of each communication subject to this policy that is not forwarded and, on a quarterly basis, will deliver the list to the Chairperson of the Board. In addition, each communication subject to this policy that is not forwarded because it was determined by the Corporate Secretary to be frivolous shall nevertheless be retained in our files and made available at the request of any member of the Board to whom such communication was addressed. | 23 | | 24
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TABLE OF CONTENTS The Board is currently comprised of nine members, all of whowhom except MG (Ret) Fastfor Mr. Landon are standing for election at the Annual Meeting. MG (Ret) FastMr. Landon has not been renominated and will retire fromdepart the Board following the election at the Annual Meeting this year. We are deeply grateful to MG (Ret) FastMr. Landon for herhis contributions to the Company. Our nominees for the election of directors at the Annual Meeting include seveneight independent non-employee directors and our Chief Executive Officer. Each director is elected to serve a one-year term, with all directors subject to annual election. At the recommendation of the Nominating and Corporate GovernanceNCG Committee, the Board has nominated the following persons to serve as directors for the term beginning at the Annual Meeting on May 21, 2021:20, 2022: Eric C. Andersen; Granetta B. Blevins; Anna M. Fabrega; Jean C. Halle; Dr. Barbara L. Kurshan; Timothy J. Landon; Daniel S. Pianko, William G. Robinson, Jr.; Angela K. Selden; and LtGen (Ret.) Vincent R. Stewart. All of the nominees except LtGen (Ret.) Stewartfor Ms. Fabrega are currently serving on the Board. Proxies received in response to this solicitation will be voted FOR the election of each nominee named in this section unless otherwise stated in the proxy or in the case of a broker non-vote with respect to the proposal. Proxies submitted for the Annual Meeting can only be voted for those nominees named in this Proxy Statement. If, however, any director nominee is unable or unwilling to serve as a nominee at the time of the Annual Meeting, the persons named as proxies may vote for a substitute nominee designated by the Board, or the Board may reduce the size of the Board. Each nominee has consented to serve as a director if elected, and the Board does not believe that any nominee will be unwilling or unable to serve. Each director will hold office until his or her successor is duly elected and is qualified or until his or her earlier death, resignation, or removal.
Criteria for Evaluating Director Nominees The Board provides strategic direction to the Company and oversees the performance of our business and management. The Nominating and Corporate GovernanceNCG Committee periodically identifies and reviews with the Board desired skills and attributes of both individual Board members and the Board overall within the context of current and future needs. Among the Committee’s responsibilities is the development of general criteria, subject to approval by the full Board, for use in identifying, evaluating, and selecting qualified candidates for election or re-election to the Board. The Committee reviews the appropriate skills and characteristics required of directors in the context of the current composition of the Board, our operating requirements, and the long-term interests of our stockholders. It may use outside consultants to assist in identifying candidates. In determining whether to recommend candidates to serve on the Board, the Committee considers (i) whether candidates meet regulatory and independence requirements, (ii) the Board’s overall composition in light of current and future needs, (iii) the past performance of incumbent directors, and (iv) whether candidates have the qualities of integrity, judgment, acumen, and the time and ability to make a constructive contribution to the Board. In reviewing the composition of the Board, the Committee considers professional skills and background, experience in relevant industries, diversity, age, tenure, and geographic background. The Committee maintains a commitment to include candidates with a diversity of backgrounds, including women and minorities, and considers candidates submitted by directors and management, as well as candidates recommended by stockholders, which are evaluated in the same manner as other candidates identified to it. Final approval of director candidates is determined by the full Board. | 24 | PURPOSE
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As a part of our continued process of Board refreshment and succession planning, the Nominating and Corporate GovernanceNCG Committee soughtdetermined to add twoan additional directorsdirector to the Board in 20202022, and engaged Spencer Stuart, a professional search firm, to replace MG (Ret) Fast. LtGen (Ret.) Stewart came toassist with the Committee’s attention upon the recommendation of MG (Ret) Fast, who initially recommended him for service on thesearch. After a comprehensive review, Spencer Stuart identified Ms. Fabrega as a potential Board of Trustees of APUS, which is a role he assumed in August 2020. Ms. Blevins was identified to the Committee by Dr. Kurshan, who was acquainted with her from prior experiences in the education sector, and Mr. Pianko was identified to the Committee by Ms. Selden, who had become acquainted with him after she became CEO of APEI in connection with her discussions with education industry participants with experience buying, owning and running education and skills businesses.member.
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TABLE OF CONTENTS The Board has determined that all of our director nominees are qualified to serve as directors of the Company. Set forth below are some of the experiences, qualifications, attributes, and skills possessed by these nominees. | | Business Strategy Experience | ● | ● | ●• | ● | ● | ●• | ● | ● | ●• | | | • | | | ��� | | | • | | | • | | | • | | | • | | | Finance, Investment and Accounting Experience | ● | ● | ●• | ● | | ●• | | ● | • | | | • | | | • | | | • | | | | | | • | | | | | | | Corporate Governance Experience | ● | ● | ●• | | | • | ● | | | | | • | | | | | | | | | • | | | | | | | | | | Operational Experience | ● | ● | ●• | ● | ● | ●• | ● | ● | ●• | | | • | | | • | | | • | | | • | | | • | | | • | | | | Education or Academia Experience | | ● | ● | ● | | ●• | | | | | | • | | | • | | | • | | | | | | | | | | | | | Risk Management Experience | ● | ● | • | | | ●• | | | ●• | | | • | | | | | | • | | | | | | | | | • | | | | Sales and Marketing Background | ● | | ●• | | ● | | | ● | • | | | • | | | | | | | | | | | | • | | | | | | | Talent Management Expertise | | | | | ● | | ● | ● | ●• | | | | | | | | | | | | • | | | • | | | • | | | | Technology or Cybersecurity Expertise | ● | ● | ●• | ● | ● | ●• | ● | ● | ●• | | | • | | | • | | | • | | | • | | | • | | | • | |
The demographic makeup of our current Board, as disclosed by the Board members themselves, is as follows: Board Diversity Matrix (as of March 28, 2022) | | Part I: Gender Identity | | | | | | | | | | | | | Directors | | | 4 | | | 4 | | | 1 | | | | Part II: Demographic Background | | | | | | | | | | | | | African American or Black | | | | | | 2 | | | — | | | | White | | | 4 | | | 2 | | | — | | | | Did Not Disclose Demographic Background: 1 | |
Information for each nominee for director, including names, ages as of April 9, 2021,1, 2022, terms of office, principal occupations, and business experience is set forth below. In addition, for each nominee, we have included additional information regarding the experiences, qualifications, attributes, or skills that caused the Nominating and Corporate GovernanceNCG Committee and the Board to determine that the person should serve as a director for the Company. | 25 | | 26
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TABLE OF CONTENTS | 
 Director since June 2012 ●
• Chairperson of the Board ●
• Management Development & Compensation Committee
| | | BiographyBiography Mr. Andersen has served on the Board since June 2012, including as Chairperson of the Board since May 2020. Since 2015, Mr. Andersen is a partnerhas been with PeakEquity, a lower middle market private equity firm that specializes in making investments in enterprise software companies.companies, where he served as a general partner and investment committee member from 2015 until January 2022 and now serves as an operating executive. Prior to joining PeakEquity, Mr. Andersen was a partner at Milestone Partners, a private equity firm, from 2011 to 2015. From 2006 to 2011 Mr. Andersen served as a Managing Director of private equity firm Silver Lake Partners, before which he worked in the consulting industry with IBM Business Consulting Services (BCS), serving as Managing Partner, Asia Pacific responsible for IBM’s business solutions and business process outsourcing business across Asia Pacific, and Managing Partner, Distribution Sector responsible for IBM’s consulting business in the pharmaceutical, retail, consumer goods and travel/transportation industries.Pacific. Before working with IBM, Mr. Andersen was a senior partner at PwC Consulting, where he served in a variety of positions. Mr. Andersen has served as a director of Vertex (Nasdaq: VERX), a software company focused on delivering comprehensive tax solutions, since January 2008, and currently serves as Vertex’s lead independent director. Mr. Andersen also currently serves on the boardsboard of directors of severala private companies. company that is a portfolio company of PeakEquity.
Skills and Qualifications ●
• Experience as a principal in several private equity firms●
• Expertise in outsourcing, information technology and software, and international operations | |
| 
 Director since June 2020 ●
• Nominating and Corporate Governance Committee
| | | BiographyBiography Ms. Blevins has served on the Board since June 2020. Ms. Blevins has worked as an independent consultant since January 2000, working in a variety of capacities for non-profit and for-profit start-ups to mid-size businesses in multiple industries. From October 2018 to September 2019, Ms. Blevins served as Chief of Staff, LRNG at Southern New Hampshire University, where she was responsible for managing strategy, budget and resources for the LRNG learning platform. She also served as Chief Financial Officer and Chief of Staff of the non-profit social enterprise Collective Shift, which created the LRNG platform, from January 2015 until its acquisition by Southern New Hampshire University in October 2018. In addition, she served as Chief Financial Officer of Education Design Studio, a fund investor and business incubator for education technology start-up companies, from December 2012 until December 2019, and Chief Financial Officer of GlassLab, Inc., a non-profit that creates digital games for learning and assessment, from May 2014 to December 2016. Prior to 2000, Ms. Blevins held senior level finance and corporate planning positions with both public and privately held companies. Ms. Blevins currently serves on the Board of Trustees and chairs the AuditFinance Committee of Georgetown College in Georgetown, Kentucky, and has previously served on and chaired other nonprofit boards.
Skills and Qualifications
●
• Experience in senior management positions for a range of corporations and non-profits●
• Significant experience in financial management, strategic planning, and strategy execution●
• Expertise in the education industry, including with respect to technology | |
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TABLE OF CONTENTS | |  Director nomineeAge: 43
Independent: Yes | | | Biography
Since October 2021, Ms. Fabrega has served as Chief Executive Officer of fresh prepared food subscription service company Freshly, LLC, after joining Freshly as Chief Commercialization Officer in January 2021. Prior to Freshly, Ms. Fabrega spent nine years in roles of increasing seniority with Amazon, most recently as Managing Director, Amazon Convenience Stores, which includes Amazon Go, Amazon’s cashless convenience and grocery stores, from January 2020 through January 2021, and previously as Director, Amazon Go, from 2014 through January 2020. During her Amazon Go tenure, Ms. Fabrega helped launch Amazon Go Grocery, the first “Just Walk Out” grocery store, and scale the business to 28 stores across four cities. She earlier served as Senior Manager, Marketing and Third Party Marketplace, Sporting Goods, and General Manager, Sports and Outdoors, Amazon’s $4 billion sports and outdoors business, after joining Amazon in 2011. Before Amazon, Ms. Fabrega served as a Senior Product Manager, Brand Management and Relationship Marketing, and then Senior Manager, Global Brand Strategy, at Microsoft from 2008 through 2011, Director, Brand Management and Financial Services, for Stripes Convenience Stores, a convenience store chain then owned by Susser Holdings Corporation, from 2004 through 2008, and Inventory Control Manager at J&L Industrial, an industrial distribution and supply company then owned by Kennemetal, from 2002 to 2003. Ms. Fabrega began her career in distribution and operations at McMaster-Carr Supply Company, a hardware, tools, and materials supplier, in 1999.
Skills and Qualifications
• Strong experience in marketing, including digital marketing, and business management roles
• Leadership at accelerated growth and technology companies | |
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TABLE OF CONTENTS | 
 Director since March 2006 ●
• Audit Committee (Chair) ·
| | | BiographyBiography Ms. Halle has served on the Board since March 2006. Since 2010, Ms. Halle has worked as an independent consultant and since April 2018, Ms. Halle has served on the Maryland State Board of Education, including as a Vice President since July 2019. From September 2013 until May 2014 she served as the Acting Chief Operating Officer for Curiosityville, a digital early learning company. From 2002 to 2010, Ms. Halle was the Chief Executive Officer of Calvert Education Services, a provider of accredited distance education programs and educational support services. From 1999 to 2001, Ms. Halle was the Chief Financial Officer and Vice President of New Business Development for Times Mirror Interactive, a digital media subsidiary of the former Times Mirror Company. From 1986 to 1999, Ms. Halle held a number of positions with The Baltimore Sun Company, including Vice President of New Business Development, Chief Financial Officer and Vice President of Finance, President of Homestead Publishing, a subsidiary of The Baltimore Sun Company, and Director of Strategic Planning. From 1983 to 1986, Ms. Halle was the Chief Financial Officer and Vice President of Finance for Abell Communications, and Assistant Treasurer of A.S. Abell Company, the former parent company of The Baltimore Sun Company. From 1979 to 1983, Ms. Halle was a Senior Management Consultant with Deloitte, Haskins and Sells, now Deloitte, an international accounting and professional services firm. Ms. Halle previously served on the advisory board of Stevenson University, and the board of the Loyola University School of Education. Ms. Halle currently serves onEducation, and the Board of Trustees of Catholic Distance University, and currently serves as the advisory boardVice President of a private company. | | | | the Women’s Education Alliance.
Skills and Qualifications ●
• Experience in online education as a Chief Executive Officer●
• Experience in financial consulting●
• Named a National Association of Corporate Directors Board Leadership Fellow, having completed a comprehensive program of study for experienced corporate directors spanning leading practices for boards and committees | |
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TABLE OF CONTENTS |  Director since August 2014 ●
• Management Development & Compensation Committee
| | | BiographyBiography Dr. Kurshan has served on the Board since August 2014. Dr. Kurshan is the Innovation Advisor (previously Executive Director of Academic Innovation) and a Senior Fellow in Education at the Graduate School of Education at the University of Pennsylvania, a position she has held since 2012. At the University of Pennsylvania, she currently manages the university’s Global Education Innovation and Entrepreneurship certificate program and has among other things run the Milken-GSE Business Plan Competition and overseen the Master’s in Education Entrepreneurship program. In addition, from 2013 to 2019, she was Chair of the Board of Education Design Studio, Inc., a seed fund and incubator for education entrepreneurs operated in collaboration with the university. Dr. Kurshan also provides consulting services in the areas of education, technology, and innovation through Educorp Consultants Corporation, a company she has owned and operated since 1989. In addition, she was previously the Co-CEO of a private equity fund, Core Learning Fund at SPO Partners, which invested in education technology companies. Dr. Kurshan has had an over 40-year career as both an academic and award-winning entrepreneur. She also currently serves on the board of directors of an educational gamingtechnology company.
Skills and Qualifications
●
• Extensive background and leadership experience of more than 40 years in the field of higher education●
• Entrepreneurial experience building companies●
• Finance and investment experience in edtech companies and management of private equity fund and seed fund | |
| 
 Director since January 2009 June 2020 ●
• Nominating and Corporate Governance Committee (Chair)● Audit Committee
| | Biography
Mr. Landon has served on the Board since January 2009. Since August 2017, Mr. Landon has served as a partner of Ergo Ventures & Advisers, a venture investing and consulting firm and the operating partner in LESA Automotive and SmartReal.com, which integrate hardware, software, logistics, and services to deliver digital video, photography, and 3D imaging to auto dealers and real estate agents, respectively. From September 2013 to August 2017, Mr. Landon served as the Chief Executive Officer of Aggrego, LLC, a venture capital-backed startup focused on building content and ad networks for mobile distribution in the United States, Western Europe, the Caribbean, Central America, and Asia Pacific. From June 2012 until September of 2013, Mr. Landon served as President of Wrapports Ventures, the venture capital and incubator division of Wrapports, LLC, which disrupted and transformed local media using technology. From 2008 to 2012, Mr. Landon served as Chief Executive Officer of Landon Company, where he focused on early stage angel investing and consulting for private equity, venture capital, and large traditional and online media companies. Mr. Landon worked at Tribune Company for more than 20 years, and served in a variety of positions within the Tribune organization, including as President of Tribune Interactive, Inc. from March 2004 until February 2008, where he was responsible for overall interactive and classified advertising strategy, technology, and operations for the Tribune Company, and had leadership roles in starting CareerBuilder.com, Classified Ventures (the holding company of Apartments.com and Cars.com), and other online businesses.
Skills and Qualifications
● Extensive experience in starting, building and managing internet-focused media businesses over the last 25 years
● Significant knowledge of online marketing and online business models, which has direct relevance and applicability to our business
|
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Daniel S. Pianko | 
Director since June 2020
● Nominating and Corporate Governance Committee
Age: 44
Independent: Yes
| | Biography
Mr. Pianko has served on the Board since June 2020. Mr. Pianko is the founder of and currently serves as an investor and Managing Director for Achieve Partners, since January 2019. Since April 2011, he has served as an investor and Managing Director for University Ventures, which he also founded. Mr. Pianko is a frequent commentator on higher education and his insights have been featured in national media outlets including The Wall Street Journal, CNBC, TechCrunch, Inside Higher Ed, and The Chronicle of Higher Education. Prior to founding University Ventures, Mr. Pianko established a student loan fund, served as chief of staff for the public/private investments in the Philadelphia School District, and worked as a hedge fund analyst. Mr. Pianko began his career in investment banking at Goldman Sachs. He currently serves on a number of non-profit boards, including the Board of Trustees of Harlem Village Academies. Academies and African Leadership University.
Skills and Qualifications ●
• Significant investing experience●
• Deep industry experience and expertise related to higher education | | | | | |
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TABLE OF CONTENTS | 
 Director since June 2016 ●
• Management Development & Compensation Committee (Chair) ●
• Nominating and Corporate Governance Committee
| | | BiographyBiography Mr. Robinson has served on the Board since June 2016. Since October 2018, Mr. Robinson has served as president of Broadgate Human Capital, LLC, a human resources consulting firm. From December 2013 through September 2017, Mr. Robinson served as executive vice president and chief human resources officer of Sabre Corporation, a travel technology company, where he was responsible for leading Sabre’s global human resources organization, including talent management, organizational leadership, and culture. Prior to joining Sabre in December 2013, Mr. Robinson served as the senior vice president and chief human resources officer at Coventry Health Care, a diversified managed health care company that then had 14,000 employees, from 2012 to 2013. From 2010 to 2011, Mr. Robinson served as senior vice president for human resources at Outcomes Health Information Solutions, a healthcare analytics and information company specializing in the optimization and acquisition of medical records. Prior to that, from 1990 to 2010, he worked for General Electric, where he held several human resources leadership roles in diverse industries including information technology, healthcare, energy, and industrial, including as the human resources leader within the GE Enterprise Solutions division, where he led a global team in an organization of 20,000 employees in 200 locations worldwide. Mr. Robinson has served as a director of Clover Health Investments, Corp. (Nasdaq: CLOV), a health technology company focused on improving health outcomes for America’s seniors, since March 2021, and also serves on the board of MUST Ministries, a charitable organization.
Skills and Qualifications
●
• Significant experience and leadership in human capital management●
• Experience as an executive officer of other public companies | | |
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TABLE OF CONTENTS | 
 Director since September
• President and Chief Executive Officer
Age 56
Age 55 Independent: Independent: No
| | | BiographyBiography Ms. Selden joined us in September 2019has served as President and Chief Executive Officer and a member of the Board.Board since September 2019. Ms. Selden previously served as Chief Executive Officer and a member of the board of DIGARC, LLC, an education technology provider to higher education institutions, since October 2016.from 2016 to 2019. From July 2015 until April 2016, Ms. Selden was Interim Chief Executive Officer of Skybridge Americas, a global contact center and provider of fulfillment solutions, and served as a member of its board of directors from July 2015 through December 2018. Prior to Skybridge Americas, Ms. Selden served as Chief Executive Officer of Workforce Insight, LLC, a global provider of strategic workforce management, from 2014 to April 2015, after Workforce Insight’s acquisition by Baird Capital Partners, where Ms. Selden served as Executive in Residence from April 2013 to April 2014 and led the acquisition of Workforce Insight. Prior to her role at Baird, Ms. Selden served as Chief Executive Officer and Executive Co-Chairman of Arise Virtual Solutions, Inc., a virtual workforce solutions outsourcer. Earlier in her career, Ms. Selden spent 18 years at Accenture, including serving as the Managing Partner, leading Accenture’s North American Consumer and Industrial Products group to significant growth.
Ms. Selden co-founded and has served as Chairman of DinerIQ, a provider of a mobile marketing technology platform for the hospitality industry, since August 2015, and has served on the board of directors of Talent Wave, a provider of independent contractor compliance and workforce solutions, since July 2015, and on the University of St. Thomas, Opus College of Business’ Strategic Board of Governors since April 2012. From July 2013 to March 2015, Ms. Selden served as Executive Chairman and Director of Call Assistant/Strategic Fundraising, Inc., a global call center platform and services business.
| |
Skills and Qualifications
●
• Close to 20 years’ of leadership and management experience within the education and technology-enabled solutions industries and within private-equity and publicly-traded environments●
• Experience delivering workforce solutions to enterprise customers and executing large-scale business transformation programs | |
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TABLE OF CONTENTS | 
 Director nominee since May 2021
• Management Development & Compensation Committee
| | | BiographyBiography LtGen (Ret.) Stewart has served on the Board since May 2021. Since July 2020, LtGen (Ret.) Stewart has served as Chief Inclusion & Innovation and Business Intelligence officerOfficer for consulting firm Ankura Consulting Group, LLC. LtGen (Ret.) Stewart founded and has served as President of Stewart Global Solutions, LLC, an international consulting company focused on cybersecurity, geopolitical intelligence, strategic planning and crisis management services, since April 2019.2019, and has served as a partner of Pine Island Capital Partners, which provides strategic advice to direct investment companies addressing current national security challenges in the cybersecurity and intelligence sectors, since 2021. Prior to founding Stewart Global Solutions, during a military career that spanned for nearly four decades, LtGen (Ret.) Stewart served in many senior roles. As Deputy Commander of United States Cyber Command from October 2017 to April 2019, he provided strategic leadership to more than 10,000 personnel executing the full spectrum of cyberspace operations, including securing the Department of Defense’s Information Network, which consisted of 3 million users in 140 countries across 15,000 networks and 6,000 physical locations. Previously, as Director of the Defense Intelligence Agency from January 2015 to October 2017, he managed a global organization of over 16,000 personnel operating in more than 100 countries, delivering intelligence on the military capabilities of potential adversaries. From 2013 to 2015, LtGen (Ret.) Stewart served as Commanding General, Marine Forces Cyberspace Command, and from 2009 to 2013, he served as Director of Intelligence, United States Marine Corps. Earlier in his military career, he served in a series of intelligence, command, and strategy roles with the Department of Defense and United States Marine Corps. LtGen (Ret.) Stewart has served as Chairman of the board of directors of ShoulderUp Technology Acquisition Corp. (NYSE: SUAC.U, SUAC, SUAC.W), a blank check company formed for the purpose of effecting a business combination, since November 2021, and a director of KBR, Inc. (NYSE: KBR), a company that provides science, technology and engineering solutions to governments and companies, since June 2021.
Skills and Qualifications ●
• Extensive experience and achievements in the U.S. Military, including cybersecurity and intelligence●
• Almost 40 years of military service until his retirement as a Lieutenant General●
• Strategic leadership and management experience | |
THE BOARD RECOMMENDS A VOTE FOR ELECTION OF EACH OF THE NINE NOMINATED DIRECTORS.
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TABLE OF CONTENTS 20202021 DIRECTOR COMPENSATION Our non-employee director compensation policy was established and is periodically revised following consultation with Willis Towers Watson. In December 2019, Willis Towers Watson presented to the MDC Committee information on non-employee director compensation, providing comparative information on the same peer group that the MDC Committee uses for executive compensation, as well as general industry levels. Following consultation with Willis Towers Watson, the MDC Committee recommended, and the Board approved, increases in director compensation, effective as of January 1, 2020. The Board determined that these increases were appropriate because the annual cash compensation for our non-employee directors was previously near the bottom of our peer group and total annual compensation was below the median of the general industry survey data provided by Willis Towers Watson. The Board also considered that there had not been any increases to director compensation for three years.
Pursuant to theour non-employee director compensation policy, for 2020,2021, directors received an annual retainer of $70,000. The chairs of the Audit, MDC, and Nominating and Corporate GovernanceNCG Committees were entitled to receive andan additional annual retainersretainer of $15,000, $10,000 and $8,000, respectively. The non-employee Chairperson of the Board was entitled to receive an additional annual retainer of $50,000, and the Vice-Chairperson was entitled to receive an additional annual retainer of $15,000. The Chairperson was not entitled to receive any additional annual retainers for also serving as chair of any of the Board’s standing committees. Members of the Board may also be asked to serve in a committee role that involves service as a representative of the Board on the board of one of our wholly owned subsidiaries. The MDC Committee recommended modifying the payments for service in these roles, and in June 2020September 2021 the Board approved a flat additional retainer of $30,000 for service with respect to American Public University System or Rasmussen University and for other subsidiariesHondros College of Nursing approved a payment of $3,000 ($3,600 for a director serving as chair) per in-person meeting, or $900 ($1,200 for a director serving as chair) forper telephonic meetings,meeting, but with no more than one payment per day. The annual retainers are payable in quarterly installments, and each director may, before the beginning of the applicable year, elect to receive his or her annual retainer in common stock having the same value as the portion of the annual retainer to be paid, calculated as of the close of business on the first business day of the year. In connection with our annual meeting of stockholders, our non-employee director compensation policy for 20202021 also provided for an annual grant to each director of restricted stock having a value of $80,000 on the grant date. Consistent with past practice, the restricted stock grant vests on the earlier of the one-year anniversary of the date of grant or immediately prior to the next year’s annual meeting of stockholders. Directors who join the Board during the year, which in 2020 included Ms. Blevins and Mr. Pianko, receive pro-rated retainers and restricted stock grants.
We also reimburse all directors for travel and other necessary business expenses incurred in the performance of their services for us and extend coverage to them under the directors’ and officers’ indemnity insurance policies. | 32 | PURPOSE
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The following table sets forth information regarding compensation earned by our non-employee directors during 2020: | Name(1) | | Fees Earned or Paid in
Cash ($) | | | Stock Awards ($)(2) | | | Total ($) | | | Eric C. Andersen | | $ | 107,019 | | | $ | 79,985 | | | $ | 187,004 | | | Granetta B. Blevins | | $ | 38,462 | | | $ | 73,632 | | | $ | 112,094 | | | Barbara G. Fast | | $ | 111,000 | | | $ | 79,985 | | | $ | 190,985 | | | Jean C. Halle | | $ | 85,000 | | | $ | 79,985 | | | $ | 164,985 | | | Barbara L. Kurshan | | $ | 80,353 | | | $ | 79,985 | | | $ | 160,338 | | | Timothy J. Landon | | $ | 78,000 | | | $ | 79,985 | | | $ | 157,985 | | | Daniel S. Pianko | | $ | 38,462 | | | $ | 73,632 | | | $ | 112,094 | | | William G. Robinson | | $ | 95,165 | | | $ | 79,985 | | | $ | 175,150 | |
2021: | | Eric C. Andersen | | | $120,000 | | | $79,973 | | | $199,973 | | | | Granetta B. Blevins | | | $70,000 | | | $79,973 | | | $149,973 | | | | MG (Ret.) Barbara G. Fast(2) | | | $35,000 | | | $— | | | $35,000 | | | | Jean C. Halle | | | $85,000 | | | $79,973 | | | $164,973 | | | | Dr. Barbara L. Kurshan | | | $87,527 | | | $79,973 | | | $167,500 | | | | Timothy J. Landon | | | $78,000 | | | $79,973 | | | $157,973 | | | | Daniel S. Pianko | | | $79,946 | | | $79,973 | | | $159,919 | | | | William G. Robinson | | | $110,000 | | | $79,973 | | | $189,973 | | | | LtGen (Ret.) Vincent R. Stewart | | | $55,366 | | | $79,973 | | | $135,339 | |
(1) See the Summary Compensation Table in the “Compensation Tables and Disclosures” section of this Proxy Statement for disclosure related to Ms. Selden, and Dr. Boston, each of whomwho is one of our named executive officers. (2) MG (Ret.) Fast retired from the Board upon the expiration of her term following the 2021 Annual Meeting. (3) The grant date fair value per share of the restricted stock awards in 2020 for Ms. Blevins and Mr. Pianko2021 was $28.83, and for the other directors was $31.74,$28.11, each as computed in accordance with FASB ASC Topic 718. MG (Ret) Fast elected to defer receipt of the vested shares until the earlier of the date of separation from service and June 1, 2023. Dr. Kurshan elected to defer receipt of the vested shares until the earlier of the date of separation from service and June 1, 2022.
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TABLE OF CONTENTS As of December 31, 2020,2021, there were no exercisable or unexercisable option awards held by our current2021 non-employee directors. The aggregate number of unvested stock awards outstanding held as of that date by our current2021 non-employee directors were as follows: | | Eric C. Andersen | | | 2,5202,845 | | | | Granetta B. Blevins | | | 2,5542,845 | | | | MG (Ret.) Barbara G. Fast | | | 2,5200 | | | | Jean C. Halle | | | 2,5202,845 | | | | Dr. Barbara L. Kurshan | | | 2,5202,845 | | | | Timothy J. Landon | | | 2,5202,845 | | | | Daniel S. Pianko | | | 2,5542,845 | | | | William G. Robinson | | | 2,5202,845 | | | | LtGen (Ret.) Vincent R. Stewart | | | 2,845 | |
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TABLE OF CONTENTS Compensation Discussion and Analysis OUR 2020 NEOS
Our named executive officers (“NEOs”) for 20202021 are: | | | | | | | | 
| |  | | | | | | Angela K. Selden
President and
Chief Executive Officer
and President | | Wade T. Dyke
President of American
Public University System
(“APUS”) since
August 12, 2020 | | Wallace E. Boston, Jr.
former President of
APUS, who served in this
role until his retirement
on August 12, 2020 | | | | | |  | | 
| |  | | | | | | Richard W. Sunderland, Jr.
Executive Vice President and
Chief Financial Officer | | | Patrik Dyberg
Executive Vice President and
Chief Technology Officer | | | | | | | | | | | | | | Thomas A. Beckett
Senior Vice President,
General Counsel and Secretary | | | Dr. Vernon Smith
Senior Vice President and Provost of American
Public University System
(“APUS”) | | | Dr. Wade T. Dyke
Former President of APUS* | |
EXECUTIVE SUMMARY
* Dr. Dyke departed his position effective November 4, 2021. This Compensation Discussion and Analysis describes our executive compensation program and decisions for 2020.2021. This section details the compensation framework applied by the Management Development & Compensation Committee (the “MDC Committee”) and, in particular, our compensation philosophy and objectives, elements of compensation, compensation decisions, and the link between executive compensation and performance. | 34 | PURPOSE
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Consistent with the improved financial performance and registrationIn 2021, at American Public University System (“APUS”), there was a moderation in net registrations and enrollment, growth at APUS and National Education Seminars, Inc., which we refer to asoffset by above target EPS performance, while Hondros College of Nursing (“HCN”), the delivered both strong financial performance and enrollment growth. This performance resulted in compensation realized byof our NEOs was significantly highergenerally slightly less in 2021 than in 2020, than in 2019. Thiswhich is a direct reflection of the design of our executive compensation program and our intention to pay for performance. Our NEOs received maximum payouts underUnder our annual incentive plan, our NEOs received above-target payouts in 2021, reflecting a range of achievement tied to company and education unit financial performance and above target payouts tied toenrollment goals and satisfaction of individual “management by objective” performance measuresobjectives and key results (“MBOs”OKRs”). For example, Ms. Selden’s total payout under our 20202021 annual incentive plan was 147%represented 110.1% of her target opportunity slightly(or 99.1% of her base salary), less than her total opportunity of 150% of target.target (or 135% of her base salary) and less than the percentage of target opportunity earned in 2020. In addition, based on above-target performance above threshold for bothrevenue and performance above target for adjusted EBITDA, and revenue,which were the performance measures for performance-based deferred stock units (“PSUs”) that we granted in 2020,2021, PSUs were earned by NEOs at 191.5%128.5% of the target opportunity, slightly less than the total opportunity of 200% of target.
A Returntarget and less than the percentage of target opportunity earned in 2020.
Building a National Platform to Enrollment MomentumWe provide onlineEducate Service-Minded Students
2021 was a transformative year for American Public Education, Inc. (“APEI”) as we advanced our mission of “Educating the Service Minded.” This included a continued emphasis on core business growth and on-campus postsecondarythe acquisitions of new education to approximately 92,700 students throughproviders that advance our two subsidiary institutions, APUS and HCN. APUS provides online postsecondary education to approximately 90,400 adult learners and has a historymission. On September 1, 2021, we completed the acquisition of serving the academic needs of the military, military-affiliated, and public service communities. HCN provides nursing education to more than 2,300 students across six campuses in Ohio and one campus in Indiana. In October 2020, we announced that we had entered into a definitive agreement to acquire Rasmussen University a nursing- and health-sciences focused institution serving over 18,000 students at its 24 campuses across seven states and online. The Rasmussen acquisition is expected to close in the third quarter of 2021, subject to the satisfaction or waiver of closing conditions that include, among others, regulatory review by ED, approval by the HLC, and approval by or notices to other regulatory and accrediting bodies.We saw strong financial performance in 2020 thanks to continued enrollment growth at APUS and a turnaround with record enrollment at HCN. We believe this performance reflects the process of resetting and re-positioning us for growth that began in 2019, and more broadly reflects the resilient, steady leadership and execution of strategic and operational imperatives by our named executive officers during a period of unprecedented disruption in education and the wider economy.
2020 Say-on-Pay Vote
We consider the views of our stockholders in designing our executive compensation program and welcome feedback on our executive pay practices. At our 2020 Annual Meeting, more than 96% of the votes cast by our stockholders on our annual advisory vote on the compensation of our NEOs were in favor of this proposal.(“RU”). We believe that this levelRU adds an attractive portfolio of support for this proposal affirms our approachcurriculum, and in particular a strong nursing curriculum ladder, along with a strong alignment around mission and culture. The addition of RU has resulted in a more diversified Company with three now roughly equal parts by revenue: one-third nursing education; one-third military and veterans’ education; and one-third other online education. In addition, in 2021 we announced, and on January 1, 2022, we completed, the acquisition of substantially all of the assets of Graduate School USA (“GSUSA”), one of the largest providers of training to executive compensation. See page 73 for this year’s say-on-pay proposal.the federal government workforce. The acquisition further advances APEI’s focus on providing training that provides students with pathways to employment and career advancement.
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TABLE OF CONTENTS 2020The charts below show the breakdown of the components of Ms. Selden’s target compensation opportunity for 20202021 as well as the average target compensation for our other NEOs serving at the beginning of the year, other than Dr. Boston.year. As discussed in the overview section below, the breakdown of target compensation opportunity reflects our focus on variable compensation tied to performance, with our CEO’s fixed base salary representing only 23% of her total target compensation opportunity, with annual and long-term incentives tied to financial, enrollment, individual, and equitystock price performance representing the remainder. | 35 | PURPOSE
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CEO Target Compensation*Compensation | | | Other NEO Target Compensation** | | | | | |
* Pay NEO pay mix totals exclude signinga $10,000 special bonus amounts,award to our Chief Financial Officer for his work on our capital structure and credit facilities, and for his performance in connection with the RU acquisition, as described in the “Summary Compensation Table”“CEO Awards” below. COMPENSATION PROGRAM OVERVIEW
| | COMPENSATION PROGRAM OVERVIEW | |
Compensation Program Philosophy and Objectives Our compensation programs for our NEOs are designed to attract, incentivize, retain, and reward the talent that we need to maintain and strengthen our position in highercareer-minded adult education and to achieve our business objectives, as well as to hold our executives accountable for our actual business performance. | Variable Cash Compensation | 
| | | | | We believe in using variable cash compensation to motivate and reward performance for our NEOs. | | | Focus on Corporate Goals |
| | | | | We strive to provide compensation that is directly related to the achievement of our corporate goals, which we measure through earnings per share, enrollment, individual managementannual objectives with individualized, quarterly components set for each NEO, and revenue and adjusted EBITDA and revenue goals. | | | Carefully Monitor External Market Practices |
| | | | | We monitor market practices so that our programs reflect the realities of the competitive market to ensure we are paying for performance. At the same time, we must also ensure we can attract the top talent necessary to drive results through our business strategy. | |
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TABLE OF CONTENTS Executive Compensation Best Practices Highlighted below are certain executive compensation practices that we employ in order to align executive compensation with stockholder interests. Also listed below are certain compensation practices that we do not employ because we do not believe they would serve our stockholders’ long-term interests. | What We Do | | | | | | How We Do It | | | | We Pay for
Performance |
| | | | | We tie a significant portion of our executives’ annual compensation opportunity to objective performance metrics and continue to monitor our compensation mix to ensure the performance-based portion is consistent with that of our peers. | | | | We Target Pay
Competitively |
| | | | | We seek to target compensation within a competitive range of the market median and only deliver greater compensation when warranted by actual superior performance. Conversely, we deliver lower compensation when performance results do not meet our threshold expectations. We review our compensation and performance alignment as compared to our peers annually to understand where our programs are working and where we can continue to make improvements. | |
| | We Enforce
Executive Stock
Ownership
Guidelines |
| | | | | Each of our executives is expected to own shares of our common stock with a value ranging from one to six times the executive’s base salary, depending on position. | | | | We Utilize
Meaningful Vesting
Conditions for
Equity Awards |
| | | | | Equity awards, including performance-based awards, have three-year ratable vesting periods from the date of grant. | | | | We Incorporate ESG into Pay Decisions | | | | | | Our short-term annual incentive cash compensation program contains range of achievement tied to satisfaction of individual objectives consistent with important strategic, financial, and operational goals, including our ESG goals. In 2021, these included objectives related to cybersecurity governance, adherence to the Code of Ethics and ethical standards, and employee engagement, talent assessment, retention, and development. | | | | We Impose a
“Clawback “Clawback Policy” |
| | | | | We can recover any performance-based cash or equity award where, as a result of an accounting restatement, the performance goals were later determined not to have been achieved. In addition, we can recover equity awards made to an employee in cases where we have to prepare an accounting restatement due to our material noncompliance with financial reporting requirements and the restatement is the result of misconduct that resulted from the employee knowingly having engaged in that misconduct, the employee’s gross negligence, or the employee knowingly or through gross negligence having failed to prevent misconduct. | | | | We Utilize an
Independent
Compensation
Consulting Firm |
| | | | | The MDC Committee utilizes Willis Towers Watson, an independent compensation consulting firm, to assist the Committee in determining compensation. | |
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TABLE OF CONTENTS | | We Don’t Permit
Hedging |
| | | | | We prohibit our directors and employees, including our NEOs, from engaging in short sales, transactions in derivative securities (including put and call options), or other forms of hedging and monetization transactions, such as zero-cost collars, equity swaps, exchange funds, and forward sale contracts, that allow the holder to limit or eliminate the risk of a decrease in the value of our securities. | | | | We Don’t Permit
Pledging |
| | | | | We prohibit our directors and officers, including our NEOs, from holding our securities in margin accounts, pledging our securities as collateral or maintaining an automatic rebalance feature in savings plans, deferred compensation, or deferred fee plans, to avoid sales of our securities on behalf of an individual related to margin calls, loan defaults, and automatic rebalances, which may occur when the individual has material nonpublic information about us. | | | | We Don’t Offer
Single-Trigger
“Change “Change of Control”
Payments |
| | | | | For those NEOs who have employment agreements, the agreements provide that in the case of a “change of control” the NEO only receives severance payments in connection with a termination of their employment. | | | | We Don’t Provide
Tax Gross-Ups |
| | | | | We do not provide our NEOs with tax gross-up payments for a change of control in employment agreements, or for other benefits. | |
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Assessing Competitive Practice For 2020,2021, the MDC Committee continued its prior engagement of Willis Towers Watson as an independent consultant to the Committee, including to assist the Committee with a competitive assessment of base salary, annual incentives, long-term equity incentiveincentives, and total direct compensation. For the Committee’s assessment of its compensation program, Willis Towers Watson provides comparative data that includes survey data for each of the NEOs and data from a group of publicly traded companies against which we compare compensation, which we refer to as our peer group. For those executives for whom both survey data and peer group data are available, the MDC Committee uses the survey data for its primary comparisons because we believe, consistent with the advice of Willis Towers Watson, that the survey data is more robust and provides a better comparison for the Company than the peer group data. This is in part because peer group data is more limited and typically cannot be size-adjusted to account for revenue responsibilities. | | | 39
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TABLE OF CONTENTS Consistent with the advice of Willis Towers Watson, when reviewing compensation for executive positions, the MDC Committee generally considers compensation to be competitive if it falls within the following ranges relative to the 50th percentile of the comparative survey data: | ● | within 10% for base salary |
| ● | within 15% for total cash compensation |
| ● | within 20% for total direct compensation |
within 10% for base salary within 15% for total cash compensation within 20% for total direct compensation Survey Data and Peer Group For 20202021 compensation decisions, Willis Towers Watson provided data from the following published surveys as a primary source: the 20192020 Willis Towers Watson General Industry Executive Compensation U.S. Survey Report and the 2018-20192019-2020 College and University Professionals Association for Human Resources Administrators in Higher Education Annual Survey Report. Because of the variance in size among the companies included in the databases for the published surveys, Willis Towers Watson informed the MDC Committee that, to the extent possible, it had assessed the published survey data in the context of APEI’s, APUS’s, and APUS’sHCN’s projected fiscal year 20202021 revenue, as revenue responsibility is typically one of the most reliable predictors of executive pay. | 38 | PURPOSE
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While the MDC Committee uses survey data as the primary source of comparative information, we believe our peer group is still an important as a secondaryelement of the review of the competitive market for executive talent. Prior to making compensation decisions for 2019, the MDC Committee, with the assistance of Willis Towers Watson, had adopted a new peer group after screening for public companies within the education services, consumer services, commercial and professional services, and software and services industry that were similar in size (revenue, net income, total assets and number of employees), were peers of our peers, and that we had selected or proxy advisory firm Institutional Shareholder Services had identified as our peers. For 2020,2021, the MDC Committee went through the same evaluation process, however theprocess. The 2021 peer group did not changewas unchanged from what it had been in 2019 and consisted of the following companies: | ● | Carriage Services, Inc.; |
| ● | GP Strategies Corporation; |
| ● | Grand Canyon Education, Inc.; |
| ● | Stride, Inc. (fka K12 Inc.); |
| ● | Lincoln Educational Services Corporation; |
| ● | Perdoceo Education Corporation; |
| ● | Strategic Education, Inc.; |
| ● | Universal Technical Institute, Inc.; and |
| ● | Zovio Inc. (fka Bridgepoint Education, Inc.). |
Carriage Services, Inc.; GP Strategies Corporation; Grand Canyon Education, Inc.; Stride, Inc. (fka K12 Inc.); Lincoln Educational Services Corporation; Perdoceo Education Corporation; Strategic Education, Inc.; Universal Technical Institute, Inc.; and Zovio Inc. The review of our peer group for setting initial 20202021 compensation only resulted in comparative information for Ms. Selden, Mr. Sunderland, and Mr. Sunderland.Dr. Dyke. The analysis indicated that there was insufficient comparable information for the other NEOs, other than with respect to the President of APUS. However, Dr. Boston’s salary had been set separately as discussed below and his successor had not been hired at the time compensation was generally set for 2020. The MDC Committee, however, did take the peer group information into account when assessing the competition package for Dr. Dyke at the time of his appointment.NEOs. | 39 | | 40
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TABLE OF CONTENTS ELEMENTS OF COMPENSATION
| | ELEMENTS OF COMPENSATION | |
The compensation program for our NEOs is comprised of three core elements: base salary; annual incentive cash compensation; and long-term equity incentives. | | BASE SALARY | | ●
| | | | • | | | Regular, fixed element of compensation. ● Reviewed annually.
● Reflects each NEO’s individual role and responsibility.
| ●
| | • | | | Informed by the 50th percentile of the survey data received from the MDC Committee’s independent consultant. ●
| | | | | | | • | | | Reviewed annually. | | | • | | | Intended to be part of a total compensation package that is competitive.competitive | | | | | | | • | | | Reflects each NEO’s individual role and responsibility. | | | | | | | | | | | | | | | | | | | | | | | | | | SHORT-TERM ANNUAL INCENTIVE
CASH COMPENSATION | | ●
| | | | • | | | Provides cash incentives for achieving and surpassing corporate and individual goals. ●
| | | • | | | Provides compensation for annual performance, with a quarterly element for individual objectives. | | | | | | | • | | | Offers the opportunity for NEOs to earn: | | | • | | | Helps to focus executives on corporate financial, strategic and operational plans and goals, which are expected to lead to increased stockholder value. | | | | | | | | | | ○ annual payments for achievement of earnings and enrollment targets; and ○ annual payments for satisfaction of MBOs.● individual
objectives. | | | • | | | This focus is enhanced through an additional incentive that pays an additional amount to NEOs for superior performance, which is referred to as the stretch portion of the annual incentive plan. | | | | | | | • | | | Generally structured so that target total cash (base salary plus annual incentives) is competitive with the 50th percentile of the survey data when target performance goals under the annual incentive plan are achieved. | ● Provides compensation for annual performance.
● Helps to focus executives on corporate financial, strategic and operational goals, which are expected to lead to increased stockholder value.
● This focus is enhanced through an additional incentive that pays an additional amount to NEOs for superior performance, which is referred to as the stretch portion of the annual incentive plan.
| | | | | | |
| | | | | | LONG-TERM EQUITY INCENTIVE COMPENSATION | | ●
| | | | • | | | Annual grants of equity awards comprised of time-based restricted stock units (“RSUs”) and PSUs. ●
| | | • | | | Intended to align the interests of the NEOs with those of our stockholders. | | | | | | | • | | | All awards vest over three years. ●
| | | • | | | Time-based vesting aids in the retention of NEOs. | | | | | | | • | | | PSUs tied to 2020fiscal year achievement of revenue and adjusted EBITDA. | | | • | | | Revenue and adjusted EBITDA and revenue.● performance measures align with metrics that are relevant to the achievement of our long-term strategic goals.
| | | | | | | • | | | Generally selected so that total target compensation is competitive with the 50th percentile of the survey data received from the MDC Committee’s independent consultant. ● Provides compensation that is tied to longer-term performance.
| ● Intended to align the interests of the NEOs with those of our stockholders.
● Time-based vesting aids in the retention of NEOs.
● Adjusted EBITDA and revenue performance measures align with metrics that are relevant to the achievement of our long-term strategic goals.
●
| | • | | | The MDC Committee retains the right to adjust equity awards downward. | | | | | | | • | | | Provides compensation that is tied to longer-term performance. | | | | |
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TABLE OF CONTENTS 2020 COMPENSATION DECISIONS
| | 2021 COMPENSATION DECISIONS | |
In setting base salary, annual incentive cash compensation, and long-term equity incentives for 2020,2021, the MDC Committee considered, among other factors, the compensation levels for our NEOs in 2019,2020, the respective performances of each of our continuing NEOs in 2019,2020, an enhanced focus on differentiation and pay-for-impact based on a culture of performance and accountability, and what the Committee believed was required based on the marketplace for executive talent, including based on the market information provided by Willis Towers Watson.
Base salary is an integral part of compensation for our NEOs and is generally set in January of each year, absent other factors, such as promotions or new hires. Ms. Selden was appointed to her position in September 2019, and her base salary was set at that time, taking into account the negotiated amount necessary to attract Ms. Selden to the Company, as well as the comparative data presented by Willis Towers Watson, which indicated that her base salary was competitive with the 50th percentile of the survey data. The MDC Committee did not change Ms. Selden’s base salary for 2020, which isand consistent with the MDC Committee’s general policy of not increasing base salary for executives who were recently hired. Thehired, Ms. Selden did not receive a raise in January 2020. For 2021, the MDC Committee also noteddetermined to increase Ms. Selden’s salary by 7%, taking into consideration that herMs. Selden’s base salary remained competitive withwas slightly below the 50th percentile of survey data but significantly below the survey data.When Dr. Boston ceased to serve50th percentile of peer data, as Presidentwell as Ms. Selden’s performance and CEOleadership of the Company, in September 2019 but continuedincluding successfully negotiating the agreement to hold the position of President of APUS, his base salary was decreased from $692,070 to $500,000, which amount was negotiated with Dr. Boston in connection with the leadership transition and was intended to reflect a lower level of responsibility. As with Ms. Selden, Dr. Boston did not receive any change in salary for 2020.
acquire Rasmussen University. Each of the other continuing NEOs received a 2% salary increase, except for Dr. Dyke, who did not receive an increase and Mr. Beckett, who received a 4.5%4% increase. Dr. Dyke, who was appointed to his position effective August 2020, did not receive a salary increase consistent with our practice of not providing an increase in the year after hire. In approving these increases, the Committee considered that the budget had contemplated a general salary increase across the organization, the contribution and role of each NEO, the other factors described abovesurvey data regarding the compensation for each NEO with respect to market, and the recommendation of Ms. Selden. In particular,Selden and, with respect to Dr. Smith, the recommendation of Dr. Dyke. With respect to Mr. Beckett, the Committee considered that while Mr. Sunderland’s salary placed him slightly above the 75th percentile of the survey data and our peer group data, he is a long-serving and highly valued member of our executive team, and his contributions to the Company were expected to be particularly important during 2020 as we had recently undergone a leadership change and anticipated implementing new strategies intended to drive enrollment growth and accelerate brand recognition. Mr. Dyberg’s base salary was between the 50th and 75th percentile of the survey data, which was generally consistent with the level of base salary established when he joined the Company in 2018 as well as the importance to the Company of the information technology transformation program that we initiated in 2019. Mr. Beckett’s 4.5% increase in salary reflected his performance in 2019 and that his salary wasstill below the 50th percentile of the survey data.Dr. Dykedata and was appointed to his position effective August 2020, and his base salary was set at that time taking into account the negotiated amount necessary to attract Dr. Dyke to the Company, the importance of the APUS President to the Company and its performance, as well as the comparative data presented by Willis Towers Watson, which indicated that his base salary was slightly above the 75th percentile of the blended survey and peer company data.
not yet competitive with market. Annual Incentive Cash Compensation
Overall Opportunity . We believe annual incentive cash compensation furthers our compensation philosophy and objectives by focusing our NEOs on performance goals that measure corporate strategic, financial, and operational objectives. The total opportunity for annual cash incentive compensation for our NEOs under our annual incentive plan (“AIP”) is expressed as a target percentage of base salary. We further enhance the focus on performance goals through a stretch incentive opportunity under the AIP that pays an additional amount to our NEOs for superior performance, which we refer to as the stretch | 41 | PURPOSE
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portion of the AIP. The following table setsets forth the target and stretch incentives under the AIP, expressed as a percentage of base salary. | | Angela K. Selden | | | 90 | | | 45 | | | 135 | | | | Richard W. Sunderland, Jr. | | | 50 | | | 30 | | | 80 | | | | Patrik Dyberg | | | 50 | | | 30 | | | 80 | | | | Thomas A. Beckett | | | 50 | | | 20 | | | 70 | | | | Dr. Vernon Smith | | | 50 | | | 20 | | | 70 | | | | Dr. Wade T. Dyke | | | 55 | | | 30 | | | 85 | |
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TABLE OF CONTENTS | Named Executive Officer | | Target Incentive | | Stretch Incentive
(% of Base Salary) | | Total Maximum
Potential | | Angela K. Selden | | 90 | | 45 | | 135 | | Wade T. Dyke | | 55 | | 30 | | 85 | | Wallace E. Boston, Jr. | | 90 | | 45 | | 135 | | Richard W. Sunderland, Jr. | | 50 | | 30 | | 80 | | Patrik Dyberg | | 50 | | 30 | | 80 | | Thomas A. Beckett | | 50 | | 20 | | 70 |
The target and stretch percentages for Ms. Selden, Dr. Dyke, Dr. Boston, Mr. Sunderland, and Mr. Dyberg, and Dr. Dyke reflect the minimum target and stretch percentages set forth in their employment agreements.agreements, and Mr. Beckett’s and Dr. Smith’s target and stretch percentages reflect the percentages set for all executives at a similar level. After considering the survey data and the individual performance of the executives, the MDC Committee believed, in its subjective, but informed, judgment,determined that the percentages for all continuing NEOs should remain the same for 2020.2021. Ms. Selden’s annual incentive target was set at a higher percentage than those of the other NEOs, (other than Dr. Boston), reflecting that she is ourAPEI’s President and CEO, and Dr. Dyke’s percentage was set in connection with his appointment as President of APUS and in recognition of the significant importance of that role.APUS. Dr. Boston’s annual incentive targetDyke’s departure on November 4, 2021 was set at a higher percentage because it was the minimumtreated as termination without cause under his employment agreement, which was entered into when he was President and CEO, and in recognitionprovided for proration of his long service in that position and the important role he played during the transition to Ms. Selden’s and Dr. Dyke’s leadership. In anticipation of his retirement, Dr. Boston’s employment agreement, described below under “Employment Agreements – Dr. Boston’s Employment Agreement”, provided that his incentive for 2020 would be proratedAIP payments in the event he terminatedof a termination of his employment duringby the year.Company other than for disability or cause. Dr. Dyke’s employment agreement is described more fully below under “Employment Agreements – Dr. Dyke’s Employment Agreement”, provided that his incentive for 2020 would be prorated for the portion of the year that he was employed and that he would receive no less than $100,000. The MDC Committee agreed to provide a guaranteed minimum bonus for Dr. Dyke as part of the overall incentive package to attract him to the Company. The guaranteed minimum was slightly greater than the $96,525 total target opportunity that would be available to Dr. Dyke based on the 55% target incentive set forth in his employment agreement. The MDC Committee agreed to provide a guaranteed minimum bonus for Dr. Dyke as part of the overall incentive package to attract him to the Company. Agreement.” We believe that the proportion of target annual incentive compensation to target total cash compensation (base salary plus target annual incentive pay) for our NEOs should be a relatively high percentage. It is also the Committee’s general intent, as discussed above, that target annual incentives should be structured so that target total cash compensation approximates the 50th percentile of the survey data for achievement of target performance goals under the AIP. We believe that positioning to be competitive with the 50th percentile is appropriate for target total cash compensation because of the high level of performance that we believe is required from our executives in order for us to achieve our performance targets.goals. We believe the high percentage of compensation tied to incentive compensation increases the focus of our NEOs on achieving our performance goals.
Performance Measures . The MDC Committee intended that performance under the NEOs’ AIP at both the target and stretch incentive levels wouldshould be measured based on achieving and surpassing businessour achievement of our financial performance goals and individual achievement of individual “management by objective” goals (“MBOs”).OKRs. We believe that aview this split among goals isas an important to reflectreflection of our belief that our NEOs should be focused on businessthe overall performance goalsof the business and also on specific goals relevant to their specific positions and responsibilities, dependent in significant part on individual performance, and largely derived fromindividualized objectives that are consistent with important strategic, financial, and operating planoperational goals. We also believe this split also encourages a focus on multiple | 42 | PURPOSE
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performance metrics of performance rather than focusing on one particular metric to the exclusion of others that are also important to our results. For 2020,2021, the Committee determined that 80% of the target award would be based on business performance and 20% of the target award would be based on achievement of MBOs.OKRs. This switch to OKRs, from the previous system of “management by objective” individual performance measures, was in part in connection with the MDC Committee’s enhanced focus on pay-for-impact and simplification with respect to the executive compensation program. In contrast to MBOs, in which each NEO receives a range of individual goals and only that NEO’s performance is taken into consideration with respect to payouts, OKRs are enterprise- or business unit-wide annual objectives with individualized component goal results, or “key results,” that are consistent with our strategic, financial, and operational goals. OKRs also include quarterly targets toward each key result that can be adjusted over the course of the year and serve as milestones toward achievement and help measure progress. OKRs are developed through collaborative goal-setting and are designed to be challenging, ambitious goals with measurable results. In setting OKRs, objectives are first defined by either Ms. Selden or the applicable business unit leadership, and key results are then established along with the quarterly milestones. OKRs for business unit leaders are approved by Ms. Selden, and Ms. Selden’s OKRs are recommended by the Chairperson of the Board, in consultation with Ms. Selden, and approved by the MDC Committee. Following the completion of the fiscal year, achievement of each NEO’s OKRs is assessed either at the minimum level (which represents strong performance), at the target level (which represents excellent performance), or at the stretch level (which represents superior performance). Business Performance Measures (80% of the AIP target opportunity). The MDC Committee determined that the portion of each NEO’s 20202021 AIP award that relates to business performance would be based on achieving and surpassing (i) specified earnings per share (“EPS”) at the consolidated APEI level, the APUS business unit level and the HCN business unit level (other than for executives employed at the APUS level) and (ii) specified enrollments at APUS and HCN (other than for executive employed at the APUS level).enrollment metrics. The Committee initially selected EPS as a performance measure because of its strong alignment with shareholderstockholder value | | | 43
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TABLE OF CONTENTS creation and added enrollment upon the advice of Ms. Selden as a way to encouragefocus on the importance of growth and determined to retain EPS and enrollment growth.as the performance metrics for 2021 for the same reasons. For those executives employed at the APEI level, the AIP opportunity related to business performance was allocated 50% to APEI EPS performance, 40% to a combination of APUS EPS performance and enrollment, and 10% to a combination of HCN EPS performance and enrollment. For those executives at the APUS level, the AIP opportunity related to business performance goals was allocated 25% to APEI EPS performance and 75% to a combination of APUS EPS performance and enrollment. In selecting consolidated, APUSAPUS- and HCNHCN- specific business performance goals, the Committee’s intention was to focus executives at the APEI level both on APEI’s overall business and also the business of APUS and HCN, and to focus executives employed at the APUS level on both the business unit in which they were employed and the larger overall context of the Company. For those executives employed at the APEI level, the AIP opportunity related to business performance was allocated 50% to APEI EPS performance, 40% to a combination of APUS EPS performance and enrollments, and 10% to a combination of HCN EPS performance and enrollments. For those executives at the APUS level, the AIP opportunity related to business performance goals was allocated 25% to APEI EPS performance and 75% to a combination of APUS EPS performance and enrollments.The following table shows the business performance goals for the APEI-level executives and for the APUS-levelAPUS executives expressed as a percentage of the portion of the AIP award that relates to business performance: | | EPS Goal Weighting | Enrollment Goal Weighting | | | Company | | APUS | | HCN | | Total | APUS | | HCN | | Total | | APEI-level Executives | 50% | | 26.75% | | 6.75% | | 83.5% | 13.25% | | 3.25% | | 16.5% | | APUS-level Executives | 25% | | 50% | | – | | 75% | 25% | | – | | 25% |
| | APEI-level Executives | | | 50% | | | 26.8% | | | 6.7% | | | 83.5% | | | 13.2% | | | 3.3% | | | 16.5% | | | | APUS-level Executives | | | 25% | | | 50% | | | — | | | 75% | | | 25% | | | — | | | 25% | |
Earnings Per Share. The MDC Committee used the target EPS for consolidated financial performance, APUS financial performance, and HCN financial performance that was included in our budget when approved by the Board of Directors.Directors, with the target EPS for consolidated and HCN financial performance adjusted to reflect differences in forecasted HCN results as of January 2021 versus the budget. For 2020,2021, the Committee also specified that 50% of the target amount would be paid if earnings per share thresholds were attained that reflected 80% achievement of the target levels, which the Committee thought was a level of achievement that would still require effort for the Company to achieve. The Committee determined that it was appropriate to provide an incentive at a threshold level because it would provide an annual incentive that reflected the positive performance of the Company and the contributions of our employees and NEOs. The Committee provided that the stretch portion of the AIP related to financial performance would be payable on earnings per share that reflected 110% achievement of the target levels. This level of achievement was viewed as representing exceptional performance for which management should be rewarded. In setting the 80% and 110% levels, the Committee also considered analysis from Willis Towers Watson that reflected that achievement at these levels was neither certain at the threshold level or likely to be achieved at the stretch level. When the MDC Committee initially set the target EPS for 2021 consolidated financial performance, it determined not to take into consideration the impact of the RU acquisition, and to make updates to reflect acquisition costs at a later date. The EPS targets were initiallyalso set prior to our management teamunderwritten public offering in February 2021 and our debt financing that occurred in connection with the Board were contemplating changes toclosing of the budget. TheRU acquisition. As a result, when assessing achievement of EPS targets in January 2022, the MDC Committee determined to establish initial goals and update those goals if and when changes todisregarded the budget were made. In May 2020, the MDC approved revised EPS goals that reflected the Board-approved revised budget, and which took into account increasesincrease in planned marketing expenditures and the expected resulting business impacts, an expected reduction in interest incomeoutstanding shares as a result of changes in interest rates,the offering and higher costsearnings associated with increased student utilizationRU, and it adjusted the calculation of EPS for expenses and taxes associated with merger and acquisition and integration activities for the acquisitions of RU and GSUSA and interest payments related to the debt financing. | 43 | | 44
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TABLE OF CONTENTS of APUS’s military tuition grant.
The tabletables below showsshow the initial and updated goals for consolidated APEI EPS.| APEI EPS | | Threshold | | Target | | Stretch | | 2020 Result | | Achievement | | Initial Goal | | $1.07 | | $1.34 | | $1.47 | | $1.25 | | Stretch | | Updated Goal | | $0.65 | | $0.81 | | $0.89 |
| | Goal | | | $1.20 | | | $1.50 | | | $1.65 | | | $1.52 | | | Target + 14% of Stretch | |
| | APUS EPS | | 145% | 108% of target | | | Target + 84% of Stretch | | | | HCN EPS | | | 150% of stretch(2) | | | Target + 100% of Stretch | |
| (1)
| The specific targets for APUS and HCN earnings per share are not disclosed because they relate to amounts that are not publicly disclosed and disclosure would result in competitive harm. |
| (2)
| As a result of a nearly break-even budget, threshold andforecast, the stretch levelslevel for HCN EPS did not calculate to 80% and 110%, respectively, of the target HCN EPS. |
For 2020, stretch2021, target goals were achieved for each of the APEI and APUS EPS metric. APEI reported earnings per share, on a GAAP basis, of $1.25 per share. Earnings per share attributable to our performance at APUSmetrics, and HCN also exceeded the stretch level of performance. These results were primarily a result of revenue increases resulting from an increase in net course registrations at APUS and student enrollment at HCN.goal was received for the HCN EPS metric. As a result, of these earnings,(i) our NEOs earned 100% of the target portions of the AIP associated with APEI EPS performance and APUS performance, and (ii) Ms. Selden, Mr. Sunderland, Mr. Dyberg, and Mr. Beckett received 100% of both the target and stretch portions of the AIP associated with HCN EPS performance. In addition, our NEOs earned 14% of the stretch portion of the AIP associated with APEI EPS performance and 84% of the stretch portion of the AIP associated with APUS EPS performance. Enrollment. In addition to EPS, for 2020, upon the recommendation of Ms. Selden,2021, the MDC Committee addedused total enrollment at each of APUS and HCN as an elementelements of the AIP in order to motivate awardeesNEOs to focus on enrollment growth.enrollment. The MDC Committee set as the target enrollment number based on the number of enrollments anticipated by our budget as approved by the Board. For 2020,2021, the Committee also specified that 50% of the target amount would be paid if enrollment thresholds were attained that reflectedat 95% of the target levels, which the Committee thought was a level of achievement that would still require effort to achieve. As with EPS, the Committee determined that it was appropriate to provide an incentive at a threshold level because it would provide an annual incentive that reflected the positive performance of the Company and the contributions of our employees and NEOs. The Committee provided that the stretch portion of the AIP related to enrollmentsenrollment would be payable on enrollments that reflectedfor achievement at 103% achievement of the target levels. This level of achievement was viewed as representing exceptional performance for which management should be rewarded. | Enrollment | | Threshold | | Target | | Stretch | | 2020 Result | | Achievement | | APUS | | 310,233 | | 326,561 | | 336,358 | | 353,085 | | Stretch | | HCN | | 6,823 | | 7,182 | | 7,397 | | 7,408 | | Stretch |
| | APUS | | | 336,788 | | | 354,514 | | | 365,149 | | | 345,270 | | | 97% of Target | | | | HCN | | | 8,222 | | | 8,655 | | | 8,915 | | | 9,475 | | | Target + 100% of Stretch | |
For 2020,2021, APUS had total enrollment of 353,085345,270 and HCN had total enrollment of 7,408.9,475. As a result of these enrollments, our NEOs earned 100%74% of the target portion and 100% of the stretch portion of the AIP associated with APUS enrollment and 100% of both the target and stretch portions of the AIP associated with HCN enrollment. Management by Objective GoalsObjectives and Key Results (20% of the AIP target opportunity). MBOsOKRs are based on company-wide performanceannual objectives with individualized, component goals, or “key results” set for each NEO and are consistent with our strategic, plan. By focusing onfinancial, and operational goals. OKRs are designed to be challenging, ambitious goals consistent with measurable results. In setting OKRs, the annual objectives are first defined, the key results within those objectives are established, and the narrower quarterly targets toward each key result are then formulated.
In 2021, the Chairperson of the Board recommended, in consultation with Ms. Selden, Ms. Selden’s OKRs to the MDC Committee, which subsequently approved her OKRs. Ms. Selden approved the OKRs for | | | 45
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TABLE OF CONTENTS the other corporate-level executives, with the OKRs for Dr. Dyke being approved by the Board of Trustees of American Public University System, and with the OKRs for Dr. Smith being approved by Dr. Dyke. On a quarterly basis commencing following the completion of the second quarter, in addition to a self-assessment, Ms. Selden, with the assistance of our strategic plan, MBOs are intended to focusChief Human Resources Officer, assessed achievement against the executives on goals that will deliver long-term stockholder value. MBOs also provide both personal accountabilitymilestones and rewardsdetermined whether the next quarter’s previously established milestones remained relevant. The Committee then reviewed the updated milestones for Company performance because they are crafted such that executives are directly responsible for or contribute to their achievement. Ms. Selden following this review. We believe that MBOs helpthis structure encourages management to keep management from focusing solelyfocus on not only the current year’s financial and business results, which are covered by other parts of the AIP, because many of the MBOs reflect our view of key actions required to capture future market opportunities andbut also operational successes that will help prepare the Company for continued growth and improvement inimprovement. By focusing on goals consistent with our strategic, financial, and operational plans, OKRs are intended to focus the future. | 44 | PURPOSE
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Each NEO had six MBOsexecutives on goals that will deliver long-term stockholder value. OKRs provide personal accountability and reward for 2020, exceptCompany performance because executives are directly responsible for Dr. Dyke, who had three MBOs, reflecting that he joined us late in the year. Each NEO other than Dr. Dyke shared two common goals relatedor contribute to (i) establishingtheir achievement and refiningare assessed on an enterprise operating framework for the Company and (ii) improving the student experience.individualized basis. In addition, each NEO other than Dr. Dyke had additional MBOs focused on team-specific goals on individual goals, somethe establishment of which also shared common themes. quarterly milestones encourages NEOs to work toward objectives throughout the fiscal year, allows for better tracking of progress toward those objectives, and provides us with the ability to flexibly adjust key results as conditions warrant.
The existence of commonalities across MBOs reflectsMDC Committee set overlapping objectives for all executives to reflect that executives must work together to achieve results. For NEOs other than Dr. Dyke,shared the following objectives for 2021, each common goal was weighted 20%with corresponding, individualized component goals and each team or unique goal was weighted 15%quarterly key results: Innovation Powered by a Growth Mindset; Employee Engagement and Success; and Student Engagement and Success (APUS-level executives only). Each NEO also had an OKR related to improvement and optimization of Dr. Dyke’s goals was weighted approximately 33%. Additional information on each NEO’s MBOs can be found under “Annual Incentive Plan Payouts” below.Our 2020 MBOs were establishedservice delivery, with the opportunity to pay out minimum, target,APEI-level executives having an “Establish APEI Operating Framework” objective and stretch amounts. Achievement at the minimum level represents strong performance and would result in payout of 50% of the target amount, achievement at the target level represents superior performance and would result in payout of the target amount, and achievement at the stretch level representsAPUS-level executives having a level of excellent performance and would result in payout of the target and stretch amounts. When setting the stretch MBO goals, the MDC Committee did not believe that it was likely that an executive would achieve all of their MBOs at the stretch level.
“Business Continuity” objective. To assist in determining the levelextent to which each MBO wasOKRs were met, each NEO was required when the MBOs were set to identify how they planned to support each of their MBOs and at the end of the year to provide a self-assessment with respect to their performance. For NEOs other than Ms. Selden,performance, and Ms. Selden provided her own assessment of performance,each NEO, and theDr. Katherine Zatz, Acting President of APUS following Dr. Dyke’s departure, provided an assessment with respect to Dr. Smith. The MDC Committee affirmed her conclusions after discussions with herMs. Selden and a review of the Company’s performance and, with respect to MBOsOKRs for APUS executives, coordination with the Chair and Vice Chair of the APUS Board of Trustees. The Committee reached its conclusions with respect to Ms. Selden’s performance in a session without any executives present. For 2020,2021, the MDC Committee designed the AIP so that no payments would be made to NEOs for MBOOKR performance unless the Company’s consolidated EPS was at least at the threshold level, and that no payments would be made to NEOs for MBOOKR performance above target unless the target EPS was achieved for the applicable business unit(s). As a result of APEI, APUS, and HCN all achieved greater thanachieving at least target EPS. As a result,EPS, subject to achievement of the MBOs, theOKRs, NEOs were eligible for payments for MBOOKR performance up to the stretch level. Annual Incentive Plan Payouts The following tables show the target opportunities and payouts for each element of the AIP for each NEO, as well as total target opportunities and payouts. Further information about the MBOsOKRs for each NEO and the assessment of their performance against those MBOsOKRs is provided in footnotes to the “Opportunities and Results” tables. | 45 | | 46
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TABLE OF CONTENTS Annual Incentive Plan Opportunity and Actual Payout | | Target AIP Opportunity | Stretch AIP Opportunity | Total AIP Opportunity | Actual AIP Payout | Base
Salary | Percent of
Base Salary | | Dollar
Amount | Percent of
Base Salary | | Dollar
Amount | Percent of
Base Salary | | Dollar
Amount | Percent of
Base Salary | | Dollar
Amount | | $630,000 | 90% | | $567,000 | 45% | | $283,500 | 135% | | $850,500 | 132.3% | | $833,490 |
| | $675,000
| | | 90% | | | $607,500 | | | 45% | | | $303,750 | | | 135% | | | $911,250 | | | 99.1% | | | $668,661 | |
Opportunities and Results | Goal Category | | % | | Goal | | Target
Opportunity | | Achievement | | Payout | | Business Performance | | 80% | | | | $453,600 | | | | $680,400 | | Earnings Per Share | | | | Consolidated EPS | | $226,800 | | Stretch | | $340,200 | | | | | | APUS EPS | | $121,565 | | Stretch | | $182,347 | | | | | | HCN EPS | | $30,391 | | Stretch | | $45,587 | | | | | | | | | | | | | | Enrollment | | | | APUS Enrollment | | $59,875 | | Stretch | | $89,813 | | | | | | HCN Enrollment | | $14,969 | | Stretch | | $22,453 | | | | | | | | | | | | | | Management by Objective | | 20% | | | | $113,400 | | | | $153,090 | | Common MBOs | | | | Establish Operating Framework | | $22,680 | | Stretch(1) | | $34,020 | | | | | | Improve Student Experience | | $22,680 | | Stretch(2) | | $34,020 | | Individual MBOs | | | | Implement Marketing and Brand Transformation | | $17,010 | | Stretch(3) | | $25,515 | | | | | | Drive Operational Excellence | | $17,010 | | Target(4) | | $17,010 | | | | | | Support Inorganic Growth Strategy | | $17,010 | | Stretch(5) | | $25,515 | | | | | | Drive Enterprise Digital Transformation | | $17,010 | | Target(6) | | $17,010 | | | | | | | | | | | | | | TOTAL | | 100% | | | | $567,000 | | | | $833,490 |
| | Business Performance | | | 80% | | | | | | $486,000 | | | | | | $565,386 | | | | Earnings Per Share | | | | | | APEI EPS | | | $243,000 | | | Target + 14% of Stretch | | | $260,259 | | | | | | | | | | APUS EPS | | | $129,606 | | | Target + 84% of Stretch | | | $184,329 | | | | | | | | | | HCN EPS | | | $32,402 | | | Target + 100% of Stretch | | | $48,603 | | | | | | | | | | | | | | | | | | | | | | | Enrollment | | | | | | APUS Enrollment | | | $64,794 | | | 97% of Target | | | $47,899 | | | | | | | | | | HCN Enrollment | | | $16,198 | | | Target + 100% of Stretch | | | $24,297 | | | | | | | | | | | | | | | | | | | | | | | Objectives and Key Results | | | 20% | | | | | | $121,500 | | | Above Threshold
(85% of Target)(1) | | | $103,275 | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | 100% | | | | | | $607,500 | | | | | | $668,661 | |
| (1) | Reflects Ms. Selden’s support for formulation of a 2020 version of the APEI vision, mission, purpose, and values by Company leadership, implementation of the shared services model at HCN, and adoption of marketing dashboards for the enterprise, APUS, and HCN. |
| (2) | Reflects efforts focused on improving the student experience at APUS and HCN, including defining success metrics and measurements to identify areas of continuous improvement. |
| (3) | Primarily reflects our investment in and execution of marketing efforts, including an APU brand strategy, a brand-building campaign, and other marketing strategy and technology initiatives. |
| (4)
| Reflects the additionMDC Committee’s determination of multiple additional executives in 2020, progress in drivingoverall achievement between threshold and target. Ms. Selden met all quarterly component targets toward her Innovation Powered by a culture of growth, completion of an assessment of whether to divest or build on assets (including the sale of two properties), and Ms. Selden’s adherence to and maintenance of our values, as well as the postponement of work on an MBOGrowth Mindset objective, including targets related to the corporate office dueRU and GSUSA acquisitions and equity and debt financing, and met most quarterly targets toward her Establish APEI Operating Framework and Employee Engagement and Success objectives, including targets related to the COVID-19 pandemic. |
| (5) | Reflects the proposed acquisition of Rasmussen University and progress in other areas around planning for inorganic growth, including partnerships and possible additional future acquisitions. |
| (6) | Reflects completion of our learningcybersecurity governance, customer relationship management system migration, implementation, of an analytical modelimproving data analytics, and hiring key executive talent, but did not meet certain quarterly targets, including related to measure student satisfaction,employee engagement, performance management process, and progress against cybersecuritya new vision and cloud computing migration goals.mission statement for APEI. |
| 46 | | 47
| | | PURPOSE
MADE POSSIBLE |
TABLE OF CONTENTS Mr. Sunderland Dr. Dyke
Annual Incentive Plan Opportunity and Actual Payout | | Target AIP Opportunity | Stretch AIP Opportunity | Total AIP Opportunity | Actual AIP Payout | Base
Salary | Percent of
Base Salary | | Dollar
Amount | Percent of
Base Salary | | Dollar
Amount | Percent of
Base Salary | | Dollar
Amount | Percent of
Base Salary | | Dollar
Amount | | $175,500 | 55% | | $96,525 | 30% | | $52,650 | 85% | | $149,175 | 81.0% | | $142,156 |
| | $436,220
| | | 50% | | | $218,110 | | | 30% | | | $130,866 | | | 80% | | | $348,976 | | | 63.2% | | | $275,773 | |
Opportunities and Results | Goal Category | | % | | Goal | | Target
Opportunity | | Achievement | | Payout | | Business Performance | | 80% | | | | $77,220 | | | | $119,340 | | Earnings Per Share | | | | Consolidated EPS | | $19,305 | | Stretch | | $29,835 | | | | | | APUS EPS | | $38,610 | | Stretch | | $59,670 | | | | | | | | | | | | | | Enrollment | | | | APUS Enrollment | | $19,305 | | Stretch | | $29,835 | | | | | | | | | | | | | | Management by Objective | | 20% | | | | $19,305 | | | | $22,816 | | | | | | Complete Leadership Transition | | $6,436 | | Stretch(1) | | $9,947 | | | | | | Manage Government Relations | | $6,434 | | Target(2) | | $6,434 | | | | | | Progress Strategic Plan | | $6,434 | | Target(3) | | $6,434 | | | | | | | | | | | | | | TOTAL | | 100% | | | | $96,525 | | | | $142,156 |
| | Business Performance | | | 80% | | | | | | $174,488 | | | | | | $209,904 | | | | Earnings Per Share | | | | | | APEI EPS | | | $87,244 | | | Target + 14% of Stretch | | | $94,680 | | | | | | | | | | APUS EPS | | | $46,533 | | | Target + 84% of Stretch | | | $70,109 | | | | | | | | | | HCN EPS | | | $11,633 | | | Target + 100% of Stretch | | | $18,613 | | | | | | | | | | | | | | | | | | | | | | | Enrollment | | | | | | APUS Enrollment | | | $23,263 | | | 97% of Target | | | $17,197 | | | | | | | | | | HCN Enrollment | | | $5,816 | | | Target + 100% of Stretch | | | $9,305 | | | | | | | | | | | | | | | | | | | | | | | Objectives and Key Results | | | 20% | | | | | | $43,622 | | | Stretch (151% of Target)(1) | | | $65,869 | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | 100% | | | | | | $218,110 | | | | | | $275,773(2) | |
(1)
| (1)Reflects the MDC Committee’s determination of overall achievement at stretch as a result of successful achievement of almost all key results, including key results related to RU and GSUSA acquisitions and integration planning, enhancement of corporate tax capabilities, and adherence to the Code of Conduct and high ethical standards. Only three key results, including two related to the Employee Engagement and Success objective, were not met in full. |
(2)
| Primarily reflects a successful completionUpon the recommendation of Ms. Selden and approval of the transition from the previous PresidentMDC Committee, Mr. Sunderland and several other company employees also received special one-time cash awards of APUS, including Dr. Dyke’s efforts to improve the general tenor of the management environment and improve relationships and find synergies between APUS and the parent company. |
| (2) | Reflects that there were no significant negative regulatory or legislative developments during Dr. Dyke’s tenure$10,000 in 2020, but also that there had been no positive reforms to the so-called “90/10 Rule” that prohibits for-profit institutions from deriving more than 90%recognition of their annual revenue from Title IV programs.work on key company initiatives in 2021. Mr. Sunderland’s award was granted for his work on our capital structure and credit facilities, and for his performance in connection with the RU acquisition. This amount does not include that award. |
| (3) | Reflects that Dr. Dyke had begun the process and made significant progress in drafting a strategic plan for APUS, but had not completed the plan. | 48
| | | PURPOSE
MADE POSSIBLE |
| 47 | PURPOSE
MADE POSSIBLE |
TABLE OF CONTENTS Mr. Dyberg Dr. Boston
Annual Incentive Plan Opportunity and Actual Payout | | Target AIP Opportunity | Stretch AIP Opportunity | Total AIP Opportunity | Actual AIP Payout | Base
Salary | Percent of
Base Salary | | Dollar
Amount | Percent of
Base Salary | | Dollar
Amount | Percent of
Base Salary | | Dollar
Amount | Percent of
Base Salary | | Dollar
Amount | | $305,000 | 90% | | $274,500 | 45% | | $137,250 | 135% | | $411,750 | 131.4% | | $400,770 |
| | $371,423
| | | 50% | | | $185,711 | | | 30% | | | $111,427 | | | 80% | | | $297,138 | | | 56.6% | | | $210,369 | |
Opportunities and Results | Goal Category | | % | | Goal | | Target
Opportunity | | Achievement | | Payout | | Business Performance | | 80% | | | | $219,600 | | | | $329,400 | | Earnings Per Share | | | | Consolidated EPS | | $54,900 | | Stretch | | $82,350 | | | | | | APUS EPS | | $109,800 | | Stretch | | $164,700 | | | | | | | | | | | | | | Enrollment | | | | APUS Enrollment | | $54,900 | | Stretch | | $82,350 | | | | | | | | | | | | | | Management by Objective | | 20% | | | | $54,900 | | | | $71,370 | | Common MBOs | | | | Establish Operating Framework | | $10,980 | | Target(1) | | $10,980 | | | | | | Improve Student Experience | | $10,980 | | Target(2) | | $10,980 | | Team MBOs | | | | Plan/Execute Business Continuity | | $8,235 | | Stretch(3) | | $12,353 | | | | | | Enterprise Risk Assessment | | $8,235 | | Stretch(4) | | $12,353 | | Individual MBOs | | | | Drive APUS Operational Excellence | | $8,235 | | Stretch(5) | | $12,353 | | | | | | Support APUS Strategic Initiatives | | $8,235 | | Stretch(6) | | $12,353 | | | | | | | | | | | | | | TOTAL | | 100% | | | | $274,500 | | | | $400,770 |
| | Business Performance | | | 80% | | | | | | $148,569 | | | | | | $178,724 | | | | Earnings Per Share | | | | | | APEI EPS | | | $74,285 | | | Target + 14% of Stretch | | | $80,616 | | | | | | | | | | APUS EPS | | | $39,620 | | | Target + 84% of Stretch | | | $59,695 | | | | | | | | | | HCN EPS | | | $9,905 | | | Target + 100% of Stretch | | | $15,848 | | | | | | | | | | | | | | | | | | | | | | | Enrollment | | | | | | APUS Enrollment | | | $19,807 | | | 97% of Target | | | $14,642 | | | | | | | | | | HCN Enrollment | | | $4,952 | | | Target + 100% of Stretch | | | $7,923 | | | | | | | | | | | | | | | | | | | | | | | Objectives and Key Results | | | 20% | | | | | | $37,142 | | | Above Threshold
(85.2% of Target)(1) | | | $31,645 | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | 100% | | | | | | $185,711 | | | | | | $210,369 | |
| (1)
| Reflects the developmentMDC Committee’s determination of a business scorecard for APUS, including a design map for key metrics necessary for a reviewoverall achievement at between the threshold and target levels due to only partial achievement of the APUSEmployee Engagement and Success objective and certain key results related to IT transformation, business progressing through several iterationscontinuity and the refinementdata strategy. Mr. Dyberg accomplished key results related to integration of metrics.RU, including IT integration, and web modernization, cloud computing, and cybersecurity initiatives. |
| (2) | Reflects the establishment of student satisfaction metrics and a student satisfaction baseline, with resourcing for the initiative ongoing. | 49
| | | PURPOSE
MADE POSSIBLE |
| (3) | Reflects a rapid and successful transition to remote work and remote operations during the COVID-19 pandemic, with services meeting or exceeding established service levels. |
| (4) | Reflects the update of risks after thorough review, reporting of risks to the APUS Board of Trustees and APEI Board of Directors, and implementation of organizational improvements to the enterprise risk assessment. |
| (5) | Reflects the evaluation and implementation of artificial intelligence technology and a contract for a robotic process automation application, improvements to corporate communications, and engagement of a consulting firm to evaluate faculty workload. |
| (6) | Reflects execution of a plan to increase tuition assistance graduate enrollments, the implementation of tuition adjustment, Dr. Boston’s assistance in the search for his successor as President of APUS, and selection of a vendor to support credentialing. |
| 48 | PURPOSE
MADE POSSIBLE |
TABLE OF CONTENTS Annual Incentive Plan Opportunity and Actual Payout | | Target AIP Opportunity | Stretch AIP Opportunity | Total AIP Opportunity | Actual AIP Payout | Base
Salary | Percent of
Base Salary | | Dollar
Amount | Percent of
Base Salary | | Dollar
Amount | Percent of
Base Salary | | Dollar
Amount | Percent of
Base Salary | | Dollar
Amount | | $427,667 | 50% | | $213,834 | 30% | | $128,300 | 80% | | $342,134 | 79.1% | | $338,285 |
| | $310,944
| | | 50% | | | $155,472 | | | 20% | | | $62,189 | | | 70% | | | $217,661 | | | 56.9% | | | $177,080 | |
Opportunities and Results | Goal Category | | % | | Goal | | Target
Opportunity | | Achievement | | Payout | | Business Performance | | 80% | | | | $171,067 | | | | $273,707 | | Earnings Per Share | | | | Consolidated EPS | | $85,533 | | Stretch | | $136,853 | | | | | | APUS EPS | | $45,846 | | Stretch | | $73,353 | | | | | | HCN EPS | | $11,461 | | Stretch | | $18,338 | | | | | | | | | | | | | | Enrollment | | | | APUS Enrollment | | $22,581 | | Stretch | | $36,129 | | | | | | HCN Enrollment | | $5,645 | | Stretch | | $9,032 | | | | | | | | | | | | | | Management by Objective | | 20% | | | | $42,767 | | | | $64,578 | | Common MBOs | | | | Establish Operating Framework | | $8,553 | | Stretch(1) | | $13,685 | | | | | | Improve Student Experience | | $8,553 | | Stretch(2) | | $13,685 | | Team MBOs | | | | Progress Financial Systems | | $6,415 | | Stretch(3) | | $10,264 | | | | | | Plan/Execute Business Continuity | | $6,415 | | Stretch(4) | | $10,264 | | Individual MBOs | | | | Drive Operational Excellence | | $6,415 | | Target(5) | | $6,415 | | | | | | Support Inorganic Growth Strategy | | $6,415 | | Stretch(6) | | $10,264 | | | | | | | | | | | | | | TOTAL | | 100% | | | | $213,834 | | | | $338,285 |
| | Business Performance | | | 80% | | | | | | $124,378 | | | | | | $139,766 | | | | Earnings Per Share | | | | | | APEI EPS | | | $62,189 | | | Target + 14% of Stretch | | | $65,722 | | | | | | | | | | APUS EPS | | | $33,169 | | | Target + 84% of Stretch | | | $44,373 | | | | | | | | | | HCN EPS | | | $8,293 | | | Target + 100% of Stretch | | | $11,609 | | | | | | | | | | | | | | | | | | | | | | | Enrollment | | | | | | APUS Enrollment | | | $16,582 | | | 97% of Target | | | $12,258 | | | | | | | | | | HCN Enrollment | | | $4,146 | | | Target + 100% of Stretch | | | $5,804 | | | | | | | | | | | | | | | | | | | | | | | Objectives and Key Results | | | 20% | | | | | | $31,094 | | | Above Target
(120% of Target)(1) | | | $37,314 | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | 100% | | | | | | $155,472 | | | | | | $177,080 | |
| (1)
| Reflects the operationalizationMDC Committee’s determination of line of business scorecards and results, formulation of the 2020 APEI vision, mission, purpose, and values, deliveryachievement at stretch as a result of a five-year operating planhigh level of achievement of most key results, including results related to retention of top talent and implementation of a shared services model at HCN. |
| (2) | Reflects efforts focused on improvinglow turnover in the student experience at APUS and HCN, including defining success metrics and measurementslegal department, driving actions to identify areas of continuous improvement. |
| (3) | Primarily reflects upgrades to specified enterprise resource management systems. |
| (4) | Reflectsimprove employee engagement, development of a business continuity plan,employee policies, diving the executionlegal department talent review process, integration efforts involving RU, and enterprise risk management and compliance, and achievement of a transitionone key result related to remote work during the COVID-19 pandemic, and operating in a fully remote environment within established service levels and deadlines.enterprise risk management at target. |
| (5) | Reflects Mr. Sunderland’s continued focus on building and expanding the Company’s leadership capability, process improvement, and transforming our culture. | 50
| | | PURPOSE
MADE POSSIBLE |
| (6) | Reflects Mr. Sunderland’s involvement in the proposed Rasmussen acquisition and his efforts in other areas around inorganic growth, including partnerships. |
| 49 | PURPOSE
MADE POSSIBLE |
TABLE OF CONTENTS Dr. Smith Mr. Dyberg
Annual Incentive Plan Opportunity and Actual Payout | | Target AIP Opportunity | Stretch AIP Opportunity | Total AIP Opportunity | Actual AIP Payout | Base
Salary | Percent of
Base Salary | | Dollar
Amount | Percent of
Base Salary | | Dollar
Amount | Percent of
Base Salary | | Dollar
Amount | Percent of
Base Salary | | Dollar
Amount | | $364,140 | 50% | | $182,070 | 30% | | $109,242 | 80% | | $291,312 | 79.1% | | $288,035 |
| | $313,056
| | | 50% | | | $156,528 | | | 20% | | | $62,611 | | | 70% | | | $219,139 | | | 56.7% | | | $177,554 | |
Opportunities and Results | Goal Category | | % | | Goal | | Target
Opportunity | | Achievement | | Payout | | Business Performance | | 80% | | | | $145,656 | | | | $233,050 | | Earnings Per Share | | | | Consolidated EPS | | $72,828 | | Stretch | | $116,525 | | | | | | APUS EPS | | $39,036 | | Stretch | | $62,457 | | | | | | HCN EPS | | $9,759 | | Stretch | | $15,614 | | | | | | | | | | | | | | Enrollment | | | | APUS Enrollment | | $19,227 | | Stretch | | $30,763 | | | | | | HCN Enrollment | | $4,807 | | Stretch | | $7,691 | | | | | | | | | | | | | | Management by Objective | | 20% | | | | $36,414 | | | | $54,985 | | Common MBOs | | | | Establish Operating Framework | | $7,283 | | Stretch(1) | | $11,652 | | | | | | Improve Student Experience | | $7,283 | | Stretch(2) | | $11,652 | | Team MBO | | | | Plan/Execute Business Continuity | | $5,462 | | Stretch(3) | | $8,739 | | Individual MBOs | | | | Implement Marketing/Brand Transformation | | $5,462 | | Stretch(4) | | $8,739 | | | | | | Drive Operational Excellence | | $5,462 | | Target(5) | | $5,462 | | | | | | Drive Enterprise Digital Transformation | | $5,462 | | Stretch(6) | | $8,739 | | | | | | | | | | | | | | TOTAL | | 100% | | | | $182,070 | | | | $288,035 |
| | Business Performance | | | 80% | | | | | | $125,223 | | | | | | $139,987 | | | | Earnings Per Share | | | | | | APEI EPS | | | $31,306 | | | Target + 14% of Stretch | | | $33,084 | | | | | | | | | | APUS EPS | | | $62,611 | | | Target + 84% of Stretch | | | $83,760 | | | | | | | | | | | | | | | | | | | | | | | Enrollment | | | | | | APUS Enrollment | | | $31,306 | | | 97% of Target | | | $23,143 | | | | | | | | | | | | | | | | | | | | | | | Objectives and Key Results | | | 20% | | | | | | $31,306 | | | Above Target
(120% of Target)(1) | | | $37,567 | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | 100% | | | | | | $156,528 | | | | | | $177,554 | |
| (1)
| Reflects the operationalizationMDC Committee’s determination of lineoverall achievement at above target level as a result of business scorecards andtarget achievement of most key results, formulationincluding results related to migration of the 2020 APEI vision, mission, purpose, and values, delivery of a five-year operating plan and the information technology group’s leadership role in implementation of a shared services model at HCN. |
| (2) | Reflects efforts focused on improving the student experience at APUS and HCN, including defining success metrics and measurementssyllabi to identify areas of continuous improvement. |
| (3) | Primarily reflects helping the organization switch to fully remote work while increasing IT productivity, as well as creation of a cybersecurity roadmap and the conduct of a cyber incident exercise. |
| (4) | Primarily reflects completion of a website modernization project. |
| (5) | Reflects progress in cloud computing initiatives and Mr. Dyberg taking the lead in beginning the development of an enterprise data strategy. |
| (6) | Reflects the level of progress made withour new learning management system, cloud computing,delivery on a pilot learning program, use of predictive analytics, target and cybersecurity initiatives.stretch achievement of goals related to reaffirmation of APUS’ accreditation, stretch achievement of a goal related to graduate student advising/mentoring, and threshold achievement of goals related to the Employee Engagement and Success objective. |
| 50 | | 51
| | | PURPOSE
MADE POSSIBLE |
TABLE OF CONTENTS Dr. Dyke Mr. Beckett
Annual Incentive Plan Opportunity and Actual Payout | | Target AIP Opportunity | Stretch AIP Opportunity | Total AIP Opportunity | Actual AIP Payout | Base
Salary | Percent of
Base Salary | | Dollar
Amount | Percent of
Base Salary | | Dollar
Amount | Percent of
Base Salary | | Dollar
Amount | Percent of
Base Salary | | Dollar
Amount | | $298,985 | 50% | | $149,493 | 20% | | $59,797 | 70% | | $209,290 | 70% | | $209,290 |
| | $382,192
| | | 55% | | | $210,205 | | | 30% | | | $114,658 | | | 85% | | | $324,863 | | | 60.9% | | | $232,821 | |
Opportunities and Results | Goal Category | | % | | Goal | | Target
Opportunity | | Achievement | | Payout | | Business Performance | | 80% | | | | $119,594 | | | | $167,432 | | Earnings Per Share | | | | Consolidated EPS | | $59,797 | | Stretch | | $83,716 | | | | | | APUS EPS | | $32,051 | | Stretch | | $44,872 | | | | | | HCN EPS | | $8,012 | | Stretch | | $11,218 | | | | | | | | | | | | | | Enrollment | | | | APUS Enrollment | | $15,786 | | Stretch | | $22,101 | | | | | | HCN Enrollment | | $3,947 | | Stretch | | $5,525 | | | | | | | | | | | | | | Management by Objective | | 20% | | | | $29,899 | | | | $41,858 | | Common MBOs | | | | Establish Operating Framework | | $5,980 | | Stretch(1) | | $8,372 | | | | | | Improve Student Experience | | $5,980 | | Stretch(2) | | $8,372 | | Team MBOs | | | | Enterprise Risk Assessment | | $4,485 | | Stretch(3) | | $6,279 | | | | | | Drive Compliance and Ethical Excellence | | $4,485 | | Stretch(4) | | $6,279 | | Individual MBOs | | | | Drive Operational Excellence | | $4,485 | | Stretch(5) | | $6,279 | | | | | | Support Inorganic Growth Strategy | | $4,485 | | Stretch(6) | | $6,279 | | | | | | | | | | | | | | TOTAL | | 100% | | | | $149,493 | | | | $209,290 |
| | Business Performance | | | 80% | | | | | | $168,164 | | | | | | $199,188 | | | | Earnings Per Share | | | | | | APEI EPS | | | $42,041 | | | Target + 14% of Stretch | | | $45,298 | | | | | | | | | | APUS EPS | | | $84,082 | | | Target + 84% of Stretch | | | $122,811 | | | | | | | | | | | | | | | | | | | | | | | Enrollment | | | | | | APUS Enrollment | | | $42,041 | | | 97% of Target | | | $31,079 | | | | | | | | | | | | | | | | | | | | | | | Objectives and Key Results | | | 20% | | | | | | $42,041 | | | Threshold (80% of Target)(2) | | | $33,633 | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | 100% | | | | | | $210,205 | | | | | | $232,821 | |
| (1)
| Reflects Mr. Beckett’s supportDr. Dyke’s base salary of establishing the initial phase of the shared services model at HCN, including by overseeing shared services agreement drafting and supporting development of service level agreements, and by helping to build the 2020 version of our vision, mission, purpose, and values.$450,000 prorated from January 1, 2021 through his departure on November 4, 2021. |
| (2) | Reflects efforts focused on improving the student experience at APUS and HCN, including defining success metrics and measurements to identify areas of continuous improvement. |
| (3) | Reflects Mr. Beckett’s oversight of and the completion of our enterprise risk assessment and risk mitigation review process, including the implementation of new and updated risks, and implementation of new risk mitigation and risk review processes. |
| (4) | Primarily reflects legal department support for development of the APUS business continuity plan and leave, return to work and other policies related to the COVID-19 pandemic, as well as service in support of cybersecurity efforts and the development and implementation of a California Consumer Privacy Act compliance plan. |
| (5)
| Reflects the adoptionMDC Committee’s determination of updatesoverall achievement at a threshold level as a result of incomplete achievement of or not meeting key results related to the Codecustomer relationship management system implementation, enrollment, talent management, and strategic planning for APUS, and accomplishing key results related to reaffirmation of Business Conduct and Ethics and the APUS Board of Trustees Manual, Mr. Beckett’s maintenance of high ethical standards, and engagement of low cost legal resources.APUS’ accreditation. |
| (6) | Reflects Mr. Beckett’s involvement in the proposed acquisition of Rasmussen, including drafting of documentation and oversight of legal diligence, and other potential transactions. |
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Equity Incentives We believe that a significant portion of our NEOs’ total compensation should be in the form of long-term equity incentive awards in order to align the priorities of the NEOs with the interests of our stockholders. To further emphasize performance and ensure management’s objectives are aligned with those of our stockholders, the 20202021 annual equity awards for our continuing NEOs were split 50% as RSUs and 50% as PSUs. Consistent with historical practice, both the RSUs and PSUs generally vest in three equal installments on the first three anniversaries of the grant date, subject to achievement of performance metrics for the PSUs. The size of the annual equity awards for each continuing NEO was expressed as a percentage of base salary. In determining the appropriate percentage and resulting annual equity incentive grants for our NEOs, the MDC Committee reviewed the comparative survey data provided by Willis Towers Watson. The percentages and resulting sizes for the equity incentive awards were discussed at the same time the Committee met to set the other elements of compensation so that all elements of compensation were set taking into account the total compensation package. The Committee determined to generally make awards so that total target compensation for our executives generally did not exceed amounts that would be considered competitive with the 50th percentile of the survey data, with exceptions for certain executives based on their roles and competitive and other factors. In setting the percentages, the MDC Committee also continued to consider equitable treatment among executives but recognized that the market for competitive talent varies among executives and that it is appropriate for equity awards to vary among executives. In 2020, Mr. Sunderland, Mr. Dyberg, and Mr. Beckett each also received an additional one-time PSU with the same terms as the annual PSUs. In assessing whether to make these awards, the MDC Committee considered that the 2019 payouts to these executives were limited notwithstanding the strong financial performance at APUS in 2019 and the important contributions to those results from these leaders. The Committee also considered that the Company was in the midst of a leadership transition, with our new CEO having recently joined the Company and an expected transition in the role of President of APUS during 2020. The Committee concluded it was appropriate for retention purposes and in recognition of the contributions from these leaders to grant them additional equity awards and determined to use PSU grants, rather than cash awards or awards that would vest solely based on time.
For 2020,2021, the following chart shows the value of the equity awards for each NEO shown expressed as a percentage of base salary, and also shows the resulting valuesnumbers of the RSUs and PSUs at the target level of performance. Amounts are not shown for Dr. Boston,Dyke, whose 20202021 equity awards were forfeited upon retirementhis departure in accordance with his employment agreement, and Dr. Dyke, whose 2020 equity awards are described below under “Dr. Dyke’s Equity Awards.”agreement. | | | 52
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TABLE OF CONTENTS | | | | | Annual Awards | | One-Time Awards | | NEO | | Base Salary
($) | | Value (%
of Salary) | | RSUs (#) | | PSUs (#) | | Value (%
of Salary) | | PSUs (#) | | Ms. Selden | | 630,000 | | 250 | | 29,616 | | 29,616 | | — | | — | | Mr. Sunderland | | 427,667 | | 115 | | 9,248 | | 9,248 | | 15 | | 2,413 | | Mr. Dyberg | | 364,140 | | 90 | | 6,163 | | 6,163 | | 15 | | 2,054 | | Mr. Beckett | | 298,985 | | 60 | | 3,373 | | 3,373 | | 15 | | 1,687 |
| | Ms. Selden | | | 675,000 | | | 250 | | | 26,600 | | | 26,600 | | | | Mr. Sunderland | | | 436,220 | | | 115 | | | 7,908 | | | 7,908 | | | | Mr. Dyberg | | | 371,423 | | | 90 | | | 5,269 | | | 5,269 | | | | Mr. Beckett | | | 310,944 | | | 65 | | | 3,186 | | | 3,186 | | | | Dr. Smith | | | 313,056 | | | 55 | | | 2,714 | | | 2,714 | |
After determining the dollar value of equity incentive awards, consistent with its historical practice, the Committee calculated the number of shares to be subject to the awards using a 60-day trailing average for our stock price as of a date shortly before the Committee met to approve the grants. We believe that doing so removes some of the variability that can impact awards if the Committee were to use the stock price on only one date. | 52 | PURPOSE
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In order to reflect the importance of overall financial performance and also the importance of growth for the Company, for 2020,2021, the Committee determined to continue to use revenue and adjusted EBITDA and revenue as the performance metrics for the PSUs, weighted at 75%25% and 25%75%, respectively. This weighting reflected the concern that a greater focus on revenue could provide an incentive for our executives to seek to generate additional revenue even if it was at the expense of our overall performance or the quality of students attracted to our institutions. Revenue is defined as the Company’s GAAP revenue as reported. Adjusted EBITDA, which is a non-GAAP measure, iswas defined for the purposes of the PSU awards as income from operations before income taxes minusplus interest incomeexpense plus depreciation and amortization plus stock-based compensation expense plus loss on disposal of assets. Revenue is defined asassets plus expenses associated with merger and acquisition and integration activities. When the Company’s GAAP revenue as reported. MDC Committee initially set the target adjusted EBITDA for 2021, it determined not to take into consideration the impact of the RU acquisition, and to make updates to reflect acquisition costs at a later date. As a result, in calculating whether the adjusted EBITDA target had been met, the MDC Committee made adjustments for expenses associated with merger and acquisition and integration activities for the acquisitions of RU and GSUSA. The MDC Committee set targets for the PSUs and RSUs in February 2020 in the midst of ongoing discussions regarding potential changes toJanuary 2021, taking into account the budget. Later in the year, the Board approved adjustments to the budget to take into account increases in planned marketing expenditures and the expected resulting business impacts, an expected reduction in interest income as a result of changes in interest rates, and higher costs associated with increased student utilization of APUS’s military tuition grant. As a result, when the MDC Committee met in March 2021 to review and certify 2020 performance to determine PSU payouts, the Committee assessed performance as if the targets to measure performance had been adjusted as indicated below to reflect the prior budgetary changes. This had the effect of increasing the revenue goals and decreasing the Adjusted EBITDA goals.The threshold level for the PSUs was established at 50% of the target level and the maximum level was set at 200% of the target level in 2020,2021, consistent with 20192020 levels. These numbers reflected the MDC Committee’s view of appropriate performance. For levels of revenue and adjusted EBITDA and revenue between the applicable dollar amounts set forth below, the percentage of the award earned would be prorated accordingly. | | | | | | Adjusted EBITDA (75% of Target Number of PSUs) | | | Revenue (25% of Target Number of PSUs) | | | | Earnout
(% of
Target) | | | % of Budget
Amount | | Initial Goal | | Adjusted
Level | | | % of Budget
Amount | | Initial Goal | | Adjusted
Level | | Maximum | | 200 | | | 115 | | $55.4 million | | $42.1 million | | | 110 | | $314.8 million | | $332.1 million | | Target | | 100 | | | 100 | | $48.2 million | | $36.6 million | | | 100 | | $299.8 million | | $301.9 million | | Threshold | | 50 | | | 85 | | $41.0 million | | $31.1 million | | | 90 | | $269.8 million | | $271.7 million | | Actual Result | | | | | | | | | $45.7 million | | | | | | | $321.8 million |
| | Maximum | | | 200 | | | 110 | | | $370.2 million | | | 115 | | | $58.8 million | | | | Target | | | 100 | | | 100 | | | $336.6 million | | | 100 | | | $51.1 million | | | | Threshold | | | 50 | | | 90 | | | $302.9 million | | | 85 | | | $43.4 million | | | | Actual Result | | | | | | | | | $329.4 million | | | | | | $54.8 million | |
Our 20202021 revenue was $329.4 million, or approximately 97.9% of the target goal, and adjusted EBITDA of $45.7 million exceeded the maximum level, and revenue was $321.8$54.8 million, or approximately 107%107.2% of the target goal, resulting in approximately 191.5%128.5% of the target PSU awards being earned. The award earned is further subject to time-based vesting, in order to continue to provide a retention element and to encourage executives to focus on the long-term performance of the Company. | | | 53
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TABLE OF CONTENTS Dr. Dyke’s EquityCEO Awards. In connection with hiring Dr. Dyke, Upon the recommendation of Ms. Selden and approval of the MDC Committee, negotiated initial equityMr. Sunderland and several other company employees received special one-time cash awards of $10,000 in recognition of their work on key company initiatives in 2021. Mr. Sunderland’s award was granted for his work on our capital structure and credit facilities, and for his performance in connection with Dr. Dyke with a valuethe RU acquisition. 2021 Say-on-Pay Vote We consider the views of approximately $600,000, of which $420,000 was comprised of RSUs and $180,000 of which was comprised of stock options. In determining to make the equity awards to Dr. Dyke and the types of awards to make, we took into account what was required to attract him to the Company, the advice of Willis Towers Watson on market practice, the importance of aligning his interests with our stockholders in designing our executive compensation program and the desire for stock appreciation over the long-term. Consistent withwelcome feedback on our customary practice, the awards to Dr. Dyke vest over three-years and were calculated using a trailing 60-day averageexecutive pay practices. At our 2021 Annual Meeting, 85% of the stock price, rathervotes cast by our stockholders on our annual advisory vote on the compensation of our NEOs were in favor of this proposal, which is less than the grant date stock price.robust 96% approval the prior year. We believe that the 2021 result reflected an “against” vote by one greater than 5% stockholder that did not respond to management’s request to discuss its voting decision. We believe that the level of support received at our 2021 Annual Meeting for this proposal affirms our approach to executive compensation, but we continued to strive to expand our ongoing stockholder engagement program during 2021 to elicit further feedback and perspectives on the issues important to our stockholders, including executive compensation. Because the annual advisory vote occurred after our compensation was set for 2021, the results for the 2021 vote were not available to be considered prior to establishing our 2021 compensation program, but the MDC Committee considered and discussed the results prior to establishing our compensation program for 2022. See page 83 for this year’s say-on-pay proposal. | 53 OTHER COMPENSATION POLICIES AND PRACTICES | PURPOSE
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OTHER COMPENSATION POLICIES AND PRACTICES
Employment Agreements and Post-Termination Compensation We have entered into employment agreements with Ms. Selden, Mr. Dyke, Mr. Sunderland, and Mr. Dyberg. These agreements provide the executive with severance payments upon certain terminations, including termination without cause, termination by the executive for good reason, or upon certain triggering events following a change of control. The agreements provide for certain payments in connection with a termination of the executives’ employment within 60 days prior to or 365 days following a change of control of the Company, in the case of Ms. Selden within 12 months following a change of control, in the case of Dr. Dyke, or within 180 days with respect to the other two NEOs. We believe that these agreements were necessary to attract some of our NEOs and help to retain these NEOs due to the prevalence of similar arrangements in the market in which we compete for executives. In 2014, the MDC Committee (then the Compensation Committee) authorized negotiating an employment agreement with Mr. Sunderland on substantially the same terms as the agreements with our other then-serving NEOs. The Committee determined it was appropriate to have an employment agreement with Mr. Sunderland in an effort to retain Mr. Sunderland, treat him similarly to other executives, and to ensure his agreement would be subject to post-employment non-competition and non-solicitation terms with which he otherwise would not have had to comply. In 2018, the Committee determined in hiring Mr. Dyberg that it was appropriate and necessary to enter into the employment agreement with Mr. Dyberg. In reaching this conclusion, the MDC Committee took into account that as an Executive Vice President, Mr. Dyberg was similarly situated to Mr. Sunderland, that we would gain benefits from the agreement, and the negotiations to attract Mr. Dyberg to the Company. In 2019, we entered into an employment agreement with Ms. Selden in connection with Ms. Selden’s appointment as our President and Chief Executive Officer. The MDC Committee determined that entering into the employment agreement with Ms. Selden was appropriate in order to attract her to the Company and provide her with employment on terms similar to our other executives and in line with what we concluded were appropriate terms for a Chief Executive Officer for a company of our size and in our industry and commensurate with her responsibilities. In September 2020, Ms. Selden’s employment agreement was amended to extend certain relocation benefits. In June 2020, we entered into an employment agreement with Dr. Dyke, effective August 12, 2020, in connection with Dr. Dyke’s appointment as President of APUS. The MDC Committee determined that it was appropriate to enter into an employment agreement in order to attract him to the Company and provide him with employment on terms similar to our other executives.In 2017, at the recommendation of the MDC Committee, our Board adopted the American Public Education, Inc. Executive Severance Plan (the “Executive Severance Plan”).Plan. The MDC Committee recommended the adoption of the Executive Severance Plan in order to provide severance benefits to Senior Vice Presidents of the Company
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TABLE OF CONTENTS that are designated by the MDC Committee without having to adopt individual employment or severance agreements. The MDC Committee concluded that a severance arrangement for the designated participants was appropriate in order to help retain these executives. In concluding it was appropriate to adopt the Executive Severance Plan, the MDC Committee considered practices in industry generally and among our peer group, as well as the advice of Willis Towers Watson. The MDC Committee also considered that the Executive Severance Plan requires, as a condition to receiving benefits, that each participant must comply with covenants not to compete with us and our affiliates and not to solicit our employees or those of our affiliates, in each case during the term of employment and for a period of 12 months thereafter. In addition, in order to receiving severance benefits, a participant must agree to release all claims against us and our affiliates and their respective officers and directors. For additional information regarding these agreements, including a quantification of benefits that would be received by these officers had termination occurred on December 31, 20202021, and the benefits that Dr. BostonDyke received in connection with his retirement on August 12, 2020,departure effective November 4, 2021, see the section titled “Potential Payments upon Termination or Change in Control” below. | 54 | PURPOSE
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Non-Qualified Deferred Compensation We maintain a non-qualified deferred compensation plan in which our executive officers are permitted to participate. The Internal Revenue Code limits the amountamounts of matching contributions that we can contribute to our traditional 401(k) plan for the benefit of our executives. The deferred compensation plan provides that we will make an annual matching contribution to plan participants in an amount equal to the difference between the matching contribution that the participant would have received under our 401(k) plan if those limitations under the Internal Revenue Code did not apply and the matching contribution that the employee actually received under our 401(k) plan. The balances in the plan are only available for investment in investment options that are also available under our 401(k) plan. We believe that it is fair to provide this plan to our executives because absent the limitations under the Internal Revenue Code, they would have otherwise received these amounts. The plan also permits us, but does not require us to, make additional, discretionary contributions. We did not make any discretionary contributions in 2020.2021. Limited Perquisites and Tax Gross-Ups As an online academic institution, APUS has deans, program directors, faculty members, and others who live at great distance from our headquarters in Charles Town, West Virginia. As a result and because Charles Town has relatively limited options compared to what would be available if our headquarters were in a larger city, APUS has housing available for the use of visitors when they are visiting Charles Town. We allow members of our leadership team the opportunity to also utilize university housing when they are staying overnight in Charles Town, even if that is their principal place of business. In 2020, NEOs took limited advantage of the housing benefit. In order that Dr. Boston could be more efficient and be able to work on his commute to Charles Town, we also provided Dr. Boston with the opportunity to utilize a car service for travel to and from Charles Town, in addition to other locations.
Pursuant to her employment agreement, Ms. Selden was initially entitled to receive up to $8,000 per month for one year from September 23, 2019 for temporary lodging expenses and reimbursement for weekly travel from her current residence to the required work location, and up to $75,000 during calendar year 2020 in incurred relocation expenses, subject to our relocation policy. Due to the COVID-19 pandemic and the related closure of our administrative offices, Ms. Selden’s travel and relocation planning was different than originally contemplated. In September 2020, Ms. Selden’s employment agreement was amended to extend the lodging and travel reimbursement benefits for another year and to provide for up to $75,000 during calendar year 2021 in incurred relocation expenses.expenses, and, in order to facilitate Ms. Selden’s presence and duties at Company locations, reimbursement for temporary lodging not to exceed $8,000 per month as well as for airplane travel. Ms. Selden took advantage of the temporary lodging at hotels and travel benefits during 2021. Pursuant to his employment agreement, Dr. Dyke iswas entitled, for a period through August 31, 2021, to lodging in university housing and to rental car and airplane travel reimbursement to facilitate his presence and work at APUS’s principal executive offices, and up to $60,000 through December 31, 2021 in incurred relocation expenses, subject to our relocation policy. Dr. Dyke took advantage of the lodging and travel benefits during 2021. We did not provide a gross-up to our NEOs for any personal income taxes they incurred as a result of any of these benefits.
Role of Executives in Executive Compensation Decisions Historically, our Chief Executive Officer has recommended to the MDC Committee each element of compensation for all executive officers other than himself or herself,that of the Chief Executive Officer, and the MDC Committee determines the target level of compensation for each executive officer. In July 2020, we hired a newOur Chief Human Resources Officer Amy Manning, who now providesprovided support to Ms. Selden and the Committee, including with respect to structuring compensation arrangements.arrangements during 2021. | | | 55
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TABLE OF CONTENTS The amount of each element of compensation for our Chief Executive Officer is determined by the MDC Committee. Our Chief Executive Officer and our Chief Human Resources Officer do not participate in deliberations relating to their own compensation. None of our other executive officers participates in any deliberations related to the setting of executive compensation, except that Dr. Boston participated | 55 | PURPOSE
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in setting executive compensation in 2020 in the context of his role as President of APUS to advise on compensation for executives who are officers of APUS, and Dr. Dyke participated in evaluating the performance of those executives.
CEO Pay Ratio As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are presenting the ratio of our Chief Executive Officer’s annual total compensation to our median employee’s annual total compensation. In order to identify our median employee for purposes of calculating the ratio, we used total annual earnings as reported in our payroll system for our approximately 2,922 employees other than our Chief Executive Officer as of December 31, 2020.2021. This consisted of approximately 2,948 employees, excluding, as permitted by SEC rules, employees who joined us in connection with our acquisition of RU, which we completed on September 1, 2021. As set forth in the Summary Compensation Table appearing elsewhere in this Proxy Statement, the 20202021 annual total compensation as determined under Item 402 of Regulation S-K for our Chief Executive Officer was $2,996,393.$2,994,052. The 20202021 annual total compensation for our median employee, who is a part-time faculty member at APUS, was $32,620.$29,408. The ratio of our Chief Executive Officer’s annual total compensation to our median employee’s total compensation for 20202021 is approximately 92102 to 1. This ratio was determined using reasonable estimates as permitted by the SEC’s rules and should not be used as a comparison with pay ratios disclosed by other companies. | 56 | | 56
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TABLE OF CONTENTS Management DevelopmentMANAGEMENT DEVELOPMENT & COMPENSATION COMMITTEE REPORT The Management Development & Compensation Committee reviewed and discussed the above Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with the Company’s management. Based on its review and discussions with the Company’s management, the Management Development & Compensation Committee recommended that the Compensation Discussion and Analysis be included in the Company’s Proxy Statement and in the Company’s Annual Report on Form 10-K (including by incorporation by reference to this Proxy Statement). Management Development & Compensation Committee (April 6, 2021)(March 27, 2022)
William G. Robinson, Jr., Chairperson
Eric C. Andersen MG (Ret) Barbara G. Fast
LtGen (Ret.) Vincent R. Stewart | 57 | | 57
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TABLE OF CONTENTS COMPENSATION TABLES AND DISCLOSURES Summary Compensation Table Name and
Principal
Position(1) | | Year | | Salary(2) | | Bonus(3) | | Stock
Awards(4) | | Option
Awards(4) | | Non-Equity
Incentive Plan
Compensation(5) | | All Other
Compensation(6) | | Total | Angela K. Selden
Chief Executive Officer and President | | 2020 | | $ | 630,000 | | $ | 50,000 | | $ | 1,416,829 | | | — | | $ | 833,490 | | $ | 66,074 | | $ | 2,996,393 | | | 2019 | | $ | 170,877 | | $ | 50,000 | | $ | 1,251,918 | | $ | 599,994 | | $ | 200,000 | | $ | 17,221 | | $ | 2,290,010 | Wade T. Dyke
President, APUS | | 2020 | | $ | 175,500 | | $ | 75,000 | | $ | 469,977 | | $ | 179,998 | | $ | 142,156 | | $ | 8,422 | | $ | 1,051,053 | Wallace E. Boston, Jr.
Former President of APUS | | 2020 | | $ | 308,219 | | | — | | $ | 899,583 | | | — | | $ | 400,770 | | $ | 2,114,453 | | $ | 3,723,025 | | | 2019 | | $ | 639,974 | | | — | | $ | 1,764,236 | | | — | | $ | 163,059 | | $ | 93,791 | | $ | 2,661,060 | | | 2018 | | $ | 678,500 | | | — | | $ | 1,732,198 | | | — | | $ | 788,756 | | $ | 55,831 | | $ | 3,255,285 | | Richard W. Sunderland, Jr. Executive Vice President, Chief Financial Officer | | 2020 | | $ | 444,116 | | | — | | $ | 500,143 | | | — | | $ | 338,285 | | $ | 26,681 | | $ | 1,309,225 | | | 2019 | | $ | 419,281 | | | — | | $ | 419,137 | | | — | | $ | 63,940 | | $ | 32,003 | | $ | 934,361 | | | 2018 | | $ | 411,060 | | | — | | $ | 411,545 | | | — | | $ | 279,521 | | $ | 20,618 | | $ | 1,122,744 | Patrik Dyberg
Executive Vice President, Chief Technology Officer | | 2020 | | $ | 364,140 | | | — | | $ | 343,970 | | | — | | $ | 288,035 | | $ | 21,470 | | $ | 1,017,615 | | | 2019 | | $ | 357,000 | | | — | | $ | 356,874 | | | — | | $ | 71,400 | | $ | 22,778 | | $ | 808,052 | | | 2018 | | $ | 234,932 | | $ | 50,000 | | $ | 652,413 | | | — | | $ | 170,325 | | $ | 56,012 | | $ | 1,163,682 | Thomas A. Beckett
Senior Vice President and General Counsel | | 2020 | | $ | 305,453 | | | — | | $ | 201,717 | | | — | | $ | 209,290 | | $ | 16,198 | | $ | 732,658 | | | 2019 | | $ | 286,110 | | | — | | $ | 157,282 | | | — | | $ | 57,222 | | $ | 20,141 | | $ | 520,755 | | | 2018 | | $ | 280,500 | | | — | | $ | 154,470 | | | — | | $ | 181,624 | | $ | 13,612 | | $ | 630,206 |
| | Angela K. Selden
President and Chief Executive Officer | | | 2021 | | | $675,000 | | | — | | | $1,573,656 | | | — | | | $ 668,661 | | | $ 76,735 | | | $2,994,052 | | | | 2020 | | | $630,000 | | | $50,000 | | | $1,416,829 | | | — | | | $833,490 | | | $66,074 | | | $2,996,393 | | | | 2019 | | | $170,877 | | | $50,000 | | | $1,251,918 | | | $599,994 | | | $200,000 | | | $17,221 | | | $2,290,010 | | | | Richard W. Sunderland, Jr.
Executive Vice President, Chief Financial Officer | | | 2021 | | | $436,220 | | | $10,000 | | | $467,837 | | | — | | | $275,773 | | | $37,621 | | | 1,227,451 | | | | 2020 | | | $444,116 | | | — | | | $500,143 | | | — | | | $338,285 | | | $26,681 | | | $1,309,225 | | | | 2019 | | | $419,281 | | | — | | | $419,137 | | | — | | | $63,940 | | | $32,003 | | | $934,361 | | | | Patrik Dyberg
Executive Vice President, Chief Technology Officer | | | 2021 | | | $371,423 | | | — | | | $311,714 | | | — | | | $210,369 | | | $30,081 | | | $923,587 | | | | 2020 | | | $364,140 | | | — | | | $343,970 | | | — | | | $288,035 | | | $21,470 | | | $1,017,615 | | | | 2019 | | | $357,000 | | | — | | | $356,874 | | | — | | | $71,400 | | | $22,778 | | | $808,052 | | | | Thomas A. Beckett
Senior Vice President and General Counsel | | | 2021 | | | $310,944 | | | — | | | $188,484 | | | — | | | $177,080 | | | $22,516 | | | $699,023 | | | | 2020 | | | $305,453 | | | — | | | $201,717 | | | — | | | $209,290 | | | $16,198 | | | $732,658 | | | | 2019 | | | $286,110 | | | — | | | $157,282 | | | — | | | $57,222 | | | $20,141 | | | $520,755 | | | | Vernon C. Smith
Senior Vice President, Provost, APUS | | | 2021 | | | $313,056 | | | — | | | $160,560 | | | — | | | $177,554 | | | $24,063 | | | $675,234 | | | | 2020 | | | $306,918 | | | — | | | $151,844 | | | — | | | $214,229 | | | $20,063 | | | $693,054 | | | | 2019 | | | $300,900 | | | — | | | $165,455 | | | — | | | $128,823 | | | $21,588 | | | $616,766 | | | | Wade T. Dyke
President, APUS | | | 2021 | | | $382,192 | | | — | | | $440,624 | | | — | | | $232,821 | | | $188,983 | | | $1,244,620 | | | | 2020 | | | $175,500 | | | $75,000 | | | $469,977 | | | $179,998 | | | $142,156 | | | $8,422 | | | $1,051,053 | |
(1) Ms. Selden was not employed by the Company prior to September 2019, and so information is only provided for 2019 and 2020. Dr. Dyke was not employed by the Company prior to August 12, 2020, and so information is only provided for 2020.2020 and 2021.(2) Values reflect the amounts actually paid to the NEOs for each year. For Ms. Selden, the 2019 amount reflects her annual salary of $630,000 prorated from her September 23, 2019 hire date to December 31, 2019. For Dr. Dyke, the 2020 amount reflects his base salary of $450,000 prorated from August 12, 2020 to December 31, 2020, and for Dr. Boston, the 2020 amount reflects his base salary of $500,000 prorated from January 1, 2020 until his retirement date on August 12, 2020. For Mr. Dyberg, the 2018 amount reflects his annual base salary of $350,000 prorated from his May 7, 2018 hire date to December 31, 2018. Amounts for each of Dr. Boston, Mr. Sunderland, and Mr. Beckett include a one-time cash payment in lieu of accumulated vacation time resulting from a change in policy relating to vacation accrual for all employees.(3) Amounts shown for Ms. Selden and Dr. Dyke and Mr. Dyberg reflect signing bonuses paid to each executive in connection with their hire in 2019 and 2020, respectively. Amount shown for Mr. Sunderland reflects special bonus award in connection with his work on our capital structure and 2018, respectively.credit facilities, and for his performance in connection with the acquisition of RU. (4) Amounts reflect the aggregate grant date fair value, computed in accordance with FASB ASC Topic 718, of RSUs, PSUs and stock options, as applicable, excluding estimates of forfeiture. A discussion of the relevant assumptions used in calculating these equity awards can be found in Notes 21 and 1113 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2020.2021. PSUs are valued assuming achievement at target, which was the probable outcome determined for accounting purposes at the time of grant. The target and maximum grant date values of PSUs for 20202021 are as follows: | 58 | PURPOSE
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| | Angela K. Selden | | | $786,828 | | | $1,573,656 | | | | Richard W. Sunderland, Jr. | | | $233,919 | | | $467,837 | | | | Patrik Dyberg | | | $155,857 | | | $311,714 | | | | Thomas A. Beckett | | | $94,242 | | | $188,484 | | | | Vernon C. Smith | | | $80,280 | | | $160,560 | | | | Wade T. Dyke | | | $220,312 | | | $440,624 | |
| Name | | | | Grant Date Value at
Target Performance | | | | Grant Date Value at
Maximum Performance | | Angela K. Selden | | | | $ | 708,415 | | | | $ | 1,416,829 | | Wade T. Dyke | | | | | — | | | | | — | | Wallace E. Boston, Jr. | | | | $ | 449,792 | | | | $ | 899,583 | | Richard W. Sunderland, Jr. | | | | $ | 278,931 | | | | $ | 557,862 | | Patrik Dyberg | | | | $ | 196,551 | | | | $ | 393,101 | | Thomas A. Beckett | | | | $ | 121,035 | | | | $ | 242,070 |
(5)Amounts reflect payments made pursuant to our annual incentive compensation plan based upon the achievement of performance goals established by our MDC Committee. | | | 58
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TABLE OF CONTENTS (6) Amounts for 20202021 include, but are not limited to, (i) $11,400$11,600 of 401(k) contribution matches made by us for each of our NEOs except for Dr. Dyke, who received $6,346, and (ii) non-qualified deferred compensation plan matching contributions made by us of $24,770$48,740 for Ms. Selden, and $11,078$19,380 for Dr. Boston, respectively, (iii) gross-ups for taxes related to a small food and beverage allotment, in the amount of $3 for Ms. Selden and Mr. Sunderland, and $4$14,778 for Dr. Dyke, Mr. Dyberg, $9,209 for Mr. Beckett, $9,491 for Mr. Smith, and $11,138 for Mr. Beckett.Dyke. For Ms. Selden, amounts also include $10,887 reimbursable relocationtemporary lodging at hotels and lodgingtravel expenses, including as provided for by her Employment Agreement.employment agreement, and a small commemorative gift in connection with the closing of the RU acquisition, and for Dr. Dyke, $10,857 in reimbursable lodging and travel benefits, including as provided by his employment agreement. For Dr. Boston,Dyke, amounts also include those paid or accrued in connection with the termination of his retirement,employment, including (i) $473,231$112,422 in severance and (ii) $1,558,254, the value of accelerated vesting of certain unvested RSU and PSU awards granted to Dr. Boston in 2018 and 2019, and (iii) $46,972$38,595 of accrued vacation pay. For more information about payments related to Dr. Boston’s retirement,Dyke’s departure, see “Potential Payments Upon Termination or Change of Control.” 20202021 Grants of Plan-Based Awards| Name | | Award
Type | | Grant Date | | Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1) | | Estimated Future Payouts
Under Equity Incentive
Plan Awards(2) | | All Other
Stock
Awards:
Number
of Stock
or Units(3) | | All Other
Option
Awards:
Number of
Securities
Underlying
Options | | Exercise or
Base Price
of Option
Awards
($/Sh) | | Grant
Date Fair
Value of
Stock and
Option
Awards(4) | | | Threshold | | Target | | Maximum | | Threshold | | Target | | Maximum | | | | Angela K. Selden | | RSUs | | 2/7/2020 | | | | | | | | | | | | | | | | | 29,616 | | | | | | | $ | 708,415 | | | PSUs | | 2/7/2020 | | | | | | | | | | | 3,702 | | 29,616 | | 59,232 | | | | | | | | | $ | 708,415 | | Annual
Incentive
Plan | | | | $ | 7,484 | | $ | 567,000 | | $ | 850,500 | | | | | | | | | | | | | | | | | | | Wade T. Dyke | | Stock Options | | 8/12/2020 | | | | | | | | | | | | | | | | | | | 9,370 | | $ | 33.37 | | $ | 469,977 | | | RSUs | | 8/12/2020 | | | | | | | | | | | | | | | | | 13,917 | | | | | | | $ | 179,998 | | Annual
Incentive
Plan | | | | $ | 100,000 | | $ | 100,000 | | $ | 149,175 | | | | | | | | | | | | | | | | | | | Wallace E. Boston, Jr. | | RSUs | | 2/7/2020 | | | | | | | | | | | | | | | | | 18,804 | | | | | | | $ | 449,792 | | | | PSUs | | 2/7/2020 | | | | | | | | | | | 2,351 | | 18,804 | | 37,608 | | | | | | | | | $ | 449,792 | | Annual
Incentive
Plan | | | | $ | 27,450 | | $ | 274,500 | | $ | 411,750 | | | | | | | | | | | | | | | | | | | Richard W. Sunderland, Jr. | | RSUs | | 2/7/2020 | | | | | | | | | | | | | | | | | 9,248 | | | | | | | $ | 221,212 | | | PSUs | | 2/7/2020 | | | | | | | | | | | 1,458 | | 11,661 | | 23,322 | | | | | | | | | $ | 278,231 | | Annual
Incentive
Plan | | | | $ | 2,823 | | $ | 213,833 | | $ | 342,133 | | | | | | | | | | | | | | | | | | | Patrik Dyberg | | RSUs | | 2/7/2020 | | | | | | | | | | | | | | | | | 6,163 | | | | | | | $ | 147,419 | | | PSUs | | 2/7/2020 | | | | | | | | | | | 1,027 | | 8,217 | | 16,434 | | | | | | | | | $ | 196,551 | | | Annual Incentive Plan | | | | $ | 2,403 | | $ | 182,070 | | $ | 291,312 | | | | | | | | | | | | | | | | | | | Thomas A. Beckett | | RSUs | | 2/7/2020 | | | | | | | | | | | | | | | | | 3,373 | | | | | | | $ | 80,682 | | | PSUs | | 2/7/2020 | | | | | | | | | | | 633 | | 5,060 | | 10,120 | | | | | | | | | $ | 121,035 | | Annual
Incentive
Plan | | | | $ | 1,973 | | $ | 149,493 | | $ | 209,290 | | | | | | | | | | | | | | | | | |
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| | Angela K. Selden | | | RSUs | | | 1/22/2021 | | | | | | | | | | | | | | | | | | | | | 26,600 | | | $786,828 | | | | PSUs | | | 1/22/2021 | | | | | | | | | | | | 3,325 | | | 26,600 | | | 53,200 | | | | | | $786,828 | | | | Annual Incentive Plan | | | | | | $8,100 | | | $607,500 | | | $911,250 | | | | | | | | | | | | | | | | | | | Richard W. Sunderland, Jr. | | | RSUs | | | 1/22/2021 | | | | | | | | | | | | | | | | | | | | | 7,908 | | | $233,919 | | | | PSUs | | | 1/22/2021 | | | | | | | | | | | | 989 | | | 7,908 | | | 15,816 | | | | | | $233,919 | | | | Annual Incentive Plan | | | | | | $2,908 | | | $218,110 | | | $348,976 | | | | | | | | | | | | | | | | | | | Patrik Dyberg | | | RSUs | | | 1/22/2021 | | | | | | | | | | | | | | | | | | | | | 5,269 | | | $155,857 | | | | PSUs | | | 1/22/2021 | | | | | | | | | | | | 659 | | | 5,269 | | | 10,538 | | | | | | $155,857 | | | | Annual Incentive Plan | | | | | | $2,476 | | | $185,712 | | | $297,138 | | | | | | | | | | | | | | | | | | | Thomas Beckett | | | RSUs | | | 1/22/2021 | | | | | | | | | | | | | | | | | | | | | 3,186 | | | $94,242 | | | | PSUs | | | 1/22/2021 | | | | | | | | | | | | 398 | | | 3,186 | | | 6,372 | | | | | | $94,242 | | | | Annual Incentive Plan | | | | | | $2,073 | | | $155,472 | | | $217,661 | | | | | | | | | | | | | | | | | | | Vernon C. Smith | | | RSUs | | | 1/22/2021 | | | | | | | | | | | | | | | | | | | | | 2,714 | | | $80,280 | | | | PSUs | | | 1/22/2021 | | | | | | | | | | | | 339 | | | 2,714 | | | 5,428 | | | | | | $80,280 | | | | Annual Incentive Plan | | | | | | $15,653 | | | $156,528 | | | $219,139 | | | | | | | | | | | | | | | | | | | Wade T. Dyke | | | RSUs | | | 1/22/2021 | | | | | | | | | | | | | | | | | | | | | 7,448 | | | $220,312 | | | | PSUs | | | 1/22/2021 | | | | | | | | | | | | 931 | | | 7,448 | | | 14,896 | | | | | | $220,312 | | | | Annual Incentive Plan | | | | | | $24,750 | | | $225,000 | | | $315,000 | | | | | | | | | | | | | | | | |
(1) These columns show the range of possible cash payouts for 20202021 performance pursuant to our annual incentive plan. Actual amounts paid out pursuant to the plan are included in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table above. For a discussion of the performance goals established by the MDC Committee for these awards, see the section titled “Annual Incentive Cash Compensation” in the Compensation Discussion and Analysis. (2) These columns show the range of PSUs that could be earned based on 20202021 performance pursuant to the performance-based awards granted in 2020.2021. PSUs earned vest over a three-year period. For a discussion of the performance goals established by the MDC Committee for these awards, see the section titled “2020“2021 Compensation Decisions — Equity Incentives” in the Compensation Discussion and Analysis. (3)This column shows the number of RSUs granted, which vest ratably over three years. | | | 59
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TABLE OF CONTENTS (4) Amounts reflect the grant date fair value, computed in accordance with FASB ASC Topic 718, and will likely vary from the amount actually realized by any NEO based on a number of factors, including the number of shares that are earned and ultimately vest, the timing of vesting, the timing of any sale of shares, and the market price of our common stock at that time. PSUs are valued assuming achievement at target, which was the probable outcome determined for accounting purposes at the time of grant. For RSUs, we calculate grant date fair value by multiplying the number of shares granted by the closing market price per share of our common stock on the grant date. Assumptions used in determining the grant date fair value of the options are set forth in Note 11 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for fiscal 2020.Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
For each of our NEOs other than Mr. Beckett, and Dr. Smith, the amounts disclosed in the tables above are in part a result of the terms of the NEOs’ employment agreements. We do not have an employment agreementagreements with Mr. Beckett.Beckett or Dr. Smith. Ms. Selden’s Employment Agreement . In August 2019, we entered into an employment agreement with Ms. Selden to serve as our President and Chief Executive Officer, effective September 23, 2019. The term of Ms. Selden’s employment agreement ends on March 31, 2023, and automatically renews for additional one-year terms unless we give written notice of our intent not to renew at least 30 days prior to the renewal date. Pursuant to her agreement, Ms. Selden’s base salary was set at $630,000 per year, subject to annual review and adjustment by our MDC Committee. Ms. Selden’s employment agreement provides that she is entitled to participate in our annual incentive plan, under which she is eligible for an annual bonus of up to 90% of her base salary then in effect, and up to an additional 45% of her base salary as then in effect based upon the achievement of certain performance goals or certain “stretch” performance goals, respectively, as determined by the MDC Committee, provided that for 2019, Ms. Selden’s bonus was guaranteed to be not less than $200,000 or more than $300,000. Pursuant to her employment agreement, Ms. Selden received (i) a one-time signing bonus of $100,000, paid in two installments, with $50,000 payable on the first payroll date after the effective date and $50,000 payable on the first payroll after the first anniversary of the effective date, each of which installments must be returned to the Company if Ms. Selden’s employment is terminated within 12 months of payment of the bonus by Ms. Selden without good reason or by the Company with cause, as defined in the agreement, (ii) an RSU grant of 52,668 shares of the common stock of the Company (the “Selden RSU Grant”), (iii) a grant of 43,134 stock options of the Company with an exercise price of $23.77 per share (collectively, with the Selden RSU Grant, together the “Initial Selden Equity Grants”), and (iv) up to $8,000 per month for temporary lodging expenses and reimbursement for weekly travel from Ms. Selden’s current residence to the required work location for one year following September 23, 2019, and up to $75,000 during calendar year 2020 in incurred relocation expenses, subject to our relocation policy. Due to the COVID-19 pandemic and the related closure of our administrative offices, Ms. Selden’s travel and relocation planning was different than originally contemplated. On September 23, 2020, we entered into an amendment to Ms. Selden’s employment agreement to provide that up to $75,000 of incurred relocation expenses would be reimbursed if incurred during the calendar year 2021, and to extend the reimbursement for temporary lodging and travel expenses to a period of two years following September 23, 2019. | 60 | PURPOSE
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In addition to a base salary and annual bonus, Ms. Selden is entitled to receive such other benefits approved by our MDC Committee and made available to our other senior executives and to participate in plans and receive bonuses, incentive compensation and fringe benefits as we may grant or establish from time to time. Ms. Selden has agreed not to compete with us nor solicit our employees for alternative employment during the term of her agreement and for a period of two years after termination for any reason. Dr. Dyke’s Employment Agreement. In June 2020, we entered into an employment agreement with Dr. Dyke to serve as President of American Public University System, effective August 12, 2020. The initial term of Dr. Dyke’s employment agreement ends on March 31, 2024, and automatically renews for additional one-year terms unless we give written notice of our intent not to renew at least 180 days prior to the renewal date. Dr. Dyke’s employment agreement has similar provisions to the provisions of Ms. Selden’s agreement discussed above, except with respect to his position, amounts relating to his base salary and annual bonus, and the length and scope of his restrictive covenants. Pursuant to his agreement, Dr. Dyke’s initial annual salary was set at $450,000, subject to annual review and adjustment by our MDC Committee. Dr. Dyke is eligible for an annual bonus of up to 55% of his base salary then in effect and up to an additional 30% of his base salary as then in effect based upon the achievement of certain performance goals or certain “stretch” performance goals, respectively, as determined by the MDC Committee. Pursuant to his employment agreement, Dr. Dyke received (i) a one-time signing bonus of $75,000, paid in two installments (ii) an RSU grant of 13,917 shares of our common stock, and (iii) grant of 9,370 stock options with an exercise price of $33.37 per share. Dr. Dyke’s base salary for 2020 and target annual incentive compensation plan award for 2020 are set forth in the tables above. Dr. Dyke has agreed not to compete with us nor solicit our employees for alternative employment during the term of his agreement and for a period of 18 months after termination for any reason.
Dr. Boston’s Employment Agreement. In August 2019, we entered into an amended and restated employment agreement with Dr. Boston, pursuant to which Dr. Boston retired from his position as President and Chief Executive Officer, effective September 23, 2019. Under his amended agreement, following his departure as President and Chief Executive Officer, Dr. Boston continued his service as President of APUS in advance of his expected retirement date in 2020, which was expected to occur on June 30, 2020. On June 30, 2020, we entered into an amendment to the agreement with Dr. Boston, and pursuant to that amendment Dr. Boston retired as APUS President on August 12, 2020. Dr. Boston’s employment agreement has similar provisions to the provisions of the agreements discussed above, except with respect to his position, amounts relating to his base salary and annual bonus, and the length and scope of his restrictive covenants. Under Dr. Boston’s amended agreement, his base salary was $500,000 per year, and he continued to be eligible to receive a bonus of up to 90% of his base salary and up to an additional 45% of his base salary for 2020, based upon the achievement of certain performance goals and “stretch” performance goals, respectively, as determined by the MDC Committee. In addition, Dr. Boston’s employment agreement provided for an annual equity award grant in the first quarter of 2020 with a value of $1,000,000 on the same terms and conditions as grants to other senior executives, which would only have vested under certain circumstances involving a change in control. Furthermore, under Dr. Boston’s employment agreement, we were required to pay or reimburse him for customary and reasonable moving expenses he incurred in connection with any subsequent relocation of our executive offices. Dr. Boston has agreed not to compete with us nor solicit our employees for alternative employment during the term of his agreement and for a period of two years after termination for any reason.
Mr. Sunderland’s Employment Agreement. We have entered into an employment agreement with Mr. Sunderland that has similar provisions to the provisions of the agreements discussed above, except with respect to his position, amounts relating to his initial base salary and annual bonus, and scope of restrictive covenants. In August 2014, we entered into an employment agreement with Mr. Sunderland to serve as Executive Vice President and Chief Financial Officer. Under his employment agreement, Mr. Sunderland’s | | | 60
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TABLE OF CONTENTS initial term of employment ran until March 31, 2017, and automatically renews for additional one-year terms unless we give written notice of our intent not to renew at least 30 days prior to the renewal date. Pursuant to his agreement, Mr. Sunderland’s initial annual salary was set at | 61 | PURPOSE
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$300,000, $300,000, subject to annual review and adjustment by our MDC Committee. Mr. Sunderland is eligible for an annual bonus of up to 50% of his base salary then in effect and up to an additional 30% of his base salary as then in effect based upon the achievement of certain performance goals or certain “stretch” performance goals, respectively, as determined by the MDC Committee.
Mr. Dyberg’s Employment Agreement . In May 2018, we entered into an employment agreement with Mr. Dyberg to serve as Executive Vice President and Chief Technology Officer. The initial term of Mr. Dyberg’s employment agreement ended on March 31, 2021, and automatically renewed for an additional one-year term pursuant to his employment agreement, which provides for such automatic renewal unless we give written notice of our intent not to renew at least 30 days prior to the renewal date. Mr. Dyberg’s employment agreement has similar provisions to the provisions of the agreements discussed above, except with respect to his position, amounts relating to his base salary and annual bonus, and the length and scope of his restrictive covenants. Pursuant to his agreement, Mr. Dyberg’s initial annual salary was set at $350,000, subject to annual review and adjustment by our MDC Committee. Mr. Dyberg is eligible for an annual bonus of up to 50% of his base salary then in effect and up to an additional 30% of his base salary as then in effect based upon the achievement of certain performance goals or certain “stretch” performance goals, respectively, as determined by the MDC Committee. Pursuant to his employment agreement, Mr. Dyberg received (i) a one-time signing bonus of $50,000, (ii) an RSU grant of 16,750 shares of our common stock, and (iii) payments to cover relocation expenses in connection with his hire. Mr. Dyberg has agreed not to compete with us nor solicit our employees for alternative employment during the term of his agreement and for a period of 18 months and one year, respectively, after termination for any reason.Dr. Dyke’s Employment Agreement. In June 2020, we entered into an employment agreement with Dr. Dyke to serve as President of American Public University System, effective August 12, 2020. Dr. Dyke’s employment agreement had similar provisions to the provisions of Ms. Selden’s agreement discussed above, except with respect to his position, amounts relating to his base salary and annual bonus, and the length and scope of his restrictive covenants. Pursuant to his agreement, Dr. Dyke’s initial annual salary was set at $450,000, subject to annual review and adjustment by our MDC Committee. Dr. Dyke was eligible for an annual bonus of up to 55% of his base salary then in effect and up to an additional 30% of his base salary as then in effect based upon the achievement of certain performance goals or certain “stretch” performance goals, respectively, as determined by the MDC Committee. Pursuant to his employment agreement, Dr. Dyke received (i) a one-time signing bonus of $75,000, paid in two installments (ii) an RSU grant of 13,917 shares of our common stock, and (iii) grant of 9,370 stock options with an exercise price of $33.37 per share. Dr. Dyke agreed not to compete with us nor solicit our employees for alternative employment during the term of his agreement and for a period of 18 months after termination for any reason. The executives’ base salaries and target annual incentive compensation plan awards for 20202021 are set forth in the tables above. Each of the above employment agreements provides for payments upon certain terminations of the executive’s employment. For a description of these termination provisions, whether or not following a change in control, and a quantification of benefits that would be received, or in the case of Dr. Dyke, were received, by these executives, see the section titled “Potential Payments Upon Termination or Change in Control” on page 64. For Dr. Boston, the description is of the termination provisions as they applied to his retirement, and the quantification of benefits received by Dr. Boston in connection therewith.64. | | | 61
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TABLE OF CONTENTS2020 2021 Outstanding Equity Awards at Fiscal Year-End The following table sets forth information with respect to the outstanding equity awards at December 31, 20202021 for our NEOs: | | | Option Awards | | Stock Awards | | | Name | | Number of
Securities
Underlying
Unexercised
Options (#) Exercisable | | Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable | | Options
Exercise
Price ($) | | Options
Expiration
Date | | Number of
Shares or
Units of
Stock That
Have Not
Vested(1) | | Market Value
of Shares
or Units of
Stock That
Have Not
Vested ($)(2) | | | Angela K. Selden | | 14,378 | | 28,756 | | $23.77 | | 9/22/2029 | | 121,443 | | 3,701,583 | | | Wade T. Dyke | | — | | 9,370 | | $33.77 | | 8/11/2030 | | 13,917 | | 424,190 | | | Wallace E. Boston, Jr. | | — | | — | | | | | | — | | — | | | Richard W. Sunderland, Jr. | | — | | — | | | | | | 43,738 | | 1,333,134 | | | Patrik Dyberg | | — | | — | | | | | | 32,202 | | 981,517 | | | Thomas A. Beckett | | — | | — | | | | | | 17,624 | | 537,180 | |
| | Angela K. Selden | | | 28,756 | | | 14,378 | | | $23.77 | | | 9/22/2029 | | | 135,891 | | | $ 3,023,575 | | | | Richard W. Sunderland, Jr. | | | — | | | — | | | | | | | | | 41,891 | | | $932,075 | | | | Patrik Dyberg | | | — | | | — | | | | | | | | | 28,996 | | | $645,183 | | | | Thomas A. Beckett | | | — | | | — | | | | | | | | | 17,025 | | | $378,806 | | | | Vernon C. Smith | | | — | | | — | | | | | | | | | 13,463 | | | $299,552 | | | | Wade T. Dyke | | | — | | | — | | | | | | | | | — | | | — | |
(1) Includes the number of shares underlying PSUs that were earned pursuant to the achievement of the 2020 2021 performance metrics, as adjusted. Of the numbers of shares of stock shown, for the officers indicated, the following numbers of shares have vested or will vest on the dates indicated: Name | | Grant Date | | | Award Type | | | Vest Date | | | Number of Shares or
Units of Stock That
Have Not Vested | | | | Angela K. Selden | | | 9/23/2019 | | RSU | RSU | | | 9/23/20212022 | | | 17,556 | | | | 2/7/2020 | 9/23/2019 | | RSU | | 9/23/2022 | 2/7/2022 | 17,556 | | 9,872 | | | | | 2/7/2020 | | RSU | RSU | | | 2/7/20212023 | | | 9,872 | | | | | 2/7/2020 | | RSU | PSU | | | 2/7/2022 | | 9,872 | 18,905 | | | | | 2/7/2020 | | RSU | PSU | | | 2/7/2023 | | 9,872 | 18,905 | | | | 1/22/2021 | 2/7/2020 | | PSURSU | | 3/11/2021 | 1/22/2022 | 18,905 | | 8,867 | | | | 1/22/2021 | 2/7/2020 | | PSURSU | | 2/7/2022 | 1/22/2023 | 18,905 | | 8,867 | | | | 1/22/2021 | 2/7/2020 | | PSURSU | | 2/7/2023 | 1/22/2024 | 18,905 | | 8,866 | | Wade T. Dyke | 1/22/2021 | 8/12/2020 | | RSUPSU | | 8/12/2021 | 2/25/2022 | 4,639 | | 11,528 | | | | 1/22/2021 | 8/12/2020 | | RSUPSU | | 1/12/2022 | 1/22/2023 | 4,639 | | 11,260 | | | | 1/22/2021 | 8/12/2020 | | RSUPSU | | 8/12/2023 | 1/22/2024 | 4,639 | | 11,393 | | | | Richard W. Sunderland, Jr. | | 1/15/2018 | 1/21/2019 | RSU | | 1/15/2021RSU | | 2,679 | 1/21/2022 | | | 2,324 | | | | 1/21/2019 | 1/15/2018 | | PSU | | 1/15/2021 | 1/21/2022 | 3,937 | | 446 | | | | 2/7/2020 | 1/21/2019 | | RSU | | 1/21/2021 | 2/7/2022 | 2,325 | | 3,083 | | | | 2/7/2020 | 1/21/2019 | | RSU | | 1/21/2022 | 2/7/2023 | 2,324 | | 3,082 | | | | 2/7/2020 | 1/21/2019 | | PSU | | 1/21/2021 | 2/7/2022 | 448 | | 7,444 | | | | 2/7/2020 | 1/21/2019 | | PSU | | 1/21/2022 | 2/7/2023 | 446 | | 7,443 | | | | 1/22/2021 | 2/7/2020 | | RSU | | 2/7/2021 | 1/22/2022 | 3,083 | | 2,636 | | | | 1/22/2021 | 2/7/2020 | | RSU | | 2/7/2022 | 1/22/2023 | 3,083 | | 2,636 | | | | 1/22/2021 | 2/7/2020 | | RSU | | 2/7/2023 | 1/22/2024 | 3,082 | | 2,636 | | | | 1/22/2021 | 2/7/2020 | | PSU | | 3/11/2021 | 2/25/2022 | 7,444 | | 3,427 | | | | 1/22/2021 | 2/7/2020 | | PSU | | 2/7/2022 | 1/22/2023 | 7,444 | | 3,348 | | | | 1/22/2021 | 2/7/2020 | | PSU | | 2/7/2023 | 1/22/2024 | 7,443 | | 3,387 | |
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TABLE OF CONTENTS | | Patrik Dyberg | | | 1/21/2019 | | PSU | PSU | | | 1/21/20212022 | | | 381 | | | | | 1/21/2019 | | PSU | RSU | | | 1/21/2022 | | 381 | 1,979 | | | | 2/7/2020 | 5/7/2018 | | RSU | | 1/15/2021 | 2/7/2022 | 5,583 | | 2,054 | | | | 2/7/2020 | 1/21/2019 | | RSU | | 1/21/2021 | 2/7/2023 | 1,979 | | 2,054 | | | | 2/7/2020 | 1/21/2019 | | RSUPSU | | 1/21/2022 | 2/7/2022 | 1,979 | | 5,246 | | | | | 2/7/2020 | | RSU | PSU | | | 2/7/20212023 | | 2,055 | 5,242 | | | | 1/22/2021 | 2/7/2020 | | RSU | | 2/7/2022 | 1/22/2022 | 2,054 | | 1,757 | | | | 1/22/2021 | 2/7/2020 | | RSU | | 2/7/2023 | 1/22/2023 | 2,054 | | 1,756 | | | | 1/22/2021 | 2/7/2020 | | PSURSU | | 3/11/2021 | 1/22/2024 | 5,246 | | 1,756 | | | | 1/22/2021 | 2/7/2020 | | PSU | | 2/7/2022 | 2/25/2022 | 5,245 | | 2,285 | | | | 1/22/2021 | 2/7/2020 | | PSU | | 2/7/2023 | 1/22/2023 | 5,245 | | 2,230 | | | | 1/22/2021 | | | PSU | | | 1/22/2024 | | | 2,256 | | | | Thomas A. Beckett | | 1/15/2018 | 1/21/2019 | RSU | | 1/15/2021PSU | | 1,005 | 1/21/2022 | | | 167 | | | | 1/21/2019 | 1/15/2018 | | PSURSU | | 1/15/2021 | 1/21/2022 | 1,477 | | 872 | | | | 2/7/2020 | 1/21/2019 | | RSU | | 1/21/2021 | 2/7/2022 | 872 | | 1,124 | | | | 2/7/2020 | 1/21/2019 | | RSU | | 1/21/2022 | 2/7/2023 | 872 | | 1,124 | | | | 2/7/2020 | 1/21/2019 | | PSU | | 1/21/2021 | 2/7/2022 | 168 | | 3,230 | | | | 2/7/2020 | 1/21/2019 | | PSU | | 1/21/2022 | 2/7/2023 | 167 | | 3,230 | | | | 1/22/2021 | 2/7/2020 | | RSU | | 2/7/2021 | 1/22/2022 | 1,125 | | 1,062 | | | | 1/22/2021 | 2/7/2020 | | RSU | | 2/7/2022 | 1/22/2023 | 1,124 | | 1,062 | | | | 1/22/2021 | 2/7/2020 | | RSU | | 2/7/2023 | 1/22/2024 | 1,124 | | 1,062 | | | | 1/22/2021 | 2/7/2020 | | PSU | | 3/11/2021 | 2/25/2022 | 3,230 | | 1,381 | | | | 1/22/2021 | 2/7/2020 | | PSU | | 2/7/2022 | 1/22/2023 | 3,230 | | 1,349 | | | | 1/22/2021 | | | PSU | | | 1/22/2024 | | | 1,364 | | | | Vernon C. Smith | | | 1/21/2019 | | | PSU | | | 1/21/2022 | | | 177 | | | | 1/21/2019 | | | RSU | | | 1/21/2022 | | | 917 | | | | 2/7/2020 | | PSU | RSU | | | 2/7/2022 | | | 1,058 | | | | 2/7/2020 | | | RSU | | | 2/7/2023 | | 3,230 | 1,058 | | | | 2/7/2020 | | | PSU | | | 2/7/2022 | | | 2,026 | | | | 2/7/2020 | | | PSU | | | 2/7/2023 | | | 2,026 | | | | 1/22/2021 | | | RSU | | | 1/22/2022 | | | 905 | | | | 1/22/2021 | | | RSU | | | 1/22/2023 | | | 905 | | | | 1/22/2021 | | | RSU | | | 1/22/2024 | | | 904 | | | | 1/22/2021 | | | PSU | | | 2/25/2022 | | | 1,177 | | | | 1/22/2021 | | | PSU | | | 1/22/2023 | | | 1,148 | | | | 1/22/2021 | | | PSU | | | 1/22/2024 | | | 1,162 | |
(2) The market value of the shares of common stock that have not vested is based on the closing price of our common stock on Nasdaq on December 31, 20202021 (the last trading day of 2020)2021), $30.48.$22.25. | 63 | | 63
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TABLE OF CONTENTS Option Exercises and Stock Vested There were no option exercises by our NEOs during 2020.2021. The following table sets forth information with respect to shares of restricted stock held by our NEOs that vested during 2020:| | | Stock Awards | | | Name | | Number of Shares
Acquired on
Vesting (#) | | | Value Realized
on Vesting ($)(1) | | | Angela K. Selden | | | 17,556 | | | | 491,919 | | | Wade T. Dyke | | | — | | | | — | | | Wallace E. Boston, Jr. | | | 105,533 | | | | 2,998,121 | | | Richard W. Sunderland, Jr. | | | 12,389 | | | | 329,390 | | | Patrik Dyberg | | | 7,944 | | | | 216,908 | | | Thomas A. Beckett | | | 4,732 | | | | 125,631 | |
2021: | | Angela K. Selden | | | 46,333 | | | 1,366,850 | | | | Richard W. Sunderland, Jr. | | | 19,918 | | | 623,099 | | | | Patrik Dyberg | | | 15,246 | | | 476,455 | | | | Thomas A. Beckett | | | 7,881 | | | 246,820 | | | | Vernon C. Smith | | | 6,789 | | | 211,875 | | | | Wade T. Dyke | | | 4,639 | | | 127,573 | |
(1) The value realized on vesting is based on the closing price of our common stock on Nasdaq on the day of vesting, multiplied by the number of shares acquired. Non-qualified Deferred Compensation The following table sets forth information with respect to each defined contribution or other plan that provides for the deferral of compensation on a basis that is not tax-qualified during 2020:| Name | | Executive
Contributions
in Last FY | | | Registrant
Contributions
for Last FY(1) | | | Aggregate
Earnings
in Last FY(2) | | | Aggregate
Withdrawals/
Distributions | | | Aggregate
Balance at
Last FYE(3) | | | Angela K. Selden | | | — | | | $ | 24,770 | | | $ | 51 | | | | — | | | $ | 24,820 | | | Wade T. Dyke | | | — | | | | — | | | | — | | | | — | | | | — | | | Wallace E. Boston, Jr. | | | — | | | $ | 11,078 | | | $ | 42,547 | | | | — | | | $ | 357,029 | | | Richard W. Sunderland, Jr. | | | — | | | $ | 8,910 | | | $ | 8,281 | | | | — | | | $ | 70,870 | | | Patrik Dyberg | | | — | | | $ | 6,571 | | | $ | 1,861 | | | | — | | | $ | 18,313 | | | Thomas A. Beckett | | | — | | | $ | 3,289 | | | $ | 2,561 | | | | — | | | $ | 20,695 | |
2021: | | Angela K. Selden | | | — | | | $ 48,740 | | | $ 2,349 | | | — | | | $ 75,858 | | | | Richard W. Sunderland, Jr. | | | — | | | $19,380 | | | $7,053 | | | — | | | $97,304 | | | | Patrik Dyberg | | | — | | | $14,778 | | | $1,977 | | | — | | | $35,068 | | | | Thomas A. Beckett | | | — | | | $9,209 | | | $2,319 | | | — | | | $32,223 | | | | Vernon C. Smith | | | — | | | $9,491 | | | $1,882 | | | — | | | $28,718 | | | | Wade T. Dyke | | | — | | | $11,138 | | | $— | | | — | | | $11,138 | |
(1) Includes amounts contributed by the Company in 20212022 with respect to 20202021 as matching contributions. All amounts are reported in the Summary Compensation Table on page 58.58. (2) Amounts reflected in this column include changes in plan values during 2020,2021, as well as any dividends and interest earned by the plan participant with regard to the investment funds chosen by such participant during the fiscal year. (3) All amounts have been reported in the Summary Compensation Table or in previous years.Potential Payments Upon Termination or Change in Control This section describes the payments that may be made to our NEOs in connection with a change in control or pursuant to certain termination events. The employment agreements for Ms. Selden, Dr. Dyke, Mr. Sunderland, and Mr. Dyberg described beginning on page 54,60, include (and the employment agreement for Dr. Boston included) provisions providing for payments to them in the event of certain terminations of their respective employment. Mr. Beckett doesand Dr. Smith do not have an employment agreement,agreements but isare covered by our Executive Severance Plan. As described in more detail below, in the event of a voluntary resignation of an NEO without “good reason” (as defined below), the NEO is not entitled to any payments or benefits upon such resignation other than certain accrued but unpaid salary and benefits. | 64 | PURPOSE
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Termination for cause, without good reason or by reason of death.death. In the event that Ms. Selden’s, Dr. Dyke’s, Mr. Sunderland’s, or Mr. Dyberg’s employment is terminated by us for “cause,” by the | | | 64
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TABLE OF CONTENTS executive without “good reason,” or by reason of death (each of “cause” and “good reason” as defined below), we will pay to each of them or their estate, as the case may be, (i) his or her full base salary through the date of termination, (ii) any previously deferred and unpaid compensation and any unpaid accrued vacation pay, and (iii) any earned, but unpaid, amounts the executive is entitled to as of the date of termination in connection with any fringe benefits or under any of our incentive compensation plans or programs, including the annual incentive bonus (together, the “Base Amounts”). In the event that Mr. Beckett’s or Dr. Smith’s service to the Company is terminated by us for “cause,” by the executive without “good reason,” or by reason of death (each of “cause” and “good reason” as defined below), we will pay him or his estate, as the case may be, (i) his full base salary through the date of termination, (ii) any unpaid accrued vacation pay and unreimbursed business expenses accrued through the date of termination, (iii) any benefits provided under our employment benefit plans upon or following a termination of employment (together, the “Accrued Amounts”), and (iv) the bonus, if any, earned with respect to the calendar year ending on or preceding the termination date, to the extent not previously paid (the “Earned Bonus”).
Termination by reason of disability.disability. If Dr. Dyke’s, Mr. Sunderland’s, or Mr. Dyberg’s employment is terminated by reason of disability, we are required to pay to them, in a lump sum within 30 days of the date of termination, (or 60 days, in the case of Dr. Dyke), an amount equal to (i) his base salary through the date of termination, (or 1.5 times his base salary, in the case of Dr. Dyke), (ii) his annual incentive bonus, to the extent the Company and the executive were then satisfying applicable performance targets, adjusted for the short period through the date of termination, for such bonus, prorated for the period of the executive’s service during the applicable year, and (iii) any previously deferred and unpaid compensation and unpaid accrued vacation pay (together, the “Accrued Obligations”). In addition, subject to the executive’s timely execution of a release of claims, we are further required to pay to the executive an amount equal to the sum of (i) the executive’s annual base salary paid in installments in accordance with our normal payroll practices for a period of 18 months (the “Salary Continuation Payments”) and (ii) the executive’s annual incentive bonus, to the extent the Company and the executive were then satisfying applicable performance targets, adjusted for the short period, after the date of termination to the end of the calendar year for such bonus and as to the remainder of the 18-month period following the date of termination (the “Bonus Period”), if net income increased from the same period in the prior year and the performance targets established for the successor executive were being satisfied for that period, paid in installments in accordance with our normal payroll practices over the Bonus Period (for Mr. Sunderland) or paid in two installments, one within 60 days after the end of the year in which the termination occurred, and the second within 60 days after the end of the Bonus Period (for Mr. Dyberg), or paid in equal proportionate installments in accordance with normal payroll practices for a period of 18 months, commencing within 60 days following the termination date (the “Bonus Continuation Payments”).If Ms. Selden’s employment is terminated by reason of disability, we are required to pay to her, (i) in a lump sum within 30 days of the date of termination, an amount equal to the Accrued Obligations, (ii) an amount equal to two times Ms. Selden’s annual base salary paid in installments in accordance with our normal payroll practices for a period of 24 months (the “Selden Salary Continuation Payments”), and (iii) an amount equal to two times Ms. Selden’s annual incentive bonus, to the extent the Company and the executive were then satisfying applicable performance targets, adjusted for the short period, after the date of termination to the end of the calendar year for such bonus and as to the remainder of the 24-month period following the date of termination (the “Selden Bonus Period”), if net income increased from the same period in the prior year and paid in two installments, one within 60 days after the end of the year in which the termination occurred, and the second within 60 days after the end of the Selden Bonus Period (the “Selden Bonus Continuation Payments”), in the case of (ii) and (iii), subject to Ms. Selden’s timely release of claims. | 65 | PURPOSE
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These payments shall be reduced by the sum of the amounts, if any, payable to the executive at or prior to the time of any payment under our disability benefit plans and which amounts were not previously applied to reduce any payment, all in a manner that complies with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). | | | 65
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TABLE OF CONTENTS If Mr. Beckett’s or Dr. Smith’s employment is terminated by reason of disability, we are required pursuant to the terms of the Executive Severance Plan to pay to him the Accrued Amounts and Earned Bonus.
Termination other than for cause or disability or for good reason.reason. In the event that we terminate Ms. Selden’s, Dr. Dyke’s, Mr. Sunderland’s, or Mr. Dyberg’s employment other than for cause or disability or they terminate their employment for good reason, we are required to pay, or provide, to the executive (subject to the NEO’s timely execution of a release of claims in respect of all but the first item below), as applicable: | ● | in a lump sum within 30 days of the date of termination, the Accrued Obligations; |
| ● | the Salary Continuation Payments or the Selden Salary Continuation Payments, as applicable; |
| ● | the Bonus Continuation Payments or the Selden Bonus Continuation Payments, as applicable; |
| ● | for a period of 24 months following the date of termination (for Ms. Selden) or 12 months following the date of termination (for Dr. Dyke, Mr. Sunderland, and Mr. Dyberg) or for any longer period provided for under the terms of the appropriate plan, program, practice or policy, a continuation of benefits to the executive and/or his or her family at a level and in an amount that is at least equal to that which would have been provided by us to them had the executive continued his employment, provided, however, that we may elect to pay the executive a payment equal to 24 or 12 months’ premiums (as applicable) under our benefit plans in lieu of the continuation of such benefits, and provided, further, that if the executive becomes reemployed with another employer and is eligible to receive any of the benefits that had been provided by us, then the benefits we provide shall be secondary; and |
| ● | to the extent not otherwise paid or provided, for a period of 24 months following the date of termination (for Ms. Selden) or 12 months following the date of termination (for Dr. Dyke, Mr. Sunderland, and Mr. Dyberg), any other amounts or benefits required to be paid or provided or which the executive is eligible to receive under any of our other existing benefit schemes; provided, however, if Ms. Selden terminates her employment as a result of our notice of nonrenewal termination (as defined in Ms. Selden’s employment agreement) prior to the beginning of a change in control termination period (as defined in Ms. Selden’s employment agreement), then the Selden Salary Continuation Payments shall be for a period of 18 months, the Selden Bonus Continuation Payments shall be equal to 1.5 times the Annual Bonus, and the continuation of benefits shall apply for only 18 months. |
in a lump sum within 30 days of the date of termination, the Accrued Obligations; the Salary Continuation Payments or the Selden Salary Continuation Payments, as applicable; the Bonus Continuation Payments or the Selden Bonus Continuation Payments, as applicable; for a period of 24 months following the date of termination (for Ms. Selden) or 12 months following the date of termination (for Mr. Sunderland, and Mr. Dyberg) or for any longer period provided for under the terms of the appropriate plan, program, practice or policy, a continuation of benefits to the executive and/or his or her family at a level and in an amount that is at least equal to that which would have been provided by us to them had the executive continued his employment, provided, however, that we may elect to pay the executive a payment equal to 24 or 12 months’ premiums (as applicable) under our benefit plans in lieu of the continuation of such benefits, and provided, further, that if the executive becomes reemployed with another employer and is eligible to receive any of the benefits that had been provided by us, then the benefits we provide shall be secondary; and to the extent not otherwise paid or provided, for a period of 24 months following the date of termination (for Ms. Selden) or 12 months following the date of termination (for Mr. Sunderland, and Mr. Dyberg), any other amounts or benefits required to be paid or provided or which the executive is eligible to receive under any of our other existing benefit plans; provided, however, if Ms. Selden terminates her employment as a result of our notice of nonrenewal termination (as defined in Ms. Selden’s employment agreement) prior to the beginning of a change in control termination period (as defined in Ms. Selden’s employment agreement), then the Selden Salary Continuation Payments shall be for a period of 18 months, the Selden Bonus Continuation Payments shall be equal to 1.5 times the Annual Bonus, and the continuation of benefits shall apply for only 18 months. In the event that Ms. Selden’s employment is terminated by the Company without cause or by her for good reason, Ms. Selden will become vested in a prorated portion of each of her then-unvested outstanding equity awards, determined by multiplying the number of shares of our common stock scheduled to vest at the vesting date immediately following her termination of employment by a fraction, the numerator of which is the number of days following the last vesting date (or the grant date if no portion of the award has vested) that she was employed and the denominator of which is the number of days from the last vesting date or the grant date, as applicable, to the date the next tranche of such outstanding equity award would have vested, rounded to the nearest whole share, subject, however, in the case of performance-vesting awards to the attainment of the applicable performance criteria. In the event that we terminate Mr. Beckett’s or Dr. Smith’s employment other than for cause or disability or they terminate their employment for good reason, we are required to pay, or provide, to the executive | 66 | PURPOSE
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(subject (subject to the executive’s timely execution of a release of claims and other certain restrictive covenants): (i) the Accrued Amounts; (ii) the Earned Bonus; (iii) an amount equal to his base salary in effect immediately prior to the date of termination plus the product of (x) the annual cash bonus that would have been earned for the entire calendar year in which the date of termination occurs based on the actual level of achievement of any Company performance goals for such year and the higher of the actual or target level of achievement of any individual performance goals for such year; and (y) a fraction, the numerator of which is the number
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TABLE OF CONTENTS of days the executive was employed by the Company during the calendar year in which the date of termination occurs and the denominator of which is the number of days in such year, paid on the date that annual bonuses are paid to our executives or the 61st day following the date of termination; and (iv) any amount, determined in the sole discretion of the MDC Committee, equal to 12 times the difference between (x) the monthly COBRA premium paid by the executive for group health plan coverage and (y) the monthly premium amount paid by the executive immediately prior to the date of termination for the same coverage, payable in a single lump sum on the 61st day following the date of termination.
Termination following a change of control.control. If within 60 days prior to or one year after a change in control (as defined below), we terminate Ms. Selden’s employment, or if within one year after a change in control, we terminate Dr. Dyke’s employment or if within 180 days after a change of control, we terminate Mr. Sunderland’s, or Mr. Dyberg’s employment, other than for cause or disability or the executive terminates his or her employment for good reason, we are required to pay, or provide, to the executive (subject to the NEO’s timely execution of a release of claims in respect of all but the first item below): | ● | in a lump sum within 30 days of the effective date of termination, the Accrued Obligations; |
| ● | an amount equal to the sum of (i) two times the executive’s annual base salary and (ii) two times the executive’s annual incentive bonus, to the extent the Company and the executive were then satisfying applicable performance targets, adjusted for the short period, in a lump sum within 60 days of the effective date of termination; |
| ● | for a period of 24 months following the date of termination (for Ms. Selden) or 12 months following the date of termination (for Dr. Dyke, Mr. Sunderland, and Mr. Dyberg) or for any longer period provided for under the terms of the appropriate plan, program, practice, or policy, a continuation of benefits to the executive and/or his or her family at a level and in an amount that is at least equal to that which would have been provided by us to them had the executive continued his or her employment, provided, however, that we may elect to pay the executive a payment equal to 24 or 12 months’ (as applicable) premiums under our benefit plans in lieu of the continuation of such benefits, and provided, further, that if the executive becomes reemployed with another employer and is eligible to receive any of the benefits that had been provided by us, then the benefits we provide shall be secondary; and |
| ● | to the extent not otherwise paid or provided, for a period of 24 months following the date of termination (for Ms. Selden) or 12 months following the date of termination (for Dr. Dyke, Mr. Sunderland, and Mr. Dyberg), any other amounts or benefits required to be paid or provided or which the executive is eligible to receive under any of our other existing benefit schemes. |
in a lump sum within 30 days of the effective date of termination, the Accrued Obligations; an amount equal to the sum of (i) two times the executive’s annual base salary and (ii) two times the executive’s annual incentive bonus, to the extent the Company and the executive were then satisfying applicable performance targets, adjusted for the short period, in a lump sum within 60 days of the effective date of termination; for a period of 24 months following the date of termination (for Ms. Selden) or 12 months following the date of termination (for Mr. Sunderland and Mr. Dyberg) or for any longer period provided for under the terms of the appropriate plan, program, practice, or policy, a continuation of benefits to the executive and/or his or her family at a level and in an amount that is at least equal to that which would have been provided by us to them had the executive continued his or her employment, provided, however, that we may elect to pay the executive a payment equal to 24 or 12 months’ (as applicable) premiums under our benefit plans in lieu of the continuation of such benefits, and provided, further, that if the executive becomes reemployed with another employer and is eligible to receive any of the benefits that had been provided by us, then the benefits we provide shall be secondary; and to the extent not otherwise paid or provided, for a period of 24 months following the date of termination (for Ms. Selden) or 12 months following the date of termination (Mr. Sunderland and Mr. Dyberg), any other amounts or benefits required to be paid or provided or which the executive is eligible to receive under any of our other existing benefit schemes. In the event that any amounts payable or benefits to be provided to the executive under the employment agreement or otherwise would be nondeductible to us by reason of Section 280G of the Code and would subject the executive to the excise tax imposed by Section 4999 of the Code, then such payments and/or benefits will be reduced to the extent necessary so that such payments or benefits will no longer be ineligible for deduction by reason of Section 280G of the Code or subject to the excise tax imposed by Section 4999 of the Code unless the executive would receive at least $50,000 more on a net after-tax basis if such payments and benefits were not reduced. | 67 | PURPOSE
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If within six months after a change of control, we terminate Mr. Beckett’s or Dr. Smith’s employment without cause or the executive terminates his or her employment for good reason (as defined below), the executive shall be entitled to receive the Accrued Amounts and the Earned Bonus. In addition, we are required to pay to the executive (subject to the executive’s timely execution of a release of claims and other certain restrictive covenants): an amount equal to the 1.5 times the sum of the base salary in effect, plus the executive’s target annual bonus for the year in which the date of termination occurs, payable in a single lump sum on the 61st day following the date of termination; and | ● | an amount equal to the 1.5 times the sum of the base salary in effect, plus the executive’s target annual bonus for the year in which the date of termination occurs, payable in a single lump sum on the 61st day following the date of termination; and | 67
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TABLE OF CONTENTS | ● | an amount, determined in the sole discretion of the Committee, equal to 18 times the difference between (x) the monthly COBRA premium paid by the executive for group health plan coverage for the executive, and (y) the monthly premium amount paid by the executive immediately prior to the date of termination for the same coverage, payable in a single lump sum on the 61st day following the date of termination. |
an amount, determined in the sole discretion of the Committee, equal to 18 times the difference between (x) the monthly COBRA premium paid by the executive for group health plan coverage for the executive, and (y) the monthly premium amount paid by the executive immediately prior to the date of termination for the same coverage, payable in a single lump sum on the 61st day following the date of termination. Acceleration of equity awards upon termination for death, for disability or following a change of control.control. Under Ms. Selden’s, Dr. Dyke’s, Mr. Sunderland’s, and Mr. Dyberg’s employment agreements, all equity awards granted to the NEO under any of our equity incentive plans that are outstanding immediately prior to the following events will vest and become fully exercisable as follows: (i) upon termination of the executive’s employment by the executive’s death; (ii) upon our termination of the executive’s employment for disability; or (iii) upon termination of the executive’s employment, in the 12-month period following a change of control, or in the 60 day period prior to or one year period after a change of control, in the case of Ms. Selden (a) by us for any reason other than for disability or cause, or for no reason at all, or (b) by the executive for good reason in the 12-month period following a change of control. However, for purposes of clauses (i) and (ii) above, any equity awards that are subject to performance conditions for a performance period not yet completed will be deemed to be vested and exercisable in a pro-rated amount equivalent to the portion of the performance period that has passed and assuming achievement of the performance conditions for that period at the “target” level, and, for purposes of clause (iii) above, any equity awards that are subject to performance conditions for a performance period not yet completed will be deemed to be vested and exercisable in full at the “target” level.The Executive Severance Plan does not affect the term of any outstanding equity awards. In the event Mr. Beckett’s or Dr. Smith’s employment is terminated, the treatment of any outstanding equity awards is determined in accordance with the terms of the Company equity plan or plans under which they were granted and any applicable award agreements.
Terms defined in employment agreements.agreements. For purposes of Ms. Selden’s, Dr. Dyke’s, Mr. Sunderland’s, and Mr. Dyberg’s employment agreements, the following definitions apply:“Cause” means: | ● | refusal by the executive to follow a lawful written order of the Chair of our Board, the Board, or for each executive except Ms. Selden, our Chief Executive Officer; |
| ● | the executive’s engagement in conduct materially injurious to us or our reputation; |
| ● | dishonesty of a material nature that relates to the performance of the executive’s duties under his or her employment agreement; |
| ● | the executive’s conviction for any crime involving moral turpitude or any felony; or |
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| ● | the executive’s continued failure to perform his or her duties under his or her employment agreement (except due to the executive’s incapacity as a result of physical or mental illness) to the satisfaction of the Board for a period of at least 30 consecutive days after written notice is delivered to the executive specifically identifying the manner in which the NEO has failed to perform his or her duties. |
the executive’s engagement in conduct materially injurious to us or our reputation; dishonesty of a material nature that relates to the performance of the executive’s duties under his or her employment agreement; the executive’s conviction for any crime involving moral turpitude or any felony; or the executive’s continued failure to perform his or her duties under his or her employment agreement (except due to the executive’s incapacity as a result of physical or mental illness) to the satisfaction of the Board for a period of at least 30 consecutive days after written notice is delivered to the executive specifically identifying the manner in which the NEO has failed to perform his or her duties. “Change of control” generally means: our dissolution or liquidation, or a merger, consolidation or reorganization of us with one or more other entities in which we are not the surviving entity; a sale of substantially all of our assets to another person or entity; or | ● | our dissolution or liquidation, or a merger, consolidation or reorganization of us with one or more other entities in which we are not the surviving entity; | 68
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TABLE OF CONTENTS | ● | a sale of substantially all of our assets to another person or entity; or |
| ● | any transaction (including without limitation a merger or reorganization in which we are the surviving entity) which results in any person or entity owning 50% or more of the combined voting power of all classes of our stock. |
any transaction (including without limitation a merger or reorganization in which we are the surviving entity) which results in any person or entity owning 50% or more of the combined voting power of all classes of our stock. “Good reason” generally means: | ● | the assignment to the executive of duties inconsistent in any material respect with the NEO’s position as set forth in, or in accordance with, his or her employment agreement, excluding an isolated, insubstantial and inadvertent action that we remedy promptly after receipt of notice from the executive; |
| ● | any material failure by us to comply with any provisions of the executive’s employment agreement, excluding an isolated, insubstantial and inadvertent failure that we remedy promptly after receipt of notice from the executive; |
| ● | there is a change of control and the executive does not continue in his or her position, or any other office he or she holds at the time of the transaction, of the most senior resulting entity succeeding to our business; |
| ● | any material failure by us to require any successor or any party that acquires control of us, whether directly or indirectly, by purchase, merger, consolidation or otherwise, or all or substantially all of our business and/or assets to assume expressly and agree to perform the executive’s employment agreement in the same manner and to the same extent; |
| ● | with respect only to Ms. Selden, any material reduction in her base salary or annual bonus opportunity; |
| ● | with respect only to Ms. Selden, after her initial relocation, any requirement that her primary workplace be located more than 50 miles from our current headquarters; and |
| ● | with respect only to Ms. Selden, her election to terminate employment after the end of the term or any renewal term if we have delivered to her an written notice of intent not to renew. |
the assignment to the executive of duties inconsistent in any material respect with the NEO’s position as set forth in, or in accordance with, his or her employment agreement, excluding an isolated, insubstantial and inadvertent action that we remedy promptly after receipt of notice from the executive; any material failure by us to comply with any provisions of the executive’s employment agreement, excluding an isolated, insubstantial and inadvertent failure that we remedy promptly after receipt of notice from the executive; there is a change of control and the executive does not continue in his or her position, or any other office he or she holds at the time of the transaction, of the most senior resulting entity succeeding to our business; any material failure by us to require any successor or any party that acquires control of us, whether directly or indirectly, by purchase, merger, consolidation or otherwise, or all or substantially all of our business and/or assets to assume expressly and agree to perform the executive’s employment agreement in the same manner and to the same extent; with respect only to Ms. Selden, any material reduction in her base salary or annual bonus opportunity; with respect only to Ms. Selden, after her initial relocation, any requirement that her primary workplace be located more than 50 miles from our current headquarters; and with respect only to Ms. Selden, her election to terminate employment after the end of the term or any renewal term if we have delivered to her a written notice of intent not to renew. None of the foregoing constitute good reason if the executive consents in writing to such event, and none of the foregoing constitute good reason unless the executive provides notice to us within 90 days of the initial existence of such grounds and we fail to cure the asserted grounds for good reason within 30 days of receipt of such notice from the executive. In order to terminate his or her employment for good reason, the executive must terminate employment within 30 days of the end of the cure period if the breach has not been cured. | 69 | PURPOSE
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Terms defined in the Executive Severance Plan.Plan. For purposes of the Executive Severance Plan, which currently only applies to Mr.Beckett,Mr. Beckett and Dr. Smith, the following definitions apply: gross negligence or willful misconduct in connection with the performance of duties; conviction of, or pleading guilty or nolo contendere to, a criminal offense (other than minor traffic offenses); or material breach of any term of any employment, consulting or other services, confidentiality, intellectual property, or non-competition agreements, if any, between such executive and the Company or an affiliate. | ● | gross negligence or willful misconduct in connection with the performance of duties; | 69
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TABLE OF CONTENTS | ● | conviction of, or pleading guilty or nolo contendere to, a criminal offense (other than minor traffic offenses); or |
| ● | material breach of any term of any employment, consulting or other services, confidentiality, intellectual property, or non-competition agreements, if any, between such executive and the Company or an affiliate. |
“Change of control” generally means: | ● | the dissolution or liquidation of the Company or a merger, consolidation, or reorganization of the Company with one or more other entities in which the Company is not the surviving entity; |
| ● | a sale of substantially all of the assets of the Company to another person (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act); or |
| ● | any transaction (including without limitation a merger or reorganization in which the Company is the surviving entity) which results in any person owning 50% or more of the combined voting power of all classes of common stock of the Company. |
the dissolution or liquidation of the Company or a merger, consolidation, or reorganization of the Company with one or more other entities in which the Company is not the surviving entity; a sale of substantially all of the assets of the Company to another person (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act); or any transaction (including without limitation a merger or reorganization in which the Company is the surviving entity) which results in any person owning 50% or more of the combined voting power of all classes of common stock of the Company. “Good reason” generally means: | ● | a material diminution in the executive’s authority, duties or responsibilities; |
| ● | a material reduction in the executive’s base salary; or |
| ● | a material change in the geographic location at which the executive must perform services, including a required relocation of the executive’s principal place of employment of more than 50 miles. |
a material diminution in the executive’s authority, duties or responsibilities; a material reduction in the executive’s base salary; or a material change in the geographic location at which the executive must perform services, including a required relocation of the executive’s principal place of employment of more than 50 miles. Equity Retirement Policy.Policy. In July 2016, the MDC Committee approved the Equity Retirement Policy, effective January 1, 2017. The Equity Retirement Policy provides for accelerated vesting at retirement of any (i) time-based awards and (ii) subject to the achievement of the applicable performance measure, performance-based awards, that were granted at least one year prior to the date of retirement. The Equity Retirement Policy applies to employees who have voluntarily terminated service, reached an age of 62 years, and provided at least 10 years of continuous service to the Company.The only NEOCompany as of and through the date of their retirement.
In 2021, there were no NEOs eligible for the Equity Retirement Policy, though Mr. Sunderland will become eligible in 2020 was Dr. Boston.September 2022. Payment and Benefit Estimates The table below reflects the potential termination or change in control payments pursuant to the employment agreements and arrangements described above, calculated as though the applicable triggering event occurred, ( i.e.the NEO’s employment was terminated, or the applicable change in control occurred) on December 31, 20202021 (the last trading day of 2020)2021), using the closing price of our common stock on Nasdaq of $30.48$22.25 on December 31, 2020.2021. As discussed in the narrative above, upon termination for cause or by the NEO without good reason, the NEO is generally only entitled to receive amounts they are owed as of the termination date (e.g., salary, benefits, and, in limited cases, any previously earned, but unpaid, annual incentive compensation). These accrued amounts are described | 70 | PURPOSE
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in the narrative above, and we have not included these earned, but unpaid amounts, in the termination events included in the table below. | | | 70
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TABLE OF CONTENTS | | | Aggregate
Severance
Pay(1)
($) | | | Accelerated
Vesting of
Equity
Awards
($) | | | Welfare
Benefits
Continuation
($) | | | Total
($) | | | Angela K. Selden | | | | | | | | | | | | | | | | | | Termination by Reason of Disability | | $ | 2,394,000 | | | $ | 3,894,535 | | | | — | | | $ | 6,288,535 | | | Termination other than for Cause or Disability or by Executive for Good Reason | | $ | 2,394,000 | | | $ | 3,894,535 | | | $ | 52,236 | | | $ | 6,340,771 | | | Termination other than for Cause within 60 days before or 1 year after a Change in Control | | $ | 2,394,000 | | | $ | 3,894,535 | | | $ | 52,236 | | | $ | 6,340,771 | | | Termination by Executive for Good Reason 12 months after a Change in Control | | $ | 2,394,000 | | | $ | 3,894,535 | | | $ | 52,236 | | | $ | 6,340,771 | | | Termination by Reason of Death | | | — | | | $ | 3,894,535 | | | | — | | | $ | 3,894,535 | | | Wade T. Dyke | | | | | | | | | | | | | | | | | | Termination by Reason of Disability | | $ | 408,038 | | | $ | 424,190 | | | | — | | | $ | 832,228 | | | Termination other than for Cause or Disability or by Executive for Good Reason | | $ | 408,038 | | | $ | 424,190 | | | $ | 17,444 | | | $ | 849,672 | | | Termination by Executive for Good Reason within 12 months of a Change in Control | | $ | 544,050 | | | $ | 424,190 | | | $ | 17,444 | | | $ | 985,685 | | | Termination by Reason of Death | | | — | | | $ | 424,190 | | | | — | | | $ | 424,190 | | | Richard W. Sunderland | | | | | | | | | | | | | | | | | | Termination by Reason of Disability | | $ | 962,251 | | | $ | 1,333,134 | | | | — | | | $ | 2,295,385 | | | Termination other than for Cause or Disability or by Executive for Good Reason | | $ | 962,251 | | | | — | | | $ | 25,713 | | | $ | 987,964 | | | Termination other than for Cause or by Executive for Good Reason within 180 days of a Change in Control | | $ | 1,283,001 | | | $ | 1,333,134 | | | $ | 25,713 | | | $ | 2,641,848 | | | Termination other than for Cause or by Executive for Good Reason within 12 months of a Change in Control | | $ | 962,251 | | | $ | 1,333,134 | | | $ | 25,713 | | | $ | 2,321,098 | | | Termination by Reason of Death | | | — | | | $ | 1,333,134 | | | | — | | | $ | 1,333,134 | | | Patrik Dyberg | | | | | | | | | | | | | | | | | | Termination by Reason of Disability | | $ | 819,315 | | | $ | 981,517 | | | | — | | | $ | 1,800,832 | | | Termination other than for Cause or Disability or by Executive for Good Reason | | $ | 819,315 | | | | — | | | $ | 20,818 | | | $ | 840,133 | | | Termination other than for Cause or by Executive for Good Reason within 180 days of a Change in Control | | $ | 1,092,420 | | | $ | 981,517 | | | $ | 20,818 | | | $ | 2,094,755 | | | Termination other than for Cause or by Executive for Good Reason within 12 months of a Change in Control | | $ | 819,315 | | | $ | 981,517 | | | $ | 20,818 | | | $ | 1,821,650 | | | Termination by Reason of Death | | | — | | | $ | 981,517 | | | | — | | | $ | 981,517 | | | Thomas A. Beckett | | | | | | | | | | | | | | | | | | Termination other than for Cause or Disability or by Executive for Good Reason | | $ | 508,274 | | | | — | | | $ | 21,551 | | | $ | 529,825 | | | Termination other than for cause within six months of a Change in Control | | $ | 672,716 | | | $ | 396,057 | | | $ | 32,326 | | | $ | 1,101,099 | | | Termination other than for cause after six months but within 12 months of a Change in Control | | | — | | | $ | 396,057 | | | | — | | | $ | 396,057 | | | Termination by the Executive for good reason within six months of a Change in Control | | $ | 672,716 | | | | — | | | $ | 32,326 | | | $ | 705,042 | |
| | Angela K. Selden | | | | | | | | | | | | | | | | Termination by Reason of Disability | | | $ 2,565,000 | | | $ 2,966,889 | | | — | | | $5,531,889 | | | | Termination other than for Cause or Disability or by Executive for Good Reason | | | $2,565,000 | | | $2,966,889 | | | $ 63,948 | | | $5,595,837 | | | | Termination other than for Cause within 60 days before or 1 year after a Change in Control | | | $2,565,000 | | | $2,966,889 | | | $63,948 | | | $5,595,837 | | | | Termination by Executive for Good Reason 12 months after a Change in Control | | | $2,565,000 | | | $2,966,889 | | | $63,948 | | | $5,595,837 | | | | Termination by Reason of Death | | | — | | | $2,966,889 | | | — | | | $2,966,889 | | | | Richard W. Sunderland, Jr | | | | | | | | | | | | | | | | Termination by Reason of Disability | | | $981,495 | | | $934,700 | | | — | | | $1,916,195 | | | | Termination other than for Cause or Disability or by Executive for Good Reason | | | $981,495 | | | — | | | $27,449 | | | $1,008,944 | | | | Termination other than for Cause or by Executive for Good Reason within 180 days of a Change in Control | | | $1,308,660 | | | $934,700 | | | $27,449 | | | $2,270,809 | | | | Termination other than for Cause or by Executive for Good Reason within 12 months of a Change in Control | | | $981,495 | | | $934,700 | | | $27,449 | | | $1,943,644 | | | | Termination by Reason of Death | | | — | | | $934,700 | | | — | | | $934,700 | | | | Patrik Dyberg | | | | | | | | | | | | | | | | Termination by Reason of Disability | | | $835,703 | | | $646,941 | | | — | | | $1,482,644 | | | | Termination other than for Cause or Disability or by Executive for Good Reason | | | $835,703 | | | — | | | $23,360 | | | $859,063 | | | | Termination other than for Cause or by Executive for Good Reason within 180 days of a Change in Control | | | $1,114,269 | | | $646,941 | | | $23,360 | | | $1,784,570 | | | | Termination other than for Cause or by Executive for Good Reason within 12 months of a Change in Control | | | $835,703 | | | $646,941 | | | $23,360 | | | $1,506,004 | | | | Termination by Reason of Death | | | — | | | $646,941 | | | — | | | $646,941 | | | | Thomas A. Beckett | | | | | | | | | | | | | | | | Termination other than for Cause or Disability or by Executive for Good Reason | | | $474,501 | | | — | | | $25,824 | | | $500,325 | | | | Termination other than for cause within six months of a Change in Control | | | $699,624 | | | $379,784 | | | $38,734 | | | $1,118,142 | | | | Termination other than for cause after six months but within 12 months of a Change in Control | | | — | | | $379,784 | | | — | | | $379,784 | | | | Termination by the Executive for good reason within six months of a Change in Control | | | $699,624 | | | — | | | $25,824 | | | $725,448 | | | | Vernon C. Smith | | | | | | | | | | | | | | | | Termination other than for Cause or Disability or by Executive for Good Reason | | | $480,854 | | | — | | | $31,698 | | | $512,552 | | | | Termination other than for cause within six months of a Change in Control | | | $704,376 | | | $300,464 | | | $47,547 | | | $1,052,387 | | | | Termination other than for cause after six months but within 12 months of a Change in Control | | | — | | | $300,464 | | | — | | | $300,464 | | | | Termination by the Executive for good reason within six months of a Change in Control | | | $704,376 | | | — | | | $31,698 | | | $736,074 | |
(1) We have assumed for purposes of calculating the aggregate severance pay that (a) our financial performance and, if applicable, the NEO’s successor’s performance would be sufficient for the NEO to receive the maximum payout and (b) in the case of a termination due to Disability for Ms. Selden, Dr. Dyke, and Messrs. Sunderland, Dyberg, and Beckett, and Dr. Smith amounts are not reduced by any payment under our disability benefit plans. | 71 | | 71
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TABLE OF CONTENTS Dr. Dyke’s Termination Benefits Dr. Boston’s Retirement Benefits In August 2019, we entered into an amended and restatedDyke’s departure on November 4, 2021 was treated as a termination without cause under his employment agreement (the “Amended Agreement”) with Dr. Boston in connection with his retirement from the position of President and Chief Executive Officer, effective September 23, 2019, that provided for certain payments upon his retirement, which was expected to occur on June 30, 2020. On June 30, 2020, we entered into an amendment to the agreement with Dr. Boston, and pursuant to that amendment Dr. Boston retired as APUS President on August 12, 2020 (the “Retirement Date”). In connection with Dr. Boston’s retirement on the Retirement Date, we were required to pay, or provide, to him:
| ● | an amount equal to the sum of (i) Dr. Boston’s full base salary through the date of termination, (ii) his annual bonus, prorated for the period of his service during 2020, and (iii) any previously deferred and unpaid compensation; |
| ● | an amount equal to two times Dr. Boston’s 2019 base salary and two times his 2019 annual bonus; |
| ● | a pro rata annual bonus for 2020, determined based on actual performance and paid at the same time annual bonuses for 2020 were paid to our senior executives generally; |
| ● | for 24 months after the date of termination, or any longer period as may be provided by the terms of the appropriate plan, program, practice or policy, a continuation of welfare benefits to Dr. Boston and/or his family at a level and in an amount that is at least equal to that which would have been provided by the Company to them had Dr. Boston continued his employment for such period; and |
| ● | for 24 months after the date of termination, any other amounts or benefits required to be paid or provided or that Dr. Boston is eligible to receive under any of our benefit schemes. |
Consistent with our retirement policy for equity incentive awards, Dr. Boston’s then-outstanding equity awards vested in full on the Retirement Date, except that equity inventive awards granted in 2020 were forfeited pursuantagreement. Pursuant to the terms of the Amended Agreement.
Pursuant to the Amended Agreement,his employment agreement, Dr. Boston isDyke was entitled to the sum of (A) $1,384,140,(i) $675,000, representing two1.5 times Dr. Boston’s 2019his annual base salary, and (B) $1,245,726, representing two times Dr. Boston’s 2019 Annual Bonus, paidpayable in substantially equal proportionate installments in accordance with our normal payroll practices overfor a period of 24 months.18 months, plus (ii) $274,128, representing his full 2021 annual bonus. He was also entitled under his employment agreement to his annual bonus for the period from January 1, 2022 through May 4, 2023, only if net income has increased from the same period in the prior year and the performance targets established for the successor President of APUS (or, to the extent there is alsono successor, the most comparable executive selected by the MDC Committee in its sole discretion) are satisfied for that period. This would amount to $303,904 in annual bonus assuming target payout. In addition, Dr. Dyke was entitled (i) for a period of 12 months following November 4, 2021 or for any longer period provided for under the terms of the appropriate plan, program, practice or policy, to a continuation of benefits to Dr. Dyke and/or his family at a level and in an amount that is at least equal to that which would have been provided by us to him had Dr. Dyke continued his employment, or a payment equal to 12 months’ premiums under our benefit plans in lieu of the continuation of such benefits; and (ii) to the extent not otherwise paid or provided, for a period of 12 months following November 4, 2021, to any other amounts or benefits required to be paid or provided or that he is eligible to receive under any of our other existing benefit schemes. In total, he was entitled to up to $94,169$46,144 in continued benefits over a period of 24 months. He was paid a pro rata bonus for calendar year 2020 of $400,770 and received accelerated vesting of equity awards for a value of $1,558,254.benefits. The total estimated value of Dr.Boston’sDr. Dyke’s benefits upon termination, assuming target bonus payout from the period from January 1, 2022 through May 4, 2023, is $4,683,059.
$1,299,176. Consistent with the terms of our equity award agreements, Dr. Dyke forfeited his unvested equity incentive awards upon his termination. Equity Compensation Plan Information The following table summarizes our equity compensation plan information as of December 31, 2020.2021. All equity compensation plans have been approved by Company stockholders. | Plan | | Number of
securities
to be
issued
upon
exercise of outstanding
options
(a) | | | Weighted-
average
exercise
price of
outstanding
options
(b) | | | Number of
securities
remaining
available for
future
issuance
under equity
compensation
plans
(excluding
securities
reflected in
column (a))
(c) | | | Equity compensation plans approved by Company stockholders | | | 60,504 | | | $ | 26.45 | | | | 1,964,062 | | | Equity compensation plans not approved by Company stockholders | | | — | | | | — | | | | — | | | Total | | | 60,504 | | | $ | 26.45 | | | | 1,964,062 | |
| | Equity compensation plans approved by Company stockholders | | | 101,520 | | | $ 26.65 | | | 1,410,394 | | | | Equity compensation plans not approved by Company stockholders | | | — | | | — | | | — | | | | Total | | | 101,520 | | | $26.65 | | | 1,410,394 | |
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TABLE OF CONTENTS
AMENDMENT NUMBER TWO TO
AMERICAN PUBLIC EDUCATION, INC. 2017 OMNIBUS INCENTIVE PLAN We are asking our stockholders to consider and to approve adoption of an amendment (the “Plan Amendment”) to the American Public Education, Inc. 2017 Omnibus Incentive Plan (the “2017 Plan”) to increase the number of shares authorized for issuance thereunder by 1,125,000 and to clarify provisions on vesting in dividends or dividend equivalent rights paid on unvested awards and the determination of fair market value. On March 29, 2022, upon the recommendation of our MDC Committee, our Board unanimously approved the Plan Amendment subject to the approval of the Plan Amendment by our stockholders at this Annual Meeting. The 2017 Plan was originally approved by stockholders and became effective on May 12, 2017 (the “Original Effective Date”), and was thereafter amended on May 15, 2020 to increase by 1,425,000 the number of shares authorized for issuance under the 2017 Plan. The Board recommends that stockholders approve the Plan Amendment because the 2017 Plan (as amended, the “Amended Plan”) is important to our continued growth and success and is required for us to be able to continue to make equity awards to key persons in a size that the Board believes necessary to accomplish our goals. If stockholders do not approve the Plan Amendment, the shares available for future awards under the 2017 Plan will soon be exhausted, and we will be unable to issue equity awards and would be reliant on cash awards. An inability to grant equity-based awards would have significant negative consequences to us and our stockholders including the following: Inability to Attract and Retain Executive Leaders. Equity awards are an essential element of a competitive pay package, and without the ability to grant equity incentives, it would be difficult to attract and retain an appropriate executive team. Inhibited Pay for Performance and Alignment with Stockholders. A key element of our compensation philosophy is to pay a meaningful portion of variable compensation in the form of stock-based awards in order to strengthen the alignment of our employee and stockholder interests, and if we do not have the ability to make equity grants, our employees would have less of an incentive to drive long-term value creation. Increased Cash Compensation. We would be compelled to alter our compensation programs to increase the cash-based components, which would not provide the same benefits as equity awards and would limit cash available for other purposes. The purpose of the Amended Plan is to (i) provide incentives to eligible persons to contribute to the success of the Company and to operate and manage our business in a manner that will provide for the long-term growth and profitability of the Company and that will benefit our stockholders and other important stakeholders, and (ii) provide a means of recruiting, rewarding, and retaining key personnel. To this end, the Amended Plan provides for the grant of options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”) (including deferred stock units), unrestricted stock, dividend equivalent rights, performance shares and other performance-based awards, other equity-based awards, and cash bonus awards. | | | 73
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TABLE OF CONTENTS Notable Features of the Amended Plan As described in more detail below, notable features of the Amended Plan include: granting of options or SARs only at a per share exercise price at least equal to the fair market value of a share of our common stock on the grant date; granting of options or SARs with a ten-year maximum term; no repricing of options or SARs without prior stockholder approval; further clarifying changes to emphasize that there shall be no vesting in dividends or dividend equivalent rights paid on unvested awards of any type unless the underlying awards vest; no liberal share recycling; no reload or “evergreen” share replenishment features; and limiting the total maximum compensation that may be paid or granted to a non-employee director during a single calendar year. Summary of the Material Terms of the Amended Plan A summary of the material terms of the Amended Plan is set forth below. This summary is qualified in its entirety by reference to the 2017 Plan, as amended, and the Plan Amendment. The 2017 Plan is filed as Exhibit 10.1 to our Current Report on Form 8-K filed on May 15, 2017, the 2020 amendment is filed as Exhibit 10.1 to our Current Report on Form 8-K filed on May 18, 2020 and the Plan Amendment is attached as Annex A to this Proxy Statement. Both the 2017 Plan, as amended, and the Plan Amendment are incorporated by reference into this proposal. We encourage stockholders to read and refer to the 2017 Plan, the 2020 amendment, and the Plan Amendment for a more complete description of the Amended Plan. Effective Date; Term. If the Plan Amendment is approved by our stockholders at the annual meeting, the Amended Plan will become effective as of the date of the Annual Meeting (the “Effective Date”), and unless terminated sooner in accordance with the terms of the Amended Plan or extended with stockholder approval, the Amended Plan will terminate on May 15, 2030. Administration of the Amended Plan. The Amended Plan generally will be administered by a committee, which we refer to as the “Committee,” consisting of two or more directors of the Company. Each such director will be required to qualify as a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act and, for so long as our common stock is listed on Nasdaq, an “independent director” under the Nasdaq listing rules. The Committee initially will be the MDC Committee and may be a subcommittee of the MDC Committee that satisfies the foregoing requirements. The Board will also be authorized to appoint one or more committees of the Board consisting of one or more directors of the Company who need not meet the independence requirements above for certain limited purposes permitted by the Amended Plan, and to the extent permitted by applicable law, the Committee will be authorized to delegate authority to the President and Chief Executive Officer of the Company and/or any other officers of the Company for certain limited purposes permitted by the Amended Plan. The Board will retain the authority under the Amended Plan to exercise any or all of the powers and authorities related to the administration and implementation of the Amended Plan. References below to the Committee include a reference to the Board or another committee appointed by the Board for those periods in which the Board or such other committee appointed by the Board is acting. | | | 74
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TABLE OF CONTENTS Except where the authority to act on such matters is specifically reserved to the Board under the Amended Plan or applicable law, the Committee will have full power and authority to interpret and construe all provisions of the Amended Plan, any award, and any award agreement, and take all actions and to make all determinations required or provided for under the Amended Plan, any award, and any award agreement, including the authority to: designate grantees of awards; determine the type or types of awards to be made to a grantee; determine the number of shares of our common stock subject to an award or to which an award relates; establish the terms and conditions of each award; prescribe the form of each award agreement; subject to limitations in the Amended Plan (including the prohibition on repricing of options and SARs without stockholder approval), amend, modify, or supplement the terms of any outstanding award; and make substitute awards. Types of Awards. The Amended Plan provides for the grant of options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”) (including deferred stock units), unrestricted stock, dividend equivalent rights, performance shares and other performance-based awards, other equity-based awards, and cash bonus awards. Eligibility. All of our employees and the employees of our subsidiaries and affiliates are eligible to receive awards under the Amended Plan. In addition, our non-employee directors and consultants and advisors who perform services for us and our subsidiaries and affiliates may receive awards under the Amended Plan, other than incentive stock options. As of March 28, 2022, there were eight non-employee directors and 5,964 employees of the Company and our subsidiaries who would be eligible to participate in the Amended Plan. Shares Reserved for Issuance. The maximum number of shares of common stock that may be issued under the Amended Plan (the “share limit”) following the Effective Date will be equal to the sum of (i) the 1,125,000 shares of our common stock that are the subject of the Plan Amendment, plus the number of shares that were eligible to be issued under (x) the Amendment number one, which included 1,425,000 shares of our common stock, and (y) the 2017 Plan as of the Original Effective Date, which included 1,675,000 shares of our common stock (or a total of 4,225,000 shares), plus (ii) the number of shares of our common stock available for future awards under the 2011 Plan as of the Original Effective Date (less the actual number of shares of our common stock issued, if any, in excess of the target number of shares of common stock upon settlement of the outstanding performance-based deferred stock units under the 2011 Plan), which was 246,577, plus (iii) the number of shares of our common stock related to awards outstanding under the 2011 Plan and any other Prior Plans (as defined in the 2017 Plan) as of the Original Effective Date that thereafter terminated or terminate by expiration or forfeiture, cancellation, or otherwise without the issuance of such shares of common stock. The maximum number of shares of our common stock available for issuance pursuant to incentive stock options granted under the Plan will be the same as the number of shares of our common stock reserved for issuance under the Amended Plan. The shares of our common stock that be issued under the Amended Plan may be authorized and unissued shares of our common stock, treasury shares, or any combination of the foregoing. Share Usage. Shares of our common stock that are subject to awards of options or SARs will be counted against the share limit as one share for every one share subject to the award. Any shares of our | | | 75
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TABLE OF CONTENTS common stock that are subject to awards other than options or SARs will be counted against the share limit as 1.69 shares for every one share subject to the award. The number of shares subject to any SARs awarded under the Amended Plan will be counted against the share limit regardless of the number of shares actually issued to settle the SARs upon exercise, and at least the target number of shares issuable under a performance-based award will be counted against the share limit as of the grant date but such number will be adjusted to equal the actual number of shares issued upon settlement of the performance-based award to the extent different from such number of shares. If any awards terminate, expire, or are canceled, forfeited, exchanged, or surrendered without having been exercised or paid or if any awards are forfeited or expire or otherwise terminate without the delivery of any shares of our common stock or are settled in cash in lieu of shares of our common stock, the shares subject to such awards will again be available for purposes of the Amended Plan, in the same amount as such shares were counted against the Amended Plan’s share limit or, if applicable, the share limits set forth in the applicable Prior Plan. The share limit, however, will not be increased by the number of shares of our common stock (i) tendered, withheld, or subject to an award surrendered in connection with the exercise of an option, (ii) that were not issued upon the net settlement or net exercise of a stock-settled SAR, (iii) deducted or delivered from payment of an award in connection with the Company’s tax withholding obligations, or (iv) purchased by the Company with proceeds from option exercises. Limits on Awards. The maximum number of shares of our common stock subject to options or SARs that may be granted under the Amended Plan to any person (other than a non-employee director) in a calendar year is 275,000 shares. The maximum number of shares subject to awards other than options or SARs that are stock-denominated and are either stock- or cash-settled that may be granted under the Amended Plan to any person (other than a non-employee director) in a calendar year is 275,000 shares. The maximum amount that may be paid as a cash-denominated performance-based award (whether or not cash-settled) for a performance period of 12 months or less in a calendar year to any person is $2 million, and the maximum amount that may be paid as a cash-denominated performance-based award (whether or not cash-settled) in respect of a performance period in excess of twelve months to any person is $3 million. Non-Employee Director Compensation Limits. The maximum total compensation (including cash payments and the aggregate grant date fair market value of shares of our common stock that may be granted under the Amended Plan) that may be paid to or granted in a calendar year to a non-employee director of the Company is $500,000. The foregoing limitation, however, will not apply to the extent that a non-employee director has been or becomes an employee of the Company during the calendar year. Adjustments. The number and kinds of shares of common stock for which awards may be made under the Amended Plan, including the share limit, the individual share limits, and the shares subject to the minimum vesting requirements described above, will be adjusted proportionately and accordingly by the Committee if the number of outstanding shares of our common stock is increased or decreased or the shares of our common stock are changed into or exchanged for a different number of shares or kind of capital stock or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse stock split, spin-off, combination of stock, exchange of stock, stock dividend, or other distribution payable in capital stock, or other increase or decrease in shares of common stock effected without receipt of consideration by the Company. Fair Market Value Determination. For so long as our common stock remains listed on Nasdaq (or listed on any other established securities exchange or traded on any other securities market), the fair market value of a share of our common stock will be the closing price for a share as quoted on such exchange or market for such date. If there is no reported closing price on such date, the Plan Amendment provides that the fair market value of a share of our common stock will be the closing price of the common stock on the preceding date for which such quotation exists. If our common stock is not listed on an established securities exchange or traded on an established securities market, the Committee will determine the fair market value by the reasonable application of a reasonable valuation method, in a manner consistent with Section 409A of the Code. On March 25, 2022, the closing price of our common stock as reported on Nasdaq was $23.45 per share. | | | 76
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TABLE OF CONTENTS Options. The Amended Plan authorizes our Committee to grant incentive stock options (as defined in Section 422 of the Code) and options that do not qualify as incentive stock options (“nonqualified options”). To the extent that the aggregate fair market value of shares of our common stock determined on the grant date with respect to which incentive stock options are exercisable for the first time during any calendar year exceeds $100,000, the option will be treated as a nonqualified option. The exercise price of each option will be determined by the Committee, provided that the per share exercise price will be equal to or greater than 100% of the fair market value of a share of our common stock on the grant date. If we were to grant incentive stock options to any 10 percent stockholder, the per share exercise price will not be less than 110% of the fair market value of a share of our common stock on the grant date. The term of an option cannot exceed ten years from the grant date. If we were to grant incentive stock options to any 10 percent stockholder, the term cannot exceed five years from the grant date. The Committee determines at what time or times each option may be exercised and the period of time, if any, after retirement, death, disability, or termination of employment during which options may be exercised. Options may be made exercisable in installments. The vesting and exercisability of options may be accelerated by the Committee. Awards of options are nontransferable, except (i) for transfers by will or the laws of descent and distribution or (ii) if authorized in the applicable award agreement, for transfers of nonqualified options, not for value, to family members pursuant to the terms and conditions of the Amended Plan. If on the day preceding the date on which an option would otherwise terminate, the aggregate fair market value of the shares of our common stock underlying the option is greater than the aggregate exercise price of such option, the Company will, prior to the termination of such option and without any action being taken on the part of the grantee, consider such option to have been exercised by the grantee. In such case, the Company will deduct from the shares of our common stock deliverable to the grantee upon such exercise the number of shares of our common stock necessary to satisfy payment of the aggregate exercise price and all withholding obligations. Stock Appreciation Rights. The Amended Plan authorizes the Committee to grant SARs that provide the grantee with the right to receive, upon exercise of the SARs, cash, shares of our common stock, or a combination of the foregoing. The amount that the recipient will receive upon exercise of a SAR generally will equal the excess of the fair market value of a share of our common stock on the date of exercise over the SAR’s per share exercise price, which must be equal to or greater than 100% of the fair market value of a share of our common stock on the grant date. SARs will become exercisable in accordance with terms determined by our Committee. Stock appreciation rights may be granted in tandem with an option grant or independently from an option grant. The term of a SAR cannot exceed ten years from the grant date. Awards of SARs are nontransferable, except (i) for transfers by will or the laws of descent and distribution or (ii) if authorized in the applicable award agreement, not for value, to family members pursuant to the terms and conditions of the Amended Plan. If on the day preceding the date on which a grantee’s SARs would otherwise terminate, the aggregate fair market value of shares of our common stock underlying the SARs is greater than the aggregate exercise price of such SARs, the Company will, prior to the termination of such SARs and without any action being taken on the part of the grantee, consider the SARs to have been exercised by the grantee. In such case, the Company will deduct from the shares of our common stock deliverable to the grantee upon such exercise the number of shares of our common stock necessary to satisfy payment of the aggregate exercise price and all withholding obligations. Restricted Stock and Restricted Stock Units. The Amended Plan also authorizes the Committee to grant restricted stock and RSUs (including deferred stock units). Subject to the provisions of the Amended Plan, the Committee will determine the terms and conditions of each award of restricted stock and RSUs, including the restricted period for all or a portion of the award, the restrictions applicable to the award, and the purchase price (if any) for the shares of our common stock subject to the award. Restricted stock and RSUs may vest solely by the passage of time and/or pursuant to achievement of performance goals, and | | | 77
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TABLE OF CONTENTS the restrictions and/or the restricted period may differ with respect to each award of restricted stock and RSUs. During the period, if any, when shares of restricted stock and RSUs are non-transferable or forfeitable or prior to the satisfaction of any other restrictions prescribed by the Committee, a grantee is prohibited from selling, transferring, assigning, pledging, or otherwise encumbering or disposing of his or her shares of restricted stock or RSUs. A grantee of restricted stock will have all the rights of a stockholder, including the right to vote the shares and receive dividends or distributions on the shares, except to the extent limited by the Committee or the Amended Plan. Grantees of RSUs will have no voting or dividend rights or other rights associated with share ownership, although the Committee may award dividend equivalent rights on such units. Grantees will not vest in dividends paid on unvested shares of restricted stock or in dividend equivalent rights paid on unvested RSUs if and until the underlying awards vest. Unrestricted Stock. The Amended Plan authorizes the Committee to grant shares of unrestricted stock. Shares of unrestricted stock are free of any restrictions, and a grantee of shares of unrestricted stock will have all the rights of a stockholder, including the right to vote the shares and receive dividends or distributions on the shares, as of the grant date. Dividend Equivalent Rights. The Amended Plan authorizes the Committee to grant dividend equivalent rights, which are rights entitling the grantee to receive credits for dividends or distributions that would be paid if the grantee had held a specified number of shares of our common stock underlying the right. The Committee may grant dividend equivalent rights to a grantee in connection with an award under the Amended Plan, or without regard to any other award, except that no dividend equivalent rights may be granted in connection with, or related to, an option or SAR. Dividend equivalent rights may be settled in cash, shares of our common stock, or a combination of the foregoing, in a single installment or in multiple installments, as determined by the Committee. Further changes have been made to the Amended Plan to emphasize that a dividend equivalent right granted as a component of another award may not vest or become payable until the underlying award vests. Performance-Based Awards. The Amended Plan authorizes the Committee to grant performance-based awards, ultimately payable in shares of our common stock or cash, in such amounts and upon such terms as determined by the Committee, pursuant to which awards will vest based on the attainment of performance goals established by the Committee. Each grant of a performance-based award will have an initial cash value or an actual or target number of shares of our common stock that is established by the Committee at the grant date. The Committee may set performance goals in its discretion that, depending on the extent to which they are met, will determine the value and/or number of shares of our common stock subject to a performance-based award that will be paid out to a grantee, and the Committee will establish the performance periods for these performance-based awards. Other Equity-Based Awards. The Amended Plan authorizes the Committee to grant other types of equity-based awards. Other equity-based awards are payable in cash, shares of our common stock or other equity, or a combination of the foregoing, and may be restricted or unrestricted, as determined by our Committee. The terms and conditions that apply to other equity-based awards are determined by the Committee. Forms of Payment. The exercise price for any option or the purchase price (if any) for restricted stock or RSUs is generally payable (i) in cash or cash equivalents, (ii) to the extent the award agreement provides, by the surrender of shares of our common stock (or attestation of ownership of shares of our common stock) with an aggregate fair market value, on the date of such surrender, of the exercise price or purchase price, (iii) to the extent permissible by applicable law and to the extent the award agreement provides, by payment through a broker in accordance with procedures set forth by the Company, or (iv) to the extent the award agreement provides and/or unless otherwise specified in an award agreement, any other form permissible by applicable law, including net exercise or net settlement and service rendered to the Company or our affiliates. | | | 78
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TABLE OF CONTENTS Corporate Transaction. If the Company experiences a “corporate transaction” in which awards will not be assumed or continued by the surviving entity: (i) immediately before the corporate transaction, except for performance-based awards, all restricted stock, RSUs (including deferred stock units), and dividend equivalent rights will vest, and all shares of common stock and/or cash subject to such awards will be delivered, and (ii) at the Committee’s discretion, (a) all options and SARs will become exercisable at least 15 days before the corporate transaction and terminate if unexercised upon the consummation of the corporate transaction, and/or (b) all options, SARs, restricted stock, RSUs, and dividend equivalent rights will be terminated and cashed out or redeemed for securities of equivalent value. Performance-based awards will vest (i) if less than half the performance period has lapsed, at target level and (ii) if more than half the performance period has lapsed, based on actual performance if determinable or, if not determinable, at target level, and in each case then will be treated in accordance with the foregoing sentence. Other equity-based awards will be governed by the terms of the applicable award agreement. If the Company experiences a “corporate transaction” in which awards will be assumed or continued by the surviving entity: (i) the awards will adjusted as appropriate as to the number of shares and type of capital stock to which the awards relate and, for options and SARs, as to the exercise price, and (ii) if the grantee’s service is terminated without “cause” (as defined in the Amended Plan) within one year following the consummation of such corporate transaction, the grantee’s award will be fully vested and may be exercised in full, to the extent applicable, beginning on the date of such termination and for the one-year period immediately following such termination or for such longer period as the Committee shall determine. In summary, a “corporate transaction” occurs under the Amended Plan if: the dissolution or liquidation of the Company or a merger, consolidation, or reorganization of the Company with one or more other entities in which the Company is not the surviving entity; a sale of substantially all of the assets of the Company to another person; any transaction (including without limitation a merger or reorganization in which the Company is the surviving entity) which results in any person owning 50% or more of the combined voting power of all classes of capital stock of the Company. Amendment, Suspension, and Termination. Our Board may amend, suspend, or terminate the Amended Plan at any time; provided that no amendment, suspension, or termination may impair the rights or obligations under outstanding awards, without the consent of the grantee. Our stockholders must approve any amendment to the Amended Plan to the extent determined by the Board or if such approval is required under applicable law (including Nasdaq rules). Our stockholders also must approve any amendment that changes the no re-pricing rules, the option exercise price rules, or the SAR exercise price rules. No Repricing. Except in connection with certain corporate transactions involving the Company, we may not: (i) amend the terms of outstanding options or SARs to reduce the exercise price of such outstanding options or SARs; (ii) cancel or assume outstanding options or SARs in exchange for or substitution of options or SARs with an exercise price that is less than the exercise price of the original options or SARs; or (iii) cancel or assume outstanding options or SARs with an exercise price above the then-current fair market value in exchange or substitution for cash, awards, or other securities, in each case, unless such action (a) is subject to and approved by our stockholders or (b) would not be deemed to be a repricing under the rules of Nasdaq or any established stock exchange or securities market on which our common stock is listed or publicly traded. | | | 79
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TABLE OF CONTENTS Summary of U.S. Federal Income Tax Consequences The U.S. federal income tax consequences of awards under the Amended Plan for grantees and the Company will depend on the type of award granted. The following summary description of U.S. federal income tax consequences is intended only for the general information of our stockholders. A grantee on an award under the Amended Plan should not rely on this description and instead should consult his or her own tax advisor. Incentive Stock Options. The grant of an incentive stock option will not be a taxable event for the grantee or the Company. A grantee will not recognize taxable income upon exercise of an incentive stock option (except that the alternative minimum tax may apply), and any gain or loss realized upon a disposition of our common stock received pursuant to the exercise of an incentive stock option will be taxed as long-term capital gain or loss if the grantee holds the shares of our common stock for at least two years after the date of grant and for one year after the date of exercise (the “holding period requirement”). We will not be entitled to a business expense deduction with respect to an incentive stock option, except as discussed below. For the exercise of an incentive stock option to qualify for the foregoing tax treatment, the grantee generally must be our employee or an employee of one of our direct corporate subsidiaries from the date the incentive stock option is granted through a date within three months before the date of exercise of the option. If all of the foregoing requirements are met except the holding period requirement mentioned above, the grantee will recognize ordinary income upon the disposition of the shares of our common stock in an amount generally equal to the excess of the fair market value of the common stock at the time the option was exercised over the option’s exercise price (but not in excess of the gain realized on the sale). The balance of the realized gain, if any, will be capital gain. We will be allowed a business expense deduction to the extent the grantee recognizes ordinary income, subject to with the limitations imposed by Section 162(m) of the Code and to our compliance with certain reporting requirements. Nonqualified Options. The grant of a nonqualified option will not be a taxable event for the grantee or the Company. Upon exercising a nonqualified option, a grantee will recognize ordinary income in an amount equal to the difference between the option’s exercise price and the fair market value of the common stock on the date of exercise. Upon a subsequent sale or exchange of shares acquired pursuant to the exercise of a nonqualified option, the grantee will have taxable capital gain or loss, measured by the difference between the amount realized on the disposition and the tax basis of the shares of our common stock (generally, the amount paid for the shares plus the amount treated as ordinary income at the time the option was exercised). Capital gain or loss will be long-term if the grantee has held the shares for more than one year. Otherwise, the capital gain or loss will be short-term. If we comply with applicable reporting requirements, we will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income, subject to the limitations imposed by Section 162(m) of the Code. A grantee who has transferred a nonqualified option to a family member by gift will realize taxable income at the time the nonqualified option is exercised by the family member. The grantee will be subject to withholding of income and employment taxes at that time. The family member’s tax basis in the shares of our common stock will be the fair market value of the shares of common stock on the date the nonqualified option is exercised. The transfer of vested nonqualified options will be treated as a completed gift for gift and estate tax purposes. Once the gift is completed, neither the transferred options nor the shares acquired on exercise of the transferred options will be includable in the grantee’s estate for estate tax purposes. In the event a grantee transfers a nonqualified option to his or her ex-spouse incident to the grantee’s divorce, neither the grantee nor the ex-spouse will recognize any taxable income at the time of the transfer. In general, a transfer is made “incident to divorce” if the transfer occurs within one year after the marriage | | | 80
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TABLE OF CONTENTS ends or if it is related to the end of the marriage (for example, if the transfer is made pursuant to a divorce order or settlement agreement). Upon the subsequent exercise of such nonqualified option by the ex-spouse, the ex-spouse will recognize taxable income in an amount equal to the difference between the option’s exercise price and the fair market value of the common stock at the time of exercise. Any distribution to the ex-spouse as a result of the exercise of the option will be subject to employment and income tax withholding at that time. Stock Appreciation Rights. The grant of a SAR will not be a taxable event for the grantee or the Company. Upon exercising a SAR, a grantee will recognize ordinary income in an amount equal to the difference between the SAR’s exercise price and the fair market value of the common stock on the date of exercise. If we comply with applicable reporting requirements, we will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income, subject to the limitations imposed by Section 162(m) of the Code. Restricted Stock. A grantee who is awarded restricted stock will not recognize any taxable income for U.S. federal income tax purposes in the year of the award, provided that the shares of common stock are subject to restrictions (that is, the shares of restricted stock are nontransferable and subject to a substantial risk of forfeiture). However, the grantee may elect under Section 83(b) of the Code to recognize compensation income in the year of the award in an amount equal to the fair market value of the common stock on the date of the award (less the purchase price, if any), determined without regard to the restrictions. If the grantee does not make such Section 83(b) election, the fair market value of the common stock on the date the restrictions lapse (less the purchase price, if any) will be treated as compensation income to the grantee and will be taxable in the year the restrictions lapse, and dividends paid while the common stock is subject to restrictions will be subject to withholding taxes. If we comply with applicable reporting requirements, we will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income, subject to the limitations imposed by Section 162(m) of the Code. Restricted Stock Units. The grant of restricted stock units (including deferred stock units) will not be a taxable event for the grantee or the Company. A grantee who receives restricted stock units will recognize ordinary income in an amount equal to the fair market value of the shares issued, or in the case of a cash-settled award, the amount of the cash payment made to such grantee at the end of the restriction period or, if later, the payment date. If we comply with applicable reporting requirements, we will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income, subject to the limitations imposed by Section 162(m) of the Code. Unrestricted Stock. The grant of unrestricted stock is a taxable event for the grantee. A grantee who receives shares of unrestricted stock will recognize ordinary income on the grant date in an amount equal to the fair market value of the shares issued, reduced by the amount, if any, paid for such shares. If we comply with applicable reporting requirements, we will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income, subject to the limitations imposed by Section 162(m) of the Code. Upon a subsequent sale or exchange of shares of unrestricted stock, the grantee will have taxable capital gain or loss, measured by the difference between the amount realized on the disposition and the tax basis of the shares of our common stock (generally, the amount paid for the shares plus the amount treated as ordinary income on the grant date). Capital gain or loss will be long-term if the grantee has held the shares for more than one year. Otherwise, the capital gain or loss will be short-term. Dividend Equivalent Rights. The grant of dividend equivalent rights will not be a taxable event for the grantee or the Company. A grantee who receives dividend equivalent rights will recognize ordinary income on the date of payment in the amount distributed to the grantee pursuant to the award. If we comply with applicable reporting requirements, we will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income, subject to the limitations imposed by Section 162(m) of the Code. | | | 81
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TABLE OF CONTENTS Cash Awards. The grant of a cash award will not be a taxable event for the grantee or the Company. A grantee who receives a cash payment in respect of a cash award will recognize ordinary income on the date of payment in the amount paid to the grantee pursuant to the award. If we comply with applicable reporting requirements, we will be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income, subject to the limitations imposed by Section 162(m) of the Code. Section 280G of the Code. To the extent payments which are contingent on a change in control are determined to exceed certain limitations, such payments may be subject to a 20% excise tax, and the Company’s deduction with respect to the associated compensation expense may be disallowed in whole or in part. The Amended Plan includes a Section 280G “best after tax” provision, meaning, if any of the payments under the Amended Plan or otherwise would constitute parachute payments within the meaning of Section 280G of the Code and would be subject to the excise tax imposed under Section 4999 of the Code, the payments will be reduced by the amount required to avoid the excise tax if such a reduction would give the grantee a better after-tax result than if the grantee received the payments in full. Awards Outstanding and Available The table below includes information as of March 25, 2022 with respect to equity compensation awards outstanding and shares remaining available for grant under the 2017 Plan: | | RSUs outstanding | | | 508,646 | | | | PSUs outstanding(1) | | | 227,272 | | | | Stock options outstanding | | | 103,106 | | | | Shares remaining available for grant under 2017 Plan | | | 815,976 | | | | Weighted average exercise price of outstanding options | | | $25.88 | | | | Weighted average remaining term of outstanding options | | | 8.47 | |
(1) Assumes awards for which the performance period has not yet been completed will be earned at target. Up to 143,225 additional shares could be issued if earned at the maximum performance level. The awards, if any, that will be made to eligible grantees under the Amended Plan are subject to the discretion of the MDC Committee, and thus we cannot currently determine the benefits or number of shares subject to awards that may be granted in the future to eligible grantees under the Amended Plan. For more information on the awards granted under the 2017 Plan to our named executive officers in 2021, see the section above entitled “2021 Outstanding Equity Awards at Fiscal Year-End.” For more information on the awards granted under the 2017 Plan to our directors in 2021, see the section above entitled “Director Compensation.” Registration with the SEC If the Plan Amendment is approved by our stockholders, we intend to file a Registration Statement on Form S-8 relating to the Amended Plan with the SEC pursuant to the Securities Act. THE BOARD RECOMMENDS A VOTE FOR THE AMENDMENT TO THE 2017 PLAN. | | | 82
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TABLE OF CONTENTS ADVISORY VOTE ON THE COMPENSATION OF
OUR NAMED EXECUTIVE OFFICERS As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are seeking stockholder input on the compensation of our named executive officers as disclosed in this Proxy Statement. We have determined to hold this vote annually. The Board and the MDC Committee actively monitor our executive compensation practices in light of the industry in which we operate and the marketplace for talent in which we compete. We believe that the supply of qualified executive talent is limited and have designed our compensation programs to help us attract and retain qualified candidates by offering compensation that is competitive within the for-profit education industry and the broader market for executive talent. As described in the Compensation Discussion and Analysis beginning on page 3436 of this Proxy Statement, our executive compensation program is designed to provide competitive levels of compensation that are based on performance metrics, reflect the level of capability and effort required to achieve our corporate goals, and to reward our executives for the achievement of strategic, operational, and financial success. By paying for performance, we believe that we align the interests of our executive officers with those of our stockholders. We also believe that an effective executive compensation program can assist us in attracting, incentivizing, retaining, and rewarding the talent that we need to maintain and strengthen our position in highercareer-minded adult education and to achieve our business objectives. To achieve these objectives, we adhere to the following principles: | ● | compensation should be directly related to achievement of our corporate goals as measured through individual management objectives and through earnings and enrollment results; |
| ● | an emphasis on equity-based compensation aligns the long-term interests of executive officers and stockholders; and |
| ● | NEO compensation must be evaluated against opportunities offered by companies that are similar to, and competitive with, us in the market for executive talent. |
compensation should be directly related to achievement of our corporate goals as measured through individual management objectives and through enrollment and earnings results; an emphasis on equity-based compensation aligns the long-term interests of executive officers and stockholders; and NEO compensation must be evaluated against opportunities offered by companies that are similar to, and competitive with, us in the market for executive talent. Our executive compensation program also includes features specifically intended to align the interests of our NEOs with those of our stockholders, such as: | ● | each of our executives is expected to own shares of our common stock with a value ranging from one to six times the executive’s base salary, depending on position; and |
| ● | we make use of equity awards with a value that is contingent on our long-term performance. |
each of our executives is expected to own shares of our common stock with a value ranging from one to six times the executive’s base salary, depending on position; and we make use of equity awards with a value that is contingent on our long-term performance. We believe our executive compensation program achieves our compensation principles, properly aligns the interests of our NEOs and our stockholders and is deserving of stockholder support. We believe that stockholders should also consider the following when determining whether to approve the compensation of our NEOs as presented in this Proxy Statement: the MDC Committee utilizes Willis Towers Watson, an independent compensation consulting firm, to assist the Committee in determining compensation; our NEOs are prohibited from engaging in short sales, transactions in derivative securities (including put and call options), or other forms of hedging and monetization transactions, such as zero-cost collars, equity swaps, exchange funds and forward sale contracts, that allow the holder to limit or eliminate the risk of a decrease in the value of our securities; | ● | the MDC Committee utilizes Willis Towers Watson, an independent compensation consulting firm, to assist the Committee in determining compensation; | 83
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| ● | our NEOs are prohibited from engaging in short sales, transactions in derivative securities (including put and call options), or other forms of hedging and monetization transactions, such as zero-cost collars, equity swaps, exchange funds and forward sale contracts, that allow the holder to limit or eliminate the risk of a decrease in the value of our securities; |
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TABLE OF CONTENTS our equity awards have been granted with three-year minimum vesting periods, and our equity plans prohibit repricing or replacement of outstanding option awards; | ● | our equity awards have been granted with three-year minimum vesting periods, and our equity plans prohibit repricing or replacement of outstanding option awards; |
| ● | upon a “change of control,” the NEOs only receive severance payments in connection with a termination of their employment; and |
| ● | employment agreements with our NEOs do not include tax-gross up payments in connection with a “change of control.” |
employment agreements with our NEOs do not include tax-gross up payments in connection with a “change of control.” For these reasons, the Board recommends that stockholders vote in favor of the following resolution: “RESOLVED, that the compensation paid to the American Public Education, Inc. named executive officers, as disclosed in the Company’s Proxy Statement for the 20212022 Annual Meeting of Stockholders pursuant to the rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables and any other related disclosure, is hereby APPROVED.” The vote is advisory and is not binding on the Company, the Board or the MDC Committee of the Board. However, the MDC Committee of the Board expects to take into account the outcome of the vote as it continues to consider our executive compensation program. THE BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT. | 74 | | 84
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RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We are asking our stockholders to ratify the Audit Committee’s appointment of Deloitte & Touche LLP (“Deloitte”) as our independent registered public accounting firm for the fiscal year ending December 31, 2021.2022. Deloitte has audited our consolidated financial statements since 2018, when we engaged Deloitte after reviewing proposals from several independent registered public accounting firms as part of a competitive review process that we undertook that year. The Audit Committee has again selected Deloitte as our independent registered accounting firm for the year ended December 31, 20212022, and believes that the retention of Deloitte for the 20212022 fiscal year is in the best interests of the Company and our stockholders. The Audit Committee has ultimate authority and responsibility for the appointment, termination, compensation, evaluation, and oversight of our independent registered public accounting firm and annually evaluates the performance of our independent registered public accounting firm. The Audit Committee also evaluates and approves the selection of the lead engagement partner. Although ratification is not required by our Bylaws or otherwise, the Board is submitting the appointment of Deloitte to our stockholders for ratification as a matter of good corporate practice. If the appointment is not ratified, the Audit Committee will consider whether it is appropriate to select another registered public accounting firm. Even if the appointment is ratified, the Audit Committee in its discretion may select a different registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders. Representatives of Deloitte are expected to be present at the Annual Meeting. They will be given an opportunity to make a statement at the meeting if they desire to do so, and they will be available to respond to appropriate questions. THE BOARD RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF DELOITTE AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2021.2022. Principal Accountant Fees and Services We regularly review the services and fees of our independent accountants. These services and fees are also reviewed by the Audit Committee on an annual basis. The following table summarizes the aggregate fees billed by Deloitte for the fiscal years ended December 31, 20202021 and 2019, respectively.| Fee Category | | 2020 | | | 2019 | | | Audit Fees | | $ | 624,000 | | | $ | 637,915 | | | Audit-Related Fees | | $ | 9,500 | | | $ | 30,000 | | | Tax Fees | | | — | | | | — | | | All Other Fees | | $ | 997,666 | | | $ | 579,111 | | | Total Fees | | $ | 1,631,166 | | | $ | 1,247,026 | |
2020. | | Audit Fees | | | $882,000 | | | $624,000 | | | | Audit-Related Fees | | | $273,604 | | | $1,013,848 | | | | Tax Fees | | | $76,125 | | | $— | | | | All Other Fees | | | $— | | | $— | | | | Total Fees | | | $1,231,729 | | | $1,637,848 | |
Audit Fees. Consist of fees billed for professional services rendered for the audit of our annual financial statements and review of financial statements included in our Quarterly Reports on Form 10-Q and services provided in connection with statutory and regulatory filings or engagements. | 75 | | 85
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TABLE OF CONTENTS Audit-Related Fees. Consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees.Fees,” including due diligence, accounting consultations and audits related to potential acquisitions, all of which for 2020 related to the proposed acquisition of RU. 2021 fees include registration statement-related fees and purchase accounting services related to the acquisition of RU. Tax Fees. Consist of fees billed for tax compliance, tax advice, and tax planning services and include fees for tax return preparation.All Other Fees. Consist of fees billed for products and services other than those described above under Audit Fees, Audit-Related Fees and Tax Fees, including advisory services related to potential acquisitions, including the proposed acquisition of Rasmussen University.
During the fiscal year ended December 31, 2020,2021, Deloitte provided various services in addition to auditing our financial statements. The Audit Committee has determined that the provision of such services is compatible with maintaining Deloitte’s independence. In 2020,2021, all fees paid to Deloitte were pre-approved pursuant to the policy described below. Audit Committee’s Pre-Approval Policies and Procedures
The Audit Committee reviews with Deloitte and management the plan and scope of Deloitte’s proposed annual financial audit and quarterly reviews, including the procedures to be utilized and Deloitte’s compensation. The Audit Committee also pre-approves all auditing services, internal control related services and permitted non-audit services (including the fees and terms thereof) to be performed for us by Deloitte, subject to the de minimis exception for non-audit services that are approved by the Audit Committee prior to the completion of an audit. None of the Deloitte services in 20202021 and 20192020 were approved by the Audit Committee pursuant to the de minimis exception. The Audit Committee may delegate pre-approval authority to one or more members of the Audit Committee consistent with applicable law and listing standards, provided that the decisions of such Audit Committee member or members must be presented to the full Audit Committee at its next scheduled meeting. | | | 86
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TABLE OF CONTENTS Each of the Audit Committee members are independent under the applicable SEC and Nasdaq rules and our corporate governance principles. The Audit Committee operates under a written charter adopted by the Board, which is available in the “Governance — Governance and Ethics Documents” section of our corporate website, www.apei.com. The Audit Committee reviews the charter and proposes necessary changes to the Board on an annual basis. During the fiscal year ended December 31, 2020,2021, the Audit Committee fulfilled its duties and responsibilities generally as outlined in its charter. The Audit Committee has: | ● | reviewed and discussed with management our audited financial statements for the fiscal year ended December 31, 2020; |
| ● | discussed with Deloitte, the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC; and |
| ● | received the written disclosures and the letter from Deloitte required under the applicable requirements of the PCAOB regarding the independent auditors’ communications with the Audit Committee concerning independence, and discussed with Deloitte its independence. |
reviewed and discussed with management our audited financial statements for the fiscal year ended December 31, 2021; discussed with Deloitte, the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC; and received the written disclosures and the letter from Deloitte required under the applicable requirements of the PCAOB regarding the independent auditors’ communications with the Audit Committee concerning independence, and discussed with Deloitte its independence. On the basis of the review and discussions referenced above, the Audit Committee recommended to the Board that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 20202021 for filing with the SEC. | 76 | PURPOSE
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In connection with the appointment, compensation, retention, and oversight of the independent auditor, the Audit Committee annually reviews the qualifications, performance, and independence of the independent auditor, and lead engagement partner, and assures the regular rotation of the lead engagement partner as required. In doing so, the Audit Committee considers a number of factors including, but not limited to: quality of services provided; technical expertise and knowledge of the industry; effective communication; objectivity; and objectivity.the likely impact of changing the independent auditor. The Audit Committee also considers whether the non-audit services provided by Deloitte are compatible with maintaining Deloitte’s independence. The Audit Committee has appointed, subject to stockholder ratification, Deloitte as our independent registered public accounting firm for fiscal year 2021.AUDIT COMMITTEE (March 4, 2021)
2022. Audit Committee (February 25, 2022) Jean C. Halle, Chairperson
Granetta B. Blevins
Dr. Barbara L. Kurshan
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TABLE OF CONTENTS DELINQUENT SECTION 16(a)16(A) REPORTS Section 16(a) of the Exchange Act requires our directors, executive officers, and holders of more than 10% of our common stock to file reports of ownership of our equity securities. Additionally, SEC regulations require that we identify in our proxy statements any persons for whom any such report was not filed on a timely basis during the most recent fiscal year or prior fiscal years. To our knowledge, based solely on a review of the copies of such reports filed with the SEC during the year ended December 31, 20202021 and representations by our directors and officers that no Form 5 was required to be filed by them, all such reports were made on a timely basis, except for (i) a late Form 34 filed on behalf of each of Granetta B. Blevinsby acting APUS President Dr. Zatz reporting two transactions and Daniel S. Pianko, (ii) a late amended Form 4 by each of Wallace E. Boston, Jr., Patrik Dyberg, Thomas A. Beckett, Amy Bevilacqua, Elizabeth LaGuardia Cooper, and Robert E. Gay, untimely with respect to one transaction each, and (iii) a late Form 4 for Wade T. Dyke,filed by our former Senior Vice President, Chief Human Resource Officer, Amy B. Manning reporting two transactions.one transaction. | 78 | | 88
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TABLE OF CONTENTS BENEFICIAL OWNERSHIP OF COMMON STOCK The following table sets forth certain information as of April 8, 2021March 25, 2022 (unless otherwise specified), with respect to the beneficial ownership of our common stock by each person who is known to own beneficially more than 5% of the outstanding shares of common stock, each person currently serving as a director, each nominee for director, each NEO (as set forth in the Summary Compensation Table on page 58)58), and all directors and executive officers as a group. | Name of Beneficial Owner | | Shares of
Common
Stock
Beneficially
Owned(1) | | | Percentage of
Class | | | More than 5% Stockholders | | | | | | | | | | BlackRock, Inc.(2) | | | 2,311,844 | | | | 12.38 | % | | T. Rowe Price Associates, Inc.(3) | | | 1,841,693 | | | | 9.86 | % | | The Vanguard Group, Inc.(4) | | | 1,307,937 | | | | 7.01 | % | | Renaissance Technologies, LLC(5) | | | 1,190,493 | | | | 6.38 | % | | Dimensional Fund Advisors LP(6) | | | 1,044,965 | | | | 5.60 | % | | Directors, Director Nominees and Named Executive Officers | | | | | | | | | | Eric C. Andersen | | | 13,596 | | | | | * | | Thomas A. Beckett | | | 13,961 | | | | | * | | Granetta B. Blevins | | | 2,554 | | | | | * | | Dr. Wallace E. Boston, Jr. | | | 170,838 | | | | | * | | Patrik Dyberg | | | 19,538 | | | | | * | | Wade T. Dyke | | | — | | | | — | | | MG (Ret) Barbara G. Fast(7) | | | 19,378 | | | | | * | | Jean C. Halle | | | 14,640 | | | | | * | | Dr. Barbara L. Kurshan(8) | | | 13,918 | | | | | * | | Timothy J. Landon | | | 16,546 | | | | | * | | Daniel S. Pianko | | | 2,554 | | | | | * | | William G. Robinson, Jr. | | | 11,796 | | | | | * | | Angela K. Selden(9) | | | 46,071 | | | | | * | | Vincent R. Stewart | | | — | | | | — | | | Richard W. Sunderland, Jr. | | | 54,648 | | | | | * | | All of our directors and executive officers as a group (17 persons)(10) | | | 260,865 | | | | 1.40 | % |
| | More than 5% Stockholders
| | | | | | | | | | BlackRock, Inc.(2) | | | 3,116,146 | | | 16.53% | | | | Redwood Capital Management, LLC.(3) | | | 1,852,192 | | | 9.82% | | | | T. Rowe Price Associates, Inc.(4) | | | 1,844,639 | | | 9.78% | | | | The Vanguard Group, Inc.(5) | | | 1,196,422 | | | 6.35% | | | | Renaissance Technologies, LLC(6) | | | 1,015,593 | | | 5.39% | | | | Dimensional Fund Advisors LP(7) | | | 999,480 | | | 5.30% | | | | Systematic Financial Management LP(8) | | | 985,294 | | | 5.23% | | | | Directors, Director Nominees and Named Executive Officers | | | | | | | | | | Eric C. Andersen | | | 16,441 | | | * | | | | Thomas A. Beckett | | | 14,157 | | | * | | | | Granetta B. Blevins | | | 5,399 | | | * | | | | Patrik Dyberg | | | 28,917 | | | * | | | | Dr. Wade T. Dyke(9) | | | 6,633 | | | * | | | | Anna M. Fabrega | | | 0 | | | * | | | | Jean C. Halle | | | 17,764 | | | * | | | | Dr. Barbara L. Kurshan | | | 11,938 | | | * | | | | Timothy J. Landon | | | 18,491 | | | * | | | | Daniel S. Pianko | | | 5,399 | | | * | | | | William G. Robinson, Jr. | | | 14,641 | | | * | | | | Angela K. Selden(10) | | | 105,697 | | | * | | | | Dr. Vernon Smith | | | 12,009 | | | * | | | | LtGen (Ret.) Vincent R. Stewart | | | 2,845 | | | * | | | | Richard W. Sunderland, Jr. | | | 67,909 | | | * | | | | All of our directors and executive officers as a group (16 persons)(10) | | | 309,800 | | | 1.64% | |
* Represents beneficial ownership of less than 1%. (1) Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Except where indicated otherwise, and subject to community property laws where applicable, the persons named in the table above have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. As of April 8, 2021,March 25, 2022, there were 18,671,10118,856,352 shares of common stock outstanding.(2) Based solely on a Schedule 13G/A filed by BlackRock, Inc. on January 25, 2021.28, 2022. The stockholder’s address is 55 East 52nd Street New York, New York 10055. ThisThe stockholder is deemed to be the beneficial owner with sole dispositive power with respect to these shares as a result of being a parent holding company or control person. The stockholder has sole voting power with respect to 2,286,2423,075,473 of these shares and sole dispositive power with respect to all of these shares.(3) Based solely on a Schedule 13G filed by Redwood Capital Management, LLC, Redwood Capital Management Holdings, LP, Double Twins K, LLC, Redwood Master Fund, Ltd., and Ruben Kliksberg on February 14, 2022. Each stockholder’s address is 250 W 55th Street New York, New York 10019. Each of the filing persons has shared voting and dispositive power with respect to these shares. | | | 89
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TABLE OF CONTENTS (4) Based solely on a Schedule 13G/A filed by T. Rowe Price Associates, Inc. on March 10, 2021.February 14, 2022. The stockholder’s address is 100 East Pratt Street, Baltimore, Maryland, 21202. The stockholder is deemed to be the beneficial owner of these shares of the Company’s common stock as a result of being an investment advisor. The stockholder has sole voting power with respect to 497,202541,648 of these shares and sole dispositive power with respect to 1,841,693all of these shares. (4)
(5) Based solely on a Schedule 13G/A filed by The Vanguard Group, Inc. on February 10, 2021.9, 2022. The stockholder’s address is 100 Vanguard Blvd., Malvern, PA 19355. ThisThe stockholder is deemed to be the beneficial owner with respect to these shares of the | 79 | PURPOSE
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Company’s common stock as the result of acting as an investment advisor. The stockholder has shared power to vote or direct to vote with respect to 16,77717,784 of these shares, sole power to dispose of or to direct the disposition of 1,277,7771,165,659 of these shares, and shared power to dispose or to direct the disposition of 30,16030,763 of these shares. (5)
(6) Based solely on a Schedule 13G/A filed by Renaissance Technologies LLC (“RTC”) and Renaissance Technologies Holdings Corporation (“RTHC”) on February 11, 2021.2022. The stockholders’ address is 800 Third Ave, New York, New York, 10022. RTC is deemed to be the beneficial owner of these shares of the Company’s common stock as a result of being an investment advisor, and RTHC is deemed to be the beneficial owner of these shares as a result of its majority ownership of RTC. RTC and RTHC each have sole voting power with respect to 1,132,693 of these shares and sole dispositive power with respect to 1,190,493 of these shares. (6)
(7) Based solely on a Schedule 13G/A filed by Dimensional Fund Advisors LP on February 12, 2021.8, 2022. The stockholder’s address is Building One, 6300 Bee Cave Road, Building One, Austin, Texas, 78746. The stockholder is deemed to be the beneficial owner with respect to these shares of the Company’s common stock as the result of acting as an investment advisor. The stockholder has sole voting power with respect to 1,004,965974,070 of these shares and sole dispositive power with respect to 1,044,805999,480 of these shares. (7)
(8) Based solely on a Schedule 13G filed by Systematic Financial Management LP on February 10, 2022. The stockholder’s address is 300 Frank W. Burr Boulevard, c/o Glenpointe East 7th Floor, Teaneck, New Jersey 07666. The stockholder has sole voting power with respect to 473,969 of these shares and sole dispositive power with respect to 985,294 of these shares. (9) Includes 4,988 shares of common stock underlying restricted deferred stock units that are releasable within 60 days of April 8, 2021.(8) Includes 2,520 shares of common stock underlying restricted deferred stock units that are releasable within 60 days of April 8, 2021.
(9) Includes 14,3783,124 shares of common stock subject to outstanding options that are exercisable within 60 days of April 8, 2021.
March 25, 2022. (10) Includes (i) 15,44528,756 shares of common stock subject to outstanding options that are exercisable within 60 days of April 8, 2021, (ii) 1,730 shares of common stock underlying restricted stock units that vest within 60 days of April 8, 2021 and (iii) 7,508 shares of common stock underlying restricted deferred stock units that are releasable within 60 days of April 8, 2021.March 25, 2022. | 80 | | 90
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TABLE OF CONTENTS Availability of Certain Documents A copy of our 2020 Annual Report on Form 10-K for the year ended December 31, 2021 has been posted on the Internet along with this Proxy Statement to all stockholders entitled to notice of and to vote at the Annual Meeting. The Annual Report is not incorporated into this Proxy Statement and is not considered proxy-soliciting material. WeUpon written request, we will mail without charge upon written request, a copy of our 2020the Annual Report, on Form 10-K including exhibits. Please send a written request to our Corporate Secretary at: American Public Education, Inc.
111 W. Congress Street
Charles Town, West Virginia 25414
Attention: Corporate Secretary The charters for our Audit, MDC, and Nominating and Corporate GovernanceNCG Committees, as well as the Guidelines and the Code of Ethics, are in the Governance section of our corporate website, www.apei.com, and are also available in print without charge upon written request to our Corporate Secretary at the address above. The information on our corporate website is not incorporated by reference into this Proxy Statement. Stockholders residing in the same household who hold their stock through a bank or broker may receive only one set of proxy materials in accordance with a notice sent earlier by their bank or broker. This practice will continue unless instructions to the contrary are received by the bank or broker from one or more of the stockholders within the household. We will promptly deliver a separate copy of the proxy materials to such stockholders upon receipt of a written or oral request to our Corporate Secretary at the address above, by emailing corpsecretary@apei.com, or by calling (304) 724-3700.724-3730. If you hold your shares in “street name” and reside in a household that received only one copy of the proxy materials, you can request to receive a separate copy in the future by following the instructions sent by your bank or broker. If your household is receiving multiple copies of the proxy materials, you may request that only a single set of materials be sent by following the instructions sent by your bank or broker. Stockholder Proposals and Nominations
Stockholder Proposals to be Considered for Inclusion in our Proxy Materials . As required by SEC rules, in order to be considered for inclusion in next year’s proxy statement, stockholder proposals must be received by our Corporate Secretary at our principal executive offices not less than 120 calendar days before the anniversary of the date the proxy statementthis Proxy Statement is released to stockholders in connection with the previous year’s annual meeting, which is no later than December 10, 2021.2, 2022. Stockholder Nominations and Proposals to be Brought Before an Annual Meeting . Our Bylaws provide that, for stockholder nominations to the Board or other proposals to be considered at an annual meeting, the stockholder must have given timely notice thereof in writing to the Corporate Secretary at American Public Education, Inc., 111 W. Congress Street, Charles Town, West Virginia 25414, Attn: Corporate Secretary. To be timely for the 2021 Annual Meeting,2023 annual meeting, the stockholder’s notice must be delivered to or mailed and received by us not more than 120 days, and not less than 90 days, before the anniversary date of the preceding annual meeting, except that if the annual meeting is set for a date that is not within 30 days before or 60 days after such anniversary date, we must receive the notice no later than the later of the 90th day prior to such annual meeting or the close of business on the tenth day following the day on which we provide notice or public disclosure of the date of the meeting. Assuming the date of our 20222023 annual meeting is not so advanced or delayed, stockholders who wish to make a proposal at the 20222023 annual meeting must notify us no earlier than January 21, 202220, 2023 and no later than | 81 | PURPOSE
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February 20, 2022.19, 2023. Such notice must provide the information required by our Bylaws with respect to each matter the stockholder proposes to bring before the 20222023 Annual Meeting. | | | 91
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TABLE OF CONTENTS Solicitation of Proxies in Support of Director Nominees Other Than the Registrant’s Nominees. In addition to satisfying the foregoing advance notice requirements under our bylaws, to comply with the universal proxy rules under the Securities Exchange Act of 1934, as amended, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Securities Exchange Act of 1934, as amended, no later than March 21, 2023. As of the date of this Proxy Statement, the Board does not intend to present any matters other than those described herein at the Annual Meeting and is unaware of any matters to be presented by other parties. If other matters are properly brought before the meeting for action by the stockholders, proxies will be voted in accordance with the recommendation of the Board or, in the absence of such a recommendation, in accordance with the judgment of the proxy holder. | | | | | By Order of the Board of Directors, | | | | | | | | | | |  | | | | | | | | | | | Thomas A. Beckett | | | | | | | Senior Vice President, General Counsel and Secretary | |
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TABLE OF CONTENTS Annex A AMENDMENT NUMBER TWO TO THE AMERICAN PUBLIC EDUCATION, INC.
2017 OMNIBUS INCENTIVE PLAN The American Public Education, Inc. 2017 Omnibus Incentive Plan (the “Plan”) is hereby amended (this “Amendment”) as set forth below by the Board of Directors of American Public Education, Inc. (the “Corporation”), subject to the approval of this Amendment by the stockholders of the Corporation: 1. Section 4.1, part (i), of the Plan is amended and restated to increase the number of shares available for issuance by one million one hundred twenty five thousand (1,125,000) as follows, with the remainder of Section 4.1 remaining unchanged: “(i) four million two hundred twenty five thousand (4,225,000) shares of Stock, plus” 2. Section 2.22, part (a) of the Plan is amended and restated as follows, with the remainder of Section 2.22 remaining unchanged: “(a) If on such date the shares of Stock are listed on a Stock Exchange, or are publicly traded on another Securities Market, the Fair Market Value of a share of Stock shall be the closing price of the Stock as reported on such Stock Exchange or such Securities Market (provided that, if there is more than one such Stock Exchange or Securities Market, the Committee shall designate the appropriate Stock Exchange or Securities Market for purposes of the Fair Market Value determination). If there is no such reported closing price on such date, the Fair Market Value of a share of Stock shall be the closing price of the Stock on the preceding day on which any sale of Stock shall have been reported on such Stock Exchange or such Securities Market.” 3. Section 10.4 of the Plan is amended and restated as follows: “Unless the Committee provides otherwise in an Award Agreement and subject to the restrictions set forth in the Plan, any applicable Company program, and the applicable Award Agreement, holders of Restricted Stock shall have the right to vote such shares of Restricted Stock and the right to receive any dividend payments or distributions declared or paid with respect to such shares of Restricted Stock. The Committee (a) may provide in an Award Agreement evidencing a grant of Restricted Stock that any cash dividend payments or distributions paid on Restricted Stock shall be reinvested in shares of Stock, which shall be subject to the same vesting conditions and restrictions as applicable to such underlying shares of Restricted Stock or (b) shall provide that any dividend payments or distributions declared or paid on shares of Restricted Stock shall only be made or paid upon satisfaction of the vesting conditions and restrictions applicable to such shares of Restricted Stock. For the avoidance of doubt, cash and stock dividends declared or paid on shares of Restricted Stock shall not vest or become payable unless and until the shares of Restricted Stock to which the dividends apply become vested and nonforfeitable. All stock dividend payments or distributions, if any, received by a Grantee with respect to shares of Restricted Stock as a result of any stock split, stock dividend, combination of stock, or other similar transaction shall be subject to the same vesting conditions and restrictions as applicable to such underlying shares of Restricted Stock.” 4. The Plan shall otherwise be unchanged by this Amendment. 5. This Amendment is adopted subject to approval by the stockholders of the Corporation at the Corporation’s 2022 Annual Meeting of Stockholders. If the stockholders fail to approve this Amendment at the Annual Meeting, the Plan shall continue in existence in accordance with its terms. * * * 
TABLE OF CONTENTS The foregoing Amendment to the Plan was duly adopted and approved by the Board of Directors of the Corporation on March 29, 2022, subject to the approval of the Amendment by the stockholders of the Corporation. Secretary The foregoing Amendment to the Plan was duly adopted by the stockholders of the Corporation at a meeting held on May ___, 2022. Secretary 
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