The Board of Directors has determined that all of the members of the Audit Committee are independent, as independence is defined under the NASDAQ Listing Standards and Rule 10A-3(b)(1) of the Securities Exchange Act of 1934 (the “1934 Act”). The Board of Directors has determined that each member of the Committee qualifies
as an “audit committee financial expert,” as defined by SEC rules, based on his education, experience and background.
A report of the Audit Committee is included below in this proxy statement.
Compensation Committee.
For the year ended December 31, 2012,2013, the Compensation Committee was composed of Messrs. Coulter (Chair), Brock and Johnson until May 2, 2013; the Compensation Committee was composed of Messrs. Grusky (Chair), Brock and Johnson until November 15, 2013; and thereafter, it was composed of Messrs. Wargo (Chair), Brock, and Johnson.
The Compensation Committee is responsible for evaluating, and recommending to the full Board for approval, the compensation of the Executive Chairman, the Chief Executive Officer and other officers of the Corporation. The Compensation Committee is responsible for determining compensation policies and practices, changes in compensation and benefits for management, employee benefits and all other matters relating to employee compensation, including matters relating to stock-based compensation, subject to the approval of the Board. The Compensation Committee has the authority to retain and terminate any compensation consultant to be used by it to assist in the evaluation of director and executive compensation. During 2012, the Compensation Committee engaged and2013, approximately $13,000 was paid approximately $10,000 to AON Consulting,Hewitt, Inc. to benchmark compensation for the CEO, COO and CFO positions. The Compensation Committee may form and delegate any of its authority to one or more subcommittees as it deems appropriate. For a discussion of the role of ourthe Executive Chairman and the CEO in determining or recommending the amount or form of executive compensation, see “Compensation Discussion and Analysis��Analysis” below. The Compensation Committee met fourthree times during 2012.2013.
The Compensation Committee has adopted a written charter, which was last amended on February 12, 2013,19, 2014, and a copy of which the Corporation will provide to any person without charge, upon request. Persons wishing to make such a request should contact Sonya G. Udler, SeniorMark C. Brown, Executive Vice President — Corporate Communications,and Chief Financial Officer, 2303 Dulles Station Blvd., Herndon, VA 20171, (703) 561-1600. In addition, the Compensation Committee charter is available on the Corporation’s website,www.strayereducation.com.
The Board has determined that all of the members of the Compensation Committee are independent, as independence is defined under the NASDAQ Listing Standards. The Board also has determined that all of the members of the Compensation Committee qualify as “non-employee” directors as defined by SEC rules and “outside directors” as defined by the Internal Revenue Code of 1986.
Nominating Committee.
For the year ended December 31, 2012,2013, the Nominating Committee was composed of Mr. Grusky (chair)(Chair), Dr. Casteen and Dr. Beason.Beason until May 2, 2013; thereafter, the Nominating Committee was composed of Dr. Casteen (Chair), Dr. Beason, and Mr. Milano. The Nominating Committee is responsible for establishing qualifications for potential directors, considering and recommending prospective candidates for Board membership, recommending the Board committee structure, making recommendations as to director independence, developing and monitoring the Corporation’s corporate governance principles, and recommending director compensation. The Nominating Committee met threetwo times during 2012.2013.
The Nominating Committee has a written charter, which was amended and restated on July 26, 2011. The Nominating Committee charter will be made available to any person upon request without charge. Persons wishing to make such a request should contact Sonya G. Udler, SeniorMark C. Brown, Executive Vice President — Corporate Communications,and Chief Financial Officer, 2303 Dulles Station Blvd., Herndon, VA 20171, (703) 561-1600. In addition, the Nominating Committee charter is available on the Corporation’s website,www.strayereducation.com.
The Board has determined that all of the members of the Nominating Committee are independent, as independence is defined under the NASDAQ Listing Standards.
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Compensation Committee Interlocks and Insider Participation
During fiscal year 2012,2013, the Compensation Committee was composed of Messrs. Coulter (Chair), Brock and Johnson until May 2, 2013; the Compensation Committee was composed of Messrs. Grusky (Chair), Brock and Johnson until November 15, 2013; and thereafter, it was composed of Messrs. Wargo (Chair), Brock, and Johnson. No member of the Compensation Committee was, during fiscal year 2012,2013, an officer or employee of the Corporation or was formerly an officer of the Corporation, or had any relationship requiring disclosure by the Corporation as a related party transaction under applicable SEC rules. No executive officer of the Corporation served on any board of directors or compensation committee of any other company for which any of the Corporation’s directors served as an executive officer at any time during fiscal year 2012.2013.
Attendance at Meetings and Director Independence
The Board of Directors met sixfive times during 2012,2013, including twoone telephonic meetings.meeting. Each Director attended at least 75% of the meetings of the Board and the meetings of the Board Committees on which he or she served as a member in 2012.2013. At each regularly scheduled meeting of the Board, the independent directors met in executive session. The Board’s Presiding Independent Director, currently Mr. Grusky,Dr. Casteen, presides at these executive sessions. The Corporation encourages all incumbent directors and director nominees to attend each annual meeting of stockholders. All but one DirectorDirectors attended last year’s meeting.meeting, including some who participated telephonically.
The Board of Directors consists of a majority of independent directors, as independence is defined under the NASDAQ Listing Standards. The Board of Directors has determined that all members of the Board of Directors, except for Messrs. Silberman and McDonnell, are independent under these standards.
Code of Business Conduct
The Board of Directors adopted a Code of Business Conduct in February 2004, meeting the requirements of Section 406 of the Sarbanes-Oxley Act of 2002 and applicable NASDAQ requirements. The Code of Business Conduct was last amended on February 12, 2013.19, 2014, and includes, among other things, provisions prohibiting employees from: insider trading; investing in Corporation-based derivative securities, including options, warrants or similar rights whose value is derived from the value of an equity security; short selling the Corporation’s securities; and trading in the Corporation’s securities on a short-term basis. The Corporation will provide to any person without charge, upon request, a copy of such Code of Business Conduct. Persons wishing to make such a request should contact Sonya G. Udler, SeniorMark C. Brown, Executive Vice President — Corporate Communications,and Chief Financial Officer, 2303 Dulles Station Blvd., Herndon, VA 20171, (703) 561-1600. In addition, the Code of Business Conduct is available on the corporate website,www.strayereducation.com. In the event that the Corporation makes any amendment to, or grants any waiver from, a provision of the Code of Business Conduct that applies to the Corporation’s principal executive officer, principal financial officer, principal accounting officer, controller or certain other senior officers and requires disclosure under applicable SEC rules, the Corporation intends to disclose such amendment or waiver and the reasons for the amendment or waiver on the Corporation’s website,www.strayereducation.com and,or, as required by NASDAQ, file a Current Report on Form 8-K with the SEC reporting the amendment or waiver.
Stockholder Communication with Directors
The Corporation has a process for stockholders to send communications to the Board of Directors. Any stockholder that wishes to communicate with the Board of Directors may do so by submitting correspondence in writing to the Board, in care of Viet D. Dinh, Corporate Secretary, Strayer Education, Inc., 2303 Dulles Station Blvd., Herndon, VA 20171, (703) 561-1600. The mailing envelope must contain a clear notation indicating that the enclosed letter is a “Stockholder-Board Communication.” All such letters must identify the author as a stockholder. All correspondence from stockholders that (i) beneficially own more than 5% of the Corporation’s common stock or (ii) have beneficially owned more than 1% of the Corporation’s common stock for at least one year will be forwarded to the Board.Board without prior review. In addition, Stockholder-Board communications from all other stockholders will be reviewed by the Chief Executive Officer and the Secretary of the Corporation, whoand if determined to be appropriate communications will forward all appropriate communicationsbe forwarded to the Board.
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Section 16(a) Beneficial Ownership Reporting Compliance
The 1934 Act requires the Corporation’s directors, executive officers and 10% stockholders to file reports of beneficial ownership of equity securities of the Corporation and to furnish copies of such reports to the Corporation. Based on a review of such reports, and upon written representations from certain reporting persons, the Corporation believes that, during the fiscal year ended December 31, 2012,2013, all such filing requirements were met.
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BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the ownership of the Corporation’s common stock as of March 15, 201310, 2014 (except as otherwise indicated), by each person known by management of the Corporation to be the beneficial owner of more than five percent (5%) of the outstanding shares of the Corporation’s common stock, each of the Corporation’s directors and director nominees, its Executive Chairman, CEO, and fourthree other named executive officers and all executive officers and directors as a group. The information presented in the table is based upon the most recent filings with the SEC by those persons or upon information otherwise provided by those persons to the Corporation. The percentages reflected in the table for each beneficial owner are calculated based on the number of shares of common stock outstanding on the record date plus those common stock equivalents and exercisable options held by the applicable beneficial owner.
Name of Beneficial Owner
| | | Common Stock Beneficially Owned(a)
| | Options Currently Exercisable or Exercisable within 60 days
| | Total
| | Percentage Owned
| | | Common Stock Beneficially Owned(a)
| | Options Currently Exercisable or Exercisable within 60 days
| | Total
| | Percentage Owned
|
---|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Royce & Associates, LLC(b) | | | 1,179,441 | | | | 0 | | | | 1,179,441 | | | | 10.6 | % | |
T. Rowe Price Associates, Inc.(c) | | | 1,160,146 | | | | 0 | | | | 1,160,146 | | | | 10.4 | % | |
| | | 1,019,330 | | | | 0 | | | | 1,019,330 | | | | 9.2 | % | |
BlackRock Fund Advisors(e) | | | 856,851 | | | | 0 | | | | 856,851 | | | | 7.7 | % | |
Generation Investment Management LLP(f) | | | 820,897 | | | | 0 | | | | 820,897 | | | | 7.4 | % | |
The Vanguard Group, Inc.(g) | | | 647,359 | | | | 0 | | | | 647,359 | | | | 5.8 | % | |
Baron Capital Group, Inc.(h) | | | 626,164 | | | | 0 | | | | 626,164 | | | | 5.6 | % | |
T. Rowe Price Associates, Inc.(b) | | | | 1,546,855 | | | | 0 | | | | 1,546,855 | | | | 14.3 | % |
Royce & Associates LLC(c) | | | | 1,084,485 | | | | 0 | | | | 1,084,485 | | | | 10.0 | % |
| | | | 942,522 | | | | 0 | | | | 942,522 | | | | 8.7 | % |
The Vanguard Group, Inc.(e) | | | | 611,300 | | | | 0 | | | | 611,300 | | | | 5.6 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| | | 221,536 | | | | 0 | | | | 221,536 | | | | 2.0 | % | | | 221,607 | | | | 0 | | | | 221,607 | | | | 2.0 | % |
| | | 6,426 | | | | 0 | | | | 6,426 | | | | * | | | | 8,063 | | | | 0 | | | | 8,063 | | | | * | |
| | | 6,276 | | | | 0 | | | | 6,276 | | | | * | | | | 2,444 | | | | 0 | | | | 2,444 | | | | * | |
| | | 1,525 | | | | 0 | | | | 1,525 | | | | * | | | | 3,162 | | | | 0 | | | | 3,162 | | | | * | |
| | | 9,540 | | | | 0 | | | | 9,540 | | | | * | | |
| | | 10,056 | | | | 0 | | | | 10,056 | | | | * | | |
| | | | 9,249 | | | | 0 | | | | 9,249 | | | | * | |
| | | 9,454 | | | | 0 | | | | 9,454 | | | | * | | | | 11,091 | | | | 0 | | | | 11,091 | | | | * | |
| | | 57,235 | | | | 0 | | | | 57,235 | | | | * | | | | 54,974 | | | | 0 | | | | 54,974 | | | | * | |
| | | 3,744 | | | | 0 | | | | 3,744 | | | | * | | | | 11,894 | | | | 0 | | | | 11,894 | | | | * | |
| | | 5,426 | | | | 0 | | | | 5,426 | | | | * | | | | 7.063 | | | | 0 | | | | 7.063 | | | | * | |
| | | 62,976 | | | | 0 | | | | 62,976 | | | | * | | |
| | | | 4,613 | | | | 0 | | | | 4,613 | | | | * | |
Named Executive Officers:
| | | | | | | | | | | | | | | | | | | | | | |
| | | 20,747 | | | | 0 | | | | 20,747 | | | | * | | | | 19,031 | | | | 0 | | | | 19,031 | | | | * | |
| | | 42,337 | | | | 0 | | | | 42,337 | | | | * | | | | 41,472 | | | | 0 | | | | 41,472 | | | | * | |
| | | 17,623 | | | | 0 | | | | 17,623 | | | | * | | |
All Executive Officers and Directors (16 persons) | | | 513,606 | | | | 0 | | | | 513,606 | | | | 4.6 | % | |
| | | | 22,172 | | | | 0 | | | | 22,172 | | | | * | |
All Executive Officers and Directors (14 persons) | | | | 439,889 | | | | 0 | | | | 439,889 | | | | 4.1 | % |
* | | represents amounts less than 1% |
(a) | | For directors and officers, the number of shares of common stock beneficially owned includes shares of restricted stock, which the holder is entitled to vote.vote, and restricted stock units. |
(b) | | Based on a Schedule 13G/A filed with the SEC on March 6, 2013. Royce & Associates, LLC including affiliated entities is an investment adviser with respect to the reported shares for the accounts of other persons who have the right to receive, or the power to direct the receipt of dividends from, or the proceeds from the sale of, such shares. The interest of one account, Royce Premier Fund, an investment company registered under the Investment Company Act of 1940 and managed by Royce & Associates, LLC, amounted to 1,068,485 shares or 9.6% of the total outstanding shares. The address is: 745 Fifth Avenue, New York, New York 10151. |
(c) | | Based on a Schedule 13G/A filed with the SEC on March 11, 2013.February 7, 2014. These securities are owned by various individual and institutional investors including T. Rowe Price Mid-Cap Value Fund, Inc. (which owns 759,691 |
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| | 1,233,300 shares, representing 6.8%11.4% of the shares outstanding), which T. Rowe Price Associates, Inc. (“Price Associates”) serves as investment adviser with power to direct investments and/or sole power to vote securities. For purposes of the reporting requirement of the Securities Exchange Act of 1934, Price Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities. The address is: 100 E. Pratt Street, Baltimore, Maryland 21202. |
(d)(c) | | Based on a Schedule 13G13G/A filed with the SEC on FebruaryJanuary 14, 2013. FMR2014. Royce & Associates, LLC including affiliated entities is the parent company of Fidelity Management & Research Company, a wholly-owned subsidiary andan investment advisoradviser with respect to the reported shares for variousthe accounts of other persons who have the right to receive, or the power to direct the receipt of dividends from, or the proceeds from the sale of, such shares. The interest of one account, Royce Premier Fund, an investment company registered under |
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| | the Investment Company Act of 1940 and managed by Royce & Associates, LLC, amounted to 1,018,485 shares or 9.4% of the total outstanding shares. The address is: 82 Devonshire745 Fifth Avenue, New York, New York 10151. |
(d) | | Based on a Schedule 13G/A filed with the SEC on January 30, 2014. The address of BlackRock, Inc. is: 40 East 52nd Street, Boston, Massachusetts 02109.New York, New York 10022. |
(e) | | Based on a Schedule 13G/A filed with the SEC on February 8, 2013. The address of BlackRock, Inc. is: 40 East 52nd Street, New York, New York 10022. |
(f) | | Based on a Schedule 13G/A filed with the SEC on February 14, 2013. The address of Generation Investment Management LLP is: 20 Air Street, 7th Floor, London, WIB 5AN, United Kingdom. |
(g) | | Based on a Schedule 13G filed with the SEC on February 11, 2013.12, 2014. The address of The Vanguard Group Inc. is: 100 Vanguard Blvd., Malvern, PA 19355. |
(h)(f) | | Based on a joint Schedule 13G/A filed with the SEC on February 14, 2013 by BAMCO, Inc., Baron Capital Group, Inc., Baron Capital Management, Inc., and Ronald Baron. BAMCO and Baron Capital Management are subsidiaries of Baron Capital Group and have advisory clients who have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Corporation’s common stock. Ronald Baron owns a controlling interest in the parent company, and serves as Chairman and CEO of the parent company, BAMCO, and Baron Capital Management. The address is: 767 Fifth Avenue, 49th Floor, New York, New York 10153. |
(i) | | Includes 7,3253,244 shares owned by Halley Dog Investments, LLC, of which Mr. Grusky is the Manager. On December 31, 2012, Mr. Grusky gifted a 70%65% interest in Halley Dog Investments, LLC to a trust for the benefit of his family members, of which he is a trustee. |
(j) | | Includes 61,560 shares pledged as security, of which 4,000 shares are owned by family members and as to which Mr. Wargo has shared investment power.members. |
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Policies and Objectives
In accordance with the Compensation Committee charter, the Corporation employs the following general policies in determining executive compensation:
The Corporation believes that compensation of the Corporation’s key executives should be sufficient to attract and retain highly qualified and productive personnel, as well as to enhance productivity and encourage and reward superior performance.
It is the policy of the Corporation that the three primary components of the Corporation’s compensation package for officers (salary, profit share, and equity grants) be considered in the aggregate. In other words, the total compensation of our executive officers should be appropriate to their contributions, and the amount of each component should take into account the size of their total compensation package, even if one individual component is larger or smaller than industry average.
Consistent with Department of Education regulations, the Corporation seeks to reward achievement of specific corporate goals by executing a profit sharing plan for the Corporation’s senior officers, some of which is paid in cash, and the rest in stocksome form of the Corporation which is restricted for at least three years.stock-based compensation with a required vesting period.
The criteria used by the Compensation Committee in deciding whether, or at what level, a profit sharing plan should be funded in any year is whether the Corporation met certain performance objectives set annually by the Board. These assessments are made only after the Compensation Committee receives the Corporation’s annual financial statements, audited by the Corporation’s independent auditing firm, PricewaterhouseCoopers LLP. Each year the corporate objectives used to determine profit sharing eligibility for executives are chosen by the Board of Directors from criteria which were approved by the stockholders of the Corporation. Criteria were approved most recently by stockholders at its annual meeting on April 26, 2011.
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| | eligibility for executives are chosen by the Board of Directors from criteria which were approved by the stockholders of the Corporation. Criteria were approved most recently by stockholders at its annual meeting on April 26, 2011. |
One of the Corporation’s guiding principles is that officers and directors think like owners. To this end, the Corporation adopted a requirement that within three years of hiring, promotion or being appointed to the Board, senior officers and members of the Board of Directors purchase shares of the Corporation in the open market, or hold vested awardedown shares equal to the amounts shown in the table below. The Board reviews compliance with this policy consistent with historic share ownership, market price fluctuations, and other factors.
Title
| | | | Required Share Ownership
|
---|
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
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In determining compensation levels at the Corporation, the Compensation Committee compares executive compensation at the Corporation to that of tennine other publicly traded companies which own education assets. These companies are: Apollo Group, Inc., Bridgepoint Education, Capella Education Company, Career Education Corporation, Corinthian Colleges, Inc., DeVry, Inc., Education Management Corporation, ITT Educational Services, Inc., Kaplan, Inc., Grand Canyon Education, Inc., Capella Education Company, and Bridgepoint Education.ITT Educational Services, Inc. The Compensation Committee also compares executive compensation at the Corporation to similarly sized companies by revenue, market capitalization, and growth profile which are in other industries.
The Compensation Committee generally tries to set salary targets at or below the midpoint of comparable companies. However, the Compensation Committee tries to set profit sharing targets (both cash and equity) at or above the midpoint of comparable companies. If, in the Board’s judgment, the midpoint or upper quartile calculations of the comparable companies yield too high a compensation level, the Board will not match these levels, but instead make reasoned judgments to lower the Corporation’s executive compensation to levels it deems more appropriate.
At the 20122013 Annual Meeting of Stockholders, the Company’s stockholders approved the overall 2011 compensation for its named executive officers by a majorityapproximately 85% of the votes cast.cast were cast in favor of the advisory resolution to approve the 2012 compensation for the Corporation’s named executives. The CompanyCorporation believes this vote reflected stockholder approval of its overall pay practices and the absence of any practices that stockholders consider problematic. Accordingly, the Compensation Committee generally continued to apply the same principles in determining the amounts and types of executive compensation for 2012.2013. The Compensation Committee values the stockholder feedback provided through the vote, and will continue to consider the results of the vote in the future.
Who Determines Compensation?
In accordance with the Compensation Committee charter, compensation for the Corporation’s Executive Chairman and its CEO is determined by the Compensation Committee subject to approval of the Corporation’s Board of Directors (excluding the Executive Chairman and the CEO, who isare also a Director)Directors). In making its determination on Executive Chairman and CEO compensation, the Compensation Committee reviews a number of factors, including but not limited to:
The Corporation’s achievement of annual goals and objectives set by the full Board of Directors in the preceding year,
The long term performance of the Corporation, and
CEO compensation level at comparable companies.
For the other named executive officers, the Compensation Committee reviews, approves, and recommends to the full Board compensation based on:
Performance of the executive officers in light of relevant goals and objectives approved by the Compensation Committee and the annual goals and objectives established by the Board in the preceding year,
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The long term performance of the Corporation,
Executive compensation level at comparable companies, and
The recommendations of the Executive Chairman and the CEO.
The Executive Chairman and the CEO providesprovide recommendations for executive officer compensation (other than himself)themselves) to the Compensation Committee based on hisa review and analysis of each officer’s performance and contributions to the Corporation. While the Compensation Committee considers the recommendations of the Executive Chairman and the CEO with respect to these elements of compensation, the Compensation Committee independently evaluates the recommendations for purposes of making its recommendations to the full Board.
The Compensation Committee meets in the beginning of each year when audited year-end financial statements are available, to consider profit sharing with respect to the just completed fiscal year, consider equity awards, and determine executive officer salaries with respect to the next fiscal year. The Committee meets from time to time during the year as may be required to address compensation and equity grant issues associated with new officer
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hires and director appointments, as well as, if applicable, making equity grants as long-term compensation and making other determinations or recommendations with respect to employee benefit plans and related matters.
Appointment of Mr. Silberman to Executive Chairman and Promotion of Karl McDonnell to Chief Executive Officer
In February of 2013, the Compensation Committee recommended and the Board of Directors voted to ratify the appointment of Mr. Silberman, then the Corporation’s current Chief Executive Officer and Chair, to Executive Chairman. Additionally, the Compensation Committee recommended and the Board approved the promotion of Karl McDonnell, the Corporation’s current Presidentthen-President and Chief Operating Officer, to the position of Chief Executive Officer. Both the appointment of Mr. Silberman to Executive Chairman and the promotion of Mr. McDonnell to Chief Executive Officer will becomebecame effective after the annual shareholder’sshareholders’ meeting, on May 2, 2013.
Identification and Analysis of 20122013 Compensation Programs
During 2012,2013, the Corporation’s executive compensation program included salary, profit sharing and long-term compensation in the form of restricted stock awarded under the Corporation’s 2011 Equity Compensation Plan.
• | | Salary — Salaries for executives other than the Executive Chairman and the CEO are reviewed, approved, and recommended to the full Board annually by the Compensation Committee upon recommendation of the Executive Chairman and the CEO. The Executive Chairman’s and the CEO’s salary issalaries are specified in histheir employment agreementagreements (see “Employment Agreements with Mr. Silberman”Silberman and Mr. McDonnell” and “Potential Payments upon Termination or Change in Control” sections below), and isare annually reviewed and approved by the Compensation Committee and the full Board of Directors. |
• | | Profit Sharing — The profit sharing plan for our named executives and other senior executives is funded each year by our Board of Directors upon the recommendation of the Compensation Committee of the Board. In determining whether to recommend such profit sharing, the Compensation Committee determines whether the Corporation has achieved its annual corporate objectives for the year. |
As befits a Corporation whose main operating asset is a 121122 year old University holding the highest possible academic accreditation, these annual corporate objectives include a number of academic measures such as improvements in student learning outcomes, student retention and continuation rates, advances in faculty hiring and qualifications, development of new academic programs, advances in online education, and increased academic rigor. The annual corporate objectives also include non-financial operational targets such as opening new campuses, securing regulatory approval to operate in new states, securing new corporate and institutional alliance partners and entering into additional academic articulation agreements with other universities and community colleges. Finally, these annual corporate objectives include financial measures, such as revenue, operating margin, operating income, net income, EPS, return on invested capital, and return of capital to owners through dividends and share repurchases. Of course, even if the Corporation achieves all of its academic, operational, and financial objectives in a given year, in the event of any breach in regulatory, legal, or ethical business standards, the Compensation Committee would eliminate the payment of cash profit sharing for that year.
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The Board does not consider movements of the stock price of the Corporation during the year in determining annual compensation. The Board strongly feels that management’s responsibility is to create an enduring increase in the intrinsic value of the Corporation. By achieving its annual corporate objectives, the Board feels management will necessarily increase the intrinsic value of the Corporation, and generate sustainable long term increases in stockholders’ value. Each year the Board selects those annual corporate objectives from among criteria which were approved by the stockholders of the Corporation, most recently at its annual meeting on April 26, 2011. While the Board believes that each of the various annual corporate objectives is relevant to the determination of executive compensation, the achievement of any one annual corporate objective would not, in and of itself, result in a specific cash profit share amount being paid to our named executive officers. The Corporation believes the achievement of these goals is realistic but not certain.
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The target profit share in cash for the Executive Chairman and/orand the Chief Executive Officer is 125% of salary and varies for Executive Vice Presidents, 90% of salary, for Senior Vice Presidents, 60% of salary,other officers and for Vice Presidents, 40% of salary.employees. Only corporate officers are eligible for a profit share distribution in cash. For 2013, the Corporation did not meet financial targets, and profit share in cash distributed was generally reduced by approximately 33% from the prior year. See “Summary Compensation” and “Narrative Disclosure to Summary Compensation Table and Grants of Plan-based Awards Table” for more information regarding profit sharing awards for 2012.2013.
• | | Equity-based Compensation Programs — As discussed above, the Corporation believes it should, subject to achievement of certain academic, operational, financial, and individual objectives, make annual equity grants in order to retain, motivate, and align the interests of those key executive officers with stockholders. |
Under this program, the target equity grant value for Executive Vice Presidents is 50% of salary, for Senior Vice Presidents, 25% of salary, and for Vice Presidents, 15% of salary. Equity awards under this program are only made after the Compensation Committee and full Board of Directors have completed their analysis of both corporate and individual performance described in the previous section on profit sharing. For our Chief Executive Officer, we feel that at least 50% of his or her target total annual compensation should be performance-based in the form of equity grants of restricted stock with at least a four year cliff vest.
We view our equity as very valuable and are reluctant to issue it. This means that we only grant restricted stock or stock options to employees and directors as compensation when we believe we are getting fair value (in terms of their service) in return. The Corporation made equity grants in February 2014 (for 2013 performance) only to the highest priority retention targets and pursuant to the Chief Executive Officer’s employment agreement. In some instances, these equity grants were above target due to contributions in effectuating our restructuring and increased responsibilities during the year.
Our restricted stock agreements with employees contain clawback provisions. If the Corporation is required to prepare an accounting restatement due to the material noncompliance of the Corporation, as a result of misconduct, with any financial reporting requirement and the employee engaged in that misconduct, knowingly failed to prevent the misconduct, or was grossly negligent in preventing the misconduct, the employee is required to reimburse the Corporation the amount of payment in settlement of the award earned or accrued during the 12-month period following the filing of the financial document that contained information affected by the material noncompliance. In addition, if the Corporation is required to prepare an accounting restatement, then the employee must forfeit any cash or stock received in connection with the award if any amount of the award was explicitly based on the achievement of pre-established performance goals that were later determined, as a result of the accounting restatement, not to have been achieved.
• | | Perquisites and Other Personal Benefits — The Corporation does not offer any perquisites. The Corporation does reimburse relocation expenses including tax gross-ups, when applicable. This benefit is offered to any officer hired from a different location to encourage prospective executives to relocate. None of the Corporation’s named executive officers received any perquisites or personal benefits during 2013. |
• | | Employment Agreements with Mr. Silberman and Mr. McDonnell — Robert S. Silberman, the Corporation’s Chairman and Chief Executive Officer,Chairman, has an employment agreement with the Corporation which had an initial term of approximately three years (ending on December 31, 2004), and thereafter, automatically extendsextended for successive one-year periods unless either the Corporation or Mr. Silberman providesprovided timely notice to the contrary. Mr. Silberman’s employment agreement currentlywas amended on May 2, 2013, in connection with his transition from Chief Executive Officer to Executive Chairman. Under the amended agreement, Mr. Silberman’s term of employment is six years, and is renewable thereafter for one year terms unless the Corporation or Mr. Silberman provides notice otherwise. The amended agreement provides for a base salary of $665,000 per annum (subject to annual increases for at least cost of living adjustments). Mr. Silberman is also eligible to receive a target profit share of at least 75%125% of base salary, for each of the fiscal years during which he is employed, upon meeting certain corporate and financial goals annually approved by the Board. In the event of termination without cause, the employment contract also provides for the payment of three years base salary, three years of medical benefits and, if such termination is in connection with a change of control or Mr. Silberman resigns after a change of control (as explained below), an amount equal to three times the latest annual profit share award paid to him prior |
19
| | to the event of termination without cause. In addition, consistent with his original agreement with the Corporation executed in 2001, Mr. Silberman is entitled to a gross-up payment for any excise taxes which may be imposed on termination payments. Mr. Silberman is the only named executive officer who has an employment agreement. |
The Corporation also entered into an employment agreement on May 2, 2013 with Karl McDonnell, in connection with his promotion to Chief Executive Officer (he did not previously have an employment agreement). Under the employment agreement, Mr. McDonnell’s term of employment is six years and is renewable thereafter for one year terms unless the Corporation or Mr. McDonnell provides notice otherwise. Under the agreement Mr. McDonnell will receive a base salary of $665,000 per annum (subject to annual increases for at least cost of living adjustments). Mr. McDonnell is also eligible to receive a target profit share of 125% of base salary for each fiscal year during which he is employed, upon meeting certain corporate and financial goals annually approved by the Board, and an annual restricted share grant target equivalent to $2,000,000, awarded at each annual meeting. Mr. McDonnell is not entitled to a gross-up payment for any excise taxes which may be imposed on termination payments.
• | | Retirement and Deferred Compensation Plans — The Corporation maintains a retirement plan (the “401(k) Plan”) intended to qualify under Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended. The 401(k) Plan is a defined contribution plan that covers all full-time employees of the Corporation of at least 21 years of age. The Corporation, in its discretion, matches employee |
18
| | contributions up to a maximum authorized amount under the plan. In 2012,2013, the Corporation matched 100%50% of employee deferrals up to a maximum of 3% of the employee’s annual salary and matched an additional 50% of employee contributions for deferrals between 3% and 5% of annual salary. The Corporation offers this plan to enable and encourage its employees to save for their retirement in a tax advantageous way. The Corporation also maintains an Employee Stock Purchase Plan (the “Employee Purchase Plan”). The purpose of the Employee Purchase Plan is to enable eligible full-time employees of the Corporation, through payroll deductions, to purchase shares of its common stock at a 10% discount from the prevailing market price from time to time. The Corporation offers this plan to encourage stock ownership by its employees. |
Impact of Tax and Accounting Treatment
Under Section 162(m) of the Internal Revenue Code of 1986, as amended and applicable Treasury regulations, no deduction is allowed for annual compensation in excess of $1 million paid by a publicly traded corporation to its chief executive officer and the three other highest compensated executive officers (other than the chief financial officer). Under those provisions, however, there is no limitation on the deductibility of “qualified performance-based compensation.” In general, the Corporation’s policy is to maximize the extent of tax deductibility of executive compensation under the provisions of Section 162(m) so long as doing so is compatible with its determination as to the most appropriate methods and approaches for the design and delivery of compensation to the Corporation’s executive officers.
20
Summary Compensation
The following table sets forth all compensation awarded to the Corporation’s named executive officers for the fiscal years ended December 31, 2010, 2011, 2012, and 2012.2013.
Summary Compensation Table(a)
| | | | Year
| | Salary
| | Cash Profit Share
| | Stock Awards(b)
| | All Other Compensation(c)
| | Total
|
---|
| | | | | 2012 | | | $ | 665,000 | | | $ | 900,000 | | | $ | 1,885,775 | | | $ | 10,000 | | | $ | 3,460,775 | |
| | | | | 2011 | | | $ | 665,000 | | | $ | — | | | $ | — | | | $ | 9,800 | | | $ | 674,800 | |
| | | | | 2010 | | | $ | 665,000 | | | $ | 875,000 | | | $ | — | | | $ | 9,800 | | | $ | 1,549,800 | |
|
| | | | | 2012 | | | $ | 432,000 | | | $ | 2,000,000 | | | $ | 750,000 | | | $ | 10,000 | | | $ | 3,192,000 | |
President, Chief Operating | | | | | 2011 | | | $ | 420,000 | | | $ | — | | | $ | — | | | $ | 9,800 | | | $ | 429,800 | |
| | | | | 2010 | | | $ | 420,000 | | | $ | 600,000 | | | $ | — | | | $ | 9,800 | | | $ | 1,029,800 | |
|
Dr. Michael A. Plater,(d) | | | | | 2012 | | | $ | 327,500 | | | $ | 300,000 | | | $ | 300,000 | | | $ | 10,000 | | | $ | 937,500 | |
Strayer University President | | | | | 2011 | | | $ | 250,000 | | | $ | — | | | $ | 250,000 | | | $ | 11,422 | | | $ | 511,422 | |
| | | | | 2010 | | | $ | 187,535 | | | $ | 185,000 | | | $ | — | | | $ | 138,521 | | | $ | 511,056 | |
|
| | | | | 2012 | | | $ | 336,000 | | | $ | 300,000 | | | $ | 500,000 | | | $ | 10,000 | | | $ | 1,146,000 | |
Executive Vice President & Chief | | | | | 2011 | | | $ | 300,000 | | | $ | — | | | $ | 300,000 | | | $ | 9,800 | | | $ | 609,800 | |
| | | | | 2010 | | | $ | 300,000 | | | $ | 350,000 | | | $ | 300,000 | | | $ | 9,800 | | | $ | 959,800 | |
|
| | | | | 2012 | | | $ | 260,000 | | | $ | 300,000 | | | $ | 250,000 | | | $ | 10,000 | | | $ | 820,000 | |
Executive Vice President & Chief | | | | | 2011 | | | $ | 220,000 | | | $ | — | | | $ | 220,000 | | | $ | 9,800 | | | $ | 449,800 | |
| | | | | 2010 | | | $ | 220,000 | | | $ | 200,000 | | | $ | 1,150,000 | | | $ | 8,782 | | | $ | 1,578,782 | |
| | | | Year
| | Salary
| | Cash Profit Share
| | Stock Awards(b)
| | Option Awards(b)
| | All Other Compensation(c)
| | Total
|
---|
| | | | | 2013 | | | $ | 665,000 | | | $ | 535,000 | | | $ | — | | | $ | 2,209,000 | | | $ | 3,825 | | | $ | 3,412,825 | |
| | | | | 2012 | | | $ | 665,000 | | | $ | 900,000 | | | $ | 1,885,775 | | | $ | — | | | $ | 10,000 | | | $ | 3,460,775 | |
| | | | | 2011 | | | $ | 665,000 | | | $ | — | | | $ | — | | | $ | — | | | $ | 9,800 | | | $ | 674,800 | |
|
| | | | | 2013 | | | $ | 582,000 | | | $ | 535,000 | | | $ | 2,000,000 | | | $ | — | | | $ | 3,825 | | | $ | 3,120,825 | |
| | | | | 2012 | | | $ | 432,000 | | | $ | 2,000,000 | | | $ | 750,000 | | | $ | — | | | $ | 10,000 | | | $ | 3,192,000 | |
| | | | | 2011 | | | $ | 420,000 | | | $ | — | | | $ | — | | | $ | — | | | $ | 9,800 | | | $ | 429,800 | |
|
| | | | | 2013 | | | $ | 357,000 | | | $ | 175,000 | | | $ | 1,000,000 | | | $ | — | | | $ | 3,825 | | | $ | 1,535,825 | |
| | | | | 2012 | | | $ | 327,500 | | | $ | 300,000 | | | $ | 300,000 | | | $ | — | | | $ | 10,000 | | | $ | 937,500 | |
| | | | | 2011 | | | $ | 250,000 | | | $ | — | | | $ | 250,000 | | | $ | — | | | $ | 11,422 | | | $ | 511,422 | |
|
| | | | | 2013 | | | $ | 342,000 | | | $ | 175,000 | | | $ | 1,500,000 | | | $ | — | | | $ | 3,825 | | | $ | 2,020,825 | |
| | | | | 2012 | | | $ | 336,000 | | | $ | 300,000 | | | $ | 500,000 | | | $ | — | | | $ | 10,000 | | | $ | 1,146,000 | |
| | | | | 2011 | | | $ | 300,000 | | | $ | — | | | $ | 300,000 | | | $ | — | | | $ | 9,800 | | | $ | 609,800 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | 2013 | | | $ | 235,000 | | | $ | 65,000 | | | $ | 1,000,000 | | | $ | — | | | $ | 3,520 | | | $ | 1,303,520 | |
| | | | | 2012 | | | $ | 220,000 | | | $ | 100,000 | | | $ | 150,000 | | | $ | — | | | $ | 8,297 | | | $ | 478,297 | |
| | | | | 2011 | | | $ | 196,000 | | | $ | — | | | $ | 150,000 | | | $ | — | | | $ | 7,600 | | | $ | 353,600 | |
(a) | | The Corporation does not have a non-equity incentive plan, a pension plan or a non-qualified deferred compensation plan and, therefore, the columns related to these plans are excluded from the table. |
(b) | | The amounts shown in the “Stock Awards” columncolumns above reflect the grant date fair value of each award computed in accordance with FASB ASC Topic 718. The value of any dividends paid by the Corporation’s dividendsCorporation is assumed to be included in the grant date fair value of each stock award. |
(c) | | See “Supplemental All Other Compensation Table” below for additional detail. |
(d) | | Dr. Plater was hired in March 2010 and was appointed University President in October 2011. |
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In 2012,2013, All Other Compensation is comprised of the Corporation’s match of contributions to a 401(k) plan only. The table below sets forth this information by named executive officer for the fiscal years ended December 31, 2010, 2011, 2012, and 2012.2013.
Supplemental All Other Compensation Table
| | | Year
| | Corporation’s 401(k) Match
| | Other
| | Total All Other Compensation
| | | Year
| | Corporation’s 401(k) Match
| | Other
| | Total All Other Compensation
|
---|
| | | 2012 | | | $ | 10,000 | | | $ | — | | | $ | 10,000 | | | | 2013 | | | $ | 3,825 | | | $ | — | | | $ | 3,825 | |
Chairman & Chief Executive Officer | | | 2011 | | | $ | 9,800 | | | $ | — | | | $ | 9,800 | | |
| | | | 2012 | | | $ | 10,000 | | | $ | — | | | $ | 10,000 | |
| | | 2010 | | | $ | 9,800 | | | $ | — | | | $ | 9,800 | | | | 2011 | | | $ | 9,800 | | | $ | — | | | $ | 9,800 | |
|
| | | 2012 | | | $ | 10,000 | | | $ | — | | | $ | 10,000 | | | | 2013 | | | $ | 3,825 | | | $ | — | | | $ | 3,825 | |
President, Chief Operating Officer & Director | | | 2011 | | | $ | 9,800 | | | $ | — | | | $ | 9,800 | | |
Chief Executive Officer & Director | | | | 2012 | | | $ | 10,000 | | | $ | — | | | $ | 10,000 | |
| | | 2010 | | | $ | 9,800 | | | $ | — | | | $ | 9,800 | | | | 2011 | | | $ | 9,800 | | | $ | — | | | $ | 9,800 | |
|
| | | 2012 | | | $ | 10,000 | | | $ | — | | | $ | 10,000 | | | | 2013 | | | $ | 3,825 | | | $ | — | | | $ | 3,825 | |
Strayer University President | | | 2011 | | | $ | 7,692 | | | $ | 3,730 | | | $ | 11,422 | | | | 2012 | | | $ | 10,000 | | | $ | — | | | $ | 10,000 | |
| | | 2010 | | | $ | — | | | $ | 138,521 | (a) | | $ | 138,521 | | | | 2011 | | | $ | 7,692 | | | $ | 3,730 | (a) | | $ | 11,422 | |
|
| | | 2012 | | | $ | 10,000 | | | $ | — | | | $ | 10,000 | | | | 2013 | | | $ | 3,825 | | | $ | — | | | $ | 3,825 | |
Executive Vice President & Chief Financial Officer | | | 2011 | | | $ | 9,800 | | | $ | — | | | $ | 9,800 | | | | 2012 | | | $ | 10,000 | | | $ | — | | | $ | 10,000 | |
| | | 2010 | | | $ | 9,800 | | | $ | — | | | $ | 9,800 | | | | 2011 | | | $ | 9,800 | | | $ | — | | | $ | 9,800 | |
|
| | | 2012 | | | $ | 10,000 | | | $ | — | | | $ | 10,000 | | |
Executive Vice President & Chief Administrative Officer | | | 2011 | | | $ | 9,800 | | | $ | — | | | $ | 9,800 | | |
| | | | 2013 | | | $ | 3,520 | | | $ | — | | | $ | 3,520 | |
Senior Vice President & Treasurer | | | | 2012 | | | $ | 8,297 | | | $ | — | | | $ | 8,297 | |
| | | 2010 | | | $ | 8,782 | | | $ | — | | | $ | 8,782 | | | | 2011 | | | $ | 7,600 | | | $ | — | | | $ | 7,600 | |
(a) | | Dr. Plater received $138,521$3,730 in 20102011 related to his relocation, $73,736$2,159 of which was for relocation expenses and $64,785$1,571 of which was for tax gross-ups. |
22
Grants of Plan-Based Awards
The following table sets forth grants of plan-based awards to the Corporation’s named executive officers for the fiscal year ended December 31, 2012.2013.
Grants of Plan-Based Awards Table(a)
Name
| | | | Grant Date
| | All Stock Awards: Number of Shares of Stock or Units (#)
| | Grant Date Fair Value of Stock Awards ($)
| | Vesting Date
|
---|
| | | | | 2/14/12 | | | | 16,320 | (b) | | | 1,885,775 | | | | 2/10/19 | |
Chairman & Chief Executive Officer | | | | | | | | | | | | | | | | | | |
|
| | | | | 2/14/12 | | | | 6,491 | (c) | | | 750,000 | | | | 2/14/17 | |
President, Chief Operating Officer & Director | | | | | | | | | | | | | | | | | | |
|
| | | | | 2/14/12 | | | | 2,596 | (c) | | | 300,000 | | | | 2/14/17 | |
Strayer University President | | | | | | | | | | | | | | | | | | |
|
| | | | | 2/14/12 | | | | 4,327 | (c) | | | 500,000 | | | | 2/14/17 | |
Executive Vice President & Chief Financial Officer | | | | | | | | | | | | | | | | | | |
|
| | | | | 2/14/12 | | | | 2,164 | (c) | | | 250,000 | | | | 2/14/17 | |
Executive Vice President & Chief Administrative Officer | | | | | | | | | | | | | | | | | | |
20
Name
| | | | Grant Date
| | All Stock Awards: Number of Shares of Stock or Units (#)
| | All Option Awards: Number of Securities Underlying Options (#)
| | Exercise Price of Option Awards ($/share)
| | Grant Date Fair Value of Stock Awards ($)
| | Vesting Date
|
---|
| | | | | 2/15/13 | | | | — | | | | 100,000 | | | $ | 51.95 | | | | 2,209,000 | (a) | | | 2/15/15 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | 5/2/13 | | | | 43,659 | (b) | | | — | | | | — | | | | 2,000,000 | | | | 5/2/17 | |
Chief Executive Officer & Director | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | 2/12/13 | | | | 16,057 | (c) | | | — | | | | — | | | | 1,000,000 | | | | 2/12/18 | |
Strayer University President | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | 2/12/13 | | | | 24,085 | (c) | | | — | | | | — | | | | 1,500,000 | | | | 2/12/18 | |
Executive Vice President & Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | 2/12/13 | | | | 16,057 | (c) | | | — | | | | — | | | | 1,000,000 | | | | 2/12/18 | |
Senior Vice President & Treasurer | | | | | | | | | | | | | | | | | | | | | | | | | | |
(a) | | The Corporation did not grant any stock optionsGrant date fair value of option awards is computed using Black-Scholes methodology resulting in 2012 and, therefore, the columns related toa fair value of $22.09 per stock option grants are excluded from the table.granted. These options vest 100% on February 15, 2015, and expire on February 14, 2021. |
(b) | | These awards of restricted stock vest 100% on February 10, 2019,May 2, 2017, subject to the satisfaction of certain performance criteria. The Corporation’s closing price of common stock was $115.55$45.81 on the date of these awards. In connection with his announced appointment as Executive Chairman, the Company modified the performance criteria of these shares to focus on academic accreditation and regulatory compliance, and converted these shares to restricted stock units, the receipt of which is deferred until retirement or other termination of employment. |
(c) | | These awards of restricted stock vest 100% on February 14, 2017.12, 2018, subject to satisfaction of certain performance criteria. The Corporation’s closing price of common stock was $115.55$62.28 on the date of these awards. |
Narrative Disclosure to Summary Compensation Table and Grants of Plan-based Awards Table
In setting compensation levels for the named executive officers in 2012,2013, the Board of Directors considered the total value of all three components of executive compensation: salary, and benefits, profit sharing, and equity grants. Salary levels for the named executive officers in 20122013 were set by the Board at a rate designed to be competitive, but at or below the midpoint of a group of peer companies. In 2012,2013, as he has each year since 2008, Mr. Silberman declined his contracted increase in salary. In connection withFor 2013, Mr. McDonnell also declined his appointment as Executive Chairman, the Companycontractual increase in Marchsalary. For 2013 modified performance criteria in an earlier award of restricted shares to focus on academic accreditation and regulatory compliance, and converted those shares to restricted stock units, the receipt of which is deferred until retirement or other termination of employment.
In 2012 our Board adopted a cash profit sharing plan for our senior officers which provides for a target of approximately 5% of pretax operating income to be allocated among approximately the top 50 officers of the University and Corporation, assuming the satisfactory achievement of the corporation’s annual objectives. The cashDue to the underperformance on financial objectives, the profit share awardsin cash distributed for 2013 was reduced by approximately 33% from the named executive officers for 2012 were consistent with this plan, with the exception of Karl McDonnell, our President and Chief Operating Officer, whose profit share was significantly above target due to his being named Chief Executive Officer.
prior year. In early 20122013 the Company awarded restricted stock equity grants for retention purposes to the named executive officers in accordance with our equity based compensation plan described in “Identification and Analysis of 20122013 Compensation Programs” section above.
2123
Outstanding Equity Awards at Fiscal Year-End
The following tables set forth outstanding option and stock awards of the Corporation’s named executive officers as of December 31, 2012.2013.
Outstanding Option Awards Table at Fiscal Year-End
Name
| | | Number of Securities Underlying Unexercised Options (#) Exercisable
| | Number of Securities Underlying Unexercised Options (#) Unexercisable
| | Option Grant Date
| | Option Exercise Price ($)
| | Option Full Vesting Date
| | Option Expiration Date
| | Market Value of Stock Options at 12/31/12 ($)
| | | Number of Securities Underlying Unexercised Options (#) Exercisable
| | Number of Securities Underlying Unexercised Options (#) Unexercisable
| | Option Grant Date
| | Option Exercise Price ($)
| | Option Full Vesting Date
| | Option Expiration Date
| | Market Value of Stock Options at 12/31/13 ($)
|
---|
| | | 100,000 | | | | — | | | | 2/15/05 | | | $ | 107.28 | | | | 2/15/09 | | | | 2/14/13 | | | $ | 0 | (a) | | | — | | | | 100,000 | | | | 2/15/13 | | | $ | 51.95 | | | | 2/15/15 | | | | 2/14/21 | | | $ | — | (a) |
Chairman & Chief Executive Officer | | | |
| | | |
|
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
President, Chief Operating Officer & Director | | | |
Chief Executive Officer & Director | | | |
|
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Strayer University President | | | | |
|
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Executive Vice President & Chief Financial Officer | | | | |
|
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | |
Executive Vice President & Chief Administrative Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Senior Vice President & Treasurer | | | |
(a) | | The Corporation’s closing stock price of $56.17$34.47 on December 31, 20122013 was compared to the option exercise price of $107.28$51.95 to determine the market value of these stock options at December 31, 2012.2013. |
2224
Outstanding Stock Awards Table at Fiscal Year-End
Name
| | | Restricted Stock Award Date
| | Number of Shares or Units of Stock That Have Not Vested (#)
| | Market Value of Shares of Stock at 12/31/12 That Have Not Vested ($)
| | Restricted Stock Vesting Date
| | | Restricted Stock/ Restricted Stock Unit Award Date
| | Number of Shares or Units of Stock That Have Not Vested (#)
| | Market Value of Shares of Stock at 12/31/13 That Have Not Vested ($)
| | Restricted Stock Vesting Date
|
---|
| | | 2/10/09 | | | | 183,680 | (a) | | | 10,317,306 | | | | 2/10/19 | | | | 3/22/13 | | | | 200,000 | (a) | | | 6,894,000 | | | | 2/10/19 | |
Chairman & Chief Executive Officer | | | 2/14/12 | | | | 16,320 | (b) | | | 916,694 | | | | 2/10/19 | | |
| | | |
|
| | | 2/10/09 | | | | 45,920 | (c) | | | 2,579,326 | | | | 2/10/14 | | | | 2/14/12 | | | | 6,491 | (b) | | | 223,745 | | | | 2/14/17 | |
President, Chief Operating Officer & | | | 2/14/12 | | | | 6,491 | (d) | | | 364,599 | | | | 2/14/17 | | |
Chief Executive Officer & | | | | 5/2/13 | | | | 43,659 | (c) | | | 1,504,926 | | | | 5/2/17 | |
| | | | |
|
| | | 2/15/11 | | | | 1,891 | (e) | | | 106,217 | | | | 2/15/14 | | | | 2/15/11 | | | | 1,891 | (d) | | | 65,183 | | | | 2/15/14 | |
Strayer University President | | | 2/14/12 | | | | 2,596 | (d) | | | 145,817 | | | | 2/14/17 | | | | 2/14/12 | | | | 2,596 | (b) | | | 89,484 | | | | 2/14/17 | |
| | | 2/12/13 | | | | 16,057 | (e) | | | 553,485 | | | | 2/12/18 | |
| |
| | | 2/12/08 | | | | 6,170 | (f) | | | 346,569 | | | | 2/12/13 | | | | 2/15/11 | | | | 2,269 | (d) | | | 78,212 | | | | 2/15/14 | |
Executive Vice President & Chief | | | 2/09/10 | | | | 1,454 | (g) | | | 81,671 | | | | 2/09/13 | | | | 2/14/12 | | | | 4,327 | (b) | | | 149,152 | | | | 2/14/17 | |
| | | 2/15/11 | | | | 2,269 | (e) | | | 127,450 | | | | 2/15/14 | | | | 2/12/13 | | | | 24,085 | (e) | | | 830,210 | | | | 2/12/18 | |
| | | 2/14/12 | | | | 4,327 | (d) | | | 243,048 | | | | 2/14/17 | |
| | | | 2/15/11 | | | | 1,134 | (d) | | | 39,089 | | | | 2/15/14 | |
Senior Vice President & Treasurer | | | | 2/14/12 | | | | 1,298 | (b) | | | 44,742 | | | | 2/14/17 | |
| | | 2/12/13 | | | | 16,057 | (e) | | | 553,485 | | | | 2/12/18 | |
| | | 2/09/10 | | | | 727 | (g) | | | 40,836 | | | | 2/09/13 | | |
Executive Vice President & Chief | | | 10/26/10 | | | | 7,834 | (h) | | | 440,036 | | | | 10/26/14 | | |
| | | 2/15/11 | | | | 1,664 | (e) | | | 93,467 | | | | 2/15/14 | | |
| | | 2/14/12 | | | | 2,164 | (d) | | | 121,552 | | | | 2/14/17 | | |
(a) | | These awards of restricted stock units vest 100% on February 10, 2019, subject to the satisfaction of certain performance criteria. The Corporation’s closing price of commonOriginally awarded as restricted stock, was $217.77 on the date of these awards. In connection with his announced appointment as Executive Chairman, the Company modified the performance criteria of these shares to focus on academic accreditation and regulatory compliance, andawards were converted these shares to restricted stock units, the receipt of which is deferred until retirement or other termination of employment. |
(b) | | These awards of restricted stock vest 100% on February 10, 2019, subject to the satisfaction of certain performance criteria. The Corporation’s closing price of common stock was $115.55 on the date of these awards. In connection with his announced appointment as Executive Chairman, the Company modified the performance criteria of these sharesrestricted stock units to focus on academic accreditation and regulatory compliance, and converted these shares to restricted stock units, the receipt of which is deferred until retirement or other termination of employment.compliance. |
(c) | | These awards of restricted stock were set to vest 100% on February 10, 2014, subject to the satisfaction of certain performance criteria. The Corporation’s closing price of common stock was $217.77 on the date of these awards. These awards of restricted stock were voluntarily returned to the Corporation in March 2013. |
(d)(b) | | These awards of restricted stock vest 100% on February 14, 2017. The Corporation’s closing price of common stock was $115.55 on the date of these awards. |
(e)(c) | | These awards of restricted stock vest 100% on May 2, 2017, subject to the satisfaction of certain performance criteria. The Corporation’s closing price of common stock was $45.81 on the date of these awards. |
(d) | | These awards of restricted stock vested 100% on February 15, 2014.24, 2014 at the end of a trading blackout period. The Corporation’s closing price of common stock was $132.23 on the date of these awards. |
(f) | | These awards of restricted stock vested 100% on February 12, 2013. The Corporation’s closing price of common stock was $162.10 on the date of these awards. |
(g) | | These awards of restricted stock vested 100% on February 9, 2013. The Corporation’s closing price of common stock was $206.39 on the date of these awards. |
(h)(e) | | These awards of restricted stock vest 100% on October 26, 2014.February 12, 2018, subject to the satisfaction of certain performance criteria. The Corporation’s closing price of common stock was $127.65$62.28 on the date of these awards. |
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Option Exercises and Stock Vested
The following table sets forth the value and share amounts realized during the fiscal year ended December 31, 20122013 upon the exercise of stock options and vesting of stock awards for the Corporation’s named executive officers.
Option Exercises and Stock Vested Table
| | | Options Exercised
| | Restricted Stock Vested
| | | | Options Exercised
| | Restricted Stock Vested
| |
---|
Name
| | | Number of Shares Acquired on Exercise (#)
| | Value Realized on Exercise ($)
| | Number of Shares Acquired on Vesting (#)
| | Value Realized on Vesting ($)
| | | Number of Shares Acquired on Exercise (#)
| | Value Realized on Exercise ($)
| | Number of Shares Acquired on Vesting (#)
| | Value Realized on Vesting ($)
|
---|
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Chairman & Chief Executive Officer | | | | | | | | | | | | | | | | | |
| | | |
|
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
President, Chief Operating Officer & Director | | | | | | | | | | | | | | | | | |
Chief Executive Officer & Director | | | |
|
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Strayer University President | | | | | | | | | | | | | | | | | | |
|
| | | — | | | | — | | | | 1,240 | | | | 132,147 | | | | — | | | | — | | | | 7,624 | | | | 407,808 | |
Executive Vice President & Chief Financial Officer | | | | | | | | | | | | | | | | | | |
|
| | | — | | | | — | | | | 689 | | | | 73,427 | | |
Executive Vice President & Chief Administrative Officer | | | | | | | | | | | | | | | |
| | | | — | | | | — | | | | 606 | | | | 32,415 | |
Senior Vice President & Treasurer | | | |
Potential Payments upon Termination or Change in Control
Mr. Silberman isand Mr. McDonnell are the only named executive officerofficers with an employment contract.contracts. In the event that Mr. Silberman is terminated by the Corporation without cause, he is entitled to receive a lump sum payment of three years’ salary, which is currently equal to $2.0 million.million, and all stock awards shall immediately vest. If such termination is in connection with a change in control, or Mr. Silberman resigns for any reason, or without reason, during the thirty day period immediately following the six month anniversary of a change in control, Mr. Silberman is entitled to receive a lump sum payment of $2.7 million, orthree times his annual salary plus three times his latest previous annual profit share award actually paid of $900,000, for a total payout of $4.7 million.paid. (A change ofin control is defined in the contract as acquisition of more than 50% of the voting stock of the Corporation or the acquisition of combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, completion of a merger or other business combination resulting in a change in control of more than 50% of the voting stock of the Corporation, election of a substantially different Board of Directors or approval by stockholders of a complete liquidation or dissolution of the Corporation.) In addition,Consistent with the agreement with Mr. Silberman in effect since 2001, Mr. Silberman is entitled to three years of medical benefits (estimated cost of $45,000), and to a gross-up payment for any excise taxes which may be imposed on termination payments. No excise taxes would have been imposed had there been a termination or change ofin control at December 31, 2012.2013. The agreement also contains covenants restricting Mr. Silberman from competing with the Corporation for threesix years after his termination of employment and requires Mr. Silberman to keep confidential the Corporation’s proprietary information.
In the event that Mr. McDonnell is terminated by the Corporation without cause, he is entitled to receive a lump sum payment of three years’ salary, which is currently equal to $2.0 million. If such termination is in connection with a change in control, or Mr. McDonnell resigns for any reason, or without reason, during the thirty day period immediately following the six month anniversary of a change in control, Mr. McDonnell is entitled to receive a lump sum payment of three times his annual salary plus three times his latest previous annual profit share award actually paid. (A change in control is defined in the same manner as in Mr. Silberman’s employment agreement.) Mr. McDonnell is not entitled to a gross-up payment for any excise taxes which may be imposed on termination payments. The agreement also contains covenants restricting Mr. McDonnell from competing with the Corporation for six years after his termination of employment and requires Mr. McDonnell to keep confidential the Corporation’s proprietary information.
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For all named executive officers, stock options and restricted stock awards made prior to 2013 vest immediately upon the occurrence of a change in control of the Corporation as defined in their respective stock option or restricted stock agreements. Change ofin control is defined in substantially the same way as in Mr. Silberman’s contract. For any stock options and restricted awards made in 2013 and thereafter, the options and awards vest in connection with a change in control only if such change in control results in termination, defined as (1) termination of employment by the Corporation without cause within six months of the effective date of the change in control or (2) the occurrence of a material reduction in the officers’ authority, functions, duties or responsibilities which causes the executives’ resignation from the Corporation within six months of the effective date of the change in control.
The valuation of the acceleration that would have been made for stock-based awards had there been a change in control at the closing price of $56.17$34.47 of the Corporation’s common stock at December 31, 20122013 is set forth below. Awards made prior to 2013 would accelerate with only a change in control, and those made in 2013 would accelerate with a change in control plus a termination or constructive termination.
Name
| | | | Value Realized
Upon Vesting Due
to Change of Control
($)
|
---|
| | | | | 11,234,000 | |
| | | | | 2,944,000 | |
| | | | | 252,000 | |
| | | | | 799,000 | |
| | | | | 696,000 | |
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Name
| | | | Value Realized Upon Vesting Due to Change in Control ($)
| | Value Realized Upon Vesting Due to Change in Control with Termination ($)
|
---|
| | | | | — | | | | 6,894,000 | |
| | | | | 224,000 | | | | 1,729,000 | |
| | | | | 155,000 | | | | 708,000 | |
| | | | | 227,000 | | | | 1,058,000 | |
| | | | | 84,000 | | | | 637,000 | |
Set forth in the table below is information pertaining to securities authorized for issuance under the Corporation’s equity compensation plans as of December 31, 2012.2013. There are options and restricted stock units but no warrants or other rights existing under these plans.
Equity Compensation Plan Information
as of December 31, 20122013
Plan Category
| | | | Number of securities to be issued upon exercise of outstanding options, warrants and rights
| | Weighted average exercise price of outstanding options, warrants and rights
| | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a))
|
---|
| | | | (a) | | (b) | | (c) |
---|
1.Equity compensation plans previously approved by security holders
| | | | | | | | | | | | | | |
A. 2011 Equity Compensation Plan which replaced the 1996 Stock Option Plan as amended | | | | | 100,000 | | | $ | 107.28 | | | | 284,257 | |
2.Equity compensation plans not previously approved by security holders | | | | | — | | | | — | | | | — | |
| | | | | 100,000 | | | $ | 107.28 | | | | 284,257 | |
Plan Category
| | | | Number of securities to be issued upon exercise of outstanding options, warrants and rights
| | Weighted average exercise price of outstanding options, warrants and rights
| | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a))
|
---|
| | | | (a) | | (b) | | (c) |
---|
1.Equity compensation plans previously approved by security holders
| | | | | | | | | | | | | | |
A. 2011 Equity Compensation Plan which replaced the 1996 Stock Option Plan as amended | | | | | 300,000 | | | $ | 51.95 | (1) | | | 179,007 | |
2.Equity compensation plans not previously approved by security holders | | | | | — | | | | — | | | | — | |
| | | | | 300,000 | | | $ | 51.95 | | | | 179,007 | |
(1) | | The weighted average covers the 100,000 stock options and not the 200,000 restricted stock units. |
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COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Strayer Education, Inc. Board of Directors is currently composed of three directors — Messrs. CoulterWargo (Chair), Brock and Johnson. Between February 14, 2012,1, 2013, the date of the last Compensation Committee Report, and February 1, 2013,19, 2014, the Compensation Committee met threefour times.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis section and, based on the review and discussion, the Committee recommended to the Board to include this information in the Corporation’s Annual Report on Form 10-K and proxy statement.
Compensation Committee:
J. David A. Coulter,Wargo, Chair
William E. Brock
Robert L. Johnson
Dated: February 1, 201319, 2014
AUDIT COMMITTEE REPORT
The Audit Committee of the Strayer Education, Inc. (the “Corporation”) Board of Directors is composed of three directors, all of whom are independent, as independence is defined under the NASDAQ Listing Standards and Rule 10A-3(b)(1) of the 1934 Act. For the year ended December 31, 2012,2013, the Audit Committee was composed of Messrs. Wargo (Chair), Milano, and Waite.Waite until November 15, 2013; thereafter the Audit Committee was composed of Messrs. Waite (Chair), Grusky, and Milano. The Audit Committee operates under a written charter first adopted in 2001, which is currently reviewed annually and which has periodically been subsequently revised by the Committee to reflect regulatory developments. The Audit Committee Charter was last amended on February 12, 2013.19, 2014. The Corporation will provide a copy of the charter to any person without charge, upon request. Persons wishing to make such a request should contact Sonya G. Udler, SeniorMark C. Brown, Executive Vice President — Corporate Communications,and Chief Financial Officer, 2303 Dulles Station Blvd., Herndon, Virginia 20171, (703) 561-1600. In addition, the Audit Committee charter is available on the Corporation’s website,www.strayereducation.com.
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Under the Audit Committee Charter and the Audit Committee’s current policies, the Audit Committee’s purpose is to:
1. | | Assist the Board of Directors in fulfilling its responsibility for: |
i. | | the integrity of the Corporation’s financial statements; |
ii. | | the Corporation’s compliance with legal and regulatory requirements; |
iii. | | the independent auditors’ qualifications and independence; and |
iv. | | the performance of the independent auditors and the Corporation’s internal audit function. |
2. | | Oversee the audits of the Corporation’s financial statements and its accounting, financial reporting and internal control processes. |
3. | | Prepare this report required to be prepared by the Audit Committee pursuant to the rules of the Securities and Exchange Commission (“SEC”) for inclusion in the Corporation’s annual proxy statement. |
4. | | Perform all other functions required to be performed by an audit committee of a publicly traded or listed company under applicable laws and the rules and regulations, as in effect from time to time, of the SEC and the NASDAQ or any other security exchange on which the company’s securities are listed. |
The Audit Committee shall have the direct authority and responsibility to appoint (subject to stockholder ratification), compensate, retain, and oversee the independent auditors.
The function of the Audit Committee is oversight. The management of the Corporation is responsible for the preparation, presentation and integrity of the Corporation’s financial statements. Management is responsible for
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maintaining appropriate accounting and financial reporting policies and internal controls and procedures that provide for compliance with accounting standards and applicable laws and regulations.
The independent auditors are responsible for planning and carrying out a proper audit of the Corporation’s annual financial statements, reviews of the Corporation’s quarterly financial statements prior to the filing of each quarterly report on Form 10-Q, and other procedures.
In connection with this responsibility, during 20122013 the Audit Committee met and held discussions with management five times together with the independent registered public accounting firm. The Audit Committee reviewed and discussed the audited financial statements with management. At least quarterly, as a matter of practice, the Audit Committee, in addition to the agenda with all present, meets separately with management, internal audit, and PricewaterhouseCoopers LLP, and in executive session of itself. Management represented to the Audit Committee that the Corporation’s consolidated financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee reviewed and discussed the consolidated financial statements with management and, independently with PricewaterhouseCoopers LLP. The Committee also discussed with PricewaterhouseCoopers LLP the matters covered by Public Company Accounting Oversight Board Audit Standard AU Section 380,Communication with Audit Committees.
During the year 2012,2013, management conducted the documentation, testing and evaluation of the Corporation’s system of internal control over financial reporting in response to the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. The Audit Committee was kept apprised of the progress of the evaluation and provided oversight during the process. In connection with this oversight, the Audit Committee received periodic updates provided by management and PricewaterhouseCoopers LLP at each regularly scheduled Audit Committee meeting. At the conclusion of the process, management provided the Audit Committee with a report on the effectiveness of the Corporation’s internal control over financial reporting. The Audit Committee also reviewed the report of management contained in the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 20122013 filed with the SEC, as well as PricewaterhouseCoopers LLP’s Report of Independent Registered Public Accounting Firm (included in the Corporation’s Annual Report on Form 10-K). This report of PricewaterhouseCoopers LLP related to its audit of (i) the consolidated financial statements and (ii) the effectiveness of internal control over financial reporting. The Audit Committee continues to oversee the Corporation’s efforts related to its internal control over financial reporting.
The Audit Committee has received from PricewaterhouseCoopers LLP the written disclosures and the letter required by the applicable standards of the Public Company Accounting Oversight Board regarding communications with the Audit Committee concerning the independence of PricewaterhouseCoopers LLP and has discussed with PricewaterhouseCoopers LLP its independence. PricewaterhouseCoopers LLP advised the Committee that there
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were no disagreements with management regarding the preparation of the Corporation’s financial statements or the conduct of the annual audit.
Based upon the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements for the year 20122013 be included in the Corporation’s annual report on Form 10-K for the year ended December 31, 2012,2013, filed with the SEC, and that PricewaterhouseCoopers LLP be retained as the Corporation’s independent registered public accounting firm for the fiscal year 2013.2014.
Audit Committee:
J. David Wargo,G. Thomas Waite, III, Chair
Robert R. Grusky
Todd A. Milano
G. Thomas Waite, III
Dated: February 12, 201318, 2014
Certain Transactions with Related Parties
The Corporation had no transactions with related parties during the fiscal year ended December 31, 2012.2013. The Corporation prohibits conflict of interest activities by any Director or Officer, or persons related thereto, unless specifically approved in advance and in writing by the General Counsel, CEO, and Audit Committee of the Board
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of Directors after full disclosure of all aspects of the activity. A conflict of interest is defined generally to include situations where a person (i) has a private interest that materially conflicts or interferes with the interests of the Corporation, (ii) has a material personal interest that will impair the person’s ability to perform his or her work objectively and effectively, or (iii) derives a material personal benefit as a result of the person performing services for the Corporation. Among the other circumstances that may be considered conflicts of interest, any engagement in a personal business transaction involving the Corporation for profit or gain will be considered a conflict of interest requiring advance approval under the Code of Business Conduct. The Corporation’s policy prohibiting conflict of interest activities is further described in the Code of Business Conduct.
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PROPOSAL 2
Ratification of Appointment of Independent Registered Public Accounting Firm
The Audit Committee and the Board of Directors have appointed the independent registered public accounting firm of PricewaterhouseCoopers LLP to serve as the Corporation’s independent registered public accounting firm for the fiscal year ending December 31, 2013.2014. PricewaterhouseCoopers LLP has acted as the Corporation’s independent registered public accounting firm for the fiscal year ended December 31, 2012.2013. Representatives of PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they desire and to respond to appropriate questions. Although stockholder ratification of the appointment of auditors is no longer required as a technical matter, the appointment of PricewaterhouseCoopers LLP is being submitted for ratification as a matter of good corporate practice in order that the Audit Committee may take into consideration the views of stockholders on this matter. The ratification of the appointment of PricewaterhouseCoopers LLP requires the approval of a majority of the votes cast at the Annual Meeting.
The Board of Directors recommends a vote for the proposal to ratify the appointment of PricewaterhouseCoopers LLP as the Corporation’s independent registered public accounting firm for the fiscal year ending December 31, 2013.2014.
Principal Accounting Fees and Services
Set forth below are the services rendered and related fees billed by PricewaterhouseCoopers LLP for 20112012 and 2012:2013:
| | | 2011
| | 2012
| | | 2012
| | 2013
|
---|
| | | | | | | | |
| | | | | | | | |
Consolidated financial statements audit | | $ | 556,000 | | | $ | 494,000 | | | $ | 494,000 | | | $ | 519,000 | |
| | | | | | | | |
| | | 60,000 | | | | 42,500 | | | | 42,500 | | | | 90,000 | |
| | | | | | | | |
Preparation of corporate tax returns | | | 89,500 | | | | 91,900 | | | | 91,900 | | | | 88,000 | |
Other tax compliance/tax advice | | | 169,400 | | | | 76,800 | | | | 76,800 | | | | 148,270 | |
| | | | | | | | |
License fee for accounting tools | | | 2,600 | | | | 1,800 | | | | 1,800 | | | | 2,600 | |
| | $ | 877,500 | | | $ | 707,000 | | | $ | 707,000 | | | $ | 847,870 | |
It is the Audit Committee’s policy to pre-approve all audit and non-audit related services provided by the Corporation’s independent registered public accounting firm. All of the services described above were pre-approved by the Corporation’s Audit Committee.
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PROPOSAL 3
Advisory Vote on the Compensation of the Named Executive Officers
This proposal, commonly known as a “Say on Pay” proposal, allows our stockholders to express their opinions regarding the decisions of the Compensation Committee on the prior year’s annual compensation to the named executive officers. Stockholders vote, on an advisory basis, to approve, reject or abstain from the compensation of our named executive officers. This vote does not address any specific item of compensation, but rather the overall compensation of our named executive officers and our compensation philosophy, policies and practices, as disclosed in this proxy statement.
As discussed in the Compensation Discussion and Analysis section of this proxy statement, the objectives of our compensation program are, among other things:
To ensure compliance with applicable regulatory, legal and ethical business standards,
To attract and retain highly qualified and productive individuals,
To reward superior contribution to the long term performance of the Corporation,
To encourage officers and directors to think like owners and align their interests accordingly.
Your advisory vote will serve as an additional tool to guide the Board of Directors and the Compensation Committee in continuing to align the Corporation’s executive compensation with the best interests of the Corporation and its stockholders.
The affirmative vote of a majority of votes cast at the Annual Meeting is required for approval of this proposal. This proposal will be presented at the annual meeting as a resolution in substantially the following form:
RESOLVED, on an advisory basis, that the compensation paid to the Corporation’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.
Although the final vote is advisory in nature and therefore is not binding on us, does not affect past executive compensation, and creates no additional fiduciary obligations, the Board and Compensation Committee intend to consider carefully the voting results of this proposal when making future compensation decisions for our named executive officers.
The Board of Directors believes that our compensation program achieves our objectives outlined above, and therefore recommends a vote “for” this proposal.
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Stockholder Proposals
All stockholder proposals intended to be considered for inclusion in the Corporation’s proxy material for the 20142015 Annual Meeting of Stockholders must be received by the Corporation no later than November 29, 201325, 2014 and must comply with all applicable SEC and other rules.
Under the Corporation’s Bylaws, if a stockholder wishes to present an item of proper business at the 20142015 Annual Meeting of Stockholders (other than a proposal submitted for inclusion in the Corporation’s proxy statement pursuant to SEC rules), the stockholder must give advance written notice to the Corporation’s Secretary at 2303 Dulles Station Blvd., Herndon, Virginia 20171, not less than 90 days nor more than 120 days before the first anniversary of the date of this proxy statement. As a result, any notice given by a stockholder pursuant to these provisions in our Bylaws must be received no earlier than November 29, 201325, 2014 and no later than December 29, 2013.25, 2014. Such notice must include all of the information required by the Corporation’s Bylaws.
Householding of Proxy Materials
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
This year, a number of brokers with account holders who are our stockholders will be “householding” our proxy materials. A single proxy statement will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate proxy statement and annual report, please notify your broker.
You may also request an additional proxy statement and annual report by sending a written request to:
Strayer Education, Inc.
Attn: Sonya G. UdlerMark C. Brown
SeniorExecutive Vice President — Corporate Communications& Chief Financial Officer
2303 Dulles Station Boulevard
Herndon, Virginia 20171
(703) 561-1600
Stockholders who currently receive multiple copies of the proxy statement at their addresses and would like to request “householding” of their communications should contact their brokers.
Other Matters
The Corporation knows of no other matters to be presented for action at the Annual Meeting other than those mentioned above. However, if any other matters should properly come before the meeting, it is intended that the persons named in the accompanying proxy card will vote on such matters in accordance with their best judgment.
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