Name

Audit Committee

Compensation Committee

Name

Audit Committee

Compensation Committee

Nominating and Corporate Governance Committee

Eric C. Andersen

X

X

Wallace E. Boston, Jr.

Barbara G. Fast(3)(2)

X

(1)

X

Jean C. Halle

X

(1)

Barbara L. Kurshan

X

X

Timothy J. Landon

X

X

(1)

Westley MooreWilliam G. Robinson, Jr.

X

X

Timothy T. Weglicki(2)2017 Meetings:

X8

7

X4

Audit Committee

The Board has established a separately designated standing Audit Committee in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, which met four times during 2014.1934. 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 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, Mr. Andersen, Mr. Landon, and Mr. Weglicki. OurDr. Kurshan. Each member of the Audit Committee is able to read and understand fundamental financial statements, including our balance sheet, statement of operations, and statement of cash flows.

The Board has determined that Ms. Halle and Mr. Andersen are each an “Audit Committee financial expert,” as that term is defined under the SEC rules implementing Section 407 of the Sarbanes-Oxley Act of 2002. OurThe 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 Securities Exchange Act of 1934.

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Compensation Committee

The Compensation 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. ThePursuant to our Bylaws, the Compensation Committee met eight times during 2014.may create one or more subcommittees, each subcommittee to consist of one or more members of the Compensation Committee, and may delegate any or all of its powers and authority to those subcommittees. The members of our Compensation Committee are MG (Ret) Fast, who serves as chair of the Committee, Mr. Andersen, and Mr. Moore. OurRobinson. The Board has determined that each member of our Compensation Committee meets NASDAQ’s independence requirements for approval of the compensation of our Chief Executive Officer and other executive officers.

The Compensation Committee has the sole authority to retain and terminate any compensation consultant to assist in evaluating executive officer compensation. In 2014,2017, the Compensation Committee retained Willis Towers Watson directly as an outside compensation consultant to assist in evaluating our compensation programs, as it has since 2007. The Compensation 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 Compensation Committee or its chairperson. The Compensation Committee used information provided to it by Willis Towers Watson in connection with making 20142017 compensation determinations. Willis Towers Watson also advised the Compensation Committee on the use of a peer group for comparative purposes. The consultant’s role in recommending the amount or form of executive compensation paid to the Company’s named executive officers during 20142017 is described in the “Compensation Discussion and Analysis —  Compensation Program Philosophy and Objectives — Competitive Compensation and Peer Group Review” section below.

The Compensation Committee considers the results of the annual advisory vote on the compensation of our named executive officers. See “Proposal No. 2” below to review this year’s proposal. In 2013,2017, approximately 89%98% of the stockholder votes cast on this proposal were voted in favor of our executive compensation proposal, which was the most recent shareholder vote before we set our 2014 compensation. The Compensation Committee considered this in the context of the recommendation of various proxy advisory firms and as part of its decision to continue to increase the proportion of compensation that is performance-based. In 2014, approximately 97% of the stockholder votes cast on this proposal were voted in favor of our executive compensation proposal.

The Compensation Committee works closely with our Chief Executive Officer, Dr. Boston, on compensation decisions and has delegated certain aspects of the annual incentive plans for the other executive officers, including the named executive officers, to Dr. Boston. For a discussion of Dr. Boston’s role in determining or recommending the executive compensation paid to the Company’s named executive officers during 2014,2017, see the “Compensation Discussion and Analysis — Role of Executives in Executive Compensation Decisions” section below. None of our other executive officers participates in any deliberations related to the setting of executive compensation with the exception of Peter W. Gibbons, our Senior Vice President, Chief Administrative Officer, who provides administrative support to the Compensation Committee and facilitates the requests for information received from the independent consultant.compensation.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee is responsible for recommending candidates for election to the Board. The Committee met five times during 2014. 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, succession planning for our Chief Executive Officer and other key executive officers, and communications with stockholders. In addition, the Nominating and Corporate Governance 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 Governance Committee are Mr. Landon, who serves as chair of the Committee, MG (Ret) Fast, Dr. Kurshan Mr. Moore, and Mr. Weglicki. OurRobinson. The Board has determined that each

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member of our Nominating and Corporate Governance Committee meets NASDAQ’s independence requirements for directors that make director nominations.

Ad Hoc Committees

From time to time, the Board may create ad hoc committees for specific purposes. In 2017, the Board created a temporary new committee of the Board called the Operations Committee. The Operations Committee was formed when Dr. Boston, the Company’s President and Chief Executive Officer took over the position of Interim President of our subsidiary, American Public University System, in light of the transition and given the increased workload for Dr. Boston. The Operations Committee was tasked with providing the Board with additional oversight, on a regular basis, of the Company’s strategic and diversification efforts, talent management and other personnel matters, and other areas of the Company’s operations. Mr. Robinson was the only member of the Operations Committee during 2017. The Operations Committee met 12 times during the course of 2017.

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DIRECTOR NOMINATIONS AND COMMUNICATION WITH DIRECTORS

Director Nomination Process

The Nominating and Corporate Governance 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 Securities Exchange Act of 1934. For a stockholder’s nomination of a person to stand for election as a director at the 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 precedingprior 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 90^th 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 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 that if, as of the tenth (10th) 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. 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 Governance Committee will promptly consider such director’s conditional resignation and make a 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” below has submitted the conditional letter of resignation as required by our Bylaws.

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 Governance 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

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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 ninety (90)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” below.

Contacting the Board of Directors

Stockholders wishing to communicate with ourthe 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.
111 W. Congress Street
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 communicationcommunications 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.

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PROPOSAL NO. 1 — ELECTION OF DIRECTORS

OurThe Board is currently comprised of eightseven members. Our nominees for the election of directors at the Annual Meeting include sevensix 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 Governance Committee, the Board has nominated the following persons to serve as directors for the term beginning at the Annual Meeting on June 12, 2015:1, 2018: Eric C. Andersen, Dr. Wallace E. Boston, Jr., MG (Ret) Barbara G. Fast, Jean C. Halle, Dr. Barbara L. Kurshan, Timothy J. Landon Westley Moore, and Timothy T. Weglicki.William G. Robinson, Jr. All of the nominees are currently serving on the Board.

It is intended by the persons named as proxies that proxiesProxies 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 the Company’s business and management. The Nominating and Corporate Governance 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. The Nominating and Corporate Governance Committee is responsible for developing the 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 Nominating and Corporate Governance 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. Among the characteristics the Committee may consider are the collective knowledge and diversity of professional skills and background, experience in relevant industries, age and geographic background in addition to the qualities of integrity, judgment, acumen, and the time and ability to work professionally and effectively with other Board members and management and make a constructive contribution to the Board. The Committee 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.

The Board has determined that all of our director nominees are qualified to serve as directors of the Company.

The name of each nominee for director, their ages as of April 21, 2015,6, 2018 and other information about each nominee is shown below. In addition, the biographies of each of the nominees below contain information regarding the experiences, qualifications, attributes or skills that caused the Nominating and Corporate Governance Committee and the Board to determine that the person should serve as a director for the Company.

Name		Age		Principal Occupation		Director Since
Eric C. Andersen		53		Partner, Milestone Partners		2012
Wallace E. Boston, Jr.		60		President and Chief Executive Officer of the Company		2004
Barbara G. Fast		61		Senior Vice President, CGI Federal		2009
Jean C. Halle		56		Independent Consultant		2006
Barbara Kurshan		66		Executive Director of Academic Innovation, University of Pennsylvania, Graduate School of Education		2014
Timothy J. Landon		52		Chief Executive Officer, Aggrego, LLC		2009
Westley Moore		36		Independent Consultant		2013
Timothy T. Weglicki		63		Founding Partner of ABS Capital Partners		2002

Name		Age		Principal Occupation		Director Since
Eric C. Andersen		56		Partner, Peak Equity		2012
Wallace E. Boston, Jr.		63		President and Chief Executive Officer of the Company		2004
Barbara G. Fast		64		President and Chief Executive Officer, BGF Enterprises LLC		2009
Jean C. Halle		59		Independent Consultant		2006
Barbara L. Kurshan		69		Senior Fellow and Innovation Advisor, University of Pennsylvania, Graduate School of Education		2014
Timothy J. Landon		55		Chief Executive Officer, Aggrego, LLC		2009
William G. Robinson, Jr.		53		Independent Consultant		2016

Eric C. Andersen has served on ourthe Board since June 2012. Mr. Andersen also serves on the board of NWHW Holdings, Inc. as the APEI representative. Mr. Andersen is a partner with Milestone Partners,Peak Equity, a lower middle market private equity firm that specializes in making control equity investments in established operating businesses.enterprise software companies. Prior to joining Peak, Mr. Andersen was a partner at Milestone Partners, ina private equity firm, from 2011 fromto 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. Before working with IBM, Mr. Andersen was a senior partner at PwC Consulting, where he served in a variety of positions. Mr. Andersen currently serves on the boardboards of directors of several private companies.

We believe that Mr. Andersen’s qualifications to serve on our boardthe Board include his experience as a principal of twoin several private equity firms, as well as his expertise in outsourcing, business processes and international operations.

Dr. Wallace E. Boston, Jr.joined us in September 2002 as Executive Vice President and Chief Financial Officer of American Public University System (APUS) and since June 2004 has served as President and Chief Executive Officer and a member of our Board.the Board of Directors of APEI. Since October 2017, Dr. Boston has also served as Interim President of APUS. Dr. Boston previously served President and Chief Executive Officer of APUS from June 2004 to July 2016. From August 2001 to April 2002, Dr. Boston served as Chief Financial Officer of Sun Healthcare Group. From July 1998 to May 2001, Dr. Boston served as Chief Operating Officer and, later, President of NeighborCare, Pharmacies.Inc. From February 1993 to May 1998, Dr. Boston served as Vice President —of Finance and later, Senior Vice President of Acquisitions and Development of Manor Healthcare Corporation, now Manor Care, Inc. From November 1985 to December 1992, Dr. Boston served as Chief Financial Officer of Meridian Healthcare. Dr. Boston currently serves on the Board of the Presidents’ Forum of Excelsior College, the Board of Avalere Health LLC, and the Board of Overseers of the University of Pennsylvania Graduate School of Education.

We believe that Dr. Boston’s qualifications to serve on ourthe Board include his service as our Chief Executive Officer since 2004 and his service as our Chief Financial Officer between 2002 and 2004. Dr. Boston’s leadership has been pivotal to the Company in some of our most significant events, including our accreditation by the Higher Learning Commission in 2006, our 2007 initial public offering, the receipt by American Public University System of the 2009 Ralph E. Gomory Award for Quality Online Education, also known as the Sloan-C Award, our reaccreditation in 2011, and our 2013 acquisition of National Education Seminars, Inc., which we refer to as Hondros College of Nursing.

Major General (Retired) Barbara G. Fasthas served on ourthe Board since May 2009, and was appointed Vice-Chairperson of the Board in August 2014.2014 and was appointed Chairperson in

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June 2015. MG (Ret) Fast also serves as Chairperson of the Board of Directors of the Company’s subsidiary National Education Seminars, Inc., which operates

as Hondros College of Nursing. She hasis the President and CEO of BGF Enterprises LLC. She served as Senior Vice President, Strategic Engagements, CGI Federal, sincefrom June 2014.2014 to September 2016. Prior to that she served as Senior Vice President, Army Defense and Intelligence Programs, CGI Federal, beginning in November 2012. Prior to that she served as Vice President of Operations and Intelligence, CGI Federal, from June 2011. Previously she was the Vice President of Cyber and Information Solutions at The Boeing Company, which she joined in August 2008. MG (Ret) Fast retired from the Army in July 2008 after a 32-year career. Her most recent posts included: Deputy Director, Army Capabilities and Requirements Center, Training and Doctrine Command, from July 2007 until June 2008; Deputy and, later, Commanding General for the United States Army Intelligence Center and Fort Huachuca, Arizona, from August 2004 until June 2007; and Director of Intelligence, Multinational Forces — Iraq (Baghdad, Iraq) from July 2003 until July 2004. MG (Ret) Fast currently serves on the boardboards of directors of several government and private organizations.

We believe that MG (Ret) Fast’s qualifications to serve on ourthe Board include her extensive experience and achievements in the U.S. Military, national and defense intelligence, and cyber security, culminating in over 32 years of military service until her retirement as a Major General, her service as Commanding General of Fort Huachuca, and her current work in industry.

industry and not-for-profit organizations.

Jean C. Hallehas served on ourthe Board since March 2006. Ms. Halle also serves on the board of Second Avenue Software as the APEI representative. Since 2010, Ms. Halle has worked as an independent consultant. 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, & Touche, an international accounting and professional services firm. Ms. Halle currently serves on the President’s Advisory Council for Stevenson University, the Board of Trustees of Catholic Distance University, the Advisory Board of Loyola University School of Education and the advisory boards of two private companies.

We believe that Ms. Halle’s qualifications to serve on ourthe Board include her multifaceted experiences in online education as Chief Executive Officer of Calvert Education Services, in media as Chief Financial Officer and Vice President of New Business Development for Times Mirror Interactive, and in financial consulting as a Senior Management Consultant at an international accounting and professional services firm. Ms. Halle was also a 2011 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.

Dr. Barbara “Bobbi” L. Kurshan has served on ourthe Board since August 2014, after having been recommended for nomination as a director by Dr. Boston.2014. Dr. Kurshan is theInnovation Advisor (previously Executive Director of Academic InnovationInnovation) and a Senior Fellow in Education at the Graduate School of Education at the University of Pennsylvania, a position she has held since 2012. Dr. Kurshan also serves as a consultant ofprovides consulting services through Educorp Consultants Corporation, a company she has owned and operated since 1989. Dr. Kurshan received her MS in Computer Science and her Ed.D. in Curriculum and Instruction with concentration in Educational Technology from Virginia Tech University and has had a nearly thirty-year career as both an academic and award-winning entrepreneur. She currently serves on the boardboards of directors of two private organizations

organizations.

We believe that Dr. Kurshan’s qualifications to serve on ourthe Board include her extensive background and leadership experience for nearly thirty years in the field of higher education.

Timothy J. Landon has served on ourthe Board since January 2009. Since September 2013, Mr. Landon has 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. Aggrego’s investors are Wrapports, LLC and Digicel Group Limited. 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 disrupts and transforms 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.comApartments.com and cars.com)Cars.com), and other online businesses. In December 2008, the Tribune Company filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code.

We believe that Mr. Landon’s qualifications to serve on ourthe Board include his extensive experience in starting, building and managing internet-focused media businesses over the last seventeen years. He brings significant knowledge of online marketing and online business models, including knowledge based on his position as President of Tribune Interactive and his experience at CareerBuilder.com, which has direct relevance and applicability to our business.

Westley MooreWilliam G. Robinson, Jr. has served has served on ourthe Board since June 2013. Since 2014,2016. Mr. Moore’s principal occupation has beenRobinson is an independent consultant. From December 2013 through September 2017, Mr. Robinson served as executive vice president and chief human resources officer of Sabre Corporation, where he was responsible for leading Sabre’s global human resources organization, including talent management, organizational leadership and culture. Prior to joining Sabre, Mr. Robinson served as the foundersenior vice president and CEO of BridgeEdU. He is also an author, public speaker and television personality through his wholly owned business entities. Within television,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. Moore has been the Executive Producer and host of the PBS miniseries on returning veterans “Coming Back with Wes Moore.” During 2011, he hosted the television program “Beyond Belief” on the Oprah Winfrey Network andRobinson served as senior vice president for human resources at Outcomes Health Information Solutions, a news analyst for NBC.healthcare analytics and information company specializing in the optimization and acquisition of medical records. Prior to that, infrom 1990 to 2010, he published a bestselling book,The Other Wes Moore. From 2007 to 2011,worked for General Electric, where he held several human resources leadership roles in diverse industries including information technology, healthcare, energy and industrial. Most recently, he was the human resources leader within the GE Enterprise Solutions division where he led a securities broker with Citigroup. From 2006 to 2007, Mr. Moore worked at the U.S. Departmentglobal team in an organization of State as a White House Fellow to Secretary of State Condoleezza Rice. Previously, Mr. Moore served as a paratrooper and Captain20,000 employees in the U.S. Army from 2004 to 2006, which included a tour of combat duty in Afghanistan. Mr. Moore currently serves on the board of the Iraq and Afghanistan Veterans of America, the Johns Hopkins University Board of Trustees, and the Valley Forge Military Academy and College Board of Trustees. He is also a trustee of the Baltimore Community Foundation, a member of the Board of Overseers of The Network for Teaching Entrepreneurship, and a trustee of Phi Theta Kappa Foundation.

200 locations worldwide.

We believe that Mr. Moore’sRobinson’s qualifications to serve on our Board include his experience in media and communications, as well as his policy and military experience.

Timothy T. Weglicki has served on our Board since August 2002, was appointed Vice-Chairperson of the Board in 2010, and was appointed Chairperson of the Board in 2013. Mr. Weglicki is a Founding Partner of ABS Capital Partners, a venture capital firm founded in 1993. Prior to co-founding ABS Capital Partners, from 1978 to 1993, Mr. Weglicki was an investment banker with Alex. Brown & Sons, where he founded and headed the Capital Markets Group from 1989 to 1993. Mr. Weglicki served on the board of directors and the compensation and the nominating and governance committees of Coventry Health Care, Inc. until its acquisition by merger in 2013 and is currently on the boards of directors of several of ABS Capital Partners’ portfolio companies.

We believe that Mr. Weglicki’s qualifications to serve on our Board include his significant experience and leadership of businesses in investment banking, capital marketshuman resources and private equityhis experience as a Founding Partner of ABS Capital Partners, a directoran executive officer of other public companies and head of the Capital Markets Group at Alex. Brown & Sons.companies.

Required Vote and Board Recommendation

In order to be elected as a director, a nominee must be elected by a majority of the votes cast with respect to such nominee at the Annual Meeting. A majority of the votes cast means that the number of shares of common stock voted FOR a nominee must exceed 50% of the votes cast with respect to that nominee. Abstentions and broker non-votes are not taken into account in determining the outcome of the election of directors. Stockholders do not have the right to cumulate their votes in the election of directors. If an incumbent nominee in an uncontested election such as the election to be held at the Annual Meeting fails to be elected, the incumbent nominee will continue in office and the Board will consider whether to accept the nominee’s earlier submitted conditional resignation. If the resignation is not accepted the incumbent nominee may continue in office until a successor is elected.

THE BOARD RECOMMENDS A VOTE FOR ELECTION OF EACH OF THE EIGHTSEVEN NOMINATED DIRECTORS.

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2014 Director Compensation

2017 DIRECTOR COMPENSATION

Under ourOur non-employee director compensation policy which was established and is periodically revised following consultation with Willis Towers Watson. In December 2016, Willis Towers Watson presented to the Compensation Committee information on non-employee director compensation, providing comparative information on the same peer group that the Compensation Committee uses for executive compensation, as well as general industry levels. Following consultation with Willis Towers Watson, the Compensation Committee recommended, and the Board approved, increases in director compensation, effective as of January 1, 2017. The Board determined that these increases were appropriate because the annual compensation for the Company’s non-employee directors was previously near the bottom of the peer group and below the median of the general industry survey prepared by Willis Towers Watson. The Board also considered that there had not been any increases to director compensation for three years.

Pursuant to the revised policy, for directors receive an annual retainer of $40,000.$60,000. The chairs of the Audit, Compensation, and Nominating and Corporate Governance Committees receive an additional annual retainerretainers of $11,000, $8,500$15,000, $10,000 and $5,500,$8,000, respectively, and the non-employee Chairperson of the Board receives an additional annual retainer of $30,000 and the non-employee Vice-Chairperson of the Board receives an additional annual retainer of  $15,000.$50,000. The Chairperson and the Vice-Chairperson areis not entitled to receive any additional annual retainers for also serving as chair of any of the Board’s standing committees.

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 also provides for an annual grant to each director of restricted stock having a value of $55,000$75,000 on the grant date. 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.

From time to time the Board may create ad hoc committees that are in addition to the regular responsibilities of Board members, and are therefore viewed as requiring time and energy outside of what the annual retainer is intended to cover. In 2017, the Board created the Operations Committee, for which it determined additional compensation was appropriate. The compensation for the Operations Committee was set at a maximum of $2,500 per day, at a rate of (i) $2,500 for each day spent on site at our headquarters in Charles Town, West Virginia and (ii) for time spent remotely, $312.50 per every hour of committee activity.

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.

Some directors may also be asked to serve as a representative of ourthe Board on the boards of our wholly-owned subsidiaries or in entities in which we have invested. A non-employee director who serves on the board of a wholly-owned subsidiary as a representative of ourthe Board receives a payment of $2,500 ($3,000 for a director serving as chair) per in-person meeting, or $750 ($1,000 for a director serving as chair) for telephonic meetings, but with no more than one payment per day. Non-employee directors who serve on the board of entities in which we have invested are compensated by those companies consistent with their policies, provided that our Compensation Committee or full Board of Directors reviews the compensation arrangements.

The following table sets forth information regarding compensation earned by our non-employee directors during 2014:2017:

Name(1)		Fees Earned or Paid in Cash ($)(2)				Stock  Awards ($)(3)				Total ($)
Eric C. Andersen(4)		$	40,000			$	54,998			$	94,998
J. Christopher Everett		$	19,153			$	—			$	19,153
Barbara G. Fast		$	56,961			$	54,998			$	111,959
Jean C. Halle		$	50,061			$	54,998			$	105,059
Barbara Kurshan		$	15,561			$	45,949			$	61,510
Timothy J. Landon		$	41,503			$	54,998			$	96,500
Westley Moore		$	40,000			$	54,998			$	94,998
Timothy T. Weglicki		$	57,683			$	54,998			$	112,681

Name(1)		Fees Earned or Paid in Cash ($)(2)				Stock Awards ($)(3)				Total ($)
Eric C. Andersen(4)		$	60,000			$	74,986			$	133,620
Barbara G. Fast		$	124,000			$	74,986			$	198,986
Jean C. Halle		$	75,000			$	74,986			$	149,986
Barbara L. Kurshan		$	60,000			$	74,986			$	134,986
Timothy J. Landon		$	68,000			$	74,986			$	139,893
Westley Moore		$	60,000			$	74,986			$	132,260
William G. Robinson		$	83,281			$	74,986			$	158,267

(1)

See the Summary Compensation Table in the “Compensation Tables and Disclosures” section of this Proxy Statement for disclosure related to Dr. Boston, who is one of our named executive officers (“NEOs”) as of December 31, 2014.2017.

(2)

Mr. Weglicki elected to receive his entire 2014 annual retainer in fully-vested sharesEach of common stock. Mr. Landon, Ms. HalleMr. Andersen, and Mr. Everett eachMoore elected to receive a portion of his or her 20142017 annual retainerretainer(s) in fully-vested shares of common stock. Mr. Everett’s annual retainer was prorated to reflect his service until the 2014 Annual Meetingstock, representing 50%, 25% and 50%, respectively, and received a total of Stockholders. Dr. Kurshan’s annual retainer was prorated to reflect that she was appointed to serve as a director on August 12, 2014.1,371, 605, and 1,210 shares, respectively. For MG (Ret) Fast, amount includes $2,500 paid$14,000 received as compensation for her service as Chairperson of the Board of APEI’s subsidiary National Education Seminars, Inc., which was paid by National Education Seminars, Inc. and which operates as Hondros College of Nursing.Nursing, and which service is at the request of the APEI Board of Directors.

(3)

Dr. Kurshan’s restricted stock award was prorated to reflect that she was appointed to serve as a director on August 12, 2014. The aggregate grant date fair value of the restricted stock award for Dr. Kurshanawards in 2017 was $30.15, and the aggregate grant date fair value of the restricted stock awards for the other directors in 2014 was $35.12, in each case$24.15, as computed in accordance with FASB ASC Topic 718. Dr. Kurshan’s award was not granted until January 15, 2015.

(4)

Mr. Andersen received an additional $25,000$30,000 as compensation for his service on the Board of Directors of NWHW Holdings, Inc., which was paid by NWHW Holdings, Inc., and which service is at the request of the APEI Board of Directors.

As of December 31, 2014,2017, there were no exercisable or unexercisable option awards held by our current non-employee directors. The aggregate number of unvested stock awards outstanding held as of that date by our current non-employee directors were as follows:

Name
Name		Stock Awards
Eric C. Andersen		1,566	3,105
Barbara G. Fast		1,566	3,105
Jean C. Halle		1,566	3,105
Barbara L. Kurshan		—	3,105
Timothy J. Landon		1,566	3,105
Westley MooreWilliam G. Robinson		1,566
Timothy T. Weglicki		1,5663,105

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Table of Contents

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

EXECUTIVE SUMMARY

This Compensation Discussion and Analysis describes our executive compensation program and decisions for 2014.2017. This section details the compensation framework applied by the Compensation Committee and, in particular, our compensation philosophy and objectives, elements of compensation, compensation decisions and the link between executive pay and performance. TheOur named executive officers, or NEOs, for 20142017 are:

Wallace E. Boston, Jr., our Chief Executive Officer and President, and Interim President of American Public University System, or APUS;

Richard W. Sunderland, Jr., our Executive Vice President and Chief Financial OfficerOfficer;

Thomas A. Beckett, our Senior Vice President, General Counsel and Secretary;

Amy N. Panzarella, our Senior Vice President, Human Resources and Community Affairs; and

Karan Powell, our Executive Viceformer President of APUS, who served in this role until October 2017.

On October 15, 2017, Dr. Powell retired from her position as President of APUS, and Provostagreed to consult with the Company through June 30, 2018. Dr. Boston became the Interim President of American Public University System

Harry T. Wilkins, our Executive Vice PresidentAPUS on that date, though his compensation structure and Chief Development Officeropportunities for 2017 were not adjusted as a result of American Public Education, Inc.his taking on this additional role, and Chief Executive Officeraccordingly, his assumption of that role is not discussed in this Compensation Discussion and Analysis. The individuals named above were the only individuals who served as executive officers of APEI during 2017.

Consistent with the design of our executive compensation program, the compensation realized by our NEOs was lower in 2017 as a result of our financial performance. While we continued to make strong operational achievements in 2017, our financial performance was below expectations. As a result, our NEOs received no payouts under our annual incentive plan tied to financial performance and only modest payouts tied to performance objectives. Dr. Boston’s payout under our annual incentive plan was only 13.3% of his target annual incentive opportunity. Based on our free cash flow (the performance measure for our performance-based deferred stock unit awards), performance awards were earned by our NEOs at only the 76.75% level.

Building on a Strong Foundation

APEI provides online and on-campus postsecondary education through two subsidiary institutions. APUS provides online postsecondary education to approximately 83,400 adult learners (as of December 31, 2017) and has a history of serving the academic needs of the military, military-affiliated and public service communities. National Education Seminars, Inc., which we refer to as Hondros College of Nursing,

or HCN, provides nursing education to approximately 2,100 students (as of December 31, 2017) across five campuses in the State of Ohio, as well as online.

Sharon van Wyk, our former Executive Vice PresidentWe continued to face a number of challenges at APUS in 2017 recruiting students, including challenges associated with competition for students and Chief Operations Officer, who resigned from her positionchallenges in March 2015the military market, the continuing effects of prior periods of decreased registrations, and ongoing declines in ordernew student course registrations resulting in decreased returning student net course registrations. As a result, net course registrations for APUS declined 6% year-over-year for 2017. Despite these and other challenges, the rate of decline decreased in 2017 as compared to accept the position of President of The Princeton Review and Tutor.com

Building on a Strong Foundation

4

Number of times APUS has received an Effective Practice Award from the Online Learning Consortium – the most of any institution.

APEI’s American Public University System (APUS) was founded to provide military and public service communities with access to affordable, quality academic programs,2016 and in 2013 APEI acquired Hondros Collegethe fourth quarter of Nursing (HCON), which educates nurses2017 as compared to the previous four quarters. We believe these improvements are indicators that our efforts to attract and retain students with greater college readiness are working, and this directly reflects the leadership of our named executive officers. In addition, we saw continued growth in student enrollment at four Ohio campuses and online. Today, APUS serves over 111,000 students andHCN in 2017. We believe that HCN’s student enrollment increase is oneattributable to the opening of the largest accredited online providers of higher educationToledo campus in the United States,January 2017 and HCON serves approximately 1,500 students. In early 2015, APUS was rankedan increase in the top 10% among online undergraduate degreedemand for programs offered byU.S. News & World Report. HCN.

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As we help our students prepare to advance their careers, APEI is committed to remaining successful amidstduring a period of growing competition and the challenges of the current economic environment.in for-profit education. We continue to focus on driving improvements in our core services — focusing on academic quality, student outcomes, and the learning experience — not only to potentially reach more students and improve our business results, but also to enroll students with greater college readiness on average and help them achieve success.

In 2014, APUS again was recognized with an Effective Practice Award from the Online Learning Consortium, which Strong and motivated leadership is a professional organization devoted to advancing quality in and expanding access to post-secondary online learning. This is the fourth effective practice award that APUS has received — the most any institution has received recognizing their contributions to improving the quality of online higher education.We remain committed to affordability — despite recently announcing a tuition increase for APUS undergraduates for the first time in 13 years, our combined tuition, fees and books after the tuition increase remain approximately 17% less for undergraduate students than the published average in-state tuition, fees and book costs at public universities, according to the College Board 2014 Trends in College Pricing. The increase in tuition was implemented primarily to support our continued investment in programs, systems and classroom innovation.

This year, APUS became an inaugural member of the John Gardner Institute’s Gateways to Completion (G2C) program — a collaborative process designed to research and improve student success, especially in general education and other high-risk courses. In addition, APUS joined the first cohort of the Higher Learning Commission’s Persistence Academy — a research-based collaboration of institutions designed to further improve persistence and completion of postsecondary students.

We continue to have high levels of student satisfaction, high referral rates and a high percentage of students returning for a second degree. In 2014, approximately 45% of our new students indicated that they were referred to APUS by others, and by the end of 2014 approximately 45% of our 2012 alumni had returned to APUS to pursue a second degree.

APUS maintained its position as a leading institution serving the U.S. military market, with Military Times ranking AMU as the number one school serving active duty military and the number nine school serving veterans. APUS has been named for the third consecutive year to U.S. News & World Report’s annual qualitative ranking of top online degree programs. In 2015, APUS ranked #27 nationally out of 292 evaluated schools that offer online bachelor’s degree programs, or in the top 10 percent overall, advancing seven places over its 2014 ranking.

In 2014, HCON completed a move to a larger, more visible and accessible facility in Cleveland, Ohio, added new evening and weekend classes at both its Cleveland and Columbus campuses and prepared for a transition of its online classrooms to the Sakai Learning Management System, which is used by APUS. In 2014, compared to the prior year, HCON achieved enrollment growth of 11% and new student enrollment growth of 16%.

We remain firmly committed to ensuring that our active duty service members and veterans have the opportunity to pursue their higher educational goals with minimal or low out-of-pocket expense. At the same time, we know that various civilian communities also seek quality, affordable online degree programs. To reach these potential students and to further strengthen our education enterprise we will continue investing in our information technology platforms to further improve the student experience and set us apart from competition, and we plan to continue diversifying by launching new degree programs and entering new markets. We believe this strategy isbe critical to achieving our academic, operational and financial goals in the future.goals.

We faced a number of challenges in 2014, including increased competition from both traditional and online universities, an uncertain regulatory environment, attracting students with greater college readiness, and changes to the military’s Voluntary Education Program, which contributed to an overall decline in APUS enrollments. As a result, net course registrations for APUS declined 1% year-over-year for 2014. Despite these and other challenges, we believe our reputation in military-affiliated communities helped drive a 9% year-over-year increase in net course registrations by students using Veteran’s Administrations benefits in 2014. Due to these challenges, among other reasons, our management recommended suspending our annual incentive plan in early 2014 and our NEOs did not receive any cash incentive payments in 2014.

2014

2017 Compensation Program Highlights

Our financial performance was directly reflected in the compensation of our top executives this year. Notably, at the recommendation of our management we voluntarily suspended our annual incentive plan, and none of our NEOs received any cash incentive payments in 2014.

We believe we have continued to make improvements in how we compensate our executives for their performance, and we continue to rigorously compare our programs to industry best practices.

Mix

The table below summarizes significantshows the breakdown of the components of Dr. Boston’s target compensation decisions relativeopportunity for 2017. As discussed in the overview section below, the breakdown of Dr. Boston’s target compensation opportunity reflects our focus on variable compensation tied to performance, with Dr. Boston’s fixed base salary representing only 28% of his total compensation opportunity, with annual and long-term incentives tied to our NEOs for fiscal year 2014:equity performance representing the remainder.

Compensation Decisions and Changes to Compensation Program for 2014
Suspended our Annual Incentive Plan to Reflect Difficult Financial Performance					At the recommendation of our management, our Compensation Committee suspended our annual incentive plan in recognition of what was expected to be a challenging year for financial returns.
Increased the percentage of equity awards tied to performance for the CEO and all of the named executive officers or NEOs				For 2014, we increased the use of performance-based shares in our overall equity mix from 30% to 35% of the value of an NEO’s long-term incentive award in order to further link the compensation of our executives with performance. The Compensation Committee approved a performance share mix increase to 40% for 2015
Eliminated excise tax gross-ups				We executed amendments and restatements to existing employment agreements to eliminate from those agreements that had them the provisions providing for excise tax gross-ups in connection with a change of control.

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 higher education and to achieve our business objectives.

Elements of our Compensation Program Philosophy
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 financial earnings, individual management objectives and free cash flow goals.
Carefully Monitor External Market Practices				We monitor market practices so that our programs reflect the realities of our rapidly evolvingthe 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 diversified business strategy.

19

Executive Compensation Best Practices

Below we highlightHighlighted 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 pay opportunity to objective performance metrics and continue to monitor our pay mix to ensure the performance-based portion is consistent with that of our peers. We review our pay and performance alignment compared to our peers to understand where our programs are working and where we can continue to make improvements.
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 within the median range.performance. Conversely, we deliver lower compensation when performance results do not meet our threshold expectations. We review our pay and performance alignment 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 the Company’s 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 Impose a “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 the Company has to prepare an accounting restatement due to the material noncompliance by the Company 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 Compensation Committee utilizes Willis Towers Watson, an independent compensation consulting firm, to assist the Committee in determining compensation.
What We Don’t Do				How We Avoid It
We Don’t Permit Hedging				We prohibit our directors and employees, including our NEOs, from engaging in short sales, transactions in derivative securities (including put and call options), or other forms of hedging and monetization transactions, such as zero-cost collars, equity swaps, exchange funds and forward sale contracts, that allow the holder to limit or eliminate the risk of a decrease in the value of our securities.
We Don’t Permit Pledging		We prohibit our directors and officers, including our NEOs, from holding our securities in margin accounts, pledging our securities as collateral or maintaining an automatic rebalance feature in savings plans, deferred compensation or deferred fee plans, to avoid sales of our securities on behalf of an individual related to margin calls, loan defaults and automatic rebalances, which may occur when the individual has material nonpublic information regarding the Company.
We Don’t Offer Single-Trigger “Change of Control” Payments				WeFor those NEOs who have employment agreements, with our NEOsthe agreements provide that in the case of a “change of control,”control” the NEO only providereceives severance payments in connection with a termination of their employment.
We Don’t Provide Only Limited Tax Gross-Up ProvisionsGross-Ups				We do not provide for tax gross-up payments for a change inof control in existing employment agreements.

50th			The Compensation Committee’s general intent is to set each NEO’s base salary near the 50th50th percentile of the survey data received from the Compensation Committee’s independent consultantconsultant.

Our executive compensation policies are designed to assist us in attracting and retaining qualified executives by providing competitive levels of compensation that are consistent with the executives’ alternatives within the for-profit education industry and the broader market for executive talent. It is the Compensation Committee’s general intent that each NEO’s base salary should be set nearwithin a competitive range of the 50th50^th percentile of the survey data received from the Compensation Committee’s independent consultant.consultant, with appropriate adjustments to reflect the specific situation of each NEO, including howtheir roles may differ from those at other companies. The Compensation Committee believes that the 50th50^th percentile for base salary is appropriate to remain competitive with the companies with which the Company competes for executive talent. Consistent with the approach to base salary, the Compensation Committee believes that target annual incentives should be structured so that target total cash compensation (base salary plus annual incentives) approximates the 50th50^th percentile of the survey data for achievement of target performance goals under the annual incentive plan. Each NEO has the opportunity to receive a stretch payment for superior performance if stretch performance goals are achieved under the plan. Conversely, the opportunitypossibility for below target payment or even no payment at all exists for below target or below threshold performance if performance goals are not achieved. The Compensation Committee believes that these opportunities for base salary and target annual incentive pay are in line with competitive market levels and are appropriate if our NEOs achieve the targeted level of performance.

For 2014,2017, the Compensation Committee continued its prior engagement of Willis Towers Watson as an independent consultant to the Compensation Committee. Willis Towers Watson provided information on competitive levels of compensation that was used by the Compensation Committee in determining 20142017 compensation, including information on base salary, annual incentives, equity awards and total compensation.

As part of the analysis of APEI’s compensation program, Willis Towers Watson provided data from the following published surveys as a primary source: the20132016 Willis Towers Watson CDB General Industry Survey Report; the20132016 Willis Towers Watson Data Services Top Management Survey; and the2012-20132015 – 2016 College and University Professionals Association for Human Resources Administrators in Higher Education Salary Survey. Because of the variance in size among the companies included in the databases for the published surveys, Willis Towers Watson informed the Compensation Committee that, to the extent possible, it had assessed the published survey data in the context of APEI’s projected fiscal year 2014 revenues,2017 revenue, as revenue responsibility is typically one of the most reliable predictors of executive pay.

In addition to published survey data, Willis Towers Watson also examined publicly-filedpublicly filed proxy statements of select industry-specific peers.

Assessing Competitive Practice

The Compensation Committee identified,also reviewed, with the guidance and input of Willis Towers Watson, a group of companies against which we compare compensation. Thesecompensation, which we refer to as our peer group. The companies in the peer group were originally selected because the Compensation Committee considered them to be similar to and competitive with us in the market for executive talent, and because they are in comparable or related businesses (e.g., focus on secondary education and online access). ThisFor 2017, the group which we refer to as our peer group, remained the same in 2014 asdid not change from what it had been in 2013the prior three years, and 2012 andit consisted of the following companies:

The review of the peer group only included comparative information for Dr. Boston and Mr. Sunderland, as the peer group information either did not identify executives at comparable positions for Dr. Powell, Mr. Wilkins and Dr. van Wyk.

the other NEOs, or the applicable NEOs were not executive officers at the time that compensation was set for 2017.

The comparative data provided by Willis Towers Watson included survey data for each of the NEOs, and was used in connection with our determinations of base salaries, target annual incentive compensation and equity incentive awards as part of the 20142017 compensation setting process, as described below. For those executives for whom both survey data and peer group data are available, the Compensation 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. Notwithstanding that the survey data is the primary source of comparative information, we believe the peer group is still important as a secondary review of the competitive market for executive talent.

The compensation program for our NEOs is comprised of three elements: base salary; annual incentive cash compensation; and long-term equity incentives.

In setting base salary, annual incentive cash compensation and long-term equity incentives for 2014, we2017, the Compensation considered the compensation levels for our NEOs in 2013,2016, the respective performances of each of our NEOs in 2013,2016, and what wethe Compensation Committee believed was required based on the marketplace for executive talent, including based on the information provided by Willis Towers Watson. WeThe Committee also considered the results of the annual advisory vote on the compensation of named executive officers. In 2013,2016, approximately 89%98% of the stockholder votes cast on this proposal were voted in favor of our executive compensation proposal, which was the most recent shareholder vote before we set our 20142017 compensation. The Compensation Committee considered this in the context of the recommendation of various proxy advisory firms and as part of its decision to continue to increase the proportion of compensation that is performance-based. In 2014,2017, approximately 97%98% of the stockholder votes cast on this proposal were voted in favor of our executive compensation proposal. Given the extremely high level of support reflected in these votes, the Committee concluded that the results of these votes did not indicate a reason to make changes to its compensation setting decisions.

Base Salary

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.promotions or new hires. For 2014,2017, the Compensation Committee approved increasingincreased Dr. Boston’s base salary by approximately 8.9%. This base2%, resulting in a salary placed Dr. Boston just belowthat was slightly above the 50th50^th percentile of the survey data and belowat the 50th50^th percentile of the peer group proxy data. The Compensation Committee determinedconcluded that itan increase was appropriate, to increase Dr. Boston’s salary to reflect his continued commitment to the Company, the Compensation Committee’s assessment of the continued success of our business compared to other companies in our industry, including after taking into account federal government funding and actions, and the competitive review by Towers Watson. The committee believed that Dr. Boston’s leadershipBoston had not received a base salary increase in 2016, that his tenure as our CEO was relatively long and that 2% was the percentage increase generally used at the Company in 2017 for senior leaders who were performing well but did not have a key component of the Company’s performance relativesignificant change in job responsibilities or other factors that would lead to that of other companies.

a more sizable increase.

The base salaries for the remainder of the NEOs increased by approximately 33.3%2%, 12.0%1.3%, 3.1%16%, and 2.2%15% for Mr. Sunderland, Dr. Powell, Mr. WilkinsBeckett and Dr. van Wyk,Ms. Panzarella, respectively. ThisThe increase placedfor Mr. Sunderland who became an executive officer on January 1, 2014,reflected the Compensation Committee’s view of his strong performance, the general percentage increase generally used at approximately the 35th percentileCompany for executives, and that he was already compensated relatively well relative to the data provided by Willis Towers Watson. Mr. Sunderland’s base salary placed him between the 50^th and 75^th percentiles of the survey data, and competitive with the lowest50^th percentile of the peer group data. While the Compensation Committee expects to increase Mr. Sunderland’s compensation over time,For Dr. Powell, the Committee believes thistook into account that it was appropriate for Dr. Powell to have a significant and appropriatesmaller increase than those generally made for Company employees because her salary had relatively recently been increased significantly in the first yearmiddle of 2016 in connection with her appointment as President of APUS, which heincrease was an executive officer. The remainder ofconsistent with the increases brought these executive officers within competitive range of salaries that had been used for the 50thnational search that was undertaken in the search for a new President. Dr. Powell’s base salary resulted in being between the 50^th and 75^th percentile of the survey data. The Compensation Committee felt thatincreases in Mr. Beckett’s and Ms. Panzarella’s base salaries were made in recognition of their relatively recent elevations to the performancelevel of eachsenior vice president, and also took into account their respective tenure and the scope of their roles. These increases left them both below the 50^th percentile of the NEOs and the Company had been strong in the prior year and that base salary increases were warranted. survey data.

Dr. Boston recommended the amounts of the increases for all of the NEOs other than himself, and the Committee concurred, determining that the levels Dr. Boston recommended which were consistent with the 50th percentile of the survey data (except for Mr. Sunderland), were appropriate.

Annual Incentive Cash Compensation

We believe annual incentive pay furthers our compensation philosophy and objectives by focusing our NEOs on corporate strategic, financial, strategic and operational goals. The opportunity for annual incentive pay for our NEOs is expressed as a percentage of base salary as follows:

Position
Position		Target Annual Incentive (as % of Base Salary)
President & CEO			60%90%
All Other NEOs			50%

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These percentages for Dr. Boston, Mr. Wilkins,Sunderland and Dr. Powell and Dr. van Wyk reflected the minimum percentages set forth in their employment agreements. After considering the survey data information and the individual performance of the executives, the Compensation Committee believed, in its subjective, but informed, judgment, that these percentages for all of the NEOs should remain the same for 2014,2017, including, with respect to Mr. Sunderland, because it was appropriate to provide the same structure for his

compensation as was used for the other NEOs.Beckett and Ms. Panzarella. Dr. Boston’s annual incentive target is set at a higher percentage than those of the other NEOs, which is consistent with overall market practice and is in part a result of the negotiation ofreflects his employment agreement in 2004, at which time we agreed to provide him a larger annual incentive to reflect his greater abilityrole as Chief Executive Officer to influence our business success as well as his greater responsibilities as the head of our Company.

President and CEO.

Overall, we believethe Compensation Committee believes that the proportion of target annual incentive pay to target total cash compensation (base salary plus target annual incentive pay) for our NEOs should be a relatively high percentage. It is the Compensation Committee’s general intent, as discussed above, that each NEO’s base salary should be set near the 50th50^th percentile of the survey data received from the Compensation Committee’s independent consultant, and that target annual incentives should be structured so that target total cash compensation approximates the 50th50^th percentile of the survey data for achievement of target performance goals under the annual incentive plan. We believe that positioning at the 50th50^th 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 the Company to achieve our performance targets. We believe the high percentage of compensation tied to incentive pay increases the focus of our NEOs on achieving our performance goals.

We further enhance this focus through a stretch incentive that pays an additional amount to our NEOs for superior performance, which we refer to as the stretch portion of the annual incentive plan. This additional amount, if achieved, provided an opportunity to Dr. Boston of an additional 40%45% of his base salary (for 100%135% of base salary in total maximum incentive potential), an opportunity to Mr. Sunderland Mr. Wilkins and Dr. van WykPowell of an additional 30% of each of their respective base salaries (for 80% of base salary in total maximum incentive potential) and an opportunity to Dr. PowellMr. Beckett and Ms. Panzarella of an additional 20% of hereach of their respective base salarysalaries (for 70% of base salary in total maximum incentive potential). This stretch incentive would have resulted in maximum total cash compensation payments to our NEOs of amounts in line with the 75th percentile of the survey data for each of our NEOs, which the Compensation Committee believes is appropriate for exceptional performance.

The Compensation Committee intended that performance under the NEO’sNEOs’ annual incentive awards at both the target and stretch incentive levels would be based on achieving and surpassing a financial performance goalsgoal and achievement of MBOs, so long as a threshold level of financial performance was also achieved.MBOs. We believe that a split among goals is important in order to send a message toreflect our employeesbelief that theyour NEOs should be focused on both an earnings goal and also on specific goals that are relevant to their specific positions and personal goalsresponsibilities and that are largely derived from important strategic and operating plan goals, and wegoals. We believe this split encourages a focus on multiple metrics of performance rather than focusing on one particular metric of performance to the exclusion of others that are also important to our results. Unlike in prior years, the Committee determined that a threshold level of financial performance would not be required before any amounts could be paid out for personal MBO goals.

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The following charts shows the breakdown between the financial goal and the MBO goals for each NEO, including how they relate to the target and stretch portions of each NEOs potential awards. The charts also show the amount of payout for 2017 of each portion of the annual incentive plan. The discussion that follows the charts focuses on the financial goal and the MBO goals.

$0
		Portion of Annual Incentive Plan		Weighting of Performance Goals		Opportunity		Actual Payout
Dr. Boston		Amount Target award equivalent to 90% of base salary Stretch award equivalent to 45% of salary		70% based on financial performance goal 20% based on annual incentive payouts for fiscal 2014.MBO goals   35% based on financial performance goal 10% based on annual MBO goals		$465,500 $133,000 $232,750 $66,500 Total Opportunity: $897,750		$0 $79,800 $0 $0 Total: $79,800

Prior to finalizing any performance goals for

		Portion of Annual Incentive Plan		Weighting of   Performance Goals		Opportunity		Actual Payout
Mr. Sunderland		Target award equivalent to 50% of base salary Stretch award equivalent to 30% of salary		40% based on financial performance goal 10% based on annual MBO goals 20% based on financial performance goal 10% based on annual MBO goals		$161,200 $40,300 $80,600 $40,300 Total Opportunity: $322,400		$0 $32,340 $0 $0 Total: $32,240

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		Portion of Annual Incentive Plan		Weighting of Performance Goals		Opportunity		Actual Payout
Dr. Powell		Target award equivalent to 50% of base salary Stretch award equivalent to 30% of salary		40% based on financial performance goal 10% based on annual MBO goals 20% based on financial performance goal 10% based on annual MBO goals		$152,000 $38,000 $76,000 $38,000 Total Opportunity: $304,000		$0 $13,300 $0 $0 Total: $13,300

		Portion of Annual Incentive Plan		Weighting of Performance Goals		Opportunity		Actual Payout
Mr. Beckett		Target award equivalent to 50% of base salary Stretch award equivalent to 20% of salary		40% based on financial performance goal 10% based on annual MBO goals 15% based on financial performance goal 5% based on annual MBO goals		$110,000 $27,500 $41,250 $13,750 Total Opportunity: $192,500		$0 $27,500 $0 $0 Total: $27,500

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		Portion of Annual Incentive Plan		Weighting of Performance Goals		Opportunity		Actual Payout
Ms. Panzarella		Target award equivalent to 50% of base salary Stretch award equivalent to 20% of salary		40% based on financial performance goal 10% based on annual MBO goals 15% based on financial performance goal 5% based on annual MBO goals		$80,000 $20,000 $30,000 $10,000 Total Opportunity: $140,000		$0 $17,500 $0 $0 Total: $17,500

Financial Performance Goal.  For 2017, the 2014Compensation Committee continued its practice of providing that the portion of each NEOs annual incentive plan however, our management recommendedaward that relates to financial performance would be based on achieving and surpassing a specified amount of earnings per share after taking into account any payment under the annual incentive plan.

Financial Performance Metric		Performance Goals
		Threshold				Target				Stretch (Maximum)
Earnings per Diluted Share		$	1.46			$	1.62			$	1.78

The Compensation Committee specified target earnings per share of $1.62, which reflected the earnings per share in the Company’s budget when approved by the Board of Directors. For 2017, the Committee also specified that 50% of the target amount would be paid if an earnings per share threshold of $1.46 was attained, which would reflect 90% achievement of the target level, 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 the Company’s employees and NEOs. The Committee provided that the stretch portion of the annual incentive plan related to financial performance would be suspended for 2014, including becausepayable on earnings per share of $1.78, which would reflect 110% achievement of the expectation that 2014 would be a challenging year for financialtarget level. This level of achievement was viewed as representing exceptional performance for which management should be rewarded.

For 2017, the Company. The Compensation Committee accepted this recommendation after consideringthreshold level was not achieved on a variety of factors, includingGAAP basis, and no payouts were made for the uncertainty and pressuresportion of the government sequestration, declinesannual incentive plan that was based on financial performance.

MBO Goals.  MBOs are based on company-wide performance goals consistent with our strategic plan for which executives are directly responsible, or to whose success they contribute, and provide personal accountability in government fundingaddition to rewards for Company performance. However, many MBO targets are shared between executives to reflect that executives must work together to achieve results. By focusing on goals consistent with our strategic plan, the military,MBOs are intended to focus the executives on goals that will deliver long-term stockholder value. We believe that the MBOs help to keep management from focusing solely on the current year’s financial results, which are covered by other parts of the annual incentive plan, because many of the MBOs represent our view of key actions required to capture future market opportunities and changeshelp prepare the Company for continued growth and improvement in the Voluntary Education Program. Thefuture.

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In establishing our MBOs for 2017, we set goals that were consistent with our strategic, financial and operational plans, and were set with the opportunity to pay out minimum, target 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 represents a level of excellent performance and would result in payout of the target and stretch amounts. When setting the stretch MBO goals, the Compensation Committee did not make anybelieve that it was likely that an executive would achieve all of his or her MBOs at the stretch level. Furthermore, for 2017, the Compensation Committee provided that no payments would be achieved for MBO performance above target unless the threshold was achieved on the financial portion of the annual incentive plan.

The 2017 MBOs for Dr. Boston, consistent with his role as our Chief Executive Officer, are set forth below.

The 2017 MBOs for Mr. Sunderland, consistent with his role as our Chief Financial Officer, are set forth below.

The 2016 MBOs for Dr. Powell, consistent with her role as President of APUS, are set forth below.

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The 2017 MBOs for Mr. Beckett, consistent with his role as our General Counsel, are set forth below.

The 2017 MBOs for Ms. Panzarella, consistent with her role as our Senior Vice President, Human Resources and Community Affairs, are set forth below

In reviewing the MBOs for each executive officer, the Compensation Committee met with Dr. Boston. After discussions with Dr. Boston, the Committee concluded that his MBOs in 2014.total were met at the 60% level. Unlike for the other executive officers, the Committee did not rely on specific weightings of Dr. Boston’s MBOs for 2017 because the Committee wanted the ability to make downward adjustments, if appropriate, to reflect overall performance. In reaching its conclusion with respect to the level of achievement for Dr. Boston, the Committee determined that his first MBO was not met, that he had partial achievement of the second MBO, substantial achievement of the third and fourth MBOs and full achievement of the final MBO. The payouts approved by the Committee for the MBOs of the NEOs are set forth in the tables above, and reflect that the Compensation Committee provided that no payments would be achieved for MBO performance above target unless the threshold was achieved on the financial portion of the annual incentive plan.

Equity Incentives

We believe that a significant portion of our NEOs’ total compensation should be in the form of equity awards in order to align the priorities of the NEOs with the interests of our stockholders. In 2014,2017, as in 2016, the equity awards were split 65%60% as time-based restricted stock and 35%40% as performance-based restricteddeferred stock units. This reflects an increase from 30% of the portion of the award in 2013 that was allocated as performance-based restricted stock units and reflects the Compensation Committee’s desire to focus more on performance-based awards and to incentivize executives for Company financial performance. Consistent with APEI’s long-term policy of tying pay to performance, for 2015 the Committee increased to 40% the percentage of long-term equity incentives that are performance-based.

The Committee also continued to use free cash flow as the performance measure for the performance-based restricteddeferred stock unit awards in 2014, and will again use this measure in 2015.2017. Free cash flow had beenwas originally selected in 2013 after:

Prior to using free cash flow for 2017, the Compensation Committee reevaluated each of these points and confirmed that it remained appropriate to use free cash flow as the metric for these awards. Free cash flow, which is a non-GAAP measure, is defined as income from operations before income taxesplus interest expenseless interest income (interest)lessplusdepreciation and amortization lesscapital expendituresless capitalized program development costs and other assets.costs. The 2014 awards2017 free cash flow goals were structuredset as follows:

Threshold

Target

Stretch (Maximum)

Free Cash Flow Goal

$37,223,200

$46,529,000

$55,834,800

Percentage of Award Earned

50% (of target)

100% (of target)

200% (of target)

The threshold level was established at 80% of the target level and the stretch level was set at 120% of the target level in 2017. These numbers reflected the Compensation Committee’s view of appropriate performance, and in the case of the target level was increased from the percentage used in 2016, which was 110% of target. For a level of free cash flow between thesethe applicable dollar amounts set forth above, the percentage of the award earned would be interpolatedprorated accordingly. For 2014,2017, free cash flow was $58.0 million,$42,217,000 after an adjustment of $2,093,000 for the non-cash impairment of certain assets and an adjustment of $1,277,000 for the costs associated with the departure of Dr. Powell. The result was achievement of the free cash flow target at 90.7% of the budgeted amount, which exceededwas below the stretchtarget goal, but above the threshold, and resulted in 200%76.75% of the target awards being earned. The award earned was thenis 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.

Consistent with historical practice, the restricted stock awards and the performance-based restricted stock units vest in one-third equal annual installments on the first three anniversaries of the grant date, subject to achievement of performance metrics for the performance-based restricted stock units.

In determining the appropriate level of 20142017 equity incentive grants for our NEOs, the Compensation Committee reviewed comparative survey information provided by Willis Towers Watson. In calculating the equity incentive grants to our NEOs, the CompensationThe Committee considered the survey data and determined that awards that were consistent with the 50th50^th percentile of the survey data for its executive vice presidents and higher would be appropriate to recognize performance and remain competitive with comparable companies. Mr. Beckett and Ms. Panzarella both received the same size equity award, which for Mr. Beckett was meaningfully below the 50^th percentile and for Ms. Panzarella was consistent with the 50^th percentile. In 2017, executives at each level below the EVP level all received the same size equity awards as others at their level, regardless of their specific position. This practice was historically used to promote equitable treatment at each level. The size of the SVP award for 2017, which is the award that Mr. Beckett and Ms. Panzarella received, was based on a percentage of an average SVP salary, where the percentage was slightly lower than market practice for Mr. Beckett’s position and the average salary was also lower than his salary.

The sizes for the equity incentive awards were discussed at the same time the Compensation Committee met to set the other elements of compensation so that all elements of compensation were set taking into account the total compensation package. After determining the dollar value of equity incentive awards, the Committee calculated the number of shares to be subject to the awards using a 60-day rolling average for the Company’s stock price as of a date shortly before the Committee met to approve the grants. The Compensation Committee believes that doing so removed some of the variability that can impact awards if it were to use the stock price on only one date.

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Consistent with historical practice, the restricted stock awards and the performance-based deferred stock units vest in three equal installments on the first three anniversaries of the grant date, subject to achievement of performance metrics for the performance-based deferred stock units.

In advance of the setting the 2017 equity incentive awards, the Compensation Committee considered and approved an equity retirement policy. 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 only applies to employees who have (i) voluntarily terminated service, (ii) reached an age of 62 years, and (iii) provided at least 10 years of service to the Company. In concluding that it was appropriate to adopt the equity retirement policy, the Committee considered practices in industry generally and among the Company’s peer group, as well as the advice of Willis Towers Watson.

Employment Agreements and Post-Termination Compensation

We have entered into employment agreements with each of our NEOs.Dr. Boston, Mr. Sunderland, and Dr. Powell. These agreements provide the executive with severance payments upon certain terminations, including termination without cause, termination by the executive for good reason in the event of a change of control, or if the executive’s employment agreement is not assumed by a successor entity in a change of control. The agreements provide for certain payments in connection with a termination of the executives’ employment within six months of a change inof control of the Company. We believe that these agreements were necessary to attract some of our NEOs and help to retain ourthese NEOs due to the prevalence of similar arrangements in the market in which we compete for executives.

In 2007, prior to the time that we were a public company, we entered into an amendment and restatement of our employment agreementsagreement with Dr. Boston and Mr. Wilkins to provide for additional severance payments for termination without cause or by the executivesDr. Boston for good reason in connection with a change of control and to provide that if severance payments payable by us become subject to the excise tax on “excess parachute payments,” we willwould reimburse themDr. Boston for the amount of such excise

tax (and the income and excise taxes on such reimbursement). We agreed to provide Dr. Bostonentered into the amended and Mr. Wilkins with these changesrestated agreement in anticipation of our initial public offering to reflectprovide Dr. Boston with what at the time we concluded were prevalent practices in the marketplace in which we compete for executives, and because as a public company we wanted these officershim to be able to focus on our operations and not be distracted by theirhis personal situationssituation in the event a change of control transaction arose, and in the case of Dr. Boston, to reflect his long-term commitment to us and our long-term commitment to him as our Chief Executive Officer. We further amended the employment agreements foragreement with Dr. Boston and Mr. Wilkins in December 2008 to provide for technical compliance with certain Department of the Treasury regulations. We entered into the employment agreement with Dr. van Wyk in August 2009 at the time she joined the Company. We entered into theinitial employment agreement with Dr. Powell in 2011 in connection with her appointment as our Provost.

Provost of APUS.

In 2013, the Compensation Committee requested and received an assessment from Willis Towers Watson on the terms contained in theDr. Boston and Dr. Powell’s employment agreements and comparisons to market practice and theour peer group. The Compensation Committee then negotiated amendments to thethese employment agreements in 2014, including eliminating any reimbursement for excise taxes from the employment agreements, and also authorized negotiating an employment agreement with Mr. Sunderland on substantially the same terms as the agreements with our other NEOs. The Committee determined it was appropriate to have an employment agreement with Mr. Sunderland in an effort to treat him similarly to other executives, to retain him and to obtain his agreement to be subject to post-employment non-competition and non-solicitation terms with which he otherwise would not have had to comply. The amendments to Dr. Boston’s and Mr. Wilkins’ employment agreementsagreement were entered into in April 2014. The amendments to Dr. Powell’s and Dr. van Wyk’s employment agreementsagreement and the new employment agreement with Mr. Sunderland were entered into in August 2014. Dr. Boston and Dr. Powell’s employment agreements were further amended in July 2016 in connection with Dr. Powell’s appointment as President of APUS, including to increase Dr. Boston’s annual incentive opportunity and Dr. Powell’s base salary, respectively.

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On October 15, 2017, Dr. Powell retired from her position as President of APUS and agreed to consult with the Company after her retirement until June 30, 2018 (the “Consulting Term”), particularly relating to supporting the transition to a new President of APUS, representing APUS in the higher education community as an advocate, and providing guidance on accreditation-related matters as requested. In connection with Dr. Powell’s retirement, she and the Company entered into a letter agreement dated September 28, 2017 to formalize the terms of her departure. Dr. Powell’s departure from the Company was treated as a termination of employment by APUS other than for cause or disability and she was entitled to the benefits provided for in her employment agreement in that circumstance, as modified by the terms of her letter agreement. For more details on the terms of Dr. Powell’s letter agreement and the amounts paid and payable to Dr. Powell in connection with her retirement, see “Potential Payments Upon Termination or Change in Control.”

In 2017, at the recommendation of the Compensation Committee, the Board of Directors of the Company, adopted the American Public Education, Inc. Executive Severance Plan (the “Executive Severance Plan”). The Committee recommended the adoption of the Executive Severance Plan in order to provide severance benefits to Senior Vice Presidents of the Company that are designated by the Committee without having to adopt individual employment or severance agreements. The 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 Committee considered practices in industry generally and among the Company’s peer group, as well as the advice of Willis Towers Watson. The 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 the Company and its affiliates and not to solicit employees of the Company or its 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 the Company and its 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, 2014,2017, see the section titled “Potential Payments upon Termination or Change in Control” below.

Non-Qualified Deferred Compensation

In 2013, we adoptedThe Company maintains a new non-qualified deferred compensation plan in which our executive officers are permitted to participate. In making the determination to adopt the plan, we took into account that theThe Internal Revenue Code limits the amount of matching contributions that we can contribute to our traditional 401(k) plan for the benefit of our executives. The new 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 2014.2016.

Effect of Accounting and Tax Treatment on Compensation Decisions

Section 162(m) of the Internal Revenue Code of 1986, as amended, generally imposes a $1 million limit on the amount that a public company may deduct for compensation paid to a company’s CEO or any of the company’s three other most highly compensated executive officers (other than the CFO) who are employed as of the end of the year. ThisThe Tax Cuts and Jobs Act of 2017 eliminated certain exceptions to this limitation does not apply to compensation that meets the requirements under Section 162(m) for “qualifying performance-based” compensation (i.e., compensation paid only if the individual’s performance meets pre-established objective goals based on performance criteria approved by stockholders) that is established by a Compensation Committee that consists only of “outside directors” as defined for purposes of Section 162(m), except with respect to certain agreements in effect on November 2, 2017 (the “162(m) Grandfather”). AllThe

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Committee expects that in the future it will authorize compensation arrangements that will not be fully deductible under 162(m) in situations where it believes such arrangements may be appropriate.

Limited Perquisites and Limited 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 ourthe APUS 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 2017, at the direction of the Board of Trustees of APUS, Dr. Powell took advantage of this benefit. While in 2017 the aggregate incremental cost to the Company to provide this benefit was relatively limited, the valuation for Dr. Powell’s personal income tax purposes was significantly higher. Accordingly, the Compensation Committee qualify as “outside directors”. We currently expectauthorized a payment to considerDr. Powell to make her whole for the qualification of our annual incentive plan compensation as performance-based compensation within the meaningincome taxes that she incurred with respect to her use of the Internal Revenue Code, buthousing in 2017. In 2017, in order that is only one factor among many considered byDr. Boston could be more efficient and be able to work on his commute to Charles Town, we also provided Dr. Boston with the Committee.opportunity to utilize a car service for travel to and from Charles Town, in addition to other locations. We did not provide a gross-up to Dr. Boston for the personal income taxes he incurred as a result of this benefit.

Role of Executives in Executive Compensation Decisions

Historically, our Chief Executive Officer has recommended to the Compensation Committee each element of compensation for all executive officers other than himself, and the Compensation Committee determines the target level of compensation for each executive officer.

The amount of each element of compensation for our Chief Executive Officer is determined by the Compensation Committee. Our Chief Executive Officer does not participate in deliberations relating to his own compensation. None of our other executive officers participates in any deliberations related to the setting of executive compensation.

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 the taxable wages for our approximately 2,800 employees as of December 31, 2017.

As set forth in the Summary Compensation Table appearing elsewhere in this proxy statement, the 2017 annual total compensation as determined under Item 402 of Regulation S-K for our Chief Executive Officer was $1,966,675. The 2017 annual total compensation for our median employee was $22,205. The ratio of our Chief Executive Officer’s annual total compensation to our median employee’s total compensation for 2017 is 89 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 the exception of Peter Gibbons, our Senior Vice President, Chief Administrative Officer, who provides support to the Committee and facilitates the requests for information received from the independent consultant.pay ratios disclosed by other companies.

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COMPENSATION COMMITTEE REPORT

THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE DOES NOT CONSTITUTE SOLICITING MATERIAL AND SHOULD NOT BE DEEMED FILED OR INCORPORATED BY REFERENCE INTO ANY OTHER FILING BY US UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT WE SPECIFICALLY INCORPORATE THIS REPORT.

The 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 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 thethis Proxy Statement).

Compensation Committee (April 20, 2015)

18, 2018)
MG (Ret) Barbara G. Fast, Chairperson

Eric C. Andersen
William G. Robinson, Jr.

Westley MooreTABLE OF CONTENTS

COMPENSATION TABLES AND DISCLOSURES

Summary Compensation Table

Name and Principal Position		Year		Salary			Stock Awards(1)			Non-Equity Incentive Plan Compensation(2)			All Other Compensation(3)			Total
Wallace E. Boston, Jr.		2014		$	610,000		$	1,245,167			—		$	26,679		$	1,881,846
President and Chief		2013		$	560,000		$	1,210,529		$	210,000		$	23,617		$	2,004,146
Executive Officer		2012		$	539,231		$	1,258,690		$	496,300		$	26,175		$	2,320,395
Richard W. Sunderland, Jr. Executive Vice President, Chief Financial Officer		2014		$	300,000		$	452,222			—		$	13,125		$	765,347
Karan Powell		2014		$	280,000		$	157,209			—		$	12,829		$	450,038
Executive Vice President,		2013		$	250,000		$	156,798		$	78,125		$	16,765		$	501,688
Provost		2012		$	236,488		$	136,480		$	158,400		$	15,018		$	546,386
Sharon van Wyk		2014		$	332,000		$	254,286			—		$	14,900		$	601,186
Former Executive Vice		2013		$	325,000		$	264,800		$	101,563		$	22,052		$	713,415
President, Chief Operations Officer		2012		$	314,631		$	255,853		$	224,438		$	22,798		$	817,719
Harry T. Wilkins(4)		2014		$	335,000		$	256,511			—		$	16,290		$	607,801
Executive Vice President,		2013		$	325,000		$	264,800		$	101,563		$	16,980		$	708,342
Chief Development Officer		2012		$	314,533		$	255,853		$	252,000		$	20,915		$	843,301

Name and Principal Position(1)		Year				Salary(2)				Stock Awards(3)				Non-Equity Incentive Plan Compensation(4)				All Other Compensation(5)				Total
Wallace E. Boston, Jr. President and Chief Executive Officer			2017			$	665,000			$	1,139,691			$	79,800			$	82,184			$	1,966,675
			2016			$	650,000			$	1,131,225			$	383,500			$	60,621			$	2,225,346
			2015			$	650,468			$	1,292,541			$	—			$	26,019			$	1,969,028
Richard W. Sunderland, Jr. Executive Vice President, Chief Financial Officer			2017			$	403,000			$	230,710			$	32,340			$	32,010			$	698,060
			2016			$	393,269			$	229,141			$	169,000			$	19,853			$	811,263
			2015			$	350,000			$	260,990			$	—			$	14,000			$	624,990
Thomas A. Beckett Senior Vice President, General Counsel and Secretary			2017			$	275,000			$	92,884			$	27,500			$	11,953			$	407,337
			2016			$	228,846			$	92,213			$	125,580			$	8,778			$	455,527
Amy N. Panzarella Senior Vice President, Human Resources and Community Affairs			2017			$	200,000			$	92,884			$	17,500			$	17,721			$	328,105
			2016			$	161,007			$	42,635			$	73,343			$	8,319			$	285,304
Karan Powell Former President of APUS			2017			$	313,059			$	263,888			$	13,300			$	107,841			$	698,089
			2016			$	344,423			$	129,750			$	182,122			$	33,849			$	690,144
			2015			$	300,728			$	173,300			$	—			$	12,029			$	486,057

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Name		Grant Date Value at Target Performance				Grant Date Value at Maximum Performance
Wallace E. Boston, Jr.		$	455,886			$	911,772
Richard W. Sunderland, Jr.		$	92,279			$	184,559
Thomas A. Beckett		$	37,154			$	74,307
Amy N. Panzarella		$	37,154			$	74,307
Karan Powell		$	105,555			$	211,110

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 performance share awards for 2014 are, as follows:

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Name			401(k) Match						Non-Qualified Deferred Compensation Plan Matching Contribution
Wallace E. Boston, Jr.				$	10,400					$	14,015
Richard W. Sunderland, Jr.				$	10,400					$	2,725
Karan Powell				$	10,400					$	2,064
Sharon van Wyk				$	10,400					$	4,500
Harry T. Wilkins				$	10,400					$	3,469

(4)

In 2014 Mr. Wilkins received an additional $25,000 as compensation for his service on the Board of Directors of NWHW Holdings, Inc., which was paid by NWHW Holdings, Inc.

29

Name		401(k) Match				Non-Qualified Deferred Compensation Plan Matching Contribution
Wallace E. Boston, Jr.		$	10,800			$	31,117
Richard W. Sunderland, Jr.		$	10,800			$	12,068
Thomas A. Beckett		$	10,800			$	5,154
Amy N. Panzarella		$	10,800			$	135
Karan Powell		$	10,800			$	0

For Dr. Boston, amount for 2017 also includes $36,170 for utilization of a car service as well as payments in connection with the use of APUS housing in Charles Town, WV while attending to APUS-related matters. For Dr. Powell, amount for 2017 includes a payment of $25,581 to make her whole for the income taxes that she incurred with respect to her use of APUS housing in Charles Town, WV and $71,653 in payments related to Dr. Powell’s departure from the Company, including for post-retirement consulting services. For more information about the payments related to Dr. Powell’s departure from the Company, see “Potential Payments Upon Termination or Change of Control.”

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20142017 Grants of Plan-Based Awards

The following table sets forth information with respect to grants of plan-based awards to our NEOs during 2014:

						Estimated Future Payouts Under Equity Incentive Plan Awards(1)												All Other Stock Awards: Number of Stock or				Grant Date Fair Value of Stock
Name		Award Type		Grant Date		Threshold				Target				Maximum				Units(2)				Awards(3)
Wallace E. Boston, Jr.		Restricted Stock		1/20/2014															18,184			$	809,370
		Performance RSUs		1/20/2014			4,896				9,791				19,582							$	435,797
Richard W. Sunderland, Jr.		Restricted Stock		1/20/2014															8,354			$	371,837
		Performance RSUs		1/20/2014			903				1,806				3,612							$	80,385
Karan Powell		Restricted Stock		1/20/2014															2,296			$	102,195
		Performance RSUs		1/20/2014			618				1,236				2,472							$	55,014
Sharon van Wyk		Restricted Stock		1/20/2014															3,713			$	165,266
		Performance RSUs		1/20/2014			1,000				2,000				4,000							$	89,020
Harry T. Wilkins		Restricted Stock		1/20/2014															3,746			$	166,734
		Performance RSUs		1/20/2014			1,009				2,017				4,034							$	89,777

2017:

										Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)												Estimated Future Payouts Under Equity Incentive Plan Awards(2)												All Other Stock Awards: Number of Stock or Units(3)				Grant Date Fair Value of Stock Awards(4)
Name		Award Type				Grant Date				Threshold				Target				Maximum				Threshold				Target				Maximum
Wallace E. Boston, Jr.			Restricted Stock				1/30/2017																												29,411			$	683,806
			Performance RSUs				1/30/2017																9,804				19,608				39,216							$	455,886
			Annual Incentive Plan							$	299,250			$	598,500			$	897,750
Richard W. Sunderland, Jr.			Restricted Stock				1/30/2017																												5,954			$	138,431
			Performance RSUs				1/30/2017																1,985				3,969				7,938							$	92,279
			Annual Incentive Plan							$	120,900			$	201,500			$	322,400
Thomas A. Beckett			Restricted Stock				1/30/2017																												2,397			$	55,730
			Performance RSUs				1/30/2017																799				1,598				3,196							$	37,154
			Annual Incentive Plan							$	55,000			$	137,500			$	192,500
Amy N. Panzarella			Restricted Stock				1/30/2017																												2,397			$	55,730
			Performance RSUs				1/30/2017																799				1,598				3,196							$	37,154
			Annual Incentive Plan							$	35,600			$	86,600			$	122,200
Karan Powell			Restricted Stock				1/30/2017																												6,810			$	158,333
			Performance RSUs				1/30/2017																2,270				4,540				9,080							$	105,555
			Annual Incentive Plan							$	114,000			$	190,000			$	304,000

(1)

These columns show the range of possible cash payouts for 2017 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 Compensation Committee for these awards, see the section titled “Annual Incentive Cash Compensation” in the Compensation Discussion and Analysis. The threshold amounts in this table represent the amounts that would have been paid if the threshold levels under each of the financial performance portion and the MBO portion of the annual incentive plan were achieved.

(2)

These columns show the range of restricted stock units that could be earned based on 20142017 performance pursuant to the performance-based restricted stock units granted in 2014.2017. Restricted stock units earned vest over a three-year period. For a discussion of the performance goals established by the Compensation Committee for these awards, see the section titled “2014“2017 Compensation Decisions — Equity Incentives” in the Compensation Discussion and Analysis.

(2)(3)

This column shows the number of shares of restricted stock granted, which vest ratably over three years.

(3)(4)

Amounts reflect the grant date fair value, computed in accordance with FASB ASC Topic 718.

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Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table

Employment Agreements

TheFor each of our NEOs other than Mr. Beckett and Ms. Panzarella, the amounts disclosed in the tables above are in part a result of the terms of the NEOs’ employment agreements.

We do not have employment agreements with Mr. Beckett or Ms. Panzarella.

Dr. Boston’s Employment Agreement.  In June 2004, we entered into an employment agreement with Dr. Boston to serve as our president and Chief Executive Officer with an initial term of three years starting from June 21, 2004 and ending June 21, 2007, which was subsequently amended to provide for renewal until March 31, 2018 and automatically thereafter 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. In December 2008, his employment agreement was amended to provide for technical compliance with certain U.S. Department of Treasury regulations. In April 2014, his agreement was amended and restated, in part to eliminate Dr. Boston’s entitlement to tax gross-up payments in connection with a change in control. In May 2016, his agreement was again amended and restated, including to increase his annual incentive target and stretch incentive. Pursuant to his amended and restated agreement, Dr. Boston’s base salary was set at $610,000$650,000 per year, subject to annual review and adjustment by our Compensation Committee. Under the agreement, Dr. Boston’s base salary may be reduced at any time as part of a general salary reduction to all employees with annual salaries in excess of $150,000, provided, however, that any reduction shall be no more than the lesser of the median percentage salary reduction applied to such employees or 20%. Dr. Boston’s employment agreement provides that he is entitled to participate in our annual incentive plan, under which he is eligible for an annual bonus of up to 60%90% of his base salary then in effect, and up to an additional 40%45% 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 Compensation Committee.

In addition to a base salary and annual bonus, Dr. Boston is entitled to receive such other benefits approved by our Compensation 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. Furthermore, under Dr. Boston’s employment agreement, we are required to pay or reimburse him for customary and reasonable moving expenses he incurs 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.

Dr. Boston’s base salary for 20142017 and target annual incentive compensation plan award for 20142017 are set forth in the tables above.

Mr. Wilkins’sSunderland’s Employment Agreement.  UponWe have entered into an employment agreement with Mr. Sunderland that has similar provisions to the provisions of Dr. Boston’s agreement discussed above, except with respect to his hiring in February 2007,position, amounts relating to their base salary and annual bonus, and length and scope of restrictive covenants. In August 2014, we entered into an employment agreement with Mr. WilkinsSunderland to serve as our executive vice president and chief financial officer, which agreement was amended and restated on October 10, 2007. In December 2008, his employment agreement was amended to provide for technical compliance with certain U.S. Department of Treasury regulations. In April 2014, his agreement was amended and restated, in part to eliminate Mr. Wilkins’s entitlement tax gross-up payments in connection with a change in control and also to reflect Mr. Wilkins’s current role as Executive Vice President and Chief Development OfficerFinancial Officer.

Under this employment agreement, Mr. Sunderland’s term of APEI and Chief Executive Officer of National Education Seminars, Inc., which we refer to as Hondros College of Nursing. As amended and restated, the agreement has a term commencing January 29, 2007 and endingemployment runs until March 31, 2017 and the term will automatically renew 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. Wilkins’s baseSunderland’s initial annual salary is set at $335,000 per year, subject to annual review and adjustment by our Compensation Committee. Under the agreement,$300,000. Mr. Wilkins’s base salary may be reduced at any time as part of a general salary reduction to all employees with annual salaries in excess of  $150,000, provided, however, that any reduction shall be no more than the lesser of the median percentage salary reduction applied to such employees or 20%. Pursuant to his employment agreement, Mr. Wilkins is entitled to participate in our annual incentive plan, under which heSunderland 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 Compensation Committee.

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In addition to a base salary and annual bonus, Mr. Wilkins is entitled to receive such other benefits approved by our Compensation 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. Furthermore, under Mr. Wilkins’s employment agreement, we are required to pay or reimburse him for customary and reasonable moving expenses he incurs in connection with any subsequent relocation of our executive offices. In his employment agreement, Mr. Wilkins 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 eighteen months after termination for any reason.

Mr. Wilkins’sSunderland’s base salary for 20142017 and target annual incentive compensation plan award for 2014 are2017 is set forth in the tables above.

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In addition, the above employment agreement 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 by these executives see the section titled “Potential Payments Upon Termination or Change in Control” below.

Mr. Sunderland’s, Dr. Powell’s and Dr. van Wyk’s Employment AgreementsAgreement..   We have  In May 2016, we entered into an employment agreement with each of Mr. Sunderlandamended and Dr. Powell and, before her departure, with Dr. van Wyk, which have similar provisions to the provisions of Dr. Boston’s agreement discussed above, except with respect to their positions, amounts relating to their base salary and annual bonus, and length and scope of restrictive covenants. We entered into the employment agreement with Dr. van Wyk to serve as Executive Vice President and Chief Operations Officer beginning August 3, 2009. We entered into therestated employment agreement with Dr. Powell to serve as Executive Vice President and Provost on November 4, 2011 in connection with her promotion to that position. In August 2014, we entered into the employment agreement with Mr. Sunderland to serve as Executive Vice President and Chief Financial Officer and Dr. Powell’s and Dr. van Wyk’s employment agreements were amended and restated.

Under their employment agreements, Mr. Sunderland’s and Dr. Powell’s terms of employment each run until March 31, 2017 and will automatically renew 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 is $300,000, and he 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 Compensation Committee.APUS. Pursuant to her agreement, Dr. Powell’s annual salary is $280,000, and she is eligible for an annual bonus of up to 50% of her base salary then in effect and up to an additional 20% 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 Compensation Committee. While Dr. van Wyk’s agreement terminated in connection with her departure from the Company on March 13, 2015, prior to such time and pursuant to her agreement, Dr. van Wyk’s annual salary was $332,000,$375,000, and she was eligible for an annual bonus of up to 50% of her base salary then in effect and up to an additional 30% 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 Compensation Committee.

Mr. Sunderland’s,On October 15, 2017, Dr. Powell retired from her position at the Company and agreed to consult with the Company until June 30, 2018. For purposes of her amended and restated employment agreement, Dr. Powell’s departure was treated as a termination of employment other than for cause or disability, and she was entitled to the benefits provided for in her employment agreement in that circumstance, as amended by the terms of the letter agreement she entered into on September 28, 2017 to formalize the terms of her departure. Dr. van Wyk’sPowell will continue to vest in her outstanding equity awards until June 30, 2018.

Dr. Powell’s base salariessalary for 20142017 and target annual incentive compensation plan awardsaward for 20142017 are set forth in the tables above.

In addition, 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 by these executives see the section titled “Potential Payments upon Termination or Change in Control” below.

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20142017 Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information with respect to the outstanding equity awards at December 31, 20142017 for our NEOs:

																					Stock Awards
Name			Number of Securities Underlying Unexercised Options (#) Exercisable						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)
Wallace E. Boston, Jr.					56,000					$	34.80						1/4/2017
					58,000					$	37.52						1/3/2018
																							70,548					$	2,601,105
Richard W. Sunderland, Jr.																							13,958					$	514,631
Karan Powell					9,118					$	3.29						7/13/2016
					4,625					$	37.19						1/1/2016
					5,500					$	34.80						1/4/2017
					5,000					$	37.52						1/3/2018
																							8,805					$	324,640
Sharon van Wyk					12,500					$	35.44						8/3/2016
					15,000					$	34.80						1/4/2017
					13,000					$	37.52						1/3/2018
																							14,733					$	543,206
Harry T. Wilkins					13,000					$	37.52						1/3/2018
																							12,500					$	460,875

														Stock Awards
Name		Number of Securities Underlying Unexercised Options (#) Exercisable				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)
Wallace E. Boston, Jr.			58,000			$	37.52				1/3/2018
															105,950			$	2,654,048
Richard W. Sunderland, Jr.															21,448			$	537,272
Thomas A. Beckett															7,726			$	193,536
Amy N. Panzarella			1,100			$	37.52				1/3/2018
															5,440			$	136,272
Karan Powell			5,000			$	37.52				1/3/2018
															17,561			$	439,903

(1)

Includes the number of shares of restricted stock units that were earned pursuant to the achievement of the 20142017 performance-based grant of restricted stock units, at 200% of target.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:

Wallace E. Boston Jr.:   10,154 shares on

Name

Grant Date

Award Type

Vest Date

Number of Shares or Units of Stock That Have Not Vested

Wallace E. Boston, Jr.

1/27/2015; 14,980 vesting 1/2 on each of 1/21/2015

PSU

1/27/2018

3,692

1/17/2016

PSU

1/17/2018

10,705

1/17/2016

PSU

1/17/2019

10,704

1/30/2017

PSU

3/8/2018

5,017

1/30/2017

PSU

1/30/2019

5,016

1/20/2017

PSU

1/30/2020

5,016

1/27/2015

RSA

1/27/2018

7,458

1/17/2016

RSA

1/17/2018

14,466

1/17/2016

RSA

1/17/2019

14,465

1/30/2017

RSU

1/30/2018

9,804

1/30/2017

RSU

1/30/2019

9,804

1/30/2017

RSU

1/30/2020

9,803

Richard W. Sunderland, Jr.

1/27/2015

PSU

1/27/2018

746

1/17/2016

PSU

1/17/2018

2,168

1/17/2016

PSU

1/17/2019

2,168

1/30/2017

PSU

3/8/2018

1,016

1/30/2017

PSU

1/30/2019

1,015

1/20/2017

PSU

1/30/2020

1,015

1/27/2015

RSA

1/27/2018

1,506

1/17/2016

RSA

1/17/2018

2,930

1/17/2016

RSA

1/17/2019

2,930

1/30/2017

RSU

1/30/2018

1,985

1/30/2017

RSU

1/30/2019

1,985

1/30/2017

RSU

1/30/2020

1,984

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Name

Grant Date

Award Type

Vest Date

Number of Shares or Units of Stock That Have Not Vested

Thomas A. Beckett

1/17/2016

PSU

1/17/2018

873

1/17/2016

PSU

1/17/2019

872

1/30/2017

PSU

3/8/2018

409

1/30/2017

PSU

1/30/2019

409

1/20/2017

PSU

1/30/2020

408

1/17/2016

RSA

1/17/2018

1,179

1/17/2016

RSA

1/17/2019

1,179

1/30/2017

RSU

1/30/2018

799

1/30/2017

RSU

1/30/2019

799

1/30/2017

RSU

1/30/2020

799

Amy N. Panzarella

1/30/2017

PSU

3/8/2018

409

1/30/2017

PSU

1/30/2019

409

1/30/2017

PSU

1/30/2020

408

1/17/2016

RSA

1/17/2018

909

1/17/2016

RSA

1/17/2019

908

1/30/2017

RSU

1/30/2018

799

1/30/2017

RSU

1/30/2019

799

1/30/2017

RSU

1/30/2020

799

Karan Powell

1/27/2015

PSU

1/27/2018

494

1/17/2016

PSU

1/17/2018

1,228

1/17/2016

PSU

1/17/2019

1,227

1/30/2017

PSU

3/8/2018

1,162

1/30/2017

PSU

1/30/2019

1,162

1/30/2017

PSU

1/30/2020

1,162

1/27/2015

RSA

1/27/2018

1,000

1/17/2016

RSA

1/17/2018

1,659

1/17/2016

RSA

1/17/2019

1,659

1/30/2017

RSU

1/30/2018

2,270

1/30/2017

RSU

1/30/2019

2,270

1/30/2017

RSU

1/30/2020

2,270

Pursuant to the September 28, 2017 letter agreement entered into between the Company and 1/21/2016; 7,648 vesting 1/2 on each of 1/21/2015 and 1/21/2016; 18,184 vesting 1/3 on each of 1/20/2015, 1/20/2016 and 1/20/2017; and 19,582 vesting 1/3 on each of 1/20/2015, 1/20/2016 and 1/20/2017.

Richard W. Sunderland, Jr.:   275 shares on 1/27/2015; 1,148 vesting 1/2 on each of 1/21/2015 and 1/21/2016; 569 vesting 1/2 on each of 1/21/2015 and 1/21/2016; 8,354 vesting 1/3 on each of 1/20/2015, 1/20/2016 and 1/20/2017; and 3,612 vesting 1/3 on each of 1/20/2015, 1/20/2016 and 1/20/2017.

Karan Powell:   1,101 shares on 1/27/2015; 1,102 vesting 1/2 on each of 1/21/2015 and 1/21/2016; 1,024 vesting 1/2 on each of 1/21/2015 and 1/21/2016; 2,296 vesting 1/3 on each of 1/20/2015, 1/20/2016 and 1/20/2017; and 2,472 vesting 1/3 on each of 1/20/2015, 1/20/2016 and 1/20/2017.

Sharon van Wyk:   2,064 shares on 1/27/2015; 3,248 vesting 1/2 on each of 1/21/2015 and 1/21/2016; 1,707 vesting 1/2 on each of 1/21/2015 and 1/21/2016; 3,746 vesting 1/3 on each of 1/20/2015, 1/20/2016 and 1/20/2017; and 4,034 vesting 1/3 on each of 1/20/2015, 1/20/2016 and 1/20/2017. Dr. van Wyk forfeited allPowell to formalize the terms of her unvested restricted stock and restricted stock units when she departed from the Companydeparture, Dr. Powell will continue to vest in March 2015.

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Harry T. Wilkins:   2,064 shares on 1/27/2015; 3,248 vesting 1/2 on each of 1/21/2015 and 1/21/2016; 1,708 vesting 1/2 on each of 1/21/2015 and 1/21/2016; 3,713 vesting 1/3 on each of 1/20/2015, 1/20/2016 and 1/20/2017; and 4,000 vesting 1/3 on each of 1/20/2015, 1/20/2016 and 1/20/2017.

her outstanding equity awards until June 30, 2018.

(2)

The market value of the shares of common stock that have not vested is based on the closing price on December 31, 2014 of our common stock on The NASDAQ Global Select Market ($36.87).on December 29, 2017 (the last trading day of 2017), $25.05.

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Option Exercises and Stock Vested

There were no option exercises by our NEOs during 2017. The following table sets forth information with respect to option exercises by our NEOs during 2014 and shares of restricted stock held by our NEOs that vested during 2014:

		Option Awards								Stock Awards
Name		Number of Shares Acquired on Exercise (#)				Value Realized on Exercise(1)				Number of Shares Acquired on Vesting (#)				Value Realized on Vesting ($)(2)
Wallace E. Boston, Jr.			—				—				25,885			$	1,136,967
Richard W. Sunderland, Jr.			—				—				1,134			$	50,335
Karan Powell			—				—				2,951			$	129,916
Sharon van Wyk			—				—				5,508			$	241,941
Harry T. Wilkins			7,272			$	312,136				5,508			$	241,941

2017:

		Stock Awards
Name		Number of Shares Acquired on Vesting (#)				Value Realized on Vesting ($)(1)
Wallace E. Boston, Jr.			48,910			$	1,145,889
Richard W. Sunderland, Jr.			11,339			$	267,117
Thomas A. Beckett			2,870			$	64,560
Amy N. Panzarella			1,716			$	39,847
Karan Powell			5,971			$	110,227

(1)

The value realized on exercise is based on the difference between the exercise price of the option and the closing price of our common stock on The NASDAQ Global Select Market on the day of exercise, multiplied by the number of shares acquired.

(2)

The value realized on vesting is based on the closing price of our common stock on The NASDAQ Global Select Market on the day of vesting, multiplied by the number of shares acquired.

Nonqualified 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 2014:

Name			Executive Contributions in Last FY						Registrant Contributions in Last FY(1)						Aggregate Earnings in Last FY(2)						Aggregate Withdrawals/ Distributions						Aggregate Balance at Last FYE(3)
Wallace E. Boston, Jr.					—					$	14,015					$	11,799						—					$	116,250
Richard W. Sunderland, Jr.					—					$	2,725					$	58						—					$	3,237
Karan Powell					—					$	2,065					$	1,794						—					$	17,859
Sharon van Wyk					—					$	4,505					$	5,287						—					$	49,521
Harry T. Wilkins					—					$	3,469					$	8,391						—					$	58,017

2017:

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)
Wallace E. Boston, Jr.			—			$	31,117			$	23,719				—			$	210,584
Richard W. Sunderland, Jr.			—			$	12,068			$	1,818				—			$	26,103
Thomas A. Beckett			—			$	5,154			$	—				—			$	5,154
Amy N. Panzarella			—			$	135			$	—				—			$	135
Karan Powell			—			$	—			$	3,582				—			$	27,346

(1)

Includes amounts contributed by the Company in 20152018 with respect to 20142017 as matching contributions. All amounts are reported in the Summary Compensation Table above.

(2)

Amounts reflected in this column include changes in plan values during 2014,2017, 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 above or in previous years.

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Potential Payments Upon Termination or Change in Control

The section below 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 Dr. Boston Mr. Sunderland, Dr. Powell, Dr. van Wyk, and Mr. Wilkins,Sunderland, described above, include provisions that provide for payments to them in the event of certain terminations of their respective employment.

Mr. Beckett and Ms. Panzarella do not have employment agreements, but are covered by the Company’s Executive Severance Plan.

As described in more detail below, in the event of an NEO’sa 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. Accordingly, in connection with Dr. van Wyk’s departure from the Company effective March 13, 2015, she was not entitled to any severance payments or benefits, and she only received the payment of the Base Amounts (as described below), and we have no further obligations to Dr. van Wyk pursuant to her employment agreement.

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Termination for cause, without good reason or by reason of death.  In the event that any of Dr. Boston’s Mr. Sunderland’s, Dr. Powell’s or Mr. Wilkins’Sunderland’s employment is terminated by us for “cause”, by the executive without “good reason”, or by reason of death (each of “cause” and “good reason” as defined below), we will pay to each of them or their estate, as the case may be, (i) his or her full base salary through the date of termination, (ii) any previously deferred and unpaid compensation and any unpaid accrued vacation pay, and (iii) any earned, but unpaid, amounts the executive is entitled to as of the date of termination in connection with any fringe benefits or under any of our incentive compensation plans or programs, including the annual incentive bonus (together, the “Base Amounts”).

In the event that Mr. Beckett’s or Ms. Panzarella’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 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 unpaid accrued vacation pay and unreimbursed business expenses accrued through the date of termination, (iii) any benefits provided under the Company’s 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 proceeding the termination date, to the extent not previously paid (the “Earned Bonus”).

Termination by reason of disability.  If any of Dr. Boston’s Mr. Sunderland’s, Dr. Powell’s or Mr. Wilkins’Sunderland’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, an amount equal to (i) his or her base salary through the date of termination, (ii) his or her 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 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 a certain 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 over the Bonus Period. 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 Bonus PeriodsPeriod for Mr. Boston is 24 months and the Bonus Period for Mr. Sunderland Dr. Powellis 18 months.

If Mr. Beckett’s or Ms. Panzarella’s employment is terminated by reason of disability, we are required pursuant to the terms of the Executive Severance Plan to pay to them the Accrued Amounts and Mr. Wilkins are twenty-four months, eighteen months, twelve months and eighteen months, respectively.

Earned Bonus.

Termination other than for cause or disability or for good reason.  In the event that we terminate any of Dr. Boston’s Mr. Sunderland’s, Dr. Powell’s or Mr. Wilkins’Sunderland’s employment other than for cause or disability or they terminate their employment for good reason, we are required to pay, or provide, to the executive (subject to the NEO’s timely execution of a release of claims in respect of all but the first item below):

in a lump sum within 30 days of the date of termination, the Accrued Obligations;

an amount equal to the sum of (i) the executive’s annual base salary 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 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 over the Bonus Period;

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for a period of 24 months following the date of termination (for Dr. Boston) or 12 months following the date of termination (for the other NEOs)Mr. Sunderland) or for any longer period provided for under the terms of the appropriate plan, program, practice or policy, a continuation of benefits to the executive and/or his or her family at a level and in an amount that is at least equal to that which would have been provided by us to them had the executive continued his 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;

to the extent not otherwise paid or provided, for a period of 24 months following the date of termination (for Dr. Boston) or 12 months following the date of termination (for the other NEOs)Mr. Sunderland), any other amounts or benefits required to be paid or provided or which the executive is eligible to receive under any of our other existing benefit schemes; and

for Dr. Boston only, to the extent that less than 33 1/3% of all outstanding equity awards granted to him under any of our equity incentive plans are vested on the date of termination, such additional equity awards will immediately accelerate, vest, and become exercisable in accordance with their terms, assuming target level achievement for purposes of any performance-based awards.

In the event that we terminate Mr. Beckett’s or Ms. Panzarella’s employment other than for cause or disability or they terminate their employment for good reason, we are required to pay, or provide, to the executive (subject to the executive’s timely execution of a release of claims and other certain restrictive covenants): (i) the Accrued Amounts; (ii) the Earned Bonus; (iii) an amount equal to his or her base salary in effect immediately prior to the date of termination plus the product of (x) the annual cash bonus that would have been earned for the entire calendar year in which the date of termination occurs based on the actual level of achievement of any company performance goals for such year and the higher of the actual or target level of achievement of any individual performance goals for such year; and (y) a fraction, the numerator of which is the number of days the executive was employed by the Company during the calendar year in which the date of termination occurs and the denominator of which is the number of days in such year, paid on the date that annual bonuses are paid to the Company’s executives or the 61^st day following the date of termination; and (iv) any amount, determined in the sole discretion of the 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 61^st day following the date of termination.

On October 15, 2017, Dr. Powell retired from her position as President of APUS and agreed to consult with the Company after her retirement until June 30, 2018 (the “Consulting Term”), particularly relating to supporting the transition to a new President of APUS, representing APUS in the higher education community as an advocate, and providing guidance on accreditation-related matters as requested. In connection with Dr. Powell’s retirement, she and the Company entered into a letter agreement dated September 28, 2017 to formalize the terms of her departure. Dr. Powell’s departure from the Company was treated as a termination of employment by APUS other than for cause or disability and she was entitled to the benefits provided for in her employment agreement in that circumstance, as modified by the terms of her letter agreement.

Under the terms of Dr. Powell’s letter agreement, during the Consulting Term, we are required to pay, or provide: (i) a bi-weekly fee of $14,875.70; (ii) for her continued participation in APUS’s medical, dental and vision benefit plans, subject to Dr. Powell’s timely COBRA election; (iii) bonus payments for the calendar year 2017, subject to achievement of performance metrics; and (iv) subject to Dr. Powell’s continued provision of consulting services, reimbursement for reasonable, documented business expenses in accordance with APUS policies and procedures for attendance at specified conferences and speaking events. Following the expiration of the Consulting Term, we are also required to pay, or provide: (i) a bi-weekly fee equal to $14,875.70 until December 31, 2019; (ii) for her continued participation in APUS’s medical, dental and vision benefit plans until

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March 31, 2019, subject to Dr. Powell’s timely COBRA election; (iii) from April 1, 2019 through December 31, 2019, a supplemental monthly payment to allow for continued participation in APUS’s benefit plans; and (iv) a bonus for calendar year 2018 of $190,000, subject to certain conditions and performance requirements.

In addition to the amounts listed above, under the letter agreement, all of Dr. Powell’s outstanding restricted stock units and restricted stock awards shall continue to vest and be settled in accordance with the respective vesting schedules and performance conditions applicable thereto.

Pursuant to the letter agreement, the receipt of the above-listed amounts by Dr. Powell will satisfy all obligations owed to Dr. Powell under her employment agreement.

Termination following a change of control.  If within 180 days after a change of control (as defined below), we terminate any of Dr. Boston’s Mr. Sunderland’s, Dr. Powell’s or Mr. Wilkins’Sunderland’s employment other than for cause or disability or the executive terminates his or her employment for good reason, we are required to pay, or provide, to the executive (subject to the NEO’s timely execution of a release of claims in respect of all but the first item below):

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 (or, for Dr. Boston and Mr. Sunderland,(ii) two times annual base salary) and (ii) the executive’s annual incentive bonus, (or, for Dr. Boston and Mr. Sunderland, two times the 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 Dr. Boston) or 12 months following the date of termination (for the other NEOs)Mr. Sunderland) or for any longer period provided for under the terms of the appropriate plan, program, practice or policy, a continuation of benefits to the executive and/or his or her family at a level and in an amount that is at least equal to that which would have been provided by us to them had the executive continued his 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 Dr. Boston) or 12 months following the date of termination (for the other NEOs)Mr. Sunderland), any other amounts or benefits required to be paid or provided or which the executive is eligible to receive under any of our other existing benefit schemes.

In the event that any amounts payable or benefits to be provided to the executive under the employment agreement or otherwise would be nondeductible to us by reason of Section 280G of the Code and would subject the executive to the excise tax imposed by Section 4999 of the Code, then such payments and/or benefits will be reduced to the extent necessary so that such payments or benefits will no longer be ineligible for deduction by reason of Section 280G of the Code or subject to the excise tax imposed by Section 4999 of the Code unless the executive would receive at least $50,000 more on a net after-tax basis if such payments and benefits were not reduced.

If within six months after a change of control, we terminate Mr. Beckett’s or Ms. Panzarella’s employment without case 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):

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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

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an amount, determined in the sole discretion of Contentsthe 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.  Under Dr. Boston’s Mr. Sunderland’s, Dr. Powell’s and Mr. Wilkins’Sunderland’s employment agreements, all equity awards granted to the NEO under any of our equity incentive plans that are outstanding immediately prior to the following events will vest and become fully exercisable as follows: (i) upon termination of the executive’s employment by the executive’s death; (ii) upon our termination of the executive’s employment for disability; or (iii) upon our termination of the executive’s employment for any reason or for no reason at all, other than for disability or cause, in the 12-month period following a change of control or 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 or Ms. Panzarella’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.  For purposes of Dr. Boston’s Mr. Sunderland’s, Dr. Powell’s and Mr. Wilkins’Sunderland’s employment agreements, the following definitions apply:

“Cause” means:

refusal by the NEO to follow a lawful written order of the Chairman of ourthe Board, the Board, or for each NEO except Dr. Boston, our Chief Executive Officer;

the NEO’s engagement in conduct materially injurious to us or our reputation;

dishonesty of a material nature that relates to the performance of the NEO’s duties under his or her employment agreement;

the NEO’s conviction for any crime involving moral turpitude or any felony; or

the NEO’s continued failure to perform his or her duties under his or her employment agreement (except due to the NEO’s incapacity as a result of physical or mental illness) to the satisfaction of ourthe Board for a period of at least 30 consecutive days after written notice is delivered to the NEO 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

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.

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“Good reason” generally means:

the assignment to the NEO 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 NEO;

any material failure by us to comply with any provisions of the NEO’s employment agreement, excluding an isolated, insubstantial and inadvertent failure that we remedy promptly after receipt of notice from the NEO;

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any material failure by us to comply with any provisions of the NEO’s employment agreement, excluding an isolated, insubstantial and inadvertent failure that we remedy promptly after receipt of notice from the NEO,provided, that in no event will a failure to pay an annual bonus by March 15 of the year following the performance year be considered a material failure by us;

there is a change of control and the NEO 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; or

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

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substantially all of our business and/or assets to assume expressly and agree to perform the NEO’s employment agreement in the same manner and to the same extent, that we would be required to perform it if no succession had taken place.

Provided,provided, however, that 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 NEO 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.NEO. In order to terminate his or her employment for good reason, the executiveNEO must terminate employment within 30 days of the end of the cure period if the breach has not been cured.

Terms defined in the Executive Severance Plan.  For purposes of the Executive Serverance Plan, which currently only applies to Mr. Beckett and Ms. Panzarella, the following definitions apply:

“Cause” means:

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.

“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.

“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.