SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
the Securities Exchange Act of 1934
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27, 2020
PERSON (VIRTUALLY).
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15, 2020 You will not be able to attend the Annual Meeting in person. You will be able to vote and submit your questions at the website listed above during the Annual Meeting.20182020 ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON
DECEMBER 14, 2018("Company"(“Company”), will be heldconducted via a live webcast at the law firm of Latham & Watkins LLP, 555 Eleventh Street, N.W., Suite 1000, Washington, D.C. 20004-1304,www.virtualshareholdermeeting.com/LRN2020 on Friday,Tuesday, December 14, 2018,15, 2020, at 10:00 A.M., Eastern Time ("(“Annual Meeting"Meeting”).eight (8)ten (10) directors to the Company'sCompany’s Board of Directors each to serve for a one-year term;2.("(“Say on Pay"Pay”);3.Company'sCompany’s independent registered public accounting firm for the fiscal year ending June 30, 2019;2021; and4.2018,2020, the record date, will receive notice of and be allowed to vote at the Annual Meeting. The foregoing matters are described in more detail in the Proxy Statement. In addition, financial and other information about the Company is contained in the Annual Report to Stockholders for the fiscal year ended June 30, 2018 ("2020 (“Annual Report"Report”), which includes our Annual Report on Form 10-K for the fiscal year ended June 30, 2018 ("2020 (“fiscal 2018"2020”), as filed with the U.S. Securities and Exchange Commission ("SEC"(“SEC”) on August 8, 2018.This year we12, 2020.26, 2018.For admission27, 2020.stockholders should comeduring regular business hours, for a period
stockholder status.
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Executive Vice President, General Counsel and Secretary
October
27, 2020
15, 2020
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Compensation Governance, Process and Incentive Decisions | | | | | | | ||
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PROPOSAL 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR | | | | | | | ||
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DECEMBER
15, 2020
other matters as may properly come before the Annual Meeting or any adjournments or postponements of the Annual Meeting.
be supplemented by telephone or personal solicitation by our directors, officers or other regular employees of the Company. No additional compensation will be paid to our directors, officers or other regular employees for these services.
during the Annual Meeting?
your broker, bank, or other agent. Follow the instructions from your broker or bank included with these proxy materials, or contact your broker or bank to request a proxy form.
Annual Meeting?
Attention: Investor Relations
2300 Corporate Park Drive
Herndon, VA 20171
(703) 483-7000
48 Wall Street, 22nd Floor
New York, New York 10005
(800) 431-9633
Banks and brokers may call (212) 269-5550
Communication with Directors. Stockholders and other interested parties may communicate directly with our Board of Directors, individually or as a group, by sending an email to our General Counsel at OGC@K12.com, or by mailing a letter to K12 Inc., 2300 Corporate Park Drive, Herndon, VA 20171, Attention: General Counsel and Secretary. Our General Counsel will monitor these communications and provide summaries of all received communications to our Board of Directors at its regularly scheduled meetings. Where the nature of a communication warrants, our General Counsel may decide to seek the more immediate attention of the appropriate committee of the Board of Directors or an individual director, or our management or independent advisors and will determine whether any response is necessary.
information that he can use to assist the Chairman and CEO to function in the most effective manner. The Board of Directors believes the Lead Independent Director provides additional independent oversight of executive management and Board matters.
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control over financial reporting, and applicable requirements regarding auditor independence;
Onplans; and
Nominating and Corporate Governance Committee
Ms. Mmes. McFadden and Alvarez and Messrs. Bron and Engler qualify as independent directors within the meaning of the applicable NYSE listing requirements and SEC regulations. Our Board of Directors has adopted Corporate Governance Guidelines which are available on our website at www.K12.com.
In fiscal 2017,inquiries; and
participated in three meetings of the Company'sCompany’s Educational Advisory Committee (“EAC”) during fiscal 2018.2020. Under its charter, the responsibilities of the Academic Committee include:
•- Our Compensation Committee assists our Board of Directors in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs, and retains outside compensation and legal experts for that purpose, as further explained in the Compensation Committee Report which begins on page
55.45.••Finally, our Nominating and Corporate Governance Committee assists our Board of Directors in fulfilling its oversight responsibilities with respect to the management of risks associated with the organization, membership and structure of the Board of Directors, succession planning for our directors and corporate governance.Director Compensation for Fiscal20182020
In fiscal2018,2020, pursuant to our Amended Non-Employee Directors Compensation Plan("(“Directors CompensationPlan"Plan”), our non-employee directorsreceivedwere eligible to receive annual cash retainers for service on the Board of Directors and assigned committees and annual restricted stock awards. Mr. Davis, our Chairman and CEO, received no additional compensation for his service on our Board of Directors.Amounts paid to Mr. Chavous, our President, Academics, Policy and Schools, for his partial year of service as a non-employee director during fiscal 2018 are set forth below in our "Summary Compensation Table for Fiscal 2018".Pursuant to the terms of the Directors Compensation Plan, each non-employee director receives an annual cash retainer of$60,000$70,000 and an additional amount for each committee on which the non-employee director serves, as shown below: Additional Cash
Retainer Committee Chair Member Audit Committee $35,000 $10,000 Compensation Committee $15,000 $5,000 Nominating and Corporate Governance Committee $10,000 $5,000 Academic Committee $5,000 $5,000 Additional Cash
RetainerCommittee Chair Member Audit Committee
$35,000 $10,000 Compensation Committee
$15,000 $5,000 Nominating and Corporate Governance Committee
$10,000 $5,000 Academic Committee
$5,000 $5,000 The Directors Compensation Plan also provides forIn January 2020, each non-employee director received an annual restricted stockawards for each non-employee director,award valued at$100,000$120,000 as of the grant date,(prorated for a partial year of service),with the shares of our Common Stock underlying such awards vesting fully
The following table sets forth the compensation paid to our non-employee directors for their services during fiscal 2018:
| | Name | | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($) (1) | | | Total ($) | | | | |
| | Aida M. Alvarez (2) | | | 78,750 | | | 120,000 | | | 198,750 | | | | |
| | Craig R. Barrett (3) | | | 75,000 | | | 120,000 | | | 195,000 | | | | |
| | Guillermo Bron (4) | | | 75,000 | | | 120,000 | | | 195,000 | | | | |
| | Robert L. Cohen (5) | | | 85,000 | | | 120,000 | | | 205,000 | | | | |
| | John M. Engler (6) | | | 85,000 | | | 120,000 | | | 205,000 | | | | |
| | Steven B. Fink (7) | | | 110,000 | | | 120,000 | | | 230,000 | | | | |
| | Victoria D. Harker (8) | | | 20,000 | | | 108,163 | | | 128,163 | | | | |
| | Robert E. Knowling, Jr. (9) | | | 85,000 | | | 120,000 | | | 205,000 | | | | |
| | Liza McFadden (10) | | | 80,000 | | | 120,000 | | | 200,000 | | | | |
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | Total ($) | | ||||
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Aida M. Alvarez (2) | 70,000 | 100,000 | 170,000 | |||||
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Craig R. Barrett (3) | 65,000 | 100,000 | 165,000 | |||||
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Guillermo Bron (4) | 75,000 | 100,000 | 175,000 | |||||
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John M. Engler (5) | 85,000 | 100,000 | 185,000 | |||||
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Steven B. Fink (6) | 100,000 | 100,000 | 200,000 | |||||
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Robert E. Knowling, Jr. (7) | 30,719 | 97,264 | 127,983 | |||||
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Liza McFadden (8) | 61,236 | 141,376 | 202,612 | |||||
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Jon Q. Reynolds (9) | 16,250 | — | 16,250 | |||||
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Andrew H. Tisch (10) | 36,250 | — | 36,250 | |||||
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(1)- Represents the aggregate grant date fair values of stock awards computed in accordance with FASB ASC Topic 718. On January 2,
2018,2020, each non-employee director who held such position at the beginning of the calendar yearreceivedwas eligible to receive an award of6,2085,961 shares of restricted stock. Ms. Alvarez, Mr. Cohen, Mr. Knowling and Ms. McFadden elected to receive their awards in deferred stockthat vestsunits under the Directors Deferred Compensation Plan. The restricted stock and deferred stock units vest on January 2,2019.2021.
ELECTION OF DIRECTORS
71
Directors.
81
68
66
Communications and Telica, Switching.Inc. Mr. Davis holds an M.B.A. from the Wharton School of the University of Pennsylvania, an M.S. in Engineering Computer Science at the Moore School of the University of Pennsylvania, and a B.S. in Engineering from Stevens Institute of Technology. Mr. Davis was selected as a director based on his strong record of executive management, finance and systems engineering skills, as well as his insight into the considerations necessary to run a successful, diverse global business. The Board of Directors also benefits from his previous service on other public company boards and his experience in accounting and financial reporting.
72
69
65
an independent non-profit corporation created by Chancellor Joel I. Klein and Mayor Michael R. Bloomberg that is chartered with developing the next generation of principals in the New York City public school system. Mr. Knowling has also held roles as Chief Executive Officer of Telwares, Chairman and Chief Executive Officer of SimDesk Technologies, Inc. and Chairman, President and Chief Executive Officer of Covad Communications. He was awarded the Wall Street Project'sProject’s Reginald Lewis Trailblazers Award by President Clinton and the Reverend Jesse Jackson in 1999. Mr. Knowling serves on the board of directors for Roper Technologies, Inc., Rite Aid Corporation and Stream Companies. He also previously served on the board of Heidrick & Struggles, Inc. from 20101999 to 2015, Hewlett Packard Company from 1999 to 2005 and Convergys Corporation from 2017 to 2018. He holds a B.A. in theology from Wabash College and an M.B.A. from Kellogg School of Management, Northwestern University. Mr. Knowling was selected as a director based on his experience in public education, public company leadership roles, technology and organizational development.
58
64
56
Venable, LLP, Shearman and Sterling, LLP, and the United States Securities and Exchange Commission. He began his legal career at Venable, LLP. Mr. Mathis formerly served on the Boardboard of Directorsdirectors of Indianapolis Power and Light Company Enterprises, Inc., AES Tietê Energia S.A., and AES Elpa S.A. In addition, he previously served on the Boardboard of Directorsdirectors at IPALCO Enterprises, Inc., DPL Inc. and The Dayton Power and Light Company and was Chairman of Eletropaulo Metropolitana Eletricidade de São Paulo S.A. Mr. Mathis holds a J.D. from the University of Virginia and a B.A. in Economics and Political Science from The University of Richmond.
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We achieved solid
solutions.
In fiscal 2017 we saw this approach begin to yield some positive results and in fiscal 2018 our core business delivered further improvements in financial, operational and academic performance. Although our stock price has continued to face headwinds from the issues identified above, revenue growth, profitability and capital expenditures for the year met or exceeded our guidance and we saw the highest
student retention level in eight years. Based on these outcomes, we believe the strategy begun three years ago has worked in many respects, and during this time we formed an executive leadership team that is poised to continue the trend. To ensure the continuity of this progress, Mr. Davis was selected as the person best suited to spearhead K12's leadership team in its current phase and he re-assumed the position of CEO during fiscal 2018, a position he previously held from January 2014 to February 2016.
We have identified the following four cornerstones on which we intend to focus our efforts to accelerate our business growth and education mission:
•#1 Strengthening Our Core—Our Managed Public School programs remain the foundationoverall success of our business and aligns their interests with those of our stockholders. Consistent with this philosophy, we reward our executives for superior performance relative to our key financial and operational metrics that drive stockholder value and improve theimprovements in retention makes us optimistic about its strength and potential for growth.•#2 Preparing Studentsacademic outcomes for theFuture—We are focused on building a more comprehensive career readiness program with a distinct brand and better linkage to corporations, trade associations, and higher education institutions.•#3 Becoming a Trusted Advisor—Our management team is proactively complementing our content and services sales approach by positioning our Institutional business as a trusted software services provider delivering end to end digital learning solutions.•#4 Going Global—We continue to develop international opportunities by building partnership-focused relationships with in-country organizations.
We believe that by actively pursuing these strategic priorities, stockholders in K12 will realize the benefits of strong revenue and profitability growth, and just as importantly, see their investment provide educational choices and exceptional learning opportunities for students and families across the nation.
Stockholder Engagement and Compensation Reforms and Highlights
As we developed our executive compensation program for fiscal 2018, our Compensation Committee took into account the extensive stockholder input we received and took steps to more tightly link executive pay to measurable performance results. Over the last several years, we have extensively overhauled our executive compensation programs and practices, including making the following structural changes prior to fiscal 2018 (which were continued into fiscal 2018):
- serve. Fiscal 2020 highlights include:
Following these reforms, the annual stockholder advisory vote on our executive compensation for fiscal 2017 yielded an approval rate of 78.5%, which was a significant improvement over prior years. We view this as an endorsement of the positive changes we have made, but also recognize that it still reflects lingering concerns among a portion of our stockholder base. To understand, address and respond to those concerns consistent with the fiduciary duties of the Board of Directors, during fiscal 2018 we maintained our stockholder outreach efforts with the goal of receiving meaningful feedback. Accordingly,
at the beginning of fiscal 2018, we proactively reached out to our top 25 stockholders, speaking with a total of five stockholders that responded and in the aggregate held over 20% of our shares outstanding. Our Investor Relations and Human Resources leaders conducted the outreach efforts, with the Chairman of the Compensation Committee participating in some of the calls. We continued these discussions during the year through written correspondence and in-person stockholder meetings to continue our executive compensation dialogue.
The stockholders that we spoke with recognized and commended our continued responsiveness to their feedback such as the elimination of overlapping performance metrics in short- and long-term incentive pay programs and the introduction of longer term performance metrics in our 2016 LTIP.
These conversations centered on three key themes, which we have sought to address in a careful and deliberative manner so as to further our strategic business objectives:
Leadership Structure and Total Compensation Cost.
•Key Stockholder Concerns. Our stockholders expressed concerns over the total compensation cost associated with maintaining separate positions of an Executive Chairman and CEO with distinct roles and each receiving significant compensation amounts.•Fiscal 2018 Highlight—Streamlined Leadership Team. With the mid-year departure of Mr. Udell, our Board of Directors determined that a single executive position undertaken by Mr. Davis with his deep knowledge of our operations, relations with our major school board customers, and architect of our going forward strategy, would best serve the Company's needs at this time. During fiscal 2018 we consolidated the separate roles of a distinct CEO and Executive Chairman into the position of Chairman and CEO. We will continue to evaluate our executive leadership needs as we execute on our strategic business goals and priorities. To maintain flexibility and ensure that stockholders are not overly burdened with excessive severance costs, we also negotiated an arrangement that would eliminate our cash severance obligations to Mr. Davis in the event Mr. Davis is replaced by a new CEO. This resulted in a one-time equity incentive award for Mr. Davis that is subject to meaningful performance and other vesting conditions, which are described below under the heading "—Determination of Long-Term Incentive Compensation—Mr. Davis-Performance Based Restricted Stock Awards."•Fiscal 2018 Highlight—Reduced Leadership Compensation Burden. The consolidation of our Chairman and CEO positions resulted in an annual cost savings to the Company (based on total target-level compensation, including equity incentives) of approximately $1.8 million. In his role as Chairman and CEO, Mr. Davis' total target-level compensation package was set at a level comparable to his prior tenure in the CEO position, which ended in fiscal 2016.•Fiscal 2018 Highlight—No Salary Increases. As in fiscal 2017, we sought to limit total compensation costs by generally maintaining base compensation at prior year levels. Other than in connection with Mr. Davis assuming increased CEO duties, none of our NEOs received any increase in base salaries or target total compensation levels for fiscal 2018.
Annual Bonus Plan Structure and Payouts
•Key Stockholder Concerns. Our stockholders expressed concerns relating to our bonus plan structure, particularly its reliance for certain executives on individual performance goals and the use of quantitative metrics that overlap with our long-term incentive program. A few
•Fiscal 2018 Highlight. In our continued effort to align our pay for performance practices with our strategy and stockholder value creation, we focused on restructuring our annual bonus plan for fiscal 2018, which included:•Eliminating individual criteria for our CFO, previously eliminated for our Chairman and CEO during fiscal 2017, and continuing to decrease the weighting of individual performance management objectives ("PMOs") for other executive officers from 50% to 30%.•Reducing the number of corporate PMOs for our most senior executives so that our annual bonus plan is tied to driving stockholder value through achievement of key financial metrics, operational goals and academic performance.•Removing performance metrics that overlap with our performance-based equity incentive awards to ensure that executives do not receive duplicate payouts for a singular achievement.•Updating the corporate PMOs to focus our executives on advancing our strategic priorities, which included adding a new a metric tied to our career and technical education ("CTE") enrollments.
•Fiscal 2018 Highlight. As the only publicly traded company in the K-12 space, comparison to our peer companies for purposes of setting target compensation levels present unique challenges. As a result, our stock price returns may not correlate strongly with our peer group. Going forward, to ensure alignment of realized pay amounts with corporate performance, we are enhancing our commitment toward establishing rigorous corporate level performance goals in our annual incentive program. Specifically, we set the fiscal year 2018 threshold performance targets at levels above the actual results for fiscal 2017 and target performance levels are directly tied to 2018 budgeted performance. Additionally, payout for threshold performance was reduced from 50% to 30% of target bonus.
stockholders also questioned why above-target bonus payouts were provided in years where our stock price performance has trailed members of our compensation peer group.
Long-Term Incentive Plan Structures
•Key Stockholder Concern. Our stockholders expressed concerns about the use of one-year performance periods for certain equity awards granted to our most senior executives and noted our lack of relative stockholder return metrics in our long-term incentive programs.•Fiscal 2018 Highlight. We implemented a relative total stockholder return metric on a trial-basis to the performance-based restricted stock awards granted to our NEOs for fiscal 2018, other than Mr. Davis and Mr. Udell. Performance-based awards for these NEOs are subject to attaining free cash flow goals, subject to increase or decrease in a range of 75% to 125% based on our relative total stockholder return as compared to the component companies in the Russell 2000 Index.•Fiscal 2018 and 2019 Highlight. Other than Mr. Chavous, who joined the Company in the fall of fiscal 2018, our NEOs participated in a three-year LTIP that was introduced in fiscal 2016. The fiscal 2016 LTIP was an overperformance plan based on achievement of specific targets over a three-year performance period with no overlapping periods or awards. The purpose of the program was to encourage achievement of strategic initiatives related to academic improvement and an increase in student lifetime value. This plan was still in place
during fiscal 2018, concluding in early fiscal 2019. To complement the existing three-year LTIP, we utilized a one-year performance period for certain equity awards to our most senior executives in fiscal 2018 to incentivize disciplined focus to drive profitability and financial stability as we continued to execute against our multi-year business plan. In setting this performance period for fiscal 2018, we also took into account the fact that equity awards granted to Mr. Davis were 100% performance-based in fiscal 2018, which we believe is a far heavier burden than the compensation practices of our peer companies. For fiscal 2019, we have eliminated one-year performance periods from our long-term incentive programs for key executives. Performance based equity incentives for fiscal 2019 for Mr. Davis, Mr. Rhyu and Mr. Chavous are based entirely on a three-year performance period and will be earned only if we realize significant stock price appreciation as of the end of the three-year period.
While executing on our multi-year strategy as described above, fiscal 2018 saw solid financial results and key achievements in the following areas:
•- Managed Public School Retention. Research shows that students who remain in the same school setting longer generally perform better academically so improving student retention in our virtual schools is a key aspect of our business strategy. We ended fiscal 2020 with student retention rates at their highest level ever. Retention rates at our managed public schools improved by more than
300210 basis points over fiscal20172019 andwe sawby 550 basis points over thehighest student retention level in eightpast three years. •Student Enrollments.Our total average student enrollments continued to increase, with 105,000 students enrolling inRetention remained a component of ourprograms duringExecutive Bonus Plan for fiscal2018, resulting in a 4.8% increase over fiscal 2017.•School Academic Performance.Since fiscal 2016, we achieved more than a 95% success rate in maintaining schools that we no longer consider to have academic performance issues, reducing2020 for thenumber of schools that we consider to be in "academic jeopardy" from 11 to 5.Named Executive Officers.
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| | | Revenue | | | | $1,015.8M | | | | $1,029.8M | | | | 1.4% | | |
For fiscal 2018 our cash flow, profit and revenue metrics were expressed on an "adjusted" basis to eliminate the impact of certain extraordinary and variable elements that are beyond the control of our executives.Please refer to the discussion titled"Fiscal 2018“Fiscal 2020 CompensationDecisions"Decisions” beginning page2925 for a discussion of how these non-GAAP financial measures are calculated.•Continued Expanding Our Career Readiness Education Offering.•Expanded Business Operations.We continued toexpandbuild upon ourbusiness operations and focused on developing our CTE programs,Career Readiness offering, highlights of whichinclude openingincluded expanding our career readiness training into the adult education and corporate training markets and acquiring Galvanize, which provides talent development for individuals and enterprises in the information technology fields. For Dr. McAlmont, the President of our Career Readiness Education programs, anew programmeaningful portion of his annual bonus for fiscal 2020 was based on the achievement of performance metrics designed to grow our Career Readiness business. Executives inOhio, developingother organizations also share responsibility in the performance metrics around growing this line of revenue.Say on Pay Results and Stockholder Engagement94.48% of the shares voted at our 2019 annual meeting of stockholders voted to approve our named executive officer compensation for fiscal 2019, reflecting our stockholders’ strong support of our executive pay programs and practices. We recognize the significance of stockholder support of our executive compensation programs and continued our stockholder outreach efforts during fiscal 2020. We remained committed to responding to stockholder feedback on our executive compensation programs and the committee considers all feedback to ensure that our programs are tightly linking executive pay to measurable performance results.At the beginning of fiscal 2020, we proactively reached out to our largest 35 stockholders, speaking with a total of seven stockholders that responded and in the aggregate held over 24% of our shares outstanding.Our Investor Relations and Human Resources leaders, as well as the Chairman of the Compensation Committee, conducted the outreach efforts. No significant concerns were raised by the stockholders and several noted key improvements in our executive compensation practices, including our increased focus on performance-based awards tied to quantifiable metrics, our enhanced disclosure of stockholder outreach efforts and our continued responsiveness to stockholder and proxy advisory firm feedback. An area referenced for further consideration involved utilizing performance periods of varying lengths in our equity incentive programs. This concept is reflected in our fiscal 2020 executive compensation program. For fiscal 2020, each NEO received an annual long-term incentive award granted in the form of performance-based restricted shares that vest based on financial performance measured at the end of one year, with any earned shares subject to additional time-based vesting over threenew project-based learning centersyears. The CEO also received a performance-based restricted stock award that is earned andmaking significant equity investments in businessesvests over a three-year performance period. Additionally, our NEOs hold performance stock units that areintended to address market demand for CTE, in addition to our core business.earned and vest based on stock price performance at the end of a three-year performance period, which performance will be measured after the close of fiscal 2021.
fixed in the form of base salary.
Carefully Consider Stockholder Input. We regularly seek and engage in dialogues with our stockholders on executive compensation matters. RecentOngoing enhancements into our executive compensation programs have beenare influenced by these discussions.
For fiscal 2021, we increased our share ownership requirements for our CEO from three times base salary to five times base salary and all other executive officers must now maintain a minimum share ownership of two times base salary.
risk-taking.
| | | Element | | | | | | | Purpose | | | |||
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| | Base Salary | | | | Evaluated annually by the Committee and reviewed in light of market pay practices. Represents a lower percentage of target total direct compensation than at most peer companies, with average base salaries benchmarking near the | | | | Provide a monthly income necessary to retain executives. | | ||||
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| | | Executive Bonus Plan | | | | |||||||||
Annual performance determines payouts. Ties a meaningful portion of target annual cash compensation to attaining | | | | Focus executives on attaining financial and strategic performance objectives from year to year. | | |||||||||
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| | | Long-Term Incentives | | | | |||||||||
Time-based Performance-based restricted stock awards: Performance targets are | | | | Enhance retention of key executives who drive consistent performance. Motivate and reward executives for achievement of long-term goals | ||||||||||
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| | | Other Compensation | | | |
| Executives may participate in benefit programs on the same terms as other employees, such as health and welfare benefit plans, 401(k) plan, life insurance and executive life and disability plans. Executives may elect to participate in a non-qualified deferred compensation plan providing tax-efficient savings, but receive no additional Company contributions. Premiums for | | | | Provides benefits having high perceived values and offers tax advantages. | ||||||||
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The Committee has assessed Compensia’s independence and concluded that no conflict of interest exists that would prevent Compensia from providing services to the Committee.executives,executive officers, including our NEOs. In fiscal 2018,2020, the Committee continued to engage Compensia, an independenta national compensation consultant company to evaluate the market competitiveness of compensation for our executive officers. Compensia'sCompensia’s work for the Committee also included an assessment of the compensation practices of peer group companies, severance pay programs and a subsequent executive compensation market analysis.
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• ACI Worldwide, Inc. • Adtalem Global Education, Inc. (formerly DeVry Education Group) • American Public Education, Inc. • Blackbaud, Inc. • Zovio (formerly Bridgepoint Education, Inc. ) | | | • Perdoceo Education | ) • Chegg Inc. •
Graham Holdings Co. • Grand Canyon Education, Inc. | • Houghton Mifflin Harcourt Co. • Huron Consulting Group | | | • Laureate Education • Scholastic Corporation • Strategic Education (formerly Strayer Education, Inc. ) • Weight Watchers International, Inc. • Zynga, Inc. • 2U, Inc. | |
Laureate Education.
positions at the companies in the peer group. The Committee used this analysis when reviewing and adjusting the compensation levels of our NEOs for fiscal 2020. This peer group was also used by Compensia to prepare an analysis of executive severance and change in control arrangements during fiscal 2020, which the Committee considered when determining to enter into new severance and change in control arrangements with our NEOs.
Chairmancompensation, and CEO Pay Mix
Compensia assisted the Committeeprovide executive severance and change in designing competitive pay packagescontrol agreements that focus heavily on variable pay components,are aligned with the intent that compensation for our Chairmanpeer group and CEO should be overwhelmingly performance-based. A graphic illustration of the basic annual total target pay mix of our Chairman and CEO, which is set forth in his employment agreement, is depicted below:
Other
| Name | Base Salary for Fiscal 2018 | |||
|---|---|---|---|---|
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Nathaniel A. Davis | $ | 735,000 | (1) | |
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James J. Rhyu | $ | 500,000 | ||
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Kevin P. Chavous | $ | 490,000 | (2) | |
| | | | | |
Howard D. Polsky | $ | 385,000 | ||
| | | | | |
Allison B. Cleveland | $ | 415,000 | ||
| | | | | |
(1)
| | Name | | | Base Salary for Fiscal 2019 | | | Base Salary for Fiscal 2020 | | | Percentage Increase | | ||||||
| | Nathaniel A. Davis | | | | $ | 735,000 | | | | | $ | 935,000 | | | | 27% | |
| | Timothy J. Medina | | | | | — | | | | | $ | 475,000 (1) | | | | — | |
| | James J. Rhyu | | | | $ | 515,000 | | | | | $ | 575,000 | | | | 12% | |
| | Kevin P. Chavous | | | | $ | 497,350 | | | | | $ | 511,850 | | | | 3% | |
| | Shaun E. McAlmont | | | | $ | 415,000 | | | | | $ | 480,000 | | | | 16% | |
| | Vincent W. Mathis | | | | $ | 405,000 | | | | | $ | 415,000 | | | | 2% | |
April 13, 2020. The Committee reviewed a competitive assessment of executive compensation levels for chief financial officer positions prepared by Compensia in determining an appropriate base salary for Mr. Medina.
PMOs for our Chairman and CEO and, for all our NEOs, removing performance metrics that overlap with our performance-based equity incentive awards. Beginningmanagement objectives (“PMOs”) utilized in fiscal 2017, we eliminated bonus payouts for achieving individual goals for our Executive Chairman and CEO and, for fiscal 2018,2019 because the Committee extended thisbelieves these key metrics, which are related to our CFOprofitability, growth and did not apply individual goalsbusiness initiatives, are closely tied to driving stockholder value.
Targetthe target annual bonus levels for our NEOs are reviewed by the Committee annually and set at levels that, when combined with base salary levels, are intended to provide target total cash compensation opportunities that approximate the market median. NoneFollowing its review of our NEOs receiveda competitive assessment of executive compensation levels prepared by Compensia, the Committee approved an increase into the target annual bonus levelsopportunities for Mr. Rhyu and Dr. McAlmont under our Executive Bonus Plan for fiscal 2018.2020. Target bonus levelsopportunities for our NEOs for fiscal 20182020 were as follows:
| | Name | | | ||||
| Target Bonus (% of Base Salary) | |||||||
|---|---|---|---|---|---|---|---|
| | |||||||
| Nathaniel A. Davis | ||||||
| | | | | 150% | | | |
| James J. Rhyu | ||||||
| | | | | 100% | | | |
| Kevin P. Chavous | ||||||
| | | | | 80% | | | |
| |||||||
| | | | | 80% | | | |
| |||||||
| | | | | 65% | | | |
metricsCorporate and Individual PMOs to be included in our Executive Bonus Plan each fiscal yearyear. Over the past several years, the Committee has
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| | | | | | ||||
| Adjusted Operating Income | | | ||||||
| | | | | | ||||
| Revenue | ||||||||
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| | | Key Business Initiatives | | | | |||
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2019. In addition, even though the threshold, target and maximum improvement levels for student retention in the 2020 Executive Bonus Plan were lower than the corresponding threshold, target and maximum improvement levels set in the 2019 Executive Bonus Plan, in order for the NEOs to earn any portion of the bonus for this metric, our student retention performance needed to improve meaningfully over 2019 levels.
| | Weighting | | | | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Metric | CEO/CFO | Other NEOs | Performance Level | Achievement | Actual Results | |||||
| | | | | | | | | | | |
| Adjusted | Threshold | $42.1M | ||||||||
| | | | | | | | | | | |
| Operating | 40% | 28% | Target | $46.8M | $49.2M | |||||
| | | | | | | | | | | |
| Income (1) | Outperform | $51.5M | ||||||||
| | | | | | | | | | | |
| Threshold | $888.5M | |||||||||
| | | | | | | | | | | |
| Revenue | 10% | 7% | Target | $914.3M | $917.2M | |||||
| | | | | | | | | | | |
| Outperform | $940.9M | |||||||||
| | | | | | | | | | | |
| Threshold | 103.7K | |||||||||
| | | | | | | | | | | |
| MPS Average | 10% | 7% | Target | 107.6K | 108.7K average enrollments | |||||
| | | | | | | | | | | |
| Enrollments (2) | Outperform | 111.6K | ||||||||
| | | | | | | | | | | |
| Threshold | 200 bps | |||||||||
| | | | | | | | | | | |
| Retention (3) | 20% | 14% | Target | 240 bps | Improvement 320 bps | |||||
| | | | | | | | | | | |
| Outperform | 320 bps | |||||||||
| | | | | | | | | | | |
| Threshold | 1400 | |||||||||
| | | | | | | | | | | |
| CTE Average | 20% | 14% | Target | 1600 | 1702 | |||||
| | | | | | | | | | | |
| Enrollments (4) | Outperform | 1800 | ||||||||
| | | | | | | | | | | |
Metric Weighting (4) Performance Levels Actual
Results (5) Payment
Percentage Adjusted Operating Income (1) 40% Threshold $63.0M $75.1M 173.3% Target $70.0M Outperform $77.0M Revenue (2) 40% Threshold $1,015.8M $1,029.8M 81.9% Target $1,035.0M Outperform $1,055.7M Retention (3) 20% Threshold 25 bps Improvement 210 bps 200% Target 100 bps Outperform 200 bps Overall Weighted Payment Percentage 142.1% (1)Operating income isFor purposes of the Executive Bonus Plan, “operating income” was adjusted for stock-based compensation expense andexcludesmay exclude anyacquisition relatedacquisition-related charges (which would include amortization subsequent to an acquisition transaction) and any other unusual, non-recurring gain or loss that is separately identified and quantified in our financial statements.(2)(2)Measures average student enrollment atRevenue may be adjusted for any unusual, non-recurring event that is separately identified and quantified in ourmanaged public schools over the school year.financial statements.(3)(3)Measures the overall improvement in retention rate of students that are active in our Managed Public SchoolProgramsprograms on or after June 1st and thepercentpercentage of these students that remain active at the end of the school year, or on May 31st, subject to certain exclusions for students ineligible to return (e.g., graduating students) or commence enrollment until the following school year.(4)(4)Measures average student enrollment atIn place of theDestinationRetention metric, Dr. McAlmont’s third metric included an individual PMO directly tied to growth of our CareerAcademy schools, whetherReadiness programs as described below.(5)In evaluating actual results for fiscal 2020, the Committee considered the impact from the acquisition of Galvanize ina stand-alone academy or in a managed public school with a destination career academy program. Enrollment is calculatedJanuary 2020 and determined that 2020 Executive Bonus Plan awards would be based ona nine-month averagefinancial results that excluded the impact of theending enrollment for each month from October through May.Galvanize acquisition. Accordingly, actual performance with respect to our achievement against the adjusted operating income and revenue PMOs reflects adjustments made to exclude amounts attributable to the Galvanize acquisition.
Individual PMOsForMr. PolskyDr. McAlmont, an individual PMO replaced the Retention metric of the corporate PMOs andMs. Cleveland, individual PMOsaccounted for30%20% ofthe NEO'shis target annual bonus opportunity under the Executive Bonus Plan for fiscal2018,2020, although the Committee retains discretion to allow for individual adjustments based on factors and considerations it deems relevant.A general description ofIn August 2020, the Committee reviewed Dr. McAlmont’s achievement against his individualPMOs for fiscal 2018PMO and theNEOs' achievementsresults areprovided below.included in the following table. Individual Goals Performance Results Produce a run rate of DCA enrollments that support the long-term DCA plan of record based on the following performance levels on July 1, 2020:•Threshold: 11,000 DCA enrollments•Target: 13,500 DCA enrollments•Outperform: 16,000 DCA enrollments NEOIndividual GoalsPerformance ResultsHoward D. PolskyFavorable outcomes in significant litigation, arbitration, and state regulatory matters;Completion of teacher certification compliance database;Implementation of share repurchase;Student data privacy initiatives and executive FCPA and securities law trainingMr. Polsky achieved his established goals and outperformed with respect to obtaining favorable outcomes in significant litigation and state regulatory matters; effectively managed an unplanned share repurchase transaction; and implemented a years' long compliance project. The CEO and the Board of Directors determined that Mr. Polsky's substantial achievements warranted an outperform result for his individual goals.156.6%16,200 DCA enrollmentsOutperform (200%) Allison B. ClevelandImprove student and family satisfaction and engagement;Renew 8 contracts and 10 charters;Improve teacher satisfaction and implement programs to build a more effective teacher workforce;Grow the number of Destination Career Academy schools and students enrolled in Career and Technical Education schools and coursesMs. Cleveland achieved her established goals and outperformed in the areas of improved family satisfaction, and engagement where a greater than 10% increase was attained in Net Promoter Score and a student retention improvement of more than 300 bps. Additionally, the number of Destination Career Academy schools more than doubled and students enrolled in CTE programs and courses outperforming against that metric.112.4%28Fiscal20182020 Executive Bonus Plan PaymentsThe following tableillustrates,sets forth, for each NEO, theCommittee'sCommittee’s approved annual bonus award under our Executive Bonus Plan for fiscal20182020 based upon performance against the corporate PMOs and, for Dr. McAlmont, performance againstthe executive'shis individual PMOs. Corporate PMOs NEO (1) Adjusted
Operating
Income Revenue Retention Individual
PMOs % of Target
Bonus Earned Amount of Bonus Nathaniel A. Davis 69.3% 32.8% 40% — 142.1% $1,992,841 James P. Rhyu 69.3% 32.8% 40% — 142.1% $817,029 Kevin P. Chavous 69.3% 32.8% 40% — 142.1% $581,839 Shaun E. McAlmont 69.3% 32.8% — 40% 142.1% $545,634 Vincent W. Mathis 69.3% 32.8% 40% — 142.1% $383,293 (1)Corporate PMOs Adjusted
Operating
IncomeNEO Revenue MPS Average
EnrollmentsRetention CTE Average
EnrollmentsIndividual
PMOs% of Target
Bonus EarnedAmount of
Bonus Nathaniel A. Davis (1)
60.5% 11.09% 12.8% 40% 30.2% — 154.6% $1,704,087 James P. Rhyu
60.5% 11.09% 12.8% 40% 30.2% — 154.6% $618,263 Kevin P. Chavous (2)
60.5% 11.09% 12.8% 40% 30.2% — 154.6% $388,439 Howard D. Polsky
42.3% 7.8% 8.9% 28% 21.1% 46.9% 155.2% $388,329 Allison B. Cleveland
42.3% 7.8% 8.9% 28% 21.1% 33.7% 141.9% $382,859 (1)- Mr.
Davis' 2018Medina was not eligible for a fiscal 2020 annual bonusaward is calculated based on his base salary of $735,000. To seek to maintainbecause he was hired during thetax deductibility of awards under our Executive Bonus Plan for certain executive officers, we historically established a performance-based "umbrella" bonus plan that was intended to qualify bonus payouts as "performance-based compensation" for purposes of Section 162(m)fourth quarter of theInternal Revenue Code. Under this plan, annual bonus awards for our most senior executives (which forfiscal2018 would be Mr. Davis and Mr. Udell) would not exceed 10% of our adjusted operating income for theyear.Based on our adjusted operating income for fiscal 2018, this would have resulted in a maximum combined possible bonus award of $3,150,000. In light of Mr. Udell's termination and Mr. Davis assuming the role of CEO during the fiscal 2018 performance period, the Board determined not to utilize the "umbrella" bonus plan in making annual bonus award calculations; however, the combined total payouts for both executives were less than the maximum amount permitted under the plan in any event. Due to the passage of the Tax Cut and Jobs Act of 2017 (the "Tax Act"), which generally eliminated our ability to rely on the "performance-based compensation" exception under Section 162(m), we no longer intend to utilize an "umbrella" bonus plan going forward. (2)The amount shown for Mr. Chavous was pro-rated for his partial year of service with us.
In connection with his termination as CEO effective March 3, 2018, Mr. Udell became entitled to receive the severance amounts under his employment agreement, which included a pro-rated portion of the annual bonus he would have received for the year of termination, based upon actual performance for such year and paid at the same time annual bonuses are generally paid to the Company's senior executives. Based upon achievement of the corporate PMOs described above, and pro-rated for the portion of fiscal 2018 during which he served as CEO, Mr. Udell received an annual bonus payment for fiscal 2018 of $1,004,677.Determination of Long-Term Incentive CompensationWe believe that providing long-term incentive compensation opportunities in the form of equity awards promotes our philosophy of aligning executive pay with the long-term interests of our stockholders while building the value of our Company.DuringWe have historically used a one-year financial performance metric in our executive equity award program and we believe this has played an important role in ensuring that executive performance can be measured against goals that can be reliably determined. To complement our annual equity award program in fiscal2018,2019 wegrantedadopted a long-term shareholder performance plan as a means of providing multi-year performance-basedRSAsequity incentive awards designed toMr. Davisencourage our NEOs to focus on executing our key strategic objectives. Awards under this program were entirely performance-based andperformance- and time-based RSAs to eachwill be earned only if we realize significant stock price appreciation as ofMr. Rhyu, Mr. Chavous, Mr. Polsky and Ms. Cleveland. In a departure from prior years, nonethe end of fiscal 2021.Fiscal 2020 Annual AwardsThe fiscal 2020 annual equity awards for our NEOs weregranted market-based awards that would be earned based solely on attaining stock price levels.Mr. Davis—Performance-Based Restricted Stock AwardsIn early fiscal 2018, the Committee approved Mr. Davis' long-term incentive award in the formcomprised entirely ofperformance-basedrestricted stockwith a cash flow goal measured by Adjusted EBITDA minus CapitalExpenditures ("CapEx")awards, which were divided equally between time- and performance-based awards. The following table sets forth the target award values for the NEOs for fiscal2018. Unlike many members of our peer group, in fiscal 2018 we did not grant time-vesting equity awards to our most senior executive.The performance-based RSAs granted to Mr. Davis for fiscal 2018 had a target award value of $2 million, as set forth in his employment agreement,2020 and the resulting number of restricted sharesgrantedsubject to each type of award, which wasdeterminedbased upon the fair market value of our Common Stock on the date of grant. Awards to the CEO were recommended by the Compensation Committee and reviewed and approved by the independent members of the Board of Directors. Mr. Medina commenced service with us in late fiscal 2020 and did not receive an annual equity award for the year. NEO Annual Equity
Award Value Number of
Time-Based
Shares Number of Performance-Based Shares Threshold Target Outperform Nathaniel A. Davis $3,000,000 53,744 42,995 53,744 71,480 James P. Rhyu $2,000,000 35,829 28,663 35,829 47,653 Kevin P. Chavous $1,200,000 21,497 17,198 21,497 28,591 Shaun E. McAlmont $1,000,000 17,914 14,331 17,914 23,826 Vincent W. Mathis $700,000 12,540 10,032 12,540 16,678 Time-Based Restricted Stock Awards. The time-based restricted stock awards granted to our NEOs for fiscal 2020 vest based on our standard vesting schedule which is semi-annually over a three year period, with 20% of the shares subject to the award vesting in the first year and 40% vesting in each of the next two years following the grantwhich resulted in a target award of 110,865 shares.date.29Performance-Based Restricted Stock Awards. The performance-based restrictedsharesstock awards are earned baseduponon the attainment of Adjusted EBITDAminus CapExperformance levels for fiscal20182020 as set forth in the following table,below,with any earned shares subject to additional time-based vesting in equal annual installments over a period of threeyears.years from the date of grant. Financial achievement falling between the specified levels would result in a proportionate adjustment to the number of shares earned.Performance LevelMetric: Adjusted EBITDA-CAPEX% of Award Earned Below ThresholdLess than $57.4M0%; entire award forfeitedPerformance Level % of Award Earned Threshold$57.4M80% of award earned Below Threshold Target<$ 66.5M-$76.5M100% of award earnedOutperform$84.2M133% of award earned134M Award Forfeited Threshold $134M 80% Target $141M 100% Outperform $148M 133% TheCompensationCommittee determined tocontinue using the cash flow metric ofuse Adjusted EBITDAminus CapExas the metric forthis awardour NEOs’ annual equity awards becausewe viewit views this as a critical metric for driving stockholder value.EBITDA is a non-GAAP financial measure that consists of net income, plus net interest expense, income tax expense, depreciation and amortization minus noncontrolling interest charges. A reconciliation of EBITDA to the U.S. GAAP financial measure of operating income is provided in Item 6 of our fiscal20182020 Annual Report on Form 10-K. EBITDA is adjusted for stock-based compensation expense andexcludesmay exclude any acquisition related charges (which would include amortization subsequent to an acquisition transaction) and any other unusual, non-recurring gain or loss that is separately identified in our financial statements.In evaluating actual results for 2020, the Committee considered the impact from the acquisition of Galvanize in January 2020 and determined to exclude amounts attributable to the Galvanize acquisition when evaluating the Adjusted EBITDA metric for purposes of the performance-based restricted stock awards.
In setting the threshold, target and outperform levels forthis award for 2018,these awards, the Committeetook into account that 100% of the equity awards for Mr. Davis are performance-based and therefore at-risk. The Committee also considered that this is a meaningful departure from the compensation practices of our peer companies, many of which provide at least half of their annual equity incentive grants in the form of time-based awards,was committed to establishing rigorous performance goals and set threshold performancelevels accordingly. In our continued focus to align our metrics to our approved budgetabove actual performance for fiscal 2019 andyear-over-year improvement, the metrics for Mr. Davis' equity award provided thattarget performancebetween prior years' results and the approved budget would result in target level attainment. Additionally, payoutsateach performance level are set in a narrower band than many programs of our peer companies to ensure that executives do not receive unreasonable payouts in the event of outperformance, taking into account the challenges we face in projecting our performance levels in our current operating environment and as we execute on transitioning our business.fiscal 2020 budgeted performance.
In early fiscal2019,2021, the Committee determined that our fiscal20182020 Adjusted EBITDAminus CapExwas$82.4$143 million, which resulted inMr. Davisthe NEOs earningan awarda number of138,898shares between the Target and Outperform levelsone-thirdas set forth in the following table. One-third ofwhichthese shares vested in August2018,2020 on the date of certification of achievement, and the remainderof whichwill vest inannualequal installments in August 2021 and 2022. NEO Number of
Performance-
Based Shares Earned Nathaniel A. Davis 58,811 James P. Rhyu 39,207 Kevin P. Chavous 23,524 Shaun E. McAlmont 19,603 Vincent W. Mathis 13,722 CEO One-Time Equity AwardAs a means of ensuring Mr. Davis’ retention and continued commitment to the Company, in August 2019and 2020.CEO Grant. In connection with Mr. Davis' appointment as CEO,the independent members of the Board granted Mr. Daviswas granteda one-time performance-based restricted stock award having a value of$2,205,000,$10,000,000, resulting in a grant of158,747358,294 restrictedshares.shares based on the fair market value of our Common Stock on the date of grant. The awardwas granted in recognition of our agreement with Mr. Davis to eliminate the Company's severance payment obligations to Mr. Davis under his employment agreement upon the appointment of a successor CEO. This award converted the value associated with Mr. Davis'lump sum cash severance payment of three times his base salary (which would be payable upon an involuntary termination coincident with a successor CEO appointment) into an equity incentive performance award designed to retain Mr. Davis for an indefinite period of time and to drive him to deliver a concrete strategic plan for the Company to execute into the future. The shares subject to this award vest as to 50% of the award upon the hiring and commencement of employment of a new CEO. This component of the award was designed to seek to ensure Mr. Davis' retention and commitment to the Company until such time as his ultimate successor is selected and appointed by the Board. Because no specific timeline has been established for any such succession, this requires Mr. Davis to remain with us for an indefinite period of time to attain this portion of the award. The remaining 50% of the awardonly vestsupon Mr. Davis' submission to the Board of a strategic plan for the Company and the Board's acceptance of the same. On October 17, 2018, the Board received and accepted the long-term strategic plan presented by Mr. Davis. Upon Mr. Udell's departure, Mr. Davis was re-appointed to the CEO position because we believed that he was best positioned to set our company and the students we serve on track for future success. This component of the award was designed with these efforts in mind and will vest only after Mr. Davis completes work, to the full satisfaction of the Board, to develop the concrete steps and strategies for the Company to execute on the four cornerstones that we believe will accelerate our business growth and education mission, specifically to strengthen our core business, prepare students for the future, become a trusted software services provider in our Institutional Business and to further expand globally.Mr. Rhyu, Mr. Polsky and Ms. Cleveland—Time- and Performance-Based Restricted Stock AwardsBeginning in August 2016, the Committee increased the percentage of variable compensation for certain of our NEOs in order to better align the interests of these executives with those of our stockholders and redefined business strategy. For fiscal 2018, the Committee reevaluated the long-term incentive component of our executive compensation program and determined to continue placing a meaningful amount of the NEOs' regular annual equity awards "at risk" such that 20% of the annual restricted stock awards granted to each of Mr. Rhyu, Mr. Polsky and Ms. Cleveland are performance-based. For fiscal 2018, a portion of their annual equity awards aresubject to attaining free cash flow goalsand the Committee also introduced a total stockholder return modifier on a trial-basisover three one-year performance periods asan element of this program. The performance-based restricted shares are earned based upon the attainment ofset forth in the followingfree cash flow performance levels for fiscal 2018:table. Performance
Year Performance
Level Portion of Award
Earned Vesting Date Performance LevelMetric: Free Cash Flow% of Award Earned FY 2020 $Below ThresholdLess than $49.5M0%; entire award forfeitedThreshold$49.5M50% of award earned60M 1/3 August 15, 2021
FY 2021Target $ 55M65M 100% of award earned 1/3
OutperformAugust 15, 2021 $60.5M125% of award earned FY 2022 $ 70M 1/3 August 15, 2022 For purposes30Awards are earned and vest on the second and third anniversaries of theperformance-based restricted shares granted to Mr. Rhyu, Mr. Polsky and Ms. Cleveland,grant date as set forth in the table above. In the event the free cash flow goal for a given performance year isdefinednot attained, the shares eligible to be earned for such year will remain eligible to vest on August 15, 2022 if cumulative free cash flow for fiscal years 2020, 2021 and 2022 equals or exceeds $195 million.Free cash flow is calculated as cash flow from operations, lessCapEx. Financial achievement falling betweencapital expenditures, as reported to and accepted by thelevels set forth inboard or thetable above would result in a proportionate adjustment to the number of shares earned.Committee.In setting the performance levels for this award, the Committeesetevaluated historical performance and considered potential future strategic investments.In early fiscal 2021, thetarget level atCommittee determined that ourbudgeted level for 2018 and the threshold level at a meaningful amount above our actual 2017 results.After determining the initial payout level for the performance-based restricted shares based on actualfiscal 2020 free cash flowresults forwas $35.4 million, which resulted in Mr. Davis not earning theyear, the payout percentageinitial one-third of the shares subject to this award. These shares may vest on August 15, 2022, if the cumulative free cash flow for fiscal years 2020, 2021 and 2022 equals or exceeds an aggregate $195 million threshold for such three-year period.Medina New Hire AwardsIn connection with commencing employment with us in April 2020, Mr. Medina was granted a time-based restricted stock awardis then adjusted upwards or downwardsTablehaving a value ofContentsin a range$800,000. The number of75% to 125%shares granted was determined based upon the fair market value ofthe initial calculated payout level dependingour Common Stock on theCompany's total stockholder return ranking as compared to companiesdate of grant, which resulted inthe Russell 2000 Index as follows:Performance LevelRelative TSR PerformanceModifier to % of Award EarnedThreshold25th percentile or below25% reduction ofan awardTarget50th percentile0% (no change to award)Outperform75th percentile or above25% increase of awardPerformance falling between the levels set forth in the table above would be interpolated linearly between the threshold, target and outperform levels. For purposesofthis modifier, total stockholder return is determined by using the average stock price over the 90 days preceding the end of the fiscal year.34,782 restricted shares. The
following table sets forth the number of time and performance-based restricted stock awards granted to each of Mr. Rhyu, Mr. Polsky and Ms. Cleveland for fiscal 2018:Name Time RSAs
(#) (1)Performance-Based RSAs
(#) (2) James J. Rhyu
34,170 8,540 Howard D. Polsky
20,340 5,080 Allison B. Cleveland
24,410 6,100 (1)The time-based RSAs vest pursuant toaward vests based on our standard vesting schedule which is semi-annually over a three-year period, with 20% of the shares subject to the award vesting in the first year and 40% vesting in each of the next two years following the grant date.(2)The performance-based RSAs are
In addition, Mr. Medina was granted performance stock units (“PSUs”) that will be earned and vest baseduponon theachievement ofCompany’s average closing stock price over thefree cash flow performance metric described above, as modified by our total stockholder return ranking as compared to companies in30 calendar day period that begins on theRussell 2000 Index. The restricted shares that are earned vest as to 20% of the shares uponeighth day after the date thedate the Committee determines achievement of the metricsCompany releases its earnings results for fiscal 2021. These PSUs are comparable to similar awards granted to our other NEOs in 2019 under our 2019 Shareholder Performance Plan andthe remaining 80% of the shares vest in four equal semi-annual installments thereafter. On August 1, 2018, the Committee determined thatwere granted as an initial long-term incentive award for Mr. Medina to align his interests and compensation with ourfiscal 2018 free cash flow was $63.5M, which resulted in base performance at the 125% "Outperform" level. However, our relative total stockholder return was at the 16th percentile of the companiesstockholders in theRussell 2000 Index, resultingsame way as the grants made to our other NEOs ina reduction of 25% of the award. Therefore, the NEOs earned awards at the 100% "Target" level.Mr. Chavous—New Hire GrantIn connection with his commencement of employment in October 2017, Mr. Chavous was granted a restricted stock award having a target award value of $1,000,000, allocated evenly between time- and performance-based restricted stock awards.2019. The number of sharesgranted was determined based upon the fair market value of our Common Stock on the date of grant, which resulted in an award of 30,212 time-based restricted shares subject to our standard vesting schedule whichthat would be earned by Mr. Medina at different stock price hurdles issemi-annually over a three-year period, with 20% of the shares subject to the award vestingset forth in thefirst year and 40% vesting in eachfollowing table. The number ofthe next two years following the grant date andPSUs earned will be interpolated on atarget award of 30,212 performance-based restricted shares with 60% of the performance-based shares (or 18,127 shares) earned upon the attainment of certain individual performance metrics and 40% of the performance-based shares (or 12,085 shares) earned upon attainment of the free cash flow performance levels for fiscal 2018 set forth above for Mr. Rhyu, Mr. Polsky and Ms. Cleveland, as modified by our total stockholder return ranking as compared to companies in the Russell 2000 Index.The following table sets forth the individual performance metrics applicable to a portion of Mr. Chavous' new hire grant and the results as determined by the Committee in August 2018. Based on its review of Mr. Chavous' performance against the individual metrics, the Committee determined that Mr. Chavous achieved 95% of his target award level for this component of his new hire grant, which resulted in Mr. Chavous earning an award of 17,220 restricted shares.MetricPerformance LevelAchievementDescriptionResultsThreshold10%Key Account RenewalTarget40%Renew, replace or transition key accounts for four "at risk" contract renewals by the end of fiscal 2018, each weighted at 10%Met for 2 accounts, partially met for 1 account and not met for 1 accountEarned: 25%Outperform40%Threshold5%Stride Phase 1PilotTarget10%Implement Stride Phase 1 pilot with demonstrated usage by target population by end of fiscal 2018Below threshold performanceEarned: 0%Outperform20%Threshold10%AcademicImprovementPlanMathImprovementPlanTarget10%Complete and obtain CEO approval on math improvement plan by end of fiscal 2018Met at target levelEarned: 10%Outperform20%Threshold5%AcademicModelsBlended PilotProgramsTarget10%Launch three new blended pilot programs by end of fiscal 2018 with evaluation planMet at target levelEarned: 10%Outperform20%Threshold10%New CTESchoolTarget20%Sign 4 new CTE schools by end of fiscal 20186 new schools signed resulting in achievement at the outperform levelEarned: 40%Outperform40%Threshold10%Board RelationsTarget10%Systematic approach and plan for Board relations approved by CEO by end of fiscal 2018MetEarned: 10%Outperform10%Prior Year Long-Term Incentive AwardsFiscal 2017 Market-Based Restricted Stock Awards
table.In fiscal 2017, Mr. Rhyu, Mr. Polsky and Ms. Cleveland were granted market-based restricted stock awards that begin to vest based upon the Company achieving an average stock price of $14.35 per share measured during the 30 consecutive calendar days following the report of fiscal 2017 earnings. On September 8, 2017, the Committee certified the achievement ofstraight-line basis if the stock pricethreshold andfalls between two of theNEOs began vestinglevels set forth in therestricted shares as follows: Stock Price Hurdle # of Shares Earned $22.63 35,352 $25.86 46,407 $29.38 51,055 $33.21 60,223 $37.35 66,934 $46.65 66,934 $57.38 66,934 NameMarket-Based RSAs(#) (1)James J. Rhyu16,000Howard D. Polsky7,000Allison B. Cleveland8,000(1)Restricted shares granted upon the achievement ofNo amounts will be earned if the stock priceappreciation threshold vest as to 20% of the shares immediately upon the date the threshold is achieved and as to 80% of the shares in four equal semi-annual installments thereafter.
LTIP Performance Share UnitsIn fiscal 2016 the Committee granted PSUs to our NEOs, which are earned based on academic performance, weighted at 70%, and a student lifetime value ("LTV") retention metric, weighted at 30%. Academic performance goals were measured over both a two and three year period and the student retention LTV metric was measured based on performance for the third year (fiscal 2018). The first tranche of the academic goal (i.e., the tranche for the two-year fiscal 2016-2017 period) was earned at the outperform level based on reducing the number of schools in academic jeopardy status over the performance period from 11 to three and began vesting in November 2017. The second tranche of the academic goal (i.e. the tranche for the three-year fiscal 2016-2018 period) was measured based on the percentage of schools not in academic jeopardyat the end of the performance periodas follows:Threshold90% of Schools70% of AwardEarnedTarget95% of Schools100% of AwardEarned��Outperform100% of Schools150% of AwardEarnedTableis below the $22.63 level. In the event ofContentsFor this purpose, "academic jeopardy" is defined asaschool having a high probability of being closed within 12-18 months ofchange in control during themeasurement date if academic performance does not improve. Over the three-yearperformance period,we reducedthenumber of schools in academic jeopardy from 11 to 5, resulting in the second tranche of this award being earned between the Threshold and Target levels, or 95.8% of the award being earned. The earned shares from the second tranche vested on August 15, 2018.The retention goal was eligible toPSUs will be earned based on theachievement of a student LTV metric, which takes into account our average revenue per student enrollment multiplied by the duration of our students' total enrollment life. The percentage growth figures shownstock price paid or implied in thetable below representtransaction and theamount of growth in LTV needed to be achieved by fiscal 2018 above the fiscal 2015 level.Threshold16% Growth70% of AwardEarnedTarget33% Growth100% of AwardEarnedOutperform52% Growth150% of AwardEarnedFor fiscal 2018, we achieved an LTV growth of less than 16%, resulting in the shares subject to the retention metric being forfeited.Theearnedacademic sharesPSUs will vestin four quarterly installments beginning August 15, 2018.Awards under the LTIP are not granted on an annual basis such that additional PSUs with overlapping performance periods were not granted to our NEOs. Fiscal 2018 was the final year of our 3-year LTIP, which was implemented in fiscal 2016.New 2019 Long-Term Shareholder Performance PlanFor fiscal 2019-2021, we have adopted a new long-term shareholder performance plan ("2019 SPP") that represents a meaningful portion of the total long-term incentive award opportunities provided to our most senior executives, Mr. Davis, Mr. Rhyu and Mr. Chavous. The awards are granted in the form of performance share units and will be earned only based on our market capitalization growth over a completed three-year performance period. The 2019 SPP was designed to provide these executives with a percentage of shareholder value growth. No amounts will be earned if total stock price growth over the three-year period is below 25% (7.6% annualized). A target amount of 6% of total value growth will be earned based on achieving total stock price growth of 33% (10% annualized) and a maximum of 7.5% of total value growth will be earned if total stock price growth equals or exceeds 95% (25% annualized).The total number of shares, and corresponding share of market cap growth, earned by each of Messrs. Davis, Rhyu and Chavous under the 2019 SPP at different stock price growth outcomes is illustrated in the following chart:immediately. Absolute Stock Price
GrowthShare of Market Cap
GrowthDavis # of Shares Earned
RhyuChavous 25% 1.0% 54,649 12,882 10,539 33% 6.0% 413,331 93,885 83,257 52% 6.5% 528,571 179,714 172,666 73% 6.5% 596,022 243,827 243,827 95% 7.5% 724,185 362,093 362,093 120% 7.5% 727,673 382,433 382,433 174% 7.5% 848,857 425,372 425,372 238% 7.5% 939,858 413,537 413,537 Deferred Compensation PlanWe maintain a non-qualified deferred compensation plan, or the Deferred Compensation Plan, under which our NEOs are eligible to elect to defer the receipt of up to 50% of their annual base salary and up to 100% of any annual incentive bonus until retirement. Earnings are credited on deferred amounts based upon a variety of investment options that may be elected by each participant. We do not make any31contributions to the Deferred Compensation Plan. Certain information with respect to amounts deferred by our NEOs under this plan is set forth below in the"Fiscal 2018“Fiscal 2020 Non-Qualified DeferredCompensation"Compensation” table.Defined Contribution PlanWe maintain a Section 401(k) Savings/Retirement Plan, or the401(k)“401(k) Plan,” in which certain of our employees, including our NEOs, are eligible to participate. All employees, including our NEOs, are automatically enrolled in the 401(k) Plan at a 3% deferral rate with the ability to opt-out. The 401(k) Plan allows participants to defer a portion of their annual compensation, subject to certain limitations imposed by the Internal Revenue Code. We currently provide matching contributions equal to $0.25 for each dollar of aparticipant'sparticipant’s contributions on the first 4% of eligible salary that they contribute each pay period, subject to certain statutory limits.Employee Benefits and PerquisitesWe provide our NEOs with certain personal benefits and perquisites, which we do not consider to be a significant component of executive compensation but recognize to be an important factor in attracting and retaining talented executives.Our NEOs participate in the same medical, dental, vision, disability and life insurance plans as our employees generally. We provide our NEOs with certain perquisites and other personal benefits, which we do not consider to be a significant component of our executive compensation programs but recognize to be an important factor in attracting and retaining talented executives. We also pay for supplemental long-term disability and life insurance premiums for our executive officers and provide them with the opportunity to receive annual Company-paid executive physical examinations and reimburse certain executives for their relocation expenses from time to time and for temporary housing expenses they may incur in connection with their provision of services. We provide these supplemental benefits to our executive officers due to the relatively low cost of such benefits and the value they provide in assisting us in attracting and retaining talented executives. None of our executive officers receive tax gross-ups or other tax payments in connection with our provision of any perquisites or personal benefits.In addition, Dr. McAlmont and Mr. Mathis were provided reimbursement of relocation expenses during fiscal 2020.The value of perquisites and other personal benefitsandperquisiteswe provided to each of our NEOs in fiscal20182020 is set forth below in our"Summary“Summary Compensation Table for Fiscal2018."Compensation Governance, ProcessAndand Incentive DecisionsRole of Compensation CommitteeThe Committee is responsible for overseeing our executive compensation programs, as specified in its charter. TheCommittee'sCommittee’s role includes:•Determiningdetermining and approving the compensation of our executive officers and recommendingto our Board of Directors the incentivecompensationand equity awards offor our Chairman and CEO,and approvingsubject to approval by thecompensation for our other executive officers, includingindependent members of theother NEOs;Board of Directors;••Establishingestablishing and approving compensation plans for our executive officers based on the recommendations of the Chairman andCEO, and the Committee's compensation consultant; andCEO;••Proposingproposing revisions to theCommittee'sCommittee’s charter for our Board ofDirectors'Directors’ approval to ensure compliance with new SEC regulations and NYSE listing standards asenacted.enacted; and
•examining management’s performance around sound environmental, social, and governance efforts, including, but not limited, to diversity and inclusion at all levels of the Company and employee policies that drive the Company’s involvement in the community as well as its philanthropic efforts such as scholarships and support for charitable organizations.In performing its responsibilities with respect to the compensation of our executive officers, the Committee uses information from a number of sources. The information utilized by the Committee includes advice from itsindependentcompensation consultant, market data regarding the compensation practices of competitors,32advice from outside legal counsel specializing in executive compensation, tally sheets showing prior compensation awards, the recommendations of our Chairman and CEO and an assessment of the outstanding equity holdings of our executive officers.Role of ManagementOur management, under the leadership of our Chairman and CEO, plays an important role in establishing and maintaining our executive compensation programs.Management'sManagement’s role includes recommending plans and programs to the Committee, implementing theCommittee'sCommittee’s decisionsand assistingand administering plans in support of the Committee. Our Chairman and CEO provides information on the individual performance of our other executive officers and makes annual recommendations to the Committee on compensation levels for our executive officers, including the otherNEOs.NEOs (other than his own compensation). Our Chairman and CEO is not present when the Committee discusses and determines matters regarding his own compensation.Role ofCommittee's IndependentCommittee’s Compensation ConsultantTheCommittee'sCommittee’s charter gives it the authority to retain and approve fees and other terms of engagement for compensation consultants and other advisors to assist it in performing its duties. In fiscal2018,2020, the Committee continued to retain Compensia as itsindependentcompensation consultant. Compensia reports directly to the Committee, which will annually review its performance, independence and fees.The Committee receives a report from Compensia on an annual basis reviewing its independence in light of SEC regulations and NYSE listing standards.Stock Ownership PolicyWe maintain a stock ownership policy that is designed to ensure that our executive officersand non-employee directorshold a significant equity stake in our Company to align their interests with those of our stockholders.TheFor fiscal 2020, the policyhas expanded over the years such that it now applies to all of our executive officers and non-employee directors. The policy requiresrequired our Chairman and CEO to maintain ownership of our Common Stock having a value equal to three times his base salary, our CFO to maintain ownership of our Common Stock equal to two times his base salary, and each of our other executive officers to maintain Common Stock ownership equal to onetimetimes their respective base salaries.Non-employee directors are required to maintain ownership of our Common Stock equal to the lesser of three times the annual cash retainer or 15,000 shares.Our executive officersand non-employee directorshave five years from the date the policy became applicable to them to accumulate the specified level of ownership. As of the date of this Proxy Statement, all of our NEOswho remain employed by the Company and non-employee directorsare in compliance with thispolicy.policy or are within the five-year period to accumulate the specified level of ownership. Effective August 2020, we increased the required ownership levels under our stock ownership policy so that our executives must maintain ownership of our Common Stock having a value equal to five times base salary for our CEO, three times base salary for our Presidents, and two times base salary for our other executive officers.
CompensationClawbackRecovery (Clawback) PolicyOur Board of Directors has adopted a clawback policy pursuant to which the Company may recover from current or former executive officers the amount of previously paid incentive compensation (including both cash bonuses and equity awards) that it determines to be appropriate if a material error or inaccuracy resulted in whole or in part from the fraud or intentional misconduct of an executive that leads to a financial restatement. This policy is intended to provide enhanced safeguards against certain types of employee misconduct and allows for recovery of significant compensation paid to an executive.Insider Trading PolicyWe maintain a Policy Statement for the Prevention of Insider Trading that applies to all securities issued by the Company, including Common Stock, options to purchase shares of Common Stock, preferred stock, and any other type of security that the Company may issue or that relates to theCompany'sCompany’s securities. Company employees, directors and consultants are prohibited fromengaging in hedging transactions, includingpurchasingCompany stockCommon Stock on margin or engaging in transactions,inputs, calls or other derivative securities designed to hedge or33offset any decrease in the market value of theCompany'sCompany’s equitysecurities and we have not permittedsecurities. In addition, our 2016 Plan prohibits the pledging of anyawards.award granted under the 2016 Plan unless otherwise determined by the plan administrator.
Tax Deductibility of Annual CompensationPrior to the passage of the Tax Act,Section 162(m) of the Internal Revenue Codelimited tax deductionslimits the deduction certain employers may take forcertain annualotherwise deductible compensationin excess of $1 million paidpayable to certainindividuals named in the summary compensation tables of public company proxy statements. Compensation that qualified as "performance-based" under Section 162(m) was exempt from this $1 million limitation. As partexecutive officers of theTax Act,employer to theability to rely on this "qualified performance-based compensation" exception was eliminated andextent thelimitation on deductibility was generally expanded to include all named executive officers. Although we maintained compensation arrangements that were intended to qualify as performance-based compensation under Section 162(m), following passage of the Tax Act we may no longer take a deduction for anycompensation paid toour covered employees in excesssuch an officer for the year exceeds $1 million. The Committee believes that tax deductibility is only one of$1 million, subject to certain transition relief rules. Furthermore, although the Committee had previously considered tax deductibilityseveral relevant considerations when structuring compensation programs andmay have taken action intendedstrives tolimit the impact of Section 162(m), it also retained discretion to grant incentive awards to NEOs that were not fully deductible as a result of Section 162(m), as the Committee mustbalance the effectiveness and overall goals of our executive compensation programs with the materiality of reduced tax deductions. Accordingly,achievingtheCommittee may approve compensation that is not deductible for federal income tax purposes in order to achieve the desired flexibility in the design and delivery of
compensation may have resulted (and may continue to result, in light of the recent changes in law) in compensation that in certain cases is not deductible for federal income tax purposes.compensation.
Accounting for Stock-Based CompensationASC Topic 718, Compensation—Stock Compensation, requires us to recognize an expense for the fair value of equity-based compensation awards. Grants of equity-based awards under our equity incentive award plans are accounted for under ASC Topic 718. The Committee considers the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award plans and programs. As accounting standards change, the Committee may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives.Equity Award Grant PracticesWe do not have any program, plan or practice to time the grant of equity awards to our employees in coordination with the release of material non-public information. We generally grant awards at the time employment commences and annually in connection with our annual compensation review process.We do notNeither the Board of Directors nor the Committee seeks to time the grant of equity awards based on our stock price.If we are in possession of material non-public information, either favorable or unfavorable, when equity awards are made, the Committee will not take the information into consideration in determining award amounts. Our practice is to determine the stock price for annual NEO equity awards on the day that incentive awards are granted.Severance and Change in Control ArrangementsWe consider severance to be an integral part of the overall compensation package for our executives. We provide severance to attract and retain individuals with superior ability and managerial talent, provide our executives with appropriate protections due to their vulnerability to terminations of employment due to a change in control, merger, or acquisition, and encourage our executives to focus their attention on their work duties and responsibilities in all situations.We believe that providing the NEOs with severance payments and benefits upon certain terminations of employmentareis a key retention tools thathelphelps us remain competitive with the companies in our compensation peer group,provideprovides our executive officers with incentives to focus on the best interests of our stockholders in the context of a potential change in control, and appropriatelyprotectprotects our executive officers in the event of an involuntary termination of employment without creating a windfall due solely to a change in control.Severance. We have entered into an employmentagreementsagreement with Mr. Davisand Mr. Polskyand a letter agreement with Mr. Rhyu that provide for severance payments and benefits upon certain terminations of employment as further described below under the section"Potential“Potential PaymentsUponupon Termination or Change in Control—Employment Agreements."” Our other NEOs are generally entitled to receive severance pay upon a qualifying termination of employment under theCompany'sCompany’s severance guidelines in an amountbetween six and twelve months of base salary, which amount isdetermined based on their position and tenure with theCompany.Company, which for Mr. Medina, Mr. Chavous, Dr. McAlmont and Mr. Mathis is currently equal to 12 months of base salary. In addition, upon a termination without cause or resignation for good reason, the NEOs may be eligible to receive, subject entirely to theCommittee'sCommittee’s discretion and contingent upon signing a release ofclaims: (i) accelerated vestingclaims in favor ofoutstanding and unvested stock options that otherwise would have vested intheone year period following the date of termination (all other options to be forfeited), and (ii)Company, accelerated vesting of outstanding and unvested restricted stock awards.In connection with34Pursuant to the terms of their outstanding award agreements, in the event the employment of Mr.Udell's resignation as CEO in March 2018, he becameMedina, Mr. Rhyu, Mr. Chavous, Dr. McAlmont or Mr. Mathis is terminated due to his death or by the Company due to disability, the executive (or his estate) would be entitled toreceivefull accelerated vesting of outstanding and unvested restricted stock awards.Change in Control. During fiscal 2020, the Committee undertook a review of our current executive severanceamounts provided forand change inhiscontrol arrangements and engaged Compensia to prepare an analysis of the executive severance and change in control arrangements of our peer group and market best practices. In June 2020, we amended Mr. Davis’s employment agreement, which sets forth his entitlements to payments and benefits upon a change in control, asfurtherdescribed in more detail below underthesection "Potential“Potential Payments Upon Termination or Change in Control—Severance Arrangement With Mr. Udell."ChangeEmployment Agreements” and entered into new change inControl.control severance agreements with our other NEOs. The change in control severance agreements with our other NEOsare generally not entitled to receive cash paymentssupersede any prior severance entitlements of the NEOs that apply in connection with a change in control and provide that, upon termination of the NEO’s employment by the Company without cause oraccelerated vestingthe resignation ofequity awards solely as a result ofemployment by the NEO for good reason, in either case, within two years following a change in control of theCompany.We have entered into change in control agreements with our NEOs, other than Mr. Davis, whose entitlements to payments or benefits upon a change in control is set forth in his employment agreement, pursuant to which, in the eventCompany, the NEOis terminated without cause or resigns for good reason within 24 months followingwill be entitled to receive, subject to the NEO signing and not revoking achangegeneral release of claims and continued compliance with certain restrictive covenants, (i) a lump sum severance payment incontrol,an amount equal to 1.5 times theexecutivestandard severance the NEO would be entitled to receive under the Company’s then-prevailing severance practices and 1.5 times thecash severance amount available under the Company's standard severance guidelines as described above andNEO’s target annual bonus; (ii) reimbursement for the Company-paid portion of the COBRA premiums required to continue group medical, dental and vision coverage for the NEO and the NEO’s covered dependents for a period of up to 12 months followingtermination. In addition,termination; and (iii) accelerated vesting of all unvested equity or equity-based awards,would become fully vested,provided that, unless a provision more favorable to the NEO is included in an applicable award agreement, any such awards that are subject to performance-based vestingwould generallyconditions will onlyvestbe payable subject to the attainment of the performance measures for the applicable performanceconditions.period as provided under the terms of the applicable award agreement.
In the event of a change in control, outstanding PSUs held by our NEOs that are earned based on stock price growth measured at the end of fiscal 2021 will be earned based on the stock price paid or implied in the transaction and the earned PSUs will vest immediately.Risk Assessment in Compensation ProgramsConsistent with SEC disclosure requirements, we periodically evaluate the risk profile associated with theCompany'sCompany’s executive and other compensation programs. In fiscal2018,2020, the Committee engaged Compensia to review the existing programs and assess whethertheyour compensation policies and practices create risks that are reasonably likely to have a material adverse effect on the Company. Among other factors, this assessment considered the program structure, design characteristics and performance-based measures associated with our executive compensation programs and concluded that our executive compensation programs contain a number of safeguards that are expected to minimize excessiverisk taking,risk-taking, including a reasonable mix of cash and equity compensation opportunities, a compensationclaw backrecovery (clawback) policy, a balanced annual incentive plan design that emphasizes top and bottom line performance, formal policies for the administration of our equity program, a succession plan for key executives and a stock ownership policy for our non-employee directors and executive officers.Based on the foregoing, we believe that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company as a whole. We also believe that our incentive compensation arrangements provide incentives that do not encourage risk-taking beyond theCompany'sCompany’s ability to effectively identify and manage significant risks, are compatible with effective internal controls and the risk management practices of our Company, and are supported by the oversight and administration of the Committee with regard to our executive compensation programs.35Summary Compensation Table for Fiscal20182020
The following table shows the compensation we paid to our NEOs for services rendered during fiscal2018, 20172020, fiscal 2019, and2016.fiscal 2018. Name Fiscal
Year Base
Salary Bonus Stock
Awards (1) Nonequity
Incentive Plan
Compensation
(2) All Other
Compensation
(3) Total Nathaniel A. Davis
Chief Executive Officer and Chairman 2020 $927,308 $— $12,999,976 $1,992,841 $12,555 $15,932,680 2019 706,731 — 7,676,558 1,385,277 17,131 9,785,697 2018 509,129 ��� 4,205,001 1,704,087 17,672 6,435,889 Timothy J. Medina (4)
Chief Financial Officer 2020 $82,212 $— $1,640,985 $— $137 $1,723,334 James J. Rhyu
President, Corporate Strategy, Marketing and Technology 2020 $572,692 $— $1,999,974 $817,029 $9,546 $3,399,241 2019 495,192 — 3,654,349 517,673 9,211 4,676,425 2018 500,000 — 755,967 618,263 9,549 1,883,779 Kevin P. Chavous
President of Academics, Policy and Schools 2020 $511,292 $— $1,199,962 $581,839 $12,391 $2,305,484 2019 487,644 — 3,329,353 499,931 14,943 4,331,871 2018 317,557 85,000 1,000,017 388,439 94,303 1,885,317 Shaun E. McAlmont
President, Career Readiness Education 2020 $477,500 $— $999,960 $545,634 $11,474 $2,034,568 2019 332,000 85,000 4,334,902 334,366 100,014 5,186,282 Vincent W. Mathis
Executive Vice President, General Counsel and Secretary 2020 $414,615 $— $699,982 $383,293 $43,787 $1,541,677 2019 317,769 50,000 3,265,637 316,042 45,286 3,994,734 (1)Name Fiscal
YearBase
SalaryBonus (1) Stock
Awards (2)Option
Awards (2)Nonequity
Incentive Plan
Compensation
(3)All Other
Compensation
(4)Total Nathaniel A. Davis (5) 2018 $509,129 $— $4,205,001 $— $1,704,087 $17,672 $6,435,889 Chairman and CEO 2017 400,000 — 1,999,989 — 716,520 15,210 3,131,719 2016 610,178 — 3,160,796 1,500,001 1,616,972 17,885 6,905,832 James J. Rhyu 2018 $500,000 $— $755,967 $— $618,263 $9,549 $1,883,779 Chief Financial Officer and 2017 500,000 — 815,840 — 458,300 9,048 1,783,188 President, Product and Technology 2016 486,500 — 533,140 — 510,825 9,719 1,540,184 Kevin P. Chavous (5) 2018 $317,557 $85,000 $1,000,017 $— $388,439 $94,303 $1,885,316 President, Academics, Policy and Schools Howard D. Polsky 2018 $385,000 $— $449,934 $— $388,329 $13,499 $1,236,762 Former Executive Vice President, General Counsel and Secretary 2017 385,000 — 356,930 — 215,716 8,891 966,537 2016 380,000 — 448,960 — 185,000 20,480 1,034,440 Allison B. Cleveland 2018 $415,000 $— $540,027 $— $382,859 $7,439 $1,345,325 Former Executive Vice President, School 2017 415,000 — 407,920 — 227,650 7,011 1,057,581 Management and Services 2016 396,000 — 491,050 — 196,650 7,380 1,091,080 Stuart J. Udell (5) 2018 $463,332 $— $2,000,005 $— $1,004,677 $1,986,973 $5,454,987 Former CEO 2017 650,000 200,000 1,999,989 — 1,164,345 19,786 4,034,120 2016 256,438 200,000 3,475,390 — 539,981 68,889 4,540,698 (1)Amount shown for 2018This column representsa signing bonus Mr. Chavous received in connection with his commencement of employment with the Company.(2)These columns representthe aggregate grant date fair value of stockand optionawards computed in accordance with FASB ASC Topic718, which, for718. For performance-based restricted stock awards, amounts are shown based on the probable outcomewith respect toof theapplicableperformanceconditions. For performance-based restricted shares granted to Mr. Davis and Mr. Udell, amountscondition, which are shown based on the target awardlevel of 110,865 shares (alevel. If maximumof 147,450 shares are eligible to be earned, which shares had aperformance is assumed for the performance-based restricted stock awards, the total grant date value of$2,659,998).stock awards for each NEO would be as follows: Mr. Davis: $13,494,974, Mr. Rhyu: $2,329,971, Mr. Chavous: $1,397,956, Mr. McAlmont: $1,164,953, and Mr. Mathis: $815,480. Forperformance-based restricted sharesPSUs granted to Mr.Rhyu, Mr. Chavous, Mr. Polsky and Ms. Cleveland that vest based uponMedina, amounts shown reflect theattainment of free cash flow goals, amounts are shown based on the target award level (a maximum of 12,810, 18,127, 7,620 and 9,150 shares, respectively, are eligible to be earned, which shares had agrant date fair values calculated using a Monte Carlo simulation model as these awards were market-based awards. The fair value was determined using a Monte Carlo simulation model and the following assumptions: the Company’s Common Stock price at the date of$151,158 for Mr. Rhyu, $200,007 for Mr. Chavous, $89,916 for Mr. Polskygrant of $23.00; an average of the one-year and$107,970 for Ms. Cleveland). For performance-based restricted shares granted to Mr. Chavous that vest based upon the achievementtwo-year continuously compounded equivalent risk-free rate; an expected stock price volatility ofindividual performance metrics, the amount shown is based on the target award level (a maximum45%; and an expected term of27,190 shares are eligible to be earned), which shares had a grant date value of $300,002.approximately 1.5 years.
(2)(3)All amounts are reported in the year earned, regardless of when they are paid.(3)(4)The amounts in this column consist of 401(k) plan matching contributions, Company-paid life insurance and long-term disabilitypremiums, and other perquisites consisting of temporary housing and commuting allowances.premiums. Theamountamounts paid to Dr. McAlmont and Mr.Udell includes $17,935Mathis also include $552 and $35,874, respectively, ina temporary housing allowance and $1,950,000 in cash severance and $12,591 in COBRA premiums. The amount paid to Mr. Chavous includes (i) $70,000 in a temporary housing allowance in 2018 and (ii) $17,500 in director fees earned for his service as a member of our Board of Directors from January 2017 to October 2017.moving expenses.(4)(5)The base salaryand non-equity incentive plan compensationearned byMessrs. Udell and ChavousMr. Medina for2018fiscal 2020 was prorated fortheirhis partialyearsyear of service.The base salary for Mr. Davis for 2018 represents a blended base salary based on the portion of the year he served as CEO.36Grants of Plan-Based Awards During Fiscal20182020 Table
The following table provides information regarding grants of plan-based awards to our NEOs during fiscal2018.2020. The equity awards described in the following table were granted under our 2016 Plan. Estimated Possible
Payouts under
Nonequity
Incentive Plan
Awards (1) Estimated Possible
Payouts under
Equity Incentive Plan Awards All Other
Stock
Awards:
Number of
Shares of
Stock
(#) Grant Date
Fair Value
of Stock
Awards
(#) Name Grant Date Target
($) Maximum
($) Threshold
(#) Target
(#) Maximum
(#) Nathaniel A. Davis
Chief Executive Officer and Chairman — 1,402,500 2,805,000 — — — — — 8/15/2019 (2) — — 42,995 53,744 71,480 — 1,499,995 8/15/2019 (3) — — — 358,294 — — 9,999,986 8/15/2019 (4) — — — — — 53,744 1,499,995 Timothy J. Medina
Chief Financial Officer — — — — — — — — 4/13/2020 (5) — — 35,352 64,827 66,934 — 840,999 4/13/2020 (4) — — — — — 34,782 799,986 James J. Rhyu
President, Corporate Strategy, Marketing and Technology — 575,000 1,150,000 — — — — — 8/15/2019 (2) — — 28,663 35,829 47,653 — 999,987 8/15/2019 (4) — — — — — 35,829 999,987 Kevin P. Chavous
President of Academics, Policy and Schools — 409,480 818,960 — — — — — 8/15/2019 (2) — — 17,198 21,497 28,591 — 599,981 8/15/2019 (4) — — — — — 21,497 599,981 Shaun E. McAlmont
President, Career Readiness Education — 384,000 768,000 — — — — — 8/15/2019 (2) — — 14,331 17,914 23,826 — 499,980 8/15/2019 (4) — — — — — 17,914 499,980 Vincent W. Mathis
Executive Vice President, General Counsel and Secretary — 269,750 539,500 — — — — — 8/15/2019 (2) — — 10,032 12,540 16,678 — 349,991 8/15/2019 (4) — — — — — 12,540 349,991 (1) Estimated Possible
Payouts under
Nonequity
Incentive Plan
Awards (1) Estimated Possible
Payouts under
Equity Incentive Plan Awards All Other
Stock
Awards:
Number of
Shares of Grant Date
Fair Value
of Stock Target Maximum Threshold Target Maximum Stock Awards Name Grant Date ($) ($) (#) (#) (#) (#) ($) Nathaniel A. Davis — 1,102,500 2,205,000 — — — — — Chairman and CEO 9/28/2017 (2 ) — — 88,692 110,865 147,450 — 2,000,005 4/20/2018 (3 ) — — — — — 158,747 2,204,996 James J. Rhyu — 400,000 800,000 — — — — — Chief Financial Officer and 9/20/2017 (4 ) — — 2,135 8,540 12,810 — 151,158 President, Product and Technology 9/20/2017 (5 ) — — — — — 34,170 604,809 Kevin P. Chavous — 254,046 508,091 — — — — — President, Academics, Policy and 12/04/2017 (4 ) — — 12,085 30,212 45,318 — 500,009 Schools 12/04/2017 (5 ) — — — — — 30,212 500,009 Howard D. Polsky — 250,250 500,500 — — — — — Former Executive Vice President, 9/20/2017 (4 ) — — 1,270 5,080 7,620 — 89,916 General Counsel and Secretary 9/20/2017 (5 ) — — — — — 20,340 360,018 Allison B. Cleveland — 269,750 539,500 — — — — — Former Executive Vice President, 9/20/2017 (4 ) — — 1,525 6,100 9,150 — 107,970 School Management and Services 9/20/2017 (5 ) — — — — — 24,410 432,057 Stuart J. Udell — 975,000 1,950,000 — — — — — Former CEO 9/28/2017 (2 ) — — 88,692 110,865 147,450 — 2,000,005 (1)- Represents the target and maximum incentive awards payable under our Executive Bonus Plan based on fiscal
20182020 base salaries for eachNEO, and for Mr. Chavous, pro-rated for his partial year of service.NEO. For additional information regarding our Executive Bonus Plan, see"Fiscal 2018“Fiscal 2020 Compensation Decisions—Determination of Annual IncentiveCompensation"Compensation” above.
(2)(2)Represents performance-basedRSAs granted to Messrs. Davis and Udellrestricted stock awards that will be earned based on the attainment of Adjusted EBITDAminus CapEx targets and which will vestperformance levels for fiscal 2020, with any earned shares vesting in equal annual installments over threeyears.years from the date of grant.(3)(3)Represents performance-basedRSAsrestricted stock awards granted to Mr. Davisas part of the amendment to his employment agreement in April 2018. One-half of the shares will vest upon the hiring and commencement of employment of a new CEO and one-half of the shares will vest upon Mr. Davis' submission to the Board of Directors of a strategic plan for the Company and the Board's acceptance of such plan.(4)Represents performance-based RSAsthat will be earned based on the attainment of free cash flow targetsas modified by our total stockholder return ranking as compared to companiesinthe Russell 2000 Index. 20% of the restricted stock award vests on the date the Committee determines achievement of the metricfiscal years 2020, 2021, andthe remaining shares vest in four equal semi-annual installments thereafter. For Mr. Chavous, 60% of the target number of shares shown represents performance-based RSAs that are earned based on Mr. Chavous' performance against individual goals and which will vest over 3 years.2022. See “Fiscal 2020 Compensation Decisions—CEO One-Time Award” for additional information.(4)(5)Represents restricted stock awards vesting semi-annually over a three-year period, with 20% vesting in the first year and 40% vesting in each of the next two years following the grant date.(5)37Outstanding Equity Awards at End of Fiscal20182020 Table
The following table provides information regarding outstanding equity awards held by our NEOs as of June 30,2018.2020. The section titled"Determination“Determination of Long-Term IncentiveCompensation"Compensation” in the Compensation Discussion and Analysis above provides additional information regarding the outstanding equity awards set forth in this table. Option Awards Stock Awards Name Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#) Option
Exercise
Price
($) Option
Expiration
Date Equity
Incentive
Plan Awards:
Amount of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($) Equity
Incentive
Plan Awards:
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($) Number of
Shares or
Units of
Stock That
Have Not
Vested
(#) Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($) Nathaniel A. Davis
Chief Executive Officer and
Chairman 420,000 — $ 21.26 01/07/21 — — — — 97,720 — $ 33.92 09/19/21 — — — — 185,985 — $ 18.17 09/04/22 — — — — 243,112 — $ 13.43 09/10/23 — — — — — — — — 727,673 (1) 19,821,813 — — — — — — — — 222,885 (2) 6,071,387 — — — — 358,294 (3) 9,759,929 — — Timothy J. Medina
Chief Financial Officer — — — — 66,934 (1) 1,823,282 — — — — — — — — 34,782 (4) 947,462 James J. Rhyu
President, Corporate Strategy, Marketing and Technology — — — — 382,433 (1) 10,417,475 — — — — — — — — 1,708 (5) 46,526 — — — — — — 114,518 (6) 3,119,470 Kevin P. Chavous
President of Academics, Policy and Schools — — — — 382,433 (1) 10,417,475 — — — — — — — — 2,417 (7) 65,839 — — — — — — 80,016 (8) 2,179,636 Shaun E. McAlmont
President, Career Readiness
Education — — — — 138,606 (1) 3,775,627 — — — — — — — — 62,725 (9) 1,708,629 — — — — — — — — Vincent W. Mathis
Executive Vice President, General Counsel and Secretary — — — — 103,954 (1) 2,831,707 — — — — — — — — 46,008 (10) 1,253,258 — — — — — — — — (1)Option Awards Stock Awards Name
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)Option
Exercise
Price
($)Options
Expiration
Date Equity
Incentive
Plan Awards:
Amount of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)Equity
Incentive
Plan Awards:
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($) Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)Nathaniel A. Davis
420,000
—
21.26
01/07/21
—
—
—
—97,720 — 33.92 09/19/21 — — — — 174,360 11,625 (1) 18.17 09/04/22 — — — — 167,139 75,973 (1) 13.43 09/10/23 — — — — — — — — 99,140 (2) 1,622,922 — — — — — — — — 477,553 (3) 7,817,543 James J. Rhyu
— — — — 43,125 (2) 705,956 — —
— — — — — — 8,540 (4) 139,800
9,600 (5) 157,152
— — — — — — 96,753 (6) 1,583,847 Kevin P. Chavous
— — — — — — — — — — — — — 12,085 (4) 197,831 — — — — — — 44,410 (7) 726,992 Howard D. Polsky
— — — — 31,229 (2) 511,219 — —
5,080 (4) 83,160
— — — — — — 4,200 (5) 68,754
— — — — — — 41,506 (8) 679,453 Allison B. Cleveland
— — — — 36,186 (2) 592,365 — — 6,100 (4) 99,857 — — — — — — 4,800 (5) 78,576 — — — — — — 48,169 (9) 788,527 Stuart J. Udell
— — — — 59,627 (2) 976,094 — —
— — — — — — 138,898 (10) 2,273,760 (1)Mr. Davis' unvested stock options vest as follows, subject to his continued employment through the applicable vesting date:•11,625 options vest on September 4, 2018; and•75,973 options vest in five equal quarterly installments of 15,195 options beginning on September 10, 2018.
(2)- Represents PSUs
granted in fiscal 2016. The PSUs vest upon achievementthat will be earned based on the attainment ofthe performance goals as follows:•30% of the PSUs vested upon the achievement of the Academic Metricstock price growth measured atAugust 1, 2017;•30%the end of fiscal 2021. The number of shares is based on thePSUs vest upon the achievementthree-year CAGR ofthe Retention Metric measured at August 1, 2018;30.0% and•40%a stock price hurdle ofthe PSUs vest upon the achievement of the Academic Metric measured at August 1, 2018.
(2)The Academic Metric measured at August 1, 2017 was achieved at the outperform level, which was 150% of target. These shares vested in four equal quarterly installments beginning on November 15, 2017. The August 1, 2018 Academic Metric was achieved between the threshold and target levels, resulting in 95.8% of the award being earned. These shares vested on August 15, 2018. The August 1, 2018 Retention Metric was not achieved.(3)- Mr.
Davis'Davis’ outstanding shares of restricted stock vest as follows, subject to his continued employment through the applicable vesting date:
••158,747 restricted shares represent performance-based restricted stock granted to Mr. Davis in connection with his appointment as CEO. One-half of the shares will vest upon the hiring and commencement of employment of a new chief executive officer and one-half of the shares will vest upon Mr. Davis' submission to the Board of Directors of a strategic plan for the Company and the Board's acceptance of the plan;•138,898
46,300 restricted shares represent performance-based restricted stock granted to Mr. Davis in fiscal 2018. The shares were deemed earned in early fiscal2019. 46,3002019, and vested on August 2, 2020;•23,135 shares vested on September 18, 2020 and 23,135 shares will vest on each of March 18, 2021 and September 18, 2021;•58,811 restricted shares represent performance-based restricted stock granted to Mr. Davis in fiscal 2020. The shares were deemed earned in early fiscal 2021. 19,604 of the shares vested on August2, 201810, 2020 and the remaining two-thirds will vest in annual installments over the following two years; and••130,392 restricted5,375 sharesrepresentvested on August 15, 2020 and 42,994 shares will vest semi-annually in four equal installments beginning on February 15, 2021.38(3)Represents performance-based restricted stock granted to Mr. Davis in fiscal2017.2020. The restricted shareswere deemedvest based on attaining free cash flow performance goals for each of fiscal year 2020, 2021 and 2022 or based on attaining a cumulative three-year free cash flow goal for fiscal years 2020-2022. To the extent earned,in early fiscal 2018. 65,195awards will vest on August 15, 2021 and August 15, 2022.(4)Mr. Medina’s outstanding shares of restricted stock vest as follows, subject to his continued employment through the applicable vesting date:•3,479 shares vested onAugust 31, 2018 and the remainingOctober 15, 2020, 3,479 shares will vestone year later;•49,516 restrictedon April 15, 2021, 27,824 sharesrepresent performance-based restricted stock granted to Mr. Daviswill vest semi-annually infiscal 2016 and earned basedfour equal installments beginning onfiscal 2016 performance as determined by the Committee in early fiscal 2017. These shares vested on August 26, 2018.October 15, 2021.(5)(4)Represents performance-based restricted shares granted in fiscal 2018. These shares were deemed earned in early fiscal 2019 based upon the attainment of free cash flow performance metrics for fiscal 2018, as modified by our total stockholder return ranking as compared to companies in the Russell 2000 Index.20% of theThe shares vested on August 1,2018 and the remaining shares will vest semi-annually in four equal installments beginning on February 1, 2019.2020.(6)(5)Represents market-based RSAs that were granted in fiscal 2017 and that began to vest when we achieved an average stock price of $14.35 measured during the 30 consecutive calendar days following the report of fiscal 2017 earnings. 20% of the shares vested on September 8, 2018 and the remaining shares will vest semi-annually in two equal installments beginning on March 8, 2019.(6)Mr.Rhyu'sRhyu’s outstanding shares of restricted stock vest as follows, subject to his continued employment through the applicablevestvesting date:••3,417
12,077 shares vested on August 31, 2020 and 12,077 shares will vest on each of February 28, 2021 and August 31, 2021;•6,834 shares vested on September 20,20182020;•39,207 restricted shares represent performance-based restricted stock granted to Mr. Rhyu in fiscal 2020. The shares were deemed earned in early fiscal 2021. 13,069 of the shares vested on August 10, 2020 and27,336the remaining two-thirds will vest in annual installments over the following two years; and•3,583 shares vested on August 15, 2020 and 28,663 shares will vest semi-annually in four equal installments beginning onMarch 20, 2019;February 15, 2021.(7)•38,400Represents performance-based restricted shareswill vest semi-annuallygranted inthree equal installments beginningfiscal 2018. These shares were deemed earned in early fiscal 2019 based upon the attainment of free cash flow performance metrics for fiscal 2018, as modified by our total stockholder return ranking as compared to companies in the Russell 2000 Index. The shares vested on August24, 2018;•20,000 shares will vest on August 29, 2018; and•7,600 shares will vest on August 6, 2018.(8)(7)- Mr.
Chavous'Chavous’ outstanding shares of restricted stock vest as follows, subject to his continued employment through the applicablevestvesting date:
••17,220
5,741 restricted shares represent performance-based restricted stock granted to Mr. Chavous in fiscal 2018. The shares were deemed earned in early fiscal 2019 based on Mr.Chavous'Chavous’ performance as measured against individual performancemetrics. Themetrics, and vested on August 1, 2020;•8,454 shares vested on August 31, 2020 and 8,454 shares will vestin equal installments over a two-year period, one-third on August 2, 2018 and one-thirdon eachanniversary thereafter;of February 28, 2021 and August 31, 2021;••3,0226,042 shares will vest on December 15,20182020;•23,524 restricted shares represent performance-based restricted stock granted to Mr. Chavous in fiscal 2020. The shares were deemed earned in early fiscal 2021. 7,842 of the shares vested on August 10, 2020 and24,168the remaining two-thirds will vest in annual installments over the following two years; and•2,150 shares vested on August 15, 2020 and 17,197 shares will vest semi-annually in four equal installments beginning onJuneFebruary 15,2019.2021.39(8)Mr. Polsky's outstanding shares of restricted stock vest as follows, subject to his continued employment through the applicable vest date:(9)•2,034 shares will vest on September 20, 2018 and 16,272 shares will vest semi-annually in four equal installments beginning on March 20, 2019; and•16,800 shares will vest semi-annually in three equal installments beginning on August 24, 2018; and•6,400 shares will vest on August 6, 2018.
(9)Ms. Cleveland's outstanding shares of restricted stock vest as follows, subject to her continued employment through the applicable vest date:•2,441 shares will vest on September 20, 2018 and 19,528 shares will vest semi-annually in four equal installments beginning on March 20, 2019;•19,200 shares will vest semi-annually in three equal installments beginning on August 24, 2018; and•7,000 shares will vest on August 6, 2018.
(10)Mr. Udell'sDr. McAlmont’s outstanding shares of restricted stock vest as follows, subject to his continued employment through the applicable vesting date:•9,000 shares vested on August 15, 2020 and 18,000 shares will vest semi-annually in two equal installments beginning on February 15, 2021;•19,603 restricted shares represent performance-based restricted stock granted to Dr. McAlmont in fiscal 2020. The shares were deemed earned in early fiscal 2021. 6,535 of the shares vested on August 10, 2020 and the remaining two-thirds will vest in annual installments over the following two years; and•138,8981,792 shares vested on August 15, 2020 and 14,330 shares will vest semi-annually in four equal installments beginning on February 15, 2021.(10)Mr. Mathis’s outstanding shares of restricted stock vest as follows, subject to his continued employment through the applicable vesting date:•7,000 shares vested on September 15, 2020 and 7,000 shares will vest on each of March 15, 2021 and September 15, 2021;•13,722 restricted shares represent performance-based restricted stock granted to Mr.UdellMathis in fiscal2018.2020. The shares were deemed earned in early fiscal2019. 46,3002021. 4,574 of the shares vested on August2, 201810, 2020 and the remaining two-thirdswere forfeited underwill vest in annual installments over theterms of Mr. Udell's separation agreement.following two years; and•1,254 shares vested on August 15, 2020 and 10,032 shares will vest semi-annually in four equal installments beginning on February 15, 2021.Option Exercises and Stock Vested During Fiscal20182020 Table
The followingOption Exercises and Stock Vestedtable providesadditionalinformation about the value realized by the NEOs as a result of the vesting of restricted stock awardsand exercise of stock optionsduring the fiscal year ended June 30,2018.2020. No stock options were exercised by the NEOs during fiscal 2020. Stock Awards Name Number of Shares
Acquired on
Vesting
(#) Value Realized
on Vesting (1)
($) Nathaniel A. Davis 230,946 5,935,839 Timothy J. Medina — — James J. Rhyu 54,783 1,268,110 Kevin P. Chavous 34,790 864,848 Shaun E. McAlmont 15,292 310,786 Vincent W. Mathis 11,754 289,584 (1)Option Awards Stock Awards Name
Number of Shares
Acquired on
Exercise
(#)Value Realized on
Exercise
($)Number of Shares
Acquired on
Vesting
(#)Value Realized on
Vesting (1)
($) Nathaniel A. Davis
— — 322,104 5,427,450 James P. Rhyu
— — 112,580 1,846,808 Kevin P. Chavous
— — 8,690 139,599 Howard D. Polsky
— — 51,697 827,755 Allison B. Cleveland
— — 57,879 924,212 Stuart J. Udell
— — 449,741 7,036,644 (1)- Represents the value of vested shares calculated by multiplying (i) the gross number of shares acquired on vesting by (ii) the closing price of our Common Stock on the date of vesting.
40Fiscal20182020 Non-Qualified Deferred CompensationTable
The following table sets forth certain information with respect to amounts deferred by the NEOs during the fiscal year ended June 30,2018,2020, under our Deferred Compensation Plan, which is discussed in more detail in the Compensation Discussion and Analysis above. Name Executive
Contributions
in Last Fiscal
Year ($) Company
Contributions
in Last Fiscal
Year ($) Aggregate
Earnings / (Losses)
in Last Fiscal
Year ($) Aggregate
Withdrawals /
Distributions
($) Aggregate
Balance at
Last FYE
($) Nathaniel A. Davis — — — — — Timothy J. Medina — — — — — James J. Rhyu 28,750 — 11,890 — 517,330 Kevin P. Chavous — — — — — Shaun E. McAlmont — — — — — Vincent W. Mathis — — — — —
Name
Executive
Contributions
in Last Fiscal
Year ($) Company
Contributions
in Last Fiscal
Year ($) Aggregate
Earnings/(Losses)
in Last Fiscal
Year ($) Aggregate
Withdrawals/
Distributions
($) Aggregate
Balance at
Last FYE
($) Nathaniel A. Davis
— — — — — James J. Rhyu
70,829 — 51,818 — 409,523 Kevin P. Chavous
— — — — — Howard D. Polsky
— — — — — Allison B. Cleveland
— — — — — Stuart J. Udell
— — — — — We have entered into an employmentagreementsagreement with Mr. Davisand Mr. Polskyand a letter agreement with Mr. Rhyu that provide for severance payments and benefits upon certain terminations of employment. Our NEOs are also entitled to certain payments and benefits upon a change in control of the Company. The terms and conditions of such payments and benefits, and the circumstances in which they will be paid or provided to our NEOs, are described in more detail below.Employment AgreementsSummary of Employment Agreement with Mr. DavisIn connection withMr. Davis' appointment asourCEO effective March 3, 2018,review of change in control arrangements for our NEOs, weentered into an amendment toamended thesecond amended and restatedemployment agreement with Mr. Davispursuant to which Mr. Davis serves as our Chairman and CEO.during fiscal 2020. Theamendment extended theterm of theemployment agreement,
toas amended, expires on September 30,2019, which term2022 and automatically renews for successiveone yearone-year periods unless notice of non-renewal is delivered by either party at least 60 days prior to the expiration of the applicable term.Under the terms of the employment agreement, as amended, Mr. Davis is entitled to receive an annual base salary of$735,000$935,000 and is eligible for annual performance-based bonuses with a target award amount equal to 150% of his base salary and a maximum award opportunity of 300% of his base salary. Mr. Davis is also entitled to annual awards under theCompany'sCompany’s equity incentiveawardsaward plans and programs as in effect from time to time with a target award level infiscal 2018 of $2,000,000, subject to Committee and Board approval. Beginning with fiscal 2019, Mr. Davis' employment agreement provides that his target award level under our annual equity incentive award plans will be inthe range of $2,700,000 to $3,300,000, subject toperformance and othersuch vesting criteria to be determined by the Board of Directors and Mr. Davis at the time of thegrant.To maintain flexibility and ensure that stockholders are not overly burdened with excessive severance costs asgrant, including performance-based vesting criteria.If wecontinue to evaluate our leadership needs, in connection with his re-appointment as CEO, we negotiated an arrangement withterminate Mr. Davis’ employment without cause or he resigns for good reason, Mr. Davisthat would eliminate ourwill be entitled to receive (i) a lump sum cashseverance obligationspayment equal toMr. Davisthree times his base salary, plus one times his target annual bonus, and (ii) 12 months of continued health, medical, dental and vision benefits (or a payment inthe event Mr. Davis is replaced bylieu thereof). In addition, upon such anew chief executive officer. Specifically,termination, or if we(i) hire a replacement CEO and Mr. Davis' employment is terminated prior to September 30, 2019 or (ii)elect not to renew the employment agreement,no severance payments will be made; however,Mr.Davis'Davis’ outstanding equity awards will continue to vest while he continues to serve as a member of the Board and if Mr. Davis is asked to leave the Board, Mr. Davis will be entitled to accelerated vesting of his outstanding equity awards, provided that performance-based awards will only be payable subject to the attainment of the applicable performance measures, and an extended option exercise period of one year.If
the foregoing circumstances do not apply and we terminateMr.Davis' employmentDavis’ termination without cause orhe resignsresignation for good reason occurs within 24 months following a change in control, Mr. Davis will be entitled to receive(i) a lump sum cash payment equal to threethe severance payments and benefits described above, except that, he would receive two times his target annual bonus and all of Mr. Davis’ outstanding equity awards would become 100% vested and any performance-based equity awards will remain subject to the attainment of applicable performance measures as such measures apply in connection with the change in control.41Notwithstanding the terms of his employment agreement, as a means to incentivize Mr. Davis’ continued employment, the Board approved a “modifier” to Mr. Davis’ PSUs that reduces the number of PSUs that would otherwise be eligible to vest in certain circumstances. Pursuant to this modifier, if Mr. Davis voluntarily resigns from employment during the third year of the performance period, he will remain eligible to vest in 75% of the PSUs that otherwise would have vested had he remained employed through the end of the performance period. In addition, in the event Mr. Davis no longer serves as Chief Executive Officer, but continues as a member of the Board, the restricted stock award that vests based on the attainment of free cash flow targets will, for so long as he continues on the Board, remain eligible to vest in accordance with its terms, subject to attainment of the applicable free cash flow targets.In the event Mr. Davis’ employment is terminated due to his death or by the Company due to disability, Mr. Davis (or his estate) will be entitled to receive (i) continued base salary payments for three months, (ii) apro-rated portion of theprorated annual bonus,he would have received for the year of termination, based upon actual performance for such year and generally paid at the same time annual bonuses are paid to the Company's executives,and (iii) one year of continued health, medical, dental and vision benefits (or a payment in lieu thereof). Mr. Davis would also be entitled to accelerated vesting of his outstanding equity awards to the extent such awards would have vested during the24 month12-month period following his termination of employment; provided that performance-based equity awards will only be payable subject to the attainment of the applicable performance measures.IfMr.Davis' termination without cause or resignation for good reason occurs within 24 months following a change in control, Mr. Davis will be entitled to receive the severance payments and benefits described above, except that, all of Mr. Davis' outstanding equity awards would become 100% vested and any performance-based equity awards will remain subject to the attainment of applicable performance measures as such measures apply in connection with the change in control.Mr. Davis'Davis’ receipt of any severance payments or benefits (other than upon death or disability) is generally contingent upon his entering into a customary separation agreement with the Company containing a release of claims in favor of the Company. The employment agreement also contains athree yearthree-year confidentiality covenant and additional restrictive covenants pursuant to which Mr. Davis has agreed not to compete with us or solicit our customers or employees for 12 months following termination. If Mr. Davis is terminated without cause or resigns for good reason, in either case, within 24 months following a change in control and the Company or the successor entity elects to continue Mr.Davis'Davis’ compliance with the non-compete provision, then Mr. Davis will be entitled to an additional payment equal to one time his then-current base salary.employment than those provided in Mr. Davis’ employment agreement, then Mr. Davis will receive those same improved terms and conditions of employment.
Summary of Letter Agreement with Mr. RhyuWe have entered into a letter agreement with Mr. Rhyu pursuant to which, in the eventhehis employment is terminated without cause or he resigns for good reason, Mr. Rhyu is entitled to 12 months of base salary continuation and any earned but unpaid bonus for the fiscal year immediately preceding the year of termination.The agreement also provides that Mr. Rhyu is subject to the terms of our Confidentiality, Proprietary Rights and Non-Solicitation Agreement which prohibits the solicitation of employees during theone year period following termination of employment.Summary of Employment Agreement with Mr. PolskyWe have entered into an employment agreement with Mr. Polsky pursuant to which, in the event he is terminated without cause or resigns for good reason, Mr. Polsky is entitled to 12 months of base salary continuation.The agreement also provides that Mr. Polsky is subject to the terms of our Confidentiality, Proprietary Rights and Non-Solicitation Agreement which prohibits the solicitation of employees during theone-year period following termination of employment.Severance Arrangement with Former NEOsMr. UdellIn connection with Mr. Udell's resignation as CEO in March 2018, he became entitled to receive the severance amounts provided for in his employment agreement, which included (i) a cash lump sum payment of $1,950,000, (ii) $1,004,677, which represents a pro-rated portion of the annual bonus for the year of termination, based upon actual performance for such year, (iii) an estimated $12,591 in COBRA premiums, and (iv) accelerated vesting of his outstanding equity awards that would have vested during the 12 month period following his termination of employment, which was valued at $5,599,809.Ms. ClevelandMs. Cleveland's employment with the Company terminated effective September 1, 2018 and she received the following severance payments and benefits: (i) a cash lump sum payment of $415,000; (ii) $382,859, which represents the annual bonus for the year of termination, based upon actual performance for such year; (iii) $10,401 in COBRA premiums, (iv) outplacement assistance valued at $5,000, and (v) accelerated vesting of her outstanding equity awards that would have vested during the 12 month period following her termination of employment, which was valued at $781,716.Change in Control ArrangementsNoneExcept as described below with respect to outstanding PSUs, none of our NEOs are entitled to any payments or benefits upon a change in control of the Company absent a qualifying termination of employment in connection with the change in control. Infiscal 2016, the Committee approved limitedJune 2020 we entered into new change in controlbenefits foragreements with our executives, other than Mr. Davis,and we subsequently entered into change in control agreements with these executives,pursuant to which they are entitled to certain additional payments and benefits in the event they incur a qualifying termination of employment within the24 month24-month period following a change in control of the Company. These agreements are described in more detail above under the heading"Severance“Severance and Change in Control Arrangements—Change in Control."” Pursuant to the terms of his employment agreement, Mr. Davis is entitled to certain additional payments and benefits in the event he incurs a qualifying termination of employment within 24 months following a change in control as described above.In the event of a change in control, outstanding PSUs held by our NEOs that are earned based on stock price growth measured at the end of fiscal 2021 will be earned based on the stock price paid or implied in the transaction and the earned PSUs will vest immediately.42
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||
| | Name | | Payment | | Death | | Disability | | Termination Without Cause | | Constructive Termination/ Good Reason | | Change in Control (no Termination) | | Change in Control (and Qualifying Termination) | | ||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||
| Nathaniel A. Davis (1) | Salary Continuation | $183,750 | $183,750 | $2,205,000 | $2,205,000 | — | $2,205,000 (2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||
| Bonus | 1,704,087 | 1,704,087 | 1,704,087 | 1,704,087 | — | 1,704,087 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||
| Benefit Continuation (3) | 6,083 | 6,083 | 6,083 | 6,083 | — | 6,083 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||
| Option Vesting (4) | 178,687 | 178,687 | 223,361 | 223,361 | — | 223,361 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||
| Restricted Stock and PSU Vesting (5) | 5,558,008 | 5,558,008 | 8,682,550 | 8,682,550 | — | 9,440,464 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | | | Payment | | | | Death | | | | Disability | | | | Termination Without Cause | | | | Constructive Termination / Good Reason | | | | Change in Control (no Termination) | | | | Change in Control (and Qualifying Termination) (1) | | |
| | James J. Rhyu | | Salary Continuation | | — | | — | | 500,000 | | 500,000 | | — | | 750,000 | | | Nathaniel A. Davis | | | | Salary Continuation | | | | td33,750 | | | | td33,750 | | | | td,805,000 | | | | td,805,000 | | | | — | | | | td,805,000 | | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Bonus | | | | 1,992,841 | | | | 1,992,841 | | | | 1,402,500 | | | | 1,402,500 | | | | — | | | | 2,805,000 | | | ||||
| | | | Benefit Continuation (3) | | — | | — | | — | | — | | — | | 6,346 | | | Benefit Continuation (2) | | | | 7,145 | | | | 7,145 | | | | 7,145 | | | | 7,145 | | | | — | | | | 7,145 | | | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting (3) | | | | 3,494,838 | | | | 3,494,838 | | | | 5,244,626 | | | | 5,244,626 | | | | — | | | | 6,071,387 | | | ||||
| | | | Restricted Stock and PSU Vesting (5) | | 2,586,761 | | 2,586,761 | | 327,400 | | 327,400 | | — | | 2,586,761 | | | PSU Vesting (4) | | | | — | | | | — | | | | — | | | | — | | | | 15,118,605 | | | | — | | | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Timothy J. Medina | | | | Salary Continuation | | | | — | | | | — | | | | 475,000 | | | | 475,000 | | | | — | | | | 712,500 | | |
| Kevin P. Chavous | Salary Continuation | — | — | 245,000 | 245,000 | — | 367,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||
| Benefit Continuation (3) | — | — | — | — | — | 6,346 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||
| Restricted Stock Vesting (5) | 924,823 | 924,823 | — | — | — | 924,823 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Timothy J. Medina | | | | Bonus | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 570,000 | | |
| | Howard D. Polsky | | Salary Continuation | | — | | — | | 385,000 | | 385,000 | | — | | 577,500 | | | Benefit Continuation (2) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12,995 | | | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting (3) | | | | 947,462 | | | | 947,462 | | | | — | | | | — | | | | — | | | | 947,462 | | | ||||
| | | | Benefit Continuation (3) | | — | | — | | — | | — | | — | | 6,083 | | | PSU Vesting (4) | | | | — | | | | — | | | | — | | | | — | | | | 1,313,764 | | | | — | | | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Salary Continuation | | | | — | | | | — | | | | 575,000 | | | | 575,000 | | | | — | | | | 862,500 | | | ||||
| | | | Restricted Stock and PSU Vesting (5) | | 1,342,579 | | 1,342,579 | | — | | — | | — | | 1,342,579 | | | James J. Rhyu | | | | Bonus | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 862,500 | | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Benefit Continuation (2) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 14,077 | | | ||||
| | | Restricted Stock Vesting (3) | | | | 3,165,996 | | | | 3,165,996 | | | | — | | | | — | | | | — | | | | 3,165,996 | | | ||||||||||||||||||||||||||||||||||||
| | PSU Vesting (4) | | | | — | | | | — | | | | — | | | | — | | | | 5,580,092 | | | | — | | | |||||||||||||||||||||||||||||||||||||
| | Salary Continuation | | | | — | | | | — | | | | 511,850 | | | | 511,850 | | | | — | | | | 767,775 | | | |||||||||||||||||||||||||||||||||||||
| | Kevin P. Chavous | | | | Bonus | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 614,220 | | | |||||||||||||||||||||||||||||||||
| | Benefit Continuation (2) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12,995 | | | |||||||||||||||||||||||||||||||||||||
| | | Restricted Stock Vesting (3) | | | | 2,245,475 | | | | 2,245,475 | | | | — | | | | — | | | | — | | | | 2,245,475 | | | ||||||||||||||||||||||||||||||||||||
| | PSU Vesting (4) | | | | — | | | | — | | | | — | | | | — | | | | 5,463,373 | | | | — | | | |||||||||||||||||||||||||||||||||||||
| | Salary Continuation | | | | — | | | | — | | | | 480,000 | | | | 480,000 | | | | — | | | | 720,000 | | | |||||||||||||||||||||||||||||||||||||
| | Shaun E. McAlmont | | | | Bonus | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 576,000 | | | |||||||||||||||||||||||||||||||||
| | Benefit Continuation (2) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 14,077 | | | |||||||||||||||||||||||||||||||||||||
| | | Restricted Stock Vesting (3) | | | | 1,708,629 | | | | 1,708,629 | | | | — | | | | — | | | | — | | | | 1,708,629 | | | ||||||||||||||||||||||||||||||||||||
| | PSU Vesting (4) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | |||||||||||||||||||||||||||||||||||||
| | Salary Continuation | | | | — | | | | — | | | | 415,000 | | | | 415,000 | | | | — | | | | 622,500 | | | |||||||||||||||||||||||||||||||||||||
| | Vincent W. Mathis | | | | Bonus | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 404,625 | | | |||||||||||||||||||||||||||||||||
| | Benefit Continuation (2) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12,725 | | | |||||||||||||||||||||||||||||||||||||
| | | Restricted Stock Vesting (3) | | | | 1,253,258 | | | | 1,253,258 | | | | — | | | | — | | | | — | | | | 1,253,258 | | | ||||||||||||||||||||||||||||||||||||
| | PSU Vesting (4) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | |||||||||||||||||||||||||||||||||||||
- (1)
In the event Mr. Davis' termination occurs in connection with our hiring a new Chief Executive Officer or a non-renewal of his employment agreement, Mr. Davis will not receive the cash severance amounts stated in this table.(2)
We
After identifying
2020.
We have considered the results of this analysis and believe that our pay ratio is impacted by the fact that many of our teachers are employed on a part-time basis and their total cash compensation reflects their part-time status. Additionally, we do not have full discretion in establishing the compensation arrangements for a large segment of our employee population, namely teachers serving in our Managed Public School programs. Because compensation costs for this group of employees are passed through to the school districts in which the teachers serve, the compensation arrangements for these teachers are not determined solely by us, but are subject to review and approval by the respective school boards.
2020.
Robert E. Knowling, Jr. (Chairman) |
ADVISORY VOTE TO APPROVE NAMED EXECUTIVE
OFFICER COMPENSATION
Prior Year Vote and Fiscal 2018 Compensation Highlights
As we developed our executive compensation program for fiscal 2018, our Compensation Committee took into account the extensive stockholder input we received and took steps to more tightly link executive pay to measurable performance results. Over the last several years, we have extensively overhauled our executive compensation programs and practices, including making the following structural changes prior to fiscal 2018 (which were continued into fiscal 2018):
•Maintained salaries at prior year levels, with the average benchmarked near the 25thpercentile of the peer group and continued to emphasize pay-for-performance;•Granted no extraordinary or one-time bonus awards outside of our standard executive compensation program;•Removed individual goals from our annual cash bonus program for the most senior executives; and•Expanded the use of performance-based stock awards and added stockholder return metrics as a feature of these awards.
Following these reforms, the annual shareholder advisory vote on our executive compensation for fiscal 2017 yielded an approval rate of 78.5%, which was a significant improvement over prior years.
While executing on our multi-year strategy as described above, fiscal 2018 saw solid financial results and key achievements in the following areas:
•Managed Public School Retention.Retention at our managed public schools improved by more than 300 basis points over fiscal 2017 and we saw the highest student retention level in eight years.•Student Enrollments.Our total average student enrollments continued to increase, with 105,000 students enrolling in our programs during fiscal 2018, resulting in a 4.8% increase over fiscal 2017.
•School Academic Performance.Since fiscal 2016, we achieved more than a 95% success rate in maintaining schools that we no longer consider to have academic performance issues, reducing the number of schools that we consider to be in "academic jeopardy" from 11 to 5.•Strong Operating and Cash Flow Performance.We set rigorous goals for the financial performance metrics under our Executive Bonus Plan and performance-based equity awards and met or exceeded target performance under each metric, delivering solid performance for the year, as discussed in the "Compensation Discussion and Analysis" section.•Expanded Business Operations.We continued to expand our business operations and focused on developing our CTE programs, highlights of which include opening a new program in Ohio, developing three new project-based learning centers and making significant equity investments in businesses that are intended to address market demand for CTE, in addition to our core business.
We are asking our stockholders to indicate their support for the compensation of our NEOs as described in this Proxy Statement. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we ask our stockholders to voteFOR the following resolution:
"
”
stockholders.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITOR
| | | | 2019 | | | 2020 | | ||||||
| Audit Fees | | | | $ | 1,119,500 | | | | | $ | 1,109,700 | | |
| Audit-Related Fees | | | | | 142,750 | | | | | | 315,500 | | |
| Tax Fees | | | | | — | | | | | | — | | |
| All Other Fees | | | | | — | | | | | | — | | |
| Total | | | | $ | 1,262,250 | | | | | $ | 1,425,200 | | |
| | 2017 | 2018 | |||||
|---|---|---|---|---|---|---|---|
Audit Fees | $ | 1,112,324 | $ | 1,111,788 | |||
Audit-Related Fees | 71,460 | 81,497 | |||||
Tax Fees | — | — | |||||
All Other Fees | — | — | |||||
| | | | | | | | |
Total | $ | 1,183,784 | $ | 1,193,285 | |||
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Audit Fees are for professional services for the Company'sCompany’s annual audit, including the audit of internal control over financial reporting for fiscal 20172019 and 2018,2020, reviews of the interim financial statements included in the Company'sCompany’s quarterly reports on Form 10-Q, and other professional services provided in connection with statutory and regulatory filings or engagements. Audit-related fees in fiscal 20172019 and 20182020 were for professional services associated with audits of certain managed schools and other minor matters.
Board and the SEC.
|
Aida M. Alvarez
Robert L. Cohen
Victoria D. Harker
| | | | | | | Shares Beneficially Owned (1) | | | ||||
| | | | | | | | | | | Percent | | |
| | | James J. Rhyu (2) | | | | 247,150 | | | | * | | |
| | | Kevin P. Chavous (3) | | | | 70,701 | | | | * | | |
| | | Shaun E. McAlmont (4) | | | | 65,899 | | | | * | | |
| | | Vincent W. Mathis (5) | | | | 39,949 | | | | * | | |
| | | Timothy J. Medina (6) | | | | 41,009 | | | | * | | |
| | | Nathaniel A. Davis (7) | | | | 790,806 | | | | 1.90% | | |
| | | Aida M. Alvarez (8) | | | | 21,045 | | | | * | | |
| | | Craig R. Barrett (9) | | | | 56,694 | | | | * | | |
| | | Guillermo Bron (10) | | | | 59,202 | | | | * | | |
| | | Robert L. Cohen (11) | | | | 9,201 | | | | * | | |
| | | John M. Engler (12) | | | | 51,383 | | | | * | | |
| | | Steven B. Fink (13) | | | | 148,490 | | | | * | | |
| | | Victoria D. Harker (14) | | | | 5,284 | | | | | | |
| | | Robert E. Knowling, Jr. (15) | | | | 17,012 | | | | * | | |
| | | Liza McFadden (16) | | | | 19,493 | | | | * | | |
| | | All Directors and Executive Officers as a Group (15 persons) (17) | | | | 1,643,318 | | | | 3.95% | | |
| | | BlackRock, Inc. (18) | | | | 2,854,899 | | | | 6.87% | | |
| | | The Vanguard Group (19) | | | | 3,652,503 | | | | 8.79% | | |
| | | Dimensional Fund Advisors (20) | | | | 3,356,184 | | | | 8.08% | | |
| | | | | | | | | | | | | |
|
| | Shares Beneficially Owned (1) | | ||||||||
| | | | | | | | | | | | | |
|
| | | Percent | | |||||||
| | | | | | | | | | | | | |
| Stuart J. Udell (2) | 405,660 | 1.01% | |||||||||
| | | | | | | | | | | | | |
| James J. Rhyu (3) | | 286,498 | | * | | ||||||
| | | | | | | | | | | | | |
| Kevin P. Chavous (4) | 98,440 | * | |||||||||
| | | | | | | | | | | | | |
| Howard D. Polsky (5) | | 112,835 | | * | | ||||||
| | | | | | | | | | | | | |
| Allison B. Cleveland (6) | 55,214 | * | |||||||||
| | | | | | | | | | | | | |
| Nathaniel A. Davis (7) | | 2,160,014 | | 5.26% | | ||||||
| | | | | | | | | | | | | |
| Aida M. Alvarez (8) | 10,078 | * | |||||||||
| | | | | | | | | | | | | |
| Craig R. Barrett (9) | | 45,727 | | * | | ||||||
| | | | | | | | | | | | | |
| Guillermo Bron (10) | 48,235 | * | |||||||||
| | | | | | | | | | | | | |
| John M. Engler (11) | | 40,416 | | * | | ||||||
| | | | | | | | | | | | | |
| Steven B. Fink (12) | 137,523 | * | |||||||||
| | | | | | | | | | | | | |
| Robert Knowling, Jr. (13) | | 6,045 | | * | | ||||||
| | | | | | | | | | | | | |
| Liza McFadden (14) | 8,526 | * | |||||||||
| | | | | | | | | | | | | |
| All Directors and Executive Officers as a Group (11 persons) (15) | | 2,876,502 | | 7.00% | | ||||||
| | | | | | | | | | | | | |
| BlackRock, Inc. (16) | 2,573,649 | 6.40% | |||||||||
| | | | | | | | | | | | | |
| The Vanguard Group (17) | | 3,095,321 | | 7.70% | | ||||||
| | | | | | | | | | | | | |
| Dimensional Fund Advisors (18) | 3,308,954 | 8.23% | |||||||||
| | | | | | | | | | | | | |
*- Denotes less than 1%.
exercisable within 60 days of October 19, 201818, 2019 and not subject to repurchase as of that date. Shares issuable pursuant to options and deferred stock units are deemed outstanding for calculating the percentage ownership of the person holding the options but are not deemed outstanding for the purposes of calculating the percentage ownership of any other person.
16(a) REPORTS
2019, except for one Form 4 for Timothy Medina that was filed late on April 16, 2020 due to an administrative error.
MATTERS TO BE ACTED ON
than June 28, 2019.29, 2021. As the rules of the SEC make clear, simply submitting a proposal does not guarantee that it will be included in the Proxy Statement.
. K12 INC. Electronic Voting Instructions Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Central Time, on December 14, 2018. Vote by Internet • Go to www.investorvote.com/LRN • Or scan the QR code with your smartphone • Follow the steps outlined on the secure website Vote by telephone • Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone • Follow the instructions provided by the recorded message Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q A Proposals — The Board of Directors recommends a vote FOR all the nominees listed herein and FOR Proposals 2 and 3. + 1. ELECTION OF DIRECTORS: For Withhold For Withhold For Withhold 01 - Aida M. Alvarez 02 - Craig R. Barrett 03 - Guillermo Bron 04 - Nathaniel A. Davis 05 - John M. Engler 06 - Steven B. Fink 07 - Robert E. Knowling, Jr. 08 - Liza McFadden For Against Abstain ForAgainst Abstain 2. TO APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS 3. RATIFICATION OF THE APPOINTMENT OF BDO USA, LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING JUNE 30, 2019 B Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below PLEASE SIGN name(s) exactly as shown above. Where there is more than one holder, each should sign. When signing as an attorney, administrator, executor, guardian or trustee or in another representative capacity, please add your title as such. If executed by a corporation or partnership, the Proxy should be executed in the full corporate or partnership name and signed by a duly authorized person, stating his or her title or authority. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD. + 1 U P X 02WNCC Annual Meeting Proxy Card X IMPORTANT ANNUAL MEETING INFORMATION
. IMPORTANT ANNUAL MEETING INFORMATION IMPORTANT NOTICE REGARDING THE AVAILABILITY53
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