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27, 2021
| | | | Sincerely, | |
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| | | Nathaniel A. Davis | ||
| | | Executive Chairman |
| | Important Information Regarding Meeting Attendance | |
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| | We are sensitive to the public health and travel concerns our stockholders may have regarding our in person Annual Meeting and recommendations that public health officials have issued and may issue in light of the | |
STOCKHOLDERS
1.Elect nine (9) directors to the Company's Board of Directors each to serve for a one-year term;2.Consider and vote upon a non-binding advisory resolution approving the compensation of the named executive officers of the Company ("Say on Pay");3.Consider and vote upon the ratification of the appointment of BDO USA, LLP, as the Company's independent registered public accounting firm for the fiscal year ending June 30, 2020; and4.Act upon such other matters as may properly come before the Annual Meeting or any adjournments or postponements of the Annual Meeting.
| 1. | Elect nine (9) directors to the Company’s Board of Directors each to serve for a one-year term; |
| 2. | Consider and vote upon the ratification of the appointment of BDO USA, LLP, as the Company’s independent registered public accounting firm for the fiscal year ending June 30, 2022; |
| 3. | Consider and vote upon a non-binding advisory resolution approving the compensation of the named executive officers of the Company (“Say-on-Pay”); |
| 4. | Consider and vote upon a stockholder proposal regarding a report on lobbying; and |
| 5. | Act upon such other matters as may properly come before the Annual Meeting or any adjournments or postponements of the Annual Meeting. |
11, 2021.
27, 2021.
27, 2021 Summary Compensation Table for Fiscal June 30, through a broker, bank or other nominee must bring a legal proxy, which can be obtained only from the broker, bank or other nominee. 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. Stride@dfking.com. Meetings; Attendance at information that he can use to assist the Executive Chairman and CEO to function in the most effective manner. The Board of Directors believes the Lead Independent Director provides additional independent oversight of executive management and Board matters. Oversight measures. The Audit Committee reports on our cybersecurity measures in its regular reports to the Board of Directors. In addition, the Audit Committee assists the Board of Directors in the oversight of legal risk management. A Legal Compliance and Ethics Committee (consisting of senior management members) maintains a Legal Compliance and Ethics Program, which includes a Chief School Compliance Officer within the Office of the General Counsel. The Legal Compliance and Ethics Committee provides reports to the Audit Committee on the Audit Committee Compensation Committee Nominating and Corporate Governance Committee Academic Committeethen votepromptly submit your proxy or voting instructions by Internet, by phonetelephone, or sign, date and return your proxy card (if you request a paper copy) at your earliest convenience. Sending in your proxy cardmail. Voting before the Annual Meeting will not prevent you from voting your shares at the Annual Meeting, if you desire to do so. By Order of the Board of Directors, 
25, 2019IMPORTANT NOTICE ABOUT THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 13, 20192019 Proxy StatementCompany’s 2021 proxy statement and the 20192021 Annual Report are available at: www.edocumentview.com/LRN.at PROXY STATEMENT QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND THESE PROXY MATERIALS CORPORATE GOVERNANCE AND BOARD MATTERS Board of Directors Director Independence Board of Directors Leadership Structure Committees of the Board of Directors Director Compensation for Fiscal 2019 NOMINEES FOR ELECTION AT THE ANNUAL MEETING Executive Officers COMPENSATION DISCUSSION AND ANALYSIS Executive Summary 202019 Performance Highlights212019 Compensation Highlights22Executive Compensation Principles and Practices23Tying Executive Pay to Company Performance25Determining Executive Compensation26Fiscal 2019 Compensation Decisions27Other Compensation32Compensation Governance, Process and Incentive Decisions33Other Compensation Policies and Practices34COMPENSATION TABLES382019 COMPENSATION COMMITTEE REPORT CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS Compensation Committee Interlocks and Insider Participation PROPOSAL 2: ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION 49Prior Year Vote and Fiscal 2019 Compensation HighlightsPROPOSAL 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR51Fees Paid to Independent Registered Public Accounting Firm51AUDIT COMMITTEE REPORT52SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT53DELINQUENT SECTION 16(a) REPORTS55INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED ON55DELIVERY OF DOCUMENTS TO SECURITY HOLDERS SHARING AN ADDRESS55PROPOSALS BY OUR STOCKHOLDERS55WHERE YOU CAN FIND MORE INFORMATION56 TO BE HELD ONDECEMBER 13, 201925, 201927, 2021 we mailed a Notice of Internet Availability of Proxy Materials ("Notice"(“Notice”) to all stockholders entitled to vote at the Annual Meeting. The Notice tells you how to:•ViewK12Stride, Inc. Annual Report to Stockholders for the fiscal year ended June 30, 2019,2021 on the Internet and vote; and•InstructK12Stride, Inc., a Delaware corporation, for use at the annual meeting of stockholders to be held at the law firm of Latham & Watkins LLP, 555 Eleventh Street, N.W.,NW, Suite 1000, Washington, D.C.DC 20004-1304, on Friday, December 13, 2019,10, 2021, at 10:00 A.M.a.m., Eastern Time, and any adjournments or postponements thereof ("(“Annual Meeting"Meeting”). "K12," "we," "our," "us"“Stride,” “we,” “our,” “us” and the "Company"“Company” each refer to K12Stride, Inc. The mailing address of our principal executive offices is 2300 Corporate Park Drive, Herndon, VA 20171. This Proxy Statement will be made available on or about October 25, 2019,27, 2021, to holders of record as of the close of business on October 18, 20192021 of our common stock, par value $0.0001 per share ("(“Common Stock"Stock”).20192021 as the record date ("(“Record Date"Date”) for determining the stockholders entitled to notice of, and to vote at, the Annual Meeting. On the Record Date, we had 40,955,11042,766,739 shares of Common Stock outstanding and entitled to vote.The presence, in person or by duly executed proxy, of stockholders representing aall the votesshares of Common Stock issued and outstanding and entitled to be castvote at the Annual Meeting, the holders of which are present in person or represented by proxy, will constitute a quorum.quorum for the transaction of business at the Annual Meeting. If a quorum is not present at the Annual Meeting, we expect that the Annual Meeting will be adjourned or postponed to solicit additional proxies.non-binding advisory resolution approving the executive compensation of the named executive officers of the Company, (ii) the ratification of the appointment of BDO USA, LLP as the Company'sCompany’s independent registered public accounting firm for the fiscal year ending2020 ("2022 (“fiscal 2020"2022”), (ii) the non-binding advisory resolution approving the compensation of the named executive officers (“NEOs”) of the Company, (iii) the approval of the stockholder proposal regarding a report on lobbying, and (iii)(iv) such other matters as may properly come before the Annual Meeting or any adjournments or postponements of the Annual Meeting.••named executive officersNEOs of the Company;•FOR3,4, the ratification of the appointment of BDO USA, LLP as the Company's independent registered public accounting firm for fiscal 2020;stockholder proposal regarding a report on lobbying; and•proxy;proxy card; (iii) voting again by telephone or (iii) attending(iv) voting again via the Internet, including during the Annual Meeting and voting in person.Meeting. Attendance at the Annual Meeting will not, in and of itself, constitute revocation of a proxy. Any written notice revoking a proxy should be delivered to K12Stride, Inc., Attn: General Counsel and Secretary, 2300 Corporate Park Drive, Herndon, VA 20171. If your shares of Common Stock are heldregistered in a brokerage account,the name of your broker, bank or other nominee, you must follow your broker'sthe instructions of such broker, bank or other nominee to revoke a proxy.Abstentions and Broker Non-VotesBroker non-votes occur when a nominee holdingvoting securities forCommon Stock in their own names should provide identification and have their ownership verified against the list of registered stockholders as of the close of business on the Record Date. Those who have beneficial ownership of stock through a beneficial owner does not vote on a particular proposal because thebroker, bank or other nominee does not have discretionary voting power on that item and has not received instructionsmust bring account statements or letters from the beneficial owner. Abstentions, withheld votes, and broker, non-votes are included in determining whether a quorum is present but are not deemed a vote cast "For"bank or "Against" a given proposal, and therefore, are not included in the tabulationother nominee indicating that they owned Common Stock as of the voting results. As such, abstentions, withheld votes and broker non-votes do not affectclose of business on the voting results with respectRecord Date.election of directors. Abstentionspublic health and broker non-votes willtravel concerns our stockholders may have the effect of a vote against the approval of any items requiring the affirmative voteregarding our in person Annual Meeting and recommendations that public health officials have issued and may issue in light of the holderscontinuing public health crisis caused by COVID-19. As a result, we will enforce appropriate protocols consistent with then applicable federal, state and local guidelines, mandates or recommendations or facility requirements. These requirements may include the use of a majorityface coverings, proof of vaccination and maintaining appropriate social distancing. We may also impose additional procedures or greaterlimitations on meeting attendees. We plan to announce any such updates on our website https://investors.stridelearning.com/governance/2021-annual-meeting/default.aspx, and we encourage you to check this website prior to the meeting if you plan to attend.outstandingAnnual Meeting will be provided during the Annual Meeting. To vote at the Annual Meeting, those who have beneficial ownership of Common Stock entitled to vote.("(“DF King"King”) to assist in obtaining proxies from stockholders for the Annual Meeting. The estimated cost of such services is $17,500, plus out-of-pocket expenses. DF King may be contacted at (800) 431-9633(866) 829-1035 (banks and brokers may call (212) 269-5550) or via email at K12@dfking.com.thirty (30)30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. We do not currently intend to seek an adjournment of the Annual Meeting.ContentsQUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND THESE PROXY MATERIALSThe following addresses some questions you may have regarding the matters to be voted uponDirectors currently consists of eleven members, each of whose term expires at the Annual Meeting. These questions and answers may not address all questions that may be importantNine of the eleven directors have been nominated for reelection for a term expiring at the 2022 annual meeting of stockholders. Each of the nominees has agreed to youserve as a stockholderdirector if elected, and the Company believes that each nominee will be available to serve.Company. Please referdirector nominees. The Board of Directors believes that this balance in age and tenure, mix of diversity, and wide range of backgrounds and experience will help bring broad and valuable perspectives to the more detailed information contained elsewhere in this Proxy Statement and the documents referred to or incorporated by reference in this Proxy Statement for additional information.Why am I receiving this Proxy Statement?The Company is soliciting proxies for the Annual Meeting. You are receiving a Proxy Statement because you owned shares of Common Stock at the close of business on October 18, 2019, the Record Date for the Annual Meeting, which entitles you to vote at the Annual Meeting. By use of a proxy, you can vote whether or not you attend the Annual Meeting. This Proxy Statement describes the matters on which we would like you to cast a vote and provides information on those matters so that you can make an informed decision.Why is K12 calling the Annual Meeting?We are calling the Annual Meeting and submitting proposals to stockholders of the Company to consider and vote upon Annual Meeting matters, including (i) the election of directors, (ii) a non-binding advisory resolution approving the compensation of the Company's named executive officers, and (iii) the ratification of the appointment of our independent registered public accounting firm.How does the Board of Directors recommend that I vote?will lead to a well-functioning Board.
Our BoardTABLE OF CONTENTSDirectors recommends that you voteFORthe electionnominees, their principal occupations and employment during the past five years, and other information regarding them are as follows.
the Board of Director nominees named in Proposal 1 andFOR each of Proposals 2 and 3.What do I need to do now?After carefully reading and considering the information in this Proxy Statement, please vote electronically via the Internet or by telephone by following the instructions provided by your bank or broker or complete, date, sign and promptly mail the proxy card (if you request a paper copy) in the envelope provided, which requires no postage if mailed in the United States.May I vote in person?Yes. If you were a stockholder of record as of the close of business on October 18, 2019, you may attend the Annual Meeting and vote your shares in person instead of voting by Internet or telephone or returning your signed proxy card (if you request a paper copy). However, we urge you to vote in advance even if you are planning to attend the Annual Meeting.How do I vote if my shares are held in "street name" by my bank, broker or agent?If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you should have received voting instructions with these proxy materials from that organization rather than from us. Simply complete and mail your voting instructions as directed by your broker or bank to ensure that your vote is counted. To vote in person at the Annual Meeting, you must obtain a valid proxy fromyour broker, bank, or other agent. Follow the instructions from your broker or bank included with these proxy materials, or contact your broker or bank to request a proxy form.If my shares are held in "street name" by a broker, will my broker vote my shares for me even if I do not give my broker voting instructions?Under the rules that govern brokersour current executive officers who have record ownership of shares that are held in "street name" for their clients, brokers may vote such shares on behalf of their clients with respect to "routine" matters (such as the ratification of auditors in Proposal 3), but not with respect to non-routine matters (such as Proposals 1 and 2). If the proposals to be acted upon at the Annual Meeting include both routine and non-routine matters, the broker may turn in a proxy card for uninstructed shares that votes on the routine matters, but expressly states that the broker is not voting on non-routine matters. This is calledalso a "broker non-vote" as to non-routine matters. Broker non-votes on non-routine matters will be counted for the purpose of determining the presence or absence of a quorum, but will not be counted for the purpose of determining the number of votes cast. We encourage you to provide specific instructions to your broker by returning your proxy card or by voting electronically via the Internet or by telephone, if permitted by the broker or other nominee that holds your shares. This ensures that your shares will be properly voted at the Annual Meeting.
Can I revoke my proxy and change my vote?Yes. You have the right to revoke your proxy at any time prior to the time your shares are voted at the Annual Meeting. If you are a stockholder of record, your proxy can be revoked in several ways: by timely delivery of a written revocation to our corporate secretary, by submitting another valid proxy bearing a later date or by attending the Annual Meeting and voting your shares in person, even if you have previously voted using one of the available methods.When and where is the Annual Meeting?The Annual Meeting will be held on December 13, 2019 at 10:00 A.M., Eastern Time, at the law firm of Latham & Watkins LLP, 555 Eleventh Street, N.W., Suite 1000, Washington, DC 20004-1304.Who can help answer my questions regarding the Annual Meeting or the proposals?You may contact K12 to assist you with questions about the Annual Meeting. You may reach K12 at:K12 Inc.Attention: Investor Relations2300 Corporate Park DriveHerndon, VA 20171(703) 483-7000You may also contact DF King to assist you with questions about proxies or voting. You may reach DF King at:D.F. King & Co.,Inc.,48 Wall Street, 22nd FloorNew York, New York 10005(800) 431-9633Banks and brokers may call (212) 269-5550TABLE OF CONTENTS
CORPORATE GOVERNANCE AND BOARD MATTERS Corporate Governance Guidelines and Code of Business Conduct and EthicsOur Board of Directors oversees the management of the Company and its business for the benefit of our stockholders in order to enhance stockholder value over the long-term and to achieve its educational mission. The Board of Directors also has adopted Corporate Governance Guidelines to assist it in the exercise of its responsibilities. The Guidelines are reviewed annually and periodically amended as the Board of Directors enhances the Company's corporate governance practices. The Board of Directors has also adopted a Code of Business Conduct and Ethics that applies to all directors, officers and employees. The purpose of this code is to promote honest and ethical conduct for conducting the business of the Company, consistent with the highest standards of business ethics. The Corporate Governance Guidelines and Code of Business Conduct and Ethics are available on our website at www.K12.com under theK12 Corporate-Investor Relations-Governance section.Our corporate governance and business conduct best practices include:•Regular executive sessions of non-management directors;•Independent directors except our Chairman of the Board and Chief Executive Officer ("CEO");•An over-boarding policy limiting other board service;•A Lead Independent Director with delineated authority and responsibility;•Director and executive officer stock ownership guidelines; and•A policy prohibiting hedging, pledging and short sales of our stock.We intend to satisfy the disclosure requirements under the Securities Exchange Act of 1934, as amended, ("Exchange Act") regarding any amendment to, or waiver from a material provision of our Code of Business Conduct and Ethics involving our principal executive, financial or accounting officer or controller by posting such information on our website.Term of Office. All directors of the Company serve terms of one year and until the election and qualification of their respective successors.Board and CommitteeAnnual Meetings and the 2018 Annual Meeting.nine11 times in person or telephonically during fiscal 2019.2021. Each director attended at least 75% of the total Board and committee meetings to which they were assigned. Our policy with respect to director attendance at the annual meeting of stockholders is to encourage, but not require, director attendance. Mr. Davis was the only then-serving member of our Board of Directors to attend our 20182020 annual meeting of stockholders. Our director attendance policy is included in our Corporate Governance Guidelines, which isare available on our website at www.K12.com.https://investors.stridelearning.com/governance.ContentsDirectors are duly elected at the Annual Meeting, then each of our directors, other than Messrs. Davis and Rhyu, will serve as an independent director. CommunicationTABLE OF CONTENTS ��� Directors.the candidate’s other professional and personal pursuits;K12Stride, Inc., 2300 Corporate Park Drive, Herndon, VA 20171, Attention: General Counsel and Secretary. Our General Counsel will monitor these communications and provide summaries of all received communications to our Board of Directors at its regularly scheduled meetings. Where the nature of a communication warrants, our General Counsel may decide to seek the more immediate attention of the appropriate committee of the Board of Directors or an individual director, or our management or independent advisors and will determine whether any response is necessary. Director IndependenceOur Board of Directors has affirmatively determined that each of our non-employee directors is "independent" as defined in the currently applicable listing standards of the New York Stock Exchange ("NYSE") and the rules and regulations of the Securities and Exchange Commission ("SEC"). Mr. Davis is not independent under either NYSE or SEC rules because he is an executive officer of the Company. If the nominees for the Board of Directors are duly elected at the Annual Meeting, then each of our directors, other than Mr. Davis, will serve as an independent director.chairmanChairman and chief executive officerCEO based on what it believes best serves the needs of the Company and its stockholders at any particular time. Both approaches have been taken depending on the circumstances. The determination to appoint Mr. Davis as Executive Chairman was based on a number of factors that made him particularly well-suited for the role. These factors included his prior position as Chairman and CEO, his prior service on the Board of Directors and its Compensation Committee, and his understanding of the Company'sCompany’s business and day-to-day operations, growth opportunities, challenges and risk management practices. This combination of Company experience and expertise enables Mr. Davis to provide strong and effective leadership to the Board of Directors and to ensure that the Board of Directors is informed of important issues. In consultation with our Lead Independent Director, the Committees of the Board of DirectorsThe standing committees of our Board of Directors are the Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee and Academic Committee. As of the date of this Proxy Statement, membership on the Committees of the Board of Directors is as follows:
Audit CommitteeThe Audit Committee, which was established in accordance with Section 3(a)(58)(A) of the Exchange Act, consists of Mr. Fink, who serves as the Chairman, Ms. Alvarez and Mr. Cohen. Our Board of Directors has determined that each of Messrs. Cohen and Fink and Ms. Alvarez qualify as independent directors under the applicable NYSE listing requirements and SEC regulations.The Audit Committee met six times during fiscal 2019. The meetings to review the Company's quarterly and annual periodic filings with the SEC each include at least two separate sessions (which together count as only one meeting). Mr. Fink engaged in routine separate communications with the Company's external auditors and Chief Financial Officer, held the required executive sessions at each meeting, and requested participation by outside counsel, as needed. The Audit Committee has a charter, available on our website at www.K12.com, setting forth its structure, powers and responsibilities. Pursuant to the charter, the Audit Committee is comprised of at least three members appointed by our Board of Directors, each of whom satisfies the requirements of independence and financial literacy. In addition, our Board of Directors has determined that Messrs. Cohen and Fink and Ms. Alvarez are each an audit committeefinancial expert, as that term is defined under the Exchange Act. Under its charter, the responsibilities of the Audit Committee include:•discussing with our independent registered public accounting firm the conduct of the annual audit, the adequacy and effectiveness of our accounting, the effectiveness of internal control over financial reporting, and applicable requirements regarding auditor independence;•approving the audited financial statements of the Company to be included in our Annual Report on Form 10-K;•selecting annually an independent registered public accounting firm;•pre-approving all audit and non-audit services and fees associated with our independent registered public accounting firm; and•reviewing and discussing with management significant accounting matters and disclosures.In addition, our Corporate Governance Guidelines provide that members of the Audit Committee may not serve on the audit committees of more than two other companies at the same time as they serve on our Audit Committee.Compensation CommitteeThe Compensation Committee consists of Mr. Knowling, who serves as the Chairman, and Messrs. Engler and Fink. Our Board of Directors has determined that each of Messrs. Engler, Fink and Knowling qualify as independent directors within the meaning of the applicable NYSE listing requirements and SEC regulations.The Compensation Committee met six times during fiscal 2019. The Compensation Committee has a charter, available on our website at www.K12.com, setting forth its structure, powers and responsibilities. These include:•reviewing the compensation philosophy of our Company;•reviewing, approving and recommending corporate goals and objectives relating to the compensation of our Chairman and CEO and, based upon an evaluation of the achievement of these goals, recommending to the Board of Directors our Chairman and CEO's total compensation;•reviewing and approving salaries, bonuses and other forms of compensation for our other executive officers, including without limitation stock options, restricted shares, and other forms of equity compensation;•considering and adopting changes to our compensation structure as applicable to all non-executive officer employees, including, but not limited to, salaries and benefits; and•performing such duties and exercising such authority as may be assigned by the Board of Directors, including under the terms of our equity incentive and bonus plans.Nominating and Corporate Governance CommitteeThe Nominating and Corporate Governance Committee consists of Ms. McFadden, who serves as the Chairman, and Messrs. Bron and Engler. Our Board of Directors has determined that each ofMs. McFadden 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.The Nominating and Corporate Governance Committee met five times during fiscal 2019. The Nominating and Corporate Governance Committee has a charter, available on our website at www.K12.com, setting forth its structure, powers and responsibilities. Under its charter, the Nominating and Corporate Governance Committee has the authority to nominate persons to stand for election and to fill vacancies on our Board of Directors. The Nominating and Corporate Governance Committee may consider the following criteria, as well as any other factors it deems appropriate, in recommending candidates for election to our Board of Directors:•personal and professional integrity, ethics and values;•experience in corporate management, such as serving as an officer or former officer of a publicly traded company, and a general understanding of marketing, finance, operations, governance and other elements relevant to the success of the Company in today's business and regulatory environment;•experience in the field of education policy and administration;•service as a board member of another publicly traded company;•practical and mature business judgment, including the ability to make independent analytical inquiries; and•diversity of the Board of Directors, which includes gender, racial and ethnic diversity, as well a diversity of backgrounds and experiences.The Board of Directors strives to nominate directors with a variety of complementary skills so that, as a group, the Board of Directors will possess a mix of the appropriate backgrounds, talent, gender, race, perspectives, skills and expertise to oversee the Company's business. Currently, our nine member Board has two Hispanic directors, two African American directors, and two female directors. The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders, provided such recommendations are submitted in writing not later than the close of business on the 90th day, or earlier than the close of business on the 120th day, prior to the anniversary of the preceding year's annual meeting of the stockholders. Such recommendations should include the name and address and other pertinent information about the candidate as is required to be included in the Company's proxy statement. Recommendations should be submitted to the corporate secretary of the Company at K12 Inc., 2300 Corporate Park Drive, Herndon, VA 20171, Attention: General Counsel and Secretary. The Nominating and Corporate Governance Committee will consider the criteria set forth above and other relevant information when evaluating director candidates recommended by stockholders.On the recommendation of the Nominating and Corporate Governance Committee, Mr. Cohen was appointed to the Board of Directors, the Audit Committee and the Academic Committee. Accordingly, he is standing for election as a director for the first time. Our directors as a group, recommended Mr. Cohen to the Nominating and Corporate Governance Committee, which evaluated him prior to his appointment to the Board of Directors.Academic CommitteeThe Academic Committee consists of Dr. Barrett, who serves as the Chairman, and Messrs. Cohen and Engler. The primary role of the Academic Committee is to make recommendations and assistmanagement in discharging its responsibility to ensure continuous improvement in academic outcomes for the students and schools we serve.The Academic Committee has a charter, available on our website at www.K12.com, setting forth the structure, powers and responsibilities of the Academic Committee. Members of the Academic Committee participated in four meetings of the Company's Educational Advisory Committee ("EAC") during fiscal 2019. Under its charter, the responsibilities of the Academic Committee include:•monitoring the effectiveness of the Company's education products and services;•participating in the meetings of the Company's EAC;•obtaining information, data, and recommendations from the Company's Chief Academic Officer to assist in its decision making;•evaluating and implementing, as necessary, the proposals of the EAC; and•reporting and recommending to the Board of Directors to maximize the Company's ability to provide an effective education to students enrolled in the schools served by the Company.setsset the agenda for the Board of Directors'Directors’ meetings, each functional division of the Company can identify risk-related topics that may require added attention, which have included evolving state curriculum standards, student engagement and retention, education technology, legal and policy matters, information security, and succession planning. Each quarter, our Executive Chairman and CEO also presentspresent an assessment of the strategic, financial and operational issues facing the Company, which frequently includes a review of associated risks and opportunities.2019,2021, the Audit Committee continued to work directly with a major independent accounting firm to support the Company'sCompany’s internal audit function in risk management. This combination provides us with the focus, scope, expertise and continuous attention necessary for effective risk management.•Company'sCompany’s policies with respect to those matters. Our internal audit department prepares various riskCompany'sCompany’s legal risks and compliance-related matters in the schools we serve and at the corporate level.•47.•for our directors and corporate governance.2019,2021, pursuant to our Amended Non-Employee Directors Compensation Plan ("(“Directors Compensation Plan"Plan”), our non-employee directors were eligible to receive annual cash retainers for service on theour Board of Directors and assigned committees and annual restricted stock awards. Mr. Davis, our Executive Chairman, and Mr. Rhyu, our CEO, received no additional compensation for histheir service on our Board of Directors. Additional Cash
RetainerCommittee Chair Member $35,000 $10,000 $15,000 $5,000 $10,000 $5,000 $5,000 $5,000 The Directors Compensation Plan also provides forIn January 2021, each non-employee director received an annual restricted stock awards for each non-employee director,award valued at $120,000$145,000 as of the grant date, (prorated for a partial year of service), with the shares of our Common Stock underlying such awards vesting fully one year from the date of the grant. The annual cash retainer, including the committee fees, and the annual restricted stock award may be deferred in the form of deferred stock units under our Deferred Compensation Plan for Non-Employee Directors ("(“Directors Deferred Compensation Plan"Plan”).
Table of ContentsTABLE OF CONTENTS
| | Name | | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($)(1) | | | Total ($) | |
| | Aida M. Alvarez(2) | | | 75,000 | | | 145,000 | | | 220,000 | |
| | Craig R. Barrett(3) | | | 75,000 | | | 145,000 | | | 220,000 | |
| | Guillermo Bron(4) | | | 75,000 | | | 145,000 | | | 220,000 | |
| | Robert L. Cohen(5) | | | 85,000 | | | 145,000 | | | 230,000 | |
| | John M. Engler(6) | | | 85,000 | | | 145,000 | | | 230,000 | |
| | Steven B. Fink(7) | | | 110,000 | | | 145,000 | | | 255,000 | |
| | Victoria D. Harker(8) | | | 80,000 | | | 145,000 | | | 225,000 | |
| | Robert E. Knowling, Jr.(9) | | | 85,000 | | | 145,000 | | | 230,000 | |
| | Liza McFadden(10) | | | 80,000 | | | 145,000 | | | 225,000 | |
| (1) | Represents the aggregate grant date fair values of stock awards computed in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 718. On January 4, 2021, each non-employee director who held such position at the beginning of the calendar year, was eligible to receive an award of 6,901 shares of restricted stock. Mr. Cohen and Mr. Knowling elected to receive their awards in deferred stock units under the Directors Deferred Compensation Plan. Ms. McFadden elected to receive 50% of her award in deferred stock units under the same plan. The restricted stock and deferred stock units vest on January 4, 2022. |
| (2) | As of June 30, 2021, Ms. Alvarez held 6,901 unvested restricted shares. |
| (3) | As of June 30, 2021, Mr. Barrett held 6,901 unvested restricted shares. |
| (4) | As of June 30, 2021, Mr. Bron held 6,901 unvested restricted shares. |
| (5) | As of June 30, 2021, Mr. Cohen held 6,901 unvested deferred stock units. |
| (6) | As of June 30, 2021, Mr. Engler held 6,901 unvested restricted shares. |
| (7) | As of June 30, 2021, Mr. Fink held 6,901 unvested restricted shares. |
| (8) | As of June 30, 2021, Ms. Harker held 6,901 unvested restricted shares. |
| (9) | As of June 30, 2021, Mr. Knowling held 6,901 unvested deferred stock units. |
| (10) | As of June 30, 2021, Ms. McFadden held 3,450 unvested deferred stock units and 3,451 unvested restricted shares. |
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | Total ($) | | ||||
|---|---|---|---|---|---|---|---|---|
| | | | | | | | | |
Aida M. Alvarez (2) | 75,000 | 120,000 | 195,000 | |||||
| | | | | | | | | |
Craig R. Barrett (3) | 70,000 | 120,000 | 190,000 | |||||
| | | | | | | | | |
Guillermo Bron (4) | 80,000 | 120,000 | 200,000 | |||||
| | | | | | | | | |
Robert L. Cohen (5) | 25,795 | 103,874 | 129,669 | |||||
| | | | | | | | | |
John M. Engler (6) | 85,000 | 120,000 | 205,000 | |||||
| | | | | | | | | |
Steven B. Fink (7) | 105,000 | 120,000 | 225,000 | |||||
| | | | | | | | | |
Robert E. Knowling, Jr. (8) | 75,000 | 120,000 | 195,000 | |||||
| | | | | | | | | |
Liza McFadden (9) | 75,000 | 120,000 | 195,000 | |||||
| | | | | | | | | |
(1)Represents the aggregate grant date fair values of stock awards computed in accordance with FASB ASC Topic 718. On January 2, 2019, each non-employee director who held such position at the beginning of the calendar year, was eligible to receive an award of 5,006 shares of restricted stock. Mr. Bron, Mr. Knowling and Ms. McFadden elected to receive their awards in deferred stock units under the Directors Deferred Compensation Plan. The restricted stock and deferred stock units vest on January 2, 2020.(2)As of June 30, 2019, Ms. Alvarez held 5,006 unvested restricted shares.(3)As of June 30, 2019, Mr. Barrett held 5,006 unvested restricted shares.(4)As of June 30, 2019, Mr. Bron held 5,006 unvested deferred stock units.(5)Mr. Cohen joined the Board of Directors in February 2019. The amounts shown represent a pro-rated portion of Mr. Cohen's annual retainer and annual restricted stock award based on his partial year of service. Mr. Cohen elected to receive his restricted stock award in deferred stock units under the Directors Deferred Compensation Plan. As of June 30, 2019, Mr. Cohen held 3,240 unvested deferred stock units.(6)As of June 30, 2019, Mr. Engler held 5,006 unvested restricted shares.(7)As of June 30, 2019, Mr. Fink held 5,006 unvested restricted shares.(8)As of June 30, 2019, Mr. Knowling held 5,006 unvested deferred stock units.(9)As of June 30, 2019, Ms. McFadden held 5,006 unvested deferred stock units.
Please see the Security Ownership of Certain Beneficial Owners and Management table starting on page 5331 for additional information on the beneficial ownership of the Company'sour Common Stock by each of our directors.
ownership guidelines for all of our non-employee directors. Pursuant to those guidelines, thesenon-employee directors must hold shares of the Company'sour Common Stock equal to the lesser of: (i) three times the annual cash retainer andor (ii) 15,000 shares. Non-employee directors must be in compliance with this policy by September 28, 2021 or five years after they begin service on our Board service,of Directors, whichever date is later. As of the date of this Proxy Statement, all of our non-employee directors are in compliance with this policy.policy or are within the period to accumulate the specified level of ownership.
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Ethics and Business Conduct periodically amended as the Board of Directors enhances the Company’s corporate governance practices. The theour Board of Directors. In the case of a deferral of an equity award, the non-employee director is granted an equal amount of deferred stock units in lieu of restricted stock.shares. Deferred stock units granted in lieu of a restricted stock award are subject to the same vesting requirements or other restrictions that would have applied to such restricted stock award.theour Board of Directors. Deferred stock units are settled in shares of our Common Stock or cash, at the Company'sCompany’s discretion.TableCorporate Governance Guidelines and Code of ContentsPROPOSAL 1:ELECTION OF DIRECTORScurrentlyoversees the management of the Company and its business for the benefit of our stockholders in order to enhance stockholder value over the long term and to achieve its educational mission. The Board of Directors also has nine members: Aida M. Alvarez, Craig R. Barrett, Guillermo Bron, Robert L. Cohen, Nathaniel A. Davis, John M. Engler, Steven B. Fink, Robert E. Knowling, Jr.adopted Corporate Governance Guidelines to assist it in the exercise of its responsibilities. The Guidelines are reviewed annually and Liza McFadden.termBoard of officeDirectors has also adopted a Code of each memberBusiness Conduct and Ethics that applies to all directors, officers and employees. The purpose of this code is to promote honest and ethical conduct for conducting the business of the Company, consistent with the highest standards of business ethics. The Corporate Governance Guidelines and Code of Business Conduct and Ethics are available on our website at https://investors.stridelearning.com/governance.expires at the Annual Meeting, or in the case of a transaction in which the aggregate amount is, or is expected to be, in excess of $250,000, the Board of Directors will review the relevant facts and circumstances of all related party transactions, including, but not limited to: (i) whether the transaction is on terms comparable to those that could be obtained in
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Upon the recommendation of our Nominating and Corporate Governance Committee,written charter adopted by the Board of Directors, has approved the nomination of nine directors, Aida M. Alvarez, Craig R. Barrett, Guillermo Bron, Robert L. Cohen, Nathaniel A. Davis, John M. Engler, Steven B. Fink, Robert E. Knowling, Jr. and Liza McFadden, for election atAudit Committee, or the Annual Meeting to serve until“Committee”, assists the next annual meeting of the stockholders (or until such time as their respective successors are elected and qualified or their earlier resignation, death, or removal from office).
Our Board of Directors in fulfilling its responsibility for oversight of the quality and integrity of the Company’s financial reporting processes and its internal audit function. Management has no reasonthe primary responsibility for the financial statements and the reporting process, including the system of internal controls and for assessing the effectiveness of the Company’s internal control over financial reporting. The independent auditors are responsible for performing an independent audit of the Company’s consolidated financial statements and internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board and for issuing reports thereon.
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| | | | Members of the Audit Committee | |
| | | | ||
| | | | Steven B. Fink (Chairman) | |
| | | | Robert L. Cohen | |
| | | | Victoria D. Harker |
| | | | 2021 | | | 2020 | | |
| | Audit Fees | | | $1,227,008 | | | $1,400,200 | |
| | Audit-Related Fees | | | 47,272 | | | 25,000 | |
| | Tax Fees | | | — | | | — | |
| | All Other Fees | | | — | | | — | |
| | Total | | | $1,274,280 | | | $1,425,200 | |
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ratify the appointment of BDO USA as the Company’s independent registered public accounting firm.
APPOINTMENT OF BDO USA AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING JUNE 30, 2022.
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Set forth below are the names and other information pertaining to each person nominatedfollowing resolution:
Aida M. Alvarez, Age 70
Ms. Alvarez joined us a director in April 2017 and is a member of our Audit Committee. She currently serves as Chair of the Latino Community Foundation. As Administrator of the U.S. Small Business Administration, she was a member of President Clinton's Cabinet from 1997 to 2001. Previously, Ms. Alvarez served as the Director of the Office of Federal Housing Enterprise Oversight from 1993 to 1997, where she was charged with financial oversight of the secondary housing market, the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac"). Prior to that, she worked for the New York City Health and Hospitals Corporation, Bear Stearns & Company, Inc. and the First Boston Corporation. She has served on the boards of directors of Fastly, Inc. since August 2019; Oportun, Inc. (formerly Progress Financial Corporation) since 2011; Zoosk, Inc. since 2014; and HP Inc. since February 2016. From 2006 to June 2016, Ms. Alvarez served on the board of Wal-Mart Stores Inc., and from 2004 to 2014, served on the boards of MUFG Americas Holdings Corporation (formerly UnionBanCal Corporation) and MUFG Union Bank N.A. (formerly Union Bank N.A.). Ms. Alvarez holds a B.A. from Harvard College. Ms. Alvarez was selected as a director because of her financial expertise, government experience, and ability to bring diverse perspectives to the Board of Directors.
Craig R. Barrett, Age 80
Dr. Barrett joined us as a director in September 2010, currently serves as Chairman of our Academic Committee and became our Lead Independent Director in September 2017. He served as Chief Executive Officer of Intel Corporation from 1998, until his retirement in 2009, and was also Chairman of the Board of Intel from 2005 to 2009. He previously served in various roles at Intel Corporation, including Chief Operating Officer, since joining Intel in 1974. Prior to Intel Corporation, Dr. Barrett was a member of the Department of Materials Science and Engineering faculty of Stanford University. Dr. Barrett currently serves as Co-Chairman of Achieve, Inc., an independent, bipartisan, non-profit education reform organization; President and Chairman of BASIS Schools, Inc.; Vice Chair of the Science Foundation Arizona; and Co-Chairman of the Business Coalition for Student Achievement. Dr. Barrett holds a B.S., M.S. and Ph.D. in Materials Science from Stanford University. Dr. Barrett was selected as a director because of his deep knowledge and experience in information technology innovation, as well as his global, operational, and leadership experience as Chairman and Chief Executive Officer of Intel Corporation. He also brings a unique perspective to the Our Board of Directors from his tenure as a professor and his volunteer work and support of numerous educational organizations.
Guillermo Bron, Age 67
Mr. Bron joined us as a director in July 2007 and currently serves as a memberour Compensation Committee value the opinions of our stockholders, and to the extent there is a significant vote against the NEO compensation, as disclosed in this Proxy Statement, we will consider our stockholders’ concerns and will evaluate what, if any, further actions are necessary to address those concerns. We expect to hold our next Say-on-Pay vote at our 2022 annual meeting of stockholders.
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| 1. | Company policies and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications. |
| 2. | Payments by Stride or any subsidiary used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient. |
| 3. | Stride or any subsidiary’s membership in and payments to any tax-exempt organization that writes and endorses model legislation. |
| 4. | Description of management’s and the Board’s decision-making process and oversight for making payments described in sections 2 and 3 above. |
1 | See https://www.opensecrets.org/federal-lobbying/clients/summary?cycle=2018&id=D000044946 and https://www.opensecrets.org/federal-lobbying/clients/summary?cycle=2020&id=D000044946 |
2 | https://www.edweek.org/policy-politics/outsized-influence-online-charters-bring-lobbying-a-game-to-states/2016/11 |
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Robert L. Cohen, Age 54
Mr. Cohen joined us as a director in February 2019. Mr. Cohen currently serves in various roles including strategic advisor, investor, and board observer to high growth education technology companies including 2U Inc. and Zybooks. Mr. Cohen served as President and Chief Operating Officer of 2U through January 2016. He was appointed President in November 2013 and Chief Operating Officer in April 2012. In addition, Mr. Cohen was 2U's founding Chief Financial Officer beginning in June 2008. From 2001 to 2008, Mr. Cohen held several senior roles at The Princeton Review, including executive vice president of strategic development and executive vice president and general manager of K12 Services. From 1983 to 2001, Mr. Cohen founded and operated the largest network of franchises of The Princeton Review before selling them back to that company. Mr. Cohen attended Princeton University. He was selected as a director because of his deep knowledge and experiencebelieves it is in the best interests of our stockholders for the Company to participate in the political process. We are highly regulated by both U.S. state and federal laws. The Company’s Senior Vice President of Public Affairs oversees our participation in the U.S. political process, the Company’s compliance with federal, state and local laws governing lobbying activities and campaign contributions and the Company’s expenditures made to trade associations and other nonprofits engaged in public policy advocacy.
3 | https://www.the74million.org/article/3-states-tried-to-shutter-failing-for-profit-online-charter-schools-a-suspicious-pattern-of-allegationsccusations-and-legal-complaints-quickly-follow |
4 | https://www.alec.org/article/emergency-crisis-remote-learning-is-not-virtual-schooling/ |
5 | https://theintercept.com/2018/11/29/alec-corporate-funders-charles-koch/ |
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Nathaniel A. Davis, Age 65
Mr. Davis joined us as a director in July 2009public disclosure requirements, and has served as our Chairman since June 2012. In January 2013, he became our Executive Chairman, and in January 2014, Mr. Davis was appointed to be our CEO, serving in that role through February 2016 and again beginning in March 2018. Prior to joining the Company he served as the managing director of RANND Advisory Group from 2003 until December 2012. Previously, Mr. Davis worked for XM Satellite Radio from June 2006is fully committed to November 2008, serving as Presidentcomplying with all applicable U.S. state and then Chief Executive Officer until the company's merger with Sirius Radio. He also served on the XM Satellite Radio board from 1999 through 2008. From 2000 to 2003, Mr. Davis was Presidentfederal laws governing its political and Chief Operating Officer and a board member of XO Communications Inc. Mr. Davis has also held senior executive positions at Nextel Communications (EVP, Network and Technical Service), MCI Telecommunications (Chief Financial Officer) and MCI Metro (President and Chief Operating Officer). Since 2011, Mr. Davis has served as a director of Unisys Corporation and RLJ Lodging Trust. Mr. Davis has also previously served on the board of several public and private firms including Mutual of America Capital Management Corporation, Charter Communications and Telica, 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.lobbying activities. The Board of Directors believes this disclosure provides our stockholders and the general public with insights into our lobbying activities. Specifically, the Company, through its agents:
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John M. Engler, Age 71
Mr. Engler joined useach NEO and all directors and executive officers of the Company as a group, except as qualified by the information set forth in the notes to this table. To our knowledge, except as noted below, no person or entity is the beneficial owner of more than 5% of the voting power of the Company’s voting securities. As of October 18, 2021, 42,766,739 shares of our Common Stock were outstanding.
| | | | Shares Beneficially Owned(1) | | ||||
| | | | Shares of Common Stock | | | Percent | | |
| | James J. Rhyu(2) | | | 525,778 | | | 1.23% | |
| | Kevin P. Chavous(3) | | | 250,025 | | | * | |
| | Shaun E. McAlmont(4) | | | 120,091 | | | * | |
| | Vincent W. Mathis(5) | | | 95,876 | | | * | |
| | Timothy J. Medina(6) | | | 96,242 | | | * | |
| | Nathaniel A. Davis(7) | | | 1,096,027 | | | 2.56% | |
| | Aida M. Alvarez(8) | | | 27,946 | | | * | |
| | Craig R. Barrett(9) | | | 63,595 | | | * | |
| | Guillermo Bron(10) | | | 66,103 | | | * | |
| | Robert L. Cohen(11) | | | 16,102 | | | * | |
| | John M. Engler(12) | | | 58,284 | | | * | |
| | Steven B. Fink(13) | | | 155,391 | | | * | |
| | Victoria D. Harker(14) | | | 12,185 | | | * | |
| | Robert E. Knowling, Jr.(15) | | | 17,868 | | | * | |
| | Liza McFadden(16) | | | 26,394 | | | * | |
| | All Directors and Executive Officers as a Group (15 persons)(17) | | | 2,627,907 | | | 6.14% | |
| | BlackRock, Inc.(18) | | | 3,001,694 | | | 7.02% | |
| | The Vanguard Group(19) | | | 3,554,797 | | | 8.31% | |
| | Dimensional Fund Advisors(20) | | | 3,174,839 | | | 7.42% | |
| * | Denotes less than 1%. |
| (1) | Beneficial ownership of shares is determined in accordance with the rules of the SEC and generally includes any shares over which a person or entity exercises sole or shared voting or investment power. Except as indicated by footnote, and subject to applicable community property laws, to our knowledge, each stockholder identified in the table possesses sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by the stockholder. The number of shares beneficially owned by a person or entity includes shares of Common Stock subject to options held by that person or entity that are currently exercisable or exercisable within 60 days of October 18, 2021 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. |
| (2) | Includes 116,510 unvested shares of restricted Common Stock that are subject to forfeiture. |
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| (3) | Includes 32,920 unvested shares of restricted Common Stock that are subject to forfeiture. |
| (4) | Includes 31,486 unvested shares of restricted Common Stock that are subject to forfeiture. |
| (5) | Includes 34,014 unvested shares of restricted Common Stock that are subject to forfeiture. |
| (6) | Includes 56,639 unvested shares of restricted Common Stock that are subject to forfeiture. |
| (7) | Includes 104,862 unvested shares of restricted Common Stock that are subject to forfeiture. |
| (8) | Includes 6,901 unvested shares of restricted Common Stock that are subject to forfeiture. |
| (9) | Includes 6,901 unvested shares of restricted Common Stock that are subject to forfeiture. |
| (10) | Includes 6,901 unvested shares of Common Stock that are subject to forfeiture. |
| (11) | Includes 6,901 deferred stock units that are subject to forfeiture. |
| (12) | Includes 6,901 unvested shares of restricted Common Stock that are subject to forfeiture. |
| (13) | Includes 6,901 unvested shares of restricted Common Stock that are subject to forfeiture. Mr. Fink has voting and investment control with respect to the securities held by S&C Fink Living Trust. |
| (14) | Includes 6,901 unvested shares of restricted Common Stock that are subject to forfeiture. |
| (15) | Includes 6,901 deferred stock units that are subject to forfeiture. |
| (16) | Includes 3,450 deferred stock units and 3,451 unvested shares of Common Stock that are subject to forfeiture. |
| (17) | Includes 421,288 unvested shares of restricted Common Stock and 17,252 deferred stock units. The unvested shares of restricted Common Stock and deferred stock units are subject to forfeiture. |
| (18) | Based solely on publicly available filings with the SEC, including the Schedule 13G/A filed on February 5, 2021. The address for BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. |
| (19) | Based solely on publicly available filings with the SEC, including the Schedule 13G/A filed on February 10, 2021. The address for The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. |
| (20) | Based solely on publicly available filings with the SEC, including the Schedule 13G/A filed on February 12, 2021. The address for Dimensional Fund Advisors, LP is Building One 6300, Bee Cave Road, Austin, TX 78746. |
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| | Section | | | Page | |
| | Executive Summary | | | 33 | |
| | What Guides our Program | | | 40 | |
| | Compensation-Setting Process | | | 42 | |
| | Fiscal 2021 Executive Compensation Program in Detail | | | 45 | |
| | Severance and Change in Control Arrangements | | | 54 | |
| | Other Executive Compensation Practices and Policies | | | 55 | |
| | Named Executive Officer | | | Role |
| | Nathaniel A. Davis | | | Executive Chairman(1) |
| | James J. Rhyu | | | Chief Executive Officer(2) |
| | Timothy J. Medina | | | Chief Financial Officer |
| | Kevin P. Chavous | | | President, Academic Policy and External Affairs |
| | Shaun E. McAlmont | | | President, Career Learning Solutions(3) |
| | Vincent W. Mathis | | | Executive Vice President, General Counsel and Secretary |
| (1) | On January 20, 2021, Mr. Davis, Chairman of our Board of Directors and Chief Executive Officer of our Company, notified our Board of Directors that he would retire from his position as Chief Executive Officer, effective January 26, 2021. Mr. Davis continues to serve as Executive Chairman of the Company, effective January 26, 2021. |
| (2) | On January 20, 2021, our Board of Directors appointed Mr. Rhyu to succeed Mr. Davis as Chief Executive Officer of our Company, effective January 26, 2021. |
| (3) | On October 14, 2021, Dr. McAlmont notified us of his decision to resign from his position effective October 29, 2021 to pursue other opportunities. |
Steven B. Fink, Age 68
Mr. Fink joined us as a director in October 2003, currently serves as Chairman of our Audit Committee and is a member of our Compensation Committee. Mr. Fink is the Co-Chairman of Heron International. He served as a director of Nobel Learning Communities, Inc. from 2003 to 2011 and as Chairman of the Board of Life Storage, LLC from 2013 to 2016. In addition, Mr. Fink is a member of the Boards of the Jackson Laboratory, City of Hope, St. Helena Hospital, Ole Health and the Herb Ritts Foundation, and is a member of The J. Paul Getty Photographs Council. From 1999 to 2009, Mr. Fink served as a director of Leapfrog Enterprises, Inc. and was its Chairman from 2004 to 2009. From 2000 to 2008, Mr. Fink was the Chief Executive Officer of Lawrence Investments, LLC. Mr. Fink has also previously served as Chairman and Chief Executive Officer of Anthony Manufacturing, Chairman and Managing Director of Knowledge
Universe and Chairman and Chief Executive Officer of Nextera Enterprises, Inc. Mr. Fink holds a B.S. in Psychology from the University of California, Los Angeles and a J.D. and an L.L.M. from New York University. Mr. Fink was selected as a director based on his significant experience in operations and financial oversight gained as serving as director or chairman for various public and private companies in addition to his membership on various company audit committees which enables him to contribute significantly to the financial oversight, risk oversight and governance of the Company.
Robert E. Knowling, Jr., Age 64
Mr. Knowling joined us as a director in January 2018 and is a member of our Compensation Committee. Since May 2009, he has served as Chairman of Eagles Landing Partners, which specializes in helping senior management formulate strategy, lead organizational transformations, and re-engineer businesses. From 2002 to 2005 he served as Chief Executive Officer of the NYC Leadership Academy, an independent non-profit corporation created by Chancellor Joel I. Klein and Mayor Michael R. Bloomberg that is chartered with developing the next generation of principals in the New York City public school system. Mr. Knowling has also held roles as Chief Executive Officer of Telwares, Chairman and Chief Executive Officer of SimDesk Technologies, Inc. and Chairman, President and Chief Executive Officer of Covad Communications. He was awarded the Wall Street Project's Reginald Lewis Trailblazers Award by President Clinton and the Reverend Jesse Jackson in 1999. Mr. Knowling serves on the board of directors for Roper Technologies, Inc., Rite Aid Corporation and Stream Companies. He also previously served on the board of Heidrick & Struggles, Inc. from 2010 to 2015 and Convergys Corporation from 2017 to 2018. He holds a B.A. in theology from Wabash College and an M.B.A. from Kellogg School of Management, Northwestern University. Mr. Knowling was selected as a director based on his experience in public education, public company leadership roles, technology and organizational development.
Liza McFadden, Age 56
Ms. McFadden joined us as a director in August 2017 and is a member of our Nominating and Corporate Governance Committee. Ms. McFadden currently leads LIZA and Partners LLC. Previously, she was President and Chief Executive Officer of the Barbara Bush Foundation for Family Literacy from 2012 to 2018. She is a former high school teacher, Florida Department of Education administrator, and served in Governor Jeb Bush's administration. Additionally, Ms. McFadden was appointed by President George W. Bush to serve on the National Institute for Literacy Board. She holds an M.A. from Florida State University and a B.A. from Fitchburg State University. Ms. McFadden was selected as a director because of her dedication to the education community and expertise in literacy.
Set forth below is biographical information for each of our current executive officers who is not also a director.
Kevin P. Chavous, President, Academics, Policy & Schools Group, Age 63
Mr. Chavous joined us in January 2017 and currently serves as President, Academics, Policy & Schools Group. He was a member of our Board of Directors from January 2017 to October 2017 before resigning to take his current position. Previously, he was the Founder and Chief Executive Officer of The Chavous Group, an educational consulting firm, a position he held from January 2012 until January 2018 and was a founding Board Member of the American Federation for Children ("AFC"). He served as AFC's Executive Counsel from 2012 to 2016. Previously, Mr. Chavous was a partner at the SNR Denton law firm from 2002 to 2012 and served as a member of the Council of the District of Columbia from 1993 to 2005, where he was Chair of the Council's Education Committee. He also has servedCommittee, and other members of management proactively engaged in extensive stockholder outreach prior to and following our 2020 annual meeting of
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Tablemanagement and Mr. Knowling met with stockholders representing more than 21% of Contents
schools acrossour outstanding Common Stock.
Vincent W.Medina, our Chief Financial Officer, Mr. Mathis, Executive Vice President,our General Counsel, and Secretary, Age 55
Mr. Mathis joined us in September 2018 and serves as Executive Vice President, General Counsel and Secretary. In this role, he has executive responsibility for providing comprehensive legal counsel forMs. Maddy, our business, including matters relating to securities, litigation, regulatory compliance, intellectual property, contracts and licensing, and corporate governance. Mr. Mathis has more than 20 years of legal experience counseling diverse global businesses. Prior to joining the Company, Mr. Mathis served as Senior Vice President, Corporate Affairs, Corporate SecretaryHuman Resources, and ChiefMr. Knowling continued their stockholder outreach efforts during the beginning of Stafffiscal 2022. At that time, we reached out to our top 25 stockholders, and as of September 1, 2021, have spoken with or are scheduled to speak with stockholders representing more than 30% of our outstanding Common Stock. In our outreach to stockholders, we have committed to maintaining an open and ongoing dialogue multiple times per year.
Shaun E. McAlmont, President, Career Readiness Education, Age 53
Dr. McAlmont joined us in August 2018 and serves as President, Career Readiness Education. In this role, he has executive responsibility for managing all aspects of K12's career readiness education programs, including development of the Destinations Career Academies and Programs, and related market expansion. Prior to joining the Company, Dr. McAlmont served as President and CEO of Neumont College of Computer Science, which included Helio Training, LLC, a software development bootcamp. Previously, Dr. McAlmont served as President and CEO of Lincoln Educational Services (NASDAQ: LINC), a national provider of career training programs, where he earlier was President and Chief Operating Officer. Prior to his roles at Lincoln, Dr. McAlmont served as President of the Online Learning Division at Alta Colleges following a role as regional vice president over multiple school campuses. Dr. McAlmont holds an Ed.D. in Higher Education Management, with distinction, from the University of Pennsylvania, an M.A. in Education Administration from the University of San Francisco, and a B.S. from Brigham Young University.
James J. Rhyu, Chief Financial Officer and President, Product and Technology, Age 49
Mr. Rhyu joined us in June 2013 and serves as Chief Financial Officer and President, Product and Technology. Prior to joining the Company, Mr. Rhyu served as Chief Financial Officer and Chief Administrative Officer of Match.com, a subsidiary of publicly traded IAC/InterActiveCorp, since June 2011. In those roles, he was responsible for overseeing a broad range of functions, including finance, human resources, legal, information technology and operations, certain international operations and product development. Prior to his roles at Match.com, Mr. Rhyu was a Senior Vice President of Finance at Dow Jones & Company from January 2009 until May 2011, where he ran the global financial function. Previously, Mr. Rhyu served for three years as the Corporate Controller of Sirius XM Radio Inc. and its predecessor company, XM Satellite Radio,fiscal 2021, as well as servingour ongoing commitment to stockholder outreach. Our stockholders also noted key improvements in our executive compensation policies and practices, including our increased focus on performance-based equity awards to be earned based on quantifiable metrics, our enhanced disclosure of our stockholder outreach efforts, and our continued responsiveness to stockholder and proxy advisory firm feedback.
| | What We Heard | | | Action Taken | | | Effective |
| | Long-term incentive compensation awards have only a one-year performance period | | | - Going forward, 60% of total annual equity award value granted in the form of PSU awards, with performance to be based on three-year metrics - For fiscal 2022, the metrics selected are related to gross margin percentage and the compound annual growth rate (“CAGR”) of our stock price measured at the end of a three-year performance period | | | - Equity awards granted for fiscal 2022 |
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| | What We Heard | | | Action Taken | | | Effective |
| | Long-term incentive compensation awards use only a single, absolute-based metric | | | - PSU awards use multiple absolute performance metrics: gross margin and a stock price CAGR for fiscal 2022 | | | - Equity awards granted for fiscal 2022 |
| | Size of equity awards granted to named executive officers in view of size of prior years’ awards | | | - Overall size of equity awards granted to Mr. Chavous and Dr. McAlmont in fiscal 2022 were smaller than equity awards granted to them in fiscal 2021 | | | - Equity awards granted for fiscal 2022 |
| | One-time award with performance metric enabling missed interim payments to be earned at end of the performance period | | | - Feedback received was in reference to a one-time award granted to our then-CEO and has not been and will not be repeated in future years. Further, any multi-year awards granted to an executive officer will not contain a “catch-up” feature similar to the award cited. One-time PSU award granted to Dr. McAlmont to accelerate growth of Career Learning business does not contain “catch-up” feature and shares not earned due to not meeting threshold revenue goal for fiscal 2021 were forfeited. | | | - Equity awards granted in fiscal 2021 |
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COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis provides information about our fiscal 2019 compensationstretch performance levels have been established with award earning potential for the following named executive officers ("NEOs"):
•Nathaniel A. Davis, Chairmanat 50%, 100%, andChief Executive Officer•James J. Rhyu, Chief Financial Officer200% of the target award payouts, respectively.
established threshold performance at the approved budget for the fiscal year.
a virtual life experience for now.
As in prior years, during fiscal 2019 we continued to respond to the feedback received from stockholders and major proxy advisory firms on our executive compensation programs by further developing our long-term performance-oriented approach to executive compensation through the introduction of a multi-year equity incentive plan intended to encourage the creation of stockholder value over a longer three-year performance period.
Say on Pay Results and Stockholder Engagement
95% of the shares voted at our 2018 annual meeting of stockholders voted to approve our named executive officer compensation for fiscal 2018, reflecting significant improvement over prior years and our stockholders' strong support of our executive pay programs and practices. We recognize the significance of stockholder support of our executive compensation programs and continued our stockholder outreach efforts during fiscal 2019. This year we endeavored to remain responsive to stockholder feedback and ensure that the elements of our executive compensation programs effectively reflect our desire to further our strategic business objectives while tightly linking executive pay to measurable performance results.
At the beginning of fiscal 2019, we proactively reached out to our top 35 stockholders, speaking with a total of four stockholders that responded and in the aggregate held over 8% of our shares outstanding.
Our Investor Relations and Human Resources leaders conducted the outreach efforts. 100% of the stockholders that we spoke with supported our fiscal 2018 advisory vote on named executive officer compensation and several noted key improvements in our compensation practices, most notably our consolidation of the distinct roles of a separate CEO and Executive Chairman, our enhanced disclosure of stockholder outreach efforts and our continued responsiveness to stockholder and proxy advisory firm feedback. While no significant concerns were raised by stockholders during these conversations, an area for consideration involved the use of longer-term performance metrics for our equity incentive programs. In response to this and similar feedback received in prior years regarding the use of one-year performance periods for certain equity awards granted to certain of our named executive officers, for fiscal 2019 we introduced a new long-term shareholder performance plan (the "2019 SPP") designed to create stockholder value over a multi-year performance period by encouraging our NEOs to focus on executing our key strategic objectives. Awards under the 2019 SPP are based entirely on a three-year performance period and will be earned only if we realize significant stock price appreciation as of the end of the three-year period.
By actively pursuing our strategic priorities during fiscal 2019, we realized strong financial resultsperformance and, with an increased interest in online schools throughout the nation, we anticipate even stronger trends in fiscal 2022. The Committee believes that performance-based compensation incentivizes our core business delivered key operational and academic achievements. Highlights include:
•Managed Public School Retention and Enrollments.Improving student retention in our virtual schools is a key aspectexecutives to promote the overall success of our businessstrategy. Research showsand aligns managements’ interests with those of our stockholders. Consistent with this philosophy, we reward our executives for great performance relative to our key financial and operational metrics thatstudents who remain in the same school setting longer generally perform better academically. To ensure the best outcomes for students, we partner with the school boards we serve to seek to enroll and retain students who are truly engaged and ready to learn. For fiscal 2019, retention at our managed public schools improved by more than ten basis points over fiscal 2018. In part, as a result of these improvements, total average enrollments in our Managed Public School Programs increased 6.3% over fiscal 2018.•- drive stockholder value. Fiscal 2021 highlights include:
| | Metric | | | Fiscal 2020 Actual Performance | | | |||||||||||
Fiscal Actual Performance | |||||||||||||||||
| | | Percentage Increase over Fiscal 2020 | | ||||||||||||||
| | Adjusted Operating Income | | | ||||||||||||||
$ | |||||||||||||||||
| | | $161.4M | | | 159.9% | | |||||||||||
| | Revenue | | | $1,040.8M | | | $1,536.8M | | | 47.7% | | ||||||
| | Adjusted EBITDA | | | $128.2M | | | $239.9M | | | 87.1% | |
For fiscal 2019 our profit 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.
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While the structural changes made to our executive compensation programs and practices in recent years were continued into fiscal 2019, the Compensation Committee (the "Committee") worked to ensure that fiscal 2019 compensation decisions reflect positive pay for performance practices in each of the key elementsPresident of our executive compensation programs. Highlights include:
•No Significant Base Salary Increases.Other than modest increases in the base salaries of Mr. Rhyu and Mr. Chavous of not more than 3%, none of our NEOs received an increase in base salary for fiscal 2019.•Continued to Simplify our Executive Bonus Plan.Beginning in fiscal 2018, the Committee focused on restructuring our Executive Bonus Plan by reducing the number of corporate performance management objectives ("PMOs") for our most senior executives. The Committee built upon this approach for fiscal 2019 by further reducing the number of corporate PMOs from five to three so that our annual bonus plan is more closely tied to driving stockholder value through the achievement of key metrics related to profitability, growth and business initiatives. Again in fiscal 2019, the Executive Bonus Plan for Mr. Davis, Mr. Rhyu and Mr. ChavousCareer Readiness Education programs, was100%granted a one-time PSU award tied to theachievement of pre-established objective measures and not to individual performance criteria.•Introduced Long-Term Shareholder Performance Plan.Our executives previously participated in a long-term incentive plan that was introduced in fiscal 2016 and concluded in early fiscal 2019. Following the conclusion of this 2016 plan, the Committee adopted the 2019 SPP with the intent that awards under the 2019 SPP are not granted on an annual basis. Accordingly, the size of awards granted under the 2019 SPP takes into account that additional similar performance share units ("PSUs") with overlapping performance periods and measured based on stock price growth will not be granted in fiscal 2020 and fiscal 2021.The 2019 SPP is a departure from the Company's historical practice of tying performance-based equity awards to achieving pre-established financial goals that may not directly correlate to stock price appreciation. Instead, the 2019 SPP was designed to focus on the creation of stockholder value over a three-year performance period and enable our NEOs to participate in a percentage of that growth. Awards under the 2019 SPP are earned at the end of a three-year performance period based solely on stock price increases over the three-year period and determined as a percentage of the total stockholder value creation that has been delivered. If a minimum percentage of stock pricegrowth of25% (measured on an absolute basis) is not attained during the performance period, the awards will be forfeited.•No Supplemental Equity Grants.We made no off-cycle or supplemental equity awards toourNEOs for fiscal 2019. Equity awards for our NEOs were limited to regular time-vesting awards, which comprise a portion of each NEO's annual equity award, and awards under our 2019 SPP. The potential award opportunities under our 2019 SPP take into account that additional similar awards with overlapping performance periods and measured based on stock price growth are not expected to be granted in fiscal 2020 and fiscal 2021.
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Table of ContentsTABLE OF CONTENTS
Executive Compensation Principles, Policies andPrinciples. Our executive compensation programs are guided by basic principles that we seek to incorporate in our executive pay practices:1.Link Compensation to Performance, Stockholder Interests and Student Success. Compensation levels should reflect actual performance, consistent with our business strategy and be aligned with stockholder interests and the success of the students in the schools we serve.2.Maintain Competitive Compensation Levels. Levels of compensation should be competitive with those offered by comparable companies in our industry to attract, retain and reward our executives. We set base pay levels near the median of our compensation peer group and provide above-peer median compensation opportunities to executives only if performance is attained at levels above rigorously set target-level goals.3.Reflect our Industry Circumstances and Unique Business. As the only publicly traded company in the K-12 space, our compensation programs must be tailored to address the interests of stockholders and our public education obligations as we execute on our long-term strategy of creating schools of academic excellence with innovative technologies, inspired teaching and personalized learning.4.Engage Independent Compensation Consultant. We engage an independent compensation consultant to inform the Committee and evaluate the alignment of pay, performance relative to our compensation peer group, and compensation risk.Policies and Practices.executives'executive officers’ compensation with stockholder interests. Listed below are those compensation policies and practices we employ and certain policies and practices we do not employ because we believe they would not serve the long-term interests of our stockholders.
What We Do | | | What We Don’t Do | ||||||
✔ | | | Carefully Consider Stockholder Input. We regularly seek and engage in dialogue with our stockholders on executive compensation matters. Ongoing enhancements to our executive compensation program are influenced by these discussions. | | | ✘ | | | Increase Shares without Stockholder Approval. Our 2016 Plan does not contain an “evergreen” provision to increase the number of shares of Common Stock available for grants each year. Any increase to the number of shares available requires stockholder approval. |
✔ | | | Maintain a Compensation Recovery (“Clawback”) Policy. We can recover incentive compensation wrongly awarded to an executive officer where fraud or intentional misconduct occurs. | | | ✘ | | | Provide Non-Performance Based “Single Trigger” Change in Control Payments. We maintain a “double trigger” vesting policy with respect to our equity awards whereby accelerated vesting in connection with a change in control of the Company also generally requires a qualifying termination of employment. |
✔ | | | Require Mandatory Stock Ownership. All of our executive officers and our non-employee directors are required to maintain a minimum ownership level of our Common Stock. 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. | | | ✘ | | | Allow Hedging or Pledging. Our insider trading policy specifically prohibits short sales, hedging and margin transactions and our 2016 Plan prohibits pledging of any award granted under the plan unless otherwise determined by the plan administrator. |
✔ | | | Perform Competitive Market Analysis. The Committee reviews competitive market data provided by its independent compensation consultant for our executive officers prior to making annual executive compensation decisions. | | | | | ||
✔ | | | Analyze Compensation Program Risk. We review our executive and other compensation programs annually to ensure that they do not encourage excessive or unnecessary risk taking. | | | | | ||
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Align Compensation to Share Price. A significant portion of our performance-based compensation is tied to growth in our stock price which directly aligns to stockholder interests. Awards under the 2019 SPP will be earned only ifguided by basic principles that we realize significant stock price appreciation as of the end of a three-year performance period.
Establish Performance Goals Aligned to Strategy. Our Executive Bonus Plan and 2019 SPP utilize objective performance-based goals that the Committee believes are rigorous and challenging.
Target Pay Competitively. We seek to target compensation within a competitive range of our compensation peer group and seek to deliver greater compensation only when warranted by market conditions or superior performance.
Use Meaningful Vesting Conditions to Promote Retention. Awards under the 2019 SPP are earned and vest after three years, and only to the extent that we experience significant stock price appreciation over such period. Time-based restricted stock awards ("RSAs") vest over three years.
Carefully Consider Stockholder Input. We regularly seek and engage in dialogues with our stockholders on executive compensation matters. Recent enhancementsincorporate in our executive compensation programs have been influenced by these discussions.
Maintain a Clawback Policy. We can recover incentive compensation wrongly awarded to an executive officer where fraud or intentional misconduct led to a restatement of our financial statements.
Require Mandatory Share Ownership. All of our executive officers, including our NEOs, and our non-employee directors are required to maintain a minimum ownership level of our Common Stock.
Perform Competitive Market Analysis. The Committee reviews competitive market data provided by its independent compensation consultant for our executive officers prior to making annual executive compensation decisions.
Analyze Executive Compensation Risk. We review the executive compensation programs annually to ensure that they do not encourage excessive or unnecessary risk taking.
What We Do Not Do
Grant Multi-Year or Guaranteed Bonuses or Equity Awards. We do not pay guaranteed bonuses and have no guaranteed equity-based awards. This ensures that we are able to base all compensation awards on measurable performance factors, operational results and competitive market needs.
Provide Generous Executive Perquisites. We do not provide significant perquisites to our executive officers, such as club memberships, personal income tax advisory services and similar items.
Offer Tax Gross-Ups. We do not provide income tax gross-ups for personal or broad-based benefits nor excise tax gross-ups for change in control payments or benefits.
Offer Pension or Supplemental Retirement Plans. We do not provide costly retirement benefits to our executive officers that reward longevity rather than contributions to Company performance.
Reprice Options. Our 2016 Incentive Award Plan ("2016 Plan") specifically prohibits repricing of options without stockholder approval.
Increase Shares without Stockholder Approval. Our 2016 Plan does not contain an "evergreen" provision to increase the number of shares available for grants each year. Any increase to the maximum number of shares available will require stockholder approval.
Provide Non-Performance Based Single Trigger Change in Control Payments. We maintain a "double trigger" vesting policy with respect to our equity awards whereby accelerated vesting in connection with a change in control of the Company generally requires a qualifying termination of employment. Awards under the 2019 SPP will be earned and vest in connection with a change in control only to the extent our stock price has increased as of the transaction. Legacy "single-trigger" vesting stock option awards from prior years have been completely eliminated from our compensation program.
Allow Hedging or Pledging. Our insider trading policy specifically prohibits short sales, hedging and margin transactions and our 2016 Plan prohibits pledging of any award granted under the plan unless otherwise determined by the plan administrator.
Link Compensation to Performance, Stockholder Interests and Student Success | | | Compensation levels should reflect actual performance, consistent with our business strategy, and be aligned with stockholder interests. |
Maintain Competitive Compensation Levels | | | Levels of compensation should be competitive with those offered by comparable companies in our industry to attract, retain and reward our executives. We set base salary levels near the median of our compensation peer group and provide above-peer median compensation opportunities to executives only if performance is attained at levels above rigorously set target-level goals. |
Reflect our Industry Circumstances and Unique Business | | | As the only publicly traded company in the K-12 space, our executive compensation program must be tailored to address the interests of stockholders and our public education obligations as we execute on our long-term strategy of creating schools of academic excellence with innovative technologies, inspired teaching and personalized learning. |
Engage Independent Compensation Consultant | | | The Committee engages an independent compensation consultant to inform the Committee and evaluate the alignment of pay and performance relative to our compensation peer group, and compensation risk. |
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Table of ContentsTABLE OF CONTENTS
Group) and four companies were added to the peer group (Cornerstone OnDemand, Kforce, Pluralsight, and RealPage) to better align with the Company’s ongoing business focus. the peer group. Nathaniel A. Davis James J. Rhyu Kevin P. Chavous Shaun E. McAlmont Vincent W. Mathis value. target performance level for each of the two corporate PMOs. The following table sets forth, for each NEO, the Nathaniel A. Davis James P. Rhyu Kevin P. Chavous Shaun E. McAlmont Vincent W. Mathis Directors grant Mr. Rhyu following number of shares of our Common Stock, which vested upon receipt: Defined Contribution Plan Prior to January 2, 2021, we matched at the rate of $0.25 for each dollar of a participant’s contributions on the first 4% of eligible salary that they contributed each pay period, subject to certain statutory limits. Table” below. stock price. policy or are still within the five-year period to accumulate the specified level of ownership. Stock on margin or engaging in transactions, in puts, calls or other derivative securities designed to hedge or offset any decrease in the market value of the manage risks. We believe we have effective internal controls. Name Nathaniel A. Davis Chief Executive Officer and Chairman James J. Rhyu Chief Financial Officer President, Product and Technology Kevin P. Chavous President of Academics, Policy and Schools Shaun E. McAlmont President, Career Readiness Education Vincent W. Mathis Executive Vice President, General Counsel and Secretary Option Exercises and Stock Vested During Fiscal Name Nathaniel A. Davis Chief Executive Officer and Chairman James J. Rhyu Chief Financial Officer President, Product and Technology Kevin P. Chavous President of Academics, Policy and Schools Shaun E. McAlmont President, Career Readiness Education Vincent W. Mathis Executive Vice President, General Counsel and Secretary In addition, during any period in which Mr. Rhyu is receiving any compensation from the Company (including and no less than any applicable severance period) and for a 12-month period thereafter, Mr. Rhyu is prohibited from competing with the Company or its business. Potential Value of Termination and Change-in-Control Benefits 2021. Audit Fees Audit-Related Fees Tax Fees All Other Fees Total James J. Rhyu (2) Kevin P. Chavous (3) Shaun E. McAlmont (4) Vincent W. Mathis (5) Nathaniel A. Davis (6) Aida M. Alvarez (7) Craig R. Barrett (8) Guillermo Bron (9) Robert L. Cohen (10) John M. Engler (11) Steven B. Fink (12) Robert E. Knowling, Jr. (13) Liza McFadden (14) All Directors and Executive Officers as a Group (13 persons) (15) BlackRock, Inc. (16) The Vanguard Group (17) Dimensional Fund Advisors (18) Section 16 of the Exchange Act requires directors and executive officers and persons, if any, owning more than 10% of a class of the the future. Tying Executive to CompanyVersus Performanceprograms areprogram is designed to link pay and performance in the following ways: CompensationElement Represents a lower percentage of target total direct compensation than at most peer companies, with average base salaries benchmarking near the 50th percentile when compared to the peer group in June 2018. Executive Bonus Plan
Ties a meaningful portion of target annual cash compensation to attaining pre-established objectiveperformance goals. Long-Term IncentivesTime-based RSAs: Encourages retention of executives and results in less dilution to our stockholders as compared to stock option grants. RSAs are subject to vesting over three years.2019 SPP PSUs: Incentivizes creation of stockholder value over a three-year performance period. PSUs are earned and vest based on stock price growth over the performance period. No PSUs will be earned if total stock price growth is below threshold levels.executing strategic changes to our businessachievement of long-term goals that deliver concrete increases toincrease stockholder value. Other Compensationsupplementalexecutive disability and life insurance benefits for executives are paid by the Company but no costly supplemental retirement programs are offered.Company. 
uses a performance-based frameworkis responsible for overseeing our executive compensation program, as specified in makingits charter. The Committee’s role includes:decisionsof our executive officers and recommending the compensation for our executives, includingExecutive Chairman and CEO, subject to approval by the independent members of our Board of Directors.2019,2021, the Committee continued to engageretain Compensia, a national compensation consultant, to evaluate the market competitiveness ofconsulting firm, as its compensation for our executive officers. Compensia'sconsultant. Compensia’s work for the Committee also included, an assessmentamong other services, a review and update of the compensation peer group, companies and a subsequent executive compensation market analysis. Theanalysis based on an assessment of the compensation practices of the companies in the peer group, a review and analysis of the compensation of the non-employee members of our Board of Directors, a review and report on the risk profile of our executive compensation programs, and preparation for the Chief Executive Officer transition, including a review of transition compensation. In addition, the Compensia consultant meets on a frequent basis with the Chairman of the Committee hasto discuss a host of compensation matters. Compensia reports directly to the Committee, which will annually review its performance, independence, and fees. In fiscal 2021, the Committee assessed Compensia'sCompensia’s independence and concluded that no conflict of interest exists that would prevent Compensia from providing services to the Committee.ComparativeCompetitive Market DataPracticesrelated policies and practices. To assess our executive compensation against the competitive market, the Committee reviews and considers the compensation levels and practices of a select group of peer companies. In general, the Committee seeks to establish the range of target total direct compensation for our executive officers near the median for similar positions at the companies in our compensation peer group, with a greater emphasis on variable cash compensation versus fixed cash compensation, and provide executive severance and change in control agreements that are aligned with our compensation peer group and market best practices.the Committee considered a number of factors, including revenue, market capitalization, industry and status as an existing peer. Compensia also considered companies that list us as a peer as well as our peers as identified by the major proxy advisory firms. The Committee seeks to maintain as much consistency as possible in the peer group year over year and carefully considers changes. The companies in thefor fiscal 2019 compensation peer group were:• ACI Worldwide, Inc.• Adtalem Global Education, Inc. (formerly DeVry Education Group)• American Public Education, Inc.• Blackbaud, Inc.• Bridgepoint Education, Inc.• Capella Education Co.• Career Education Corp.• Chegg Inc.• Graham Holdings Co.• Grand Canyon Education, Inc.• Houghton Mifflin Harcourt Co.• Huron Consulting Group• Scholastic Corporation• Strayer Education, Inc.• Weight Watchers International, Inc.• Zynga, Inc.• 2U, Inc.This peer group reflects an adjustment made in late fiscal 2018 to remove The Advisory Board Company because it was acquired. In seeking a replacement,2021, the Committee considered the previously mentioned factorsfollowing primary factors:addedbusiness focus – companies in the education services, software and human resources or employment services sectors;Group. 2019,2021, Compensia used this peer group to prepare an analysis for the Committee that compared the compensation levels of our executive officers to comparable executive positions.In general,positions at the companies in the peer group. The Committee seeksused data drawn from the companies in our compensation peer group to establishevaluate the range of targetcompetitive market when reviewing and adjusting the total direct compensation packages for our executive officers near the medianCEO and our other NEOs, including annual base salary, target annual bonus opportunities, and long-term incentive compensation opportunities, for similar positions infiscal 2021.with a greater emphasis on variable cash compensation versus fixed cash compensation.Chairmanregularly and CEO Pay MixCompensia assistedmakes adjustments to its composition annually, taking into account changes in both our business and the Committee in designing competitive pay packages that focus heavily on variable pay components, with the intent that the target total direct compensation for our Chairman and CEOshould be overwhelmingly performance-based. A graphic illustrationbusinesses of the basic annual target total pay mix of our Chairman and CEO, which is set forthcompanies in his employment agreement, is depicted below:
SalariesBaseSalaryby the Committee, and for executive officers other than the CEO, in conjunction with recommendations made by theour CEO, to ensure that our executive compensation structure remains aligned with our compensation objectives.Other than modest Compensation adjustments for our CEO are recommended by the Committee and reviewed and approved by the independent members of our Board of Directors.increasesadjustments for fiscal 2021 in August 2020, the Committee reviewed a competitive assessment of executive compensation levels prepared by Compensia, which showed that the base salary level of Mr. RhyuDavis approximated the 73rd percentile of our compensation peer group and that the base salary level of our other NEOs, on average, approximated the 50th percentile of our compensation peer group. The Committee also reviewed tally sheets which detailed the historical pay for each NEO. The independent members of our Board of Directors determined to leave Mr. Chavous of 3% and 1.5% respectively, noneDavis’ fiscal 2021 base salary at its fiscal 2020 level.received a base salary increase for fiscal 2019. The fiscal 2019 base salaries for our NEOs are2021 as set forth in the table below: (1) Mr. Davis’ annual base salary was reduced to $500,000 when he retired from his position as our Chief Executive Officer, effective January 26, 2021. (2) Mr. Rhyu’s annual base salary was increased to $700,000 when he was appointed our Chief Executive Officer, effective January 26, 2021. Name Base Salary for
Fiscal 2019 $ 735,000 $ 515,000 $ 497,350 $ 415,000 (1) $ 405,000 (2) (1)Dr. McAlmont was hired as our Executive Vice President, President of Career Readiness Education effective August 29, 2018.(2)Mr. Mathis was hired as our Executive Vice President, General Counsel effective September 4, 2018.Determination of Annual Incentive CompensationNEOs'NEOs’ target total cash compensation is "at risk" based upon Company and, for certain NEOs, individual performance. As part of our continued effort to align our pay for performance practices with our redefined business strategy,“at risk.” For the Committee has focused in recent years on restructuring the Executive Bonus Plan. This has included updating and reducing the corporate PMOs, removing performance metrics that overlap with our performance-based equity incentive awards, eliminating individual performance criteria for our most senior NEOs and decreasing the weighting of individual PMOs for our other NEOs. The Committee continued this process for fiscal 2019 by further reducing the number of corporate PMOs for all of our NEOs from five in fiscal 2018 to three for fiscal 2019 so that the2021 Executive Bonus Plan, is more closely tiedthe Committee used two corporate performance management objectives (“PMOs”) – revenue and adjusted operating income – as these key metrics are related to drivingprofitability and growth, which ultimately enhances stockholder value through the achievement of key financial metrics and operational goals.thehis target annual bonus levelopportunity is set pursuant to his employment agreement. 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 levelsopportunity for Mr. Mathis under our fiscal 2021 Executive Bonus Plan forfrom 65% to 80% of his actual earned base salary and determined to leave the target annual bonus opportunities of our other NEOs at their fiscal 2019. Target2020levelsopportunity was made following its review of the target bonus opportunities of executives holding comparable positions in our compensation peer group and to achieve parity in the target bonus opportunities of our named executive officers below the level of Executive Chairman and CEO.20192021 as set in August 2020 were as follows: NameTarget Bonus Level(% of Base Salary) 150% JamesRhyu80% Medina 80% 65% 65% (1) Mr. Rhyu’s target bonus opportunity was originally set at 100% of his actual earned base salary. However, in connection with his promotion to Chief Executive Officer, his target bonus opportunity was increased to 150% of his actual earned base salary, effective January 26, 2021. metricscorporate PMOs to be included in our Executive Bonus Plan each fiscal year. For fiscal 2019, in order to tie annual bonuses more closely to top line financial results,Over the past several years, the Committee increasedhas restructured the weighting attributable to the revenue metric and eliminated the performance metrics tied to CTE and MPS enrollments. Executive Bonus Plan by updating and reducing the number of corporate PMOs to focus our NEOs on the achievement of key financial metrics and operational goals. For fiscal 2021, the Committee used revenue and adjusted operating income, each equally weighted, as the corporate PMOs for the fiscal 2019 generally fell into the three categories set forth in the table below. Category Profitability Growth Key Business InitiativesRetention Specifically,Initially, the Committee set the target performance levels for the revenue and adjusted operating income metrics at $1,310.7 million and $108.1 million, respectively. In doing so, the Committee set the initial threshold performance levels for the Adjusted Operating Incomerevenue and Revenueadjusted operating income metrics at or above theour actual results for fiscal 20182020 and the target performance levels for allthese metrics at levels at or above our fiscal 20192021 budgeted performance. The thresholdperformance levels. Subsequently, following a discussion concerning our actual and projected enrollments, our budget and the effects of the COVID-19 pandemic on our business, the Committee determined to increase the target performance levels for the Retention metric required further improvement in student retention as comparedfiscal year for the revenue and adjusted operating income metrics to fiscal 2018, which saw robust student retention improvement. The$1,375.0 million and $130.0 million, respectively, with corresponding adjustments made to the threshold and outperform performance levels for each metric (as set forth in the table below). While increasing target performance levels were set belowis not a customary practice, the level of retention improvement weexperiencedsignificant growth in fiscal 2018 in lightour revenue generated as a result of the strong recovery in student retention during fiscal 2018 fromCOVID-19 pandemic influenced the retention drop we experienced inCommittee’s decision to increase the prior year.Mr. Davis, Mr. Rhyu and Mr. Chavousour NEOs were based solely on the achievement of these corporate PMOs, which the Committee determined was appropriate to focus theirthe efforts of our NEOs on improving Company performance and increasing stockholder value. However, for Dr. McAlmont and Mr. Mathis, thealso included individual PMOs intended to motivate these executives to produce measurable legal, compliance and business results, mindful of their functional roles within our organization and, particularly with respect to Dr. McAlmont, to ensure that a portion of his target total direct compensation is tied directly to growth of our Career Readiness business. For these NEOs, awards under the Executive Bonus Plan for fiscal 2019 were based 70% on the achievement of the corporate PMOs and 30% on the achievement of individual PMOs.
for fiscal 2019 are set forth in the table below. The PMOs provideEach PMO provided our NEOs with the opportunity to earn an above target awardsaward for that PMO in the event they exceed the pre-established performance levels,level for the PMO, but also provideprovided for no awards below minimum thresholds of performance. Achievement of a PMO at the threshold level resultsresulted in a payout at 33%50% of the target level, and achievement at the outperform level resultsresulted in a payout at 200% of the target level. Performance between the two levels iswas extrapolated on a straight-line basis. In August 2019,2021, the Committee reviewed our achievement against these corporate PMOs, andwith the results are included in the following table. (1) For purposes of the fiscal 2021 Executive Bonus Plan, “revenue” may be adjusted at the Committee’s discretion for any unusual, non-recurring event that is separately identified and quantified in our financial statements. (2) For purposes of the fiscal 2021 Executive Bonus Plan, “adjusted operating income” was operating income determined in accordance with GAAP adjusted for stock-based compensation expense and amortization of intangibles, and may, at the Committee’s discretion, exclude any acquisition related charges (which would include amortization subsequent to an acquisition transaction) and any other unusual, non-recurring gain or loss that is separately identified and quantified in our financial statements. (3) Each payment percentage was reduced from 200% to 100% to reflect a 50% weighting of the corporate PMO in the Fiscal 2021 Executive Bonus Plan formula. Weighting Metric Davis Rhyu
Chavous McAlmont
Mathis Performance Levels Actual Results Adjusted Threshold $51.8M Operating 40% 28% Target $57.5M $62.2M Income (1) Outperform $63.3M Threshold $950M Revenue 40% 28% Target $1,000M $1,015.8M Outperform $1,050M Threshold 150 bps Retention (2) 20% 14% Target 200 bps Improvement 10 bps Outperform 250 bps (1)Operating income is adjusted for stock-based compensation expense and may exclude any acquisition related charges (which would include amortization subsequent to an acquisition transaction) and any other unusual, non-recurring gain or loss that is separately identified and quantified in our financial statements.(2)Measures the overall improvement in retention rate of students that are active in our Managed Public School Programs on or after June 1st and the percent of these students that remain active at the end of the school year, or on May 31st, subject to certain exclusions for students ineligible to return (e.g., graduating students) or commence enrollment until the following school year.Individual PMOsTABLE OF CONTENTSFor Dr. McAlmont and Mr. Mathis, individual PMOs accounted for 30% of the NEO's target annual bonus opportunity under thefor fiscal 2019, although the Committee retains discretion toallow for individual adjustments based on factors and considerations it deems relevant. A general description of the individual PMOs for fiscal 2019 and the NEOs' achievements are provided below. NEOIndividual GoalsPerformance ResultsShaun E. McAlmontDevelop and grow the Career Readiness business, including through the introduction of new models, acquisition targets and opening of new DCAsDr. McAlmont launched ten new standalone DCAs and added three new career readiness programs to existing managed schools resulting in significant growth of our Career Readiness presence for school year 2019 - 2020 and beyond; introduced the National Job Shadow Week to highlight career pathways and partnerships; and entered strategic partnership with TALLO (formerly known as Stem Premier).124% Vincent W. MathisAchieve favorable outcomes in pending litigation;Oversee Board training programs;Ensure all public company filing requirements are satisfied;Support corporate development activitiesMr. Mathis achieved his established goals with respect to obtaining favorable outcomes in litigation; effectively oversaw the Board training programs; ensured all public company filing requirements were satisfied; and facilitated all corporate development activities. 120.1% Fiscal 2019 Executive Bonus Plan PaymentsCommittee'sCommittee’s approved annual bonus award under our fiscal 2021 Executive Bonus Plan for fiscal 2019 based upon performance against the corporate PMOs and, for Dr. McAlmont and Mr. Mathis, performance against the executive's individual PMOs. Corporate PMOs NEO Adjusted
Operating
Income Revenue Retention Individual PMOs % of Target
Bonus Earned Amount of
Bonus 73% 52.6% 0% — 125.6% $1,385,277 73% 52.6% 0% — 125.6% $517,673 73% 52.6% 0% — 125.6% $499,931 51.1% 36.8% 0% 36% 124.0% $334,366 51.1% 36.8% 0% 32.1% 120.1% $316,042 Determination(1) Our revenue and adjusted operating income payment percentages were each 200%. Based on their respective weighting of 50%, each metric resulted in a 100% achievement percentage, resulting in each NEO earning 200% of their target annual bonus opportunity. (2) Messrs. Davis and Rhyu’s bonus payments were pro-rated for their mid-year changes in role and compensation. As a result of their respective mid-year changes in role and responsibilities, Mr. Davis’ bonus payment was reduced from $2,805,000 to $2,236,521 and Mr. Rhyu’s bonus payment was increased from $1,170,000 to $1,575,123. stockholders while building the value ofstockholders. We have historically used a one-year financial performance metric in our Company. Duringexecutive 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 fiscal 2019 we grantedadopted a long-term stockholder performance plan as a means of providing multi-year performance-based equity incentive awards. Awards under this program were entirely performance-based and will be earned only if we realize significant stock price appreciation as of the end of fiscal 2021.RSAs and PSUs to all of our NEOs.Time-Based Restricted Stock AwardsMr. Davis. Pursuant to Mr. Davis' employment agreement, as amended in connection with his appointment as our CEO in March 2018, beginning with fiscal 2019 Mr. Davis is entitled to aperformance-based awards. The following table sets forth the target award level undervalues for our annual equity incentive award plans inNEOs for fiscal 2021 and the rangeresulting number of $2,700,000 to $3,300,000, which awards may berestricted shares subject to such vesting criteria determined by the Boardeach type of Directors and Mr. Davis, including performance-based vesting criteria. While the Board of Directors has historically granted 100% of Mr. Davis' long-term incentives in the form of performance-based equity awards, in light of recent tax law changes (which no longer provide tax benefits for granting performance-based awards) and to more closely match customary practices among companies in our compensation peer group and among public companies in general, for fiscal 2019, the Board of Directors determined to grant a portion of Mr. Davis' annual long-term incentive award, in the form of a time-based RSA with a value of $2 million. The number of shares grantedwhich was determined based upon the fair market value of our Common Stock on the date of grant. The awards granted to our CEO were recommended by the Committee and reviewed and approved by the independent members of our Board of Directors. an awardour NEOs earning the maximum number of 115,674 restricted shares.Theshares of Common Stock. One-third of these shares vested in August 2021 on the date of certification of achievement, and the remainder will vest in equal installments in August 2022 and 2023. Mr. Davis' long-term incentive award was granted in the form of PSUs under the 2019 SPP as described in more detail below under "Determination of Long-Term Incentive Compensation—2019 Long-Term Shareholder Performance Plan."and Mr. Chavous. For fiscal 2019, Mr. Rhyu and Mr. Chavous were granted time-based RSAs havinga one-time restricted stock award with a value of $1,000,000$1,500,000 for Mr. Rhyuhis promotion to his new role as CEO, which was subsequently approved by the independent members of our Board of Directors. The award was divided equally between time-based and $700,000 for Mr. Chavous. The numberperformance-based restricted stock, resulting in a grant of 30,364 time-based restricted shares granted was determinedand 30,364 performance-based restricted shares, based uponon the fair market value of our Common Stock on the date of grant, which resulted in angrant.of 60,386 restricted shares to Mr. Rhyu and 42,271 restricted shares to Mr. Chavous.Dr. McAlmont and Mr. Mathis. In connection with commencing employment in early fiscal 2019, Dr. McAlmont was granted a time-based RSA for 45,000 shares and Mr. Mathis was granted a time-based RSA for 35,000 shares.All of the time-based RSAs granted to our NEOs during fiscal 2019 vestvests based on our standard vesting schedule which is semi-annually over a three yearthree-year period, with 20% of the shares of our Common Stock subject to the award vesting in the first year and 40% vesting in each of the next two years following the grant date.2019 Long-Term Shareholder Performance Plan (SPP)In early fiscal 2019, the Committee adopted and the Board of Directors approved the 2019 SPP—our new long-term shareholder performance plan under which a meaningful portion of the total long-term incentiveopportunities are provided to our NEOs in the form of PSUs designed to provide these executives with a percentage of stockholder value growth.The 2019 SPP was adopted following the conclusion of our prior long-term incentive plan as a means of continuing our practice of providing multi-year performance-based equity incentive awards. Since awards under the 2019 SPP will not be granted on an annual basis, award amounts granted during fiscal 2019 take into account that no similar PSUs with overlapping performance periods and measured based on stock price growth are expected to be provided to our NEOs.Awards under the 2019 SPP were originally granted to Mr. Davis, Mr. Rhyu and Mr. Chavous in September 2018 and in January 2019 the Committee determined to expand participation in the 2019 SPP to Dr. McAlmont and Mr. Mathis to ensure that the long-term incentive compensation opportunities for our NEOs were aligned to driving long-term stockholder value. PSUs granted under the 2019 SPP will be earned and vest only based on our market capitalization growth over a completed three-year performance period ending in 2021. The PSUs will be earned and vest based on the Company's average closingattainment of Adjusted EBITDA performance levels for calendar 2021 as set forth in the following table, with any earned shares subject to additional time-based vesting in equal annual installments over a period of three 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. priceaward will be determined in January 2022 following the end of the calendar year. One-third of any earned shares will vest on January 26, 2022, and the remaining earned shares will vest in equal installments on January 26, 2023 and 2024, subject to accelerated vesting in the event Mr. Rhyu’s employment is terminated due to his death or disability, or, pursuant to the terms of his letter agreement, by the Company without cause or by Mr. Rhyu for good reason within two years following a change in control of the Company.30 calendar day period that beginsnext three years as the marketplace adjusted to the changing learning environment resulting from the COVID-19 pandemic and we expanded our career readiness training into the adult education and corporate training markets and sought to maximize the benefits from our acquisitions of MedCerts and Tech Elevator.eighth day after the date the Company releases its earnings resultsattainment of Career Learning Revenue goals for fiscal 2021.The2021, fiscal 2022, and fiscal 2023. Each applicable revenue hurdle and the total number of shares of our Common Stock that would be earned at each applicable stock pricesuch hurdle was determined in order to correspond to a specified percentagedollar value of market capitalization growth delivered by the stock price increases, thereby directly aligning long-term incentive awards for the NEOs with long-term stock value growth for our stockholders. This percentage amount, along with theyear over year revenue growth. The number of shares that would be earned by each of the NEOs under the 2019 SPPDr. McAlmont at different stock pricerevenue hurdles and growth outcomes is illustrated in the following chart: 3-Year
CAGR Absolute Stock
Price Growth Stock Price
Hurdle Share of
Market
Cap
Growth # of Shares Earned Davis Rhyu Chavous McAlmont Mathis 7.6% 25% $21.18 1.0% 54,649 12,882 10,539 — — 10% 33% $22.63 6.0% 413,331 93,885 83,257 — — 15% 52% $25.86 6.5% 528,571 179,714 172,666 — — 20% 73% $29.38 6.5% 596,022 243,827 243,827 — — 25% 95% $33.21 7.5% 724,185 362,093 362,093 118,265 88,699 30% 120% $37.35 7.5% 727,673 382,433 382,433 138,606 103,954 40% 174% $46.65 7.5% 848,857 425,372 425,372 181,545 136,158 50% 238% $57.38 7.5% 939,858 425,372 (1) 425,372 (1) 181,545 136,158 (1)Amounts shown for Mr. Rhyu and Mr. Chavous reflect an incremental increase in the maximum award amount approved in January 2019 to ensure share payout levels are not reduced at greater performance levels.No amounts will be earned if total stock price growth over the three-year period is below certain threshold levels, which levels are below 25% (7.6% annualized) for Mr. Davis, Mr. Rhyu and Mr. Chavous and below 95% (25% annualized) for Dr. McAlmont and Mr. Mathis. A maximum of 7.5% of total value growth will be earned if total stock price growth equals or exceeds 95%. The number of PSUs earned will be interpolated on a straight linestraight-line basis if the stock pricerevenue falls between two of the levels set forth in the table above. The number of PSUs earned are subject to additional time-based vesting requirements as follows, subject, in each case, to Dr. McAlmont’s continued employment through each applicable vesting date: a change in control duringour Common Stock 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.PSUs willplan. The awards were granted in the form of performance share units and would be earned based solely on market capitalization growth over the completed three-year performance period commencing in fiscal 2019 and concluding at the end of fiscal 2021 (the “Performance Period”).theachieving total stock price paidgrowth of 33% (10% on an annualized basis) and a maximum of 7.5% of our total value growthimpliedexceeded 95% (25% on an annualized basis). Once the threshold attainment level was reached, the number of units actually earned would be interpolated between performance levels and vest in full upon being earned.transaction and2019 SPP earned the earned PSUs will vest immediately. the "Fiscal 2019our “Fiscal 2021 Non-Qualified Deferred Compensation" table.Compensation Table” below.We currently provideEffective January 1, 2021, our matching contributions are equal to $0.25$0.50 for each dollar of a participant'sparticipant’s contributions on the first 4% of eligible salary that they contribute each pay period, subject to certain statutory limits.programsprogram but recognize to be an important factor in attracting and retaining talented executives. Our NEOs participate in the same medical, dental, vision, disability and life insurance plans as our employees generally. We also pay for supplemental long-term disability and life insurance premiums for our executive officers and provide them with the opportunity to receive annual Company-paid executive physical examinations and reimburse certain executivesexecutive officers 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 order to incentivize Dr. McAlmont and Mr. Mathis to join the company in early fiscal 2019, each of these executives received a one-time sign-on bonus in the amount of $85,000 for Dr. McAlmont and $50,000 for Mr. Mathis. In addition, Dr. McAlmont and Mr. Mathis were provided reimbursement of relocation expenses in the amounts set forth in the "Summary Compensation Table for Fiscal 2019" below.20192021 is set forth below in our "Summary“Fiscal 2021 Summary Compensation Table for Fiscal 2019."Compensation CommitteeThe Committee is responsible for overseeing our executivethe overall compensation programs, as specified in its charter. The Committee's role includes:•Determining and approving the compensation of our Chairman, CEO and other executive officers, including the other NEOs;•Establishing and approving compensation planspackage for our executive officers. We provide severance to attract and retain individuals with superior ability and managerial talent, provide our executive officers with appropriate protections due to their vulnerability to terminations of employment due to a change in control, merger or acquisition and encourage our executive officers to focus their attention on their work duties and responsibilities in all situations.recommendationsCompany, 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 of employment without cause or resignation for good reason, these NEOs may be eligible to receive (subject entirely to the Committee’s discretion and contingent upon signing a release of claims in favor of the Company) accelerated vesting of outstanding and unvested restricted stock awards.Committee's compensation consultant;NEO’s covered dependents for a period of up to 12 months following termination; and•Proposing revisions (iii) accelerated vesting of all unvested equity or equity-based awards, provided that, unless a provision more favorable to the Committee's charterNEO is included in an applicable equity award agreement, any such awards that are subject to performance-based vesting conditions will only be payable subject to the attainment of the performance measures for the applicable performance period as provided under the terms of the applicable award agreement.Directors' approval to ensure compliance with new SEC regulations and NYSE listing standards as enacted.In performing its responsibilities with respect to the compensation of our executive officers,Directors nor the Committee uses information from a numberseek to time the grant of sources. The information utilized by the Committee includes advice from its compensation consultant, market data regarding the compensation practices of competitors, advice from outside legal counsel specializing in executive compensation, tally sheetsshowing prior compensationequity awards the recommendations ofbased on 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's role includes recommending plans and programs to the Committee, implementing the Committee's decisions and assisting and administering plans in support of the Committee. 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 other 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 of Committee's Compensation ConsultantThe Committee's charter gives it the authority to retain and approve fees and other terms of engagement for compensation consultants and other advisors to assist it in performing its duties. In fiscal 2019, the Committee continued to retain Compensia as its compensation 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. Other Compensation Policies and Practicesourthe Company to align their interests with those of our stockholders. TheFor fiscal 2021, the policy has expanded over the years such that it now applies to all ofrequired our executive officers. The policy requires ourExecutive Chairman and CEO to each maintain ownership of our Common Stock having a value equal to threefive times histheir base salary, our CFOPresidents and Chief Operating Officer to maintain ownership of our Common Stock equal to three times their base salary, our Chief Financial Officer to maintain ownership of our Common Stock equal to two times his base salary and each of our other executive officers to maintain ownership of our Common Stock ownership equal to one timetwo times their respective base salaries. Our executive officers have five years from the date the policy became applicable to them to accumulate the specified level of ownership. As of the date of this Proxy Statement, all of our NEOs are in compliance with this policy. ("Clawback"(“Clawback”) Policyclawbackcompensation recovery (“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.executive. 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.executive officer.Company'sCompany’s securities. Company employees (including officers), directors and consultants are prohibited from purchasing CommonCompany'sCompany’s equity securities. In addition, our 2016 Plan prohibits the pledging of any award granted under the 2016 Plan unless otherwise determined by the plan administrator.Tax DeductibilityAnnual CompensationPrior Policies and Practicesthe passage of the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), Section 162(m) of the Internal Revenue Code limited tax deductions for certain annual compensation in excess of $1 million paid to certain executive officers of a publicly traded corporation. Compensation that qualified as "performance-based" under Section 162(m) was exempt from this $1 million limitation. As part of the Tax Act, the ability to rely on this "qualified performance-based compensation" exception was eliminated and the limitation on deductibility was generally expanded to include all named executive officers. Although we maintained compensation arrangements that were intended to qualify as performance-based compensation under Section 162(m), following passage of the Tax Act we may no longer take a deduction for any compensation paid toreview our covered employees in excess of $1 million, subject to certain transition relief rules. The Committee believes that tax deductibility is only one of several relevant considerations when structuring compensationCompany’s existing programs and strivesassess whether our compensation policies and practices create risks that are reasonably likely to balancehave a material adverse effect on our Company. Among other factors, this assessment considered the effectivenessprogram structure, design characteristics and overall goals ofperformance-based measures associated with our executive compensation programs withprogram and concluded that our executive compensation program contains a number of safeguards that are expected to minimize excessive risk taking, including a reasonable mix of cash and equity compensation opportunities, a compensation recovery (“clawback”) policy, a balanced annual incentive plan design that emphasizes top and bottom line performance, formal policies for the materialityadministration of reduced tax deductions. Accordingly, the Committee has approved compensation amountsour equity program, a succession plan for key executives and stock ownership policies for our non-employee directors and executive officersofficers.wereour compensation policies and practices do not fully deductible because of Section 162(m)create risks that are reasonably likely to have a material adverse effect on our Company as a whole. We also believe that our incentive compensation arrangements provide incentives that do not encourage risk-taking beyond our Company’s ability to effectively identify and in light of the repeal of the performance-based compensation exception to Section 162(m), expects in the future to approve compensation that is not deductible for federal income tax purposes in order to achieve the desired flexibility in the design and delivery of compensation.Equity Award Grant PracticesWe do not have any plan or practice to time the grant of equity awards to our employees in coordination with the releasemateriality of material non-public information. We generally grant awards atreduced tax deductions. Accordingly, the time employment commencesCommittee may approve compensation that is not deductible for federal income tax purposes in order to achieve the desired flexibility in the design and annually in connectiondelivery of compensation.our annual compensationmanagement the Compensation Discussion and Analysis set forth above. Based on its review process. Neitherand discussion with management, the Committee recommended to our Board of Directors northat the Committee seek to time the grant of equity awards based on our stock price.SeveranceCompensation Discussion and ChangeAnalysis be included in Control ArrangementsWe consider severance to be an integral part of the overall compensation package for our executives. We provide severance to attractthis Proxy Statement and retain individuals with superior ability and managerial talent, provide our executives with appropriate protections due to their vulnerability to terminations of employment due to a change in control, merger or acquisition and encourage our executives to focus their attention on their work duties and responsibilities in all situations.We believe that providing the NEOs with severance payments and benefits upon certain terminations of employment are key retention tools that help us remain competitive with the companies in our compensation peer group, provide our executive officers with incentives to focus on the best interests ofour stockholdersincorporated by reference in the context of a potential change in control,Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021. appropriately protect our executive officers in the event of an involuntary termination of employment without creating a windfall due solely to a change in control.Severance. We have enteredshall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into an employment agreement with Mr. Davis and a letter agreement with Mr. Rhyu that provide for severance payments and benefits upon certain terminations of employment as further described belowany filing under the section "Potential Payments Upon TerminationSecurities Act of 1933 or Change in Control—Employment Agreements." Our other NEOs are generally entitled to receive severance pay upon a qualifying termination of employment under the Company's severance guidelines in an amount determined based on their position and tenure withSecurities Exchange Act of 1934, each as amended (together, the “Acts”), except to the extent that the Company which for Mr. Chavous, Dr. McAlmontspecifically incorporates this information by reference, and Mr. Mathis is currently equal to six months of base salary. In addition, upon a termination without cause or resignation for good reason, the NEOs mayshall not otherwise be eligible to receive, subject entirely to the Committee's discretion and contingent upon signing a release of claims in favor of the Company: (i) accelerated vesting of outstanding and unvested stock options that otherwise would have vested in the one year period following the date of termination (all other options to be forfeited), and (ii) accelerated vesting of outstanding and unvested restricted stock awards.Pursuant to the terms of their outstanding award agreements, in the event the employment of Mr. Rhyu, Mr. Chavous, Dr. McAlmont or Mr. Mathis is terminated due to his death or by the Company due to disability, the executive (or his estate) would be entitled to full accelerated vesting of outstanding and unvested restricted stock awards.Change in Control. Except as described below with respect to PSUs granteddeemed filed under the 2019 SPP, the NEOs are generally not entitled to receive cash payments or accelerated vesting of equity awards solely as a result of a change in control of the Company.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 event the NEO is terminated without cause or resigns for good reason within 24 months following a change in control, the executive would be entitled to receive 1.5 times the cash severance amount available under the Company's standard severance guidelines as described above and reimbursement for COBRA premiums for up to 12 months following termination. In addition, all unvested equity awards would become fully vested, provided that any awards subject to performance-based vesting would generally only vest subject to the attainment of the applicable performance conditions.Under the 2019 SPP, in the event of a change in control during the three-year performance period, the PSUs 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 the Company's executive and other compensation programs. In fiscal 2019, the Committee engaged Compensia to review the existing programs and assess whether our compensation policies and practices create risks that are reasonably likely to have a material adverse effect on the Company. Among other factors, this assessment considered the program structure, design characteristics and performance-based measures associated with our executive compensation programs and concluded that our executive compensation programs contain a number of safeguards that are expected to minimize excessive risk taking, including a reasonable mix of cash and equity compensation opportunities, a compensation recovery ("clawback") policy, a balanced annual incentive plan design that emphasizes top and bottom line performance, formal policies for the administration of our equity program, aTable of ContentsTABLE OF CONTENTSsuccession plan for key executives and a stock ownership policy for our non-employee directors and executive officers.Based on the foregoing, we believe that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company as a whole. We also believe that our incentive compensation arrangements provide incentives that do not encourage risk-taking beyond the Company's ability to effectively identify and manage significant risks, are compatible with effective internal controls and the risk management practices of our Company, and are supported by the oversight and administration of the Committee with regard to our executive compensation programs.2019, 20182021, 2020 and 2017. (1) This column represents the aggregate grant date fair value of stock awards computed in accordance with FASB ASC Topic 718. For performance-based restricted stock awards, amounts are shown based on the probable outcome of the performance condition, which are shown based on the target award level. If maximum performance is assumed for the performance-based restricted stock awards, the total grant date value of stock awards for each NEO would be as follows: Mr. Rhyu: $2,912,082, Mr. Davis: $3,494,799, Mr. Medina: $815,065, Dr. McAlmont: $25,913,947, Mr. Chavous: $1,164,603, and Mr. Mathis: $931,578. (2) All amounts are reported in the year earned, regardless of when they are paid. (3) The amounts in this column for fiscal year 2021 consist of 401(k) plan matching contributions, Company-paid life insurance and long-term disability premiums. Name Fiscal
YearBase
SalaryBonus (1) Stock
Awards (2)Nonequity
Incentive Plan
Compensation
(3)All Other
Compensation
(4)Total Nathaniel A. Davis 2019 $706,731 $— $7,676,558 $1,385,277 $17,131 $9,785,697 Chief Executive Officer and Chairman 2018 509,129 — 4,205,001 1,704,087 17,672 6,435,889 2017 400,000 — 1,999,989 716,520 15,210 3,131,719 James J. Rhyu 2019 $495,192 $— $3,654,349 $517,673 $9,211 $4,676,425 Chief Financial Officer 2018 500,000 — 755,967 618,263 9,549 1,883,779 President, Product and Technology 2017 500,000 — 815,840 458,300 9,048 1,783,188 Kevin P. Chavous 2019 $487,644 $— $3,329,353 $499,931 $14,943 $4,331,871 President of Academics, Policy and 2018 317,557 85,000 1,000,017 388,439 94,303 1,885,317 Schools Shaun E. McAlmont (5) 2019 $332,000 $85,000 $4,334,902 $334,366 $100,014 $5,186,282 President, Career Readiness Education Vincent W. Mathis (5) 2019 $317,769 $50,000 $3,265,637 $316,042 $45,286 $3,994,734 Executive Vice President, General Counsel and Secretary (1)Amounts shown for fiscal 2019 represent signing bonuses Dr. McAlmont and Mr. Mathis received in connection with their commencement of employment with the Company.(2)This column represents the aggregate grant date fair value of stock awards computed in accordance with FASB ASC Topic 718. For PSUs, amounts shown reflect the grant date fair values calculated using a Monte Carlo simulation model as these awards were market-based awards. The fair value was determined using a Monte Carlo simulation model and the following assumptions: the Company's Common Stock price at the date of grant of $17.29 (for Messrs. Davis, Rhyu and Chavous) and $31.51 (for Dr. McAlmont and Mr. Mathis); a three-year continuously compounded equivalent risk-free rate; an expected stock price volatility of 30% and 40%, respectively; and an expected term of approximately 3.00 and 2.75 years, respectively, for shares granted on September 18, 2018 and January 31, 2019, respectively.(3)All amounts are reported in the year earned, regardless of when they are paid.(4)The amounts in this column consist of 401(k) plan matching contributions, Company-paid life insurance, and long-term disability premiums. The amounts paid to Dr. McAlmont and Mr. Mathis also include $92,698 and $43,300, respectively, in moving expenses.(5)The base salary earned by Dr. McAlmont and Mr. Mathis for fiscal 2019 was prorated for their partial years of service.2019.2021. The equity awards described in the following table were granted under our 2016 Plan. Estimated Possible
Payouts under
Nonequity
Incentive Plan
Awards (1) Estimated Possible
Payouts under
Equity Incentive Plan Awards All Other
Stock
Awards:
Number of
Shares of Grant Date
Fair Value
of Stock Target Maximum Threshold Target Maximum Stock Awards Name Grant Date ($) ($) (#) (#) (#) (#) ($) Nathaniel A. Davis — 1,102,500 2,205,000 — — — — — Chief Executive Officer and 9/18/2018 (2 ) — — 54,649 413,331 939,858 — 5,676,554 Chairman 9/18/2018 (3 ) — — — — — 115,674 2,000,003 James J. Rhyu 412,000 824,000 — — — — Chief Financial Officer 9/18/2018 (2 ) — — 12,882 93,885 413,537 — 2,448,346 President, Product and Technology 1/31/2019 (4 ) — — — 11,835 11,835 — 206,011 8/31/2018 (3 ) — — — — — 60,386 999,992 Kevin P. Chavous — 397,880 795,760 — — — — — President of Academics, Policy and 9/18/2018 (2 ) — — 10,539 83,257 413,537 — 2,422,334 Schools 1/31/2019 (4 ) — — 11,835 11,835 — 207,011 8/31/2018 (3 ) — — — — — 42,271 700,008 Shaun E. McAlmont — 269,750 581,000 — — — — — President, Career Readiness 1/31/2019 (2 ) — — 118,265 138,606 181,545 — 3,587,002 Education 8/29/2018 (3 ) — — — — — 45,000 747,900 Vincent W. Mathis — 263,250 567,000 — — — — — Executive Vice President, 1/31/2019 (2 ) — — 88,699 103,954 136,158 — 2,690,237 General Counsel and Secretary 9/4/2018 (3 ) — — — — — 35,000 575,400 (1) Represents the target and maximum incentive awards payable under our Executive Bonus Plan based on fiscal 2021 base salaries for each NEO. For additional information regarding our Executive Bonus Plan, see “Fiscal 2021 Compensation Decisions—Determination of Annual Incentive Compensation” above. (2) Represents performance-based restricted stock awards that will be earned based on the attainment of Adjusted EBITDA performance levels for fiscal 2021, with any earned shares vesting in equal annual installments over three years from the date of grant. (3) Represents performance-based restricted stock awards that will be earned based on the attainment of Adjusted EBITDA performance levels for calendar year 2021, with any earned shares vesting in equal annual installments over three years from the date of grant. (4) Represents restricted stock awards vesting semi-annually over a three-year period, with 20% vesting in the first year and 40% vesting in each of the next two years following the grant date. (5) Represents PSUs that will be earned based on the attainment of career learning revenue targets for each of fiscal 2021, 2022, and 2023. The PSUs do not have threshold award levels. See “Fiscal 2021 Compensation Decisions – Long-Term Incentive Compensation – Dr. McAlmont One-Time Equity Award” for additional information. (1)Represents the target and maximum incentive awards payable under our Executive Bonus Plan based on fiscal 2019 base salaries for each NEO. For additional information regarding our Executive Bonus Plan, see "Fiscal 2019 Compensation Decisions—Determination of Annual Incentive Compensation" above.(2)Represents PSUs that will be earned based on the attainment of stock price growth measured at the end of fiscal 2021. For more information, see "Determination of Long-Term Incentive Compensation—2019 Long-Term Shareholder Performance Plan (SPP)" above. The PSUs do not have target award levels. In accordance with the instructions to Item 402(d) of Regulation S-K, which requires disclosure of a representative amount if the target amount is not determinable, the target amount shown in the table is based on the 3-Year CAGR of 10.0% with respect to the PSUs granted to Mr. Davis, Mr. Rhyu and Mr. Chavous and based on the 3-Year CAGR of 30.0% with respect to the PSUs granted to Dr. McAlmont and Mr. Mathis. If the target amount were shown based on the prior fiscal year's performance, the amount shown in the table would be $0.(3)Represents restricted stock awards vesting semi-annually over a three-year period, with 20% vesting in the first year and 40% vesting in each of the next two years following the grant date.(4)Amounts shown for Mr. Rhyu and Mr. Chavous reflect an incremental increase in the maximum award amount approved in January 2019 to ensure share payout levels are not reduced at greater performance levels. See "Fiscal 2019 Compensation Decisions—Determination of Long-Term Incentive Compensation—2019 Long-Term Shareholder Performance Plan (SPP)" for additional information.2019.2021. The section titled "Determination of Long-Term“Long-Term Incentive Compensation"Compensation” in the Compensation Discussion and Analysis above provides additional information regarding the outstanding equity awards set forth in this table. The payout and market values below are based upon the price per share of our Common Stock on June 30, 2021 of $32.13. (1) Represents PSUs that will be earned based on the attainment of stock price growth measured at the end of fiscal 2021. The number of shares is based on the three-year CAGR of 30.0% and a stock price hurdle of $37.35 per share. (2) Mr. Rhyu’s outstanding shares of restricted stock vest as follows, subject to his continued employment through the applicable vesting date: Option Awards Stock Awards Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)Option
Exercise
Price
($)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
($)
420,000
—
$21.26
01/07/21
—
—
—
— 97,720 — $33.92 09/19/21 — — — — 185,985 — $18.17 09/04/22 — — — — 227,917 15,195 (1) $13.43 09/10/23 — — — — — — — — 724,185 (2) 22,022,466 — — — — — — — — 341,276 (3) 10,378,203 — — — — 362,093 (2) 11,011,248 — — — — — — — — 5,124 (4) 155,821 — — — — — — 3,200 (5) 97,312 — — — — — — 87,649 (6) 2,665,406 — — — — 362,093 (2) 11,011,248 — — — — — — — — 7,251 (7) 220,503 — — — — — — 67,651 (8) 2,057,267 — — — — 118,265 (2) 3,596,439 — — — — — — — — 40,500 (9) 1,231,605 — — — — 88,699 (2) 2,697,337 — — — — — — — — 31,500 (10) 957,915 (1)Mr. Davis' unvested stock options12,077 shares vested on September 10, 2019.(2)Represents PSUs that will be earned based on the attainment of stock price growth measured at the end of fiscal 2021. The number of shares is based on the 3-Year CAGR of 25.0% and a stock price hurdle of $33.21 per share.(3)Mr. Davis' outstanding shares of restricted stock vest as follows, subject to his continued employment through the applicable vesting date:•79,373August 31, 2021;DavisRhyu in connection with his appointment as CEO through September 2019.fiscal 2020. The shares were deemed earned in early fiscal 2021. 13,069 of the shares vested on August 10, 2021 and 13,069 shares will vest on August 10, 2022;(3) 30,364 restricted shares represent performance-based restricted stock granted to Mr. Rhyu in fiscal 2021. The restricted shares vest based on attaining adjusted EBITDA performance goals for calendar year 2021. To the extent earned, awards will vest in annual installments beginning in January 2022. (4) Mr. Davis’ outstanding shares of restricted stock vest as follows, subject to his continued employment through the applicable vesting date: 2019;•92,60018, 2021;2018.2020. The shares were deemed earned in early fiscal 2019. 46,3002021. 19,604 of the shares vested on August 2, 201910, 2021 and the remaining19,603 shares will vest one year later;•65,196on August 10, 2022;2017. These2021. The shares were deemed earned in early fiscal 2022. 14,536 of the shares vested on August 31, 2019;12, 2021 and•11,567 the remaining two-thirds will vest in annual installments over the following two years; andSeptember 18, 2019August 14, 2021, and 92,54026,228 shares will vest semi-annually in four equal installments beginning March 18, 2020.(4)(5) Represents performance-based restricted stock granted to Mr. Davis in fiscal 2020. The restricted shares vest 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 2020-2022. The free cash flow performance goal for fiscal year 2021 was deemed earned in early fiscal 2022 and 119,431 shares vested on August 15, 2021. To the extent earned, 238,863 shares related to the cumulative three-year free cash flow goal will vest on August 15, 2022. (6) Mr. Medina’s outstanding shares of restricted stock vest as follows, subject to his continued employment through the applicable vesting date: sharesstock granted to Mr. Medina in fiscal 2018. These2021. The shares were deemed earned in early fiscal 2019 based upon2022. 3,444 of the attainment of free cash flow performancemetrics for fiscal 2018, as modified by our total stockholder return ranking as compared to companies in the Russell 2000 Index.•1,708 shares vested on August 1, 201912, 2021 and 3,416the remaining two-thirds will vest in annual installments over the following two years; and(7) Dr. McAlmont’s outstanding shares of restricted stock vest as follows, subject to his continued employment through the applicable vesting date: 1, 2020.(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 per share measured during the 30 consecutive calendar days following the report of fiscal 2017 earnings. The shares vested on September 8, 2019.(6)Mr. Rhyu's outstanding shares of restricted stock vest as follows, subject to his continued employment through the applicable vesting date:•6,039 shares vested on August 31, 2019 and 48,308 shares will vest semi-annually in four equal installments beginning on February 28, 2020;•6,834 shares vested on September 20, 2019 and 13,668 shares will vest semi-annually in two equal installments beginning on March 20, 2020; and•12,800 shares vested on August 24, 2019.(7)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.•2,417 shares vested on August 1, 2019 and 4,834 shares will vest semi-annually in two equal installments beginning on February 1, 2020.(8)Mr. Chavous' outstanding shares of restricted stock vest as follows, subject to his continued employment through the applicable vesting date:•11,48115, 2022;2018.2021. The shares were deemed earned in early fiscal 2019 based on Mr. Chavous' performance as measured against individual performance metrics. 5,7402022. 4,920 of the shares vested on August 1, 201912, 2021 and 5,741 sharesthe remaining two-thirds will vest on August 1, 2020;•4,228in annual installments over the following two years; and31, 201912, 2021, and 33,8168,876 shares will vest semi-annually in four equal installments beginning on February 28, 2020;12, 2022.(8) Represents PSUs that will be earned based on the attainment of career learning revenue targets for each of fiscal 2021, 2022, and 2023: •18,126 40,693 shares will vest in August 2023; and(9) Mr. Chavous’ outstanding shares of restricted stock vest as follows, subject to his continued employment through the applicable vesting date: threetwo equal installments beginning on DecemberFebruary 15, 2019.(9)Dr. McAlmont's outstanding2022;ofrepresent performance-based restricted stock vest as follows, subjectgranted to his continued employment throughMr. Chavous in fiscal 2021. The shares were deemed earned in early fiscal 2022. 4,920 of the applicable vesting date:•4,500 shares vested on August 15, 201912, 2021 and 36,000the remaining two-thirds will vest in annual installments over the following two years; and15, 2020.(10)Mr. Mathis's outstanding shares of restricted stock vest as follows, subject to his continued employment through the applicable vesting date:•3,50012, 2022.(10) Mr. Mathis’ outstanding shares of restricted stock vest as follows, subject to his continued employment through the applicable vesting date: 20192021;28,0004,574 shares will vest on August 10, 2022;March 15, 2020.February 12, 2022.20192021 Tabletheour NEOs as a result of the exercise of stock options and the vesting of restricted stock awards during the fiscal year ended June 30, 2019. No stock options were exercised by the NEOs during fiscal 2019. Stock Awards Number of Shares
Acquired on
Vesting
(#)Value Realized on
Vesting (1)
($) 351,092 6,113,631 122,431 2,549,550 23,865 600,118 4,500 144,270 3,500 118,230 (1) Represents the value of exercised shares calculated by multiplying (i) the gross number of options exercised by (ii) the difference between the closing market price of our Common Stock on the date of exercise and the exercise price of the option. (2) Represents the value of vested shares calculated by multiplying (i) the gross number of shares acquired on vesting by (ii) the closing market price of our Common Stock on the date of vesting. (3) Of the 946,817 shares acquired on the exercise of such options, 415,673 shares were surrendered by Mr. Davis at the time of exercise to cover the exercise price of such options, and 239,546 shares were surrendered by Mr. Davis at the time of exercise to cover Mr. Davis’ tax withholding obligations, resulting in 291,598 net shares to Mr. Davis as a result of such exercise. (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.2019,2021, under our Deferred Compensation Plan, which is discussed in more detail in the Compensation Discussion and Analysis above. (1) All contributions have been previously reported within the Summary Compensation Table. 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 — — — — — Chief Executive Officer and Chairman James J. Rhyu 61,826 — 5,341 — 476,690 Chief Financial Officer President, Product and Technology Kevin P. Chavous — — — — — President of Academics, Policy and Schools Shaun E. McAlmont — — — — — President, Career Readiness Education Vincent W. Mathis — — — — — Executive Vice President, General Counsel and Secretary Mr. Davis' appointmenthis transition from service as our CEO during fiscal 2018,Chief Executive Officer, we entered into an amendment toamended the second amended and restated employment agreement with Mr. Davis.Davis in January 2021, pursuant to which Mr. Davis continues to serve as our Executive Chairman. The amendment extended the term of the employment agreement, toas amended, expires on September 30, 2019, which term2022 and automatically renews for successive one 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. is entitled to receive an annual base salary of $735,000 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 the Company'sCompany’s equity incentive awardsaward plans and programs as in effect from time to time withtime. For fiscal 2021, such awards had a target award level beginning with fiscal 2019 in the range of $2,700,000 to $3,300,000, based on the terms of the agreement in effect at the beginning of the year. Beginning in fiscal 2022, Mr. Davis’ target level for awards under the Company’s equity award plans and programs will be in a range to be determined based on good faith negotiations between Mr. Davis and our Board of Directors or the Committee. Equity awards granted to Mr. Davis are subject to such vesting criteria to be determined by theour Board of Directors and Mr. Davis at the time of the grant, including performance-based vesting criteria.To maintain flexibility and ensure that stockholders are not overly burdened with excessive severance costs ascontinue 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. Davis that would eliminate ourwill be entitled to receive (i) a lump sum cash severance obligationspayment equal to Mr. Davisthree times his base salary, plus one times his target annual bonus, and (ii) 12 months of continued health, medical, dental and visionthe event Mr. Davis is replaced bylieu thereof). In addition, upon such a new 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 of Directors and if Mr. Davis is asked to leave the Board of Directors, 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. Notwithstanding the terms of his employment agreement, as a means to incentivize Mr. Davis' continued employment, the Board approved a "modifier" to Mr. Davis' award under the 2019 SPP 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 second year of the performance period (and he is not asked to leave the Board), he will remain eligible to vest in 50% of the PSUs that otherwise would have vested had he remained employed through the end of the performance period. If Mr. Davis voluntarily resigns from employment (i) during the second year of the performance period and is asked to leave the Board or (ii) 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.If the foregoing circumstances do not apply and we terminate Mr. Davis' employment without cause or he resigns for good reason, Mr. Davis will be entitled to receive (i) a lump sum cash payment equal to three times his base salary, (ii) 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 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 hisoutstanding equity awards to the extent such awards would have vested during the 24-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. If Mr. Davis'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, he would receive two times his target annual bonus and all of Mr. Davis'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.Davis'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) a pro-rated annual bonus, 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 the 12-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.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 a three 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.termination of employment. 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 timetimes his then-current base salary.We havehisthat Mr. Rhyu’s employment is terminated by the Company without cause or heMr. Rhyu resigns for good reason, Mr. Rhyu iswill be entitled to 12 monthsreceive, subject to his signing and not revoking a general release of claims, (i) continued payment of his annual base salary continuation andfor a period of 24 months; (ii) any earned but unpaid annual bonus for the fiscal year immediately preceding the year of termination.isremains subject to the terms of our Confidentiality, Proprietary Rights and Non-Solicitation Agreement which prohibits the solicitation of employees during the one year period following termination of employment. granted under the 2019 SPP, 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. We have entered intocontrol of the Company. Under the change in control severance agreements with our executives, otherNEOs (other than Mr.Messrs. Davis pursuant to which theyand Rhyu) that we entered into in June 2020, such NEOs are entitled to certain additional payments and benefits in the event they incur a qualifying termination of employment within the 24 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 hisMr. Davis’s employment agreement and Mr. Rhyu’s letter agreement, each of Mr. Davis isand Mr. Rhyu are 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.Under the 2019 SPP, in the event of a change in control during the three-year performance period, the PSUs will be earned based on the stock price paid or implied in the transaction and the earned PSUs will vest immediately.2019,2021, and the price per share of our Common Stock equaled $30.41,$32.13, the value of one share of our Common Stock on the last trading day of fiscal 2019.2021. 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) Chief Executive Officer Bonus 1,385,277 1,385,277 1,385,277 1,385,277 — 1,385,277 and Chairman Benefit Continuation (3) 6,989 6,989 6,989 6,989 — 6,989 Option Vesting (4) 258,011 258,011 258,011 258,011 — 258,011 Restricted Stock Vesting (5) 6,859,614 6,859,614 9,674,668 9,674,668 — 10,378,203 PSU Vesting (6) — — 19,173,165 19,173,165 19,173,165 — James J. Rhyu Salary Continuation — — 515,000 515,000 — 772,500 Chief Financial Officer Benefit Continuation (3) — — — — — 6,862 President, Product and Restricted Stock Vesting (5) 2,918,539 2,918,539 — — — 2,918,539 Technology PSU Vesting (6) — — — — 8,381,976 — Kevin P. Chavous Salary Continuation — — 248,675 248,675 — 373,013 President of Academics, Benefit Continuation (3) — — — — — 6,902 Policy and Schools Restricted Stock Vesting (5) 2,277,770 2,277,770 — — — 2,277,770 PSU Vesting (6) — — — — 8,381,976 — Shaun E. McAlmont Salary Continuation — — 207,500 207,500 — 311,250 �� President, Career Benefit Continuation (3) — — — — — 6,887 Readiness Education Restricted Stock Vesting (5) 1,231,605 1,231,605 — — — 1,231,605 PSU Vesting (6) — — — — 967,188 — Vincent W. Mathis Salary Continuation — — 202,500 202,500 — 303,750 Executive Vice Benefit Continuation (3) — — — — — 6,774 President, General Restricted Stock Vesting (5) 957,915 957,915 — — — 957,915 Counsel and Secretary PSU Vesting (6) — — — — 725,393 — (1) Amount shown assumes that the Company or a successor to the Company does not require Mr. Davis’ continued compliance with the non-compete provision of his employment agreement after his termination of employment. If the Company does require his continued compliance with the non-compete provision of his employment agreement after his termination, he would receive an additional payment of an amount equal to one time his base salary, which was equal to $500,000 as of June 30, 2021. (2) Amounts shown represent an estimate of the cost to provide continued health, medical, dental and vision benefits. (3) Amounts shown include the dollar value of the portion of outstanding restricted shares that would vest in each of the circumstances described above. (4) Amounts shown include the dollar value of the portion of PSUs that would vest in a change in control based on the closing price of our Common Stock on June 30, 2021. (1)In the event Mr. Davis' termination of employment occurred on June 30, 2019 in connection with our hiring a new Chief Executive Officer or a non-renewal of his employment agreement, Mr. Davis would not have received the cash severance amounts stated in this table.(2)Amount shown assumes that the Company or a successor to the Company does not require Mr. Davis' continued compliance with the non-compete provision of his employment agreement after his termination. If the Company does require his continued compliance with the non-compete provision of his employment agreement after his termination, he would receive an additional payment of one time his base salary, which was equal to $735,000 as of June 30, 2019.(3)Amounts shown represent an estimate of the cost to provide continued health, medical, dental and vision benefits.(4)Amounts shown include unvested stock options that were in the money as of June 30, 2019 and that would vest in each of the circumstances described above.Table of ContentsTABLE OF CONTENTS(5)Amounts shown include the portion of outstanding restricted shares that would vest in each of the circumstances described above.(6)Amounts shown include the portion of PSUs that would vest in a change in control based on the closing price of our Common Stock on June 30, 2019. Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information regarding the relationship of the annual total compensation of our employees and the annual total compensation of our Chairman and CEO, Mr. Davis.Rhyu. We consider the pay ratio specified below to be a reasonable estimate, calculated in a manner intended to be consistent with Item 402(u) of Regulation S-K.There were no changes to the employee population or compensation programs from fiscal 2018 to fiscal 2019 that would significantly impact our pay ratio disclosure. As a result, we are using the same median employee in the CEO Pay Ratio disclosure included in our 2018 proxy statement. This employee represented the median employee following an examination of annual base salaries for fiscal 2018 of allfrom among those employees who were employed by us on April 30, 2018,June 17, 2021, excluding our CEO.CEO, based on annual base salaries for fiscal 2021, which we believe is reasonably representative of our employees’ total compensation for the year. We included all employees, in this analysis, whether employed on a full-time, part-time or seasonal basis, which yielded a total employee population of 4,757.7,348. We did not make any cost-of-living or other adjustments to employee compensation.The median employee had no change in role and no significant change to compensation from fiscal 2018 to fiscal 2019. For20192021 for such employee using the same methodology we used for our NEOs as set forth in the Summary Compensation Table for Fiscal 2019.2019,2021, the annual total compensation for our median employee was $52,182$51,536 and the annual total compensation for our Chairman and CEO was $9,785,697,$5,312,583, resulting in an estimated pay ratio of 188103 to 1.The Compensation Committee ("Committee") has reviewed$700,000 per year, his target bonus of 150% with a 200% performance payout for exceptional performance, and discussed with management the Compensation Discussion and Analysis set forth above. Based on its review and discussion with management, the Committee recommended to our Boardtotal value of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in the Company's Annual Report on Form 10-K forStock Awards received during the fiscal year ended June 30, 2019.This report is provided by the following independent directors, who comprise the Committee:Members of the Compensation CommitteeRobert E. Knowling, Jr. (Chairman)John M. EnglerSteven B. FinkThe foregoing report is not "soliciting material," shall not be deemed "filed" and shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, each as amended (together, the "Acts"), except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Acts.Table of ContentsTABLE OF CONTENTSCERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS Policies and Procedures for Related-Party TransactionsWe recognize that related-party transactions present a heightened risk of conflicts of interest and have adopted a written policy to which all related-party transactions shall be subject. Pursuant to the policy, the Audit Committee of our Board of Directors, or in the case of a transaction in which the aggregate amount is, or is expected to be, in excess of $250,000, the Board of Directors will review the relevant facts and circumstances of all related-party transactions, including, but not limited to: (i) whether the transaction is on terms comparable to those that could be obtained in arm's length dealings with an unrelated third party; and (ii) the extent of the related party's interest in the transaction. Pursuant to the policy, no director, including the Chairman of the Audit Committee, may participate in any approval of a related-party transaction to which he or she is a related party. The Board of Directors or Audit Committee, as applicable, will then, in its sole discretion, either approve or disapprove the transaction.Certain types of transactions, which would otherwise require individual review, have been pre-approved by the Audit Committee. These types of transactions include, for example: (i) compensation to an officer or director where such compensation is required to be disclosed in our proxy statement; (ii) transactions where the interest of the related party arises only by way of a directorship or minority stake in another organization that is a party to the transaction; and (iii) transactions involving competitive bids or fixed rates. Additionally, pursuant to the terms of our related-party transaction policy, all related-party transactions are required to be disclosed in our applicable filings as required by the Securities Act of 1933, as amended and the Exchange Act and related rules. Furthermore, any material related-party transactions are required to be disclosed to the full Board of Directors. We have established internal policies relating to disclosure controls and procedures, which include policies relating to the reporting of related-party transactions that must be pre-approved under our related-party transactions policy. Compensation Committee Interlocks and Insider ParticipationDuring fiscal 2019, Messrs. Engler, Fink, and Knowling served on our Compensation Committee. During fiscal 2019, there were no interlocking relationships existing between members of our Board of Directors and our Compensation Committee and members of the board of directors or the compensation committee of any other company. During fiscal 2019, no members of the Compensation Committee were current or former officers of the Company or were employees of the Company and no members of the Compensation Committee had any relationship requiring disclosure by the Company under Item 404 of Regulation S-K.PROPOSAL 2:ADVISORY VOTE TO APPROVE NAMED EXECUTIVEOFFICER COMPENSATIONIn accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") andDelinquent Section 14 of the Exchange Act, we are asking our stockholders to cast a non-binding advisory vote to approve the fiscal 2019 compensation of our NEOs, as disclosed in this Proxy Statement. This Proposal, commonly known as a "Say on Pay" proposal gives our stockholders the opportunity to express their views on the design and effectiveness of our executive compensation programs.As described in detail under the heading "Compensation Discussion and Analysis," our executive compensation programs are designed to attract, motivate, and retain our NEOs, who are critical to our success. Under these programs, our NEOs are rewarded for the achievement of specific annual, long-term and strategic goals, corporate goals, and the realization of increased stockholder value. Please read the "Compensation Discussion and Analysis" and the compensation tables that follow, included in this Proxy Statement, for additional details about our executive compensation programs, including information about the fiscal 2019 compensation of our NEOs. Prior Year Vote and Fiscal 2019 Compensation HighlightsThe annual stockholder advisory vote on our named executive officer compensation for fiscal 2018 yielded an approval rate of 95%, which reflected a significant improvement over prior years and our stockholders' strong support of our executive pay programs and practices. As in prior years, we endeavored to remain responsive to stockholder feedback when designing and implementing our executive compensation programs to ensure that the elements of these programs effectively reflect our desire to further our strategic business objectives while tightly linking executive pay to measurable performance results. For fiscal 2019, we introduced a new long-term shareholder performance plan designed to create stockholder value over a multi-year performance period by encouraging our NEOs to focus on executing our key strategic objectives. Awards under this plan 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.By actively pursuing our strategic business objectives during fiscal 2019, we realized solid financial results and key achievements in the following areas:•Managed Public School Retention and Enrollments. Improving student retention in our virtual schools is a key aspect of our business strategy. Research shows that students who remain in the same school setting longer generally perform better academically. To ensure the best outcomes for students, we partner with the school boards we serve to seek to enroll and retain students who are truly engaged and ready to learn. For fiscal 2019, retention at our managed public schools improved by more than ten basis points over fiscal 2018. In part, as a result of these improvements, total average enrollments in our Managed Public School Programs increased 6.3% over fiscal 2018.•Strong Financial Performance. We set rigorous goals for the financial performance metrics under our Executive Bonus Plan and delivered solid results for the year, as discussed in the "Compensation Discussion and Analysis" above.•Continued Expanding Our Career Readiness Education Offering. We continued to expand our Career Readiness offering, highlights of which include increasing the number ofDCAs from 13 in school year 2018-2019 to 20 in school year 2019-2020 and launching our National Job Shadow Week offering hands-on learning experiences for the DCA students.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:"RESOLVED, that the compensation paid to the Company's named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion is hereby APPROVED."The Say on Pay vote is advisory and, therefore, not binding on the Company, the Compensation Committee, or our Board of Directors. Our Board of Directors and our Compensation Committee value the opinions of our stockholders, and to the extent there is a significant vote against the NEO compensation, as disclosed in this Proxy Statement, we will consider our stockholders' concerns and will evaluate what, if any, further actions are necessary to address those concerns. We expect to hold our next Say on Pay vote at our 2020 annual meeting of stockholders.OUR BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" THE NON-BINDING ADVISORY RESOLUTION APPROVING THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE SEC.PROPOSAL 3:RATIFICATION OF APPOINTMENT OFINDEPENDENT AUDITORSubject to stockholder ratification, the Audit Committee has appointed the firm of BDO USA, LLP ("BDO USA"), as the Company's independent registered public accounting firm for our fiscal year ending June 30, 2020. Although ratification is not required by law, our Board of Directors believes that stockholders should be given the opportunity to express their view on the subject. While not binding on the Audit Committee, if the stockholders do not ratify this appointment, the appointment will be reconsidered by the Audit Committee. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders. A representative of BDO USA is expected to attend the Annual Meeting and this representative will be provided with an opportunity to make a statement, if he or she desires, and will be available to respond to appropriate questions of stockholders, if any.The affirmative vote of the holders of a majority of the shares of Common Stock present in person or represented by proxy and entitled to vote at the Annual Meeting is required to ratify the appointment of BDO USA as the Company's independent registered public accounting firm.OUR BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" THE RATIFICATION OF BDO USA AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING JUNE 30, 2020. Fees Paid to Independent Registered Public Accounting FirmThe following table sets forth the aggregate fees and expenses billed to us by BDO USA for fiscal years 2018 and 2019: 2018 2019 $ 1,111,788 $ 1,119,500 81,497 142,750 — — — — $ 1,193,285 $ 1,262,250 Audit Fees are for professional services for the Company's annual audit, including the audit of internal control over financial reporting for fiscal 2018 and 2019, reviews of the interim financial statements included in the Company'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 2018 and 2019 were for professional services associated with audits of certain managed schools and other minor matters.The Audit Committee maintains policies and procedures for the pre-approval of work performed by the independent auditors in that, under the Audit Committee charter, all auditor engagements must be approved in advance by the Audit Committee. All of the services provided to the Company by BDO USA during fiscal 2018 and 2019 were pre-approved by the Audit Committee.In accordance with a written charter adopted by the Board of Directors, the Audit Committee, or the "Committee", assists the Board of Directors in fulfilling its responsibility for oversight of the quality and integrity of the Company's financial reporting processes and its internal audit function. Management has the primary responsibility for the financial statements and the reporting process, including the system of internal controls and for assessing the effectiveness of the Company's internal control over financial reporting. The independent auditors are responsible for performing an independent audit of the Company's consolidated financial statements and internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board and for issuing reports thereon.In this context, the Committee has met and held discussions with management, the independent auditors and internal audit, as well as legal counsel. Management represented to the Committee that the Company's consolidated financial statements were prepared in accordance with generally accepted accounting principles, and the Committee has reviewed and discussed the consolidated financial statements with management and the independent auditors. The Committee discussed with the independent auditors matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC.In addition, the Committee has received the written disclosures and the letter from the independent auditors required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the Committee concerning independence and has discussed with the independent auditors the auditors' independence from the Company and its management.The Committee discussed with the Company's internal and independent auditors the overall scope and plans for their respective audits. The Committee meets with the internal and independent auditors, with and without management present, to discuss the results of their examinations, the evaluations of the Company's internal controls and the overall quality of the Company's accounting principles.In reliance on the reviews and discussions referred to above, the Committee recommended to the Board of Directors, and the Board of Directors approved, the inclusion of the audited financial statements of the Company for the fiscal year ended June 30, 2019, in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2019, filed with the SEC on August 7, 2019. The Committee also recommended to the Board of Directors, subject to stockholder ratification, the selection of BDO USA as the Company's independent registered public accounting firm for the fiscal year ending June 30, 2020, and the Board of Directors accepted its recommendation.Members of the Audit CommitteeSteven B. Fink (Chairman)Aida M. AlvarezRobert L. CohenThe foregoing report is not "soliciting material," shall not be deemed "filed" and shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, each as amended (together, the "Acts"), except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Acts.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTThe following table sets forth, as of October 18, 2019, certain information with respect to the beneficial ownership of Common Stock by each beneficial owner of more than 5% of the Company's voting securities (based solely on review of filings with the SEC), each director and each named executive officer and all directors and executive officers of the Company as a group, except as qualified by the information set forth in the notes to this table. To our knowledge, except as noted below, no person or entity is the beneficial owner of more than 5% of the voting power of the Company's voting securities. As of October 18, 2019, 40,955,110 shares of our Common Stock were outstanding.Unless otherwise noted, the address for each director and executive officer is c/o K12 Inc., 2300 Corporate Park Drive, Herndon, VA 20171. Shares Beneficially
Owned (1) Percent 294,683 * 99,263 * 59,460 * 44,382 * 1,577,495 3.76% 15,084 * 50,733 * 53,241 * 3,240 * 45,422 * 142,529 * 11,051 * 13,532 * 2,410,115 5.75% 2,682,386 6.55% 3,239,885 7.91% 3,434,707 8.39% *Denotes less than 1%.(1)Beneficial ownership of shares is determined in accordance with the rules of the SEC and generally includes any shares over which a person or entity exercises sole or shared voting or investment power. Except as indicated by footnote, and subject to applicable community property laws, to our knowledge, each stockholder identified in the table possesses sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by the stockholder. The number of shares beneficially owned by a person or entity includes shares of Common Stock subject to options held by that person or entity that are currently exercisable orexercisable within 60 days of October 18, 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.(2)Includes 101,221 unvested shares of restricted Common Stock that are subject to forfeiture.(3)Includes 84,014 unvested shares of restricted Common Stock that are subject to forfeiture.(4)Includes 53,914 unvested shares of restricted Common Stock that are subject to forfeiture.(5)Includes 40,540 unvested shares of restricted Common Stock that are subject to forfeiture.(6)Includes 271,957 unvested shares of restricted Common Stock and 946,817 shares of Common Stock underlying options that are currently exercisable or exercisable within 60 days of October 18, 2019. The unvested shares of restricted Common Stock are subject to forfeiture.(7)Includes 5,006 unvested shares of restricted Common Stock that are subject to forfeiture.(8)Includes 5,006 unvested shares of restricted Common Stock that are subject to forfeiture.(9)Includes 5,006 deferred stock units that are subject to forfeiture.(10)Includes 3,240 deferred stock units that are subject to forfeiture.(11)Includes 5,006 unvested shares of restricted Common Stock that are subject to forfeiture.(12)Includes 5,006 unvested shares of restricted Common Stock that are subject to forfeiture. Mr. Fink has voting and investment control with respect to the securities held by S&C Fink Living Trust.(13)Includes 5,006 deferred stock units that are subject to forfeiture.(14)Includes 5,006 deferred stock units that are subject to forfeiture.(15)Includes 571,670 unvested shares of restricted Common Stock, 18,258 deferred stock units and 946,817 shares of Common Stock underlying options that are currently exercisable or exercisable within 60 days of October 18, 2019. The unvested shares of restricted Common Stock and deferred stock units are subject to forfeiture.(16)Based solely on publicly available filings with the SEC, including the Schedule 13G/A filed on February 6, 2019. The address for BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055.(17)Based solely on publicly available filings with the SEC, including the Schedule 13G/A filed on February 11, 2019. The address for The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355.(18)Based solely on publicly available filings with the SEC, including the Schedule 13G/A filed on February 8, 2019. The address for Dimensional Fund Advisors, LP is Building One 6300, Bee Cave Road, Austin, TX 78746.DELINQUENT SECTION 16(a) REPORTSCompany'sCompany’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of the Company'sCompany’s equity and equity-derivative securities. Based solely upon a review of the copies of such reports and written representations from reporting persons, we believe that all Section 16(a) filing requirements applicable to our officers, directors and greater than 10% stockholders were complied with on a timely basis during fiscal 2019,2020, except Forms 4 for Mr.Nathaniel Davis, that wereJames Rhyu, Kevin Chavous, Shaun McAlmont, and Vincent Mathis filed late on August 16, 2018 and October 11, 2018 in connection with the vesting of equity awards13, 2020 due to an administrative error.executive officerbring any other business before the stockholders at an annual meeting must notify our corporate secretary of K12 who has servedthis proposal in such capacity since July 1, 2018, or any associate of any such director or officer,writing not later than 90 days nor earlier than 120 days prior to the knowledgefirst anniversary of the executive officerspreceding year’s annual meeting of K12,stockholders. Accordingly, for our 2022 annual meeting of stockholders, any notification must be made no earlier than August 12, 2022 and no later than September 11, 2022. If during the prior year we did not hold an annual meeting, or if the date of the meeting has any material interest, direct or indirect, through security holdings or otherwise, in any matter proposed tochanged more than 30 days from the prior year, then notice must be acted onreceived a reasonable time before we mail our proxy materials for the current year. The stockholder must be a stockholder of record both at the Annual Meeting, which istime of giving notice and at the time of the annual meeting. The fact that the Company may not shared by all other stockholders orinsist upon compliance with these requirements should not be construed as is otherwise describeda waiver of our right to do so at any time in this Proxy Statement.DELIVERY OF DOCUMENTS TO SECURITY HOLDERS SHARING AN ADDRESSSEC'sSEC’s rules permit the Company to deliver a single set of Annual Meeting materials to one address shared by two or more of the Company'sCompany’s stockholders. The Company has delivered only one Notice of Internet Availability of Proxy Materials or Proxy Statement and Annual Report (where paper copies were previously requested) to multiple stockholders who share an address, unless the Company received contrary instructions from the affected stockholders prior to the mailing date. The Company will promptly deliver, upon written or oral request, a separate copy of the Notice of Internet Availability of Proxy Materials or separate paper copies of all Annual Meeting materials, as requested, to any stockholder at the shared address to which a single copy of those documents was delivered. If you prefer to receive separate copies of the Proxy StatementAnnual Meeting materials or Annual Report,the materials for future meetings, contact K12Stride, Inc., 2300 Corporate Park Drive, Herndon, VA 20171, Attention: Investor Relations, or call us at (703) 483-7000.K12Stride, Inc., 2300 Corporate Park Drive, Herndon, VA 20171, Attention: Investor Relations, or call us at (703) 483-7000.intended for inclusionpresented in next year's proxy statement under Rule 14a-8this Proxy Statement will be brought before the Annual Meeting. However, if other matters are properly presented at the Annual Meeting or any adjournments or postponements of the Exchange Act shouldAnnual Meeting, then the proxy holders will vote in their discretion with respect to those matters.sentadjourned from time to our principal executive offices and must be received not less than 120 calendar days prior to October 25, 2020. Accordingly, stockholder proposals must be received no later than June 27, 2020. Astime upon the rulesapproval of the SEC make clear, simply submittingholders of shares representing a proposal does not guarantee that it will be included in the Proxy Statement.Additionally, our Bylaws provide that stockholders desiring to nominate a director or bring any other business before the stockholders at an annual meeting must notify our corporate secretary of this proposal in writing not later than 90 days nor earlier than 120 days prior to the first anniversarymajority of the preceding year's annualvotes present in person or by proxy at the Annual Meeting, until a quorum is present. Any business may be transacted at the adjourned meeting of stockholders. Accordingly, for our 2020 annual meeting of stockholders, any notification must be made no earlier than August 15, 2020 and no later than September 14, 2020. If during the prior year we did not hold an annual meeting, or if the date ofwhich might have been transacted at the meeting has changedoriginally noticed. If the adjournment is for more than 30 days, fromor if after the prior year, then notice must be receivedadjournment a reasonable time before we mail our proxy materialsnew record date is fixed for the current year. The stockholder mustadjourned meeting, a notice of the adjourned meeting shall be agiven to each stockholder of record bothentitled to vote at the time of giving notice and at the time of the annual meeting. The fact that the Company mayWe do not insist upon compliance with these requirements should not be construed as a waiver of our rightcurrently intend to do so at any time in the future.WHERE YOU CAN FIND MORE INFORMATIONWe are subject to the information filing requirements of the Exchange Act and, in accordance with the Exchange Act, file certain reports and other information with the SEC relating to our business, financial condition and other matters.Copies of these materials can be obtained, upon payment of the SEC's customary charges, by writing to the SEC's principal office at 100 F Street, NE, Washington, DC 20549. The SEC also maintains a website at http://www.sec.gov that contains reports, proxy statements and other information.Any person from whom proxies for the meeting are solicited may obtain, if not already received, from the Company, without charge, a copy of the Company's Annual Report on Form 10-K for fiscal 2019, by written request addressed to K12 Inc., 2300 Corporate Park Drive, Herndon, VA 20171, Attention: Investor Relations Department. The Annual Report on Form 10-K is not soliciting material and is not incorporated in this document by reference.In order to obtain any documents you request from the Company in time for the Annual Meeting, you must request the documents from the Company by Tuesday, December 3, 2019, which is eight business days prior to the dateseek an adjournment of the Annual Meeting.You should rely only on the information contained in this document to vote your shares of Common Stock at the Annual Meeting. We have not authorized anyone to provide you with information that is different from what is contained in this document. This document is dated as 25, 2019. You should not assume that the information contained in this document is accurate as of any date other than that date, and the mailing of this document to stockholders does not create any implication to the contrary. This document does not constitute a solicitation of a proxy in any jurisdiction where, or to or from any person to whom, it is unlawful to make such solicitation in that jurisdiction.
27, 2021MMMMMMMMMMMM MMMMMMMMMMMMMMM C123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000004 ENDORSEMENT_LINE______________ SACKPACK_____________ Your vote mattersAPPENDIX A – here’s how to vote! You may vote online or by phone instead of mailing this card. Votes submitted electronically must be MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 received by 1:00am, Central Time, on December 13, 2019 Online GIof ntoo welwewct.rinovneicstvoortviontge,.com/LRN or scan delete QR code and control # the QR code — login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at www.investorvote.com/LRN 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 VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q + 1. Election of Directors: For Withhold For Withhold For Withhold 01 - Aida M. Alvarez 02 - Craig R. Barrett 03 - Guillermo Bron 04 - Robert L. Cohen 05 - Nathaniel A. Davis 06 - John M. Engler 07 - Steven B. Fink 08 - Robert E. Knowling, Jr. 09 - Liza McFadden ForAgainst Abstain ForAgainst Abstain 2. TO APPROVE, ON AN ADVISORY BASIS, THE COMPENSATIONRECONCILIATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS. 3. RATIFICATIONNON-GAAP FINANCIAL MEASURES Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders. The material is available at: www.edocumentview.com/LRN q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q + Notice of 2019 Annual Meeting of Stockholders This Proxy is solicited by the Board of Directors for the Annual Meeting of Stockholders on December 13, 2019 at 10:00 A.M. The above signed stockholder of K12 Inc., a Delaware corporation (the “Company”), hereby constitutes and appoints Nathaniel A. Davis and Vincent W. Mathis, and each of them, with the power to act without the other and with the power of substitution, as proxies (the “Proxy Holders”) and attorneys-in-fact for the above signed, to attend the annual meeting of stockholders of the Company to be held at the law firm of Latham & Watkins LLP, located at 555 Eleventh Street, NW, Suite 1000, Washington, DC 20004-1304, on December 13, 2019 at 10:00 A.M., Eastern Time, and any adjournment(s), continuation(s) or postponement(s) thereof, to cast on behalf of the above signed all votes that the above signed is entitled to cast at such annual meeting and in their discretion, to vote upon such other business as may properly come before the annual meeting and otherwise to represent the above signed at the annual meeting with all powers possessed by the above signed if personally present at the annual meeting. This proxy when properly executed will be voted in the manner directed herein by the above signed stockholder. If no instruction is indicated but the Proxy Card is signed, this Proxy Card will be voted “FOR” the election of the Board of Directors nominees named in the proxy statement; “FOR” the approval, on a non-binding advisory basis, of the compensation of the named executive officers of the Company; and “FOR” the ratification of the appointment of BDO USA, LLP as the Company’s independent registered public accounting firm for the fiscal year ending June 30, 2020. Stockholders who plan to attend the annual meeting may revoke their Proxy by attending and casting their vote at the annual meeting in person. PLEASE ACT PROMPTLY. PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. The above signed hereby acknowledge(s) receipt of a copy of the accompanying Notice of 2019 Annual Meeting of Stockholders and access to the proxy statement with respect thereto and hereby revokes any proxy or proxies heretofore given with respect to such annual meeting. (Items to be voted appear on reverse side) Change of Address — Please print new address below. Comments — Please print your comments below. Meeting Attendance Mark box to the right if you plan to attend the Annual Meeting. + C Non-Voting Items REVOCABLE PROXY – K12 INC. Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.investorvote.com/LRN
