UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrantx Filed by a Party other than the Registrant ¨
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Filed by the Registrant ⌧ | ||
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Filed by a Party other than the Registrant ◻ | ||
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◻ | Preliminary Proxy Statement | |
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Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||
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Definitive Proxy Statement | ||
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Soliciting Material Pursuant to |
Grand Canyon Education, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
Phoenix, Arizona 85017 (602) April Dear Stockholder: You are cordially invited to attend the The notice of annual meeting and the proxy statement that follow describe the matters to come before the Annual Meeting. Each holder of record of shares of the Company’s common stock (Nasdaq GM: LOPE) at the close of business on April Our Annual Meeting materials are available over the Internet. We believe that this delivery process expedites stockholders’ receipt of proxy materials as well as lowers the costs and reduces the environmental impact of our Annual Meeting. All stockholders as of the record date were mailed a Notice of Internet Availability (the “Notice”) with instructions on how to access our Annual Meeting materials online and how to request a paper copy of the materials by mail. The Notice also includes instructions on how to vote online or by telephone. Internet voting must be completed before midnight,
This proxy statement is dated April
Notice of Annual Meeting of Stockholders
This summary highlights information contained elsewhere in the Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement before voting. For more complete information regarding the Company’s 2023 performance, please review the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
6 SUMMARY OF MATTERS TO BE VOTED UPON AND BOARD RECOMMENDATIONS Stockholders are being asked to vote on the following matters at the Annual Meeting:
DIRECTOR NOMINEES The following provides summary information regarding our director nominees:
7 OUR CORPORATE GOVERNANCE HIGHLIGHTS We believe that effective corporate governance is critical to our ability to create long term value for our stockholders. The following highlights certain key aspects of our corporate governance framework:
8 SOCIAL RESPONSIBILITY AND HUMAN CAPITAL DEVELOPMENT The Company seeks to meet the needs of the local community in which we operate as well as those outside our community, particularly the education challenges that our country faces, and then works to find solutions to these challenges. We believe these challenges include: university education is too expensive; students are taking on too much debt to pay for their education; bachelor degrees are taking too long to complete; programs are not targeted enough toward careers; as tuition increases, diversity decreases; universities have inadequate counseling and support services, especially for distanced learners; most university professors have no formal training in teaching, learning or course design; and universities are under significant financial pressures. These challenges have been enhanced due to a declining number of high school graduates attending college. We believe we provide the capital, technology and expertise to our university partners to alleviate the challenges in each of the areas listed above. We work with these university partners to develop educational models that allow them the ability to decrease tuition or increase scholarships to their students which will often lower the debt their students incur. We work with our university partners and thousands of high schools across the country on dual credit, online prerequisite courses and other programs that shorten the time to completion thereby lowering cost and debt levels. We focus with our university partners and their local communities to develop programs where there are skills shortages such as healthcare, teacher education, science, technology, engineering and math. We provide expanded academic counseling services and support to the students of our university partners which has proven to increase retention and completion. Our faculty services and curriculum development teams assist not only our university partners but other universities and K-12 schools in improving their online education pedagogy. Our business model has helped our university partners succeed through the various changes in the educational landscape that have put pressure on their financial condition and operations. We also participate with our employees in a number of activities to benefit our communities including:
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Our Diverse Workforce The Company believes that it must have the best talent, including employees who possess a diverse range of experiences, backgrounds and skills, in order to anticipate and meet the needs of our business and those of our university partners. Over time, we have hired, developed and retained a diverse management and workforce that reflects our surrounding community and that is a key component in GCE’s success and an important part of the Company’s culture. We provide employees with training, development, and educational resources that promote learning and lead to real career advancement opportunities. We believe that our success in attracting, retaining, and developing human capital is directly correlated to our ability to provide employees both an interesting and engaging work experience as well as opportunities for meaningful involvement in the surrounding community. A growing body of evidence suggests that diverse teams improve financial outcomes and support innovation, resiliency, and productivity. GCE’s commitment to fostering diversity among its workforce in its community is evident in the following:
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ENVIRONMENTAL AWARENESS Online education is inherently more environmentally friendly than traditional campus education due to a reduction in greenhouse gas production caused by avoiding traveling to and from a brick-and-mortar campus. It also increases student capacity while eliminating the need for construction of a physical campus. A majority of our university partners’ students are enrolled in hybrid or online educational models. In addition, a significant number of our university partners’ students utilize an ebook format versus paper textbooks, which is more environmentally friendly in that it saves paper and other material and there is no shipment required. The Company owns, and operates its business from, a four-story 325,000 square foot administrative building, which includes office space for approximately 2,700 employees and a parking garage. We constructed these facilities in 2016 and, as with every one of our projects over the past ten years, we designed them to maximize energy efficiency and minimize electricity usage and environmental impact. Our headquarters building includes the following design features:
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In addition to its efficient facilities, the Company has undertaken other measures to minimize its environmental impact, including, among others:
This has resulted in savings in the areas of waste, janitorial costs, and travel costs related to business travel and commuting. Climate Disclosures We do not operate in a high-risk industry for climate risks. We believe that we have low climate risk with respect to our physical environment (e.g. fires, drought, hailstorms, increasing weather pattern changes). A significant portion of our workforce is continuing to work remotely. We have insurance policies in place to cover any damage for our property, plant and equipment. Our Audit Committee is tasked with oversight of climate-related risks for the Company. We are evaluating emissions reduction requirements with key suppliers for costs such as information security systems, communication and marketing costs, travel costs, and continued expansion of our off-campus classroom and laboratory sites. We currently do not have any regulatory emissions reporting obligations. We do not have significant risk from a transition to a low-carbon economy, which could result in changing customer behavior. Our customers are university partners located in the United States. Cybersecurity Our Audit Committee is tasked with oversight of the cybersecurity controls in place at the Company. The Company employs a dedicated Chief Information Security Officer, with an experienced and competent security team, and works closely with the Chief Risk Officer to provide risk reporting and ensure security and compliance. The Company regularly engages third party experts to perform cybersecurity assessments. These assessments are normally performed on an annual basis. Reports are sent to the Audit Committee monthly, and Security, Risk and Compliance updates are provided quarterly. The Company has implemented policies and procedures for all employees including:
The Company maintains a cyber insurance policy. The Company has not had a security breach and has not incurred any material expenses for a security breach in the past three years. 12 Other Corporate Policy Matters We maintain a whistleblower hotline available to both internal and external parties. The whistleblower policy is disclosed on the GCE intranet for employees and disclosed on the GCE investor relations website for external parties. Hotline activity is managed by a third party and all calls are reviewed and monitored by the Chief Risk Officer and General Counsel and discussed at the quarterly Audit Committee meetings. Questions and Answers Please see the General Information section for important information about the proxy materials, voting, the annual meeting, Company documents, communications and the deadlines to submit stockholder proposals and director nominees for the 2024 Annual Meeting of Stockholders. Additional questions may be directed to our General Counsel, Grand Canyon Education, Inc., 2600 W. Camelback Road, Phoenix, Arizona 85017.
You can learn more about the Company, view our governance materials and much more by visiting our website, www.gce.com. 13 Grand Canyon Education, Inc. 2600 West Camelback Road Phoenix, Arizona 85017 PROXY STATEMENT GENERAL INFORMATION The enclosed proxy is being solicited by our Board of Directors for use in connection with the Annual Meeting to be held on Notice of Internet Availability In accordance with the electronic delivery rules adopted by the Securities and Exchange Commission (“SEC”), the Company is permitted to furnish proxy materials to its stockholders on the Internet, in lieu of mailing a printed copy of proxy materials to each stockholder of record. You will not receive a printed copy of proxy materials unless you request a printed copy. The Notice, which was Record Date and Quorum Only stockholders of record at the close of business on April Submission of Proxies; Revocation All valid proxies received prior to the Annual Meeting will be exercised. All shares represented by a proxy will be voted, and where a proxy specifies a stockholder’s choice with respect to any matter to be acted upon, the shares will be voted in accordance with that specification. If no choice is indicated on the proxy, the shares will be voted in favor of the proposal. You may revoke your proxy at any time before it is exercised by submitting to our Secretary a written notice of revocation, submitting a properly executed proxy bearing a later date, voting by telephone or via the Internet at a later time (if initially able to vote in that manner) so long as such vote or voting direction is received by the applicable date and time set forth above for stockholders of record, or by attending the Annual Meeting and voting in person. If you hold your shares through a bank, broker, trustee or nominee and you have instructed the bank, broker, trustee or nominee to vote your shares, you must follow the directions received from your bank, broker, trustee or nominee to change those instructions. Deadlines for Stockholder Proposals Stockholder proposals may be included in our proxy materials for an annual meeting so long as they are provided to us on a timely basis and satisfy certain other conditions established by the 14 Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). To be timely, a proposal to be included in our proxy statement must be received at our principal executive offices, addressed to our Secretary, not less than 120 calendar days before the first anniversary of the date that our proxy statement was released to stockholders in connection with the previous year’s annual meeting. Accordingly, for a stockholder proposal to be included in our proxy materials for our A stockholder’s notice to our Secretary must set forth as to each matter the stockholder proposes to bring before the meeting (i) a brief description of the business desired to be brought before the meeting and the text of the proposal or business, including the text of any resolutions proposed for consideration and, in the event that such business includes a proposal to amend the Company’s bylaws, the language of the proposed amendment, (ii) the name and address, as they appear on the Company’s books, of the stockholder proposing such business and the names and addresses of the beneficial owners, if any, on whose behalf the business is being brought, (iii) a representation that the stockholder is a holder of record of stock of the Company entitled to vote at the meeting on the date of such notice and intends to appear in person or by proxy at the meeting to propose the business specified in the notice, (iv) any material interest of the stockholder and any such other beneficial owner in such business, and (v) the following information regarding the ownership interests of the stockholder or any such other beneficial owner, which shall be supplemented in writing by the stockholder not later than ten (10) days after the record date for voting at the meeting to disclose such interests as of such record date: (A) the class and number of shares of the Company that are owned beneficially and of record by the stockholder and any such other beneficial owner;(B) any “derivative instrument” (which is defined as any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Company or with a value derived in whole or in part from the value of any class or series of shares of the Company, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the Company or otherwise directly or indirectly owned beneficially by such stockholder and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Company); (C) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder has a right to vote any shares of any security of the Company; (D) any short interest in any security of the Company (meaning a person shall be deemed to have a short interest in a security if such person, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security); (E) any rights to dividends on the shares of the Company owned beneficially by such stockholder that are separated or separable from the underlying shares of the Company; (F) any proportionate interest in shares of the Company or derivative instruments held, directly or indirectly, by a general or limited partnership in which such stockholder is a general partner or, directly or indirectly, beneficially owns an interest in a general partner; and (G) any performance-related fees (other than an asset-based fee) to which such stockholder is entitled based on any increase or decrease in the value of shares of the Company or derivative instruments, if any, as of the date of such notice, including, without limitation, any such interests held by members of such stockholder’s immediate family sharing the same household. Quorum The presence at the Annual Meeting, in person or by proxy, of the holders of a majority of the shares of common stock outstanding on the record date will constitute a quorum for the transaction of business at the meeting. Abstentions and broker non-votes are included in determining whether a quorum is present. Abstentions 15 include shares present in person but not voting and shares represented by proxy but with respect to which the holder has abstained. Broker non-votes occur when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power on that item and has not received instructions from the beneficial owner. Vote Required If you hold your shares in “street name,” and you do not give your bank, broker or other holder of record specific voting instructions for your shares, your record holder can vote your shares on routine matters, which include only the
Adjournment or Postponement of Meeting The Annual Meeting may be adjourned or postponed to any other time and to any other place at which a meeting of stockholders may be held by the chairman of the Annual Meeting or, in the absence of such person, by any officer entitled to preside at or to act as Secretary of the Annual Meeting, or by the holders of a majority of the shares of stock present or represented by proxy at the meeting and entitled to vote, although less than a quorum. Expenses of Soliciting Proxies We will bear the cost of soliciting proxies. In addition to solicitation by the use of mail or via the Internet, certain directors, officers and regular employees may solicit proxies by telephone or personal interview. None of such persons will receive any additional compensation for their services. 16 CORPORATE GOVERNANCE AND BOARD MATTERS Corporate Governance Philosophy The business affairs of the Company are managed under the direction of the Board of Directors in accordance with the Delaware General Corporation Law, as implemented by the Company’s certificate of incorporation and bylaws. The role of the Board of Directors is to effectively govern the affairs of the Company for the benefit of its stockholders and other constituencies. The Board of Directors strives to ensure the success and continuity of business of the Company through the selection of qualified management. It is also responsible for ensuring that the Company’s activities are conducted in a responsible and ethical manner. The Company is committed to having sound corporate governance principles. Changes to the Board of Directors During 2023 and 2024 The Corporate Governance Principles and Practices of Grand Canyon Education, Inc. (the “Company”) require that a director tender his or her resignation for consideration by the Nominating and Corporate Governance Committee of the Board of Directors upon ceasing to be actively employed in his or her principal business or profession. In accordance with this policy, Mr. David M. Adame, a director since 2021, tendered his resignation for consideration in light of his resignation as President and Chief Executive Officer of Chicanos por la Causa. Effective December 15, 2023, the Board of Directors, acting on the recommendation of the Nominating and Corporate Governance Committee, accepted Mr. Adame’s resignation. Mr. Adame’s decision to resign was not due to any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. On April 24, 2024, upon the recommendation of the Nominating and Corporate Governance Committee, Mr. Kevin F. Warren, who previously served on the Board of Directors from September 2012 until August 2019, was appointed to the Board of Directors and to serve as a member of the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee. Board of Directors Meetings and Attendance During our Director Independence Our Board of Directors periodically, and no less frequently than annually, reviews the independence of each director. During these reviews, our Board of Directors considers transactions and relationships between each director (and his or her immediate family and affiliates) and the Company and management to determine whether any such transactions or relationships are inconsistent with a determination that the director was independent. Our Board of Directors has affirmatively determined that each director other than 17 Board Leadership Structure
Our Board leadership structure comprises a “combined” Chairman of the Board and Chief Executive Officer, a lead independent director, Board committees led entirely by independent directors and active engagement by all directors. In selecting Mr. Mueller to serve as Chairman, the Board determined that having Mr. Mueller serve in In accordance with our Corporate Governance Principles and Practices, in the event the positions of Chairman and Chief Executive Officer are held by the same person, or if the position of Chairman is also held by a non-independent person, a lead independent director is appointed annually by the affirmative vote of a majority of those directors who have been determined to
Importantly, all of our directors play an active role in overseeing the Committees of Our Board of Directors During 2023 Our Board of Directors directs the management of our business affairs, as provided by Delaware law, and conducts its business through meetings of the Board of Directors. Our Board of Directors has established three standing committees: an Audit 18 served. In addition, from time to time, special committees may be established under the direction of the Board of Directors when necessary to address specific issues. The composition of the Board committees complies with the applicable rules of the Nasdaq Stock Market and applicable law. Our Board of Directors has adopted written charters for each of the standing committees, which are available in the Corporate Governance section of the Investor Relations page on our website at Audit Committee(Number of meetings held during 2023: Five). The Audit Committee is also tasked with oversight of The Audit Committee also provides oversight of the climate related risks at the Company. We do not operate in a high-risk industry for climate risks. We believe that we have low climate risk with respect to our physical environment (e.g. fires, drought, hailstorms, increasing weather pattern changes). A significant portion of our workforce is continuing to work remotely. We have insurance policies in place to cover any damage for our property, plant and equipment. We currently do not have any regulatory emissions reporting obligations. We do not have significant risk from a transition to a low-carbon economy, which could result in changing customer behavior. Compensation The Compensation Committee’s charter allows it to delegate any matters within its authority to individuals or subcommittees as it deems appropriate. In addition, the Compensation Committee has the authority under its charter to retain outside advisors to assist it in the performance of its duties.
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Nominating and Corporate Governance Information About the Board of Directors The following matrix provides information regarding the members of our Board of Directors, including certain types of knowledge, skills, experiences and attributes possessed by one or more of our directors which our Board of Directors believes are relevant to our business or industry. The matrix does not encompass all of the knowledge, skills, experiences or attributes of our directors, and the fact that a particular knowledge, skill, experience or attribute is not listed does not mean that a director does not possess it. In addition, the absence of a particular knowledge, skill, experience or attribute with respect to any of our directors does not mean the director in question is unable to contribute to the decision-making process in that area. The type and degree of knowledge, skill and experience listed below may vary among the members of the Board of Directors.
Code of Conduct We have adopted a business code of conduct, which applies to all of our employees, directors, and consultants. The code of conduct includes particular provisions applicable to our senior financial management, which includes our Chief Executive Officer, Chief Financial Officer, and other employees including our principal accounting officer, 20 waiver from, a provision of our code of conduct that applies to any director or officer, including our Chief Executive Officer, Chief Financial Officer, and other persons including our principal accounting officer Risk Oversight Our Board of Directors is responsible for oversight of our risk assessment and management processes. The Board of Directors has delegated to the Compensation Committee basic responsibility for oversight of management’s compensation risk assessment, and has delegated to the Audit Committee tasks related to risk process oversight. In exercising its oversight duties, the Board of Directors receives reports from each committee regarding the committee’s considerations and actions. The Audit Committee’s process includes working with the Company’s Chief Risk Officer and other members of the Company’s enterprise risk management team, meeting periodically with the Chief Risk Officer and other members of management and receiving reports on enterprise risk management, including management’s assessment of risk exposures (including risks related to liquidity, credit, operations, cyber security, climate, and regulatory compliance, among others), and the processes in place to monitor and control such exposures. The Audit Committee may also, from time to time, receive updates between meetings from the Chief Risk Officer, the Chief Executive Officer, the Chief Financial Officer and other members of management relating to risk oversight matters. Director Nomination Process When selecting nominees for appointment or election to our Board of Directors, our Nominating and Corporate Governance Committee
Although our Nominating and Corporate Governance Committee will review each candidate’s qualifications to determine whether such candidate is appropriate for our Board of Directors, candidates need not possess any minimum qualifications or specific qualities or skills. In accordance with its charter, the Nominating and Corporate Governance Committee’s review and assessment of incumbent directors and proposed nominees includes the consideration of a candidate’s skills, business experiences, and background, which may include with respect to any particular incumbent or proposed nominee consideration of one or more of the following criteria:
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With respect to existing members of the Board of Directors, our Nominating and Corporate Governance Committee will reassess the qualifications of a director, including the director’s performance on our Board of Directors to date, the director’s current employment, the director’s service on other boards of directors and the director’s independence, prior to recommending a director for reelection to another term. All director-nominees were recommended for election at the Annual Meeting by our Nominating and Corporate Governance Committee, and such recommendations were formally approved by our Board of Directors. Stockholders who wish to recommend individuals for consideration by our Nominating and Corporate Governance Committee to become nominees for election to our Board of Directors may do so by submitting a written recommendation to our Nominating and Corporate Governance Committee, c/o General Counsel, Grand Canyon Education, Inc., Each submission must set forth: (i) the name and address of the stockholder who intends to make the nomination, or the beneficial owner, if any, on whose behalf the nomination is being made and of the person or persons to be nominated; (ii) a representation that the stockholder is a holder of record of stock of the Company entitled to vote for the election of directors on the date of such notice and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (iii) the following information regarding the ownership interests of the stockholder and such other beneficial owners, which shall be supplemented in writing by the stockholder not later than ten (10) days after the record date for notice of the meeting to disclose such interests as of such record date: (A) the class and number of shares of the Company that are owned beneficially and of record by the stockholder or any such beneficial owner; (B) any derivative instrument directly or indirectly owned beneficially by such stockholder or any such beneficial owner and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Company; (C) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder or any such beneficial owner has a right to vote any shares of any security of the Company; (D) any short interest in any security of the Company; (E) any rights to dividends on the shares of the Company owned beneficially by such stockholder or any such beneficial owner that are separated or separable from the underlying shares of the Company; (F) any proportionate interest in shares of the Company or derivative instruments held, directly or indirectly, by a general or limited partnership in which such stockholder or any such beneficial owner is a general partner or, directly or indirectly, beneficially owns an interest in a general partner; and (G) any performance-related fees (other than an asset-based fee) to which such stockholder or any such beneficial owner is entitled based on any increase or decrease in the value of shares of the Company or derivative instruments, if any, as of the date of such notice, including, without limitation, any such interests held by members of such stockholder’s or beneficial owner’s immediate family sharing the same household, (iv) a description of all arrangements or understandings between the stockholder or such beneficial owner and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (v) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three (3) years, and any other material relationships, between or among such stockholder and such other beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the stockholder making the nomination and any beneficial owner on whose behalf 22 the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee was a director or executive officer of such registrant, (vi) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission, had the nominee been nominated, or intended to be nominated, by the Board of Directors; and (vii) the consent of each nominee to serve as a director of the Company if so elected. We did not receive any director nominations from stockholders for the Annual Meeting. Annual Elections Our directors are elected Policy on Majority Voting Pursuant to our bylaws, In addition, pursuant to our Corporate Governance Principles and Practices, a Board member, including the Chief Executive Officer, who ceases to be actively employed in his or her principal business or profession, or experiences other changed circumstances that could pose a conflict of interest, diminish his or her effectiveness as a Board member, or otherwise be detrimental to the Company, is expected to offer his or her resignation to the Board. The Board in its discretion will determine whether such member should continue to serve as a director for an unexpired term or any future terms. Compensation Committee Interlocks and Insider Participation During Stockholder Communications with the Board of Directors Stockholders may communicate with any of our directors, including our lead independent director, the chair of any of the committees of the Board of Directors, or the non-management directors as a group by writing to them c/o Secretary, Grand Canyon Education, Inc., 23 Directors or any specific director, as indicated in the correspondence, except for junk mail, mass mailings, job inquiries, surveys, business solicitations or advertisements, or patently offensive or otherwise inappropriate material. The Secretary may forward certain correspondence, such as product-related or service-related inquiries, elsewhere within the Company for review and possible response. Stock Ownership The Board of Directors believes that each outside director and executive officer should develop a meaningful ownership position in the Company.
Under the policy, the following may be used in determining share ownership for purposes of the ownership requirement:
Each person covered by the policy is expected to achieve the target ownership threshold within Anti-Hedging and Anti-Pledging Policy
24 rewards of ownership, are prohibited. In addition, the policy addresses the practices of holding Company stock in a margin account, under which the securities may be sold by the broker without the customer’s consent if the customer fails to meet a margin call, and of pledging Company stock as collateral for a loan, in which event the securities may be sold in foreclosure if the borrower defaults on the loan. Because a margin sale or foreclosure sale may occur at a time when the pledgor is aware of material nonpublic information or otherwise is not permitted to trade in Company securities, directors, officers and other employees of the Company are prohibited from holding Company securities in a margin account or pledging Company securities as collateral for a loan. An exception to this prohibition may be granted where a person wishes to pledge Company securities as collateral for a loan (not including margin debt) and clearly demonstrates the financial capacity to repay the loan without resort to the pledged securities. Any person wishing to enter into such an arrangement must first receive pre-approval for the proposed transaction from the Company’s compliance officer in accordance with the pre-approval procedures set forth in the policy. Compensation of Directors We have a compensation program in place for our non-employee directors that utilizes annual retainers and restricted stock grants. New non-employee directors, upon appointment or election to the Board of Directors, receive an award of restricted stock under our 25 2023 Director Compensation The following table provides information regarding the compensation paid to
26 PROPOSAL NO. 1 ELECTION OF DIRECTORS
Composition of our Board of Directors Our bylaws provide that our business will be managed by or under the direction of the Board of Directors. The number of directors constituting our Board of Directors is determined from time to time by our Board of Directors. Currently, our Board of Directors consists of Directors and Director Nominees All of the nominees named below The following table sets forth certain information regarding each director nominee:
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| Jack A. Henry has been serving as a member of our Board of Directors since November 2008. Since 2000, Mr. Henry has served as the Managing Director of Sierra Blanca Ventures, LLC, a private investment and consulting firm. From 1966 to 2000, Mr. Henry worked as a certified public accountant for Arthur Andersen, a national accounting firm, retiring in 2000 as the Managing Partner of the Phoenix, Arizona office. Mr. Henry has previously served on the boards of directors of nine other publicly traded companies and seven private companies. Mr. Henry also currently serves on the board of directors and as chair of the audit committee of a private company. He is past President and founder of the Arizona Chapter of the National Association of Corporate Directors having served in that capacity for 16 years. Mr. Henry previously served on numerous community and nonprofit organizations including chairman of the Arizona Chamber of Commerce, Greater Phoenix Leadership, Greater Phoenix Economic Council, and Junior Achievement of Central Arizona. Mr. Henry also was a member of the Super Bowl ’96 Executive Committee, Arizona Business Hall of Fame, Arizona Economic Forum and the Violence Prevention Initiative. Mr. Henry has spoken and consulted on audit committee and corporate governance matters. Mr. Henry received a Bachelor of Business Administration degree and a Master of Business Administration degree from the University of Michigan. We believe that Mr. Henry’s extensive experience with public and financial accounting matters for corporate organizations, as well as experience as a consultant to and director of other public companies, provide significant insight and expertise to our Board of Directors. | |
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| | Lisa Graham Keegan has been serving as a member of our Board of Directors since August 2019. Since 2001, Ms. Keegan has served as the Principal Partner at The Keegan Company, an education policy consulting firm, where she leads numerous projects, writes, and speaks on critical issues in American education. From 1991 to 2001, Ms. Keegan served as an Arizona elected official, first in the Arizona House of Representatives from 1991 to 1995, where she chaired the House Education Committee and oversaw the K-12, community college and university education budgets on the Appropriations Committee, and later as the Arizona Superintendent of Public Instruction from 1995 to 2001, where she oversaw Arizona’s public school system and directed the state’s Department of Education. In 2000 and 2008, respectively, Ms. Keegan served as education advisor to the John McCain campaigns for President. Ms. Keegan serves on the boards of the Grand Canyon Council Boy Scouts of America: 50 CAN, The 50-State Campaign for Achievement Now education advocacy organization; the National School Choice Awareness Foundation, an education organization focused on increasing parental awareness of school options; The Foundation For Advancing Alcohol Responsibility (Responsibility.org) National Advisory Board; and The Common Sense Institute of Arizona, a non-partisan research organization dedicated to the protection and promotion of Arizona’s economy. Ms. Keegan received a Bachelor of Arts degree from Stanford University and a Masters’ Degree from Arizona State University. We believe Ms. Keegan’s extensive experience with education and public office experience provides a tremendous resource to our Board of Directors and management team, particularly in the areas of operations and finance. |
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| | Chevy Humphrey, DBA has been serving as a member of our Board of Directors since August 2019. Dr. Humphrey has served as the President and CEO of the Museum of Science and Industry, Chicago (MSI) since January 2021. In this role, she oversees all aspects of executing the strategic vision of MSI, including guest experience, transformational exhibits, education programming, community engagement, and financial sustainability and growth. Dr. Humphrey is an international leader in the field of informal science education. Before joining MSI, she served for 15 years as CEO of Arizona Science Center. She serves as the Past Chair of the Board of the American Alliance of Museums, the world’s largest museum association, serving 35,000 members. She is Past Chair of the Board of the Association of Science and Technology Centers, which serves more than 500 science centers in more than 50 countries and has also served as the Chair of the Selection and Annual Review Committee for the National Science Foundation’s then-largest informal science initiative, Nanoscale Informal Science Education Network (NISE-Net). Dr. Humphrey has a long history serving on a wide variety of boards. Currently, she is a member of the Board of Governors for Argonne National Laboratory, a science and engineering research national laboratory operated by U-Chicago Argonne LLC for the United States Department of Energy. She also serves on the Economic Club of Chicago, Choose Chicago, the Theodore Roosevelt Presidential Library, the Sandra Day O’Connor Institute, Helios Education Foundation, and Education Forward Arizona. Dr. Humphrey was named to Crain’s Chicago Business’s 2023 Notable Women in STEM list and its 2023 Who’s Who list; she participated in Leadership Greater Chicago’s Daniel Burnham Fellowship, and she has received numerous awards from Chicago community organizations, including Girls Inc. Chicago’s 2023 Strong Smart Bold award and the Illinois Black Chamber, Cook County Black Chamber and Garfield Park Chamber of Commerce’s 2022 Business Leader of the Year award. Dr. Humphrey is originally from Houston, Texas. She earned a Doctorate in Business Administration from Grand Canyon University and an honorary Doctor of Science and Technology degree from the University of Advancing Technology. She holds a Master of Business Administration—with specializations in innovation entrepreneurship and marketing—from Northeastern University and a Bachelor of Science in Business with a concentration in Marketing from the University of Phoenix. Dr. Humphrey also received Executive Education certifications from The Wharton School at the University of Pennsylvania, Stanford University Graduate School of Business, and Yale School of Management. We believe Dr. Humphrey’s extensive experience and STEM related experience provides a tremendous resource to our Board of Directors and management team, particularly in the areas of operations, finance, and corporate governance. |
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| | Kevin F. Warren has been serving as a member of our Board of Directors since his appointment on April 24, 2024. He served previously as a member of our Board of Directors from September 2012 through August 27, 2019. Mr. Warren has served as President and Chief Executive Officer of the Chicago Bears Football Club, a National Football League (“NFL”) franchise, since April 2023, with responsibility for football and business operations. Mr. Warren is the first black President and CEO of the Chicago Bears and only the fifth President in the history of the Chicago Bears. Mr. Warren served as the Commissioner-Elect of the Big Ten Conference from September 2019 to January 2020. On January 2, 2020, Mr. Warren officially began his tenure as Commissioner of the Big Ten Conference and served in that role until April 2023. From 2005 to 2019, Mr. Warren served as a senior officer of the Minnesota Vikings, an NFL franchise. Prior to joining the Vikings, from 2003 to 2005, Mr. Warren worked for the international law firm of Greenberg Traurig LLP, which included representing the Wilf ownership group during its acquisition of the Vikings. From 2001 to 2003, Mr. Warren served as Senior Vice President of Business Operations & General Counsel of the Detroit Lions, an NFL franchise. Prior to that time, Mr. Warren worked with the St. Louis Rams, an NFL franchise, as Vice President of Football Administration in 2001 and as Vice President of Player Development & Football Legal Counsel from 1997 to 2000. Mr. Warren earned his bachelor’s degree in business administration from Grand Canyon University, his master’s degree in business administration from Arizona State University, and his Juris Doctor degree from the University of Notre Dame School of Law. We believe Mr. Warren’s extensive experience with legal, financial and marketing matters provides a tremendous resource to our Board of Directors and management team, particularly in the areas of operations, finance and corporate governance. |
Our Board of Directors unanimously recommends that the stockholders voteFOR the election of each of the sevensix nominees listed above to constitute our Board of Directors.
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PROPOSAL NO. 2
APPROVAL OF CERTAIN PROVISIONS OF OUR ANNUAL CASH INCENTIVE PLAN IN
ACCORDANCE WITH SECTION 162(M) OF THE INTERNAL REVENUE CODE
Our Board of Directors previously adopted, and our stockholders previously approved, our Annual Cash Incentive Plan (the “Cash Incentive Plan”), under which annual cash bonuses paid to plan participants can qualify as “performance-based” compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) and thus be fully deductible by the Company for federal income tax purposes. Our stockholders now are being asked to approve certain provisions of the Cash Incentive Plan solely for the purpose of preserving the Company’s ability to deduct in full for federal income tax purposes the compensation recognized by certain of our executive officers in connection with performance-based awards that may be granted to them in the future under the Cash Incentive Plan.
Section 162(m) and related guidance generally preclude a publicly traded company from taking a tax deduction for compensation in excess of $1.0 million per individual paid to certain “covered employees.” These covered employees consist of our chief executive officer and our three other highest compensated officers, excluding our chief financial officer. The deduction limitation is subject to an exception for “performance-based” compensation that meets certain requirements, including a requirement that the “material terms of the performance goals” applicable to the covered employees must be disclosed to and approved by stockholders before any compensation is paid to them. Stockholder approval of this Proposal will constitute approval of the “material terms of the performance goals” under the plan within the meaning of the regulations under Section 162(m). By approving this Proposal, the stockholders will be approving, among other things, the participant eligibility requirements, the performance criteria on which incentive awards are based and the maximum dollar amount of compensation that may be paid under the plan to any covered employee in any fiscal year.
The Board of Directors believes that it is in the best interests of the Company and its stockholders to continue to preserve the ability of the Company to deduct in full compensation related to performance-based awards granted under the Cash Incentive Plan. Therefore, solely for the purpose of qualifying such compensation as performance-based under Section 162(m), the stockholders are asked to approve the following provisions of the Cash Incentive Plan:
If the stockholders do not approve this proposal, we will not be able to provide annual cash incentives under the Cash Incentive Plan to our “covered employees” as defined in Section 162(m) until such time, if any, as stockholder approval of a subsequent similar proposal is obtained.
The affirmative vote of a majority of shares of common stock present in person or represented by proxy and voting at the Annual Meeting and entitled to vote on the matter is required for approval of this proposal.
Our Board of Directors unanimously recommends a voteFOR approval of the provisions of our Annual Cash Incentive Plan setting forth the material terms of the performance goals.
Summary of the Cash Incentive Plan
The following is a summary of the Cash Incentive Plan. It is qualified in its entirety by reference to the full text of the Plan. Copies of the Cash Incentive Plan are available to any stockholder upon request addressed to Investor Relations, Grand Canyon Education, Inc., 3300 West Camelback Road, Phoenix, Arizona 85017. The Cash Incentive Plan may also be viewed without charge on the Securities and Exchange Commission website atwww.sec.gov.
Administration.The Cash Incentive Plan will be administered by the Compensation Committee, consisting of at least two nonemployee directors, each of whom satisfies the requirements for an “outside director” as the term is defined under Section 162(m). The Compensation Committee may delegate authority to a designee with respect to administration of awards granted to persons who are not “covered employees” within the meaning of Section 162(m).
Eligibility.All of our employees, including all executive officers, are eligible to be designated to participate in the Cash Incentive Plan, and, subject to stockholder approval of this Proposal 2, were selected by the Compensation Committee to participate in the Cash Incentive Plan for 2016.
Determination of awards under the Cash Incentive Plan.For each fiscal year, the Compensation Committee establishes one or more performance goals to be satisfied and the target bonus to be earned by each participant if those performance goals are satisfied. The target bonus may be either an absolute dollar amount or a specified percentage of base salary, as determined by the Compensation Committee. For those participants who are covered employees, the Compensation Committee generally must establish the applicable annual performance goals no later the 90 days after the commencement of the fiscal year and at a time when their outcome remains substantially uncertain.
The performance goals for each fiscal year must be based on one or more of the following measures of Company performance: (i) revenue targets; (ii) adjusted EBITDA targets (as such term is defined from time to time in the Company’s periodic reports as filed with the Securities and Exchange Commission); (iii) return measures (including, but not limited to, return on assets, capital, investment, equity or sales, and total stockholder return); (iv) earnings per share; (v) net income (before or after taxes) or operating income; (vi) budget comparisons; (vii) regulatory compliance; (viii) productivity improvements; (ix) measures of student satisfaction or achievement; (x) any combination of, or a specified increase in, any of the foregoing; and (xi) the completion of corporate transactions intended to enhance the Company’s revenue or profitability. The Compensation Committee may also establish personal performance goals for any participant.
Performance goals may be based upon the attainment of specified levels of the Company’s performance under one or more of the measures described above relative to a budget, an index or the performance of other entities and may also be based on the performance of any of the Company’s business units. Performance goals may include a minimum threshold level of performance below which no award will be earned, levels of performance at which specified portions of an award will be earned and a maximum level of credited performance above which no greater award may be earned. The measured attainment of performance goals may include or exclude certain extraordinary items or transactions, as determined by the Compensation Committee.
The maximum bonus payable to any participant in a fiscal year may not be greater than 200% of the participant’s base salary for the year or exceed $2,000,000. This amount is greater than bonus levels paid by the Company in previous years. This bonus limit was set in part to allow the Cash Incentive Plan to accommodate continued growth of the Company. The Board believes that this limit will provide the Compensation Committee with sufficient flexibility to recognize exceptional individual performance.
Final payouts for a fiscal year under the Cash Incentive Plan must be certified in writing by the Compensation Committee and will occur as soon as practicable after the close of the Company’s financial books for the fiscal year. To be eligible to receive a bonus payment, a participant must generally remain an employee as of the last day of the fiscal year. However, the Compensation Committee may authorize a prorated bonus payment based on actual achievement of the applicable performance goals for the full fiscal to any employee whose employment terminates during the year by reason of death, disability, retirement or involuntary termination due to a reduction in force after at least six months of service during the year. The Compensation Committee may adjust an individual bonus payment up or down based on the individual’s personal performance, provided that no such upward adjustment may be made to any bonus payable to a covered employee.
Deferral of bonuses.Bonuses earned under the Cash Incentive Plan generally must be paid no later than the 15th day of the third month following the end of the fiscal year. However, the Compensation Committee may permit a participant to defer all or part of the bonus awarded to such participant under any Company sponsored deferred compensation plan for which that participant is eligible.
Amendment or termination.The Company reserves the right, exercisable by the Compensation Committee, to amend the Cash Incentive Plan at any time and in any respect or to discontinue and terminate the Cash Incentive Plan in whole or in part at any time; provided, however, that certain amendments to the Cash Incentive Plan will be subject to approval of the Company’s stockholders in such manner and with such frequency as shall be required under Section 162(m).
Summary of federal income tax consequences.Under present federal income tax law, participants will realize ordinary income, equal to the amount of the award paid to them, at the time of payment. That income will be subject to applicable income and employment tax withholding by the Company. The Company will receive a deduction for the amount constituting ordinary income to the participant, provided that the Cash Incentive Plan satisfies the requirements of Section 162(m), which imposes a $1,000,000 limitation on the income tax deductibility of non-performance-related compensation paid per individual in the group comprised of the Company’s chief executive officer and the three most highly compensated officers (other than the chief financial officer), and otherwise satisfies the requirements for deductibility under federal income tax law.
Award amounts. Bonuses payable under the Cash Incentive Plan for fiscal year 2016 and future years cannot currently be determined because they will depend on the attainment by the Company and plan participants of the specified performance goals established by the Compensation Committee. The amounts that were paid to our covered persons under the Cash Incentive Plan as in effect for fiscal years 2015, 2014 and 2013 are set forth in the Compensation Discussion and Analysis section under the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.
APPROVAL OF CERTAIN PROVISIONS OF OUR 2008 EQUITY INCENTIVE PLAN IN
ACCORDANCE WITH SECTION 162(M) OF THE INTERNAL REVENUE CODE
Our stockholders have previously approved our 2008 Equity Incentive Plan (the “Equity Incentive Plan”), under which employees, officers, directors and consultants may be granted equity-based and cash-based awards. The stockholders now are being asked to approve certain provisions of the Equity Incentive Plan solely for the purpose of preserving the Company’s ability to deduct in full for federal income tax purposes the compensation recognized by certain of our executive officers in connection with performance-based awards that may be granted to them in the future under the Equity Incentive Plan.
As described in Proposal No. 2, under Section 162(m) of the Code and related guidance, we generally may not deduct for federal income tax purposes compensation paid to certain executive officers to the extent of any amounts of compensation received by any of these persons that exceeds $1.0 million in any single year. However, if the compensation qualifies as “performance-based” for Section 162(m) purposes, we may deduct it for federal income tax purposes even if it exceeds $1.0 million in a single year. In general, for a grant under the Equity Incentive Plan to qualify as “performance-based,” certain material terms of the Equity Incentive Plan must have been approved by our stockholders in a separate vote. The continued availability of the exemption for awards of performance-based compensation therefore depends upon obtaining approval of certain provisions of the Equity Incentive Plan by our stockholders at the 2016 annual meeting.
The Board of Directors believes that it is in the best interests of the Company and its stockholders to continue to preserve the ability of the Company to deduct in full compensation related to stock options, stock appreciation rights and other performance-based awards granted under the Equity Incentive Plan. Therefore, solely for the purpose of qualifying such compensation as performance-based under Section 162(m), the stockholders are asked to approve the following provisions of the Equity Incentive Plan (the “Section 162(m) Qualifying Provisions”):
While we believe that compensation provided by such awards under the Equity Incentive Plan generally will be deductible by the Company for federal income tax purposes, under certain circumstances, such as a change in control of the Company, compensation paid in settlement of certain awards may not qualify as performance-based.
We believe that we must retain the flexibility to respond to changes in the market for top executive officers and offer compensation packages that are competitive with those offered by others in our industry. In the event we are motivated by competitive forces to offer compensation in excess of $1.0 million to executive officers, our Board of Directors believes it would be in our best interests and those of our stockholders to be able to deduct such compensation for federal income tax purposes.
If stockholder approval of this proposal is not obtained, we will not make any further grants under the Equity Incentive Plan to our Chief Executive Officer and our other named executive officers who are “covered employees” as defined in Section 162(m), until such time, if any, as stockholder approval of a subsequent similar proposal is obtained.
The affirmative vote of a majority of shares of common stock present in person or represented by proxy and voting at the Annual Meeting and entitled to vote on the matter is required for approval of this proposal.
Our Board of Directors unanimously recommends a voteFOR approval of the provisions of our 2008 equity incentive plan setting forth the material terms of the performance goals.
Summary of the 2008 Equity Incentive Plan
The following summary of the Equity Incentive Plan as currently in effect is qualified in its entirety by the specific language of the Equity Incentive Plan. Copies of the Equity Incentive Plan are available to any stockholder upon request addressed to Investor Relations, Grand Canyon Education, Inc., 3300 West Camelback Road, Phoenix, Arizona 85017. The Equity Incentive Plan may also be viewed without charge on the Securities and Exchange Commission website at www.sec.gov.
Purpose. Our Board of Directors and stockholders previously adopted the Equity Incentive Plan to enhance the link between the creation of stockholder value and executive incentive compensation and to give our directors, executive officers and other employees appropriate motivation and rewards for achieving increases in share value. These incentives are provided through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, other stock-based awards, cash-based awards, and nonemployee director awards.
Shares reserved for issuance under the plan. As of February 29, 2016, we had authorized and reserved a total of 12,167,127 shares of our common stock for issuance under the Equity Incentive Plan. This reserve automatically increases on a cumulative basis on January 1 of each year through 2018, by an amount equal to the smaller of (a) 2.5% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or (b) an amount determined by our Board of Directors. The Compensation Committee of our Board of Directors elected to decline the increase that would have gone into effect as of January 1, 2016. We will make appropriate adjustments in the number of authorized shares and other numerical limits in the Equity Incentive Plan and in outstanding awards to prevent dilution or enlargement of participants’ rights in the event of a stock split or other change in our capital structure. Shares subject to awards that expire or are cancelled or forfeited will again become available for issuance under the Equity Incentive Plan. The shares available will not be reduced by awards settled in cash or by shares withheld to satisfy tax withholding obligations. Only the net number of shares issued upon the exercise of stock appreciation rights or options exercised by means of a net exercise or by tender of previously owned shares will be deducted from the shares available under the Equity Incentive Plan.
Certain award limits. To enable compensation provided in connection with certain types of awards intended to qualify as “performance-based” within the meaning of Section 162(m) of the Code, the Equity Incentive Plan establishes limits on the maximum aggregate number of shares or dollar value for which such awards may be granted to an employee in any fiscal year, as follows:
In addition, to comply with applicable tax rules, the Equity Incentive Plan also limits to 4,199,937 the number of shares that may be issued upon the exercise of incentive stock options granted under the Equity Incentive Plan, provided that this limit automatically increases on a cumulative basis on January 1 of each year through 2018, by an amount equal to the smaller of (a) the annual increase described above or (b) 4,199,937 shares. These award limits are subject to appropriate adjustments in the event of a stock split or other change in our capital structure.
Plan administration. The Equity Incentive Plan is administered by our Compensation Committee or, if there is no Compensation Committee, by our Board of Directors acting as the Compensation Committee. The Compensation Committee has the complete discretion to make all decisions relating to the Equity Incentive Plan, including modifying outstanding awards. All such decisions shall be final and binding unless fraudulent or made in bad faith.
Eligibility. We may grant awards under the Equity Incentive Plan to our employees, officers, directors, or consultants, or those of any future parent or subsidiary corporation or other affiliated entity. While we may grant incentive stock options only to employees, we may grant nonstatutory stock options, stock appreciation rights, restricted stock purchase rights or bonuses, restricted stock units, performance shares, performance units, and cash-based awards or other stock-based awards to any eligible participant.
Description of options. Subject to plan limits, the Compensation Committee has discretion to determine the terms of each option and the number of shares covered by each option, and the vesting term for each option. In most cases, options will expire not more than 10 years after they are granted, though options generally expire earlier if the participant’s service terminates earlier. The total fair market value of the shares (as of the date of grant) with respect to which incentive stock options are exercisable for the first time by any participant during any calendar year may not exceed $100,000.
Type of stock option grants permitted. The Equity Incentive Plan permits us to grant incentive stock options and nonstatutory stock options. After we grant an option, the principal differences to the participant between an incentive stock option and a nonstatutory stock option relate to federal income tax consequences, which are described below.
Exercise price of stock options. The Compensation Committee determines the option exercise price of each option. However, the exercise price may not be less than the fair market value of the shares on the date of grant; provided however, that exercise price of any incentive stock option granted to a person who is also a 10% stockholder of our common stock will not be less than 110% of the fair market value of the shares on the date of grant.
Each option is exercisable at the time or times and under the restrictions and conditions that the Compensation Committee determines in its discretion; provided, however, that no option will be exercisable after the expiration of 10 years from the date the option is granted; and provided, further, that no incentive stock option granted to a person who directly or by attribution owns more than 10% of the total combined voting power of all classes of our stock or any parent or subsidiary of ours will be exercisable after the expiration of five years from the date the incentive stock option is granted.
Description of stock appreciation rights. Stock appreciation rights provide for payment of any appreciation in the market price of a specified number of shares of our common stock between the grant date and the date on which a stock appreciation right is exercised after it has vested. The amount of any payments received under a stock appreciation right will fluctuate up and down with changes in our share price. The amount of stock price appreciation may be paid in cash, in shares of our common stock having a fair market value equal to the amount of appreciation to be paid, or in a combination of cash and shares of stock. The form of payment will be determined by the Compensation Committee, in its discretion. Stock appreciation rights may be awarded in combination with options, and such an award may provide that the stock appreciation rights will not be exercisable unless the related options are forfeited.
Each stock appreciation right is exercisable at the time or times and under the restrictions and conditions that the Compensation Committee determines in its discretion; provided, however, that no stock appreciation right will be exercisable after the expiration of 10 years from the date the stock appreciation right is granted. Stock appreciation rights granted in combination with options shall expire on the date the related options expire.
Exercise price of stock appreciation rights. The Compensation Committee determines the exercise price of each stock appreciation right. However, the exercise price for each stock appreciation right granted in combination with a stock option will be the same as the exercise price of the related stock option. The exercise price per share of a freestanding stock appreciation right will not be less than the fair market value of a share of stock on the date the right is granted.
Description of restricted stock awards. The Compensation Committee may approve a restricted stock award in the form of either a restricted stock bonus, restricted stock purchase right or restricted stock unit. A restricted stock bonus is a grant of stock which does not generally require payment of any monetary purchase price, a restricted stock purchase right is an award which permits the Equity Incentive Plan participant to elect during a short period of time to purchase a specified number of shares at a specified price, and a restricted stock unit is simply a promise by us to issue shares at or after vesting of the units.
The purchase price for shares of stock issuable under a restricted stock purchase right is established by the Compensation Committee in its discretion. Generally, no monetary payment is required for the issuance of shares under a restricted stock bonus award or a restricted stock unit award, the consideration for which will be services already rendered by the Equity Incentive Plan participant. However, a participant granted a restricted stock bonus or a restricted stock unit award may be required to furnish consideration in the form of cash or past services rendered in the amount of the par value of the shares subject to the award. Generally, the vesting of restricted stock awards will cease upon termination of the participant. The Compensation Committee, in its discretion, can determine the period during which a participant may exercise its restricted stock purchase right, though such period cannot exceed 30 days from the date of grant of the award.
Description of performance awards. Performance awards may be granted in the form of either performance shares or performance units. These awards are contractual rights that provide the holder with a payment in shares or cash if certain performance goals established by the Compensation Committee are attained within a specified time period. The Compensation Committee decides, in its discretion, whether or not a participant will be granted a performance award, and if so, the type of award, the number of performance shares or units subject to the award, the applicable performance goals and the performance period. The number of performance shares or performance units a participant is awarded is set forth in an award agreement.
The initial value of each performance share and performance unit will be determined by the Compensation Committee. Generally, the initial value of a performance share will be equal to the fair market value of one share of our common stock on the date of grant and the initial value of each performance unit will be a monetary value established by the Compensation Committee at the time of grant. The ultimate value of a performance award depends on the extent to which performance goals established by the Compensation Committee are attained and, in the case of performance shares, the fair market value of our common stock at the time payment is made under the award.
Performance goals are established by the Compensation Committee based on targets to be obtained with respect to one or more measures of business or financial performance during the performance period specified by the Compensation Committee. Once a performance goal is established, it cannot be changed during the performance period.
Measurement of performance goals. The Equity Incentive Plan sets forth performance measures used in the case of an award intended to qualify as “performance-based” under Section 162(m). To qualify as a “performance-based,” the number of shares or other benefits granted, issued, retainable or vested under an award may be made subject to the attainment of performance goals for a specified period of time relating to one or more of the following performance measures, either individually, alternatively or in any combination, applied to either us as a whole or to a business unit or subsidiary, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group or index, in each case as specified by the Compensation Committee in the award: (i) revenue, (ii) sales, (iii) expenses, (iv) operating income, (v) gross margin, (vi) operating margin, (vii) earnings before any one or more of: stock-based compensation expense, interest, taxes, depreciation and amortization, (viii) pre-tax profit, (ix) net operating income, (x) net income, (xi) economic value added, (xii) free cash flow, (xiii) operating cash flow, (xiv) balance of cash, cash equivalents and marketable securities, (xv) stock price, (xvi) earnings per share, (xvii) return on stockholder equity, (xviii) return on capital, (xix) return on assets, (xx) return on investment, (xxi) employee satisfaction, (xxii) employee retention, (xxiii) market share, (xxiv) customer satisfaction, (xxv) product development, (xxvi) research and development expenses, (xxvii) completion of an identified special project, or (xxviii) completion of a joint venture or other corporate transaction.
Cash-based awards and other stock-based awards. The Compensation Committee may grant cash-based awards or other stock-based awards in such amounts and subject to such terms and conditions as the Compensation Committee determines. Cash-based awards will specify a monetary payment or range of payments, while other stock-based awards will specify a number of shares or units based on shares or other equity-related awards. Such awards may be subject to vesting conditions based on continued performance of service or subject to the attainment of one or more performance goals similar to those described above in connection with performance awards. Settlement of awards may be in cash or shares of common stock, as determined by the Compensation Committee. A participant will have no voting rights with respect to any such award unless and until shares are issued pursuant to the award. The Compensation Committee may grant dividend equivalent rights with respect to other stock-based awards. The effect on such awards of the participant’s termination of service will be determined by the Compensation Committee and set forth in the participant’s award agreement.
Nonemployee director awards. The Equity Incentive Plan authorizes the Compensation Committee to establish a program of periodic awards to our nonemployee directors. These awards may take the form of nonstatutory stock options, stock appreciation rights, restricted stock awards or restricted stock unit awards. Nonemployee director awards are to be granted on a periodic, nondiscriminatory basis. They may consist of a basic award granted to all nonemployee directors, with additions for one or more of the following: (i) initial election or appointment to our Board of Directors; (ii) service on a committee of our Board of Directors; and (iii) service as chairman of our Board of Directors. Only members of the Board of Directors who are not employees at the time of grant will be eligible to participate in the non-employee director awards component of the Equity Incentive Plan. The Board of Directors or the Compensation Committee will set the amount and type of non-employee director awards to be awarded on a periodic, non-discriminatory basis. Under our current nonemployee director compensation plan, upon joining our Board of Directors, new non-employee directors receive an award of restricted stock under the Equity Incentive Plan valued at $20,000, which vests on the one year anniversary of the date of grant, subject to accelerated vesting in the event of a change in control. For serving on the Board of Directors, our non-employee directors also receive an annual retainer of $50,000 in cash and an award of restricted stock under the Equity Incentive Plan valued at $75,000 on the date of grant. The restricted stock grants to our non-employee directors are made after our annual meeting of stockholders each year and vest on the earlier of the one year anniversary of the date of grant or immediately prior to the next year’s annual meeting of stockholders, subject to acceleration in the event of a change in control.
Effect of change in control. In the event of a change in control, as described in the Equity Incentive Plan, the acquiring or successor entity may assume or continue all or any awards outstanding under the Equity Incentive Plan or substitute substantially equivalent awards. Any awards that are not assumed or continued in connection with a change in control or are not exercised or settled prior to the change in control will terminate effective as of the time of the change in control. The Compensation Committee may provide for the acceleration of vesting of any or all outstanding awards upon such terms and to such extent as it determines, except that the vesting of all non-employee director awards will automatically be accelerated in full. The Equity Incentive Plan also authorizes the Compensation Committee, in its discretion and without the consent of any participant, to cancel each or any outstanding award denominated in shares upon a change in control in exchange for a payment to the participant with respect to each share subject to the cancelled award of an amount equal to the excess of the consideration to be paid per share of common stock in the change in control transaction over the exercise price per share, if any, under the award.
Amendment and termination. The Equity Incentive Plan will continue in effect until its termination by the Compensation Committee, provided that no awards may be granted under the Equity Incentive Plan following September 26, 2018, the tenth anniversary of the Equity Incentive Plan’s effective date. The Compensation Committee may amend, suspend or terminate the Equity Incentive Plan at any time, provided that no amendment may be made without stockholder approval that would increase the maximum aggregate number of shares of stock authorized for issuance under the Equity Incentive Plan, change the class of persons eligible to receive incentive stock options or require stockholder approval under any applicable law. No amendment, suspension or termination of the Equity Incentive Plan may affect any outstanding award unless expressly provided by the administrator, and, in any event, may not have a materially adverse effect an outstanding award without the consent of the participant unless necessary to comply with applicable law.
U.S. Federal Income Tax Consequences
The following summary is intended only as a general guide to the U.S. federal income tax consequences of participation in the Equity Incentive Plan and does not attempt to describe all possible federal or other tax consequences of such participation or tax consequences based on particular circumstances.
Incentive stock options. An optionee who is granted an incentive stock option does not recognize taxable income at the time the option is granted or upon its exercise, although the exercise may subject the optionee to the alternative minimum tax. Upon a disposition of the shares more than two years after grant of the option and one year after exercise of the option, any gain or loss is treated as long-term capital gain or loss. If these holding periods are not satisfied, the optionee recognizes ordinary income at the time of disposition equal to the difference between the exercise price and the lower of (i) the fair market value of the shares at the date of the option exercise or (ii) the sale price of the shares. Any gain or loss recognized on such a premature disposition of the shares in excess of the amount treated as ordinary income is treated as long-term or short-term capital gain or loss, depending on the holding period. We are entitled to a deduction in the same amount as the ordinary income recognized by the optionee.
Nonstatutory stock options. An optionee does not recognize any taxable income at the time he or she is granted a nonstatutory stock option. Upon exercise, the optionee recognizes taxable income generally measured by the excess of the then fair market value of the shares over the exercise price. Any taxable income recognized in connection with an option exercise by our employee is subject to tax withholding by us. We are generally entitled to a deduction in the same amount as the ordinary income recognized by the optionee, except to the extent such deduction is limited by applicable provisions of the Code. Upon a disposition of such shares by the optionee, any difference between the sale price and the optionee’s exercise price, to the extent not recognized as taxable income as provided above, is treated as long-term or short-term capital gain or loss, depending on the holding period.
Stock appreciation rights. No taxable income is reportable when a stock appreciation right is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the amount of cash received and the fair market value of any shares received. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss. We generally should be entitled to a deduction equal to the amount of ordinary income recognized by the participant in connection with the exercise of the stock appreciation right, except to the extent such deduction is limited by applicable provisions of the Code.
Restricted stock awards. A participant acquiring restricted stock generally will recognize ordinary income equal to the excess of the fair market value of the shares on the “determination date” over the price paid, if any, for such shares. The “determination date” is the date on which the participant acquires the shares unless the shares are subject to a substantial risk of forfeiture and are not transferable, in which case the determination date is the earlier of (i) the date on which the shares become transferable or (ii) the date on which the shares are no longer subject to a substantial risk of forfeiture (e.g., when they become vested). If the determination date follows the date on which the participant acquires the shares, the participant may elect, pursuant to Section 83(b) of the Code, to designate the date of acquisition as the determination date by filing an election with the Internal Revenue Service no later than 30 days after the date on which the shares are acquired. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of shares acquired pursuant to a restricted stock award, any gain or loss, based on the difference between the sale price and the fair market value of the shares on the determination date, will be taxed as capital gain or loss. We generally should be entitled to a deduction equal to the amount of ordinary income recognized by the participant on the determination date, except to the extent such deduction is limited by applicable provisions of the Code.
Restricted stock unit, performance shares and units, cash-based and other stock-based awards. A participant generally will recognize no income upon the receipt of a restricted stock unit, performance share, performance unit, unpaid cash-based or other stock-based award. Upon the settlement of such awards, participants normally will recognize ordinary income in the year of settlement in an amount equal to the cash received and the fair market value of any substantially vested shares of stock received. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. If the participant receives shares of restricted stock, the participant generally will be taxed in the same manner as described above under “Restricted stock awards.” Upon the sale of any shares received, any gain or loss, based on the difference between the sale price and the fair market value of the shares on the determination date (as defined above under “Restricted stock awards”), will be taxed as capital gain or loss. We generally should be entitled to a deduction equal to the amount of ordinary income recognized by the participant on the determination date, except to the extent such deduction is limited by applicable provisions of the Code.
Dividend equivalents. A participant will recognize taxable income upon receipt of the payment of a dividend equivalent in cash or substantially vested shares of stock.
Section162(m). Section 162(m) of the Code would render non-deductible to us certain compensation in excess of $1,000,000 received in any year by certain executive officers unless such excess is “performance-based compensation” (as defined in the Code) or is otherwise exempt from Section 162(m). The availability of the exemption for awards of performance-based compensation depends upon obtaining approval of certain material terms of the Equity Incentive Plan by our stockholders. Provided we obtain the approval of our stockholders of this proposal, grants of options and stock appreciation rights, and grants of restricted stock awards, restricted stock units and performance awards conditioned on attainment of one or more performance goals set forth in the Equity Incentive Plan, may qualify as performance-based compensation exempt from Section 162(m).
Section409A. Certain awards granted under the Equity Incentive Plan may be deemed to constitute deferred compensation within the meaning of Section 409A of the Code and must satisfy the requirements of Section 409A to avoid adverse tax consequences to participants who receive such awards. These requirements include limitations on election timing, acceleration of payments, and distributions. We intend to structure any deferrals and awards under the Equity Incentive Plan to meet the applicable tax law requirements.
PROPOSAL NO. 4
APPROVAL OF AMENDMENT TO AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
On December 21, 2015, the Delaware Court of Chancery issued an opinion inIn re VAALCO Energy,Inc. Stockholder Litigation, Consol. C.A. No. 11775-VCL, invalidating as a matter of law provisions of the certificate of incorporation and bylaws of VAALCO Energy, Inc., a Delaware corporation, that permitted the removal of VAALCO’s directors by its stockholders only for cause. The Court of Chancery held that, in the absence of a classified board or cumulative voting, VAALCO’s “only for cause” director removal provisions conflicted with Section 141(k) of the Delaware General Corporation Law and were therefore invalid.
We do not currently have a classified board or provide for cumulative voting. Currently, Article III, Section 3.5 of the Company’s Third Amended and Restated Bylaws (the “Bylaws”) thus properly provides that directors may be removed by the stockholders “with or without cause.” To the contrary, Article VI, Section C of the Company’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) provides that directors may be removed by the stockholders only “for cause.” In light of the Court of Chancery’s decision, and in order to eliminate this inconsistency in the Company’s governing documents, the Board has determined that it is advisable and in the best interests of the Company and its stockholders to amend Article VI of the Certificate of Incorporation to eliminate Section C (the “Amendment”).
We have never attempted to enforce and, in light of the VAALCO decision, we have determined that we will not attempt to enforce, the director removal provision in the Certificate of Incorporation to the extent that it purports to limit removal of directors by stockholders only for cause.
If the stockholders approve the proposed Amendment, it will become effective upon the filing of a certificate of amendment setting forth the Amendment with the Secretary of State of the State of Delaware (the “State Office”). For convenience, a marked copy of the certificate of amendment, showing the elimination of Section C from the existing language in Article VI is attached to this Proxy Statement asAppendixA. The Board reserves the right to abandon or delay the filing of the Amendment even if it is approved by our stockholders.
If the Amendment is approved and filed, the Company will file a Second Amended and Restated Certificate of Incorporation, which only restates and integrates but does not further amend the provisions of the Certificate of Incorporation, with the State Office.
The Board recommends a vote “FOR” approval of the Amendment.
ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
◻What am I voting on? | Stockholders are being asked to approve, on an advisory basis, the compensation of the named executive officers as described in the Compensation Discussion and Analysis section and the related tables. | |
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◻Voting recommendation: | | Our Board of Directors unanimously recommends that you vote “FOR” the advisory vote to approve the compensation of our named executive officers. The Compensation Committee takes very seriously its role in the governance of the Company’s compensation programs and will take into account the outcome of the advisory vote when considering future executive compensation decisions. |
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◻Vote required: | | The affirmative vote of the majority of shares present in person or represented by proxy at the Annual Meeting and entitled to vote. Broker non-votes will have no effect on the outcome of this proposal, while abstentions will have the effect of a vote against this proposal. |
The Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, enacted in 2010, requires that companies provide their stockholders with the opportunity to vote, on an advisory basis, whether to approve the compensation of companies’ named executive officers, commonly referred to as a “Say-on-Pay” vote, at least once every three years. In a vote held at our 20112017 Annual Meeting, our stockholders voted in favor of holding Say-On-Pay votes annually. In light of this result and other factors considered by the Board, the Board has determined that the Company will hold Say-On-Pay votes on an annual basis until the next required vote on the frequency of such Say-On-Pay votes.basis.
The Say-on-Pay vote is a non-binding advisory vote on the compensation of our named executive officers as described in the Compensation Discussion and Analysis section, including the tabular disclosure and accompanying narrative disclosure regarding such compensation, set forth in this proxy statement. It is not a vote to approve our general compensation policies, the compensation of our Board of Directors, or our compensation policies as they relate to risk management. Please read the Compensation Discussion and Analysis section starting on page 29 of this proxy statement for a detailed discussion about our executive compensation programs, including information about the fiscal year 20152023 compensation of our named executive officers.
The objectives of our compensation program are to attract, motivate, retain, and reward our executive officers by relating compensation to performance and making our compensation package competitive and cost-effective. We pay our executive officers based on business performance and individual performance, and, in setting compensation levels, we take into consideration our past practices, our current and anticipated future needs, and the relative skills and experience of each individual executive officer. The Compensation Discussion and Analysis section starting on page 29 of this proxy statement provides a more detailed discussion of our executive compensation program. We believe that the compensation program we follow helps us achieve our principal compensation objectives.
The vote solicited by this Proposal No. 52 is advisory, and therefore is not binding on us, our Board of Directors or our Compensation Committee, nor will its outcome require us, our Board of Directors or our Compensation Committee to take any action. Moreover, the outcome of the vote will not be construed as overruling any decision by us or our Board of Directors. Furthermore, because this non-binding, advisory vote primarily relates to the compensation of our named executive officers that we have already paid or are otherwise contractually committed to pay, there is generally no opportunity for us to revisit these decisions. However, our Board of Directors, including our Compensation Committee, values the opinions of our stockholders and, to the extent there is any significant vote against the named executive officer compensation as disclosed in this proxy statement, we will consider our stockholders’ concerns and evaluate what actions, if any, may be appropriate for us to take in the future to address those concerns.
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Stockholders will be asked at the Annual Meeting to approve the following resolution pursuant to this Proposal No. 5:2:
“RESOLVED, that the stockholders of Grand Canyon Education, Inc. approve, on an advisory basis, the compensation of the Company’s named executive officers, disclosed pursuant to Item 402 of Regulation S-K in the Company’s definitive proxy statement for the 20162024 Annual Meeting of Stockholders.”
Our Board of Directors unanimously recommends that you voteFOR the resolution approving the compensation of our named executive officers as disclosed in this proxy statement.
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RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has selected KPMG LLP (“KPMG”), an independent registered public accounting firm, to audit our consolidated financial statements for the year ending December 31, 2016. While it is not required to do so, our Audit Committee is submitting the selection of that firm for ratification in order to ascertain the view of our stockholders. In the event the stockholders fail to ratify the selection of KPMG, the adverse vote will be considered a direction to the Audit Committee to consider other auditors for next year. However, because of the difficulty in making any substitution so long after the beginning of the current year, the appointment of KPMG for fiscal 2016 will stand, unless the Audit Committee finds other good reason for making a change. Even if the selection is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the Company’s and its stockholders’ best interests. Proxies solicited by our Board of Directors will, unless otherwise directed, be voted to ratify the appointment of KPMG as our independent registered public accounting firm for the fiscal year ending December 31, 2016.
A representative of KPMG will be present at the meeting, will be afforded an opportunity to make a statement if the representative so desires, and will be available to respond to appropriate questions during the meeting.
Our Board of Directors unanimously recommends that the stockholders voteFOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016.
For the years ended December 31, 2015 and 2014, KPMG billed us the amounts set forth below for professional services rendered in connection with audit, audit-related, tax and other professional services. All of the fees for audit, audit-related, tax and other services performed by KPMG were pre-approved by the Audit Committee in accordance with the pre-approval policies and procedures described below.
Services Rendered | 2015 | 2014 | ||||||
Audit Fees(1) | $ | 560,000 | $ | 497,181 | ||||
Audit-Related Fees | — | — | ||||||
Tax Fees | — | — | ||||||
All Other Fees | — | — | ||||||
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Total Fees | $ | 560,000 | $ | 497,181 | ||||
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Approval of Independent Registered Public Accounting Firm Services and Fees
The Audit Committee has adopted a policy regarding pre-approval of audit and non-audit services performed by our independent registered public accounting firm. The Audit Committee is responsible for pre-approving all engagements of our independent registered public accounting firm. The policy also highlights services the Audit Committee will and will not approve for audit and non-audit services. The policy requires that written documentation be provided by the independent registered accounting firm to the Audit Committee for all tax services.
The Audit Committee may, annually or from time to time, set fee levels for certain non-audit services, as defined in the policy, or for all non-audit services. Any engagements that exceed those fee levels must receive specific pre-approval from the Audit Committee. The Audit Committee may delegate to the Audit Committee chair authority to grant pre-approvals of permissible audit and non-audit services, provided that any pre-approvals by the chair must be reported to the full Audit Committee at the next scheduled meeting.
On a regular basis, management provides written updates to the Audit Committee regarding the amount of audit and non-audit service fees incurred to date. All of the services described above for fiscal years 2015 and 2014 were approved by our Audit Committee.
Our Audit Committee is composed of three members, each of whom the Board has determined to be an independent director as defined by the listing standards of the Nasdaq Stock Market and the federal securities laws. The duties of the Audit Committee are summarized in this proxy statement under “Committees of Our Board of Directors” on page 4 and are more fully described in the Audit Committee charter adopted by the Board of Directors.
One of the Audit Committee’s primary responsibilities is to assist the Board in overseeing the Company’s management and independent registered public accounting firm in regard to our financial reporting and internal controls over financial reporting. In performing our oversight function, we relied upon advice and information received in our discussions with management and the independent registered public accounting firm.
We have (a) reviewed and discussed our Company’s audited financial statements for the fiscal year ended December 31, 2015, with management; (b) discussed with our Company’s independent registered public accounting firm the matters required to be discussed by Public Company Oversight Board (PCAOB) Auditing Standard Number 16,Communications with Audit Committees; (c) received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence; and (d) discussed with the independent registered public accounting firm its independence.
Based on the review and discussions with management and our independent registered public accounting firm referred to above, we recommended to our Board of Directors that the audited financial statements be included in our Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, for filing with the Securities and Exchange Commission.
Audit Committee:
Jack A. Henry (Chair)
Bradley A. Casper
Kevin F. Warren
The following sets forth information regarding our non-director executive officers as of the date of this proxy statement. For information regarding Brent D. Richardson, our Chairman, and Brian E. Mueller, a directorour Chairman and our Chief Executive Officer, and President of Grand Canyon University, see “Proposal No. 1— Election of Directors—Directors and Director Nominees.”
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Name | Age | Position | ||
Dr. W. Stan Meyer | | 63 | | Chief Operating Officer |
Daniel E. Bachus | | 53 | | Chief Financial Officer |
| | 50 | | Chief Technology Officer |
Daniel J. Briggs | | 64 | | Orbis Education, Chief Executive Officer |
Kathy J. Claypatch | | 62 | | Chief Information Officer |
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| Dr. W. Stan Meyer has been serving as our Chief Operating Officer since July 26, 2012, having previously served in the position of Executive Vice President from June 2008 to July 2012. From August 2002 to June 2008, Dr. Meyer was employed by Apollo Education Group, Inc., a for-profit, postsecondary education company and the parent company of the University of Phoenix, serving between June 2006 to June 2008 as its executive vice president of marketing and enrollment. Dr. Meyer previously served as a regional vice president of the University of Phoenix Online, a unit of the University of Phoenix, and division director of Axia College and of the School of Advanced Studies, also units of the University of Phoenix. From 1983 to 2002, Dr. Meyer held several positions with the Concordia University system, including director of operations for Concordia University’s education network. Dr. Meyer received a Bachelor of Arts in Communications degree from Concordia University and a Master of Business Administration degree and a Doctor of Education in Institutional Management degree from Pepperdine University. | |||
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| | Daniel E. Bachus has been serving as our Chief Financial Officer since July 2008. From January 2007 until June 2008, Mr. Bachus served as chief financial officer for Loreto Bay Company, a real estate developer. From 2000 to 2006, Mr. Bachus served as the chief accounting officer and controller of Apollo Education Group, Inc., a for-profit, postsecondary education company and the parent company of the University of Phoenix. From 1992 to 2000, Mr. Bachus was employed by Deloitte & Touche LLP, most recently as an audit senior manager. Mr. Bachus received a Bachelor of Science degree in Accountancy from the University of Arizona and a Master of Business Administration degree from the University of Phoenix. | ||
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| | Dilek Marsh has been serving as our Chief Technology Officer since July 2021, having previously served as Chief Data Officer since July 2018, as Executive Vice President since July 2012 and as Senior Vice President since August 2008. Ms. Marsh has been in higher education for the last 20 years. Ms. Marsh has served in information technology roles since 1999, including software development project management, business process design and business analytics. Ms. Marsh holds a Bachelor of Arts in Sociology from Bogazici University in Turkey, a Master of Arts in Anthropology from Arizona State University and a Master of Business Administration in Technology Management from the University of Phoenix. |
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| | Daniel J. Briggs has been serving as the Chief Executive Officer of Orbis Education Services, our wholly owned subsidiary, since our acquisition of Orbis Education in January 2019. Mr. Briggs founded Orbis Education in 2003 and served in various positions, including chief executive officer and chief growth officer until January 2019. Prior to founding Orbis Education, Mr. Briggs served as Vice President of National Accounts for CCS Medical, a national home delivery company addressing chronic medical conditions, and Senior Vice President for ORYX Consulting, and General |
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Dr. W. Stan Meyer has been serving as our Chief Operating Officer since July 26, 2012,
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| Kathy J. Claypatch has been serving as our Chief Information Officer since July 2021, having previously served in the position of Chief Technology Officer beginning in October 2012. From 2006 to 2012, Ms. Claypatch spent time in the financial industry and served as the Chief Information Officer for Apriva and the Vice President of information technology for TSYS Acquiring Solutions. She worked in higher education from 2002 to 2006 at Apollo Education Group, Inc., where she was responsible for growing the information technology infrastructure to support the online education environment and its rapid growth. Ms. Claypatch has over 30 years of leadership and entrepreneurial experience spanning from startups to Fortune 500 companies. | |
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Daniel E. Bachus has been serving as our Chief Financial Officer since July 1, 2008. Mr. Bachus has been serving as a Director of the Grand Canyon University Foundation since its formation in 2010 and as a director of LOPE Kingdom Fund, an entity formed to provide seed funding for entrepreneurial ventures initiated by Grand Canyon University students, since its formation in 2014. From January 2007 until June 2008, Mr. Bachus served as chief financial officer for Loreto Bay Company, a real estate developer. From 2000 to 2006, Mr. Bachus served as the chief accounting officer and controller of Apollo Education Group, Inc., a for-profit, postsecondary education company and the parent company of the University of Phoenix. From 1992 to 2000, Mr. Bachus was employed by Deloitte & Touche LLP, most recently as an audit senior manager. Mr. Bachus received a Bachelor of Science degree in Accountancy from the University of Arizona and a Master of Business Administration degree from the University of Phoenix. Mr. Bachus is also a certified public accountant.
Joseph N. Mildenhall has been serving as our Chief Information Officer since September 2009. From 1998 to September 2009, Mr. Mildenhall was employed by Apollo Education Group, Inc., a for-profit, postsecondary education company and the parent company of the University of Phoenix, serving between June 2006 and September 2009 as its chief information officer. From 1998 to 2006, Mr. Mildenhall directed the design, development and deployment of the University of Phoenix online education environment and the student and faculty Internet portal supporting the rapid growth of the online campus beginning in 1998. From 1979 to 1988, Mr. Mildenhall held increasingly responsible roles in software development at J&K Computer Systems, eventually becoming vice president and co-owner. When J&K Computer Systems was acquired by National Computer Systems, Mr. Mildenhall continued in senior software development and technology leadershiproles through 1998. Mr. Mildenhall holds a Bachelor of Science degree in Accounting from Brigham Young University and a Master of Business Administration from the University of Phoenix.
Brian M. Robertshas been serving as our Senior Vice President and General Counsel since May 2012 and as our Secretary since July 2012. Mr. Roberts has been serving as a director of LOPE Kingdom Fund, an entity formed to provide seed funding for entrepreneurial ventures initiated by Grand Canyon University students, since its formation in 2014. From August 2003 to May 2012, Mr. Roberts was employed by iGo, Inc., a publicly traded developer of electronics accessories, including serving as general counsel and secretary in charge of all legal functions since May 2005. From September 1998 to August 2003, Mr. Roberts was an attorney with the law firm of Snell & Wilmer L.L.P. Mr. Roberts received a Bachelor of Science degree in Business Administration and a Juris Doctorate from the University of Kansas.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The following discussion and analysis should be read in conjunction with “Compensation of Named Executive Officers” and the related tables that follow.
ExecutiveIn this section, we describe the material components of our executive compensation program for our named executive officers (the “named executive officers”), whose compensation is set forth in the 2023 Summary Compensation Table and other compensation tables contained in this Proxy Statement. We also provide an overview of our executive compensation philosophy and our overall program. In addition, we explain how and why the Compensation Committee of our Board arrived at the specific compensation decisions involving the named executive officers for 2023.
For 2023, our named executive officers were:
◾ | Brian E. Mueller, our Chief Executive Officer; |
◾ | Dr. W. Stan Meyer, our Chief Operating Officer; |
◾ | Daniel E. Bachus, our Chief Financial Officer; |
◾ | Dilek Marsh, our Chief Technology Officer; and |
◾ | Daniel J. Briggs, Chief Executive Officer, Orbis Education Services |
2023 Business Highlights
Our Business.We are an education services company dedicated to serving colleges and universities. We have developed significant technological solutions, infrastructure and operational processes to provide services to these institutions on a large scale. Our largest university partner is Grand Canyon University (“GCU”), an Arizona non-profit corporation that operates a comprehensive regionally accredited university that offers approximately 200 graduate and undergraduate degree programs, emphases and certificates across eightten colleges both online and on ground at our approximately 250-acre campus in Phoenix, Arizona, at leased facilities and at facilities owned by third party employers of our students. We are committed to providing an academically rigorous educational experience with a focus on professionally relevant programs that meet the objectives of our students. Our undergraduate programs are designed to be innovative and meet the future needs of employers, while providing students with the needed critical thinking and effective communication skills developed through a Christian-oriented, liberal arts foundation. We offer master and doctoral degrees in contemporary fields that are designed to provide students with the capacity for transformational leadership in their chosen industry, emphasizing the immediate relevance of theory, application, and evaluation to promote personal and organizational change. We utilize an integrated, innovative approach to marketing, recruiting, and retaining both traditional-aged students attending on ourits campus in Phoenix, Arizona and working adult students attending on ourat six off-site campus or at off-site locations in cohorts (referred to by us as professional studies students) or online, which has enabled us to increase enrollmentclassroom and laboratory sites. As of December 31, 2023, we provided education services and support to approximately 74,500121,000 students with more than 117,000 students enrolled in GCU’s programs, emphases and certificates.
GCE, together with Orbis Education Services LLC, has continued to add additional university partners. In the healthcare field, we work in partnership with a growing number of top universities and healthcare networks across the country, offering healthcare-related academic programs at off-campus classroom and laboratory sites located near healthcare providers and developing high-quality, career-ready graduates to enter the workforce ready to meet the demands of the healthcare industry. In addition, we have provided certain services to a university partner to assist them in expanding their online graduate programs. As of December 31, 2015. At2023, GCE provided education services to 25 university partners across the United States.
The decisions made by the Compensation Committee and the Board on the compensation of our named executive officers reflect their role in the organic growth of the Company during 2023, which included increases in off-campus classroom and laboratory sites (totaling 40 as of December 31, 2015, 79.6%2023), an increase in service revenue of our students were enrolled in our5.4%, and the return to online programs, and, of our working adult students (online and professional studies students), 47.8% were pursuing masters or doctoral degrees.
In 2015, we continued to increase the number of students in attendance at our expanding traditional ground campus. Our Fall 2015 ground enrollment was 15,500 students. We attribute the significantnew student growth in our enrollment to our increasing brand recognition and the value proposition that our ground traditional campus affords to traditional-aged students and their parents. After scholarships, our ground traditional students pay for tuition, room, board, and fees, often half to a third of what it costs to attend a private, traditional university in another state and an amount comparable to what it costs to attend a public university. We plan to increase enrollment growth for our traditional campus2023 over the next few years, and seek to have 17,500 ground students in attendance at the beginning of our 2016-2017 academic year.
In November 2012, we accepted an invitation to become a member of the Division I Western Athletic Conference beginning with the 2013-2014 academic year, and in 2013, we began the four-year process to reclassify our NCAA membership from Division II to Division I. During the reclassification process, we are considered a Division I university and are playing full conference schedules but are ineligible to compete for national championships which, for example, precludes us from playing in the end-of-year NCAA basketball tournament during that period of time.
Since 2010, our industry has faced a changing regulatory environment with new proposed and final rules being issued by the Department of Education and legislative hearings and initiatives in both the U.S. Senate and House of Representatives. For a complete description of these matters, please see “Business – Regulation” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K. At the same time, we believe that competition for students continues to increase, as an increasing number of traditional colleges and universities and community colleges, including many with well-established reputations for excellence, now offer distance learning and other online education programs, including programs that are geared towards the needs of working adult students. This trend has been accelerated by private companies that provide marketing, enrollment and student support services and/or manage online learning platforms for working adult students at traditional colleges and universities which we believe has resulted in declines in enrollment at most of the other publicly traded education companies.
Our senior management has guided our Company through these changes while still producing very positive financial results. For the year ended December 31, 2015:
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Our Compensation Practices Highlights
The tax rate for both periods is less than the annual effective tax rates due to the contributions made in lieu of state income taxes in the third quarter of both years.
For a discussion of the manner in which we compute our Adjusted EBITDA and to view a table setting forth a reconciliationfollowing summarizes key aspects of our Adjusted EBITDA to our net income (as determined in accordance with U.S. generally accepted accounting principles), please see Item 6,Selected Consolidated Financialcompensation policies and Other Data,beginning on page 44 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the Securities and Exchange Commission on February 17, 2016.programs:
We also had positive non-financial developments in 2015, including:
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| What We Do: | | What We Don’t Do: | |
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◻ | We Pay for Performance: A significant portion of our cash compensation is based on achievement of key financial metrics that are disclosed to our stockholders. | | ◻ | We Do Not Have Tax Gross-Ups: We do not provide tax gross-ups on any severance or change-in-control type payments. |
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◻ | We Seek Alignment with Our Stockholders. We require both our named executive officers and our directors to maintain a meaningful ownership stake at levels specified in our stock ownership policy. | | ◻ | We Do Not Permit Hedging, Short Sales, or Pledging. Under our insider trading policy, our officers and directors are prohibited from hedging, effecting short sales of, and (except in extremely limited circumstances) pledging our stock. |
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◻ | We Balance Our Incentive Compensation: Our incentive compensation programs provide a balance of short-term cash incentives that are based on achievement of annual financial metrics and time-based equity incentives that vest over five years and provide value as a long-term retention tool. | | ◻ | We Do Not Automatically Increase Salaries or Bonuses: Our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer have not accepted base salary increases in over eight years, and their bonuses are strictly performance based. |
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◻ | We Can Claw Back Compensation: We have the | | ◻ | We Do Not Provide Excessive Perquisites: Our named executive officers receive limited perquisites and benefits. |
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◻ | We Retain an Independent Compensation Consultant: Our Compensation Committee engages an independent consultant from time to time to provide guidance on peer group composition and compensation levels. | | ◻ | We Do Not Provide for Change of |
Response to Advisory Vote on Executive Compensation
We have held stockholder advisory votes on the compensation of our named executive officers, commonly referred to as a Say-on-Pay vote, at each of our past five annual meetings of stockholderssince 2011 and, in each case, our stockholders approved the compensation of our named executive officers by wide margins.margins, including receiving the support of 96.4% of shares voted in 2023. As we evaluatedevaluate our compensation practices for 2015 and into 2016 in light of such votes, we gavegive great consideration to the strong support our stockholders expressedcontinue to express for our currentoverall compensation philosophy and practices. As a result, our Compensation Committee retained our general approach to executive compensation in 20152023 and into 2016,2024, as discussed below.
Compensation Philosophy and Objectives
We believe our executive pay is reasonable and provides appropriate incentives to our executives to achieve our financial and strategic goals without encouraging them to take excessive risks in their business decisions. We regularly evaluate the major risks to our business, including how risks taken by management could impact the amount and value of the compensation that our executives receive. To this end, we continuedcontinue practices that are considered standard for good corporate governance and executive compensation, including:
● | Strong alignment between company-wide performance and payouts under our annual cash incentive plan (“Annual Cash Incentive Plan”); |
● | The absence of any guaranteed cash bonuses; |
● | As a tool to retain key personnel, all stock-based awards are subject to five-year vesting periods, with 20% of each grant vesting annually on each of the first five anniversaries of the date of grant; |
● | Severance arrangements with our named executive officers that are limited to one year of compensation and benefits and limited acceleration of vesting; and |
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● | Double-trigger change-in-control arrangements with our named executive officers. |
In light of the foregoing factors and practices, we believe our executive compensation in fiscal year 20152023 appropriately reflected the economic and regulatory environments, the performance of the Company and the relationship with market compensation necessary to retain and motivate our executives, and that the continuation of these practices in 20162024 is appropriate given the continued regulatory, economic and competitive challenges that we expect to face.
A Note About the Compensation of Our Management Team
Over the years, the Compensation Committee has periodically engaged an independent compensation consultant to provide recommendations regarding executive compensation consistent with the Company’s business needs, pay philosophy, market trends and latest legal and regulatory considerations; provide market data for base salary, short-term incentive and long-term incentive decisions; and advise the Compensation Committee as to best practices. Recent analyses of peer group data show that our named executive officers are compensated well below their peers. The reasons for this are twofold:
● | As of December 31, 2023, each of our executive officers has been with the Company for a decade (except for Mr. Briggs, who joined our Company upon our acquisition of Orbis Education) or more and, overall, our top management ranks have been extremely stable over time. This means that the compensation structure has not been forced to re-set due to the hiring of new management level personnel; and |
● | In the area of compensation, our senior executives firmly believe that compensation should be based on performance: thus, base salaries should be relatively stable, cash bonuses should reflect annual performance, and equity incentives should be granted in appropriate amounts and provide upside value only if that value is shared by all of our stockholders. |
This belief has been backed up by actions, as our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer have not accepted base salary increases in over eight years, even though their cash compensation substantially lags behind peers. In addition, the grant date value of their annual long-term equity incentive grants substantially lags behind peers. The Compensation Committee applauds the leadership and performance of our executive management team and the example they set for the Company.
Overview of 20152023 Executive Compensation
The purpose of this Compensation Discussion and Analysis is to provide information about each material element of compensation that we pay or award to, or that is earned by, the individuals set forth in the Summary Compensation Table set forth below (our “namedour named executive officers”), including our principal executive officer, our principal financial officer, and our three other most highly compensated executive officers whose total compensation for the fiscal year ended December 31, 2015, was in excess of $100,000 and who were serving as executive officers at the end of that fiscal year.officers.
This Compensation Discussion and Analysis addresses and explains the compensation practices we followed in 2015,2023, the numerical and related information contained in the summary compensation and related tables presented below, and actions we have taken regarding executive compensation since the end of our 20152023 fiscal year. Specifically, this Compensation Discussion and Analysis addresses:
● | The objectives of our compensation program (found in the section entitled “Objectives of Compensation Programs”); |
● | What our compensation program is designed to reward (also described in the section entitled “Objectives of Compensation Programs”); |
● | Each element of compensation (set forth in the section entitled “Compensation Program Design and Elements of Compensation”); |
● | Why each element was chosen (described with each element of compensation, including base pay, short-term incentives and long-term incentives); |
● | How amounts and formulas for pay are calculated and determined (also described with each element of compensation, including base pay, short-term incentives and long-term incentives); and |
● | How each compensation element and our decisions regarding that element fit into our overall compensation objectives and affect decisions regarding other elements (described with each element of compensation). |
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Compensation Determinations
All of our named executive officers who appear in the Summary Compensation Table are parties to employment agreements. With respect to each named executive officer, the level of base salary to be paid to those officers over the term of their respective employment agreements and their individual target bonus percentages were initially determined as part of the negotiation process relating to such agreements, and are subject to annual review by the Compensation Committee.
Our Compensation Committee’s charter empowers it to set all compensation, including, but not limited to, salary, bonus, incentive compensation, equity awards, benefits and perquisites, for our named executive officers. Our Compensation Committee makes such determinations with respect to our Chief Executive Officer and, for all other named executives,executive officers, makes such determinations in consultation with our Chief Executive Officer. For additional information regarding the Compensation Committee, please see “Corporate Governance and Board Matters — Committees of Our Board of Directors — Compensation Committee.”
Objectives of Compensation Programs
We pay our executive officers based on company-wide business performance, subject to adjustment based on their achievement of individual performance goals, and, in setting compensation levels, we take into consideration our past practices, our current and anticipated future needs, and the relative skills and experience of each individual executive.
Compensation philosophy. Under our compensation philosophy, a named executive officer’s total compensation will vary based on ourthe Company’s overall performance, as well as the Compensation Committee’s assessment of the particular named executive officer’s personal performance and contribution to our overall results. This philosophy generally applies to all of our employees, although the degree of variability and compensation at risk increases as an employee’s function and level of responsibility increases. Our overall goals in implementing this philosophy are to attract, motivate, and retain highly qualified individuals responsible for guiding us and creating value for our investors.
Compensation objectives. We believe that the compensation program we follow helps us achieve the following objectives:
● | Compensation should be related to performance. We believe that the performance-based portion of an individual’s total compensation should increase as the individual’s business responsibilities increase. Thus, a material portion of executive compensation is linked to our financial performance, which also serves to align the named executive officers’ interests with those of our stockholders. |
● | Compensation should be competitive and cost effective.We believe that our compensation program should foster an innovative, high integrity, and performance-oriented culture that serves to attract, motivate, and retain executives and other key employees with the appropriate skill sets to lead us through expected future growth in a dynamic, competitive, and highly regulated environment. Accordingly, we seek to provide compensation, in amounts and based on performance targets, necessary to achieve these goals and which is of fair value relative to other positions at the |
Company compensation policies. During 2015,2023, our named executive officers’ total in-service compensation consisted of base salaries, cash bonuses, share-based compensation, and other benefits generally available to all employees. With regard to these components, we adhere to the following compensation policies:
● | Cash should be a significant component of compensation. The Company’s compensation policy focuses on providing the opportunity for its named executive officers to earn total cash compensation at levels that enable the Company to achieve the motivation and retention goals described |
● | Base salaries should generally be the largest component of cash compensation. Our compensation programs generally reflect our view that base salaries reflect compensation for the named executive officers to perform the essential elements of their respective jobs, and that cash bonuses are a reward for superior company performance. In this regard, absent clear outperformance of financial goals, for all of our named executive officers other than our Chief Executive Officer, base salary should generally be the largest component of cash compensation. |
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● | Cash incentives should be linked to performance. Under our Annual Cash Incentive Plan, bonuses paid to our named executive officers are based on overall company financial performance, but are subject to reduction based on the Compensation Committee’s assessment of the particular named executive officer’s personal performance and contribution to our overall results. |
● | Equity awards should be utilized as a means to retain key management and to align their interests with those of our stockholders. We utilize time-based equity awards that vest ratably over five years. We believe a long vesting period encourages retention and focuses our management team on the long-term interests of our Company and stockholders. |
We believe our policies have helped us achieve our compensation objectives of attracting, motivating, retaining, and rewarding our key officers.
Compensation Programs Design and Elements of Compensation
We choose to pay each element of compensation to further the objectives of our compensation program, which, as noted, include the need to attract, motivate, retain, and reward key leaders critical to our success by providing competitive total compensation.
Elements of In-Service Compensation. For our 20152023 fiscal year, our executive compensation mix included base salaries, performance-based cash bonuses, share-based compensation with vesting periods, and other benefits generally available to all employees. We seek to compensate our named executive officers at levels that eliminate the need for material perquisites and enable each individual officer to provide for his or her own needs, and in 2015,2023, we did not provide any perquisites to our named executive officers. We generally determine the nature and amount of each element of compensation as follows:
● | Base salary. We typically agree upon a base salary with a named executive officer at the time of initial employment. The amount of base salary agreed upon, which is not at risk, reflects our views as to the individual executive’s past experience, future potential, knowledge, scope of anticipated responsibilities, skills, expertise, and potential to add value through performance, as well as competitive industry salary practices. Although minimum base salaries for each of our current named executive officers are set by their respective employment agreements, as described below, we review executive officer salaries annually and may increase them based on an evaluation of the Company’s performance for the year and the performance of the functional areas under a named executive officer’s scope of responsibility. We also consider qualitative criteria, such as education and experience requirements, complexity, and scope or impact of the position compared to other executive positions internally. |
● | Bonuses. We provide cash bonuses, which typically are at-risk, to recognize and reward our named executive officers based on our success in a given year. For |
● | Share-based compensation. We |
● | Other. We offer other employee benefits to named executive officers for the purpose of meeting current and future health and security needs for the executives and their families. These benefits, which we generally offer to all eligible employees, include medical, dental, and life insurance benefits; short-term disability pay; long-term disability insurance; flexible spending accounts for medical expense reimbursements; a 401(k) retirement savings plan; and |
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Elements of Post-Termination Compensation and Benefits. The employment agreements of our named executive officers provide for post-termination salary and benefit continuation in the event of a termination by us without Cause (as defined below) or by the executive for Good Reason (as defined below) or in the event of any such termination within 12twelve (12) months following a Change in Control (as defined below), and for so long as the named executive officer abides by customary confidentiality, non-competition, and non-solicitation covenants and executes a full release of all claims, known or unknown, that the executive may have against the Company. We believe that the amounts of these payments and benefits and the periods of time during which they would be provided are fair and reasonable, and we have not historically taken into account any amounts that may be received by a named executive officer following termination when establishing current compensation levels. The elements of post-termination compensation that were in effect during 20152023 pursuant to the written employment agreements consisted of the following:
● | Salary continuation. Each named executive officer would continue to receive 100% of their base salary |
● | Payment of target bonus. Each named executive officer would receive an additional amount equal to 100% of the named executive officer’s annual target bonus for the year in which such termination occurs, with such amount also payable over twelve (12) months following any qualifying termination of employment. |
● | Benefits continuation. Each named executive officer would continue to receive Company-paid premiums for continued group health benefits under COBRA during the |
● | Partially accelerated vesting of equity incentives. |
● | Fully accelerated vesting of |
See “Executive Employment Agreements” and “Potential Payments Upon Termination or Change in Control” for additional detail.
Impact of Performance on Compensation
For 2023, each of our named executive officers participated in the Annual Cash Incentive Plan, other than Mr. Briggs (as further described below). Under the Annual Cash Incentive Plan as in effect for 2015,2023, a named executive officer’s bonus is based on the Company’s achievement of revenue and Adjusted EBITDA targets, with the resulting amount subject to reduction based on the Compensation Committee’s assessment of the particular named executive officer’s personal performance and contribution to our overall results. For 2015,2023, we defined Adjusted EBITDA for purposes of the Annual Cash Incentive Plan in a manner consistent with the definition we use when reporting our financial results. See Item 6,SelectedConsolidatedFinancial7, Management’s Discussion and OtherDataAnalysis of Financial Condition and Results of Operations – Adjusted EBITDA (Non- GAAP Financial Measure),beginning on page 4463 of our Annual Report on Form 10-K for the fiscal year ended December 31, 20152023 for information regarding our use and calculation of Adjusted EBITDA. As such, we believe it is fair and reasonable to our executives to assess their individual performance on the same basis as our performance is assessed by our Board of Directors and investors.
Company performance. For our named executive officers on the Annual Cash Incentive Plan, the financial metrics account for 100% of the target bonus, with the resulting amount subject to reduction based on the Compensation Committee’s assessment of the particular named executive officer’s personal performance and contribution to our overall results. For other plan participants on the Senior Management Plan (as defined below), the financial metrics account for 60% of the target bonus and specific individual performance goals account for 40% of the target bonus.
Individual performance. In reviewing individual performance, we look at an executive’s achievement of non-financial objectives that, with respect to a given participant, may include achieving objectives related to, among other things, program development and expansion, regulatory compliance, student retention and academic outcomes.
Calculation of bonuses. For each named executive officer on the Annual Cash Incentive Plan, the Compensation Committee establishes a target bonus, which is stated as a percentage of the named executive officer’s
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base salary. For 2015,2023, the target bonus percentagesopportunity as a percentage of base salary for each of the named executive officers on the Annual Cash Incentive Plan were as follows:
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Bonus Opportunity as a Name(1) Threshold Target Maximum Brian E. Mueller 50.0 % 100.0 % 150.0 % Dr. W. Stan Meyer 37.5 % 75.0 % 112.5 % Daniel E. Bachus 37.5 % 75.0 % 112.5 % Dilek Marsh 17.5 % 35.0 % 52.6 % Daniel J. Briggs 52.0 % 74.3 % 96.6 %
Percentage of
Base Salary
For each namedthese executive officer,officers, the financial metrics account for 100% of the target bonus, with the revenue target and the Adjusted EBITDA target accounting for 50% each. The actual percentage is determined on the basis of the Company’s achievement of the revenue and Adjusted EBITDA targets that the Compensation Committee establishes for the applicable fiscal year. For participants to earn any payout under the plan, the Company must achieve at least 95% ofthe threshold targets established for both the revenue and Adjusted EBITDA goals. Assuming both of these thresholds are achieved, payouts are made based on the Company’s achievement of a minimum of 95% of both the revenue goal and Adjusted EBITDA goal, (resultingwith achievement of both goals at the threshold level resulting in a bonus of 50% of the target bonus)bonus and aachievement of both goals at the maximum of 105% of the revenue goal and 107% of the Adjusted EBITDA goal (resultinglevel resulting in a bonus of 150% of the target bonus).bonus. Performance between minimumthreshold and maximum levels results in prorated payments using straight-line interpolation.
Shown below is a summary of the matrix described above:
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Goal |
| Achievement of Financial Metric at Threshold Level |
| Achievement of Financial Metric at Target Level |
| Achievement of Financial Metric at Maximum Level |
Revenue goal (50.0% of financial metric) | | 50% of target bonus attributable to goal | | 100% of target bonus attributable to goal | | 150% of target bonus attributable to goal |
Adjusted EBITDA (50.0% of financial metric) | | 50% of target bonus attributable to goal | | 100% of target bonus attributable to goal | | 150% of target bonus attributable to goal |
Bonus payout as a % of target bonus | | 50% | | 100% | | 150% |
Goal | Threshold | Target | Maximum | |||
Revenue goal (50.0% of financial metric) | 95% of goal | 100% of goal | 105% of goal | |||
Adjusted EBITDA (50.0% of financial metric) | 95% of goal | 100% of goal | 107% of goal | |||
Bonus payout as a % of target bonus | 50% | 100% | 150% |
Under the Annual Cash Incentive Plan, the actual bonus that a named executive officer could earn for a given fiscal year ranges from 0% to a maximum of 150% of his or her annual target bonus. To illustrate how the plan functions, assume that a named executive officer’s base salary for 20152023 is $300,000 and that the target bonus is 50% of base salary. Of this target bonus of $150,000, $75,000 (or 50%) would be paid based upon the Company’s achievement of the revenue target and $75,000 (or 50%) would be paid based on the Company’s achievement of the Adjusted EBITDA target. If the revenue target is achieved at the threshold level (so only 50% of the revenue component of the bonus is payable at that level) and the Adjusted EBITDA target is achieved at the target level (so that 100% of the Adjusted EBITDA component of the bonus is payable at that level) the participant would be entitled to a potential bonus of $112,500, calculated as $37,500 (50% of the revenue component) plus $75,000 (100% of the Adjusted EBITDA component).
The plan for eligible senior management other than(the “Senior Management Plan”), in which Mr. Briggs participated in 2021, 2022 and 2023, differs from the named executive officers differsAnnual Cash Incentive Plan in that it continues to includeincludes achievement of individual performance targets as a primary element of the bonus calculation, such that achievement of revenue and Adjusted EBITDA targets each account for 30% of target bonus opportunity and the achievement of individual performance targets accounts for 40% of target bonus.bonus opportunity. In addition, for eligible senior management other thanparticipating in this plan, the named executive officers,bonus under the bonusSenior Management Plan is calculated based on two six-month cycles, such that the determination of the bonus payable for each half of the applicable year is determined on the basis of the achievement of the revenue, Adjusted EBITDA and individual performance targets established for each such period.
Changes to performance goals and target awards. In accordance with the terms of the Annual Cash Incentive Plan, at any time prior to the final determination of bonuses earned, the Compensation Committee may adjust the
42
performance goals and target awards to reflect a change in corporate capitalization (such as a stock split or stock dividend), or a corporate transaction (such as a merger, consolidation, separation, reorganization or partial or complete liquidation), or to reflect equitably the occurrence of any extraordinary event (including the financial impacts of a unique circumstance), any change in applicable accounting rules or principles, any change in the Company’s method of accounting, any change in applicable law, or any other change of a similar nature. In addition, under the Annual Cash Incentive Plan, the Compensation Committee may reduce (but not increase) the bonus amount for each named executive officer based on the committee’s determination of the participant’s achievement of personal and other performance goals established by the Compensation Committee and other factors as the committee determines.
20152023 financial goals. The following table shows the company-wideCompany-wide financial goals established for the named executive officers for 2015.2023. These financial goals were selected based upon a combination of the Company’s internal budget and analyst estimates, which the Board of DirectorsCompensation Committee believes establishes an appropriate level at which to set goals in order to maximize the incentive for superior performance.
Threshold (95% of Goal) | Target (100% of Goal) | Maximum (105% of Goal for Revenue/107% of Goal for Adjusted EBITDA) | ||||||||||
Revenue | $ | 732,450,000 | $ | 771,000,000 | $ | 809,550,000 | ||||||
Adjusted EBITDA | 241,256,300 | 253,954,000 | 271,730,780 |
Threshold Target Maximum Revenue $ 940,500,000 $ 948,500,000 $ 956,500,000 Adjusted EBITDA $ 279,482,000 $ 287,482,000 $ 295,482,000
Actual performance vs. compensation paid for 20152023. For 2015,2023, the Company achieved revenue of $778.2$960.9 million which is equal to 101.0% of target, and Adjusted EBITDA of $265.0$302.3 million, (excluding certain adjustments),both of which is equal to 104.4%exceeded the maximum level of target,achievement, resulting in performance payout percentages for our named executive officers (other than Mr. Briggs) equal to 109.3%150.0% for the revenue component of the targetincentive bonus and 131.0%150.0% for the Adjusted EBITDA component of the incentive target bonus. Accordingly, the named executive officers achieved incentive bonuses equal to the following percentages of their base salaries:as follows:
Name | Revenue Performance Payout (%) | Adjusted EBITDA Performance Payout (%) | 2015 Bonus as Percentage of Target Bonus (%) | 2015 Bonus as Percentage of Base Salary($) | 2015 Bonus ($) | |||||||||||||||
Brian E. Mueller(1) | 109.3 | % | 131.0 | % | 120.2 | % | 120.2 | % | $ | 771,363 | ||||||||||
Dr. W. Stan Meyer(1) | 109.3 | % | 131.0 | % | 120.2 | % | 90.1 | % | $ | 337,922 | ||||||||||
Daniel E. Bachus(1) | 109.3 | % | 131.0 | % | 120.2 | % | 90.1 | % | $ | 337,922 | ||||||||||
Joseph N. Mildenhall(1) | 109.3 | % | 131.0 | % | 120.2 | % | 60.1 | % | $ | 192,841 | ||||||||||
Brian M. Roberts | 109.3 | % | 131.0 | % | 120.2 | % | 54.6 | % | $ | 150,188 |
| | | | | | | | | | | |
| | | | | | | | | | | |
Name |
| Revenue |
| Adjusted |
| 2023 Bonus as |
| 2023 Bonus |
| 2023 | |
Brian E. Mueller | | 150.0 | % | 150.0 | % | 150.0 | % | 150.0 | % | $ | 481,500 |
Dr. W. Stan Meyer | | 150.0 | % | 150.0 | % | 150.0 | % | 112.5 | % | $ | 438,750 |
Daniel E. Bachus | | 150.0 | % | 150.0 | % | 150.0 | % | 112.5 | % | $ | 438,750 |
Dilek Marsh | | 150.0 | % | 150.0 | % | 150.0 | % | 52.6 | % | $ | 165,000 |
20152023 individual goals. The individual performance goals applicable to the named executive officers in 20152023 focused on each executive’s achievement of one or more objectives that related to their specific duties and responsibilities on behalf of the Company. For Dr. Meyer, Mr. Bachus, Mr. Mildenhall, and Mr. Roberts, oneThese individual performance goal was to manage their individual departments within budget. The individual performance goals for Mr. Mueller, Dr. Meyer, and Mr. Bachus included continuing to work on initiatives to increase the percentageincluded:
● | For Dr. Meyer and Mr. Bachus, collectively: to manage their individual departments within budget. |
● | For Mr. Mueller, Dr. Meyer and Mr. Bachus, collectively: to work on key strategic initiatives for the Company including the future growth of the hybrid healthcare partnerships with new and existing university partners and new off-campus classroom and laboratory sites, continue to achieve growth goals set by our most significant partner and participate in a specified number of investor conferences and/or investor meetings. |
● | For Mr. Mueller, Dr. Meyer and Mr. Bachus: to lead the Company’s corporate responsibility initiatives, including its efforts in expanding its environmental awareness, social responsibility and human capital, and governance initiatives. |
● | For Dr. Meyer: to demonstrate leadership over key functional areas such as marketing, online operations and campus operations. |
● | For Mr. Bachus: to manage the financial and reporting functions to ensure that no material weaknesses occurred within the Company’s financial reporting structure. |
● | For Ms. Marsh: to manage process improvements, manage data reporting and analytics for the company and our university partners, and manage the full development lifecycle of software tools necessary for operations teams in the Company to help educate, manage and support students. |
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Based on each individual named executive officer’s achievement or substantial achievement of their individual performance goals, and in light of the superior financial performance achieved by the Company in 2015,2023, the Compensation Committee determined that cash bonuses under the Annual Cash Incentive Plan should be paid out at the maximum level achieved as a result of the achievement of the company-wide financial goals, and that no reductions were otherwise merited.
Equity IncentivesBonus Paid to Mr. Briggs.
In 2008, our Board Under the terms of Directorsthe third amended and stockholders adoptedrestated employment agreement entered into on May 1, 2023 between Mr. Briggs and the Equity Incentive Plan and authorized and reservedCompany, Mr. Briggs was eligible to receive an incentive bonus with a total of 4,199,937 shares of our common stock for issuance thereunder. The number of shares authorized and reserved under the Equity Incentive Plan increases on each subsequent January 1 through 2018 by antarget amount equal to 74.3% of his base salary and threshold and maximum amounts equal to 52.0% and 96.6%, respectively. Of his target bonus, 60% is to be based on the smallerachievement of (a) 2.5%revenue and Adjusted EBITDA targets and 40% is to be based on the achievement of individual performance goals, including developing new and expanding current university partner relationships, increasing the number of shares of common stock issuedopened off-campus classroom and outstandinglaboratory sites, and achieving certain revenue and profitability goals for our hybrid healthcare programs.
Based on the immediately preceding December 31, or (b)financial performance of the Company during 2023 and the percentage of his individual goals determined to be achieved, Mr. Briggs was awarded a lesser amount determined by our Boardbonus of Directors. As$87,750, which is equal to approximately 29.0% of January 1, 2015, we had authorized and reserved a total of 12,167,127 shares under the his base salary.
Equity Incentive Plan. The Compensation Committee elected to decline the increase that would have gone into effect as of January 1, 2016, leaving the number of shares of common stock authorized for issuance under the Incentive Plan at 12,167,127. Shares subject to awards that expire or are cancelled or forfeited are available for issuance under the Equity Incentive Plan. The shares available are not reduced by awards settled in cash or by shares withheld to satisfy tax withholding obligations. Only the net number of shares issued upon the exercise of options exercised by means of a net exercise or by tender of previously owned shares are deducted from the shares available under the Equity Incentive Plan.
The following table provides information asAs of December 31, 2015, with respect to2023, there were 1,081,311 shares of our common stock that may be issuedavailable for grant under our existing equity compensation plans:the 2017 Plan.
Equity Compensation Plan Information
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted- average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans | |||||||||
Equity Compensation Plans Approved by Securityholders | 2,219,522 | (1) | $ | 14.71 | 5,331,140 | (2) | ||||||
Equity Compensation Plans Not Approved by Securityholders | None | — | None | |||||||||
Total | 2,219,522 | (1) | $ | 14.71 | 5,331,140 | (2) |
We may grant awards under the Equity Incentive Plan to our employees, officers, directors, or consultants, or those of any future parent or subsidiary corporation or other affiliated entity. While we may grant incentive stock options only to employees, we may grant nonstatutory stock options, stock appreciation rights, restricted stock purchase rights or bonuses, restricted stock units, performance shares, performance units, and cash-based awards or other stock-based awards to any eligible participant.
Only members of the Board of Directors who are not employees at the time of grant are eligible to participate in the non-employee director awards component of the Equity Incentive Plan. The Board of Directors, based on the recommendation of the Compensation Committee, sets the amount and type of non-employee director awards to be awarded on a periodic, non-discriminatory basis. Non-employee director awards may be granted in the form of nonstatutory stock options, stock appreciation rights, restricted stock awards and restricted stock unit awards.
In the event of a change in control, as described in the Equity Incentive Plan, the acquiring or successor entity may assume or continue all or any awards outstanding under the Equity Incentive Plan or substitute substantially equivalent awards. Any awards that are not assumed or continued in connection with a change in control or are not exercised or settled prior to the change in control will terminate effective as of the time of the change in control. In connection with a change in control, the Compensation Committee may provide for the acceleration of vesting of any or all outstanding awards upon such terms and to such extent as it determines, except that the vesting of all non-employee director awards will automatically be accelerated in full, and the vesting of awards held by each of our named executive officers who are parties to employment agreements will automatically be accelerated in full upon termination without cause or for good reason within 12 months following such change in control. The Equity Incentive Plan also authorizes the Compensation Committee, in its discretion and without the consent of any participant, to cancel each or any outstanding award denominated in shares upon a change in control in exchange for a payment to the participant with respect to each share subject to the cancelled award of an amount equal to the excess of the consideration to be paid per share of common stock in the change in control transaction over the exercise price per share, if any, under the award.Award Grant Policy
Our Board of Directors has approved a policy relating to the granting of stock options and other equity-based awards. Under this policy:
● | All stock option grants, restricted stock awards, and other equity based awards, which we collectively refer to as stock-based awards, must be approved by the Compensation Committee; |
● | The date for determining the strike price and similar measurements for stock-based awards will be the date of the meeting (or a date shortly after the meeting) or, in the case of an employee, director, or consultant not yet hired, appointed, or retained, respectively, the subsequent date of hire, appointment, or retention, as the case may be; |
● | We will not intentionally grant stock-based awards before the anticipated announcement of materially favorable news or intentionally delay the grant of stock-based awards until after the announcement of materially unfavorable news; and |
● | The Compensation Committee will approve stock-based grants only for persons specifically identified at the meeting by management. |
Severance and Change in Control Arrangements
Our named executive officers are eligible for severance payments and benefits in the event of an involuntary termination of employment without “cause” or for “good reason,” as well as certain benefits in connection with a change in control of the Company. Our named executive officers are also eligible for “double trigger” severance payments and benefits in the event of an involuntary termination of employment without “cause” or a termination of employment with “good reason” in connection with, or within twelve (12) months immediately following, a change in control of the Company. Our equity awards are also designed to be “double trigger,” so long as such awards are allowed to continue in effect following any change in control transaction on substantially equivalent terms and conditions to those applicable prior to such transaction. For detailed information on the estimated potential payments and benefits payable to the named executive officers in the event of their termination of employment, including following a change in control of the Company, see the section titled “Potential Payments Upon Termination or Change in Control.”
Perquisites and Other Personal Benefits
We generally do not provide our named executive officers with perquisites or other personal benefits, except for company paid life insurance and a 401(k) plan match, both of which are available to employees of the Company generally. The value of these benefits is reported in the Summary Compensation Table. We generally do not provide tax reimbursements or any other tax payments, including excise tax “gross-ups,” to any of our executive officers.
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Clawback Policy
As directed by the Dodd-Frank Act, in November 2022, the SEC issued final rules directing the national securities exchanges to adopt listing standards that require issuers to seek recovery from executive officers in certain circumstances involving financial restatements. The new clawback rules, which took effect on December 1, 2023 and cover incentive compensation paid on or after October 1, 2023, apply to all issuers listed on a national securities exchange. On October 25, 2023, the Board of Directors adopted the Recovery of Erroneously-Awarded Incentive Compensation Committee;
Role of the Compensation Consultant
The Compensation Committee has the sole authority, delegated from the Board of Directors, to appoint, compensate and oversee the work of our outsidean independent compensation consultant. InAs in prior years, the Compensation Committee has retained Mercer as its consultant to assist the Compensation Committee with its responsibilities related to our executive compensation programs. The executive compensation services that Mercer provided to the Compensation Committee included providing market benchmark information and advising on changes to executive officer and non-employee director compensation levels. Mercer did not perform any compensationincurred $35,000 of consulting costs utilizing Mercer’s services during 2015, although they have been engaged to provide compensation consulting services for 2016.in 2023.
Effect of Accounting and Tax Treatment on Compensation Decisions
Internal Revenue Code Section 162(m) Policy
Section 162(m) of the Code, as amended, imposes a $1 million limit on the amount that a public company may deduct for compensation paid to the company’s chief executive officer or any of the company’s four other most highly compensated executive officers who are employed as of the end of the year. This limitation does not apply to compensation that meets the requirements under Section 162(m) for “qualifying performance-based” compensation (i.e., compensation paid only if the individual’s performance meets pre-established objective goals based on performance criteria approved by stockholders). Our stockholders are being asked to approve the performance criteria within our Equity Incentive Plan and our Annual Cash Incentive Plan at our 2016 annual meeting in accordance with Section 162(m) (having previously approved such criteria at the 2011 annual meeting).
Internal Revenue Code Section 409A
Section 409A of the Internal Revenue Code (“Section 409A”) requires that “nonqualified deferred compensation” be deferred and paid under plans or arrangements that satisfy the requirements of the statute with respect to the timing of deferral elections, timing of payments and certain other matters. Failure to satisfy these requirements can expose employees and other service providers to accelerated income tax liabilities, and penalty taxespenalties and interest on their vested compensation under such plans. Accordingly, as a general matter, it is our intention to design and administer our compensation and benefits plans and arrangements for all of our employees and other service providers, including our named executive officers, so that they are either exempt from, or satisfy the requirements of, Section 409A. With respect to our compensation and benefit plans that are subject to Section 409A, in accordance with Section 409A and regulatory guidance issued by the Internal Revenue Service, we believe we are currently operating such plans in compliance with Section 409A.
Accounting Standards
Grants of equity awards under the Equity Incentive Planour equity plan are recognized as compensation expense for the fair value of equity-based compensation awards. The Compensation Committee considers the accounting implications of significant compensation decisions, including in connection with decisions that relate to the Equity Incentive Plan andour equity award programs thereunder.programs. As accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives.
Conclusion
We believe that the compensation amounts paid to our named executive officers for their service in 20152023 were reasonable and appropriate and in our best interests.
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Compensation Policies and Practices as Related to Risk Management
In connection with the preparation of this proxy statement, our Compensation Committee reviewed and discussed our compensation policies and practices for senior management, including our named executive officers. In this regard, the Compensation Committee took note of the fact that:
● | We pay base salaries we believe are competitive and that are generally intended to constitute the largest component of cash compensation. We believe that this emphasis on paying competitive base salaries that are not at risk for performance discourages inappropriate risk taking; |
● | Our Annual Cash |
● | The cash payments that may be made to our named executive officers under the Annual Cash Incentive Plan are subject to stated maximum limits, which we believe mitigates any risks that our named executive officers may take; and |
● | The equity grants made to our named executive officers, and all other employees, under our equity plan all vest in annual increments over a period of five years, which we believe discourages excessive or inappropriate short-term risk taking. |
Based on that review, and with input from management, the Compensation Committee has determined that there are no known potential risks arising from our compensation polices or practices that are reasonably likely to have a material adverse effect on us.
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Compensation of Named Executive Officers
Summary Compensation Table
The following table sets forth the total compensation earned for services rendered by our principalnamed executive officer, our principal financial officer, and our three other most highly compensated executive officers whose total compensation for the fiscal year ended December 31, 2015 was in excess of $100,0002023, 2022 and who were serving as executive officers at2021. In accordance with the end ofrules promulgated by the SEC, certain columns relating to information that fiscal year. The listed individuals are referred to herein as the “named executive officers.”is not applicable have been omitted from this table.
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Name and Position |
| Year |
| Salary |
| Stock |
| Non-Equity |
| All Other |
| Total | |||||
Brian E. Mueller | | | | | | | | | | | | | |||||
Chief Executive Officer and Chairman | | 2023 | | $ | 321,000 | | $ | 1,211,643 | | $ | 481,500 | | $ | 2,744 | | $ | 2,016,887 |
(Principal Executive Officer) | | 2022 | | $ | 321,000 | | $ | 1,211,488 | | $ | 460,495 | | $ | 4,130 | | $ | 1,997,113 |
| | 2021 | | $ | 321,000 | | $ | 1,211,575 | | $ | 306,353 | | $ | 4,130 | | $ | 1,843,058 |
| | | | | | | | | | | | | | | | | |
Dr. W. Stan Meyer | | 2023 | | $ | 390,000 | | $ | 646,578 | | $ | 438,750 | | $ | 6,653 | | $ | 1,481,981 |
Chief Operating Officer | | 2022 | | $ | 390,000 | | $ | 646,492 | | $ | 419,610 | | $ | 6,353 | | $ | 1,462,455 |
| | 2021 | | $ | 390,000 | | $ | 646,494 | | $ | 279,154 | | $ | 6,173 | | $ | 1,321,821 |
| | | | | | | | | | | | | | | | | |
Daniel E. Bachus | | 2023 | | $ | 390,000 | | $ | 646,578 | | $ | 438,750 | | $ | 938 | | $ | 1,476,266 |
Chief Financial Officer | | 2022 | | $ | 390,000 | | $ | 646,492 | | $ | 419,610 | | $ | 938 | | $ | 1,457,040 |
(Principal Financial Officer) | | 2021 | | $ | 390,000 | | $ | 646,494 | | $ | 279,154 | | $ | 938 | | $ | 1,316,586 |
| | | | | | | | | | | | | | | | | |
Dilek Marsh | | 2023 | | $ | 313,418 | | $ | 450,019 | | $ | 165,000 | | $ | 4,441 | | $ | 932,878 |
Chief Technology Officer | | 2022 | | $ | 304,831 | | $ | 449,972 | | $ | 157,802 | | $ | 4,123 | | $ | 916,728 |
| | 2021 | | $ | 280,528 | | $ | 420,307 | | $ | 95,437 | | $ | 3,930 | | $ | 800,202 |
| | | | | | | | | | | | | | | | | |
Daniel J. Briggs | | 2023 | | $ | 302,904 | | $ | 500,034 | | $ | 87,750 | | $ | 5,964 | | $ | 896,652 |
Orbis Education CEO | | 2022 | | $ | 299,850 | | $ | 499,932 | | $ | 178,769 | | $ | 5,664 | | $ | 984,215 |
| | 2021 | | $ | 294,082 | | $ | 500,002 | | $ | 161,543 | | $ | 5,412 | | $ | 961,039 |
| | | | | | | | | | | | | | | | | |
(1) | The amounts in this column reflect the base salary cash payments made in each year. |
(2) | The amounts shown in this column reflect the compensation costs attributable to the restricted stock awards granted in |
(3) | The amounts in this column reflect non-equity incentive payments earned pursuant to our Annual Cash Incentive |
(4) | In |
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20152023 Grants of Plan-Based Awards
The following table sets forth certain information with respect to incentive plan awards under our Annual Cash Incentive Plan and our Equity Incentive2017 Plan for the fiscal year ended December 31, 20152023 to each of our named executive officers:
Estimated Future Payouts Under Non- Equity Incentive Plan Awards(1) | All Other Stock Awards: Number of Shares of Stock (#) | Grant Date Fair Value of Stock Awards(2) | ||||||||||||||||||||||
Name | Grant Date | Threshold($) | Target($) | Maximum($) | ||||||||||||||||||||
Brian E. Mueller | Mar. 18, 2015 | $ | 321,000 | $ | 642,000 | $ | 963,000 | 34,500 | $ | 1,578,375 | ||||||||||||||
Dr. W. Stan Meyer | Mar. 18, 2015 | 140,625 | 281,250 | 421,875 | 18,400 | 841,800 | ||||||||||||||||||
Daniel E. Bachus | Mar. 18, 2015 | 140,625 | 281,250 | 421,875 | 18,400 | 841,800 | ||||||||||||||||||
Joseph N. Mildenhall | Mar. 18, 2015 | 80,250 | 160,500 | 240,750 | 18,400 | 841,800 | ||||||||||||||||||
Brian M. Roberts | Mar. 18, 2015 | 62,500 | 125,000 | 187,500 | 18,400 | 841,800 |
| | | | | | | | | | | | | | | | |
| | | | Estimated Future Payouts Under Non- | | | | | ||||||||
Name |
| Grant Date |
| Threshold($) |
| Target |
| Maximum |
| All Other |
| Grant Date | ||||
Brian E. Mueller | | — | | $ | 160,500 | | $ | 321,000 | | $ | 481,500 | | — | | | — |
| | January 25, 2023 | | | — | | | — | | | — | | 10,732 | | $ | 1,211,643 |
| | | | | | | | | | | | | | | | |
Dr. W. Stan Meyer | | — | | $ | 146,250 | | $ | 292,500 | | $ | 438,750 | | — | | | — |
| | January 25, 2023 | | | — | | | — | | | — | | 5,727 | | $ | 646,578 |
| | | | | | | | | | | | | | | | |
Daniel E. Bachus | | — | | $ | 146,250 | | $ | 292,500 | | $ | 438,750 | | — | | | — |
| | January 25, 2023 | | | — | | | — | | | — | | 5,727 | | $ | 646,578 |
| | | | | | | | | | | | | | | | |
Dilek Marsh | | — | | $ | 55,000 | | $ | 110,000 | | $ | 165,000 | | — | | | — |
| | January 25, 2023 | | | — | | | — | | | — | | 3,986 | | $ | 450,019 |
| | | | | | | | | | | | | | | | |
Daniel J. Briggs | | — | | $ | 157,500 | | $ | 225,000 | | $ | 292,500 | | — | | | — |
| | January 25, 2023 | | | — | | | — | | | — | | 4,429 | | $ | 500,034 |
| | | | | | | | | | | | | | | | |
(1) | These amounts reflect the Threshold, Target and Maximum bonuses payable to our named executive officers under our Annual Cash Incentive Plan or Senior Management Plan, as applicable (based on their base salaries as in effect at year end). All such awards have been paid, and the actual amounts paid are set forth in the Summary Compensation Table above. |
(2) | The amounts shown in this column reflect the compensation costs attributable to the restricted stock awards granted in |
2015
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2023 Outstanding Equity Awards at Fiscal Year-End
The following table provides certain summary information concerning outstanding equityunvested restricted stock awards held by the named executive officers as of December 31, 2015.2023. The Company does not have any outstanding stock options or other types of equity incentive awards.
Option Awards(1) | Stock Awards | |||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares of Stock That Have Not Vested (2) | Market Value of Shares of Stock That Have Not Vested | ||||||||||||||||
Brian E. Mueller | 120,000 | 30,000 | $ | 15.34 | March 11, 2021 | 129,600 | $ | 5,199,552 | ||||||||||||||
100,000 | — | 21.10 | February 25, 2020 | — | — | |||||||||||||||||
609,788 | — | 12.00 | November 19, 2018 | — | — | |||||||||||||||||
Dr. W. Stan Meyer | 64,000 | 16,000 | 15.34 | March 11, 2021 | 69,120 | 2,773,094 | ||||||||||||||||
40,000 | — | 21.10 | February 25, 2020 | — | — | |||||||||||||||||
241,315 | — | 12.00 | November 19, 2018 | — | — | |||||||||||||||||
Daniel E. Bachus | 64,000 | 16,000 | 15.34 | March 11, 2021 | 69,120 | 2,773,094 | ||||||||||||||||
40,000 | — | 21.10 | February 25, 2020 | — | — | |||||||||||||||||
169,128 | — | 12.00 | November 19, 2018 | — | — | |||||||||||||||||
Joseph N. Mildenhall | 22,900 | 16,000 | 15.34 | March 11, 2021 | 74,720 | 2,997,766 | ||||||||||||||||
25,000 | — | 21.10 | February 25, 2020 | — | — | |||||||||||||||||
50,000 | — | 17.03 | September 16, 2019 | — | — | |||||||||||||||||
Brian M. Roberts | — | — | — | - | 53,120 | 2,131,174 |
| | | |||
| | Stock Awards | |||
Name |
| Number of |
| Market Value | |
Brian E. Mueller | | 39,250 | | $ | 5,182,570 |
Dr. W. Stan Meyer | | 20,944 | | $ | 2,765,446 |
Daniel E. Bachus | | 20,944 | | $ | 2,765,446 |
Dilek Marsh | | 13,102 | | $ | 1,729,988 |
Daniel J. Briggs | | 15,650 | | $ | 2,066,426 |
(1) | The |
| | | | | |
Vesting Date | Brian E. Mueller | Dr. W. Stan Meyer | Daniel E. Bachus | Dilek Marsh | Daniel J. Briggs |
March 1, 2024 | 13,384 | 7,142 | 7,142 | 4,069 | 4,974 |
March 1, 2025 | 10,767 | 5,745 | 5,745 | 3,494 | 4,444 |
March 1, 2026 | 7,886 | 4,208 | 4,208 | 2,859 | 3,255 |
March 1, 2027 | 5,066 | 2,703 | 2,703 | 1,882 | 2,091 |
March 1, 2028 | 2,147 | 1,146 | 1,146 | 798 | 886 |
(2) | The |
2015 Option Exercises and2023 Stock Vested
The following table provides certain summary information concerning restricted stock awards made to our named executive officers that vested, during the fiscal year ended December 31, 2015. Our named executive officers2023.
| | | | | | |
| | Restricted Stock Awards | ||||
Name |
| Number of Shares |
| Value Realized | ||
Mr. Brian E. Mueller | | | 13,911 | | $ | 1,580,985 |
Dr. W. Stan Meyer | | | 7,424 | | $ | 843,738 |
Mr. Daniel E. Bachus | | | 7,424 | | $ | 843,738 |
Ms. Dilek Marsh | | | 3,861 | | $ | 438,803 |
Mr. Daniel J. Briggs | | | 4,089 | | $ | 464,715 |
(1) | The value realized on vesting of restricted stock equals the closing trading price of our common stock on the date of vesting (or if such day is not a trading day, the immediately preceding trading day), multiplied by the number of shares vesting. |
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Pay Ratio Disclosure
Under Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to provide the ratio of the annual total compensation of Mr. Mueller, our Chief Executive Officer, to the annual total compensation of the median employee of the Company (the “Pay Ratio Disclosure”).
For 2023, our last completed fiscal year:
● | the annual total compensation of our median employee (other than the Chief Executive Officer) was $63,433: and |
● | the annual total compensation of Mr. Mueller, as reported above in the Summary Compensation Table, was $2,016,887. |
|
Based on this information, for 2023 the ratio of the annual total compensation of Mr. Mueller, our Chief Executive Officer, to the annual total compensation of our median employee was 31.8 to 1. |
To identify the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee, we took the following steps:
● | We determined that, as of December 31, 2023, our employee population consisted of 5,800 individuals, all of whom were located in the United States and of which 4,068, or 70.1%, were full-time employees, 2,186, or 37.7%, were full-time salaried employees, and 1,732, or 29.9%, were part-time employees and student workers. We selected December 31, 2023 as the date upon which we would identify the “median employee” because it enabled us to make such identification in a reasonably efficient and economical manner. |
● | During the 2023 fiscal year, there were no such changes in employee population or compensation arrangements generally that would significantly change our pay ratio disclosure. Therefore, as permitted by Item 402(u) of Regulation S-K, we used the same median employee for 2023 that we used for our 2022 pay ratio calculation. See our proxy statement for our 2022 annual meeting of stockholders for information regarding the process we utilized to identify our “median employee.” |
● | We then combined all of the elements of such employee’s compensation for 2023 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $63,433. The difference between such employee’s base salary and the employee’s annual total compensation represents the employee’s overtime pay, annual bonus and company matching contributions on behalf of the employee to our 401(k) employee savings plan. Since we do not maintain a defined benefit or other actuarial plan for our employees, and do not otherwise provide a plan for payments or other benefits at, following, or in connection with retirement, the “median employee’s” annual total compensation did not include amounts attributable to those types of arrangements. |
Because the SEC rules for identifying the “median employee” and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies including companies in our peer group may not exercise any options during 2015.be comparable to the pay ratio reported above. Other companies may have different employment and compensation practices, different geographic breadth, perform different types of work, and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
This information is being provided for compliance purposes only. Neither the Compensation Committee nor management of the Company used the pay ratio measure in making compensation decisions.
Restricted Stock Awards | ||||||||
Name | Number of Shares Acquired on Vesting(#) | Value Realized on Vesting($) | ||||||
Mr. Brian E. Mueller | 33,900 | $ | 1,550,604 | |||||
Dr. W. Stan Meyer | 18,080 | $ | 826,989 | |||||
Mr. Daniel E. Bachus | 18,080 | $ | 826,989 | |||||
Mr. Joseph N. Mildenhall | 20,880 | $ | 954,557 | |||||
Mr. Brian M. Roberts | 11,680 | $ | 521,405 |
Executive Employment Agreements
We are party to employment agreements with each of our named executive officers. Each of the agreements havehas a four-yearfive-year term from the effective date, except for the agreement with Mr. Briggs which has a three-year term from the effective date, that automatically renews for one yearone-year periods after the initial four-year term unless either party provides written
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notice that it does not wish to renew the respective agreement. On January 21, 2016, the Compensation Committee approved an amendment to the employment agreements for each of our named executive officers to re-set the term of each employment agreement, such that each agreement has been extended for an additional four-years through June 30, 2020. Except with respect to certain items of compensation, as described below, theThe terms of each agreement are similar in all material respects.
to:
● | Receive a base salary and a target incentive bonus. |
● | Receive customary and usual fringe benefits generally available to our senior management, and to be reimbursed for reasonable out-of-pocket business expenses. |
● | Receive certain benefits upon his or her termination of employment under specified circumstances. |
In addition, each of the above employment agreements provides for payments upon certain terminations of the executive’s employment, as described below.
Termination for Cause
Each of the employment agreements provides that if the named executive officer is terminated by us for “Cause,” the named executive officer will be entitled to receive only his or her base salary then in effect, prorated to the date of termination, and all fringe benefits through the date of termination, and all of such officer’s unvested options and unvested restricted stock awards will terminate. For purposes of each of the employment agreements, “Cause” is defined as (a) acts or omissions constituting gross negligence, recklessness or willful misconduct on the part of the executive with respect to the executive’s obligations or otherwise relating to the business of the Company; (b) the executive’s material breach of the employment agreement; (c) the executive’s breach of the Company’s employee nondisclosure and assignment agreement; (d) the executive’s conviction or entry of a plea of nolo contendere for fraud, misappropriation or embezzlement, or any felony or crime of moral turpitude; (e) the executive’s inability to perform the essential functions of the executive’s position, with or without reasonable accommodation, due to a mental or physical disability; (f) the executive’s willful neglect of duties as determined in the sole and exclusive discretion of the Board of Directors, provided that the executive has received written notice of the action or omission giving rise to such determination and has failed to remedy such situation to the satisfaction of the Board of Directors within 30 days following receipt of such written notice, unless the executive’s action or omission is not subject to cure, in which case no such notice shall be required, or (g) the executive’s death.
Termination Without Cause or Termination for Good Reason
Each of the employment agreements provides that if the named executive officer’s employment is terminated by us without Cause, or by the executive for “Good Reason,” the named executive officer will be entitled to receive his or her base salary then in effect, pro-rated to the date of termination, as well as a severance package consisting of the following:
● | a severance payment in an amount equal to the sum of (i) twelve (12) months of the executive’s base salary then in effect on the date of termination, and (ii) 100% of the executive’s target bonus for the fiscal year in which the termination occurs, with the total of such amounts to be payable over twelve (12) months in equal installments in accordance with the Company’s regular payroll cycle, commencing with the first payroll date occurring on or after the sixtieth (60th) day following the date of the executive’s termination of employment; |
● | payment by us of the premiums required to continue the executive’s group health care coverage for a period of twelve (12) months following the executive’s termination under the applicable provisions of the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), provided that the executive timely elects to continue and remains eligible for these benefits under COBRA, and does not become eligible for health coverage through another employer during this period; and |
● | acceleration of the vesting of the next annual installment under any outstanding |
To receive the severance package, the executive must: (i) comply with all surviving provisions of his or her agreement, including the non-competition, non-solicitation, and confidentiality provisions described below, and (ii) execute a full general release, releasing all claims, known or unknown, that executive may have against us arising out of or in any way related to executive’s employment or termination of employment with us. In addition, for options that
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previously vested, the executive has until the earlier of three months from the date of separation and the expiration of the applicable option to exercise such options.
For purposes of each of the employment agreements, “Good Reason” is defined as the occurrence of any of the following conditions without the executive’s written consent, which condition remains in effect 90 days after the executive provides written notice to us of such condition: (a) a material reduction in the executive’s base salary as then in effect prior to such reduction, other than as part of a salary reduction program among similar management employees, (b) a material diminution in the executive’s authority, duties or responsibilities as an employee of the Company as they existed prior to such change, or (c) a relocation of the executive’s principal place of work that increases the executive’s one-way commute distance by more than 50 miles; provided that the executive will be deemed to have given consent to any such condition if the executive does not provide written notice to us of his or her intent to exercise such rights within 30 days following the first occurrence of such condition.
Termination Upon a Change in Control
Each of the employment agreements provides that if the named executive officer’s employment is terminated by us without Cause or by the executive for Good Reason, in each case upon or within twelve (12) months following a “Change in Control,” then, in addition to receiving his or her base salary then in effect, pro-rated to the date of termination, and the severance package described above, the named executive officer will also be entitled to acceleration of the vesting of all stock option and restricted stock awards held by such executive that have not yet vested as of the date of such termination. For purposes of each of the employment agreements, “Change in Control” is defined as any one of the following occurrences: (a) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), becomes the “beneficial owner” (as such term is defined inRule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of the total fair market value or total combined voting power of ourthen-outstanding securities entitled to vote generally in the election of directors; provided, however, that a Change in Control shall not be deemed to have occurred if such degree of beneficial ownership results from any of the following: (i) an acquisition of securities by any person who on the effective date of the employment agreement was the beneficial owner of more than 50% of such voting power, (ii) any acquisition of securities directly from us including, without limitation, pursuant to or in connection with a public offering of securities, (iii) any acquisition of securities by us, (iv) any acquisition of securities by a trustee or other fiduciary under a Company employee benefit plan, or (v) any acquisition of securities by an entity owned directly or indirectly by stockholders of the Company in substantially the same proportions as their ownership of the voting securities of the Company; (b) the sale or disposition of all or substantially all of the Company’s assets (other than a sale or disposition to one or more subsidiaries of the Company), or any transaction having similar effect is consummated; (c) the Company is party to a merger or consolidation that results in the holders of voting securities of the Company outstanding immediately prior thereto failing to continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (d) the dissolution or liquidation of the Company.
Non-Competition and Non-Solicitation Obligations
Each of the employment agreements prohibits the executives from engaging in any work that creates an actual conflict of interest with us, and includes customary non-competition and non-solicitation covenants that prohibit the executives, during their employment with us and for a period of twelve (12) months thereafter, from (i)(a) owning (except ownership of less than 1% of any class of securities which are listed for trading on any securities exchange or which are traded in the over the counterover-the-counter market), managing, controlling, participating in, consulting with, rendering services for, being employed by, or in any manner engaging in the operation of a for-profit, postsecondary(i) any business that develops or administers services to degree-granting institutions of higher education, institution or (ii) any other business that isof the Company in which the same line of business as us; (ii) soliciting funds on behalf of, or forexecutive had significant involvement prior to the benefit of, any for-profit, postsecondary education institution (other than us) or any other entity that competes with us; (iii) soliciting our current or prospective students to be students for any other for-profit, postsecondary education institution; (iv)executive’s separation; (b) inducing or attempting to induce any employee of our employeesthe Company to leave ourthe employ of the Company, or in any way interfering with the relationship between usthe Company and any of our employees;employee thereof, or (v)(c) inducing or attempting to induce any of our students, customers, suppliers, licensees,customer, supplier, licensee or other business partnersrelation of the Company to cease doing business with, or modify its business relationship with, us,the Company, or in any way interfereinterfering with or hinderhindering the relationship between any such student, customer, supplier, licensee or business partnerrelation and us.the Company. Each of the executives has separately entered into a confidentiality agreement with us.
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Potential Payments upon Termination or Change in Control
The following table provides information regarding the potential payments upon termination without Cause or for Good Reason, as well as upon termination without Cause or for Good Reason after a Change in Control of the Company, which would have been paid to each executive in the event he or she had been terminated as of December 31, 2015,29, 2023, the last business day of fiscal year 2015.2023. All payments in connection with any such termination will comply with Section 409A of the Internal Revenue Code, to the extent Section 409A applies. The actual amounts to be paid out can only be determined at the time of such executive’s separation from the Company.
Termination without Cause or for Good Reason | Termination without Cause or for Good Reason following a Change in Control | |||||||||||||||||||||||
Cash Payment ($)(1) | Benefits ($)(2) | Acceleration of Vesting of Shares and Options ($)(3) | Cash Payment ($)(1) | Benefits ($)(2) | Acceleration of Vesting of Shares and Options ($)(3) | |||||||||||||||||||
Brian E. Mueller | $ | 1,284,000 | $ | 13,128 | $ | 2,380,296 | $ | 1,284,000 | $ | 13,128 | $ | 5,942,952 | ||||||||||||
Dr. W. Stan Meyer | 656,250 | 15,841 | 1,269,491 | 656,250 | 15,841 | 3,169,574 | ||||||||||||||||||
Daniel E. Bachus | 656,250 | 18,379 | 1,269,491 | 656,250 | 18,379 | 3,169,574 | ||||||||||||||||||
Joseph N. Mildenhall | 481,250 | 10,549 | 1,381,827 | 481,250 | 10,549 | 3,394,246 | ||||||||||||||||||
Brian M. Roberts | 137,500 | 7,920 | — | 137,500 | 7,920 | 2,131,174 |
| | | | | | | | | | | | | | | | | | |
| | Termination without Cause or for Good Reason | | Termination without Cause or for Good Reason | ||||||||||||||
|
| Cash |
| Benefits |
| Acceleration of |
| Cash Payment |
| Benefits |
| Acceleration of | ||||||
Brian E. Mueller | | $ | 642,000 | | $ | 21,015 | | $ | 1,767,223 | | $ | 642,000 | | $ | 21,015 | | $ | 5,182,280 |
Dr. W. Stan Meyer | | | 682,500 | | | 17,218 | | | 943,030 | | | 682,500 | | | 17,218 | | | 2,765,393 |
Daniel E. Bachus | | | 682,500 | | | 25,045 | | | 943,030 | | | 682,500 | | | 25,045 | | | 2,765,393 |
Dilek Marsh | | | 423,418 | | | 25,045 | | | 537,244 | | | 423,418 | | | 25,045 | | | 1,729,750 |
Daniel J. Briggs | | | 527,904 | | | 17,218 | | | 656,925 | | | 527,904 | | | 17,218 | | | 2,066,241 |
(1) | Assumes a termination date of December |
(2) | Reflects the cost related to the continuation of the executive’s health benefits for the period specified. |
(3) | Calculated based on an assumed termination date of December |
Pay vs. Performance Comparison
As discussed in the Compensation Discussion and Analysis above, our Compensation Committee has implemented an executive compensation program designed to align a substantial portion of our NEOs’ realized compensation to the achievement of GCE’s financial, operational, and strategic objectives, and to align our executive pay with changes in the value of our shareholders’ investments. The following table set forth additional compensation information for our NEOs, calculated in accordance with SEC regulations, for fiscal years 2023, 2022, 2021 and 2020.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | Value of Initial Fixed $100 | | | | | | | ||||
| | | | | | | | Average | | Average | | Investment Based on: | | | | | | | ||||||
| | Summary | | | | | Summary | | Compensation | | | | | Peer Group | | | | | | | ||||
| | Compensation | | Compensation | | Compensation | | Actually Paid | | Total | | Total | | | | | | | ||||||
| | Table | | Actually Paid | | Table Total for | | to Non-CEO | | Shareholder | | Shareholder | | Net | | Adjusted | ||||||||
Year | | Total for CEO (1) | | to CEO (2) | | Non-CEO NEOs (3) | | NEOs (2) (3) | | Return | | Return (4) | | Income (5) | | EBITDA (6) | ||||||||
2023 | | $ | 2,016,887 | | $ | 3,085,751 | | $ | 1,196,944 | | $ | 1,672,392 | | $ | 137.84 | | $ | 98.69 | | $ | 204,985 | | $ | 302,302 |
2022 | | $ | 1,997,113 | | $ | 2,919,364 | | $ | 1,205,110 | | $ | 1,604,033 | | $ | 110.30 | | $ | 92.68 | | $ | 184,675 | | $ | 291,336 |
2021 | | $ | 1,843,058 | | $ | 1,864,868 | | $ | 1,099,912 | | $ | 1,100,530 | | $ | 89.48 | | $ | 100.13 | | $ | 260,344 | | $ | 327,354 |
2020 | | $ | 2,105,208 | | $ | 1,830,647 | | $ | 1,322,165 | | $ | 1,222,327 | | $ | 97.20 | | $ | 124.90 | | $ | 257,196 | | $ | 323,830 |
(1) | The dollar amounts reported are the amounts of total compensation reported for our CEO, Mr. Mueller, in the Summary Compensation Table for fiscal years 2023, 2022, 2021 and 2020. Mr. Mueller served as CEO for each of the years presented. |
(2) | The dollar amounts reported represent the amount of “compensation actually paid” or “CAP”, as computed in accordance with SEC rules. The dollar amounts do not reflect the actual amounts of compensation paid to our CEO or other NEOs during the applicable |
(3) | For 2023, 2022 and 2021, reflects compensation information for our 2023 NEOs, other than our CEO, as described in the CD&A of this proxy statement (each of whom served as NEOs for 2023, 2022 and 2021). For 2020, reflects compensation information for Dr. Meyer, Mr. Bachus, Mr. Briggs and Mr. Joseph Mildenhall, our prior chief information officer. |
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(4) | Reflects cumulative total shareholder return for the eight companies included in the customized peer group used by GCE for purposes of Item 201 (e) of Regulation S-K under the Exchange Act in GCE’s Annual Report on Form 10-K for the year ended December 31, 2023. Those eight companies are: 2U Inc, Adtalem Global Education, Inc, Chegg Inc, Coursera Inc, John Wiley & Sons Inc, Laureate Education Inc, Pearson Plc and Strategic Education Inc. |
(5) | The decline in net income between 2021 and 2022 is partially due to the lower interest income achieved as a result of the repayment to us by Grand Canyon University of a secured note payable that had been in place since 2018. |
(6) | We defined Adjusted EBITDA for purposes of the Annual Cash Incentive Plan in a manner consistent with the definition we use when reporting our financial results. See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations – Adjusted EBITDA (Non- GAAP Financial Measure), beginning on page 63 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for information regarding our use and calculation of Adjusted EBITDA. |
To calculate the amounts in the “Compensation Actually Paid to CEO” column in the table above, the following amounts were deducted from and added to (as applicable) our CEO’s “Total” compensation as reported in the Summary Compensation Table:
| | | | | | | | | | | | |
| | Summary | | | | | | | | | | |
| | Compensation | | Reported | | Equity Award | | | | |||
| | Table Total for | | Value of Equity | | Adjustments | | Compensation | ||||
Year |
| CEO |
| Awards for CEO (1) |
| for CEO (2) |
| Actually Paid to CEO | ||||
2023 | | $ | 2,016,887 | | $ | (1,211,643) | | $ | 2,280,507 | | $ | 3,085,751 |
2022 | | $ | 1,997,113 | | $ | (1,211,488) | | $ | 2,133,739 | | $ | 2,919,364 |
2021 | | $ | 1,843,058 | | $ | (1,211,575) | | $ | 1,233,385 | | $ | 1,864,868 |
2020 | | $ | 2,105,208 | | $ | (1,211,533) | | $ | 936,972 | | $ | 1,830,647 |
(1) | Represents the grant date fair value of the equity awards to our CEO, as reported in the “Stock Awards” column in the Summary Compensation Table for each |
(2) | Represents the adjustments to equity awards granted to our CEO to arrive at CAP, as itemized in the table below. No awards vested in the year they were granted. |
| | | | | | | | | | | | |
Fair Value of Equity Awards for CEO | | 2023 |
| 2022 | | 2021 | | 2020 | ||||
As of year-end for awards granted during the year | | $ | 1,417,053 | | $ | 1,542,425 | | $ | 1,207,911 | | $ | 1,341,808 |
Year-over-year increase (decrease) of unvested awards granted in prior years | | $ | 752,305 | | $ | 555,228 | | $ | (209,339) | | $ | (83,431) |
Increase (decrease) from prior fiscal year-end for awards that vested during the year | | $ | 111,149 | | $ | 36,086 | | $ | 234,813 | | $ | (321,405) |
Total Equity Award Adjustments | | $ | 2,280,507 | | $ | 2,133,739 | | $ | 1,233,385 | | $ | 936,972 |
To calculate the amounts in the “Average Compensation Actually Paid to Non-CEO NEOs” column in the table above, the following amounts were deducted from and added to (as applicable) the average of the “Total” compensation of our non-CEO named executive officers for each applicable year, as reported in the Summary Compensation Table for that year:
| | | | | | | | | | | | |
| | Average Summary | | Average | | Average | | | | |||
| | Compensation | | Reported Value of | | Equity Award | | Average | ||||
| | Table Total for | | Equity Awards for | | Adjustments | | Compensation Actually | ||||
Year |
| Non-CEO NEOs |
| Non-CEO NEOs (1) |
| for Non-CEO NEOs (2) |
| Paid to Non-CEO NEOs | ||||
2023 | | $ | 1,196,944 | | $ | (560,802) | | $ | 1,036,250 | | $ | 1,672,392 |
2022 | | $ | 1,205,110 | | $ | (560,722) | | $ | 959,645 | | $ | 1,604,033 |
2021 | | $ | 1,099,912 | | $ | (553,324) | | $ | 553,942 | | $ | 1,100,530 |
2020 | | $ | 1,322,165 | | $ | (609,865) | | $ | 510,027 | | $ | 1,222,327 |
(1) | Represents the average of the grant date fair value of the equity awards to our named executive officers (other than our CEO), as reported in the “Stock Awards” column in the Summary Compensation Table for |
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(2) | Represents adjustments for the equity awards granted to our named executive officers (other than our CEO) to arrive at CAP, as itemized in the table below. No awards vested in the year they were granted. |
| | | | | | | | | | | | |
Fair Value of Equity Awards for Non-CEO NEOs | | 2023 | | 2022 | | 2021 | | 2020 | ||||
As of year-end for awards granted during the year | | $ | 655,876 | | $ | 713,892 | | $ | 551,651 | | $ | 675,443 |
Year-over-year increase (decrease) of unvested awards granted in prior years | | $ | 334,835 | | $ | 232,133 | | $ | (79,117) | | $ | (34,816) |
Increase (decrease) from prior fiscal year-end for awards that vested during the year | | $ | 45,539 | | $ | 13,620 | | $ | 81,408 | | $ | (130,600) |
Total Equity Award Adjustments | | $ | 1,036,250 | | $ | 959,645 | | $ | 553,942 | | $ | 510,027 |
Pay-for-Performance Alignment
The following table identifies the seven most important financial performance measures used by our Compensation Committee to link the “compensation actually paid” (CAP) to our CEO and other NEOs in 2023, calculated in accordance with SEC regulations, to company performance.
Most Important Financial Performance Measures
● | Adjusted EBITDA |
● | Service Revenue |
● | Return on Equity |
● | Free Cash Flow |
● | Total Shareholder Return |
● | As Adjusted Non-GAAP Diluted EPS |
● | Net Income |
Company Selected Metric
We present Adjusted EBITDA because we consider it to be an important supplemental measure of our operating performance. We also make certain compensation decisions based, in part, on our operating performance, as measured by Adjusted EBITDA. All of the adjustments made in our calculation of Adjusted EBITDA are adjustments to items that management does not consider to be reflective of our core operating performance. Management considers our core operating performance to be that which can be affected by our managers in any particular period through their management of the resources that affect our underlying revenue and profit generating operations during that period and does not consider the items for which we make adjustments (as listed above) to be reflective of our core performance.
We believe Adjusted EBITDA allows us to compare our current operating results with corresponding historical periods and with the operational performance of other companies in our industry because it does not give effect to potential differences caused by variations in capital structures (affecting relative interest expense, including the impact of write-offs of deferred financing costs when companies refinance their indebtedness), tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses), the book amortization of intangibles (affecting relative amortization expense), and other items that we do not consider reflective of underlying operating performance. We also present Adjusted EBITDA because we believe it is frequently used by securities analysts, investors, and other interest parties as a measure of performance.
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Compensation Committee Report
The Compensation Committee has discussed and reviewed the Compensation Discussion and Analysis with management. Based upon this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
| |
| Compensation Committee: |
| |
|
|
| Jack A. Henry |
| Sara Lisa Graham Keegan |
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PROPOSAL NO. 3
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
◻What am I voting on? | Stockholders are being asked to ratify the appointment of KPMG LLP, a registered public accounting firm, to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2024. | |
| | |
◻Voting recommendation: | | Our Board of Directors unanimously recommends that you vote “FOR” the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2024. |
| | |
◻Vote required: | | The affirmative vote of the majority of shares present in person or represented by proxy at the Annual Meeting and entitled to vote. Brokers have discretion to vote on the ratification of our independent auditors and, as such, no votes on this proposal will be considered broker non-votes. Abstentions will have the effect of a vote against this proposal. |
The Audit Committee of the Board of Directors has selected KPMG LLP (“KPMG”), an independent registered public accounting firm, to audit our consolidated financial statements for the year ending December 31, 2024. While it is not required to do so, our Audit Committee is submitting the selection of that firm for ratification in order to ascertain the view of our stockholders. In the event the stockholders fail to ratify the selection of KPMG, the adverse vote will be considered a direction to the Audit Committee to consider other auditors for next year. However, because of the difficulty in making any substitution so long after the beginning of the current year, the appointment of KPMG for fiscal 2024 will stand, unless the Audit Committee finds other good reason for making a change. Even if the selection is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the Company’s and its stockholders’ best interests. Proxies solicited by our Board of Directors will, unless otherwise directed, be voted to ratify the appointment of KPMG as our independent registered public accounting firm for the fiscal year ending December 31, 2024.
A representative of KPMG will be present at the meeting, will be afforded an opportunity to make a statement if the representative so desires, and will be available to respond to appropriate questions during the meeting.
Our Board of Directors unanimously recommends that the stockholders vote FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2024.
Fees
For the years ended December 31, 2023 and 2022, KPMG billed us the amounts set forth below for professional services rendered in connection with audit, audit-related, tax and other professional services. All of the fees for audit, audit-related, tax and other services performed by KPMG were pre-approved by the Audit Committee in accordance with the pre-approval policies and procedures described below.
| | | | | | |
Services Rendered |
| 2023 |
| 2022 | ||
Audit Fees(1) | | $ | 772,000 | | $ | 745,000 |
Audit-Related Fees | | | — | | | — |
Tax Fees | | | — | | | — |
All Other Fees(2) | | | 61,716 | | | — |
Total Fees | | $ | 833,716 | | $ | 745,000 |
(1) | Audit Fees in 2023 and 2022 relate to services rendered for the audits of our annual consolidated financial statements including accounting and reporting consultations, for the review of our quarterly financial statements, and for services that are normally provided by the auditor in connection with statutory and regulatory filings or engagements. |
(2) | Other Fees in 2023 relate to reimbursement for costs associated with legal requests. |
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Approval of Independent Registered Public Accounting Firm Services and Fees
The Audit Committee has adopted a policy regarding pre-approval of audit and non-audit services performed by our independent registered public accounting firm. The Audit Committee is responsible for pre-approving all engagements of our independent registered public accounting firm. The policy also highlights services the Audit Committee will and will not approve for audit and non-audit services. The policy requires that written documentation be provided by the independent registered accounting firm to the Audit Committee for all tax services.
The Audit Committee may, annually or from time to time, set fee levels for certain non-audit services, as defined in the policy, or for all non-audit services. Any engagements that exceed those fee levels must receive specific pre-approval from the Audit Committee. The Audit Committee may delegate to the Audit Committee chair authority to grant pre-approvals of permissible audit and non-audit services, provided that any pre-approvals by the chair must be reported to the full Audit Committee at the next scheduled meeting.
On a regular basis, management provides written updates to the Audit Committee regarding the amount of audit and non-audit service fees incurred to date. All of the services described above for fiscal years 2023 and 2022 were approved by our Audit Committee.
AUDIT COMMITTEE REPORT
The Audit Committee operates under a written charter adopted by the Board that outlines its responsibilities and the practices it follows. You can view the charter on the Company’s website, www.gce.com. The Audit Committee reviews and assesses the adequacy of its charter at least annually and, when appropriate, recommends changes to the Board to reflect the evolving role of the Audit Committee. The duties of the Audit Committee as set forth in its charter are summarized in this proxy statement under Committees of Our Board of Directors.
The Audit Committee is composed of five, non-employee directors, each of whom the Board has determined meet the independence and financial literacy requirements of the Nasdaq Stock Market and additional, heightened independence criteria applicable to members of the Audit Committee under SEC and Nasdaq Stock Market rules. The Board has designated each of Mr. Jack A. Henry and Ms. Chevy Humphrey as “audit committee financial experts” under the SEC rules.
Primary Responsibilities of the Audit Committee and the Audit Committee’s Activities in 2023
The Audit Committee represents and assists the Board in fulfilling its oversight responsibility relating to the integrity of the Company’s financial statements and the financial reporting process, the systems of internal accounting and financial controls, the internal audit function and the annual independent audit of the Company’s financial statements. The Audit Committee oversees the Company’s compliance with legal and regulatory requirements, the independent auditors’ qualifications and independence, the performance of the Company’s internal audit function and the independent auditors, and the Company’s ethical compliance programs, including the Company’s codes of conduct. The Audit Committee’s process includes working with the Company’s Chief Risk Officer and other members of the Company’s enterprise risk management team, meeting periodically with the Chief Risk Officer and other members of management and receiving reports on enterprise risk management, including management’s assessment of risk exposures (including risks related to liquidity, credit, operations, regulatory compliance and cybersecurity, among others), and the processes in place to monitor and control such exposures.
During 2023, among other things, the Audit Committee:
● | Engaged KPMG as our independent auditors; |
● | Was involved in the selection of the lead engagement partner and negotiation of audit fees; |
● | Evaluated the tenure of the independent audit firm; |
● | Met with the senior members of the Company’s financial management team at each regularly scheduled meeting; |
● | Held separate private sessions, during its regularly scheduled meetings, with each of KPMG and our Chief Risk Officer, at which candid discussions regarding financial management, legal, accounting, auditing and internal control issues took place; |
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● | Received periodic updates on management’s process to assess the adequacy of the Company’s system of internal control over financial reporting, the framework used to make the assessment and management’s conclusions on the effectiveness of the Company’s internal control over financial reporting; |
● | Discussed with KPMG the Company’s internal control assessment process, management’s assessment with respect thereto and KPMG’s evaluation of the Company’s system of internal control over financial reporting; |
● | Reviewed and discussed with management and KPMG the Company’s periodic reports prior to filing with the SEC, including matters such as significant accounting policies, management judgements and accounting estimates; |
● | Reviewed the Company’s internal audit plan and the performance of the Company’s internal audit function; |
● | Reviewed with senior members of the Company’s financial management team, KPMG, and our Chief Risk Officer the overall audit scope and plans, the results of internal and external audits, evaluations by management and the independent auditors of the Company’s internal controls over financial reporting and the quality of the Company’s financial reporting; and |
● | Reviewed with management, including our Chief Risk Officer, Chief Information Security Officer and General Counsel, and KPMG significant risks and exposures identified by management, the overall adequacy and effectiveness of the Company’s legal, regulatory and ethical compliance programs, including the Company’s code of conduct, cybersecurity programs and climate-related risks for the Company. |
2023 Audited Financial Statements
One of the Audit Committee’s primary responsibilities is to assist the Board in overseeing the Company’s management and independent registered public accounting firm in regard to our financial reporting and internal controls over financial reporting. In performing our oversight function, we relied upon advice and information received in our discussions with management and the independent registered public accounting firm.
We have (a) reviewed and discussed our Company’s audited financial statements for the fiscal year ended December 31, 2023, with management; (b) discussed with our Company’s independent registered public accounting firm the matters required to be discussed by Public Company Oversight Board (PCAOB) Auditing Standard Number 1301, Communications with Audit Committees (PCAOB General Auditing Standards 1300, Auditor Communications); (c) received the written disclosures and presentation from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence; and (d) discussed with the independent registered public accounting firm its independence.
Based on the review and discussions with management and our independent registered public accounting firm referred to above, we recommended to our Board of Directors that the audited financial statements be included in our Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, for filing with the Securities and Exchange Commission.
Audit Committee: | |
| |
| Jack A. Henry (Chair) |
| Sara Ward Lisa Graham Keegan Chevy Humphrey |
| |
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BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information regarding the beneficial ownership of our common stock as of February 29, 2016March 31, 2024 for:
● | each person, or group of affiliated persons, known to us to own beneficially 5% or more of our outstanding common stock; |
● | each of our directors; |
● | each of our named executive officers; and |
● | all of our directors and named executive officers as a group. |
The information in the following table has been presented in accordance with the rules of the SEC. Under SEC rules, beneficial ownership of a class of capital stock includes any shares of such class as to which a person, directly or indirectly, has or shares voting power or investment power and also includes any shares as to which a person has the right to acquire such voting or investment power within 60 days of the date set forth above through the exercise of any stock option, warrant or other right. If two or more persons share voting power or investment power with respect to specific securities, each such person is deemed to be the beneficial owner of such securities. Except as we otherwise indicate below and under applicable community property laws, we believe that the beneficial owners of the common stock listed below, based on information they have furnished to us, have sole voting and investment power with respect to the shares shown. Unless otherwise noted below, the address for each holder listed below is 33002600 W. Camelback Road, Phoenix, Arizona 85017.
The calculations of beneficial ownership in this table are based on 46,267,97929,839,253 shares outstanding at February 29, 2016March 31, 2024.
Common Stock | ||||||||
Amount and Nature of Beneficial Ownership | Percent of Class(1) | |||||||
Principal Stockholders: | ||||||||
Wells Fargo & Company(2) | 5,057,995 | 10.9 | % | |||||
The Vanguard Group – 23-1945930(3) | 3,374,517 | 7.3 | % | |||||
Riverbridge Partners LLC(4) | 3,136,760 | 6.8 | % | |||||
BlackRock Inc.(5) | 2,552,649 | 5.5 | % | |||||
Van Berkom & Associates Inc.(6) | 2,386,824 | 5.2 | % | |||||
Directors and Named Executive Officers: | ||||||||
Brent D. Richardson(7) | 110,504 | 0.2 | % | |||||
Brian E. Mueller(8) | 1,138,650 | 2.5 | % | |||||
Dr. W. Stan Meyer(8) | 457,376 | 1.0 | % | |||||
Daniel E. Bachus(8) | 392,555 | 0.8 | % | |||||
Joseph N. Mildenhall(8) | 219,756 | 0.5 | % | |||||
Brian M. Roberts | 63,947 | 0.1 | % | |||||
David J. Johnson | 11,326 | * | ||||||
Jack A. Henry | 16,866 | * | ||||||
Bradley A. Casper | 9,988 | * | ||||||
Kevin F. Warren | 6,224 | * | ||||||
Sara R. Dial | 6,155 | * | ||||||
All directors and executive officers as a group (11 persons) | 2,433,347 | 5.3 | % |
| | | | | |
| | Common Stock | | ||
|
| Amount and Nature of |
| Percent of Class(1) |
|
Principal Stockholders: | | | | | |
The Vanguard Group– 23-1945930(2) | | 3,003,213 | | 10.0 | % |
BlackRock, Inc.(3) | | 2,993,921 | | 10.0 | % |
Riverbridge Partners LLC(4) | | 1,845,730 | | 6.2 | % |
Directors and Named Executive Officers: | | | | | |
Brian E. Mueller | | 307,733 | | 1.0 | % |
Dr. W. Stan Meyer | | 111,798 | | 0.4 | % |
Daniel E. Bachus | | 117,710 | | 0.4 | % |
Dilek Marsh | | 27,174 | | 0.1 | % |
Daniel J. Briggs | | 24,609 | | 0.1 | % |
Sara Ward | | 4,711 | | * | |
Jack A. Henry | | 14,782 | | * | |
Lisa Graham Keegan | | 2,905 | | * | |
Chevy Humphrey | | 3,345 | | * | |
All directors and executive officers as a group (9 persons) | | 614,767 | | 2.0 | % |
* | Represents beneficial ownership of less than 0.1% |
(1) | The percentage of beneficial ownership as to any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days after such date, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days after such date. Consequently, the denominator for calculating beneficial ownership percentages may be different for each beneficial owner. |
(2) | This information for |
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Malvern, PA 19355. Vanguard reported that it had sole voting power over 0 shares, shared voting power over 11,657 shares, sole dispositive power over 2,959,976 shares, and shared dispositive power over 43,237 shares. |
(3) | This information for BlackRock, Inc. (“BlackRock”) is based on a Schedule 13G/A filed with the Securities and Exchange Commission on January |
This information for |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Policies and Procedures for Related Party Transactions
We have adopted a written related party transactions policy, pursuant to which our executive officers, directors and principal stockholders, including their immediate family members, are not permitted to enter into a related party transaction with us without the prior consent of our Audit Committee. Any request for us to enter into a transaction with an executive officer, director, principal stockholder or any of such persons’ immediate family members or affiliates, in which the amount involved exceeds $120,000, must be presented to our Audit Committee for review, consideration and approval. All of our directors, executive officers and employees are required to report to our Audit Committee any such related party transaction. In approving or rejecting the proposed agreement, our Audit Committee will take into account, among other factors it deems appropriate, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related party’s interest in the transaction. Under the policy, if we should discover related party transactions that have not been pre-approved, the Audit Committee will be notified and will determine the appropriate action, including ratification, rescission or amendment of the transaction. In addition, under the policy, certain types of transactions have been pre-approved by the Audit Committee, including employment arrangements with executive officers, director compensation, transactions where all stockholders receive proportional benefits, transactions involving competitive bids, regulated transactions, and banking-related service transactions.
Relationship to Grand Canyon University
Mr. Brian E. Mueller has served as the Chief Executive Officer of the Company since 2008 and the Chairman of the Board of the Company since 2017 and has also served as the President of GCU since 2012. In connection with the sale of GCU to Grand Canyon University, an Arizona non-profit corporation, in 2018, the Board of Directors of the Company and the board of trustees of GCU each independently determined that Mr. Mueller should retain those roles. Accordingly, Mr. Mueller remains the Chairman of the Board and Chief Executive Officer of the Company and as the President of GCU, although he is prohibited from serving on the board of trustees of GCU. Our Board and the board of trustees of GCU each recognized that Mr. Mueller’s dual role could raise conflict of interest issues. Accordingly, at the time of the sale of GCU, GCU adopted governance provisions that prohibit Mr. Mueller from serving on the board of trustees of GCU. We also jointly imposed a structure, through GCU’s governance documents and through express provisions of the Master Services Agreement, that prevent Mr. Mueller from participating in day-to-day management of, or negotiations between the Company and GCU relating to, the Master Services Agreement. Aside from Mr. Mueller, no other employee of GCU or GCE has a dual role in both organizations. Beginning July 1, 2018, the base salary under Mr. Mueller’s employment agreement with the Company was decreased by 50% to $321,000, reflecting his dual employment by GCE and GCU.
GCU is a separate non-profit entity under the control of an independent board of trustees, none of whose members have ever served in a management or corporate board role at the Company. GCU’s board of trustees has adopted bylaws and a related conflict of interest policy that, among other things, (i) prevents any trustee of GCU from attending any meeting, or voting on any matter, as to which such trustee has a conflict of interest, (ii) establishes a special committee of independent trustees to oversee on behalf of GCU all matters related to GCU’s relationship with the Company, and (iii) prohibits any trustee from having any financial interest in, or role with, the Company. In addition, an operational structure has been put in place that prevents Mr. Mueller from participating in operational
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matters involving the Company and GCU. Accordingly, the Company’s relationship with GCU, both pursuant to the master services agreement between the two companies and operationally, is no longer as owner and operator, but as a third-party service provider to an independent customer. While the Company believes that its relationship with GCU will remain strong, GCU’s board of trustees and management have fiduciary and other duties that require them to focus on the best interests of GCU and over time those interests could diverge from those of the Company.
Certain Transactions
Set forth below is a summary of certain transactions since January 1, 2015,2022, in which the Company was or is to be a participant and involving our directors, executive officers, beneficial owners of more than 5% of our common stock, and some of the entities with which the foregoing persons are affiliated or associated, and in which the amount involved exceeds or will exceed $120,000.
Agreement with Mind StreamsGCE Community Fund (“GCECF”)
– GCECF was initially formed in 2014. GCECF makes grants for charitable, educational, literary, religious or scientific purposes within the meaning of Section 501(c )(3) of the Internal Revenue Code. Mr. Mueller serves as the president of GCECF, and the board of directors of GCECF is composed of Company executives. The Company was a party to a revenue sharing arrangementis not the primary beneficiary of GCECF, and accordingly, the Company does not consolidate GCECF’s statement of activities with Mind Streams, L.L.C. (Mind Streams), which is owned and operated, in part, by Gail Richardson, the father of Brent D. Richardson, our Chairman of the Board. Pursuant to this agreement and in accordance with the applicable rules and regulations of the Department of Education, we pay to Mind Streams a percentage of the net revenue that we receive from applicants to Grand Canyon University who were recruited by Mind Streams and who matriculate at the University. Mind Streams bears all costs associated with the recruitment of these applicants. Forits financial results. The Company contributed $1.7 million for the year ended December 31, 2015, we expensed approximately $1.6 million pursuant to this agreement and, as2023, of which no amounts were owed at December 31, 2015, approximately $0.2 million was due to Mind Streams.2023.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that our Company’s directors and executive officers and beneficial owners of more than 10% of the Company’s common stock file initial reports of ownership and reports of changes in ownership with the SEC. Directors and executive officers are required to furnish the Company with copies of all Section 16(a) forms they file. Based solely on a review of the copies of such forms furnished to the Company and written representations from our Company’s directors and executive officers, all reports required by Section 16(a) were filed on a timely basis for the fiscal year ended December 31, 2015.
HOUSEHOLDING OF PROXY MATERIALS
The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for annual reports, proxy statements, and Notices of Internet Availability of Proxy Materials with respect to two or more stockholders sharing the same address by delivering a single annual report, proxy statement, or Notice of Internet Availability of Proxy Materials addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for stockholders and cost savings for companies. Brokers with account holders who are stockholders of the Company may be householding the Company’s proxy materials. Once you have received notice from your broker that it will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate annual report, proxy statement, or Notice of Internet Availability of Proxy Materials or if you are receiving multiple copies thereof and wish to receive only one, please notify your broker or notify the Company by sending a written request to Grand Canyon Education, Inc., 33002600 W. Camelback Road, Phoenix, Arizona, 85017, Attn: Investor Relations, or by calling (602) 639-7500.247-4400.
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ADDITIONAL INFORMATION
Our 20152023 annual report and our Annual Report on Form 10-K for fiscal year 2015,2023, including financial statements, are available electronically along with our proxy statement to all stockholders of record as of April 22, 2016,18, 2024, including those stockholders whose shares are held in a brokerage, bank or similar account, who will receive the same mailing from the organization holding the account. Stockholders who wish to obtain a copy of our Annual Report on Form 10-K, for the fiscal year ended December31, 2015,2023, and our proxy statement may do so without charge by writing to Investor Relations, Grand Canyon Education, Inc., 33002600 W. Camelback Road, Phoenix, Arizona 85017.
As of the date of this proxy statement, management knows of no matters that will be presented for determination at the Annual Meeting other than those referred to herein. If any other matters properly come before the Annual Meeting calling for a vote of stockholders, it is intended that the persons named in the proxies solicited by our Board of Directors, in accordance with their best judgment, will vote the shares represented by these proxies.
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By Order
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