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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 Registrant x
Filed by a Party other than the Registrant ¨
Filed by the Registrant ☒ | Filed by a Party other than the Registrant ☐ |
Check the appropriate box:
☒ | Preliminary Proxy Statement |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
☐ | Definitive Proxy Statement |
☐ | Definitive Additional Materials |
☐ | Soliciting Material Pursuant to |
DEVRY INC.
Adtalem Global Education Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒ | No fee required. |
☐ | Fee paid previously with preliminary materials. |
☐ | Fee computed on table |
1) Title
About Us
Who We Are
Adtalem Global Education is a leading post-secondary educator and provider of professional talent to which transaction applies:
2) Aggregate numberthe healthcare industry. With a dedicated focus on driving strong outcomes that increase workforce preparedness, Adtalem empowers a diverse learning population to achieve their goals and make inspiring contributions to our global community. Adtalem is the parent organization of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant to Exchange ActRule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
¨ Fee paid previously with preliminary materials.
¨ Check box if any partAmerican University of the feeCaribbean School of Medicine, Chamberlain University, Ross University School of Medicine, Ross University School of Veterinary Medicine, and Walden University.
STUDENT FOCUSED
Empowering individuals is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filingmeaning behind our name – Adtalem Global Education. Adtalem (pronunciation: ad TAL em) is Latin for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
“To Empower.”
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MISSION | VISION | PURPOSE | ||||||||
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We provide global | To create a dynamic global | We empower students to | ||||||||
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WE ARE 5 institutions |
| NEARLY 10,000 colleagues |
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WITH A NETWORK OF MORE THAN 300,000 alumni located in all 50 states – addressing nursing and physician shortages, particularly in underserved communities |
| WITH 27 operating campuses and satellite locations |
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As of October 1, 2023.
Dear Shareholder:
On behalfNotice of the Board of Directors of DeVry Inc., it is our pleasure to invite you to attend our Annual Meeting of Shareholders at 9:00 a.m., Central Standard Time, Wednesday, November 6, 2013, at DeVry University’s location at 225 West Washington St., Chicago, Illinois.
We will begin with a discussion of the items listed in the enclosed Proxy Statement, followed by a report on the progress of DeVry during the last fiscal year. DeVry’s performance also is discussed in the enclosed 2013 Annual Report to Shareholders, which we think you will find to be interesting reading.
We look forward to seeing you at the meeting.
Thank you.
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Online check-in will be available beginning at 7:45 a.m. Central Standard Time. Please allow ample time for the online check-in process. | The Annual Meeting will be held entirely online at: www.virtualshareholdermeeting.com/ATGE2023. | September 22, 2023 |
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Board Voting | ||||
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DEVRY INC.
3005 Highland Parkway
Downers Grove, IL 60515-5799
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On
November 6, 2013
You are cordially invited to attend the Annual Meeting of Shareholders of DeVry Inc. (“DeVry”) at DeVry University’s location at 225 West Washington St., Chicago, Illinois, on Wednesday, November 6, 2013, at 9:00 a.m. Central Standard Time, for the following purposes:
(1) To elect Connie R. Curran, Daniel Hamburger and Ronald L. Taylor as Class I Directors to serve until the 2015 Annual Meeting of Shareholders (Proposal No. 1);
(2) To ratify the selection of PricewaterhouseCoopers LLP as the independent registered public accounting firm for DeVry for the current fiscal year (Proposal No. 2);
(3) To approve an amendment to our Restated Certificate of Incorporation to change our name to “DeVry Education Group Inc.” (Proposal No. 3);
(4) To approve the DeVry Inc. Incentive Plan of 2013 (Proposal No. 4);
(5) To conduct an advisory vote on executive compensation (Proposal No. 5); and
(6) Towill also consider such other business as may come properly come before the Annual Meeting or any adjournment thereof.
You will find enclosed with this Notice a Proxy Card and a Proxy Statement forTo participate in the Annual Meeting and a copy of the DeVry Inc. Annual Report for 2013.
The Board of Directors has fixed a record date of September 24, 2013. Only shareholders of record on that date are entitled to notice of, and to vote at, the 2013 Annual Meeting.
All shareholders are cordially invited to attend the Annual Meeting in person. However, to assure representation at the2023 Annual Meeting, you are encouraged to vote bywill need the 16-digit control number included on your proxy by followingcard or in the instructions on the enclosed Proxy Card. Postage is not required for mailing in the United States. Upon written request, DeVry will reimburse shareholders for the cost of mailingthat accompanied your proxy cards from outside the United States. You may also vote your shares by telephone or through the Internet by following the instructions set forth on the enclosed Proxy Card. You may attend the Annual Meetingmaterials.
This notice and vote in person even if you have returned a proxy in writing, by telephone or through the Internet.
By Order of the Board of Directors,
GREGORY S. DAVIS
Secretary
October , 2013
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on November 6, 2013 — Our Proxy Statement, voting instructions, and the DeVryAdtalem Global Education Inc.’s 2023 Annual Report for 2013to Shareholders are available at www.proxyvote.com.
DEVRY INC.
3005 Highland Parkway
Downers Grove, IL 60515-5799
ANNUAL MEETING OF SHAREHOLDERS, TO BE HELD ON NOVEMBER 6, 2013
PROXY STATEMENT
PROXIES AND VOTING INFORMATION
The Board of Directors of DeVry Inc. (“DeVry”) is sending you this Proxy Statement and the accompanying Proxy Card to solicit your proxy to vote your shares at DeVry’s Annual Meeting of Shareholders to be held on November 6, 2013, and any adjournment thereof (the “Annual Meeting”). The solicitation of proxies gives every shareholder an opportunity to vote because your shares can be voted only if you are presentbeing first sent or represented by proxy at the Annual Meeting. This Proxy Statement and accompanying Proxy Card are first being sentgiven to shareholders on or about October , 2013.6, 2023.
When
Douglas G. Beck
Senior Vice President, General Counsel, Corporate Secretary and Institutional Support Services
REVIEW YOUR PROXY STATEMENT AND VOTE IN ONE OF FOUR WAYS:
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VIA THE INTERNET | BY TELEPHONE | BY MAIL | VIRTUALLY | |||
Visit the web site listed on your proxy card | Call the telephone number on your proxy card | Sign, date, and return your proxy card in the enclosed envelope | Attend the Annual Meeting online at www.virtualshareholdermeeting.com/ ATGE2023. |
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on November 8, 2023. Our Proxy Statement and the Adtalem Global Education Inc. Annual Report for 2023 are available online at www.proxyvote.com or at our investor relations website, http://investors.adtalem.com. |
Proxy Summary
This summary highlights selected information about the items to be voted on at the annual meeting. It does not contain all of the information that you have returned your proxy, the proxy committee appointed by DeVry’s Board of Directors (and each of them, with full powers of substitution) will vote your shares as you direct. Please follow the instructions on the enclosed Proxy Card, which explainshould consider in deciding how to submit yourvote. You should read the entire proxy by mail, by telephone or throughstatement carefully before voting.
OUR BOARD OF DIRECTORS
Director Nominees
Diverse mix of backgrounds, current and former CEOs, marketing and medical professionals, and a former finance executive at a leading global company.
Director | Other Public |
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| Stephen W. Beard |
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| 2021 |
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| William W. Burke INDEPENDENT President and Founder, |
| 64 |
| 2017 |
| 2 |
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| Mayur Gupta INDEPENDENT |
| 46 |
| 2021 |
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| Donna J. Hrinak INDEPENDENT |
| 72 |
| 2018 |
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| Georgette Kiser INDEPENDENT |
| 55 |
| 2018 |
| 3 |
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| Liam Krehbiel INDEPENDENT |
| 47 |
| 2022 |
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| Michael W. Malafronte INDEPENDENT Adtalem Global Education Inc. Senior Advisor, |
| 49 |
| 2016 |
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| Sharon L. O’Keefe INDEPENDENT |
| 71 |
| 2020 |
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| Kenneth J. Phelan INDEPENDENT |
| 64 |
| 2020 |
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| Lisa W. Wardell |
| 54 |
| 2008 |
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Academic Quality | Audit and Finance | Compensation | External Relations | Nominating & | Audit Committee | Committee |
CORPORATE GOVERNANCE HIGHLIGHTS
Shareholder Engagement
We conduct regular outreach and engagement with our shareholders and value their insight and feedback.
OUR OUTREACH
We reached out to our shareholders representing approximately 91% of shares owned.
Ongoing Enhancements
Our Board continually monitors best practices in corporate governance and, consistent with feedback from shareholders and other stakeholders, has taken the Internet. If you submitfollowing actions in recent years:
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| ● Appointed an independent Chairman of the Board ● Conducted a Board composition analysis to align the current and future skills and experiences represented on the Adtalem Board with the Company’s evolving strategic objectives ● Updated our Stock Ownership Guidelines to limit the type of equity awards that count toward compliance to only the pre-tax value of unvested restricted stock units | |||
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| ● Amended our Director Nominating Process to consider expertise on climate change, climate-related risks, and cybersecurity ● Amended the charters of our Audit and Finance, Compensation, and External Relations Committees to provide additional responsibility and oversight of environmental, social, and governance (“ESG”) matters ● Added a new director who is committed to improving equity in education for underserved communities | |||
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| ● Refreshed our Board by adding three new directors including our new CEO and a director with significant expertise in digital marketing | |||
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| ● Refreshed our Board by adding two new directors with significant expertise in healthcare and risk oversight ● Amended the charter of our External Relations Committee to clarify its responsibilities for oversight of our sustainability strategy, including environmental and social policies | |||
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| ● Appointed a Lead Independent Director when our CEO was appointed as our Chairman of the Board ● Enhanced our proxy statement to focus on disclosures in key areas of investor interest ● Increased stock ownership requirements for our executive officers | |||
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| ● Broadened our shareholder outreach program and increased Board involvement |
Ongoing Best Practices
BOARD COMMITTEES | ||
• We have five Board committees – Academic Quality, Audit and Finance, Compensation, External Relations, and Nominating & Governance, each of which typically meets at least four times per year • The Chair of each committee, in consultation with the committee members, determines the frequency and length of committee meetings • Our Board and each of its committees are authorized to retain independent advisors at Adtalem’s expense | ||
DIRECTOR STOCK OWNERSHIP | ||
• 60% of our non-employee directors’ annual compensation (excluding fees for other additional roles) is in the form of restricted stock units (“RSUs”) • Our non-employee directors (other than those who are affiliated with our shareholders) are subject to a policy requiring their ownership of shares with a value equal to or in excess of three times their annual retainer | ||
CONTINUOUS IMPROVEMENT | ||
• New directors receive a tailored, two-day, live training program about Adtalem and its institutions from management • Our directors are encouraged to participate in director-oriented training and board education programs • The Board annually undergoes a self-assessment process to critically evaluate its performance at a committee and Board level | ||
COMMUNICATION | ||
• Our Board engages in open and frank discussions with each other and with senior management • Our directors have access to all members of management | ||
EXECUTIVE COMPENSATION HIGHLIGHTS
Our Compensation Framework
2023 COMPENSATION SNAPSHOT
Objective | Time | Performance | Additional Explanation | |||
Salary | Base Salary | Reflect experience, market competition and scope of responsibilities | Reviewed Annually | ● Assessment of performance in prior year. | ● Represents 12% to 35% of target Total Direct Compensation for Mr. Beard and other NEOs (on average), respectively. | |
Annual | MIP | Reward achievement of short-term operational business priorities | 1 year | ● Revenue ● Adjusted Earnings Per Share (“EPS”)* ● Individual Performance Modifier | ● Represents 15% to 23% of target Total Direct Compensation for Mr. Beard and other NEOs (on average), respectively. | |
Long-Term Incentive(equity) | RSUs | Align interests of management and shareholders, and retain key talent | 3 year ratable | ● Stock price growth | ● Represents 40% of NEO LTI granted in FY23.** | |
Revenue Growth PSUs | Reward achievement of multi-year financial goals, align interests of management and shareholders, and retain key talent | 3 year cliff | ● Revenue Growth | ● Represents 60% of NEO LTI granted in FY23.** | ||
EBITDA Margin PSUs | ● EBITDA Margin |
* | The Management Incentive Plan (“MIP”) payout for executive leadership of the institutions is also based on revenue and adjusted operating income at such executive’s institution. |
** | The total long-term incentive (“LTI”) award consisting of both RSUs and PSUs represents 73% of target Total Direct Compensation for Mr. Beard and 42% of target Total Direct Compensation for other NEOs (on average). |
SUSTAINABILITY AND COMMUNITY RELATIONS
Adtalem is committed to a proxy by telephone or throughholistic approach to our communities, providing quality learning and working opportunities, caring for the Internet, you should not also mailplaces where we operate, and conducting our business in a transparent and responsible manner. We advanced our ESG strategy during fiscal year 2023 and remained steadfastly focused on our overarching philosophy of stewardship.
ADTALEM GLOBAL EDUCATION SUSTAINABILITY COMMITMENT | ||
  Adtalem Global Education operates in a sustainable, ethical, and responsible manner as we increase access and equity in education and workforce training. Adtalem is committed to protecting the environment, increasing climate awareness and resilience, continuously increasing our diverse and inclusive culture, and investing in the well-being of the communities where we teach, learn, and work. | ||
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Environmental Stewardship In fiscal year 2020 we launched multi-year environmental goals through 2024 that encompass our strategic approach to reducing our carbon footprint, embracing renewable energy, and enhancing waste management practices. Through these goals, Adtalem is addressing environmental issues that help safeguard the environment and our communities. | Social Practices As a global, scaled healthcare education enterprise, we are uniquely positioned to address the deep inequities and shortages across the healthcare system. We remain focused on bridging this gap through increased access to education and support for underrepresented students and by working directly with healthcare systems to place qualified healthcare professionals into critically needed positions. We do this by embracing the power of diversity, equity, and inclusion and forging strong partnerships to educate students and provide essential workers to employer partners, all while maintaining our steadfast focus on helping improve communities and healthcare systems. | Governance Practices We have significant female and multicultural representation on our Board. We continue to engage in active Board refreshment and in 2023 conducted a board composition analysis to align the current and future skills and experiences represented on the Adtalem Board with the Company’s evolving strategic objectives and enable Adtalem to proactively plan for ongoing Board refreshment. | ||
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Community Engagement and Philanthropy As a mission-driven organization and responsible corporate citizen, our commitment to social impact goes beyond the classroom. We support charitable and civic organizations across the globe that share our values by way of the Adtalem Global Education Foundation and corporate philanthropy. Through corporate giving efforts, Adtalem provided $221,671 to global community and civic partners in fiscal year 2023. Additionally, the Adtalem Global Education Foundation awarded grants totaling $564,775 to support organizations that align with its focus areas of strengthening the pipeline to careers in healthcare, addressing healthcare disparities, increasing access to quality educational opportunities for underserved populations, and promoting economic growth through skills-based workforce development. | Expanding Educational Access We have created sustainable strategies to engage and support students from historically underrepresented groups and our intentional approach continues to yield industry-leading results. In fiscal year 2023, 83% of the total student population in our five degree-conferring institutions identified as female and 52% as people of color. ethnically diverse. We are the largest grantor of nursing degrees in the U.S., the largest grantor of Bachelor of Science in Nursing, Master of Science in Nursing-Family Nurse Practitioner, and Doctor of Nursing Practice degrees to minority students1 and the number one provider of Black MD graduates, more than any U.S. medical school.2 Our veterinarian school has an average of 400 graduates per year representingalmost 9% of all Doctor of Veterinary Medicinegraduates from American Veterinary Medical Association Council on Education accredited schools.Furthermore, over the past three years, one of three graduates from our veterinarian school have been people of color. We have a unique opportunity to improve the state of healthcare by changing the face of those who deliver it. | Empower Scholarship Fund The Empower Scholarship Fund is another avenue through which we champion social impact efforts, supporting students with the greatest need in continuing their educational aspirations through their chosen programs at Adtalem institutions. During fiscal year 2023, the Empower Scholarship Fund awarded $301,700 in scholarships, and since 2016, it has provided 2,629 scholarships totaling more than $4.9 million. |
1 Analysis is based on FY2021 IPEDS data downloaded on 09/15/2022. Under-represented minority includes students who identify as: American Indian or Alaska Native, Black or African American, Hispanic or Latino, Native Hawaiian or other Pacific Islander.
2 Based on 2020-2021 data.
DIVERSITY, EQUITY, AND INCLUSION
At Adtalem, diversity, equity, and inclusion (DEI) is core to us by any of these means without choices for each proposal, the proxy committee will vote your sharesour mission. Our DEI commitments are far-reaching – from our emphasis on the unmarked proposals as recommended by DeVry’s Board of Directors. Abstentions, directionscultivating a workplace culture where differences are celebrated to withhold authorityour inclusive admission process and broker non-votes (where a named entity holds shares for a beneficial owner who has not provided voting instructions) will be considered present at the Annual Meeting for purposes of a quorum but will not be counted in determining the total number of votes cast. A proxy may be revoked at any time before the proxy is voted at the Annual Meeting by: (1) notifying DeVry in writing that the proxy has been revoked, (2) submitting a later-dated proxy by mail, over the telephone or through the Internet, or (3) voting in person at the Annual Meeting. The election of Connie R. Curran, Daniel Hamburger and Ronald L. Taylor as Class I Directors (Proposal No. 1), the ratification of the selection of the independent registered public accounting firm (Proposal No. 2), the approval of the proposed amendment to DeVry’s Restated Certificate of Incorporation to change DeVry’s name to “DeVry Education Group Inc.” (Proposal No. 3), the approval of the DeVry Inc. Incentive Plan of 2013 (Proposal No. 4) and the approval of executive compensationfocus on advancing health equity in the advisory vote (Proposal No. 5) will each require the affirmative vote of a majority of the shares of Common Stock of DeVry outstanding on the record date, as required by DeVry’s Restated Certificate of Incorporation. The effect of an abstention, direction to withhold authority or broker non-vote with respect to these proposals is the same as a “no” vote.
If youcommunities we serve. We are a DeVry colleague who is a participant in the DeVry Inc. Employee Stock Purchase Plan or the DeVry Inc. Success Sharing Retirement Plan’s DeVry Stock Fund, your proxy will serve as direction to the custodian of the DeVry Inc. Employee Stock Purchase Plan or the trustee of the DeVry Inc. Success Sharing Retirement Plan to vote your shares for your account as you have directed. If you submit a proxy without indicating your voting preference, your shares will be voted in the same proportion as shares for which instructions have been received.
DeVry will bear the expense of soliciting proxies and will reimburse all shareholders for the expense of sending proxies and proxy material to beneficial owners, including expenditures for foreign mailings. The solicitation initially will be made by mail but also may be made by DeVry colleagues by telephone, electronic means or personal contact.
As of September 24, 2013, DeVry had shares of Common Stock ($0.01 par value) outstanding. Shareholders are entitled to one vote per share owned on the record date.
PROPOSAL NO. 1
The current size of the Board of Directors is 12 Directors. The Restated Certificate of Incorporation provides for a Board of Directors that is divided into three classes, with Class III Directors who were elected at the 2012 Annual Meeting serving a three-year term, the Class I Directors to be elected at the 2013 Annual Meeting to serve a two-year term, and the Class II Directors to be elected at the 2014 Annual Meeting to serve a one-year term. At and after the 2015 Annual Meeting, all Directors will be elected to a one-year term, and the Board will no longer be classified. The current members of Class I, whose terms of office expire in November 2013, are Connie R. Curran, Daniel Hamburger, Harold T. Shapiro and Ronald L. Taylor. Except for Harold T. Shapiro, who has chosen notproud to stand for re-election,equality and social justice at the enterprise level and across our family of institutions, and we remain committed to equipping a diverse community of learners to be the culturally aware professionals our communities desperately need.
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A-1 | APPENDIX A – SUMMARY OF SPECIAL ITEMS EXCLUDED FOR PERFORMANCE ASSESSMENT |
PROPOSAL NO. 1
Election of Directors
The Board has nominated eachten of themAdtalem’s eleven sitting directors and recommends their re-election, as Class I Directors, each for a term to expire in 2015. The Board of Directors has acted to decreaseat the size of the Board of Directors to 11 members, with such change to take effect immediately prior to the 20132024 Annual Meeting. All of the nominees have consented to serve as Directorsdirectors if elected at the Annual MeetingMeeting. Dr. Charles DeShazer has informed the Board that he is not standing for re-election and will retire from the Board at the Annual Meeting. Dr. DeShazer has served on the Adtalem Board since 2021 and the Board sincerely appreciates Dr. DeShazer’s service to Adtalem. Dr. DeShazer’s decision to not stand for re-election is not the result of Shareholders.any disagreement with the Company.
It is intended that all shares represented by a proxy in the accompanying form will be voted for the election of each of Connie R. Curran, Daniel HamburgerStephen W. Beard, William W. Burke, Mayur Gupta, Donna J. Hrinak, Georgette Kiser, Liam Krehbiel, Michael W. Malafronte, Sharon L. O’Keefe, Kenneth J. Phelan, and Ronald L. TaylorLisa W. Wardell as Class I Directorsdirectors unless otherwise specified in such proxy. A proxy cannot be voted for more than threeten persons. In the event that a nominee becomes unable to serve as a Director,director, the proxy committee (appointed by the Board) will vote for the substitute nominee that the Board designates. The Board has no reason to believe that any of the nominees will become unavailable for election.
Each nominee for election as a Director, and each Director continuing in office,director is listed below, along with a brief statement of his or her current principal occupation, business experience, and other information, including directorships in other public companies held as of the date of this Proxy Statement or within the previous five years. Under the Captionheading “Relevant Experience,” we describe briefly the particular experience, qualifications, attributes, or skills that led to the conclusion that these nominees and the continuing Directors should serve on the Board. As explained below under the caption “Board of Directors and Board Committee Information — Director“Director Nominating Process, and Factors Considered,” the Nominating and& Governance Committee looks at the Board as a whole, attempting to ensure that it possesses the characteristics that the Board believes are important to effective governance.
Approval by ShareholdersAPPROVAL BY SHAREHOLDERS
You have the option to vote FOR, AGAINST or ABSTAIN with respect to the election of each director nominee. The election of each of the threeten nominees for Directordirector listed below requires the affirmative vote of a majority of the shares of Common Stock of DeVry outstanding onAdtalem represented at the record date. Annual Meeting. Adtalem maintains a majority voting standard for uncontested elections (when the number of nominees is the same as the number of directors to be elected), so for a nominee to be elected as a member of the Board, the nominee must receive the affirmative vote of a majority of the shares of Common Stock of Adtalem represented at the Annual Meeting. Abstentions and broker non-votes, if any, will be counted as votes AGAINST each director nominee. See VOTING INFORMATION- Effect of Not Casting Your Vote. Shareholders may not cumulate their votes in the election of directors. If a nominee for re-election fails to receive the requisite majority vote where the election is uncontested, such director must promptly tender his or her resignation to Adtalem’s Chairman or Adtalem’s General Counsel and Corporate Secretary, subject to acceptance by the Board.
Unless otherwise indicated on the proxy, the shares will be votedFOReach of the nominees listedidentified below.
The Board of Directors recommends a vote FOR each of the nominees identified below. 
Proposal No. 1 Election of Directors recommends a vote FOR the nominees listed below.
NOMINEESBOARD COMPOSITION
CLASS I — TERM EXPIRES 2015Director Nominees
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| Stephen W. Beard, Chief Executive Officer President and CEO, Adtalem Global Education Inc. Age: 52 Director since: 2021 |
Career Highlights
Connie R. Curran, age 66
Dr. Curran has been a Director of DeVry since November 2003. The Board hasMr. Beard was appointed Dr. Curran to replace Harold T. Shapiro as the Board Chair effective at the 2013 Annual Meeting. She is the President of Curran Associates, a healthcare consulting company. She is also the co-founder and CEO of Best on Board, a trustee education program that seeks to increase the confidence and competence of healthcare trustees through education, testing and certification. From September 2003 until June 2006, Dr. Curran served as the Executive Director of C-Change (formerly the National Dialogue on Cancer), an organization that brings together the public, private, and nonprofit sectors to focus on the eradication of cancer. She spent the preceding 15+ years in several healthcare leadership positions — President, Cardinal Health Consulting Services, 2000-2003;Adtalem’s President and CEO CurranCare, from 1995 until its acquisition by Cardinal Health in 2000; Vice Chairman/National Director for Patient Care Services, APM Incorporated, 1990-1995; and Vice President for HealthCare Management and Patient Care Services, American Hospital Association, 1985-1989. Prior to 1989, Dr. Curran was the Dean of the College of Nursing at the Medical College of Wisconsin and held professorships at the University of San Francisco and Columbia University. She is a prolific author with over 200 publications and several research programs to her credit. She serves on the boards of several nonprofit organizations and is also a director of Hospira, Inc. Dr. Curran previouslyon our Board in September 2021. Previously, Mr. Beard served as chairman of the board of Silver Cross Hospital and as a director of Volcano, Inc. Dr. Curran received her undergraduate degree in nursing from the University of Wisconsin and her master’s degree in nursing from DePaul University. She also earned her Ed.D in educational psychology from Northern Illinois University and an MBA certificate from Harvard Business School.
Relevant Experience. Dr. Curran has substantial experience as an educator and business leader in healthcare and healthcare consulting, an area that has been of increasing importance to DeVry in recent years.
Daniel Hamburger, age 49
Mr. Hamburger has been the President and Chief Executive Officer of DeVry and a Director since November 2006. He joined DeVry as Executive Vice President in November 2002. From January 2001 to November 2002, he served as Chairman and CEO of an Accenture subsidiary, Indeliq Inc., which developed education technology. Prior to that, Mr. Hamburger served as President of the Internet Commerce division of W.W. Grainger, Inc. Prior to that Mr. Hamburger was employed at R.R. Donnelley and at Bain & Co. Mr. Hamburger received his undergraduate and master’s degrees in industrial/operations engineering from the University of Michigan and his master’s degree in business administration from Harvard Business School.
Relevant Experience. Mr. Hamburger’s role as Chief Executive Officer of DeVry, which gives him deep and current knowledge of DeVry’s academic and business operations and strategy, makes him an essential member of the Board.
Ronald L. Taylor, age 69
Mr. Taylor has been a Director of DeVry since November 1987. In July 2004 he became DeVry’s Chief Executive Officer and served in that capacity until November 2006. He has served as a Senior Advisor to DeVry since November 2006. From August 1987 until his November 2002 appointment as Co-Chief Executive Officer, he was President and Chief Operating Officer. In 1973 Mr. Taylor co-founded Keller Graduate School of Management and was its President andAdtalem’s Chief Operating Officer from 1981 to 1987 and its Chief Operating Officer from 1973 until 1981. Mr. Taylor is a consultant/evaluator(COO), responsible for the Higher Learning Commissionvision, leadership, and isfinancial performance of Adtalem’s former Financial Services vertical. In addition, Mr. Beard led the company’s strategy, corporate development, government and regulatory affairs, investor relations, communications and civic engagement activities and mobilized a variety of operational and corporate initiatives to accelerate Adtalem’s global performance.
Prior to taking on the responsibility of COO in 2019 and responsibility for the former Financial Services vertical in 2020, Mr. Beard served as Senior Vice President, General Counsel and Corporate Secretary in 2018.
Prior to Adtalem, Mr. Beard was executive vice president, chief administrative officer and general counsel of Heidrick & Struggles International, Inc. (NASDAQ:HSII), where he directed global legal operations for the company and oversaw a variety of enterprise-level functions including strategy and corporate development.
Prior to joining Heidrick & Struggles, Mr. Beard was in private practice with Schiff Hardin, LLP in Chicago, where he was a member of the Board of Trusteesfirm’s corporate and securities group, advising public and private companies in mergers and acquisitions, corporate finance and corporate governance matters.
Mr. Beard began his legal career as a law clerk for the Honorable Frank Sullivan, Jr. (ret.), associate justice of the North Central AssociationIndiana Supreme Court.
Mr. Beard has been active in a variety of Collegescommunity and Schools. Mr. Taylor received his undergraduate degree, cum laude, in governmentcivic matters and international relations from Harvard University, and his master’s degree in business administration from Stanford University.
Relevant Experience. Mr. Taylor’s experience as a co-founder, long-serving Director and senior executive of DeVry, including several years as co- or sole Chief Executive Officer, give him a deep understanding of DeVry, a broad knowledge of the education marketplace and a historical perspective on its development. His role as the first and only person from a private-sector university to servecurrently serves on the board of the Higher Learning Commission gives him unique experience in the accreditation process.venture philanthropy fund, A Better Chicago.
INCUMBENT DIRECTORS
CLASS II — TERM EXPIRES 2014
Christopher B. Begley, age 61
Mr. Begley has been a Director of DeVry since November 2011. From May 2007 to January 2012, Mr. Begley served as executive chairman of the board of Hospira, Inc., a leading global hospital products company. He was Hospira’s founding CEO, holding that position from 2004 until April 2011. Prior to joining Hospira, Mr. Begley served in a variety of roles at Abbott Laboratories between 1986 and 2004, most recently as president of Abbott’s Hospital Products Division. Before joining Abbott, Mr. Begley was vice president of marketing for the V. Mueller Division of American Hospital Supply Corp. Mr. Begley earned a bachelor’s degree from Western Illinois University and a master’s degree in business administration from Northern Illinois University. Mr. Begley currently serves as chairman of the board of Hillshire Brands Co., and on the board of Zimmer Holdings Inc.
Relevant Experience. Mr. Begley brings to the Board his substantial experience as a senior executive in the healthcare industry and an awareness of policies and regulations affecting the industry, an area of increasing importance to DeVry.
David S. Brown, age 72
Mr. Brown has been a Director of DeVry since November 1987 and was a founding shareholder and director of Keller Graduate School of Management from 1973 to 1987. A practicing attorney until 1998, Mr. Brown, was a partner in the Chicago law firm of McBride and Baker from 1972 to 1979 and served as General Counsel of the U.S. Office of Minority Business Enterprise from 1971 to 1972. From 1980 to 1996, Mr. Brown was employed by United Laboratories, Inc., a manufacturer and seller of specialty chemicals, most recently as Executive Vice President, Chief Financial Officer and General Counsel. Mr. BrownBeard received his undergraduate degree in political science and philosophy from Stanford University and his LLD degree from Stanford University Law School in 1965. Mr. Brown previously served on the Executive Committee and Finance Committee of DeVry and chaired the DeVry Audit Committee for a period of seven years.
Relevant Experience. Mr. Brown’s role as a founding shareholder and long-serving Director give him a historical perspective on DeVry’s operations, to which he adds his experience as a practicing attorney and senior business executive. As an attorney, Mr. Brown specialized in business practice and business conflict resolution.
Fernando Ruiz, age 57
Mr. Ruiz has been a Director of DeVry since November 2005. He has been employed by The Dow Chemical Company, a specialty chemical, advanced materials, agroscience and plastics company, since 1980. He was appointed Vice President and Treasurer of The Dow Chemical Company in 2001 and promoted to Corporate Vice President and Treasurer in 2005. Mr. Ruiz served as Assistant Treasurer of The Dow Chemical Company from 1996-2001. Mr. Ruiz serves as a director for a number of Dow subsidiaries including Dow Financial Services Inc. and Dow Credit Corporation and serves as President and CEO of Liana Ltd., a holding company for Dow’s insurance subsidiaries, and Dorinco Reinsurance Company. Mr. Ruiz received his undergraduate degree in economics from the Catholic University of Quito, Ecuador. Mr. Ruiz currently serves as a director of the Federal Reserve Bank of Chicago.
Relevant Experience. Mr. Ruiz’s experience as a senior executive with a leading global manufacturer, his significant experience in international matters and his deep experience in finance, add both a global perspective and particular corporate finance knowledge to the Board’s decision-making process.
Lisa W. Wardell, age 44
Ms. Wardell has been a Director of DeVry since November 2008 and has been the Executive Vice President and Chief Operating Officer of The RLJ Companies (“RLJ”), a diversified holding company with portfolio companies in the financial services, asset management, real estate, hospitality, professional sports, film production, and gaming industries since 2004. In her role at RLJ, Ms. Wardell has closed $40 million in automotive dealership acquisitions, served as the primary RLJ fundraiser for a $610 million money management fund and managed a hotel development project in West Africa. Ms. Wardell is also a director of RLJ Entertainment, Inc. Prior to joining RLJ, Ms. Wardell was a Principal at Katalyst Venture Partners, a private equity firm that invested in start-up technology companies in the media and communications industries from 1999 to 2003. From 1998 to 1999, Ms. Wardell worked as a senior consultant for Accenture, a global management consulting, technology services and outsourcing company, in the company’s communications and technology strategic services practice. From 1994-1996, Ms. Wardell was an attorney with the Federal Communications Commission where she worked in the commercial wireless division, spectrum auction and allocations, and PCS and cellular. Ms. Wardell received her undergraduate degree in political science from Vassar College, her J.D. degree from Stanford University, and her master’s degree in finance from the Wharton School of Business at the University of Pennsylvania. In addition to her work at RLJ, Ms. Wardell serves on the board and is Chair of the audit committee of Christopher & Banks Corporation.
Relevant Experience. Ms. Wardell’s experience as a senior business executive in private equity, operations and strategy and financial analysis, including mergers and acquisitions, together with her previous experience with a federal regulatory agency, give her important perspectives on the issues that come before the Board. These include business, strategic, financial and regulatory matters. Her experience also qualifies her to serve as an audit committee financial expert.
CLASS III — TERM EXPIRES 2015
Darren R. Huston, age 47
Mr. Huston has been a Director since November 2009. In September 2011, he was appointed to the position of Chief Executive Officer of Booking.com, a global leader in online travel accommodations, based in Amsterdam, and a subsidiary of the Priceline Group. He previously served at Microsoft Corporation, a software products and services company. His positions at Microsoft included Corporate Vice President of Global Consumer & Online (2008 to 2011), President & Chief Executive Officer of Microsoft Japan (2005 to 2008), and Corporate Vice President, US Small and Mid-Market Solutions and Partners (2003 to 2005). Prior to joining Microsoft, Mr. Huston was a Senior Vice President at Starbucks Coffee Company, in charge of acquisitions, alliances and new product development from 1998 through 2003. Mr. Huston was an executive in McKinsey & Company’s marketing and strategy practice from 1994 through 1998. From 1990 to 1992, Mr. Huston was an economic advisor for the Government of Canada’s Department of Finance. Mr. Huston earned his bachelor’s degree from Trent University in Peterborough, Ontario, his master’s in economics from the University of British Columbia,Illinois at Urbana-Champaign and his master’s in business administrationjuris doctor degree from Harvard University Graduatethe Maurer School of Business.Law at Indiana University.
Relevant Experience.
Mr. Huston brings toBeard’s experience as our CEO and his prior service as Adtalem’s COO and General Counsel give him deep knowledge of Adtalem’s operations and strategy. Mr. Beard’s experience in refining Adtalem’s portfolio strategy, executing the Board a backgroundDeVry University, Carrington College and Adtalem Brazil divestitures, and spearheading the acquisition of Walden University, coupled with his success in marketing and strategic planning, gained in senior business leadership roles with Microsoft and Starbucks and inleading the consulting business. His familiarity with the uses of information technology and global leadership experience also add important perspectives.
William T. Keevan, age 67
Mr. Keevan has been a Director of DeVry since November 2005. He has more than 40 years of financial statement auditing, consulting, internal investigation, litigation support, regulatory compliance and corporate governance experience. He was with Arthur Andersen LLP for 28 years, including 20 years (from 1982 to 2002) as a partner in a number of senior management positions. From June 2002 to December 2006, Mr. Keevan was a Senior Managing Director of Navigant Consulting Inc., a specialty consulting firm. In December 2006, Mr. Keevan joined Kroll Inc., a leading international risk consulting firm, where he was a Senior Managing Director and the U.S. leader of the firm’s Complex Accounting, Disputes and Regulatory Compliance Services practice. In September 2010, subsequent to the sale of Kroll Inc. by Marsh & McLennan, Mr. Keevan became an independent consultant and Senior Advisor to Chess Consulting LLC, the successor to the practice he led at Kroll. Early in his career, Mr. Keevan spent five years in private industry in various financial management positions involving SEC reporting, financial analysis, cost accounting and merger and acquisition due diligence. He has been recognized in multiple forums as an expert witness on financial accounting, cost accounting, auditing and regulatory compliance matters. His clients have included companies in a wide range of industries, many of them doing substantial business with the U.S. and foreign governments and therefore subject to unique business and regulatory risks. Mr. Keevan received his undergraduate degree in accounting from the University of Akron in December 1968. He is a CPA, is licensed to practice in Virginia, Maryland and the District of Columbia and is registered in Illinois. He is also a Board Leadership Fellow of the National Association of Corporate Directors and a Chartered Global Management Accountant (CGMA). In November 2012, Mr. Keevan was elected to the Board of Trustees of the Center for Strategic & International Studies (CSIS), an independent not-for-profit organization and one of the world’s preeminent public policy institutions on foreign policy and national security issues and global challenges, such as health and energy. Mr. Keevan previously served on the board of SRA International, Inc., which was acquired by a private equity firm in 2011.
Relevant Experience. Mr. Keevan has a broad background in financial accounting and auditing, risk analysis, risk management, regulatory compliance and corporate governance, gained in senior leadership positions with several leading global business organizations and in other board positions. His experience also qualifies him to serve as an audit committee financial expert.
Lyle Logan, age 54
Mr. Logan has been a Director of DeVry since November 2007. Mr. Logan has been Executive Vice President and Managing Director, Global Financial Institutions Group (the asset management arm of Northern Trust Corporation, a financial holding company) of The Northern Trust Company since 2005. He previously served as Senior Vice President and Head of Chicago Private Banking within the Personal Financial Services business unitsegment prior to its divestiture, have played an integral role in positioning Adtalem for long-term growth.
Proposal No. 1 Election of America. Mr. Logan received his undergraduate degree in accounting and economics from Florida A&M University and his master’s degree in finance from the University of Chicago Graduate School of Business.Directors
Relevant Experience. Mr. Logan’s experience in senior leadership positions with leading banking and investment management organizations adds perspective and an understanding of global investment markets to the Board’s consideration of finance and investment management matters.
Alan G. Merten, age 71
Dr. Merten has been a Director of DeVry since November 2012. Dr. Merten was the President of George Mason University from 1996 until June 2012. Prior to coming to George Mason University, Dr. Merten was the dean of the Johnson Graduate School of Management of Cornell University from 1989 to 1996. He was dean of the College of Business Administration at the University of Florida from 1986 to 1989, where he also served as a professor of information systems. From 1970 to 1986, he was at the University of Michigan, first as an assistant professor of industrial and operations engineering, and ultimately rising to the rank of associate dean in the Michigan Business School where he was responsible for executive education and computing services. Dr. Merten has held academic appointments in both engineering and business, and academic and business positions in Hungary and France. He has served on business and government councils and committees, holding several leadership roles. Dr. Merten was chair of the National Research Council’s Committee on Workforce Needs in Information Technology and a member of the Virginia Governor’s Blue Ribbon Commission on Higher Education. Dr. Merten holds a B.S. in Mathematics from the University of Wisconsin, an M.S. in Computer Science from Stanford University and a Ph.D. in Computer Science from the University of Wisconsin. Dr. Merten currently serves as a trustee of First Potomac Real Estate Investment Trust, director emeritus of Cardinal Financial Corporation, and as a member of the Legg Mason Fixed Income Mutual Funds board.
Relevant Experience. Dr. Merten’s experience as the President of a leading university, prior academic leadership of several leading business schools, along with his accomplishments as a scholar and instructor, bring a strong and knowledgeable academic, operational, and strategic perspective to the Board’s deliberations.
BOARD OF DIRECTORS AND BOARD COMMITTEE INFORMATION
Summary
Director Since | Principal Occupation | Experience/ Qualifications | Committee Memberships | Other Public Company Boards | ||||||||||||||||||||||||||||||
| Name | Age | Independent | AUD | ACA | COM | NG | ||||||||||||||||||||||||||||
Christopher B. Begley | 61 | 2011 | Founder and former Chairman and CEO, Hospira, Inc. | •Management •Leadership •Strategic vision | x | x | x | •Hillshire Brands Co. •Zimmer Holdings Inc. | ||||||||||||||||||||||||||
David S. Brown | 72 | 1987 | Attorney-at-Law (Retired) | •Management •Leadership •Strategic vision •Finance •Accounting | x | x | x | |||||||||||||||||||||||||||
Connie R. Curran | 66 | 2003 | President, Curran and | •Academic •Management •Leadership •Strategic vision •Industry | x | x | c | •Hospira Inc. | ||||||||||||||||||||||||||
Daniel Hamburger | 49 | 2006 | President and CEO, DeVry Inc. | •Management •Leadership •Industry •Strategic vision | ||||||||||||||||||||||||||||||
Darren R. Huston | 47 | 2009 | CEO, Booking.com | •Management •Leadership •Strategic vision | x | x | x | |||||||||||||||||||||||||||
William T. Keevan | 67 | 2005 | Senior Advisor, Chess Consulting | •Management •Leadership •Strategic vision •Finance •Accounting •Regulatory | x | c | x | |||||||||||||||||||||||||||
Lyle Logan | 54 | 2007 | Executive Vice Northern Trust Corporation | •Management •Leadership •Strategic vision •Finance •Accounting | x | x | c | |||||||||||||||||||||||||||
Alan G. Merten | 71 | 2012 | Former President, George Mason University | •Academic •Management •Leadership •Strategic vision •Industry | x | c | x | •Cardinal Financial Corporation •First Potomac Realty Investment Trust | ||||||||||||||||||||||||||
Fernando Ruiz | 57 | 2005 | Corporate Vice The Dow Chemical | •Management •Leadership •Strategic vision •Finance •Accounting | x | x | x | |||||||||||||||||||||||||||
Harold T. Shapiro | 78 | 2001 | President Emeritus Princeton University | •Academic •Management •Leadership •Strategic vision •Industry •Accreditation | x | |||||||||||||||||||||||||||||
Ronald L. Taylor | 69 | 1987 | Senior Advisor, DeVry Inc. | •Industry •Management •Leadership •Strategic vision •Accreditation | x | |||||||||||||||||||||||||||||
Lisa W. Wardell | 44 | 2008 | Executive Vice The RLJ Companies | •Management •Leadership •Strategic vision •Finance •Accounting •Regulatory | x | x | x | •Christopher & Banks Corporation •RLJ Entertainment, Inc. | ||||||||||||||||||||||||||
| William W. Burke,Independent Age: 64 Committees: | (Chair) Compensation | ||||||||||||
| ||||||||||||||
Mr. Burke has been a director of Adtalem since January 2017. He served as our Lead Independent Director from July 2019 through November 2022. Since November 2015, Mr. Burke has served as President of Austin Highlands Advisors, LLC, a provider of corporate advisory services. He served as Executive Vice President & Chief Financial Officer of IDEV Technologies, a peripheral vascular devices company, from November 2009 until the company was acquired by Abbott Laboratories in August 2013. From August 2004 to December 2007, he served as Executive Vice President & Chief Financial Officer of ReAble Therapeutics, a diversified orthopedic device company which was sold to The Blackstone Group in a going private transaction in 2006 and subsequently merged with DJO Incorporated in November 2007. Mr. Burke remained with ReAble Therapeutics until June 2008. From 2001 to 2004, he served as Chief Financial Officer of Cholestech Corporation, a medical diagnostic products company. Mr. Burke received his bachelor’s degree in Finance from The University of Texas at Austin and an MBA from The Wharton School of the University of Pennsylvania. Board Service Mr. Burke has served on numerous public and private company boards including serving as a board chairman and a lead independent director. Since June 2022, he has served on the board of directors of Ceribell Inc., a privately-held medical technology company. Mr. Burke currently serves as the chair of Ceribell’s audit committee. He has served on the board of Tactile Systems Technology, Inc. (Nasdaq: TCMD) since 2015 and currently serves as Chairman of the Board. He previously served on the board of Invuity, Inc. (acquired by Stryker Corp. in 2018), LDR Holding Corporation (acquired by Zimmer Biomet in July 2016), and Medical Action Industries (acquired by Owens & Minor in October 2014). Relevant Experience Mr. Burke’s has significant experience as a senior executive and as a board member of multiple public companies, including growth-oriented healthcare technology companies. His extensive understanding of culture, financing, and operating strategy, enhances the Board’s corporate governance and strategy capabilities. | ||||||||||||||
Adtalem Global Education Inc. | 2023 Proxy Statement 16 |
| 64 | ||||||||||||||
| Finance (Chair) Compensation | |||||||||||||||
| Mayur Gupta,Independent Age: 46 Committees: Academic Quality External Relations | ||||||||||||||
Career Highlights Mr. Gupta has been director of Adtalem since August 2021. Mr. Gupta has been the Chief Marketing Officer for Kraken, Inc., a U.S.-based cryptocurrency exchange and bank, since April 2022. Previously, he was the Chief Marketing & Strategy Officer for Gannett Co., Inc., a subscription-led and digitally focused media and marketing solutions company (“Gannett”). Mr. Gupta was responsible for leading the transformation and growth of Gannett from the largest news media company to a content subscription platform. Mr. Gupta joined Gannett in September 2020. Mr. Gupta served on the board of Gannett from October 2019 until September 2020 when he stepped down from the board to become the Chief Marketing & Strategy Officer. Prior to joining Gannett, Mr. Gupta served as the Chief Marketing Officer for Freshly, a growing food-technology company, from January 2019 until September 2020, where he oversaw all consumer-faced marketing, including driving growth, building the brand, and enhancing the company’s consumer insights. Before joining Freshly, Mr. Gupta led digital initiatives at several companies, including from October 2016 to January 2019 as Vice President, Growth and Marketing at Spotify, the media services provider, and from August 2015 to September 2016 as Executive Vice President, Chief Marketing Officer and earlier as Senior Vice President, Omni-Channel Consumer Marketing and Head of Digital Platforms at Healthgrades, a healthcare scheduling company. From August 2012 to July 2015, Mr. Gupta was the first Chief Marketing Technologist at Kimberly-Clark, one of the largest consumer goods companies. For the preceding 12-years, from 2001 to 2012, he was a Technology Leader at SapientNitro (now part of Publicis). Mr. Gupta was named to Forbes World’s Most Influential Chief Marketing Officers list for 2021. Relevant Experience Mr. Gupta’s expertise across the digital marketing space, in combination with his background in technology, is helping the Board drive the Company’s next phase of growth and impact. Mr. Gupta’s ability to implement data-driven strategies to drive business growth and increase shareholder value will assist the Company in developing its own growth plans. | |||||||||||||||
Board
Adtalem Global Education Inc. | 2023 Proxy Statement 17 |
| Donna J. Hrinak, Independent Age: 72 Committees: Nominating & Governance |
Career Highlights Ms. Hrinak has been a director of Adtalem since October 2018. Ms. Hrinak served as Senior Vice President, Corporate Affairs, Royal Caribbean Group from 2020 through 2023. Previously she served as President of Boeing Latin America (2011-2020) where she opened Boeing’s first three offices in the region and oversaw all aspects of operations, from commercial and defense product sales to research and technology. Prior to Boeing, she served as Vice President Global Public Policy and Governmental Affairs/Vice President for Public Policy at PepsiCo (2008-2011) and also held a role at Kraft Foods (2006-2008), where she managed the Latin American and European Corporate Affairs teams. Prior to that, she served as a Senior Counselor for Trade and Competition at the law firm of Steel Hector & Davis and held a role with the strategic advisory firm of Kissinger McLarty Associates. Before entering the private sector, Ms. Hrinak was a career officer in the U.S. Foreign Service, and served as U.S. Ambassador to Brazil, Venezuela, Bolivia, and the Dominican Republic, as well as Deputy Assistant Secretary in the State Department. She holds a bachelor’s degree in Multidisciplinary Social Science from Michigan State University and also attended The George Washington University and the University of Notre Dame School of Law. Relevant Experience Ms. Hrinak’s extensive experience at a senior level in both the public and private sectors overseeing complex multi-cultural organizations and regulatory policy brings insight to the Board directly applicable to Adtalem’s regulatory environment and the international operations of its institutions. | |
Adtalem Global Education Inc. | 2023 Proxy Statement 18 |
Proposal No. 1 Election of Directors held eleven meetings during fiscal year 2013, consisting
| Georgette Kiser,Independent Age: 55 Committees: |
Career Highlights Ms. Kiser has been a director of Adtalem since May 2018. Ms. Kiser is an operating executive/independent advisor who helps lead due diligence and technical strategies across various private equity and venture capital firms. Previously, she was managing director and chief information officer (CIO) at The Carlyle Group, responsible for leading the firm’s global technology and solutions organization and driving IT strategies. Prior to her role at The Carlyle Group, she was in various executive roles at T. Rowe Price from 1996 to 2015, including Vice President and Head of Enterprise Solutions and Capabilities. She was a consultant and Software Engineer at Martin Marietta Management Data Systems from 1993 to 1995, and a Software Design Engineer in the Aerospace Division of the General Electric Company from 1989 to 1993. Ms. Kiser received a bachelor’s degree in Mathematics with a concentration in Computer Science from the University of Maryland, a M.S. in Mathematics from Villanova University, and an MBA from the University of Baltimore. Board Service Since 2019, Ms. Kiser has served on the boards of Aflac (NYSE: AFL), a leading supplemental insurer, Jacobs (NYSE: JEC), a leading, global professional services company, and NCR Corporation (NYSE: NCR), an American software, professional services, consulting and tech company. She serves on the audit and risk committee and compensation committee for Aflac, the compensation committee and nominating and corporate governance committee for Jacobs, and on the governance committee and chair of the risk committee at NCR. Relevant Experience Ms. Kiser’s experience in information technology at the senior leadership level in organizations with an international reach brings expertise to Adtalem which will enhance both the Board’s oversight of its business as well as Adtalem’s internal technology matters. | |
Adtalem Global Education Inc. | 2023 Proxy Statement 19 |
Proposal No. 1 Election of the committees on which they serve and the Annual MeetingDirectors
| Liam Krehbiel,Independent Age: 47 Committees: Audit and Finance |
Career Highlights Mr. Krehbiel has been a director of Adtalem since June 2022. In 2021, Mr. Krehbiel founded Topography Hospitality, LLC, and has served as its Chief Executive Officer since then. He is also the co-managing partner of Ballyfin Demesne, a luxury hotel in Ireland, which opened in 2011. In 2010, Mr. Krehbiel founded A Better Chicago, a not-for-profit corporation and venture philanthropy fund, and currently serves as Chair of its Board. A Better Chicago's mission is to build a more equitable city for Chicago's young people and future generations. Mr. Krehbiel served as the Chief Executive Officer of A Better Chicago from 2010 until May 2019. From 2007 to 2010, Mr. Krehbiel was a management consultant at Bain and Company. Prior to joining Bain, Mr. Krehbiel worked with the Edna McConnell Clark Foundation in New York. Mr. Krehbiel received a Master of Business Administration degree with a major in business administration and a double concentration in finance and marketing from Northwestern University's Kellogg School of Management. He received his Bachelor of Arts degree from Dartmouth College. Board Service In addition to serving as the Chair of A Better Chicago, Mr. Krehbiel is a director of the Civic Consulting Alliance and a trustee of The Civic Federation. Relevant Experience Mr. Krehbiel’s commitment to improving equity in education for underserved communities closely aligns with Adtalem’s mission of expanding access to education and improving health equity. Mr. Krehbiel has spent most of his career as a venture philanthropist dramatically improving educational opportunities for low-income students by funding and scaling the most effective schools and programs in the Chicago area. This experience adds depth and insight as Adtalem continues to focus on serving its students and employers in the growing healthcare education industry. | |
Adtalem Global Education Inc. | 2023 Proxy Statement 20 |
Proposal No. 1 Election of Directors
| Michael W. Malafronte, Independent Senior Advisor, Derby Copeland Capital Age: 49 |
Career Highlights Mr. Malafronte has been a director of Adtalem since June 2016. Mr. Malafronte has served as a Senior Advisor to Derby Copeland Capital since September 2022. Derby Copeland is a private equity firm that specializes in opportunistic real estate related debt financing and equity investment. Mr. Malafronte is a Founding Partner of International Value Advisers, LLC (“IVA”) and served as Managing Partner for 13 years until December 2020. He was responsible for overseeing all aspects of IVA, including company strategy and managing resources. He also served as President of IVA Funds. Prior to founding IVA in 2007, Mr. Malafronte was a Senior Vice President at Arnhold & S. Bleichroeder Advisers, LLC where he worked for two years as a senior analyst for the First Eagle Funds. There he worked under Charles de Vaulx and Jean-Marie Eveillard within the Global Value Group for the value funds, including the First Eagle Overseas, Global, U.S. Value Funds as well as the offshore funds, inclusive of the Sofire Fund Ltd. Similarly, he was responsible for covering the oil and gas, media, real estate, financial services, and retail industries on a global basis, as well as companies within the United Kingdom, Germany, and Japan. Moreover, Mr. Malafronte was responsible for covering the larger names within the portfolio such as Pargesa Holdings, ConocoPhillips, Petroleo Brasileiro, SK Corp., News Corp., Dow Jones, and Comcast. Prior to the First Eagle Funds, Mr. Malafronte worked for nine years as a Portfolio Manager at Oppenheimer & Close, a dually-registered broker dealer and investment adviser; an adviser on three domestic hedge funds, one offshore partnership and a registered investment adviser and broker dealer. While at Oppenheimer & Close, Mr. Malafronte assisted in the launch of a domestic hedge fund in 1996 and an offshore partnership in 1998. Mr. Malafronte was responsible for all facets of portfolio management for the investment partnerships, including idea generation, in-depth research, and stock selection. In addition, he was also responsible for hiring and training both operations staff and research analysts. Mr. Malafronte earned his bachelor’s degree in Finance from Babson College. Board Service Mr. Malafronte has previously served on the boards of two publicly traded companies: Bresler & Reiner Inc. (2002-2008) and Century Realty Trust (2005-2006). Relevant Experience Mr. Malafronte’s experience as a financial analyst covering institutions globally, and as a founder of a global investment firm, provides the Board with a firm understanding of Adtalem’s shareholders’ perspective and deeply informs Adtalem’s financial planning. | |
Adtalem Global Education Inc. | 2023 Proxy Statement 21 |
Table of the committees on which they served. AllContents
Proposal No. 1 Election of the Directors attended DeVry’s 2012 Annual Meeting
| Sharon L. O’Keefe, Independent Age: 71 Committees: Compensation |
Career Highlights Ms. O’Keefe served as the President of the University of Chicago Medical Center from February 2011 through July 2020. From April 2009 through February 2011, Ms. O’Keefe served as President of Loyola University Medical Center. Prior to her role at Loyola, she served from July 2002 to April 2009 as Chief Operating Officer for Barnes Jewish Hospital, a member of BJC Healthcare, St. Louis. In addition, Ms. O’Keefe has served in a variety of senior management roles at The Johns Hopkins Hospital, Montefiore Medical Center, University of Maryland Medical System, and Beth Israel Deaconess Medical Center in Boston, a teaching affiliate of Harvard Medical School. She has also served as a healthcare consultant with Ernst & Young. In addition, Ms. O’Keefe has served on the National Institutes of Health Advisory Board for Clinical Research, the Finance Committee of the National Institutes of Health Advisory Board, the Board of Trustees of the Illinois Hospital Association, and an Examiner for the Malcolm Baldrige National Quality Award. Ms. O’Keefe holds a M.S. degree in Nursing from Loyola University of Chicago and a bachelor’s degree in Nursing from Northern Illinois University. Board Service Since March 2022, Ms. O’Keefe has served on the board of directors of Conva Tec Group PLC, a global medical products and technologies company focused on therapies for the management of chronic conditions. From July 2022 to May 2023, Ms. O’Keefe served on the board of directors of Apollo Endosurgery, a medical technology company focused on development of minimally invasive devices for advanced endoscopy therapies. From 2012 until February 2022, Ms. O’Keefe served on the board of directors of Vocera Communications Inc., a provider of communication and clinical workforce solutions, where she was a member of the compensation committee. Ms. O’Keefe previously served on the board of Aviv Reit Inc. from 2013 to 2015. Relevant Experience Ms. O’Keefe’s prior leadership roles at numerous medical centers including the University of Chicago Medical Center and Loyola University of Chicago Medical Center and as a board member of other public companies provide the Board with insights into how Adtalem can best serve the needs of our employer partners and drive superior student outcomes for our healthcare and medical students and graduates. | |
Adtalem Global Education Inc. | 2023 Proxy Statement 22 |
Proposal No. 1 Election of the aggregate total numberDirectors
| Kenneth J. Phelan,Independent Age: 64 Committees: |
Career Highlights Mr. Phelan has been a Senior Advisor at Oliver Wyman Inc., a global management consulting firm, since 2019. Prior to that he served as the first Chief Risk Officer for the U.S. Department of the Treasury (“Treasury”) from 2014 to 2019. As Chief Risk Officer of the Treasury, he was responsible for establishing and building the Treasury’s Office of Risk Management to provide senior Treasury and other administration officials with analysis of key risks including credit, market, liquidity, operational, governance, and reputational risk. From 2018 to 2019, Mr. Phelan also served as Acting Director for the Office of Financial Research, an independent bureau within the Treasury charged with supporting the Financial Stability Oversight Council and conducting research about systemic risk. Prior to joining the Treasury, Mr. Phelan served as the chief risk officer for RBS America from 2011 to 2014, as chief risk officer for Fannie Mae from 2009 to 2011, and as chief risk officer for Wachovia Corporation from 2008 to 2009. Earlier in his career, Mr. Phelan held a variety of senior risk roles at JPMorgan Chase, UBS, and Credit Suisse. Mr. Phelan holds a bachelor’s degree in Business Administration and Finance from Old Dominion University, a M.S. in Economics from Trinity College, and a J.D. from Villanova University. Board Service Since 2019 Mr. Phelan has served as a director of Huntington Bancshares, Inc. (NASDAQ. HBAN), a regional bank holding company whose primary subsidiary is The Huntington National Bank. Mr. Phelan is the Chair of Huntington’s risk committee and serves on its human resources and compensation committee. Relevant Experience Mr. Phelan possesses broad risk oversight expertise and risk management experience. His knowledge and experience strengthen the Board’s governance and risk oversight. | |
Adtalem Global Education Inc. | 2023 Proxy Statement 23 |
| Lisa W. Wardell Age: 54 Committees: |
Career Highlights Ms. Wardell has been a director of Adtalem since November 2008. She is a business executive with more than 25 years of experience managing business strategy, operations, finance, and mergers and acquisitions, while driving shareholder value, stakeholder engagement, and company mission. After a successful five-year run as Adtalem’s president and CEO (2016-2019) she transitioned to CEO and Chairman (2019-2021) and Executive Chairman (2021-2022). Through her commitment to high performance and positive social impact, Ms. Wardell’s leadership has resulted in superior outcomes for Adtalem’s students and significant value creation for shareholders and positioned the company for long-term growth. Under her leadership, gender and ethnic diversity increased at the Adtalem Board to 67%. Ms. Wardell has also led the higher education sector in implementing new standards in transparency and financial literacy, and in cultivating quality partnerships to fill critical global workforce needs. Prior to Adtalem, Ms. Wardell was executive vice president and chief operating officer for The RLJ Companies. During her tenure at RLJ, Ms. Wardell managed acquisitions and executed the formation of RML Automotive, a dealership network spanning seven states with over $1 billion in annual revenues. She also worked extensively in the media, entertainment, sports, gaming, and hotel industries, which included assisting with the founding and managing of Our Stories Films Studio and managing the now Charlotte Hornets (previously Charlotte Bobcats). Ms. Wardell also served on the board of the NBAPA, Inc., the for-profit portion of the NBA Players Association, from 2018 to 2021. Prior to joining The RLJ Companies, Ms. Wardell was a principal at Katalyst Venture Partners, a private equity firm that invested in start-up technology companies, and a senior consultant at Accenture in the organization’s communication and technology strategic services practice. Ms. Wardell earned her bachelor’s degree from Vassar College and her law degree from Stanford Law School. She earned her MBA in Finance and Entrepreneurial Management from the Wharton School of Business at the University of Pennsylvania. Ms. Wardell has been featured on CNBC and Cheddar as well as in The Wall Street Journal, Washington Post, Business Insider, Black Enterprise, and other publications. Board Service Ms. Wardell serves on the board of American Express (NYSE:AXP). She served on the board of GIII Apparel Group, Ltd. (NasdaqGS:GIII) from March 2022 to June 2023. She serves as a vice chair on the executive committee of The Business Council, and as a vice chair of the Kennedy Center Corporate Fund. A fierce advocate for diversity and inclusion and access to education at scale across diverse communities, Ms. Wardell also is a member of the board of the Economic Club of Chicago, the Executive Leadership Council, CEO Action for Diversity and Inclusion, and the Fortune CEO Initiative. Relevant Experience Ms. Wardell’s prior roles as CEO and Executive Chairman give her deep knowledge of Adtalem’s academic and business operations and strategy and enhances the Board’s operations. Additionally, her experience as a senior business executive in private equity, operations, and strategy and financial analysis, including mergers and acquisitions, give her important perspectives on the issues that come before the Board, including business, strategic, financial, and regulatory matters. | |
Adtalem Global Education Inc. | 2023 Proxy Statement 24 |
Table of Directors andContents
Proposal No. 1 Election of the committees on which he served as a result of schedule conflicts due to commitments that were disclosed to the DeVry Board before he was nominated for election that pre-existed his appointment to DeVry’s Board of Directors. During fiscal year 2013, the Board met in executive session without employee Directors or other employees present at each regular Board of Directors meeting. Dr. Harold Shapiro presided over these sessions as the non-executive Board Chair.
Director Independence
The Board of Directors has considered whether each Director has any material relationship with DeVry (either directly or as a partner, shareholder or officer of an organization that has a relationship with DeVry) and has otherwise complied with the requirements for independence under the applicable listing standards of the New York Stock Exchange (“NYSE”).
As a result of this review, the Board of Directors affirmatively determined that all of DeVry’s current Directors are “independent” of DeVry and its management within the meaning of the applicable NYSE rules, with the exception of Mr. Taylor and Mr. Hamburger. Mr. Taylor is considered an inside Director because of his status as a Senior Advisor to DeVry. Mr. Hamburger is considered an inside Director because of his employment as President and CEO of DeVry.
The Board considered the relationship between DeVry and Northern Trust Corporation, at a subsidiary of which DeVry maintains depository accounts and through which a significant portion of DeVry’s disbursement activity is conducted, because Mr. Logan is Executive Vice President and Managing Director, Global Financial Institutions Group, with Northern Trust Global Investments, a business unit of Northern Trust Corporation. In fiscal year 2013, DeVry incurred approximately $1.1 million in fees to Northern Trust Corporation, which were partially offset against compensating balance credits earned on an average monthly outstanding balance of approximately $30.4 million. The Board of Directors concluded, after considering that the relationship predates Mr. Logan’s joining the Board, that Mr. Logan had no involvement in the transactions, the lack of materiality of the transactions to DeVry and to Northern Trust Corporation, and the fact that the terms of the transactions are not preferential either to DeVry or to Northern Trust Corporation, that the relationship is not a material one for purposes of the NYSE listing standards and would not influence Mr. Logan’s actions or decisions as a Director of DeVry.
Board Leadership Structure
In accordance with DeVry’s Corporate Governance Principles, the Board believes that it makes its selection of the Board Chair and the CEO in the way that it deems best for the organization and its shareholders and assesses this determination on an ongoing basis. The Board therefore has no specific policy with respect to the separation of the offices of Board Chair and CEO. The Board believes that this issue should be part of the succession planning process and that it is in the best interests of DeVry and its shareholders for the Board to make a determination regarding this issue when it annually elects the Board Chair. Since 2004, the offices of Board Chair and CEO have been held by different individuals, with the Board Chair currently being Dr. Shapiro, an independent Director. The Board has appointed Dr. Curran, an independent director, to replace Dr. Shapiro as the Board Chair effective at the 2013 Annual Meeting. The Board believes that the existing leadership structure currently serves DeVry and its shareholders well.
Board Committees
The Board has four standing committees: Academic, Audit and Finance, Compensation, and Nominating and Governance. During fiscal year 2013, the Board combined the Audit and Finance Committees and eliminated
the External Relations Committee, reserving its responsibilities for the full Board. Current copies of the charters of each of these committees and a current copy of DeVry’s Corporate Governance Principles are available in print from the Secretary of DeVry, 3005 Highland Parkway, Downers Grove, IL 60515-5799, to any shareholder upon written request and can also be found on DeVry’s website, www.devryinc.com. Only Directors who meet the NYSE listing standards definition of “independent” for purposes of determining Board independence are appointed to the Nominating and Governance and Compensation Committees. Only Directors who meet these standards and the additional NYSE listing standards and the Securities and Exchange Commission definitions of “independent” for purposes of determining Audit and Finance Committee independence are appointed to the Audit and Finance Committee.
Academic Committee. Directors Alan Merten (Chair), Connie R. Curran, Darren R. Huston, Ronald L. Taylor and Lisa W. Wardell serve as members of DeVry’s Academic Committee, which was established to assure that the academic perspective is heard and represented at the highest policy-setting level and incorporated in all of DeVry’s activities and operations. The purpose of the Committee, which met three times in fiscal year 2013, is to support improvement in academic quality by providing oversight of DeVry’s academic policy and input to the Board and management regarding academic activities. The Committee reviews the academic program, policies and practices of DeVry’s institutions. Specifically, the Academic Committee evaluates the academic quality and assessment process and evaluates curriculum and programs, offering recommendations for improvement. The Committee also has oversight responsibility for risks and exposures related to academic quality, including accreditation, curriculum development and delivery, student persistence and outcomes.
Audit and Finance Committee. Directors William T. Keevan (Chair), David S. Brown, Darren R. Huston, Fernando Ruiz and Lisa W. Wardell serve as members of the Audit and Finance Committee, which was established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act. The Committee met eleven times in fiscal year 2013. The Board of Directors has determined that all of the members of the Audit and Finance Committee are “independent” as required by the applicable listing standards of the NYSE and by the applicable rules and regulations issued by the Securities and Exchange Commission. The Board determined that the Audit and Finance Committee has two “audit committee financial experts” serving on that Committee; namely, William T. Keevan, whose business background may be found on page 7 of this Proxy Statement, and Lisa W. Wardell, whose business background may be found on page 6 of this Proxy Statement.
The principal duties of the Audit and Finance Committee include:
Monitoring DeVry’s financial reporting processes, including its internal control systems;
DIRECTOR NOMINATING PROCESS
Selecting DeVry’s independent registered public accounting firm, subject to ratification by the shareholders;
Evaluating the independent registered public accounting firm’s independence;
Monitoring the scope, approach and results of the annual audits and quarterly reviews of financial statements and discussing the results of those audits and reviews with management and the independent registered public accounting firm;
Overseeing the effectiveness of DeVry’s internal audit function and overall risk management processes;
Discussing with management and the independent registered public accounting firm the nature and effectiveness of DeVry’s internal control systems; and
Reviewing and recommending to the Board DeVry’s financing policies and actions related to investment, capital structure and financing strategies.
The Committee also has oversight responsibility for risks and exposures relating to the adequacy and effectiveness of the accounting, information technology, and financial controls, including DeVry’s policies and procedures to assess, monitor and manage exposure to risk (business and financial), and the steps management has taken with respect thereto; DeVry’s adherence to legal, regulatory and ethics compliance programs; enterprise-wide risk management; and DeVry’s capital structure, debt, investments and foreign exchange. Additional details about the Committee’s activities are spelled out in the Committee’s Charter, which was most
recently amended and restated by the Board of Directors on August 21, 2013. The report of the Audit and Finance Committee appears on page 44 of this Proxy Statement.
Compensation Committee. Directors Connie R. Curran (Chair), Christopher B. Begley, Lyle Logan, Fernando Ruiz and William T. Keevan serve as members of the Compensation Committee, which held five meetings in fiscal year 2013, consisting of four regular meetings and one special meeting. The Board of Directors has determined that all of the members of the Compensation Committee are “independent” as defined in the applicable NYSE listing standards. The role of the Compensation Committee is discussed below in the section on “Compensation Discussion and Analysis.” The report of the Compensation Committee appears on page 19 of this Proxy Statement.
The principal duties of the Compensation Committee include:
Reviewing eligibility criteria and award guidelines for DeVry’s compensation programs;
Assisting the other Directors, other than DeVry’s CEO (“Non-employee Directors”), in establishing the CEO’s annual goals, objectives and compensation;
Monitoring and evaluating matters relating to DeVry’s compensation structure;
Retaining independent compensation consultants to advise the Compensation Committee, as it deems appropriate, including approval of the consultants’ fees and other retention terms; and
Periodically reviewing the compensation paid to Non-employee Directors and making recommendations to the Board for any adjustments.
The Compensation Committee also has oversight responsibility for risks and exposures related to colleague compensation programs and management succession planning and assesses whether the organization’s compensation practices encourage risk taking that would have a material adverse effect on DeVry. In connection with fulfilling this responsibility, the Compensation Committee reviewed the structure and elements of DeVry’s compensation program and its policies and practices that manage or mitigate such risk, including, the balance of short-term and long-term incentives, use of multiple performance measures, a multi-year vesting schedule for long-term incentives, the stock ownership guidelines, and the implementation of a claw-back policy. Based on this review, the Committee concluded that DeVry’s compensation program does not encourage excessive risk taking.
Nominating and Governance Committee. Directors Lyle Logan (Chair), Christopher B. Begley, David S. Brown and Alan G. Merten serve as members of DeVry’s Nominating and Governance Committee, which met four times during fiscal year 2013. The Board of Directors has determined that all of the members of the Nominating and Governance Committee are “independent,” as defined in the applicable NYSE listing standards.
The principal duties of the Nominating and Governance Committee include:
Regularly reviewing the skills and experience of the Board as a whole, and evaluating their suitability to serve the current and future interests of DeVry and its colleagues, students and shareholders;
Regularly updating DeVry’s director search criteria to ensure an appropriate Board composition that provides effective governance for the growing, complex, global educational operations of DeVry and the broad spectrum of students that DeVry serves;
Overseeing and conducting a planning process for CEO and director succession and potential related risks;
Overseeing risks and exposures stemming from governance structures and processes as well as Board composition and function;
Proposing a slate of Directors for election by the shareholders at each Annual Meeting and proposing candidates to fill any vacancies on the Board;
Reviewing the Board’s committee structure;
Leading the Board and committee evaluation process;
Reviewing and recommending to the Board a position description detailing responsibilities of and expectations for the Board Chair;
Reviewing and making recommendations to the Board regarding DeVry’s response to shareholder proposals for inclusion in DeVry’s annual Proxy Statement;
Reviewing corporate governance trends for their applicability to DeVry and keeping the Board informed of current best practices in corporate governance;
Monitoring developments in rules and practices applicable to the governance of DeVry institutions and overseeing the activities of the governing bodies of DeVry institutions, keeping the Board advised, as appropriate, with respect thereto;
Monitoring the activities of the DeVry Political Action Committee;
Monitoring the activities of the DeVry Foundation; and
Making regular oral or written reports to the Board.
The Nominating & Governance Committee will consider shareholder recommendations of candidates for Director. Such recommendations should be sent to the Secretary of DeVry. Detailed procedures, including minimum qualifications and specific qualities or skills believed necessary, and the Committee’s process (arising primarily out of DeVry’s By-Laws) for identifying and evaluating nominees, have been codified in DeVry’s policy on the Director Nominating Process, which is described below under the caption “Director Nominating Process and Factors Considered.”
Director Continuing Education
Members of the Board of Directors are encouraged to participate in continuing education and enrichment classes and seminars. During fiscal year 2013, Mr. Keevan participated in various director education programs sponsored by the National Association of Corporate Directors and Corporate Board Member. He also participated in Continuing Professional Education programs sponsored by the American Institute of Certified Public Accountants, Financial Executives International, the American Bar Association and other organizations.
Director Nominating Process and Factors Considered
The Nominating and Governance Committee is responsible for making recommendations of nominees for Directorsdirectors to the Board. The Nominating & Governance Committee’s goal is to put before theour shareholders candidates who, with the incumbent Directors,directors, will constitute a board that has the characteristics necessary to provide effective oversight for theAdtalem’s growing, complex, and global educational operations of DeVry and reflectsreflect the broad spectrum of students that DeVryAdtalem serves. The Nominating & Governance Committee seeks a diversity of thought, background, experience, and other characteristics in its candidates. To this end, DeVry’sAdtalem’s Governance Principles provide that nominees are to be selected on the basis of, among other things, knowledge, experience, skills, expertise, diversity, personal and professional integrity, business judgment, time availability in light of other commitments, absence of conflicts of interest, and such other relevant factors that the Nominating & Governance Committee considers appropriate in the context of the interests of DeVry,Adtalem, its Board, and its shareholders. When considering nominees, the Committee seeks to ensure
BOARD SUCCESSION PLANNING
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We are committed to ensuring that our Board represents the right balance of experience, tenure, independence, age, and diversity. Additionally, our Governance Principles provide that a director is required to retire from our Board when he or she reaches the age of 75, although on the recommendation of the Nominating & Governance Committee, our Board may waive this requirement if it determines that a waiver is in the best interests of Adtalem. Our Nominating & Governance Committee has led the gradual transformation of our Board, with four of our eight independent directors joining the Board since 2020. When considering nominees, the Nominating & Governance Committee intends that the Board as a whole · Leadership · Strategic vision · Business judgment · Management experience · Experience as a CEO or similar function · Experience as a CFO or accounting and finance expertise · Industry knowledge · Healthcare, medical, and related education and services · Education sector and accreditation · Cybersecurity · Mergers, acquisitions, joint ventures, and strategic alliances · Public policy experience, particularly in higher education · Regulatory experience · Human capital management and/or compensation expertise · Global markets and international experience · Corporate governance ● Climate change and climate risk | | BOARD REFRESHMENT | |
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| | ANNUAL PROCESS FOR NOMINATION | |
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| Identify Candidates · Directors · Management · Shareholders · Independent Search Firm |
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| Nominating & Governance Committee Review · Review qualifications · Consider diversity · Examine Board composition and balance · Review independence and potential conflicts · Meet with potential nominees |
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| | 5 | Shareholder Review and Election |
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Adtalem Global Education Inc. | 2023 Proxy Statement 25 |
Academic leadership;
Accounting and finance expertise;
Business judgment;
Management experience;
Industry knowledge;
Accreditation and other specialized knowledge of higher education;
Public policy experience, particularly in higher education;
Leadership;
Strategic vision; and
Regulatory experience.
The Nominating & Governance Committee has implemented this policy by evaluating each prospective Directordirector nominee as well as each incumbent Directordirector on the criteria described above, and in the context of the composition of the full Board, to determine whether shehe or heshe should be nominated to stand for election or re-election.
In screening Directordirector nominees, the Nominating & Governance Committee also reviews potential conflicts of interest, including interlocking directorships and substantial business, civic, and social relationships with other members of the Board that could impair the prospective nominee’s ability to act independently.
Identification and Consideration of New Nominees
In identifying potential nominees and determining which nominees to recommend to the Board, the Nominating & Governance Committee has retained the advisory services of Russell Reynolds Associates, an international executive search firm. In connection with each vacancy, the Nominating & Governance Committee develops a specific set of ideal characteristics for the vacant director position. The Nominating & Governance Committee evaluates director candidates that it has identified and any identified by shareholders on an equal basis using these characteristics and the general considerations identified above.
Shareholder Nominations
The Nominating & Governance Committee will not only consider nominees that it identifies, but will consider nominees submitted by shareholders in accordance with the advance notice process for shareholder nominations identified in the By-Laws. Under this process, all shareholder nominees must be submitted in writing to the attention of Adtalem’s General Counsel and Corporate Secretary, of DeVry Inc., 3005 Highland Parkway, Downers Grove,500 West Monroe Street, Suite 1300, Chicago, IL 60515-5799,60661, not less than 90 days prior to the anniversary of the immediately preceding Annual Meetingannual meeting of Shareholders.shareholders. As a result, a shareholder nomination must be submitted by 5:00 pm Central Daylight Time on August 10, 2024. Such shareholder’s notice shall be signed by the shareholder of record who intends to make the nomination (or his duly authorized proxy) and shall also include, among other things, the following information:
the name and address, as they appear on DeVry’s books, of such shareholder and the beneficial owner or owners, if any, on whose behalf the nomination is made;
the number of shares of DeVry’s Common Stock which are beneficially owned by such shareholder or beneficial owner or owners;
| ● | the name and address, as they appear on Adtalem’s books, of such shareholder and the beneficial owner or owners, if any, on whose behalf the nomination is made; |
| ● | the number of shares of Adtalem’s Common Stock which are beneficially owned by such shareholder or beneficial owner or owners; |
| ● | a representation that such shareholder is a holder of record entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to make the nomination; |
| ● | the name and residence address of the person or persons to be nominated; |
| ● | a description of all arrangements or understandings between such shareholder or beneficial owner or owners and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination is to be made by such shareholder; |
| ● | such other information regarding each nominee proposed by such shareholder as would be required to be disclosed in solicitations of proxies for elections of directors, or would otherwise be required to be disclosed, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including any information that would be required to be included in a proxy statement filed pursuant to Regulation 14A had the nominee been nominated by the Board; and |
| ● | the written consent of each nominee to be named in a proxy statement and to serve as a director if so elected. |
In addition, any shareholder who intends to appearsolicit proxies in person or by proxysupport of director nominees other than our nominees at the meeting2024 Annual Meeting of Shareholders, in order to makecomply with the nomination;
SEC’s universal proxy rules, must provide notice no later than September 9, 2024 to our Corporate Secretary (at the name and residencesame address of the person or persons to be nominated;
a description ofpreviously set forth) that contains all arrangements or understandings between such shareholder or beneficial owner or owners and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination is to be madeinformation required by such shareholder;
such other information regarding each nominee proposed by such shareholder as would be required to be disclosed in solicitations of proxies for elections of Directors, or would otherwise be required to be disclosed, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, includingRule 14a-19. There were no director nominations proposed for the 2023 Annual Meeting by any information that would be required to be included in a proxy statement filed pursuant to Regulation 14A had the nominee been nominated by the Board of Directors; andshareholder.
the written consent of each nominee to be named in a proxy statement and to serve as a Director if so elected.
In addition to candidates submitted through this advance notice By-Law process for shareholder nominations described above, shareholders may also request that a director nominee be included in Adtalem’s proxy materials in accordance with the proxy access provision in the By-Laws. Any shareholder or group of up to 20 shareholders holding both investment and voting rights to at least 3% of Adtalem’s outstanding Common Stock continuously for at least three years may nominate the greater of (i) two or (ii) 20% of the Adtalem directors to be elected at an annual meeting of shareholders. Such requests must be received not less than 120 days nor more than 150 days prior to the anniversary date of the immediately preceding annual meeting of shareholders. As a result, any notice given by or on behalf of a shareholder pursuant to these provisions of the By-Laws must be received no earlier than June 11, 2024 and no later than July 11, 2024. However, if we hold our 2024 Annual Meeting of Shareholders more than 30 days from the first anniversary of this year’s Annual Meeting, then in order for notice by the shareholder to be timely, such notice must be received not later than the close of business on the tenth day following the day on which notice of the date of the annual meeting was mailed or public disclosure of the date of the annual meeting was made, whichever occurs first.
In addition to candidates submitted through the By-Laws process for shareholder nominations, shareholders may also recommend candidates by following the procedures set forth below under the caption “Communication“Communications with Directors.”
Adtalem Global Education Inc. | 2023 Proxy Statement 26 |
Director Independence
The Board annually reviews the continuing independence of Adtalem’s non-employee directors under applicable laws and rules of the New York Stock Exchange (“NYSE”). The Board, excluding any director who is the subject of an evaluation, reviews and evaluates director transactions or relationships with Adtalem, including the results of any investigation, and makes a determination with respect to whether a conflict or violation exists or will exist or whether a director’s independence is or would be impaired.
The Board has considered whether each director has any material relationship with Adtalem (either directly or as a partner, shareholder, or officer of an organization that has a relationship with Adtalem) and has otherwise complied with the requirements for independence under the applicable listing standards of the NYSE.
As a result of this review, the Board affirmatively determined that, with the exception of Mr. Beard and Ms. Wardell, all of Adtalem’s current directors, and all director nominees, are “independent” of Adtalem and its management within the meaning of the applicable NYSE rules. Mr. Beard is considered an inside director because of his employment as President and CEO of Adtalem. Ms. Wardell is considered an inside director because of her previous employment as President and CEO of Adtalem.
BOARD STRUCTURE AND OPERATIONS
Summary of Board and Committee Structure
Adtalem’s Board held six meetings during fiscal year 2023, consisting of four regular meetings and two special meetings. Currently, the Board has five standing committees: Academic Quality, Audit and Finance, Compensation, External Relations, and Nominating & Governance. The following tables describes each standing committee, its members and chairs, its key responsibilities and the number of meetings held during fiscal year 2023. Current copies of the charters of each of these committees, a current copy of Adtalem’s Governance Principles, and a current copy of Adtalem’s Code of Conduct and Ethics can be found on Adtalem’s website, www.adtalem.com, and are also available in print to any shareholder upon request from Adtalem’s General Counsel and Corporate Secretary, 500 West Monroe Street, Suite 1300, Chicago, IL 60661. The Board has determined that each of the members of the Audit and Finance, Compensation, and Nominating & Governance committees is independent within the meaning of applicable laws and NYSE listing standards in effect at the time of determination. The standing Audit and Finance Committee was established in accordance with Section 3(a)(58)(A) of the Exchange Act, the rules and regulations of the Securities and Exchange Commission (“SEC”), and the listing standards of the NYSE.
Academic Quality Committee
Members | Meetings in fiscal year 2023 | |
Georgette Kiser (Chair) Charles DeShazer Mayur Gupta Lisa Wardell | 4 |
Key Responsibilities
| ● | Supports improvement in academic quality and assures that the academic perspective is heard and represented at the highest policy-setting level and incorporated in all of Adtalem’s activities and operations |
| ● | Reviews the academic programs, policies, and practices of Adtalem’s institutions |
| ● | Evaluates the academic quality and assessment process and evaluates curriculum and programs |
Audit and Finance Committee
Members | Meetings in fiscal year 2023 | Report |
William W. Burke (Chair) Donna J. Hrinak Liam Krehbiel | 9 | Page 38 |
Key Responsibilities
| ● | Monitors Adtalem’s financial reporting processes, including its internal control systems and the scope, approach, and results of audits |
| ● | Selects and evaluates Adtalem’s independent registered public accounting firm, subject to ratification by the shareholders |
| ● | Reviews and recommends to the Board Adtalem’s financing policies and actions related to investment, capital structure, and financing strategies |
| ● | Provides oversight of Adtalem’s policies and processes established by management to identify, assess, monitor, manage, and control technology, cyber, information, ESG, and other risks |
Adtalem Global Education Inc. | 2023 Proxy Statement 27 |
| ● | Provides oversight of Adtalem’s frameworks and standards for climate-related disclosures and reporting |
| ● | Reviews and approves any potential related party transactions |
The Board has determined that Mr. Burke is qualified as an audit committee financial expert.
Compensation Committee
Members | Meetings in fiscal year 2023 | Report |
Kenneth J. Phelan (Chair) William W. Burke Charles DeShazer Sharon O’Keefe | 6 | Page 58 |
Key Responsibilities
| ● | Oversees all compensation practices and reviews eligibility criteria and award guidelines for Adtalem’s compensation program |
| ● | Reviews and approves, following discussions with the other independent members of the Board, CEO annual goals and objectives |
| ● | Evaluates the CEO’s performance against established annual goals and objectives |
| ● | Recommends CEO compensation to the other independent members of the Board for approval |
| ● | Reviews recommendations made by the CEO and approves compensation for executive officers, including base salary, annual incentive, and equity compensation |
| ● | Reviews and approves the total pay-out of short- and long-term incentive pools, including annual grants of equity awards |
| ● | Reviews and recommends to the Board compensation paid to non-employee directors |
External Relations Committee
Members | Meetings in fiscal year 2023 | |
Donna Hrinak (Chair) Mayur Gupta Liam Krehbiel Kenneth J. Phelan Lisa Wardell | 4 |
Key Responsibilities
| ● | Provides awareness and oversight of Adtalem’s external relations strategy, policy, and practice |
| ● | Monitors, analyzes, and effectively manages legislative and regulatory policy trends, issues, and risks |
| ● | Develops recommendations to the Board regarding formulating and adopting policies, programs, and communications strategy related to legislative, regulatory, and reputational risk |
| ● | Oversees risks and exposures related to higher education public policy, as well as compliance with laws and regulations applicable to Adtalem |
| ● | Provides oversight regarding significant public policy issues including environmental, social, health and safety, and public and community affairs |
| ● | Reviews Adtalem’s sustainability strategy, including initiatives and policies relating to environmental stewardship, corporate social responsibility, and corporate culture |
Nominating & Governance Committee
Members | Meetings in fiscal year 2023 | |
Sharon O’Keefe (Chair) Donna Hrinak Georgette Kiser | 4 |
Key Responsibilities
| ● | Reviews Board and committee structures and leads the Board self-evaluation process |
| ● | Assesses Board needs and periodically conducts director searches and recruiting to ensure appropriate Board composition |
| ● | Recommends candidates for nomination as directors to the Board |
Adtalem Global Education Inc. | 2023 Proxy Statement 28 |
| ● | Oversees and conducts planning for CEO and director succession and potential related risks |
| ● | Recommends governance policies and procedures |
Board Leadership Structure
Pursuant to our Governance Principles, the Board believes that it should be free to make its selection of the Chairman of the Board and the CEO in the way that it deems best for Adtalem and its shareholders at any given time. To ensure continued Board independence, the Board has adopted a policy that, in the event the Chairman of the Board and CEO roles are combined, or the Chairman of the Board is not otherwise independent, the Board shall appoint a Lead Independent Director. In identifying potential nomineesNovember 2022, the Board determined to keep the roles of Chairman of the Board and determiningCEO separate. With an independent Chairman in place, Mr. Burke stepped down from serving as our Lead Independent Director. The Board reviews its leadership structure periodically and as circumstances warrant.
During fiscal year 2023, the Board met in executive session without employee directors or other employees present at each regular Board meeting. Mr. Burke, as Adtalem’s Lead Independent Director, presided over these sessions through November 2022. Mr. Malafronte, as Adtalem’s independent Chairman, presided over these sessions after November 2022.
Our Governance Principles provide that when we have a Lead Independent Director, he or she:
| ● | sets the agenda for, calls meeting of and leads executive sessions of the independent directors and reports to the Executive Chairman of the Board, as appropriate, concerning such meetings; |
| ● | acts as a liaison between the Executive Chairman of the Board and the independent directors; |
| ● | advises the Executive Chairman of the Board as to the quality, quantity, and timeliness of the flow of information from management that is necessary for the independent directors to effectively and responsibly perform their duties; |
| ● | when appropriate, makes recommendations to the Executive Chairman of the Board about calling full meetings of the Board; |
| ● | serves as a resource to consult with the Executive Chairman of the Board and other Board members on corporate governance practices and policies and assumes the primary leadership role in addressing issues of this nature if, under the circumstances, it is inappropriate for the Executive Chairman of the Board to assume such leadership; and |
| ● | performs such other duties as requested by the Board or Nominating & Governance Committee and as set forth in the Governance Principles. |
Director Attendance
During fiscal year 2023, our Board met six times. Each of Adtalem’s directors attended at least 75% of the meetings of the Board and Board committees on which nomineesthey served that occurred during their respective time of service on the Board in fiscal year 2023.
With the exception of Dr. DeShazer, all of our directors who were directors at the time participated in the 2022 Annual Meeting of Shareholders, held virtually in November 2022. Dr. DeShazer was not in attendance due to recommenda family matter. Our Board encourages all of its members to attend the Annual Meeting but understands there may be situations that prevent such attendance.
Director Continuing Education
Members of the Board are encouraged to participate in continuing education and enrichment classes and seminars. During fiscal year 2023, the following directors attended the following classes and seminars: (i) Mr. Burke attended PwC’s Annual Corporate Directors Exchange; (ii) Ms. Kiser attended the National Association of Corporate Directors (“NACD”) ESG Continuous Learning Cohort and Brightview ESG trainings; and (iii) Mr. Phelan attended a HR & Employment Law Conference and a Corporate Counsel Conference.
Board Self-Evaluation
Each year our Board undertakes a self-evaluation process to critically evaluate its performance and effectiveness. Additionally, each committee conducts a self-evaluation to monitor its performance and effectiveness. The process is coordinated by the Chairman and the chair of the Nominating & Governance Committee. In fiscal year 2023 the Board conducted the evaluation process with the assistance of Adtalem’s Legal Department. Board and committee members are asked to provide commentary about a variety of topics, including the following: overall Board performance, including strategy, challenges, and opportunities; Board and committee meeting logistics and materials; Board and committee culture; and human capital and succession planning. The results of the evaluations were aggregated by Adtalem’s Legal Department and discussed at Board and committee meetings in May 2023.
Adtalem Global Education Inc. | 2023 Proxy Statement 29 |
Board Composition Analysis
During fiscal year 2023, our Board conducted a Board Composition Analysis (“Analysis”) in consultation with Russell Reynolds Associates (“RRA”), an international executive search and leadership advisory firm. The objectives of the Analysis included aligning the current and future skills and experiences represented on the Adtalem Board with the Company’s evolving strategic objectives and enabling Adtalem to proactively plan for Board refreshment. The Analysis is intended to help the Board prioritize various backgrounds, skills, and experience for future recruiting. All of our directors, including Mr. Beard were interviewed for the Analysis.
Adtalem last prepared a board composition analysis five years ago. The Analysis included a review of board governance expectations of leading institutional investors and proxy advisors. RRA reviewed five categories, including key board responsibilities, board roles and independence, shareholder rights, board composition and policies, and executive compensation. Adtalem met all 24 governance standards for public companies reviewed by RRA.
As part of the Analysis, RRA benchmarked Adtalem against a seven-company peer group, the overall S&P 500, and two companies identified by RRA as governance leaders. Adtalem was benchmarked against this group on financial performance, Board demographics, committee structure, and board skills and competencies. The Analysis focused on the strategy-driven director criteria which is intended to inform future director recruitment. It reflected core experiences and expertise that would be additive to the Adtalem Board based on Company strategy. The Analysis provided the Board with a recruiting priority roadmap.
KEY BOARD RESPONSIBILITIES
Strategic Oversight
The Board has an active role in our overall strategy. The Board actively reviews and provides guidance on Adtalem’s long-term strategy and annual operating plan. Management reports its progress in executing on Adtalem’s strategies and operating plan throughout the year. In addition, throughout the year, segment leadership will report to the Board regarding individual segment strategies and operating plans. The full Board has primary responsibility to review and provide oversight to management on our ESG strategy, supported by the work of our Audit and Finance, Compensation, External Relations, and Nominating & Governance Committees, each of whom provides oversight on various components of our ESG strategy. For example, our Audit and GovernanceFinance Committee provides oversight of Adtalem’s policies and procedures to identify, assess, monitor, manage, and control ESG risks. The Audit and Finance Committee also provides oversight of Adtalem’s frameworks and standards for climate-related disclosures and reports. The Compensation Committee has retained the advisory services of Russell Reynolds Associates. In connection with each vacancy, the Nominatingresponsibility for reviewing strategy and Governance Committee develops a specific set of ideal characteristics for the vacant Director position. The Nominatinginitiatives related to recruiting and Governance Committee looks at nominees it identifiesretention to include ESG goals and any identified by shareholders on an equal basis using these characteristics and the general criteria identified above.milestones, if any.
Board of Directors’ Role in Risk Oversight
DeVry’sAdtalem’s full Board is responsible for assessing major risks facing DeVryAdtalem and overseeing management’s plans and actions directed toward theirthe mitigation and/or elimination.elimination of such risk. The Board has assigned specific elements
of the oversight of risk management of DeVryAdtalem to committees of the Board, as summarized below. Each committee meets periodically with members of management and, in some cases, with outside advisors regarding the matters described below and, in turn, reports to the full Board at least after each regular meeting regarding any findings.
Managing current and emerging business risks, from regulatory and market risks to global risks like a pandemic, is an important component of our governance and oversight system. Management undertakes a regular review of a broad set of risks across Adtalem’s business and operations to identify, assess, manage, and monitor existing and emerging threats and opportunities. Adtalem’s Enterprise Risk Management (“ERM”) team is responsible for leading our risk management program at the enterprise level. The ERM team places particular focus on key risks that have the potential for the highest impact to Adtalem and its operations, and the highest likelihood of risk occurrence based on Adtalem’s preparedness and potential impact to Adtalem’s strategy. As part of management’s proactive risk identification and mitigation efforts, the ERM team has initiated the development of Risk Appetite Statements for each critical enterprise risk. These Risk Appetite Statements are expected to deepen our understanding of risks, enable effective action to mitigate risks, and strengthen our risk culture.
Adtalem Global Education Inc. | 2023 Proxy Statement 30 |
Board/Committee | Primary Areas of Risk Oversight | |
Full Board | · Reputation · Legal and regulatory · Strategic planning · Major organizational actions · Education public policy | |
Academic | · Academic quality · Accreditation · Curriculum development and · Student persistence · Student outcomes | |
Audit and | · Accounting and · Information technology · Cybersecurity · Financial controls · Risk management policies and · Legal and · Related party transactions · Capital structure ·Investments ·Climate-related disclosures and reporting | |
Compensation | · Compensation practices · Talent development · Retention · Management succession planning | |
External | · Accreditation · Higher education public policy · Compliance with laws and regulations applicable to · Sustainability, environmental, corporate social responsibility, and | |
| public and community affairs | ||
Nominating & | ||
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| · Board composition and function · Board and Chairman of the Board | |
Succession Planning and Human Capital Management
The Board recognizes that one of its most important duties is to ensure continuity in Adtalem’s senior leadership by overseeing the retention and development of executive talent and planning for the effective succession of our CEO and the executive leadership team. To ensure that the succession planning and leadership development process supports and enhances our long-term strategic objectives, the Board periodically consults with our CEO and Chief Human Resources Officer on Adtalem’s business goals, the skills and experience necessary to help Adtalem achieve those goals, our organizational needs, our leadership pipeline, the succession plans for critical leadership positions, and our talent development and leadership initiatives. Talent and leadership development, including succession planning, is a top priority of our CEO and the senior executive team. Our CEO seeks input from members of our Board regarding candidates for executive positions and other key roles.
Our Sustainability Commitment
SAFEGUARDING GLOBAL HEALTH AND THE ENVIRONMENT
We recognize that ESG practices and goals are important to our shareholders because our approach to these areas can provide insight into our corporate behavior, long-term performance, and sustainability. We aim to empower and enhance the communities in which we teach, learn and work by operating sustainably, maintaining responsible governance standards, and supporting our global community.
Adtalem’s mission to be a force for good includes raising our students’ awareness of important issues that jointly impact both public health and the environment. By providing education that illuminates these intersections among human, animal, and
Adtalem Global Education Inc. | 2023 Proxy Statement 31 |
environmental health, we expand our collective understanding of global challenges, such as the spread of disease and environmental degradation. Our graduates are empowered to solve these challenges and positively impact society in these areas and more. This informs our approach to environmental stewardship, including enhancing climate resilience in vulnerable communities and conserving resources and energy throughout our operations.
At Adtalem, we help protect our planet and people by maintaining efficient, environmentally aware operations, and by working to address global challenges such as climate change and disaster management. Demonstrating our commitment to environmental stewardship, in 2020 we launched multiyear environmental goals through 2024 that encompass our strategic approach to reducing our carbon footprint, embracing renewable energy, and enhancing waste management practices:
| 1. | Achieve a ten percent (10%) reduction (when compared to our 2019 baseline levels) of controllable energy use and GHG emission levels across Adtalem’s U.S. properties by 2024; |
| 2. | Aim to initiate an average of one renewable energy project per year at an owned location from 2021 through 2024; and |
| 3. | Implement an enhanced waste and recycling initiative across Adtalem’s controllable waste portfolio by the end of 2024. |
Throughout fiscal year 2023, we continued implementing energy conservation measures, such as installing light timers, updating water heaters, and replacing HVAC systems. These measures have allowed us to reduce energy and emissions by 23.1% and 32.6%, respectively, from our 2019 baseline, reporting on direct-paid utilities only. We are proud to have achieved these reductions so far; however, we recognize energy and emissions data can differ year-to-year due to operational circumstances, attendance at institutions, the addition of new campuses or relocations, along with external factors out of our control. Moving into fiscal year 2024, we are planning on collecting a comprehensive database of our facilities, including both directly paid and landlord-charged utilities. In accordance with Goal 2, we completed our first solar array upgrade in St. Maarten during fiscal year 2023. The upgraded system has a total capacity of approximately 76 kilowatt peak (kWp). During the last six months of fiscal year 2023, the system successfully reduced carbon dioxide emissions by 51,062.2 kilograms while providing an average monthly energy cost savings of $2,475. We also made progress on Goal 3 by completing comprehensive waste audits for our owned, U.S. facilities, with the help of a third-party environmental consultant. Informed by the results of the waste audits, as well as recycling programs that we promoted in the Caribbean, our other institutions will be evaluating opportunities for scalable waste and recycling solutions moving forward.
EMPOWERING INDIVIDUALS, IMPACTING GLOBAL COMMUNITIES
According to recent surveys conducted by the American College of Healthcare Executives, the U.S. healthcare system is experiencing unprecedented labor shortages, with CEOs and leaders of healthcare systems stating that is their number one concern. By multiple measures, including healthcare professional degrees and number of graduates, Adtalem is a leader in providing highly qualified, diverse graduates into the U.S. healthcare professional system. The work that we do to help address these critical shortages has never been more relevant, particularly in underserved communities.
In fiscal year 2023, 83% of the total student population in our five degree-conferring institutions identified as female and 52% identified as people of color. We are the number one grantor of U.S. Nursing degrees, the number one grantor of the Doctor of Veterinary Medicine degrees3, the number one grantor of research doctoral degrees in Psychology and Social Science, and, combined, American University of the Caribbean School of Medicine and Ross University School of Medicine graduate more MDs than any U.S. medical school.
The initiatives described above along with a detailed discussion of our Sustainability Commitment and its core pillars – Operating with Purpose and Responsibility; Safeguarding Global Health and the Environment; and Empowering Individuals, Impacting Global Communities can be found in Adtalem’s most recent Sustainability Report: https://www.adtalem.com/sustainability.
Information Security and Cybersecurity
Adtalem takes seriously the custody of student, employee, and stakeholder information, and therefore employs strong governance practices regarding information security. For example, Adtalem’s Enterprise Information Security Framework policy and Information Governance and Security procedures are modeled on the National Institute of Standards and Technology (NIST) 800-53 policy framework. We continually evaluate the effectiveness of our security measures. A recent comprehensive review, in alignment with the NIST 800-53 cybersecurity framework, concluded that Adtalem’s cybersecurity program exceeded the maturity of industry peers in nearly all categories.
Some key safeguards include regularly scheduled penetration tests, vulnerability assessments and mandatory security awareness training for all users of our systems. Representative training topics include: protection of sensitive information, phishing, and mobile device security.
We use advanced security tools and software to protect our systems and information, detect unauthorized activity, and take expeditious corrective action, as required.
Adtalem’s systems regularly undergo penetration testing to identify and address any vulnerabilities, and to ensure that our infrastructure is adequately configured to reduce cyber risk. To its knowledge, Adtalem has not experienced a significant information security breach in the past four years. Adtalem maintains a cybersecurity insurance policy, which would potentially
3American Association of Veterinary Medical Colleges. “2022-2023 Institutional Data Report.” December 2022. Based on reported number of graduates in most recent class from AAVMC member veterinary institutions.
Adtalem Global Education Inc. | 2023 Proxy Statement 32 |
Non-employeeProposal No. 1 Election of Directors receive an annual retainer of $70,000, paid quarterly.
defray certain costs associated with a breach. In addition, Adtalem has adopted best practices in incident training through written incident response plans and regular tabletop exercises.
The Adtalem Audit and Finance Committee, comprised entirely of independent directors, assists the Board Chair receives an annual retainerin its responsibilities of $120,000. The Chairoverseeing that the Company has established, documented, maintained, and periodically reevaluates its cybersecurity processes. Management reports on the state of the cybersecurity program to the Audit and Finance Committee receives an additional annual retaineron a quarterly basis. Additionally, Adtalem’s IT general controls are audited annually by both the Company’s internal audit function and independent registered public accounting firm, PricewaterhouseCoopers LLP.
Outreach and Engagement
We value the opinions of $20,000,our shareholders and believe regular, proactive communications with our shareholders to be in the Chairlong-term best interests of the Compensation Committee receives an additional retainer of $15,000Adtalem. Our investor communications and the chairs of each of the other committees receive an additional annual retainer of $5,000 for their roles as committee chairs. Directorsoutreach include investor day meetings, investor conferences, and quarterly conference calls. These calls are reimbursed for any reasonable and appropriate expenditures attendant to Board membership.
Under the DeVry Inc. Nonqualified Deferred Compensation Plan, a Director may elect to defer all or a portion of the cash retainer. Any amount so deferred is, at the Director’s election, valued as if invested in various investment choices made available by the Compensation Committee for this purpose, and is payable in cash in installments, or as a lump-sum on or after termination of service as a Director, or at a later date specified by the Director.
As long-term incentive compensation for Directors, each Non-employee Director received restricted stock units commonly referred to at DeVry as “Full-Value Shares” with an approximate value of $100,000 directly following the 2012 Annual Meeting of Shareholders. Each Full-Value Share represents the right to receive one
share of DeVry Inc. Common Stock following the satisfaction of the vesting period. The Full-Value Shares granted in November 2012 vest at a rate of 33.33% per year over three years. In May 2013, the Board of Directors approved a changeopen to the vesting periodpublic and are available live and as archived webcasts on our website. Additionally, we reach out at least annually to our largest shareholders to invite feedback. We hold individual calls with shareholders who accept our invitation to allow for Full-Value Shares to be granted in November 2013.open, meaningful discussions. As part of our shareholder outreach, we have met with shareholders holding approximately 59% of our shares. These Full-Value Shares will vest 100% upon their one-year anniversary. Prior to fiscal year 2010, Directorsincluded discussions of regular business updates, strategic outlook, compensation matters, and ESG. We share material feedback received stock options as long-term incentive compensation.
This table discloses all director compensation provided in fiscal year 2013 to the Directors of DeVry (other than Mr. Hamburger who received no compensation for his service as a Director).
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Total ($) | |||||||||
Christopher B. Begley | 70,000 | 100,117 | 170,117 | |||||||||
David S. Brown | 70,000 | 100,117 | 170,117 | |||||||||
Connie R. Curran (3) | 105,750 | 100,117 | 205,867 | |||||||||
Darren R. Huston (4) | 70,000 | 100,117 | 170,117 | |||||||||
William T. Keevan | 90,000 | 100,117 | 190,117 | |||||||||
Lyle Logan | 75,000 | 100,117 | 175,117 | |||||||||
Alan G. Merten (5) | 64,250 | 100,117 | 164,367 | |||||||||
Fernando Ruiz (6) | 87,500 | 100,117 | 187,617 | |||||||||
Harold T. Shapiro | 190,000 | 100,117 | 290,117 | |||||||||
Ronald L. Taylor (7) | 85,000 | 100,117 | 185,117 | |||||||||
Lisa W. Wardell (8) | 72,500 | 100,117 | 172,617 | |||||||||
This table discloses the aggregate number of option and Full-Value Share awards outstanding at June 30, 2013 for each of the Directors (other than Mr. Hamburger who received no Full-Value Share awards for his service as a Director). These figures represent both Full-Value Share awards as well as stock option awards made prior to August 2009 when the Board discontinued its practice of granting stock options to Directors in favor of awards of Full-Value Shares upon their election or re-election to thefrom our shareholders with our Board.
Name | Options Outstanding (#) | Full-Value Shares Outstanding (#) | ||||||
Christopher B. Begley | 0 | 5,661 | ||||||
David S. Brown | 13,000 | 6,375 | ||||||
Connie R. Curran | 875 | 6,375 | ||||||
Darren R. Huston | 0 | 6,375 | ||||||
William T. Keevan | 8,660 | 6,375 | ||||||
Lyle Logan | 3,500 | 6,375 | ||||||
Alan G. Merten | 0 | 3,920 | ||||||
Fernando Ruiz | 12,500 | 6,375 | ||||||
Harold T. Shapiro | 5,250 | 6,375 | ||||||
Ronald L. Taylor (1) | 307,375 | 6,375 | ||||||
Lisa W. Wardell | 3,500 | 6,375 | ||||||
(1) Includes options granted for his prior service as a senior executive of DeVry.
COMMUNICATIONCOMMUNICATIONS WITH DIRECTORS
Shareholders and other interested parties wishing to communicate with the Board, of Directorsour Chairman, or any member or committee of the Board of Directors are encouraged to send any communication to:to our General Counsel and Corporate Secretary, DeVryAdtalem Global Education Inc., 3005 Highland Parkway, Downers Grove,500 West Monroe Street, Suite 1300, Chicago, IL 60515-579960661 and should prominently indicate on the outside of the envelope that it is intended for the Board, of Directors,our Chairman, the independent directors as a group, or a membercommittee or committeean individual member of the Board of Directors.Board. Any such communication must be in writing, must set forth the name and address of the shareholder (and the name and address of the beneficial owner, if different), and must state the form of stock ownership and the number of shares beneficially owned by the shareholder making the communication. DeVry’sAdtalem’s General Counsel and Corporate Secretary will compile and periodicallypromptly forward all such communicationcommunications to the Board except for spam, junk mail, mass mailings, resumes, or other forms of Directors.job inquiries, surveys, business solicitations, or advertisements.
CERTAIN TRANSACTIONSCommunicating Accounting Complaints
Various DeVry policies and procedures, including the Code of Conduct and Ethics, which applies to DeVry’s Directors, officers and all other colleagues, and annual questionnaires completed by all DeVry Directors, Director nominees and executive officers, require disclosure of transactions or relationships that may constitute conflicts of interest or otherwise require disclosure under applicable Securities and Exchange Commission rules. The Board annually reviews the continuing independence of DeVry’s Non-employee Directors under applicable laws or rules of the NYSE. The Board, excluding any Director who is the subject of an evaluation, reviews and evaluates director transactions or relationships with DeVry, including the results of any investigation, and makes a determination with respect to whether a conflict or violation exists or will exist or whether a Director’s independence is or would be impaired.
No relationships or transactions existed or occurred between DeVry and any officer, Director or nominee for Director, or any affiliate of or person related to any of them, since the beginning of DeVry’s last fiscal year, of the type and amount that are required to be disclosed under applicable Securities and Exchange Commission rules.
POLICY FOR COMMUNICATING ALLEGATIONS RELATED TO ACCOUNTING COMPLAINTS
Shareholders, colleaguesAdtalem employees, and other interested persons are encouraged to communicate or report any complaint or concern regarding financial statement disclosures, accounting, internal accounting controls, auditing matters, or violations of DeVry’sAdtalem’s Code of Conduct and Ethics (collectively, “Accounting Complaints”) to the General Counsel and Corporate Secretary of DeVry Inc.Adtalem at the following address:
General Counsel
DeVry and Corporate Secretary
Adtalem Global Education Inc.
3005 Highland Parkway
Downers Grove,
500 West Monroe Street, Suite 1300
Chicago, IL 60515-579960661
Accounting Complaints also may be submitted in a sealed envelope addressed to the Chair of the Audit and Finance Committee, in care of the General Counsel, at the address indicated above, and labeled with a legend such as: “To Be Opened Only by the Audit and Finance Committee.” Any person making such a submission who would like to discuss an Accounting Complaint with the Audit and Finance Committee should indicate this in the submission and should include a telephone number at which he or she may be contacted if the Audit and Finance Committee deems it appropriate.
ColleaguesAdtalem employees and students may also report Accounting Complaints using any of the reporting procedures specified in DeVry’sAdtalem’s Code of Conduct and Ethics. All reports by colleaguesemployees shall be treated confidentially to the extent possible and may be made anonymously. DeVryAdtalem will not discharge, demote, suspend, threaten, harass, or in any manner discriminate against any colleagueemployee in the terms and conditions of his or her employment based upon any lawful actions taken by such colleagueemployee with respect to the good faith submission of Accounting Complaints.
BOARD PRACTICES AND CODE OF CONDUCTETHICSPOLICIES
DeVryCertain Relationships and Related Person Transactions
It is Adtalem’s policy that the Audit and Finance Committee review, approve, or ratify all transactions in which Adtalem participates and in which any related person has a direct or indirect material interest and the transaction involves or is expected to involve payments of $120,000 or more in the aggregate per fiscal year. Our legal staff is primarily responsible for gathering information from the directors and executive officers, including annual questionnaires completed by all our directors, director nominees, and executive officers. The Audit and Finance Committee reviews the relevant facts and circumstances of all related party transactions, including whether the transaction is on terms comparable to those that could be obtained in arm’s length dealings with an unrelated third party and the extent of the related party’s interest in the transaction. No member of the Audit and Finance Committee may participate in any approval of a related party transaction to which he or she is a related party.
Various Adtalem policies and procedures, including the Code of Conduct and Ethics, which applies to Adtalem’s directors, officers, and all other employees, and annual questionnaires completed by all Adtalem directors, director nominees, and
Adtalem Global Education Inc. | 2023 Proxy Statement 33 |
executive officers, require disclosure of related person transactions or relationships that may constitute conflicts of interest or otherwise require disclosure under applicable SEC rules.
There were no transactions in fiscal year 2023 that required approval under our policies and procedures or disclosure as required by the rules and regulations of the SEC.
Governance Principles/Code of Conduct and Ethics
Our Board has adopted Governance Principles that set forth expectations for directors, director qualifications, director retirement, director independence standards, board committee structure, and functions and other policies for Adtalem’s governance. We have adopted a Code of Conduct and Ethics (the “Code”) that appliesapplicable to all employees including directors, officers, and full- and part-time employees and faculty of Adtalem Global Education Inc. and its Directors, officers (includingsubsidiaries. These documents are available on Adtalem’s website at https://www.adtalem.com/about-us/organizational-governance. Any amendments or waivers of the CEO, the Chief Financial OfficerCode of Conduct and the Chief Accounting Officer) and all other colleagues. The Code is intendedEthics will be disclosed at these website addresses.
We encourage individuals to promote:
honest and ethical conduct;
full, fair, accurate, timely and understandable disclosure;
compliancespeak up with applicable laws, rules and regulations;
prompt internal reporting ofquestions, concerns, or potential violations of the Code;our Code of Conduct, and
accountability for adherence we have a 24-hour reporting hotline administered through a third-party to the Code.
The Code is availableoffer anonymity to anyone reporting such issues. Information about our whistleblower policy and practices are included in print, without charge, from the Secretary of DeVry, 3005 Highland Parkway, Downers Grove, IL 60515-5799, to any shareholder upon written request and is also available on DeVry’s website, www.devryinc.com. DeVry posts any amendments to or waivers from the Code (toof Conduct. All reports, which are reviewed by the extent applicable to DeVry’s DirectorsAudit and executive officers) on DeVry’s website, www.devryinc.com.
Security Ownership of Certain Beneficial Owners
The table below sets forth the number and percentage of outstanding shares of Common Stock beneficially owned by each person known by DeVry to own beneficially more than five percent of our Common Stock, in each case as of June 30, 2013, except as otherwise noted.
Name | Amount and Nature of Beneficial Ownership | Percentage Ownership | ||
Dennis Keller | 5,299,978(1) | 8.4% | ||
Fairpointe Capital LLC 1 N. Franklin, Ste 330 Chicago, IL 60606 | 5,258,569(2) | 8.4% | ||
FMR LLC 82 Devonshire Street Boston, MA 02109 | 4,690,509(3) | 7.5% | ||
Baron Capital Group, Inc. 767 Fifth Avenue New York, NY 10153 | 4,344,834(4) | 6.9% | ||
Ariel Investments, LLC 200 E. Randolph Drive, Suite 2900 Chicago, IL 60601 | 3,991,145(5) | 6.3% | ||
BlackRock Inc. 40 East 52nd Street New York, NY 10022 | 3,255,589(6) | 5.2% | ||
The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | 3,003,129(7) | 4.8% | ||
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Members of the family of Edward C. Johnson 3d, Chairman of FMR LLC, are the predominant owners, directly or through trusts, of Series B Voting common shares of FMR LLC, representing 49% of the voting
power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC.
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Security Ownership by Directors and Named Executive Officers
The table below sets forth the number and percentage of outstanding shares of Common Stock beneficially owned by (1) each Director of DeVry, (2) each Named Executive Officer listed on page 21, and (3) all Directors and officers of DeVry as a group, in each case as of June 30, 2013, except as otherwise noted. DeVry believes that each individual named has sole investment and voting power with respect to the shares of Common Stock indicated as beneficially owned by them, except as otherwise noted.
Name of Beneficial Owner | Common Stock Beneficially Owned Excluding Options and Full-Value Shares (1) | Stock Options Exercisable and Full-Value Shares Scheduled to Vest within 60 days of June 30, 2013 | Total Common Stock Beneficially Owned | Percentage Ownership | ||||||||||||
Non-Employee Directors | ||||||||||||||||
Christopher B. Begley | 608 | 0 | 608 | * | ||||||||||||
David S. Brown | 10,085 | 13,000 | 23,085 | * | ||||||||||||
Connie R. Curran | 3,585 | 656 | 4,241 | * | ||||||||||||
Darren R. Huston | 2,685 | 0 | 2,685 | * | ||||||||||||
William T. Keevan | 6,785 | 8,660 | 15,445 | * | ||||||||||||
Lyle Logan | 2,516 | 3,500 | 6,016 | * | ||||||||||||
Alan G. Merten | 0 | 0 | 0 | * | ||||||||||||
Fernando Ruiz | 2,528 | 12,500 | 15,028 | * | ||||||||||||
Harold T. Shapiro | 2,766 | 5,250 | 8,106 | * | ||||||||||||
Ronald L. Taylor | 963,958 | 307,156 | 1,271,114 | 2.0 | % | |||||||||||
Lisa W. Wardell | 2,581 | 3,500 | 6,081 | * | ||||||||||||
Named Executive Officers | * | |||||||||||||||
Daniel Hamburger | 52,430 | 841,926 | 872,138 | 1.4 | % | |||||||||||
Timothy J. Wiggins | 5,332 | 18,242 | 39,872 | * | ||||||||||||
Susan Groenwald | 1,195 | 23,655 | 24,550 | * | ||||||||||||
David J. Pauldine | 14,246 | 173,397 | 198,892 | * | ||||||||||||
Steven Riehs | 5,889 | 72,870 | 76,870 | * | ||||||||||||
All Directors and Officers as a Group (24 persons) | 1,093,263 | 1,757,726 | 2,850,989 | 4.6 | % | |||||||||||
The Compensation Committee of the Board of Directors (the “Compensation Committee”) hereby furnishes the following report to the shareholders of DeVry in accordance with rules adopted by the SecuritiesIndependence and Exchange Commission. The Compensation Committee has reviewedInsider Participation
During fiscal year 2023, Kenneth J. Phelan, William W. Burke, Charles DeShazer, and discussedSharon O’Keefe served on the Compensation Discussion and AnalysisCommittee. No member of this Proxy Statement with DeVry’s management and, based on such review and discussions, the Compensation Committee recommended to the Boardwas, during 2023, an officer or employee of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
This report is submitted on behalfAdtalem, was formerly an officer of Adtalem, or had any relationship requiring disclosure by Adtalem as a related person transaction under Item 404 of Regulation S-K. During 2023, none of the membersCompany’s executive officers served on the board of directors or a compensation committee of any other entity, any officers of which served on Adtalem’s Board or our Compensation Committee.
DIRECTOR COMPENSATION
The competitiveness of the Compensation Committee:
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COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
DeVry’s executivedirector compensation program is designed so that executive pay is strongly aligned with organizational and individual performance. The program is heavily weighted with performance-based components. Thus, for example, as illustrated in the following chart, approximately 84% of our CEO’s total target compensation in fiscal year 2013 was performance dependent.
We achieve a strong alignment between pay and performance in our compensation programreviewed annually by rewarding executives through annual incentive payouts when predetermined financial performance targets are met and providing lower or no payouts when the targets are not met. Such alignment is also achieved through the use of equity-based compensation, which, by its nature, yields realizable value for executives only to the extent that long-term shareholder value is generated.
We believe that academic quality leads to growth and we have designed, and regularly review, our compensation program with this operating philosophy in mind. Our emphasis on academic quality and student outcomes is reflected in, among other things, the goals set for the organization and each of our executives each year. The individual portion of our Management Incentive Plan (“MIP”) and the Performance Share portion of long-term equity compensation awards reinforce this emphasis by encouraging our executives to pursue excellence in academic quality and student outcomes and by rewarding their achievements in these areas of critical importance to DeVry.
Fiscal Year 2013 Highlights
As reported last fiscal year, after five consecutive years of meeting our goal of delivering double-digit revenue growth and over 20 percent earnings growth, our financial performance in fiscal year 2012 fell well short of our goals. Revenue and earnings declined for fiscal year 2012 and DeVry’s share price decreased substantially
(though in-line with our sector as a whole). As a result, in fiscal year 2013, DeVry was extremely focused on better aligning our costs with our revenues and this yielded more stabilized earnings performance. DeVry’s overall revenue and earnings performance for fiscal year 2013 were still not quite at the targeted performance levels. However, the performance was significantly closer to target than for fiscal year 2012. Through the strong linkage between pay and performance in our executive compensation programs, this resulted in increased stock price and somewhat higher annual incentive payouts than in fiscal year 2012.
As we focused on driving our financial performance, management continued its emphasis on enhancing academic quality and student outcomes, including:
Graduating nearly 28,000 students into high-demand fields
Helping nearly 4,000 students realize their dream of becoming a nurse or furthering their nursing education
Helping more than 1,300 medical students pursue their goal of becoming a physician
Helping 45,000 accounting graduates work toward their goal of becoming a CPA
Reducing costs at our institutions in transition to better align them with decreased enrollments
DeVry Brasil acquiring Facid on July 1, 2013
Increasing investments in DeVry’s growing institutions like DeVry Medical International, Becker Professional Education, Chamberlain College of Nursing and DeVry Brasil
Investing $114 million in capital spending on new campuses, new programs, and academic quality enhancements, and other projects to benefit students
DeVry’s executive compensation program functioned as designed this year by maintaining a close correlation between pay and performance. As shown in the first table below, payouts to our Named Executive Officers listed on page 21 (“NEOs”) under our annual MIP increased somewhat this year as compared to last year, although payouts were still below target for all NEOs, except for Dr. Groenwald as a result of Chamberlain’s exemplary performance. This program rewarded our NEOs for individual achievements relating to academic quality and student outcomes, furtherance of DeVry’s core TEACH values, and improved financial performance.
Mr. Wiggins’ FY12 MIP payout represents a partial year payout given his January 2012 hire date.
The relationship between pay and performance this year is further highlighted by the direct relationship between DeVry’s stock price and the value of our NEO’s equity-based compensation. The following graph shows how the realizable value of our NEO’s equity-based compensation, granted over the past five years, has been impacted by the drop in our stock price, as of June 30, 2013.
Reflects (i) the grant date fair value, as reported in our annual proxy statements, for all LTI awards made during from fiscal year 2009 through fiscal year 2013 and (ii) the total current value of $31.02 based on the closing market price of DeVry’s Common Stock on June 30, 2013, as reported inThe Wall Street Journal.
Another of our goals is to align our executives’ long-term interests with those of our shareholders. Looking ahead, these awards continue to serve that purpose by offering a significant reward opportunity for leaders if they are able to succeed in creating long-term value for our shareholders by achieving our academic and financial objectives.
Compensation Discussion & Analysis Detail
This section provides an overview and analysis for fiscal year 2013 of our compensation program and policies, the material compensation decisions made by the Board of Directors and the Compensation Committee under the program and policies, how those decisions were made, and the material factors considered in making those decisions. Later in this Proxy Statement, under the heading “Executive Compensation” you will find a series of tables and related narratives containing specific information about the compensation earned or paid in fiscal year 2013 to the following individuals, whom we refer to as our Named Executive Officers or “NEOs”:
Daniel M. Hamburger, President and Chief Executive Officer, DeVry Inc.
Timothy J. Wiggins, Senior Vice President, Chief Financial Officer and Treasurer, DeVry Inc.
Susan Groenwald, President, Chamberlain College of Nursing
David J. Pauldine, President, DeVry University
Steven Riehs, President, DeVry Medical International and President, International and Professional Education
The discussion below is intended to help you understand the detailed information provided in those tables and related narratives and put that information into context within our overall compensation program. When we use the words “we,” “our” or “us,” they refer to DeVry.
Executive Compensation Objectives
For fiscal year 2013, the overall goals of our compensation program were to serve the essential purpose of the organization, which is to empower our students to achieve their educational and career goals, while also maximizing the long-term return to our stakeholders. We designed our program to:
Align NEO compensation with academic, student outcome, and financial objectives;
Attract, motivate and retain high-quality executives; and
Reward organizational and individual performance.
As part of our compensation philosophy, we believe we should pay our NEOs total compensation that is competitive with other alternatives available to them in the marketplace and that a significant portion of each NEO’s total compensation should be variable — with both upside potential and downside risk — depending upon the performance of DeVry and of the individual. The CEO’s compensation, in particular, has the most potential for variability as it is expected to align most closely with the performance of the organization. In addition, we believe we should maintain a clear, straightforward and transparent approach to our executive compensation program.
How the Compensation Committee Determined Executive Compensation
Principles of Executive Compensation
The Compensation Committee uses the following Principles of Executive Compensation as a means to assess our executive compensation program and to provide guidance to management on the Compensation Committee’s expectations for our overall executive compensation structure:
Role of the Compensation Committee
The Compensation Committee has responsibility for establishing, implementing and monitoring adherence to our compensation program. The Compensation Committee’s role is to oversee, on behalf of the Board and for the benefit of DeVry and its shareholders, our compensation and benefit plans and policies and their effective
execution, including reviewing and approving equity awards to Directors and NEOs, and reviewing and approving annually all compensation decisions relating to our NEOs. The Compensation Committee meets periodically to review the design and effective functioning of our executive compensation program, including approving compensation levels and performance targets, reviewing management performance, and approving annual cash incentive compensation distributions and long-term incentive compensation awards. The Compensation Committee operates under a written Charter, a copy of which is available on DeVry’s website, www.devryinc.com.
Role of Executive Officers and Management
The Compensation Committee invites select members of management to participate in its meetings. The CEO, General Counsel and Senior Vice President of Human Resources were regular attendees at Compensation Committee meetings in fiscal year 2013. The Compensation Committee also invited the CFO to provide perspective and participate in its meetings from time to time. Management’s role was to contribute input and analysis to the Compensation Committee’s discussions. At the Compensation Committee’s direction and request, management made recommendations to the Compensation Committee with respectthe assistance and input of Meridian Compensation Partners (“Meridian”), the Compensation Committee’s independent compensation consultant. In fiscal year 2023, the director compensation program was benchmarked by Meridian and reviewed against Adtalem’s peer group. As a result of that review, in the second half of fiscal year 2023, the Board increased the long-term incentive compensation paid to directors by $15,000. As a result of the increase, each non-employee director annually will receive RSUs with an approximate value of $140,000. The RSUs will be granted directly following the 2023 Annual Meeting of Shareholders. Each RSU represents the right to receive one share of Common Stock following the satisfaction of the vesting period. All RSUs granted in November 2023 will vest upon the one-year anniversary of the grant date. In addition to the key elements of our executive compensation program forRSUs, in fiscal year 2013, which are discussed in more detail below.2023, non-employee directors continued to receive an annual retainer of $85,000, paid quarterly. The CEOChair of the Audit and Senior Vice PresidentFinance Committee received an additional annual retainer of Human Resources, with input from$25,000, the CFO, recommended the aggregate dollars available to be distributed to eligible colleagues under our MIP for fiscal year 2013, and made specific recommendations toChair of the Compensation Committee with respect to MIP awards for membersreceived an annual retainer of the senior leadership team that report directly to the CEO. Similarly, the CEO and Senior Vice President of Human Resources, with input from the CFO, made recommendations to the Compensation Committee concerning the aggregate number of stock options, Full-Value Shares and Performance Shares to be granted to deserving colleagues under DeVry’s long-term incentive plans for fiscal year 2013, and made specific recommendations with respect to individual equity awards to members of the senior leadership team. As we discuss below, our CEO made specific recommendations to the Compensation Committee for his direct reports, including the other NEOs, regarding performance goals, increases to their annual base salaries, MIP awards and long-term incentive compensation awards for fiscal year 2013. The Compensation Committee discussed the recommendations with management, gave feedback on the recommendations, regularly met in executive session for further discussion and analysis, and consulted with outside advisors. The Committee approved the overall magnitude of MIP awards and equity awards, and made all final compensation decisions with respect to long term incentive awards to NEOs other than Mr. Hamburger. The independent members of the Board approved all compensation decisions for Mr. Hamburger.
Role of Independent Consultants
For fiscal year 2013, management used widely-published compensation surveys to help inform many of the decisions related to the total compensation of our executive team. The Compensation Committee also engaged The Delves Group, which was acquired by Towers Watson effective July 1, 2013, as compensation consultants to review management’s recommendations and provide data and insights to ensure that our executive compensation program is fair, reasonable, and consistent with our compensation objectives. The role of this compensation consultant in our compensation processes was purely advisory in nature$17,500, and the Compensation Committee retained ultimate responsibility for its compensation-related decisions.
The Compensation Committee and management analyzed and considered survey data provided by the consultants to help provide a broad perspective on the marketplace and market trends given DeVry’s stated objective of paying compensation that is competitive with other marketplace alternatives. This survey data was one of many pieces of information included in a subjective process of determining executive compensation. The Compensation Committee used the survey data as general guidance, together with its own knowledge, experience and discretion, in establishing each of the individual elements of NEO compensation for our executives. The Compensation Committee did not target any specific percentile levels in establishing compensation levels and opportunities.
The Role of Performance
A significant portion of the total compensation of the NEOs is performance-based. Financial performance of the organization is one indication of the performance of our NEOs. DeVry’s operating philosophy is that quality leads to growth. This reflects our strong view that quality academic programs and student outcomes are another indication of the performance of our NEOs. With these factors in mind, the Compensation Committee designed DeVry’s compensation program to reward NEOs for both achieving academic quality and student outcomes and for attaining financial targets.
Given the importance of the CEO’s role with respect to critical drivers of organizational performance, the Compensation Committee believes that organizational performance should factor most significantly in the judgments and decisions it makes concerning CEO compensation. This focus may result in the CEO’s compensation being more affected by organizational performance year-to-year than the compensation of other NEOs.
Performance Goals and Measures
We have a confidential five-year strategic plan containing various milestones, which was developed by our executive management team and approved by our Board. The plan is rigorously reviewed and updated annually. At the outset of fiscal year 2013, our executive management team recommended, and our Board subsequently approved, a fiscal year operating plan. The specific, quantitative goals set for NEO and organizational performance in fiscal year 2013 were, in turn, derived from our 2013 operating plan.
The Compensation Committee continued its practice of using annual revenue and earnings per share as the key measures of organizational financial performance. For fiscal year 2013, DeVry’s financial performance goals were revenue of $2,093 million and fully diluted earnings per share of $2.96.
The Compensation Committee used revenue and operating income by institution or segment, as applicable, as key measures in assessing the performance of NEOs in operating roles in fiscal year 2013. We do not disclose the particular institutional or segment performance goals utilized in our MIP or otherwise. We consider such information confidential, as its disclosure would cause competitive harm.
The Compensation Committee considered the organization’s performance goals to represent the best estimate of what the organization could deliver if management, individually and collectively, were to materially satisfy its goals and objectives for the year. The Compensation Committee intended all the goals to be aggressive yet achievable. At the time the Compensation Committee set these goals, it expected that it would take extraordinary performance on the part of management to exceed them to the extent necessary to yield maximum incentive payouts under our MIP. We believe that DeVry’s incentive plans have successfully implemented its philosophy of pay for performance in fiscal year 2013.
Individual Performance Goals
At the beginning of fiscal year 2013, the Compensation Committee approved individual performance goals and objectives for the CEO. The CEO also worked collaboratively with the other NEOs in developing their individual performance goals and to assign weightings to them to place additional emphasis on tactical priorities. The individual performance goals are factors in determining base salary adjustment, annual cash incentive compensation (MIP) and long-term incentive compensation. These individual performance goals reflected functional results or institution performance appropriate for each NEO’s respective role. Each stressed the building of academic outcomes, organizational strength and advancement of DeVry’s core values. The individual performance goals intentionally include elements that can be rated objectively as well as elements that are of a subjective nature. This allows the evaluator — the independent members of the Board in the case of the CEO and the CEO with input and approval from the Compensation Committee in the case of the other NEOs — to assess the individual’s performance against objective criteria, while utilizing its discretion to make adjustments based on the individual’s perceived contributions and other subjective criteria.
The primary individual performance goals and objectives set for our CEO, Mr. Hamburger, were to:
Further improve high quality career oriented education;
Deliver service excellence;
Align costs with enrollment;
Regain enrollment growth;
Make targeted growth investments;
Pursue technology innovation; and
Accomplish public policy goals to support student access and success.
The primary individual performance goals and objectives set for Mr. Wiggins, as Senior Vice President, CFO and Treasurer, were to:
Build operational excellence capability and culture and deliver operational savings targets;
Provide insightful business analysis/planning;
Pursue cost savings opportunities while enhancing diversity of supplier base in purchasing/supply management;
Lead risk management and insurance efforts across the organization;
Pursue tax planning opportunities while ensuring full compliance;
Evaluate alternative capital structure opportunities;
Monitor and enhance internal control and enterprise risk management processes; and
Build the finance team, and develop succession and talent management plans.
The primary individual performance goals and objectives set for Dr. Groenwald, Mr. Pauldine and Mr. Riehs as institutional leaders were to:
Deliver high quality academic programs that yield strong student outcomes;
Optimize operational and financial performance;
Enhance each institution’s culture of service excellence; and
Effectively execute strategic plans, particularly concerning facilities, student services and relationships with accreditation, government and other education professionals.
These goals were selected by the Compensation Committee in the case of the CEO, and by the CEO in the case of the NEOs, because they are reflective of management’s role in DeVry achieving the overall goals set forth in fiscal year 2013 operating plan and, in turn, our long-term strategic objectives. At the same time, these goals were selected because they are reflective of a number of qualities we expect of all of our executives, such as behaviors that:
Promote dedication to the empowerment of our students to achieve their educational and career goals;
Reinforce DeVry’s core TEACH values;
Attract, motivate, reward and retain colleagues who consistently deliver strong performance to ensure DeVry’s long term success; and
Promote teamwork that is focused on meeting the expectations of students and employers of graduates, various outside agencies (regulators and accreditors) and shareholders.
Impact of Fiscal Year 2012 “Say on Pay” Vote
At our 2012 Annual Meeting of Shareholders, the shareholders approved, on an advisory basis, the compensation of DeVry’s named executive officers by an affirmative vote of approximately 92% of the votes cast on the proposal plus broker non-votes. While the Compensation Committee remains open to shareholder feedback, it determined that it was not necessary to alter its compensation practices materially for fiscal year 2013.
Elements of Executive Compensation
The key elements of our executive compensation program for fiscal year 2013 were unchanged from fiscal year 2012, except that SARs and Full-Value Shares, which are discussed in more detail below, were added as long-term incentive compensation for fiscal year 2013:
Annual base salary;
Annual cash incentive (MIP); and
Long-term incentive (LTI) composed of:
The Compensation Committee aimed to provide total compensation to each NEO that was market-competitive, combining a stable base salary element with two at-risk elements (MIP and LTI) available to be earned based upon individual and organizational performance. We believe this approach helps reinforce a culture of performance by recognizing individual potential and rewarding results.
The following is a description for fiscal year 2013 of the three main components of our compensation program, the purpose of each, and the role each played in fiscal year 2013 in meeting the overarching objectives of our compensation program for our NEOs.
Annual Base Salary
We pay base salaries as a secure, predictable component of cash compensation, which is essential for attracting and retaining talented executives. An initial base salary is negotiated at the outset of employment, thereby establishing it as satisfactory to the executive and thus, by inference, consistent with current market conditions. The Compensation Committee then adjusts base salaries, effective as of the early part of each succeeding fiscal year, to reflect the executive’s prior performance and to respond to changes in market conditions.
The Compensation Committee evaluated the CEO’s annual base salary at the beginning of fiscal year 2013. Its evaluation took into account the organization’s general approach to merit increases for other colleagues, actual results versus the performance targets and goals previously set for DeVry and for him for fiscal year 2012. The Compensation Committee also considered its interaction with Mr. Hamburger, its observation of his performance throughout fiscal year 2012 and the perceived market for CEOs, thus adding a further discretionary element to its evaluation. The Compensation Committee believes that our executive compensation program is better because of this element, as it allows for the consideration of unforeseen circumstances and factors that cannot be measured with precision. Although DeVry’s financial performance was below expectations for fiscal year 2013, the Compensation Committee’s evaluation was made at the beginning of fiscal year 2013, based on fiscal year 2012 performance in terms of operational, academic and financial performance. The Compensation Committee found that the CEO contributed materially to these results and achieved or exceeded nearly all of his individual performance objectives for fiscal year 2012. The Committee felt these considerations as well as the uncertain economic outlook at the time and the conservative approach taken with respect to merit increases throughout the organization were sufficient to justify a modest increase in Mr. Hamburger’s base salary. As a result, for fiscal year 2013, the Compensation Committee set Mr. Hamburger’s annual base salary at $839,460, which represented approximately a 2.0% increase over his fiscal year 2012 salary. The Compensation Committee increased the CEO’s salary because the Compensation Committee wanted to reward the CEO for his consistently strong executive performance, his success in building a high quality executive team, his potential to continue building a positive future for DeVry and to ensure that his salary stayed at a level that compared appropriately to the salaries of chief executive officers at other organizations in the marketplace.
Mr. Hamburger recommended to the Compensation Committee the annual base salarychairs of each of the other NEOs atcommittees received an additional annual retainer of $12,500 for their roles as committee chairs. The Chairman of the outsetBoard is entitled to an additional annual retainer of $120,000 for his service. This was prorated during fiscal year 2013. His recommendations were made2023 as Mr. Malafronte was appointed as the Chairman of our Board in consultation with the Senior Vice
President of Human Resources. They were based upon their experience with and analysisNovember 2022. Mr. Malafronte waived his receipt of the market at that time, their monitoring of the compensation levels at other organizations in DeVry’s market and Mr. Hamburger’s assessment of each NEO’s performance for the prior year. Generally, the CEO made his assessments for adjustment of the other NEOs’ fiscal year 2013 salaries at the outset of the year, based on the following seven criteria:
We believe that the annual base salaries paid in fiscal year 2013 to each NEO served our executive compensation objectives to:
Retain our high-quality executives by paying them a market competitive annual base salary; and
Reward individual performance by increasing annual base salaries from prior year levels as a result of DeVry’s overall, and each NEO’s individual, positive performances.
Annual Cash Incentive Compensation
The MIP is a portion of executive cash compensation. It is an annual cash incentive program designed to motivate and reward our NEOs and other management colleagues by putting a substantial portion of cash compensation at risk and paying annual incentives depending upon the extent to which each NEO’s respective individual performance goals for academic quality and student service and DeVry’s financial objectives are met or exceeded. We determine and pay the MIP payments for a particular fiscal year only after that fiscal year has ended and financial results have been audited (i.e., in the beginning of the next fiscal year). Thus, MIP awardsretainer for fiscal year 2013 were determined and paid in2023 (including the early partadditional retainer for his service as Chairman). The Lead Independent Director is also entitled to receive an additional annual retainer of fiscal year 2014, after the results$35,000 for the fiscal year ended June 30, 2013, were confirmed.
The Compensation Committee considered three primary items in determining the amounts of MIP awards for fiscal year 2013:
2013 NEO MIP Targets
MIP Targets were established for each NEO as a percentage of base salary at the beginning of fiscal year 2013. The CEO’s MIP Target was 100% of base salary rate, pursuant to his employment agreement, which is discussed in more detail below. Previously established MIP Targets for the other NEOs were reviewed at the beginning of fiscal year 2013 and not changed. The possible payouts derived from the MIP Targets for all of the NEOs are set forth on the 2013 Grants of Plan-Based Awards table on page 35 below.
Organizational, Institutional and Individual Performance Measures
As discussed above, the Compensation Committee selected DeVry earnings per share, DeVry revenue, institution operating income and institution revenue as the measures most reflective of management’s role in DeVry achieving its operating plan. The Compensation Committee also used individual performance measures described beginning on page 23 because it believed this served to advance our short-term goal of each NEO
meeting his or her respective individual performance goals forservice when a Lead Independent Director is serving in the year, which the Compensation Committee believed would, on a combined basis, help DeVry meet its aggregate goals. These various measures were allocated to best align the measurements with each NEO’s respective role and the goals of the organization and our compensation programs. The relative percentages assigned to each of the organizational, institution and individual performance goals for each NEO forrole. This retainer was prorated during fiscal year 20132023 as Mr. Burke ended his service as Lead Independent Director upon the appointment of an independent Chairman in November 2022. Directors were as follows:reimbursed for any reasonable and appropriate expenditures attendant to Board membership.
| NEO Organizational, Institution, and Individual Performance Measure Allocations | ||||||||||||||||||||
Name | DeVry Earnings Per Share | DeVry Revenue | Institution Operating Income | Institution Revenue | Individual Performance | |||||||||||||||
Daniel M. Hamburger | 40 | % | 30 | % | — | — | 30 | % | ||||||||||||
Timothy J. Wiggins | 40 | % | 30 | % | — | — | 30 | % | ||||||||||||
Susan Groenwald | 20 | % | 10 | % | 25 | % | 15 | % | 30 | % | ||||||||||
David J. Pauldine | 20 | % | 10 | % | 25 | % | 15 | % | 30 | % | ||||||||||
Steven Riehs | 20 | % | 10 | % | 25 | % | 15 | % | 30 | % | ||||||||||
MIP Payouts for Fiscal Year 2013
MIP payouts for each NEO can be as low as zero and also provide an opportunityUnder the Adtalem Nonqualified Deferred Compensation Plan, a director may elect to earn up to 200% of MIP Target, which rewards exceptional performance compared to expectations, over-delivery of strategic initiatives, and/defer all or achievement of initiatives not contemplated at the time goals were set.
The independent members of the Board, based on the recommendation of the Compensation Committee and an evaluation of organizational performance relative to present metrics and Mr. Hamburger’s achievement of individual performance goals, granted Mr. Hamburger a MIP payout of $764,160. This amount was comprised of $265,269 for the 40% portion of his MIP based on DeVry’s earnings per share, $184,094 for the 30% portion of his MIP based on DeVry’s revenue, and $314,797 based on the 30% portion of his MIP based on individual performance.
The process was essentially the same for the other continuing NEOs, except that the CEO reviewed each NEO’s performance, and the CEO’s recommendations were reviewed and approved by the Compensation Committee. NEO MIP awards were based on an evaluation of organizational performance, individual performance (based on individual goals described beginning on page 23), and in the case of Dr. Groenwald and Messrs. Pauldine and Riehs, the performance of the institutions they oversee. Dr. Groenwald and Mr. Riehs received MIP payouts based on the performance of the institutions they oversee. Mr. Pauldine did not receive a payout based on the institution he oversees. Please see “Executive Compensation — 2013 Summary Compensation Table” and “Executive Compensation — 2013 Grants of Plan-Based Awards” below for specific information about annual cash incentive (MIP) awards for the NEOs.
We believe the MIP payouts made to our NEOs for fiscal year 2013 served our executive compensation objective of pay for performance. They rewarded NEOs to the extent they met or exceeded pre-established individual performance goals and financial performance goals related to the institutions they oversee.
Long-Term Incentive Compensation
In fiscal year 2013, the Compensation Committee continued its reliance on long-term incentive vehicles to align the long-term interests of management and shareholders. In doing so, the Compensation Committee encouraged our executives to focus on the behaviors and initiatives that would lead to increased long-term value to our students and other stakeholders. The Compensation Committee believes that long-term equity compensation also is an important retention tool and, thus, the Compensation Committee chose to use a four-year graded vesting schedule for grants of stock options and Full-Value Shares and a three-year cliff vesting schedule for Performance Shares, to encourage longer-term focus and retention.
The Compensation Committee granted equity awards to each of the NEOs in August 2012 based on both retrospective and prospective considerations and organizational and individual considerations. The Compensation Committee took into account the same seven criteria described in the “Annual Base Salary”
section above in determining the size of these awards. The Compensation Committee targeted the value of the long-term equity compensation for each NEO to represent a substantial percentage of total compensation to serve two complementary objectives of our compensation program: the long-term retention of quality executives and the creation of long-term value. The Compensation Committee granted stock options, Performance Shares and Full-Value Shares. The Compensation Committee chose to introduce Full-Value Shares (i.e., time-based vesting restricted stock units) as part of its ongoing focus on meeting the objectives of the long-term incentive plan, to drive long-term performance, increase retention of key executives and provide balance in the forms of compensation provided to executives. The Committee believed delivering a portion of the overall long-term incentive awardscash retainer. Any amount so deferred is, at the director’s election, valued as if invested in various investment choices made available by the formCompensation Committee for this purpose, and is payable in cash installments, or as a lump-sum on or after termination of Full-Value Shares was an important component to meeting these objectives. For awards grantedservice as a director, or at a later date specified by the director. No non-employee directors deferred any portion of their compensation in fiscal year 2012, 70% were delivered in stock options and 30% were delivered in Performance Shares. For awards granted in August2023.
Adtalem Global Education Inc. | 2023 Proxy Statement 34 |
This table discloses all non-employee director compensation was allocated via the different award vehicles, as follows:
Award Vehicle | CEO | Other NEOs | ||||||
Stock Options | 60 | % | 50 | % | ||||
Full-Value Shares | 15 | % | 25 | % | ||||
Performance Shares | 25 | % | 25 | % | ||||
The Compensation Committee granted incentive stock options (ISOs) with a value of up to the $100,000 IRS limitation applicable to each one-year vesting period. To the extent this limitation was met for any NEO, the remaining portion of the stock option award was issued in the form of non-qualified stock options. The Compensation Committee recognizes that DeVry may not receive a tax deduction for ISOs, but weighed this consideration against the tax benefit ISOs provide to colleagues and the consequent enhancement to DeVry’s ability to attract and retain executives and determined it was in DeVry’s best interest to continue utilizing ISOs in the manner described.
The Compensation Committee granted Performance Shares to NEOs, in addition to stock options and Full-Value Shares. The Compensation Committee approved additional performance criteria for Performance Shares granted for fiscal year 2013 that are designed to emphasize the importance of student outcomes for DeVry. Performance Shares granted for fiscal year 2013 will vest based on a weighted-average of measurements of student learning outcomes across DeVry’s institutions once a minimum level of Return on Invested Capital (“ROIC”) is attained. Some key design elements of the Performance Share program are:
There is a three-year performance period associated with each award of Performance Shares.
The Performance Shares vest based on the level of attainment of performance targets during the performance period but shares of Common Stock are only distributed after the end of the three-year performance period.
The performance measures are a combination of academic and student outcome goals during the fiscal year 2013-2015 period for each of the DeVry institutions, with a minimum level of ROIC that must be attained over this same three-year performance period. The minimum level of ROIC that must be attained for any Performance Shares grantedprovided in fiscal year 2013 to vest is 10.0%. A brief description of the academic and student outcome performance measure and weightings for each institution is as follows:
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At the end of the three-year performance period, the Compensation Committee will certify the performance, and participants will earn from zero up to 120% of the target number of Performance Shares based on performance against the goals during the performance period.
Details concerning fiscal year 2013 stock option, Full-Value Share and Performance Share awards for the NEOs appear in the 2013 Grants of Plan-Based Awards table on page 35.
We believe that the long-term incentive compensation granted at the beginning of fiscal year 2013 to each NEO served our executive compensation objectives to:
Align NEO compensation with our pre-established objectives;
Reward individual and DeVry performance by tying a portion of the stock options and Performance Shares that we granted to each NEO to both our organization’s and each NEO’s individual performance against pre-established criteria; and
Provide incentives consistent with the overall goal of enhancing long-term value by requiring the stock options and Full-Value Shares to vest in equal installments over a four-year period and Performance Shares to be distributed at the end of a three-year performance period based on actual performance, which provides incentives to our NEOs to remain with DeVry for an extended period of time in order to realize the greatest possible value of their equity compensation awards.
Stock Appreciation Rights and Full-Value Share Awards Granted to Mr. Hamburger
As part of his overall compensation package for fiscal year 2013, the independent directors, upon the recommendation of the Compensation Committee, approved Long-Term Incentive (LTI) compensation for Mr. Hamburger valued at $3,500,000, consisting of 60% stock options, 25% Performance Shares, and 15% Full Value Shares to be granted under any of DeVry’s currently maintained equity compensation plans. DeVry attempted to implement Mr. Hamburger’s stock option grant under the DeVry Inc. Amended and Restated 2005 Incentive Plan (the “2005 Plan”) and filed on his behalf a report on Form 4 indicating that Mr. Hamburger had acquired 255,425 stock options. It subsequently came to DeVry’s attention that Mr. Hamburger’s stock option grants in fiscal years 2009, 2011, 2012, and 2013 may have exceeded the 150,000 limit on the number of stock options that may be granted to any individual participant in a fiscal-year period under the 2005 Plan. Mr. Hamburger had not exercised any of the stock options in question.
The matter was investigated by a cross-functional DeVry working group, advised by external counsel and working in coordination with DeVry’s external auditors, all under the oversight of the Compensation Committee. This group concluded that any stock options purportedly granted under the 2005 Plan in excess of the 150,000 annual stock option limit were, in fact, unfulfilled, as such awards were null and void under the express terms of the 2005 Plan. Accordingly, DeVry filed on Mr. Hamburger’s behalf amended reports on Form 4 stating that he had not, in fact, acquired more than 150,000 stock options under the 2005 Plan in fiscal year 2013 or in any of the preceding years in question. With respect2023 to the implementationdirectors of Mr. Hamburger’s fiscal year 2013 stock option grant, DeVry was able to use 87,910 shares available under the DeVry 2003 Incentive Stock Plan (the “2003 Plan”) to fulfill part of the Compensation Committee’s original intentions, leaving 17,515 stock options still unfulfilledAdtalem for the 2013 fiscal year,their service as reflected in the following table.directors.
| | | | | | |
| | Fees Earned or | | Stock | | |
| | Paid in Cash | | Awards | | Total |
Name | | ($)(1) | | ($)(2) | | ($) |
William W. Burke | | 118,750 | | 125,082 | | 243,832 |
Charles DeShazer | | 85,000 | | 125,082 | | 210,082 |
Mayur Gupta | | 85,000 | | 125,082 | | 210,082 |
Donna J. Hrinak |
| 97,500 |
| 125,082 |
| 222,582 |
Georgette Kiser |
| 97,500 |
| 125,082 |
| 222,582 |
Liam Krehbiel(3) | | 105,095 | | 125,082 | | 230,177 |
Lyle Logan(4) | | 36,375 | | — | | 36,375 |
Michael W. Malafronte |
| 25,625 |
| 125,082 |
| 150,707 |
Sharon L. O’Keefe |
| 94,375 |
| 125,082 |
| 219,457 |
Kenneth J. Phelan |
| 98,125 |
| 125,082 |
| 223,207 |
Lisa W. Wardell |
| 63,750 |
| 125,082 |
| 188,832 |
Fiscal Year | Grant Date | Option Grants Purportedly Made(1) | Vesting Schedule | Exercise Price | Grant Date Stock Price | Expiration Date | Option Grants Unfulfilled | |||||||
| 2009 | 8/28/2008 | 195,200 | 25% per year over four years | $51.23 | $51.23 | 8/28/2018 | 45,200 | |||||||
| 2011 | 8/27/2010 | 184,100 | 25% per year over four years | $38.71 | $38.71 | 8/27/2020 | 34,100 | |||||||
| 2012 | 8/24/2011 | 170,200 | 25% per year over four years | $41.87 | $41.87 | 8/24/2021 | 20,200 | |||||||
| 2013 | 8/29/2012 | 255,425 | 25% per year over four years | $18.60 | $18.60 | 8/29/2022 | 17,515 | |||||||
| Total | 804,925 | — | — | — | — | 117,015 |
| (1) | Includes |
The Compensation Committee and the independent directors recognized that their intentions with respect to Mr. Hamburger’s LTI compensation in the impacted years remained unrealized as a result of the foregoing. Desiring to fulfill both their original intentions and Mr. Hamburger’s expectations, they acted to replace the unfulfilled LTI, as closely as possible, taking into account both quantitative and qualitative considerations. The Compensation Committee elected to use Stock Appreciation Rights (“SARs”) as the primary replacement vehicle because they replicated, as closely as practicable, the attributes of the unfulfilled stock option grants while remaining compliant with the terms of the 2003 Plan and the 2005 Plan. Other than as described below, they designed the replacement grants to track the form of the unfulfilled stock option grants, including the original vesting schedule and expiration date, and to minimize the tax and accounting impact both to DeVry and to Mr. Hamburger. On February 13, 2013, the independent directors, upon the recommendation of the Compensation Committee, granted the following LTI compensation to Mr. Hamburger:
45,200 SARs, which are fully vested, have an exercise price of $51.23 and have an expiration date of August 28, 2018.
34,100 SARs, 50% of which were vested on the grant date, 25% of which vested on August 27, 2013, and 25% of which will vest on August 27, 2014. These SARs have an exercise price of $38.71 and have an expiration date of August 27, 2020.
20,200 SARs, 25% of which were vested on the grant date, 25% of which vested on August 24, 2013, and 25% of which will vest on each of August 24, 2014 and August 24, 2015. These SARs have an exercise price of $41.87 and have an expiration date of August 24, 2021.
17,515 SARs, 25% of which vested on August 29, 2013 and 25% of which will vest on each of the three subsequent anniversaries thereof. These SARs have an exercise price of $30.54 and have an expiration date of August 29, 2022.
6,850 Full-Value Shares, which vest 25% on August 29, 2013 and 25% on each of the three subsequent anniversaries thereof.
With one exception, the vesting schedules and the exercise prices for each of the replacement SAR grants correspond to the vesting schedules and exercise prices of the original, unfulfilled stock option grants. The sole exception pertains to the grant of 17,515 SARs set to begin vesting on August 29, 2013. With respect to that grant only, the exercise price as of the February 13, 2013 grant date was higher than the exercise price of the original, unfulfilled stock options. The exercise price of the SARs was $30.54, corresponding to the closing price of DeVry’s common stock on the grant date. The exercise price of the original, unfulfilled stock options was $18.60, corresponding to the closing price of DeVry’s common stock on August 29, 2012. The difference, which was due to appreciation in DeVry’s common stock price between August 29, 2012 and February 13, 2013, represented value to Mr. Hamburger. In order to make Mr. Hamburger whole for these “in the money” stock options, the independent directors granted him 6,850 Full-Value Shares according to the following formula. The number of Full-Value Shares granted to Mr. Hamburger was determined with the goal of replacing that loss and calculated by multiplying (i) the difference between the replacement SARs exercise price and the unfulfilled option exercise price of $11.94 by (ii) the number of unfulfilled options of 17,515, and (iii) then dividing the foregoing product by the then-current fair market stock value of $30.54 to arrive at a number of Fair Value Shares of 6,850 to award to Mr. Hamburger. In this way, the aggregate value of all of the replacement awards was expected to approximate, as closely as practicable, the value of the unfulfilled stock option awards and the original intention of the Compensation Committee.
DeVry determined that the financial impact of the unfulfilled awards was immaterial to the individual prior fiscal periods and recorded a net adjustment in fiscal year 2013 for the reversal of stock-based compensation expense previously recorded for the unfulfilled awards, partially offset by expense related to the immediate vesting of the replacement awards. In addition, DeVry expects to recognize expense over the remaining vesting period of the replacement awards which will approximate the net adjustment that was recorded in fiscal year 2013.
All references in this Proxy Statement to the fiscal year 2009, 2011, 2012 and 2013 stock option grants described above reflect only the stock options that were validly granted under the 2003 Plan or 2005 Plan, and
exclude the option grants that were unfulfilled. Also see the 2013 Summary Compensation Table, 2013 Grants of Plan-Based Awards and 2013 Outstanding Equity Awards at Fiscal Year-End and the related footnotes, which contain information revised to reflect only the stock options that were validly granted under the 2003 Plan or 2005 Plan, and exclude the option grants that were unfulfilled.
Incentive Compensation Recoupment Policy
DeVry has adopted an incentive compensation recoupment policy, which is applicable to all executive officers. The policy provides that, in addition to any other remedies available to DeVry (but subject to applicable law), if the Board of Directors or any committee of the Board of Directors determines that it is appropriate, DeVry may recover (in whole or in part) any incentive payment, commission, equity award or other incentive compensation received by an executive officer of DeVry to the extent that such incentive payment, commission, equity award or other incentive compensation is or was paid on the basis of any financial results that are subsequently restated due to executive officer conduct that is determined by the independent Directors to have been knowing or intentional, fraudulent or illegal.
All Other Compensation
In general, we do not provide benefits or perquisites to our NEOs that are not available to other colleagues, with the exception of these:
Matching contributions under the DeVry Inc. Nonqualified Deferred Compensation Plan;
A leased automobile or cash automobile allowance; and
Personal financial planning services (for the NEOs other than the CEO).
These benefits and perquisites make up the smallest portion of each NEO’s total compensation package. The nature and quantity of perquisites provided by DeVry did not change materially in fiscal year 2013 versus 2012, consistent with our philosophy that benefits and perquisites should not represent a meaningful component of our compensation program. The Compensation Committee periodically reviews the benefit and perquisite program to determine if adjustments are appropriate.
The “All Other Compensation” column of the 2013 Summary Compensation Table shows the amounts of benefit and perquisite compensation we provided for fiscal year 2013 to each of the NEOs.
Deferred Compensation
DeVry maintains the DeVry Inc. Nonqualified Deferred Compensation Plan (the “Deferred Plan”). The Deferred Plan is a voluntary, non-tax qualified, deferred compensation plan for executives and Directors to save for retirement by deferring a portion of their current compensation until termination of service with DeVry or other specified dates. We credit matching contributions to participants’ accounts under the Deferred Plan to the extent their matching contributions to our tax-qualified Success Sharing 401(k) Retirement Plan are limited by the Internal Revenue Code. The Deferred Plan enables the NEOs and other colleagues with a certain level of annual compensation ($115,000 for calendar year 2013) to save a portion of their income for retirement on a scale consistent with other colleagues not subject to IRS limits. We did not contribute to the Deferred Plan except to match contributions made by the NEOs during the 2013 fiscal year. We do not have a defined benefit pension plan, and, therefore, our Success Sharing 401(k) Retirement Plan and the Deferred Plan are the only retirement savings vehicles for executives.
Stock Ownership Guidelines
In February 2010, the Board of Directors adopted stock ownership guidelines that apply to all Directors and executive officers of DeVry, including the NEOs. Under the guidelines, all executive officers are expected to maintain ownership of DeVry’s Common Stock equal to a multiple of his or her current base salary (as adjusted from time to time), as follows: the CEO — three times current base salary; all other NEOs — two times current base salary; and all other executive officers — one times current base salary. All Directors are expected to maintain ownership of DeVry stock equal to a multiple of three times his or her current annual retainer (as
adjusted from time to time). Shares that count toward satisfaction of the guidelines include DeVry stock directly and/or beneficially owned, DeVry stock held in DeVry’s Profit Sharing 401(k) Retirement Plan or other private accounts, DeVry stock held in DeVry’s Nonqualified Deferred Compensation Plan, vested Full-Value Shares, and the after-tax value of unvested Full-Value Shares and/or vested in-the-money options, provided that these can make up no more than 50% of the ownership expectation. Unvested Performance Shares do not count toward satisfaction of these guidelines. All participants who were Directors or executive officers when the guidelines were adopted will have until August 2014 to achieve his or her respective expected stock ownership level, and participants who became Directors or executive officers after February 2010 will have until five years following their election or date of hire, as the case may be, to achieve his or her respective expected stock ownership level. In light of the significant drop in the market value of DeVry Common Stock, and the resulting drop in the value of executive officer and Director option holdings, the Compensation Committee approved revisions to DeVry’s stock ownership guidelines in fiscal year 2012 to: (1) deem that ownership guidelines are met for an executive who has met the ownership threshold and not sold his or her equity but fallen below the Board’s stock ownership guidelines solely due to declines in DeVry Common Stock prices and (2) require, absent exigent circumstances, executives who have not yet met the guidelines at the end of five years to retain, until the guidelines are satisfied, 100% of the after-tax shares received from option exercises or the vesting of Full-Value Shares or Performance Shares.
Employment Agreements
DeVry and Mr. Hamburger entered into an employment agreement effective November 15, 2006, that provides for an initial base salary, annual salary increases and annual cash incentive during the term and sets forth the severance benefits that will be provided upon termination of his employment under certain conditions.
DeVry entered into substantially similar employment agreements with Mr. Pauldine, effective October 12, 2009, with Dr. Groenwald, effective September 1, 2011, with Mr. Wiggins, effective January 3, 2012, and with Mr. Riehs effective May 17, 2013. The employment agreements set forth, among other things, the severance benefits that will be provided upon certain employment termination scenarios.
The Compensation Committee believes that these employment agreements provide:
security and incentives that help enable DeVry to retain and attract top executives,
greater ability for DeVry to retain its key executives following the occurrence of an extraordinary corporate transaction, and
benefits to DeVry, including non-competition and non-solicitation covenants by the NEOs.
Each of these employment agreements is discussed in detail in the narrative accompanying the 2013 Summary Compensation Table under the caption “Employment Agreements,” and DeVry’s obligation to provide severance benefits in accordance with the agreements is discussed beginning on page 40 under the caption “2013 Potential Payments Upon Termination or Change-in-Control.”
Deductibility of Compensation
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public companies for certain compensation in excess of $1 million per year paid to “covered employees,” defined as the chief executive officer and the three other most highly compensated officers (other than the chief financial officer) employed as executive officers at year-end. Certain compensation, including “performance-based compensation,” may qualify for an exemption from the deduction limit if it satisfies certain requirements under Section 162(m). The Compensation Committee views the tax deductibility of executive compensation as one factor to be considered in the context of its overall compensation philosophy. The Compensation Committee reviews each material element of compensation on a continuing basis and takes steps to assure deductibility if that can be accomplished while still remaining faithful to our executive compensation philosophy and objectives.
Base salaries do not qualify as “performance-based compensation” under Section 162(m). However the base salaries of DeVry’s NEOs are below the $1 million level. Amounts paid to an executive that are excludable from gross income, such as Success Sharing Retirement Plan and Deferred Plan contributions reflected in the “All
Other Compensation” column in the 2013 Summary Compensation Table, are not subject to Section 162(m). Incentive compensation paid by DeVry in fiscal year 2013 under the MIP that is based on organizational performance (whether DeVry or another institution) is expected to qualify as “performance-based compensation.” Gains on the exercise of stock options and SARs and income recognized upon the vesting of Performance Shares also qualify as performance-based compensation under Section 162(m).
Changes for Fiscal Year 2014
The Compensation Committee changed the relative percentages assigned to each of the organizational, institution and individual performance goals for the CEO for fiscal year 2014 as follows: 45% to DeVry earnings per shares, 40% to DeVry revenue and 15% to individual performance, which had been allocated 40%, 30% and 30%, respectively, for fiscal year 2013.
In addition, the Compensation Committee approved a new long-term incentive compensation allocation for CEO awards for fiscal year 2014, such that it will be composed of 50% stock options, 25% Performance Shares, and 25% Full-Value Shares. These allocations will now be the same as the allocations used for the other members of DeVry’s senior leadership team.
The Compensation Committee also changed from 10.0% to 5.0% the minimum level of ROIC that must be attained for any Performance Shares granted in fiscal year 2014 to vest regardless of the academic and student outcome performance. The purpose of the Performance Shares granted in fiscal year 2013 and again in fiscal year 2014 is to drive focus on achieving exemplary results in academics and student outcomes. The ROIC threshold is effectively a “pass/fail” test and does not affect the size of the payout. Once the minimum threshold is met, the size of the payout is driven entirely by meeting or exceeding the academic and student outcomes goals. The Compensation Committee elected to make this change to the minimum ROIC performance level for fiscal year 2014 based on the Committee’s intention that the ROIC threshold be achievable in the current economic environment, and their assessment of the relationship between DeVry’s minimum ROIC threshold and recent historical ROIC performance of competitor organizations.
2013 Summary Compensation Table
This table shows the compensation of DeVry’s Chief Executive Officer, Chief Financial Officer and each of the other NEOs for fiscal years 2013, 2012 and 2011, which ended June 30, 2013, June 30, 2012 and June 30, 2011, respectively.
Name and Principal Position | Year | Salary ($)(1) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||
Daniel Hamburger | 2013 | 835,662 | 1,601,695 | (5) | 2,935,450 | (5) | 764,160 | 107,443 (6) | 6,244,410 | |||||||||||||||||||
Chief Executive Officer and | 2012 | 848,462 | 1,337,960 | 2,625,000 | (5) | 123,450 | 112,389 (6) | 5,047,261 | ||||||||||||||||||||
President | 2011 | 788,067 | 1,336,218 | 2,479,500 | (5) | 867,000 | 101,698 (6) | 5,572,483 | ||||||||||||||||||||
Timothy J. Wiggins | 2013 | 405,385 | 398,180 | 370,227 | 202,515 | 41,563 (7) | 1,417,870 | |||||||||||||||||||||
Senior Vice President, | 2012 | 200,000 | 889,178 | 209,870 | 31,515 | 29,241 (7) | 1,359,804 | |||||||||||||||||||||
Chief Financial Officer and | ||||||||||||||||||||||||||||
Treasurer | ||||||||||||||||||||||||||||
Susan Groenwald | 2013 | 266,724 | 437,195 | 127,277 | 194,274 | 35,694 (8) | 1,061,164 | |||||||||||||||||||||
President, Chamberlain College of Nursing | ||||||||||||||||||||||||||||
David J. Pauldine | 2013 | 455,552 | 422,997 | 393,437 | 165,691 | 53,198 (9) | 1,490,875 | |||||||||||||||||||||
President, DeVry University | 2012 | 456,477 | 252,735 | 562,625 | 88,833 | 52,818 (9) | 1,413,488 | |||||||||||||||||||||
| 2011 | 417,840 | 215,358 | 490,115 | 318,597 | 46,113 (9) | 1,488,023 | ||||||||||||||||||||||
Steven Riehs | 2013 | 340,012 | 211,498 | 196,719 | 179,118 | 44,057 (10) | 971,404 | |||||||||||||||||||||
President, DeVry Medical | 2012 | 335,004 | 126,575 | 282,188 | 68,481 | 39,130 (10) | 851,378 | |||||||||||||||||||||
International and President, | 2011 | 309,179 | 126,456 | 288,035 | 181,461 | 31,653 (10) | 936,784 | |||||||||||||||||||||
International and Professional Education | ||||||||||||||||||||||||||||
| (2) | The amounts reported in the Stock Awards column represent the grant date fair value of |
Initial Option Grant Date | # of Options Awarded | Grant Date Fair Value of Initial Option Award | # of Options Unfulfilled | Adjustment to Grant Date Fair Value for Unfulfilled Awards | # of Make-Whole SARs | Grant Date Fair Value of SARs | ||||||||||||||||||
8/28/2008 | 195,200 | $ | 4,579,392 | 45,200 | $ | (1,060,392 | ) | 45,200 | $ | 384,652 | ||||||||||||||
8/27/2010 | 184,100 | $ | 3,043,173 | 34,100 | $ | (563,673 | ) | 34,100 | $ | 329,406 | ||||||||||||||
8/24/2011 | 170,000 | $ | 2,978,500 | 20,200 | $ | (353,500 | ) | 20,200 | $ | 209,474 | ||||||||||||||
8/29/2012 | 255,425 | $ | 1,943,784 | 17,515 | $ | (133,289 | ) | 17,515 | $ | 201,423 | ||||||||||||||
|
|
|
| |||||||||||||||||||||
| 117,015 | 117,015 | |||||||||||||||||||||||
The amounts shown in the Option Awards column of the 2013 Summary Compensation Table for fiscal years 2011, 2012 and 2013 reflect (i) the adjustment to the initial grant date fair value resulting from the unfulfilled stock options for fiscal years 2011 and 2012; and (ii) for fiscal year 2013, the aggregate grant date fair value of the SAR awards ($1,124,955), in each case as shown in the above table. The amount shown in the Stock Awards column of the 2013 Summary Compensation Table for fiscal year 2013 includes the $209,199 grant date fair value of the additional 6,850 Full-Value Shares granted on February 13, 2013.
For more information, please see the discussion in the “Compensation Discussion and Analysis — Elements of Executive Compensation — Long-Term Incentive Compensation — Stock Appreciation Rights and Full-Value Shares to Mr. Hamburger” beginning on page 28.
Employment Agreement with Mr. Hamburger
DeVry and Mr. Hamburger are parties to an employment agreement dated as of November 15, 2006, which provides for (i) an initial salary of $675,000 per year, subject to annual increases (but no decreases), (ii) an annual cash incentive under the MIP targeted at 100% of base salary, (iii) benefits and perquisites made available to senior management generally, and (iv) reimbursement of expenses consistent with DeVry’s policy in effect from time to time.
Employment Agreements with Mr. Pauldine, Dr. Groenwald, Mr. Riehs and Mr. Wiggins
Effective October 12, 2009, DeVry entered into an employment agreement with Mr. Pauldine. Effective September 1, 2011, DeVry entered into a similar employment agreement with Dr. Groenwald. Effective January 3, 2012, DeVry entered into a similar employment agreement with Mr. Wiggins. Effective May 17, 2013, DeVry entered into a similar employment agreement with Mr. Riehs. Each of these employment
agreements provides for (i) a base salary, subject to annual increases (but no decreases unless in the case of an across-the-board percentage reduction affecting all executives equally at the NEO’s respective level); (ii) an annual cash incentive under the MIP targeted as a percentage of base salary; (iii) benefits and perquisites made available to senior management generally; (iv) reimbursement of expenses consistent with DeVry’s policy in effect from time to time; and (v) severance benefits that will be provided upon certain terminations of employment, which are described beginning on page 40 under the caption “2013 Potential Payments Upon Termination or Change-in-Control.”
Stock Appreciation Rights and Full-Value Shares Awards Granted to Mr. Hamburger
As described under the caption “Compensation Discussion and Analysis — Elements of Executive Compensation — Long-Term Incentive Compensation — Stock Appreciation Rights and Full-Value Shares Awards Granted to Mr. Hamburger” beginning on page 28, DeVry granted certain SARs and Full-Value Shares to Mr. Hamburger on February 13, 2013 to replace the value of previously unfulfilled stock option awards.
2013 Grants of Plan-Based Awards
This table sets forth information for each NEO with respect to (1) estimated future payouts under non-equity incentive plan awards that could have been earned for fiscal year 2013, (2) estimated future payouts under equity incentive plan awards granted in fiscal year 2013, (3) stock options and SARs granted in fiscal year 2013 and (4) Full-Value Shares granted in fiscal year 2013.
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Shares of | All Other Underlying | Exercise Awards | Grant Date Stock and | |||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($)(3) | Target ($)(4) | Maximum ($)(5) | Threshold (#)(6) | Target (#)(7) | Maximum (#)(8) | Stock or Units (#) | Options (#)(9) | ($/sh) (10) | Option Awards(11) | |||||||||||||||||||||||||||||||||
Daniel M. Hamburger | 419,730 | 839,460 | 1,678,920 | |||||||||||||||||||||||||||||||||||||||||
| 8/29/2012 | 37,632 | 47,040 | 56,448 | $ | 867,418 | |||||||||||||||||||||||||||||||||||||||
| 8/29/2012 | 237,910 | 18.60 | $ | 1,810,495 | ||||||||||||||||||||||||||||||||||||||||
| 8/29/2012 | 28,230 | 18.60 | $ | 525,078 | ||||||||||||||||||||||||||||||||||||||||
| 2/13/2013 | 6,850 | (12) | 30.54 | $ | 209,199 | |||||||||||||||||||||||||||||||||||||||
| 2/13/2013 | 117,015 | (12) | (12 | ) | $ | 1,124,954 | ||||||||||||||||||||||||||||||||||||||
Timothy J. Wiggins | 122,100 | 244,200 | 488,400 | |||||||||||||||||||||||||||||||||||||||||
| 8/29/2012 | 8,600 | 10,750 | 12,900 | $ | 198,230 | |||||||||||||||||||||||||||||||||||||||
| 8/29/2012 | 48,650 | 18.60 | $ | 370,227 | ||||||||||||||||||||||||||||||||||||||||
| 8/29/2012 | 10,750 | 18.60 | $ | 199,950 | ||||||||||||||||||||||||||||||||||||||||
Susan Groenwald | 95,000 | 190,000 | 380,000 | |||||||||||||||||||||||||||||||||||||||||
| 8/29/2012 | 2,960 | 3,700 | 4,400 | $ | 68,228 | |||||||||||||||||||||||||||||||||||||||
| 5/15/2013 | 7,896 | 9,870 | 11,844 | $ | 300,147 | |||||||||||||||||||||||||||||||||||||||
| 8/29/2012 | 16,725 | 18,60 | $ | 127,277 | ||||||||||||||||||||||||||||||||||||||||
| 8/29/2012 | 3,700 | 18.60 | $ | 68,820 | ||||||||||||||||||||||||||||||||||||||||
David J. Pauldine | 160,522 | 321,044 | 642,088 | |||||||||||||||||||||||||||||||||||||||||
| 8/29/2012 | 9,136 | 11,420 | 13,704 | $ | 210,585 | |||||||||||||||||||||||||||||||||||||||
| 8/29/2012 | 51,700 | 18.60 | $ | 393,437 | ||||||||||||||||||||||||||||||||||||||||
| 8/29/2012 | 11,420 | 18.60 | $ | 212,412 | ||||||||||||||||||||||||||||||||||||||||
Steven Riehs | 120,000 | 240,000 | 480,000 | |||||||||||||||||||||||||||||||||||||||||
| 8/29/2012 | 4,568 | 5,710 | 6,852 | $ | 105,292 | |||||||||||||||||||||||||||||||||||||||
| 8/29/2012 | 25,850 | 18.60 | $ | 196,719 | ||||||||||||||||||||||||||||||||||||||||
| 8/29/2012 | 5,710 | 18.60 | $ | 106,206 | ||||||||||||||||||||||||||||||||||||||||
45,200 SARs, which are fully vested, have an exercise price of $51.23 and have an expiration date of August 28, 2018.
34,100 SARs, 50% of which were vested on the grant date, 25% of which vested on August 27, 2013 and 25% of which will vest on August 27, 2014. These SARs have an exercise price of $38.71 and have an expiration date of August 27, 2020.
20,200 SARs, 25% of which were vested on the grant date, 25% of which vested on August 24, 2013 and 25% of which will vest on each of August 24, 2014 and August 24, 2015. These SARs have an exercise price of $41.87 and have an expiration date of August 24, 2021.
17,515 SARs, 25% of which vested on August 29, 2013 and 25% of which will vest on each subsequent anniversary thereof. These SARs have an exercise price of $30.54 and have an expiration date of August 29, 2022.
2013 Outstanding Equity Awards at Fiscal Year-End
This table sets forth information for each NEO with respect to (i) each grant of options and SARs to purchase DeVry Common Stock that was made at any time, has not yet been exercised, and remained outstanding at June 30, 2013 and (ii) unvested Full-Value Shares and Performance Shares as of June 30, 2013.
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($)(4) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(7) | Market Value of Shares or Units of Stock That Have Not Vested ($)(8) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(10) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(11) | ||||||||||||||||||||||||
Daniel Hamburger | 30,000 | (2) | 0 | 21.40 | 06/15/2015 | |||||||||||||||||||||||||||
| 45,750 | (1) | 0 | 21.62 | 10/03/2016 | ||||||||||||||||||||||||||||
| 50,000 | (1) | 0 | 28.80 | 02/06/2017 | ||||||||||||||||||||||||||||
| 110,000 | (1) | 0 | (1) | 34.53 | 08/31/2017 | |||||||||||||||||||||||||||
| 150,000 | (5) | 0 | (5) | 51.23 | 08/28/2018 | |||||||||||||||||||||||||||
| 87,318 | (3) | 29,107 | (3) | 52.28 | 08/28/2019 | |||||||||||||||||||||||||||
| 74,758 | (5) | 75,242 | (5) | 38.71 | 08/27/2020 | |||||||||||||||||||||||||||
| 37,428 | (5) | 112,572 | (5) | 41.87 | 08/24/2021 | |||||||||||||||||||||||||||
| 45,200 | (6) | 0 | (6) | 51.23 | 08/28/2018 | |||||||||||||||||||||||||||
| 17,292 | (6) | 16,808 | (6) | 38.71 | 08/27/2020 | |||||||||||||||||||||||||||
| 5,122 | (6) | 15,078 | (6) | 41.87 | 08/24/2021 | |||||||||||||||||||||||||||
| 0 | (6) | 17,515 | (6) | 30.54 | 08/29/2022 | |||||||||||||||||||||||||||
| 0 | (5) | 237,190 | (5) | 18.60 | 08/29/2022 | 35,080 | 1,088,182 | (9) | 114,150 | 3,540,933 | ||||||||||||||||||||||
Timothy J. Wiggins | 3,393 | 10,182 | 36.99 | 02/24/2022 | ||||||||||||||||||||||||||||
| 0 | 48,650 | 18.60 | 08/29/2022 | 26,973 | 836,702 | 13,180 | 383,717 | |||||||||||||||||||||||||
Susan Groenwald | 2,000 | 0 | 19.45 | 01/03/2016 | ||||||||||||||||||||||||||||
| 900 | 0 | 21.62 | 10/03/2016 | |||||||||||||||||||||||||||||
| 2,000 | 0 | 34.53 | 08/31/2017 | |||||||||||||||||||||||||||||
| 1,525 | 0 | 51.23 | 08/28/2018 | |||||||||||||||||||||||||||||
| 1,875 | 625 | 52.28 | 08/28/2019 | |||||||||||||||||||||||||||||
| 3,575 | 3,575 | 38.71 | 08/27/2020 | |||||||||||||||||||||||||||||
| 1,987 | 5,963 | 41.87 | 08/24/2021 | |||||||||||||||||||||||||||||
| 0 | 16,725 | 18.60 | 08/29/2022 | 3,987 | 123,677 | 16,430 | 509,659 | |||||||||||||||||||||||||
David J. Pauldine | 26,480 | (1) | 0 | 21.76 | 10/24/2015 | |||||||||||||||||||||||||||
| 18,000 | (1) | 0 | 21.62 | 10/03/2016 | ||||||||||||||||||||||||||||
| 31,000 | (1) | 0 | (1) | 34.53 | 08/31/2017 | |||||||||||||||||||||||||||
| 25,625 | (3) | 0 | (3) | 51.23 | 08/28/2018 | |||||||||||||||||||||||||||
| 12,216 | (3) | 5,984 | (3) | 52.28 | 08/28/2019 | |||||||||||||||||||||||||||
| 14,825 | (3) | 14,825 | (3) | 38.71 | 08/27/2020 | |||||||||||||||||||||||||||
| 8,037 | (3) | 24,113 | (3) | 41.87 | 08/24/2021 | |||||||||||||||||||||||||||
| 0 | 51,700 | 18.60 | 08/29/2022 | 11,420 | 354,248 | 23,130 | 538,321 | |||||||||||||||||||||||||
Steven Riehs | 1,373 | (1) | 0 | 15.75 | 11/15/2014 | |||||||||||||||||||||||||||
| 1,812 | (2) | 0 | 21.40 | 06/15/2015 | ||||||||||||||||||||||||||||
| 4,955 | (1) | 0 | 21.62 | 10/03/2016 | ||||||||||||||||||||||||||||
| 9,036 | (1) | 0 | (1) | 34.53 | 08/31/2017 | |||||||||||||||||||||||||||
| 15,025 | (3) | 0 | (3) | 51.23 | 08/28/2018 | |||||||||||||||||||||||||||
| 7,734 | (3) | 3,916 | (3) | 52.28 | 08/28/2019 | |||||||||||||||||||||||||||
| 8,712 | (3) | 8,713 | (3) | 38.71 | 08/27/2020 | |||||||||||||||||||||||||||
| 4,031 | 12,094 | (3) | 41.87 | 08/24/2021 | ||||||||||||||||||||||||||||
| 0 | 25,850 | 18.60 | 08/29/2022 | 5,710 | 177,124 | 12,060 | 274,372 | |||||||||||||||||||||||||
| (3) |
| (4) |
Adtalem Global Education Inc. | 2023 Proxy Statement 35 |
2013 Option Exercises and Stock VestedRatify Selection of PricewaterhouseCoopers LLP as Independent Registered Public Accounting Firm
This table sets forth information concerning (1)
Subject to shareholder ratification, the exercise during fiscal year 2013 of options to purchase shares of Common Stock by each of the NEOs, (2) the dollar amount realized on exercise of the exercised options, (3) the vesting during fiscal year 2013 of Performance Shares, and (4) the dollar amount realized on vesting of Performance Shares.
| Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | ||||||||||||
Daniel M. Hamburger | 0 | 0 | 27,540 | 526,565 | ||||||||||||
Timothy J. Wiggins | 0 | 0 | 5,407 | 169,347 | ||||||||||||
Susan Groenwald | 0 | 0 | 439 | 8,394 | ||||||||||||
David J. Pauldine | 11,025 | 121,385 | 4,307 | 82,350 | ||||||||||||
Steven Riehs | 0 | 0 | 2,759 | 52,752 | ||||||||||||
2013 Nonqualified Deferred Compensation
This table sets forth the contributions by each NEO and DeVry for fiscal year 2013, the earnings accrued on each NEO’s account balance in 2013 and the account balance at June 30, 2013 under the Deferred Plan.
Name | Executive Contributions in Last Fiscal Year ($)(1) | Employer Contributions in Last Fiscal Year ($)(2) | Aggregate Earnings/ (Loss) in Last Fiscal Year ($)(3) | Aggregate Balance at Last Fiscal Year End ($)(4) | ||||||||||||
Daniel Hamburger | 58,496 | 65,405 | 136,052 | 1,099,526 | ||||||||||||
Timothy J. Wiggins | 7,222 | 7,441 | 444 | 17,070 | ||||||||||||
Susan Groenwald | 5,587 | 8,770 | 606 | 17,583 | ||||||||||||
David J. Pauldine | 40,658 | 24,898 | 71,909 | 636,805 | ||||||||||||
Steven Riehs | 11,948 | 12,668 | 5,288 | 180,964 | ||||||||||||
Deferred Compensation Plan
The Deferred Plan covers Directors and selected key colleagues approved for participation by the Compensation Committee. All of the named executive officers are eligible to participate in the Plan. Under the Deferred Plan as it applies to colleagues, participants may make an advance election to defer up to 50% of salary and up to 100% of annual cash incentive (MIP) compensation until termination of service with DeVry or certain other specified dates. DeVry credits matching contributions to participants’ accounts under the Deferred Plan to the extent they have elected to defer the maximum amount under DeVry’s Success Sharing Retirement Plan and their matching contributions to the Success Sharing Retirement Plan are limited by applicable Internal Revenue Code provisions. DeVry may also credit participants’ accounts with discretionary success sharing contributions. Participants are fully vested in their own deferral and matching contributions, plus earnings, and will vest in discretionary contributions, if any, as determined by the Compensation Committee. Participants may elect to have their Deferred Plan accounts credited with earnings based on various investment choices made available by the Compensation Committee for this purpose. Participants may elect to have account balances paid in a lump sum or in installments. Distributions are generally made or commence in January of the year following termination of employment (but not earlier than six months after termination) or January of the year in which the specified payment date occurs. In the event of death before benefits commence, participants’ accounts will be paid to their beneficiaries in a lump sum.
2013 Potential Payments Upon Termination or Change-in-Control
DeVry provides benefits to certain of the NEOs upon termination of employment from DeVry in specific circumstances. These benefits are in addition to the benefits to which these NEOs would be entitled upon a termination of employment generally (i.e., vested retirement benefits accrued as of the date of termination, stock-based awards that are vested as of the date of termination and the right to elect continued health coverage pursuant to COBRA). In addition, DeVry’s equity compensation plans and the stock award agreements used to implement them provide for accelerated vesting of outstanding stock awards in the event of a change in control of DeVry, regardless of whether a termination of employment occurs.
Employment Agreements
Mr. Hamburger
The employment agreement of Mr. Hamburger was effective as of November 15, 2006, in connection with his assumption of the duties of President and Chief Executive Officer of DeVry. The employment agreement provides that either party may terminate Mr. Hamburger’s employment upon 180 days advance notice, except that DeVry may terminate his employment immediately for any reason, Mr. Hamburger may terminate his employment immediately for “good reason”, and his employment will automatically terminate immediately in the event of death or disability. The agreement provides the following severance benefits:
If a change in control of DeVry has not occurred and Mr. Hamburger’s employment is terminated for reasons other than by DeVry for “cause” or due to retirement at age 65, he is entitled to an immediate payment equal to 12 times his monthly base salary.
If at any time Mr. Hamburger terminates his employment for “good reason,” he is entitled to an immediate payment equal to 12 times his monthly base salary.
If DeVry terminates Mr. Hamburger’s employment following a change in control of DeVry, he is entitled to the following:
i. an immediate payment equal to 24 times his monthly base salary;
ii. an immediate payment equal to a pro rata portion of the average MIP award paid to him for the two years prior to his termination; and
iii. immediate vesting of all outstanding stock options.
For purposes of the agreement:
(i) “cause” means Mr. Hamburger’s conviction of a felony or a crime involving monies, other property, fraud or embezzlement; (ii) “good reason” exists if Mr. Hamburger is not accorded the duties and responsibilities described in the agreement, if his duties or responsibilities are materially or substantially reduced, if he is not paid amounts owed under the agreement within 10 days notice to DeVry, or if DeVry otherwise breaches the agreement; (iii) “disability” means a physical or mental disability that causes Mr. Hamburger to be unable to perform his duties under the agreement for a period of 180 days; and (iv) “change in control” means a sale of substantially all of DeVry’s assets or the acquisition by another entity of a majority of DeVry’s Common Stock.
Mr. Pauldine, Dr. Groenwald, Mr. Riehs and Mr. Wiggins
DeVry entered into substantially similar employment arrangements with Mr. Wiggins on December 14, 2011 (effective January 3, 2012), with Mr. Pauldine on October 12, 2009, with Dr. Groenwald on September 1, 2011 and with Mr. Riehs on May 17, 2013. These employment agreements provide, among other things, that if the NEO’s employment with DeVry is terminated by DeVry without “cause” or by the NEO with “good reason” and the NEO executes a release of claims, then the NEO will be entitled to the following benefits:
in the cases of Messrs. Wiggins, Pauldine and Riehs one and one-half times the sum of the NEO’s base salary plus “MIP target,” payable in 18 equal monthly payments and in the case of Dr. Groenwald one times the sum of the NEO’s base salary plus “MIP target” payable in 12 equal monthly payments;
a pro-rated “MIP award” (if employed for at least six months in the fiscal year during which termination occurs) based on actual performance for the relevant fiscal year paid in a lump sum at the time MIP awards are paid to other colleagues;
in the cases of Messrs. Wiggins, Pauldine and Riehs, 18 months of continued health benefit plan coverage at active employee rates following the termination date, and in the case of Dr. Groenwald, 12 months of continued health benefit plan coverage at active colleague rates following the termination date; and
access to, in the case of Messrs. Wiggins, Pauldine and Riehs a nine-month, in the case of Dr. Groenwald a six-month senior executive level outplacement program at DeVry’s sole expense.
In the case of Mr. Pauldine, Mr. Riehs and Mr. Wiggins, their employment arrangements also provide that if their termination occurs after the day that is 18 months prior to their 55th birthday they will be treated as having been terminated due to “retirement” for purposes of all outstanding stock options and other equity awards that include a definition of the term “retirement,” including both those outstanding on the date of the employment agreement and those thereafter granted.
In addition, the employment arrangements provide that if the NEO’s employment with DeVry is terminated by DeVry without “cause” or by the NEO with “good reason” during a “change in control period” and the NEO executes a release of claims, then the NEO will be entitled to the following benefits:
in the cases of Messrs. Wiggins, Pauldine and Riehs two times the sum of the NEO’s base salary plus “MIP target,” payable in 24 equal monthly payments and in the case of Dr. Groenwald one and one half times the sum of the NEO’s base salary plus “MIP target” payable in 18 equal monthly installments;
a pro-rated “MIP award” (if employed for at least six months in the fiscal year during which termination occurs) based on actual performance paid in a lump sum at the time MIP awards are paid to other employees;
in the cases of Messrs. Wiggins, Pauldine and Riehs 24 months of continued health benefit plan coverage at active employee rates following the termination date and in the case of Dr. Groenwald 18 months of continued health benefit plan coverage at active employee rates following the termination date; and
in the cases of Messrs. Wiggins, Pauldine and Riehs access to a 12 month senior executive level outplacement program at DeVry’s sole expense and in the case of Dr. Groenwald access to a 9 month senior executive level outplacement program at DeVry’s sole expense.
For purposes of these employment agreements:
(i) “cause” means (A) the commission of a felony or other crime involving moral turpitude or the commission of any other act or omission involving misappropriation, dishonesty, fraud, illegal drug use or breach of fiduciary duty, (B) willful failure to perform duties as reasonably directed by the CEO or the CEO’s designee, (C) the NEO’s gross negligence or willful misconduct with respect to the performance of the NEO’s duties under the employment agreement, (D) obtaining any personal profit not fully disclosed to and approved by DeVry’s Board of Directors in connection with any transaction entered into by, or on behalf of, DeVry, or (E) any other material breach of the employment agreement or any other agreement between the NEO and DeVry; (ii) “change in control period” means the period commencing on the date of a “Change in Control” (as defined in the DeVry Inc. Incentive Plan of 2005) and ending on the 12-month anniversary of such date; (iii) “good reason” means, without the NEO’s consent, (A) material diminution in title, duties, responsibilities or authority, (B) reduction of base salary, MIP target or colleague benefits except for across-the-board changes for executives at the NEO’s level, (C) exclusion from executive benefit/compensation plans, (D) material breach of the employment agreement that DeVry has not cured within 30 days after the NEO has provided DeVry notice of the material breach which shall be given within 60 days of the NEO’s knowledge of the occurrence of the material breach, or (E) resignation in compliance with securities, corporate governance or other applicable law (such as the US Sarbanes-Oxley Act) as specifically applicable to the NEO; (iv) “MIP award” means the amount actually granted the NEO under the MIP, as in effect from time to time, upon the achievement of specific DeVry-wide and personal performance goals of the NEO that will be determined each fiscal year by the NEOs direct supervisor and/or the Compensation Committee as necessary and appropriate to comply with DeVry policy; and (v) “MIP target” means the percentage of the NEO’s base salary established as the target under the MIP, as adjusted from time to time.
Equity Award Plans
The equity award agreements under which options, SARs, Performance Shares and Full-Value Shares are held by colleagues, including the NEOs, provide for the immediate vesting of unvested options and Full-Value Shares and of Performance Shares at the target levels in the event of a change in control of DeVry. The provisions of the equity award agreements under which options, SARs, Performance Shares and Full-Value Shares were granted to employees, including the NEOs, provide the following:
If the participant’s employment is terminated due to death or disability (as defined in the agreement), options and SARs will become fully vested and exercisable for the remaining term of the option, Full-Value Shares will fully vest, and Performance Shares will continue to vest in accordance with their terms.
If the participant’s employment terminates due to mutual agreement, the participant will be credited with one additional year of service for the purpose of determining vesting of options, SARs and Full-Value Shares, and the options and SARs will be exercisable until the earlier of one year from termination or the expiration of the term of the option.
If the participant’s employment terminates due to retirement, options and SARs will continue to vest and be exercisable, and Full-Value Shares and Performance Shares will continue to vest in accordance with their respective terms. Retirement means the participant’s termination without cause after age 55 when the sum of his or her age and full years of service equals or exceeds 65.
2013 Potential Severance Payments
The tables set forth below quantify the additional benefits as described above that would be paid to each NEO under the following termination of employment or change in control events, had such an event occurred on June 30, 2013.
Termination of Employment — No Change in Control
Name: | Daniel Hamburger | Timothy J. Wiggins | Susan Groenwald | David J. Pauldine | Steven Riehs | |||||||||||||||
Salary: | $ | 839,460 | $ | 610,500 | $ | 380,000 | $ | 687,953 | $ | 600,000 | ||||||||||
MIP Target Amount: | 0 | 366,300 | 190,000 | 481,567 | 420,000 | |||||||||||||||
Pro-Rated MIP: | 0 | 202,515 | 194,274 | 165,691 | 179,118 | |||||||||||||||
Continued Health Coverage: | 0 | 16,424 | 10,675 | 16,424 | 16,424 | |||||||||||||||
Outplacement Services: | 0 | 22,500 | 15,000 | 22,500 | 22,500 | |||||||||||||||
Termination of Employment Following a Change in Control
Name: | Daniel Hamburger | Timothy J. Wiggins | Susan Groenwald | David J. Pauldine | Steven Riehs | |||||||||||||||
Salary: | $ | 1,678,920 | $ | 814,000 | $ | 570,000 | $ | 917,270 | $ | 800,000 | ||||||||||
MIP Target Amount: | 0 | 488,400 | 285,000 | 642,089 | 560,000 | |||||||||||||||
Pro-Rated MIP: | 443,805 | 202,515 | 194,274 | 165,691 | 179,118 | |||||||||||||||
Continued Health Coverage: | 0 | 21,899 | 16,012 | 21,899 | 21,899 | |||||||||||||||
Outplacement Services: | 0 | 30,000 | 22,500 | 30,000 | 30,000 | |||||||||||||||
Value of Vesting of Unvested Stock Options, Performance Shares and Full-Value Shares (1): | 7,592,364 | 1,824,653 | 841,060 | 1,534,683 | 772,553 | |||||||||||||||
Change in Control — No Termination of Employment
Name: | Daniel Hamburger | Timothy J. Wiggins | Susan Groenwald | David J. Pauldine | Steven Riehs | |||||||||||||||
Value of Vesting of Unvested Stock Options, Performance Shares and Full-Value Shares (1): | $ | 7,592,364 | $ | 1,824,653 | $ | 841,060 | $ | 1,534,683 | $ | 772,553 | ||||||||||
EQUITY COMPENSATION PLAN INFORMATION
DeVry currently maintains four equity compensation plans: the 1994 Stock Incentive Plan, the 1999 Stock Incentive Plan, the 2003 Stock Incentive Plan and the DeVry Inc. Incentive Plan of 2005. DeVry’s shareholders have approved each of these plans.
The following table summarizes information, as of June 30, 2013, relating to these equity compensation plans under which DeVry’s Common Stock is authorized for issuance.
Plan Category | Number of securities to be issued upon exercise of outstanding options, awards, warrants and rights (a)(1) | Weighted-average exercise price of outstanding options, awards, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)(2) | |||||||||
Equity compensation plans approved by security holders | 4,512,651 | $ | 32.64 | 2,128,086 | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | 4,512,651 | $ | 32.64 | 2,128,086 | ||||||||
AUDIT AND FINANCE COMMITTEE REPORT
To Our Shareholders:
The Audit and Finance Committee of DeVry Inc. consists of five independent Directors. The members of the Audit and Finance Committee meet the independence and financial literacy requirements of the NYSE and additional, heightened independence criteria applicable to members of the Audit and Finance Committee under SEC and NYSE rules. In fiscal year 2013, the Audit and Finance Committee held 11 meetings. The Audit and Finance CommitteeBoard has adopted, and annually reviews, a charter outlining the practices it follows. The charter conforms to the Securities and Exchange Commission’s implementing regulations and to the NYSE listing standards.
Management is responsible for DeVry’s internal controls and the financial reporting process by which it prepares the financial statements. DeVry’sreappointed PricewaterhouseCoopers LLP (“PwC”), as independent registered public accounting firm is responsible for performing an independent auditAdtalem and its subsidiaries for fiscal year 2024. The Board recommends to the shareholders that the selection of the annual financial statements of DeVry and expressing an opinion on those statements. The principal duties of the Audit and Finance Committee include:
Monitoring DeVry’s financial reporting processes, including its internal control systems;
Selecting DeVry’sPwC as independent registered public accounting firm subject to ratification byfor Adtalem and its subsidiaries be ratified. If the shareholders;
Evaluatingshareholders do not ratify the independent registered public accounting firm’s independence;
Monitoringselection of PwC, the scope, approach and resultsselection of the annual audits and quarterly reviews of financial statements and discussing the results of those audits and reviews with management and the independent registered public accounting firm;
Overseeing the effectiveness of DeVry’s internal audit function and overall risk management processes;
Discussing with management and the independent registered public accounting firm the nature and effectiveness of DeVry’s internal control systems; and
Reviewing and recommending to the Board DeVry’s financing policies and actions related to investment, capital structure and financing strategies.
During fiscal year 2013, at each of its regularly scheduled meetings,will be reconsidered by the Audit and Finance Committee metCommittee. Representatives of PwC are expected to be present at the Annual Meeting with the senior membersopportunity to make a statement, if they desire to do so, and to be available to respond to appropriate questions from shareholders.
APPROVAL BY SHAREHOLDERS
Proposal No. 2 to ratify the selection of the DeVry’s financial management team. Additionally, the Audit and Finance Committee had separate private sessions, on a quarterly basis, with DeVry’s General Counsel, DeVry’sPwC as independent registered public accounting firm for Adtalem for fiscal year 2024 will require the Vice Presidentaffirmative vote of Audit, Ethicsa majority of the shares of Common Stock of Adtalem represented at the Annual Meeting. Abstentions will be treated as a vote AGAINST the proposal, while broker non-votes, if any, will not be counted as votes represented and Compliance Services, DeVry’s Chief Financial Officer,entitled to vote and, DeVry’s Vice President, Finance and Chief Accounting Officer, at which candid discussions regarding financial management, legal, accounting, auditing and internal control issues took place. The Audit and Finance Committee’s agenda is established by the Audit and Finance Committee’s Chairman and DeVry’s Vice President, Finance and Chief Accounting Officer.
The Audit and Finance Committee is updated periodically on management’s process to assess the adequacy of DeVry’s system of internal control over financial reporting, the framework used to make the assessment and management’s conclusionstherefore, will have no effect on the effectivenessresult of DeVry’s internal control over financial reporting. The Auditthe vote for this proposal. See VOTING INFORMATION – Effect of Not Casting Your Vote. If you sign and Finance Committee also discusses with DeVry’sreturn your proxy card, but give no direction or complete the telephonic or internet voting procedures but do not specify how you want to vote your shares, the shares will be voted FOR ratification of the selection of PwC as independent registered public accounting firm DeVry’s internal control assessment process, management’s assessment with respect thereto andfor Adtalem for fiscal year 2024.
If the evaluation by DeVry’s independent registered public accounting firmappointment of its system of internal control over financial reporting.
The Audit and Finance Committee reviewed with senior members of management, including the Vice President of Audit, Ethics and Compliance Services and the General Counsel, and DeVry’s independent registered public accounting firm, DeVry’s policies and procedures with respect to risk assessment and risk management.
The Audit and Finance Committee evaluates the performance of DeVry’s independent registered public accounting firm, including the senior audit engagement team, each year and determines whether to reengage the current independent registered public accounting firm or consider other audit firms. As a threshold matter, the Committee satisfies itself that the most recent Public Company Accounting Oversight Board (PCAOB)
inspection report pertaining to the current firm does not contain any information that would render inappropriate its continued servicePwC as DeVry’s independent public accountants, including consideration of the public portion of the report and discussion in general terms of the types of matters covered in the non-public portion of the report. The Audit and Finance Committee also considers the quality and efficiency of the previous services rendered by the current auditors and the auditors’ technical expertise and knowledge of DeVry’s global operations and industry. Based on this evaluation, the Audit and Finance Committee decided to reengage PricewaterhouseCoopers LLP as DeVry’sour independent registered public accounting firm for fiscal year 2013. It reviewed with senior members of DeVry’s financial management team, PricewaterhouseCoopers LLP and2024 is not ratified by our shareholders, the Vice President of Audit, Ethics and Compliance Services, the overall audit scope and plans, the results of internal and external audit examinations, evaluations by management and PricewaterhouseCoopers LLP of DeVry’s internal controls over financial reporting and the quality of DeVry’s financial reporting. Althoughadverse vote will be considered a direction to the Audit and Finance Committee hasto consider other auditors for next year. However, because of the sole authority to appoint DeVry’s independent registered public accounting firm,difficulty in making any substitution of auditors after the beginning of the current year, the 2024 appointment will stand unless the Audit and Finance Committee will continue its long-standing practice of recommending that the Board ask the shareholders, at their Annual Meeting,finds other good reason to ratify the appointment of DeVry’s independent registered public accounting firm.make a change.
| The Board of Directors recommends a vote FOR the ratification of the appointment of PwC as Adtalem’s independent registered public accounting firm for fiscal year 2024. | |
SELECTION AND ENGAGEMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
With respect to DeVry’s audited financial statements for fiscal year 2013:
The Audit and Finance Committee has reviewed and discussed the audited financial statements with management;
The Audit and Finance Committee has met with PricewaterhouseCoopers LLP, DeVry’s independent registered public accounting firm, and discussed the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, as adopted by the Public Company Accounting Oversight Board in Rule 3200T; and
The Audit and Finance Committee has received the written disclosures and the letter from PricewaterhouseCoopers LLP required by the applicable requirements of the Public Accounting Oversight Board regarding the independent accountant’s communications with the Audit and Finance Committee concerning independence, and has discussed with PricewaterhouseCoopers LLP their independence.
In reliance upon the Audit and Finance Committee’s reviews and discussions with both management and PricewaterhouseCoopers LLP referred to above, management’s representations and the report of PricewaterhouseCoopers LLP on DeVry’s audited financial statements, the Audit and Finance Committee has recommended to the Board of Directors that the audited financial statements for the fiscal year ended June 30, 2013, be included in DeVry’s Annual Report on Form 10-K to be filed with the Securities and Exchange Commission.
In addition, the Audit and Finance Committee has re-appointed, subject to shareholder ratification, PricewaterhouseCoopers LLP as DeVry’s independent registered public accounting firm for fiscal year 2014.
This Audit and Finance Committee Report is not to be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent that DeVry specifically incorporates this Report by reference, and is not otherwise to be deemed filed under such Acts.
William T. Keevan, Chair
David S. Brown
Darren R. Huston
Fernando Ruiz
Lisa W. Wardell
The Audit and Finance Committee appointed PricewaterhouseCoopers LLP (“PwC”) as DeVry’s independent registered public accounting firm for the fiscal year ended June 30, 2013. DeVry’s shareholders ratified the engagement at the Annual Meeting of Shareholders on November 7, 2012. In addition to engaging PwC to audit the consolidated financial statements for DeVry and its subsidiaries for the year and review the interim financial statements included in DeVry’s Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission, the Audit and Finance Committee also engaged PwC to provide various other audit and audit related services — e.g. , auditing of DeVry’s compliance with student financial aid program regulations.
The Sarbanes-Oxley Act of 2002 prohibits an independent public accountant from providing certain non-audit services for an audit client. DeVry engages various other professional service providers for these non-audit services as required. Other professional advisory and consulting service providers are engaged where the required technical expertise is specialized and cannot be economically provided by colleague staffing. Such services include, from time to time, business and asset valuation studies, and services in the fields of law, human resources, information technology, employee benefits and tax structure and compliance.
The aggregate amounts included in DeVry’s financial statements for fiscal year 2013 and 2012 for fees billed or to be billed by PwC for audit and other professional services, respectively, were as follows:
| Fiscal 2013 | Fiscal 2012 | |||||||
Audit Fees | $ | 2,424,930 | $ | 2,660,770 | ||||
Audit Related Fees | 265,000 | 0 | ||||||
Tax Fees | 318,942 | 423,793 | ||||||
All Other Fees | 3,000 | 3,000 | ||||||
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Total | $ | 3,011,872 | $ | 3,087,563 | ||||
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Audit Fees — Includes all services performed to comply with generally accepted auditing standards in conjunction with the annual audit of DeVry’s financial statements and the audit of internal control over financial reporting. In addition, this category includes fees for services in connection with DeVry’s statutory and regulatory filings, consents and review of filings with the Securities and Exchange Commission such as the annual report on Form 10-K, quarterly reports on Form 10-Q and Current Reports on Form 8-K. Also included are services rendered in connection with the required annual audits of DeVry’s compliance with the rules and procedures promulgated for the administration of federal and state student financial aid programs.
Audit Related Fees — Includes all assurance and related services such as due diligence related to acquisitions.
Tax Fees — Includes all services related to tax compliance, tax planning, tax advice, assistance with tax audits and responding to requests from DeVry’s tax department regarding technical interpretations, applicable laws and regulations, and tax accounting. DeVry’s Audit and Finance Committee has considered the nature of these services and concluded that these services may be provided by the independent registered public accounting firm without impairing its independence.
All Other Fees — Includes subscriptions for on-line accounting research services and fees for continuing professional education sessions.
The Audit and Finance Committee, at each of its regularly scheduled meetings, and on an interim basis as required, reviews all engagements of PwC for audit and all other services. Prior to the Audit and Finance Committee’s consideration for approval, management provides the Audit and Finance Committee with a description of the reason for and nature of the services to be provided along with an estimate of the time required and approximate cost. Following such review, each proposed service is approved, modified, or denied as appropriate. A record of all such approvals is maintained in the files of the Audit and Finance Committee for future reference. All services provided by PwC during the past yeartwo years were approved by the Audit and Finance Committee prior to their undertaking.
PRE-APPROVAL POLICIES
The Audit and Finance Committee has adopted a policy for approving all permitted audit, audit-related, tax, and non-audit services to be provided by PwC in advance of the commencement of such services, except for those considered to bede minimis by law for non-audit services. Information regarding services performed by the independent registered public accounting firm under thisde minimis exception is presented to the Audit and Finance Committee for information purposes at each of its meetings. There is no blanket pre-approval provision within this policy. For fiscal year 2013,years 2022 and 2023, none of the services provided by PwC were provided pursuant to thede minimis exception to the pre-approval requirements contained in the applicable rules of the Securities and Exchange Commission.SEC. Audit and Finance Committee consideration and approval generally occurs at a regularly scheduled Audit and Finance Committee meeting. For projects that require an expedited decision because theythe independent registered public accounting firm should begin prior to the next regularly scheduled meeting, requests for approval may be circulated to the Audit and Finance Committee by mail,e-mail, telephonically, or by other means for its consideration and approval. When deemed necessary, the Audit and Finance Committee has delegated pre-approval authority to its Chair. Any engagement of the independent registered public accounting firm under this delegation will be presented for informational purposes to the full Audit and Finance Committee at their next meeting.
Proposal No. 2 Ratify Selection of PricewaterhouseCoopers LLP as Independent Registered Public Accounting Firm
SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
AUDIT FEES AND OTHER FEES
During the 2023 and 2022 fiscal years, Adtalem was billed by PwC for audit and other professional services, respectively, in the following amounts:
| | | | | | |
| | Fiscal Year | | Fiscal Year | ||
Fees | | 2023 | | 2022 | ||
Audit Fees | | $ | 3,870,000 | | $ | 4,584,000 |
Audit-Related Fees | | $ | — | | $ | 2,500,000 |
Tax Fees | | $ | 733,000 | | $ | 965,324 |
All Other Fees | | $ | 900 | | $ | 4,150 |
Total | | $ | 4,603,900 | | $ | 8,053,474 |
AUDIT FEES — Includes all services performed to comply with generally accepted accounting principles in conjunction with the annual audit of Adtalem’s financial statements and the audit of internal controls over financial reporting. In addition, this category includes fees for services in connection with Adtalem’s statutory and regulatory filings, consents, and review of filings with the SEC such as the annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. Also included are services rendered in connection with the required annual audits of Adtalem’s compliance with the rules and procedures promulgated for the administration of federal and state student financial aid programs. The higher audit fees for fiscal year 2022 were primarily due to work related to the acquisition of Walden University and the disposition of our Financial Services segment.
AUDIT-RELATED FEES — Audit-related fees of $2,500,000 were billed to us by PwC for fiscal year 2022, which included services performed related to carve-out financial statement audits prepared related to the sale of our Financial Services segment.
TAX FEES — Includes all services related to tax compliance, tax planning, tax advice, assistance with tax audits, and responding to requests from Adtalem’s tax department regarding technical interpretations, applicable laws and regulations, and tax accounting. Adtalem’s Audit and Finance Committee has considered the nature of these services and concluded that these services may be provided by the independent registered public accounting firm without impairing its independence. The higher tax fees for fiscal year 2022 were primarily due to work related to the acquisition of Walden University and the disposition of our Financial Services segment.
ALL OTHER FEES — Includes subscriptions for PwC’s online accounting research services and its disclosure checklist.
Adtalem Global Education Inc. | 2023 Proxy Statement 37 |
Proposal No. 2 Ratify Selection of PricewaterhouseCoopers LLP as Independent Registered Public Accounting Firm
AUDIT AND FINANCE COMMITTEE REPORT
To Our Shareholders:
The Audit and Finance Committee of Adtalem consists of three independent directors. The members of the Audit and Finance Committee meet the independence and financial literacy requirements of the NYSE and additional heightened independence criteria applicable to members of the Audit and Finance Committee under SEC and NYSE rules. In fiscal year 2023, the Audit and Finance Committee held nine meetings. The Audit and Finance Committee has adopted, and annually reviews, a charter outlining the practices it follows. The charter conforms to the SEC’s implementing regulations and to the NYSE listing standards.
Management is responsible for Adtalem’s internal controls and the financial reporting process by which it prepares the financial statements. Adtalem’s independent registered public accounting firm is responsible for performing an independent audit of the annual financial statements of Adtalem and expressing an opinion on those statements. The principal duties of the Audit and Finance Committee include:
| ● | Monitoring Adtalem’s financial reporting processes, including its internal control systems; |
| ● | Selecting Adtalem’s independent registered public accounting firm, subject to ratification by the shareholders; |
| ● | Evaluating the independent registered public accounting firm’s independence; |
| ● | Monitoring the scope, approach, and results of the annual audits and quarterly reviews of financial statements, and discussing the results of those audits and reviews with management and the independent registered public accounting firm; |
| ● | Overseeing the effectiveness of Adtalem’s internal audit function and overall risk management processes; |
| ● | Discussing with management and the independent registered public accounting firm the nature and effectiveness of Adtalem’s internal control systems; and |
| ● | Reviewing and recommending to the Board Adtalem’s financing policies and actions related to investment, capital structure, and financing strategies. |
During fiscal year 2023, at each of its regularly scheduled meetings, the Audit and Finance Committee met with the senior members of the Adtalem’s financial management team. Additionally, the Audit and Finance Committee had separate private sessions, on a quarterly basis, with Adtalem’s independent registered public accounting firm, Adtalem’s General Counsel and Corporate Secretary, Adtalem’s Chief Financial Officer, and Adtalem’s Vice President, Internal Audit.
The Audit and Finance Committee is updated periodically on the process management uses to assess the adequacy of Adtalem’s internal control systems over financial reporting, the framework used to make the assessment and management’s conclusions on the effectiveness of Adtalem’s internal controls over financial reporting. The Audit and Finance Committee also discusses with Adtalem’s independent registered public accounting firm Adtalem’s internal control assessment process, management’s assessment with respect thereto, and the evaluation by Adtalem’s independent registered public accounting firm of its system of internal controls over financial reporting.
The Audit and Finance Committee annually evaluates the performance of Adtalem’s independent registered public accounting firm, including the senior audit engagement team, and determines whether to reengage the current independent registered public accounting firm. As a threshold matter, the Audit and Finance Committee satisfies itself that the most recent Public Company Accounting Oversight Board (“PCAOB”) inspection report pertaining to the current firm does not contain any information that would render inappropriate its continued service as Adtalem’s independent public accountants, including consideration of Directors has reappointed PricewaterhouseCoopers LLP,the public portion of the report and discussion in general terms of the types of matters covered in the non-public portion of the report. The Audit and Finance Committee also considers the quality and efficiency of the previous services rendered by the current auditors and the auditors’ technical expertise and knowledge of Adtalem’s global operations and industry. Based on this evaluation, the Audit and Finance Committee decided to reengage, and recommend ratification of, PwC as itsAdtalem’s independent registered public accounting firm for DeVry and its subsidiaries for fiscal year 2014.2023. The BoardAudit and Finance Committee reviewed with members of Directors recommendsAdtalem’s senior management team and PwC the overall audit scope and plans, the results of internal and external audit examinations, evaluations by management and PwC of Adtalem’s internal controls over financial reporting, and the quality of Adtalem’s financial reporting. Although the Audit and Finance Committee has the sole authority to the shareholders that the selection of PricewaterhouseCoopers LLP asappoint Adtalem’s independent registered public accounting firm, for DeVrythe Audit and its subsidiaries be ratified. IfFinance Committee recommends that the Board ask the shareholders, do notat their annual meeting, to ratify the selectionappointment of PricewaterhouseCoopers LLP, the selection ofAdtalem’s independent registered public accounting firm will be reconsidered byfirm. With respect to Adtalem’s audited financial statements for fiscal year 2023, the Audit and Finance Committee. RepresentativesCommittee has:
| ● | Reviewed and discussed the 2023 audited financial statements with management; |
| ● | Met with PwC, Adtalem’s independent registered public accounting firm, and discussed the matters required to be discussed by the PCAOB and the SEC; and |
| ● | Received the written disclosures and the letter from PwC required by the applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit and Finance Committee concerning independence, and has discussed its independence with PwC. |
In reliance upon the Audit and Finance Committee’s reviews and discussions with both management and PwC, management’s representations and the report of PwC on Adtalem’s audited financial statements, the Audit and Finance Committee recommended to the Board that the audited financial statements for the fiscal year ended June 30, 2023 be included in Adtalem’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023 filed with the SEC.
Adtalem Global Education Inc. | 2023 Proxy Statement 38 |
Proposal No. 2 Ratify Selection of PricewaterhouseCoopers LLP as Independent Registered Public Accounting Firm
While the Audit and Finance Committee has the responsibilities set forth in its charter (including to monitor and oversee the audit processes), the Audit and Finance Committee does not have the duty to plan or conduct audits or to determine that Adtalem’s financial statements are complete, accurate or in accordance with generally accepted accounting principles. Adtalem’s management and independent auditor have this responsibility.
This report has been furnished by the members of the Audit and Finance Committee.
William W. Burke, Chair
Donna J. Hrinak
Liam Krehbiel
The Audit and Finance Committee Report set forth above does not constitute soliciting materials and should not be deemed incorporated by reference into any other Adtalem filing under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, except to the extent that Adtalem specifically incorporates this Audit and Finance Committee Report by reference.
Adtalem Global Education Inc. | 2023 Proxy Statement 39 |
PROPOSAL NO. 3
Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers (“NEOs”)
COMPENSATION DISCUSSION & ANALYSIS
The following pages summarize our executive compensation program for our NEOs. Our 2023 NEOs are:
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Stephen W. Beard | Robert J. Phelan | Douglas G. Beck | Maurice Herrera | Steven Tom |
President and Chief Executive Officer | Senior Vice President, Chief Financial Officer | Senior Vice President, General Counsel, Corporate Secretary and Institutional Support Services | Senior Vice President, Chief Marketing Officer | Senior Vice President, Chief Customer Officer |
Executive Summary
Adtalem’s executive compensation program is designed to reward leaders for delivering strong financial results and building shareholder value. We firmly believe that academic quality and a strong student-centric focus lead to growth and, therefore, we have incorporated performance objectives into our executive compensation program to recognize leadership for their roles in improving student academic performance and outcomes.
This executive compensation program structure enables us to provide a competitive total compensation package while aligning our leaders’ interests with those of our shareholders and other stakeholders. The following chart highlights key objectives behind the development, review, and approval of our NEOs’ compensation.
Proposal No. 3 Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers (“NEOs”)
COMPENSATION OBJECTIVES
Our executive compensation program is designed to:
ALIGN INCENTIVES | | | | COMPETE FOR TALENT | | | | REWARD PERFORMANCE | |||||
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Our purpose is to empower students to achieve their goals, find success and make inspiring contributions to our global community. Success in realizing our purpose drives growth, which leads to the creation of sustainable, long-term value for our shareholders. Our compensation program is distinguished by its alignment not only with our shareholders, but also with our students, whose success is critical to our organization’s success. | | | | Our compensation program is designed to attract, retain, and motivate high-performing employees, particularly our key executives who are critical to our operations. Our compensation decisions take into account the competitive landscape for talent. | We reward outstanding performance through: ● A short-term incentive program focusing our executives on achieving strong financial results and superior academic and student outcomes, through individual performance objectives, and ● A long-term incentive program providing a mix of equity vehicles designed to reward long-term financial performance and shareholder value creation. | ||||||||
Our executive compensation program aligns the attainment of our business transformation and growth objectives with commensurate rewards based on results achieved over both short- and long-term performance periods. The Compensation Committee believes this approach appropriately focuses executives on achieving our strategic priorities and provides appropriate upside and downside potential based on actual performance and results achieved over time.
Our program, particularly how we measure performance through both annual incentives and our long-term performance share plan, employs measures that support our fundamental shift in strategic focus for management and our organization at large.
Fiscal year 2023 created a foundation for future growth through our strategic business transformation and operational execution.
Key Achievements | How this positions us for long-term sustainable growth | |
Integration of Walden University and our legacy institutions | ● Integration of Walden University and our legacy institutions into a complementary portfolio of like-kind institutions, all with a center of gravity in healthcare; and ● Created centers of excellence by centralizing our marketing and student experience capabilities, deploying best practices enterprise-wide and realizing economies of scale to enhance the student journey | |
Created an unparalleled operational foundation | ● Achieved the two-year $60 million cost synergy target, creating significant efficiencies and a more profitable operating model; and ● Efficiencies and operating model unlocked the ability to sustainably invest for future organic growth as part of our Growth with Purpose strategy | |
Launched Growth with Purpose strategy | ● Focus on improving operational and financial performance through fiscal year 2026; ● Driving organic enrollment growth through expanding access to underserved communities and delivering high-quality academic outcomes; and ● Accelerating enrollment growth led by programs such as nursing, social and behavioral health, and veterinary medicine, as we exited fiscal year 2023 | |
Disciplined Capital Allocation Philosophy | ● Robust cash generation, $206 million of net cash provided by operating activities-continuing operations in fiscal year 2023; ● Executing on capital allocation priorities, reinvested $37 million in capital expenditures in fiscal year 2023 for future growth; ● Reduced long-term financial obligations by $151 million in fiscal year 2023; and ● Returned $140 million of excess capital to shareholders through share repurchases in fiscal year 2023 |
Adtalem Global Education Inc. | 2023 Proxy Statement 41 |
Proposal No. 3 Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers (“NEOs”)
CONTINUED SHAREHOLDER OUTREACH
Adtalem employs a proactive investor relations approach, involving management and the Board, with ongoing outreach and interactive dialogue with investors to seek input on topics including corporate governance, executive compensation, diversity, equity and inclusion, and strategy. Our goal is to provide transparency to ensure there is a clear understanding of our business and our operating and financial performance – as set forth in our public filings, through one-on-one discussions, non-deal road shows, and investor conferences.
Our ongoing commitment to shareholder outreach included proactive outreach to our top shareholders in 2023. Those shareholders that did provide feedback (which collectively hold approximately 59% of our shares) responded favorably and did not express any particular areas of concern and reiterated their support for the strategic transformation actions executed last year and our new Growth with Purpose organic growth strategy.
Adtalem and the Board will continue to engage our shareholder base in the future to understand and attempt to respond to shareholder concerns.
PAY-FOR-PERFORMANCE FOCUS
We use both short- and long-term incentives to reward NEOs for delivering strong business results, increasing shareholder value, and improving student outcomes. With our pay-for-performance philosophy, an executive can earn in excess of target levels when performance exceeds established objectives. And, if performance falls below established objectives, our incentive plans pay below target levels, which in some cases could be nothing at all.
| (1) | Excludes perquisites. |
| (2) | Illustration represents fiscal year 2023 target compensation mix for Mr. Beard and the other NEOs. |
Program Design:
| ● | The actual value realized from the annual MIP award can range from zero, if threshold performance targets are not met, to up to 200% of targeted amounts for exceptional organizational performance. |
| ● | Our regular long-term incentive program consists of equity-based awards whose value ultimately depends on our stock price performance. Beginning with fiscal year 2023, the Compensation Committee determined that it would no longer grant stock options. The elimination of stock options is intended to simplify the long-term incentive program and to shift more of the equity mix to performance-based equity awards. As a result, a significant portion of the equity-based awards granted under the annual long-term incentive program (60% of the executive officers’ annual awards) is granted in the form of PSUs, the number of which earned is based on achievement of three-year financial performance goals. For the PSUs granted in fiscal year 2023, the Committee approved the use of Revenue Growth and EBITDA Margin as the financial performance measures, replacing return on invested capital (“ROIC”) and free cash flow (“FCF”) per share as the financial performance metrics for the PSUs, to better align the long-term incentive program with Adtalem’s long-term growth strategy. If the minimum levels of performance are not met, no PSUs are earned; if the minimum levels of performance are met, payout can range from 50% to 200% of the target number of PSUs. |
Adtalem Global Education Inc. | 2023 Proxy Statement 42 |
Proposal No. 3 Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers (“NEOs”)
Performance Assessment: Our Compensation Committee uses a comprehensive, well-defined, and rigorous process to assess organizational and individual performance. We believe the performance measures for our incentive plans focus management on the appropriate objectives for the creation of short- and long-term shareholder value as well as academic quality and organizational growth.
2023 COMPENSATION DECISIONS AND ACTIONS
Key Fiscal Year 2023 Compensation Decisions
BASE SALARYPage 46 | ||
Adtalem is committed to offering market competitive compensation to our key executives, including competitive base salaries. In fiscal year 2023, the Board and/or the Compensation Committee approved merit increases in base salaries of 2% for Mr. Beard and each of our other NEOs as part of our normal compensation review process which takes into account market competitiveness and individual performance. The base salary of Mr. Beard was increased from $900,000 to $918,000, the base salary of Mr. Phelan was increased from $480,000 to $489,600, the base salary of Mr. Beck was increased from $515,000 to $525,300, the base salary of Mr. Herrera was increased from $435,000 to $443,700, and the base salary of Mr. Tom was increased from $400,000 to $408,000. | ||
ANNUAL INCENTIVESPage 47 | ||
For Mr. Beard and the other NEOs, the fiscal year 2023 MIP award was based on financial performance at Adtalem (45% based on Adtalem revenue and 55% based on Adtalem adjusted earnings per share). The resulting MIP award for Mr. Beard and the other NEOs, as determined based on Adtalem financial performance, was then adjusted for individual performance by an individual performance modifier which can range from 0% to 125%. Awards under the fiscal year 2023 MIP for Adtalem financial performance were earned at 88% of the MIP target for Mr. Beard and the other NEOs. The MIP awards as determined based on financial performance for Mr. Beard and the other NEOs were then each adjusted by an individual performance modifier of 125% to reflect individual performance resulting in MIP awards that were earned at 109% of the MIP target for Mr. Beard and the other NEOs. | ||
LONG-TERM INCENTIVESPage 51 | ||
In fiscal year 2023, Mr. Beard and the other NEOs received long-term incentive awards consisting of performance-vesting PSUs and service-vesting RSUs. In addition to the PSUs granted in fiscal year 2023, PSUs granted to NEOs1 in August 2020 for the fiscal year 2021 through fiscal year 2023 three-year performance period vested in August 2023 based on the achievement of ROIC and FCF per share targets that were assessed over the three-year performance period. Based on our financial performance for the three-year performance period, the ROIC and FCF per share PSUs vested with an overall payout of 72.2% and 77.2% of target, respectively. 1 Excluding Mr. Phelan, Mr. Beck, Mr. Herrera, and Mr. Tom, who were not employed by Adtalem at the time of grant. | ||
Factors Guiding our Decisions
| ● | Executive compensation program objectives, philosophy, and principles; |
| ● | Shareholder input, including say-on-pay vote; |
| ● | Adtalem’s mission, vision, purpose, and “TEACH” values; |
| ● | The competitive landscape, trends, and best pay practices; |
| ● | Financial performance of Adtalem and its individual institutions; and |
| ● | Advice of our independent outside compensation consultant. |
The following provides a more in-depth discussion of our performance in these areas that helped drive the Compensation Committee’s evaluation of performance, and ultimately, compensation decisions for fiscal year 2023.
Adtalem Global Education Inc. | 2023 Proxy Statement 43 |
Proposal No. 3 Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers (“NEOs”)
2023 Financial and Operational Highlights
Adtalem’s fiscal year 2023 financial results reflect positive returns on our transformation and operational initiatives across the enterprise. Total enrollments at the end of fiscal year 2023 were nearly 76,000 students, resulting in revenue of $1.5 billion. During the year, we integrated Walden University and achieved our two-year $60 million cost synergy target, creating significant efficiencies and a more profitable operating model. For the full year, we grew adjusted operating income margin by 40 basis points year-over-year to 19.8% and reported adjusted earnings per share of $4.21, which was 35% higher than the prior year. See Appendix A for a reconciliation to reported GAAP results.
Fiscal year 2023 was a foundational year for Adtalem as we executed on our strategic transformation, capturing and creating value, and integrating our five like-kind institutions. We formally launched our Growth with Purpose strategy, which focuses on improving and accelerating our organic performance across the critical value-creating activities of the business while continuing to expand access for aspiring students and delivering high-quality academic outcomes. Our new foundation will amplify our purpose-led mission for many years to come.
Fiscal year 2023 revenue was below plan with adjusted earnings per share coming in ahead of our operating plan, which serves as the basis for our fiscal year 2023 MIP financial performance targets. As a result, the portions of executive officer MIP awards based on Adtalem revenue and adjusted earnings per share paid out at 58.2% and 111.6% of target, respectively.
* | Adjusted results exclude impact of special items. See Appendix A for a reconciliation to reported results. |
EXECUTIVE COMPENSATION GOVERNANCE AND PRACTICES
| WHAT WE DO | | | | WHAT WE DON’T DO | | | |
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✓ Pay for economic and academic performance ✓ Solicit and value shareholder opinions about our compensation practices ✓ Deliver total direct compensation primarily through variable pay ✓ Set challenging short- and long-term incentive award goals ✓ Provide strong oversight that ensures adherence to incentive grant regulations and limits ✓ Maintain robust stock ownership requirements ✓ Adhere to an incentive compensation recoupment (clawback) policy ✓ Offer market-competitive benefits ✓ Consult with an independent advisor on executive pay practices, plan designs, and competitive pay levels | | | | ✘ Provide guaranteed salary increases ✘ Provide tax gross-ups on severance or other payments in connection with a change in control ✘ Provide single-trigger change-in-control severance ✘ Re-price stock options or exchange underwater options for other awards or cash ✘ Pay dividends on unvested performance-based awards ✘ Provide excessive perquisites ✘ Offer a defined benefit pension or supplemental executive retirement plan ✘ Permit hedging or pledging of Adtalem Stock ✘ Reward executives without a link to performance | | |||
Adtalem Global Education Inc. | 2023 Proxy Statement 44 |
Proposal No. 3 Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers (“NEOs”)
Executive Compensation
PRINCIPLES OF EXECUTIVE COMPENSATION
The Compensation Committee uses the following Principles of Executive Compensation to assess Adtalem’s executive compensation program and to provide guidance to management on the Compensation Committee’s expectations for the overall executive compensation structure:
Principle | Purpose | |
Stewardship/Sustainability | ● Reinforce Adtalem’s purpose and long-term vision ● Motivate and reward sustained long-term growth in shareholder value ● Uphold long-term interests of all stakeholders (including students, employees, employers, shareholders, and taxpayers) ● Focus on sustaining and enhancing the quality and outcomes of education programs ● Promote continued differentiation and expansion of Adtalem’s programs | |
Accountability | ● Ensure financial interests and rewards are tied to executive’s area of impact and responsibility (division, geography, and function) ● Require timing of performance periods to match timing of employee’s impact and responsibility (short-, medium-, and long-term) ● Emphasize quality, service, and academic and career results ● Articulate well defined metrics, goals, ranges, limits, and results ● Motivate and reward achievement of strategic goals, with appropriate consequences for failure ● Comply with legislation and regulations | |
Alignment | ● Promote commonality of interest with all stakeholders (including students, employees, employers, shareholders, and taxpayers) ● Reflect and reinforce Adtalem’s values and culture ● Promote commonality of interests across business units, geography, and up, down and across the chain of command ● Provide a balance between short- and long-term performance | |
Engagement | ● Attract and retain high quality talent and provide for organizational succession ● Provide market competitive total compensation and benefits packages at all levels ● Promote consistent employee development at all levels ● Motivate urgency, creativity, and dedication to Adtalem’s purpose ● Clearly communicate the link between pay and performance | |
Transparency | ● Clearly communicate compensation structure, rationale, and outcomes to all employees and shareholders ● Provide simple and understandable structure that is easy for internal and external parties to understand ● Maintain a reasonable and logical relationship between pay at different levels ● Base plan on systematic goals that are objective and clear, with appropriate level of discretion |
Adtalem Global Education Inc. | 2023 Proxy Statement 45 |
Proposal No. 3 Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers (“NEOs”)
2023 EXECUTIVE COMPENSATION FRAMEWORK
Adtalem’s fiscal year 2023 incentive compensation program for executives was designed to link compensation performance with the full spectrum of our business goals, some of which are short-term, while others take several years or more to achieve:
2023 COMPENSATION SNAPSHOT
Objective | Time | Performance | Additional Explanation | |||
Salary | Base Salary | Reflect experience, market competition and scope of responsibilities | Reviewed Annually | ● Assessment of performance in prior year. | ● Represents 12% to 35% of target Total Direct Compensation for Mr. Beard and other NEOs (on average), respectively. | |
Annual | MIP | Reward achievement of short-term operational business priorities | 1 year | ● Revenue ● Adjusted Earnings Per Share* ● Individual Performance Modifier | ● Represents 15% to 23% of target Total Direct Compensation for Mr. Beard and other NEOs (on average), respectively. | |
Long-Term Incentive(equity) | RSUs | Align interests of management and shareholders, and retain key talent | 3 year ratable | ● Stock price growth | ● Represents 40% of NEO LTI granted in FY23.** | |
Revenue Growth PSUs | Reward achievement of multi-year financial goals, align interests of management and shareholders, and retain key talent | 3 year cliff | ● Revenue Growth | ● Represents 60% of NEO LTI granted in FY23.** | ||
EBITDA Margin PSUs | ● EBITDA Margin |
* | The MIP payout for executive leadership of the institutions is also based on revenue and adjusted operating income at such executive’s institutions. |
** | The total long-term incentive award consisting of both RSUs and PSUs represents 73% of target Total Direct Compensation for Mr. Beard and 42% of target Total Direct Compensation for other NEOs (on average). |
ANALYSIS OF 2023 EXECUTIVE COMPENSATION
Annual Base Salary Review
Annual base salaries for NEOs are intended to reflect the scope of their responsibilities, the experience they bring to their roles, and current market compensation for similar roles of other executives of companies that are peers of Adtalem. Once established, and under normal business conditions, base salaries are reviewed annually for adjustment to reflect the executive’s prior performance and respond to changes in market conditions. The table below lists the seven criteria the Compensation Committee uses to determine changes to salary from one year to the next.
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Base salary adjustments are made based on seven criteria: | |
1. | Adtalem’s overall financial performance compared to operating plan |
2. | Executive’s performance against established individual goals and objectives |
3. | Executive’s effectiveness in instilling a culture of academic quality, teamwork, student service, and integrity |
4. | Executive’s expected future contributions |
5. | Comparison to peer group and other available market data |
6. | Merit increase parameters set for all employees in the organization |
7. | Discretion based on interaction and observation throughout the year |
Fiscal Year 2023 Base Salary Decisions
In August 2022, the Board, based on the Compensation Committee’s recommendation in consultation with Meridian, increased Mr. Beard’s base salary from $900,000 to $918,000. In August 2022, the Compensation Committee also increased Mr. Phelan’s base salary from $480,000 to $489,600, Mr. Beck’s base salary from $515,000 to $525,300, Mr. Herrera’s base salary from $435,000 to $443,700, and Mr. Tom’s base salary from $400,000 to $408,000. In each case, the base salaries of the NEOs were increased by a 2% merit increase based on a review of market competitiveness and individual performance as part of our normal annual compensation review process.
Adtalem Global Education Inc. | 2023 Proxy Statement 46 |
Proposal No. 3 Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers (“NEOs”)
ANNUAL BASE SALARY
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| | Fiscal Year | | Fiscal Year | | Percent | |||
Name | | 2023 | | 2022 | | Change | |||
Stephen W. Beard | | $ | 918,000 | | $ | 900,000 | | 2.0% | |
Robert J. Phelan | | $ | 489,600 | | $ | 480,000 | | 2.0% |
|
Douglas G. Beck | | $ | 525,300 | | $ | 515,000 | | 2.0% | |
Maurice Herrera | | $ | 443,700 | | $ | 435,000 |
| 2.0% | |
Steven Tom | | $ | 408,000 | | $ | 400,000 |
| 2.0% | |
Annual Cash Incentive Compensation
The annual cash incentive, delivered through the MIP, provides the NEOs with the opportunity to earn rewards based on the achievement of organizational and institutional performance, as well as individual performance. How the MIP Works MIP target award opportunities for each NEO are set by the Compensation Committee based on factors including external surveys of peer company practices for positions with similar levels of responsibility. These targets, which are expressed as a percentage of base salary, are then reviewed at the beginning of each fiscal year based on updated market compensation data. For fiscal year 2023, the MIP provided Mr. Beard with a target award opportunity of 120% of base salary and the other NEOs with a target award opportunity ranging from 60% to 80% of base salary. The target award opportunity for Mr. Beard was increased for fiscal year 2023 from 110% of base salary based on a review of market competitiveness. No other changes were made to the MIP target award opportunity as a percentage of base salary for the other NEOs. For fiscal year 2023, the financial performance measures for the MIP, and the weightings of such measures, were Adtalem revenue (45%) and Adtalem adjusted earnings per share (55%) for Mr. Beard and each of the other NEOs. The weightings of the financial performance measures were changed for fiscal year 2023 from 45% Adtalem adjusted earnings per share for Mr. Beard and 40% Adtalem adjusted earnings per share for the other NEOs and 40% Adtalem revenue for Mr. Beard and 30% Adtalem revenue for the other NEOs. In addition to the change in the weightings of the financial performance measures, the individual performance component of the MIP, which was 15% for Mr. Beard and 30% for the other NEOs, was eliminated and replaced by an individual performance modifier. The individual performance modifier can adjust the MIP award determined based on the financial performance results by a factor that can range from 0% to 125%. The change in the weightings of the financial performance measures and the introduction of an individual performance modifier are intended to place greater emphasis on the financial performance results while continuing to incorporate individual performance into the MIP award. | Creating a Strong Link to Pay-for-Performance We believe the MIP payouts made to our NEOs for fiscal year 2023 support our executive compensation objective of pay-for-performance by rewarding our NEOs to the extent they met or exceeded pre-established financial and individual performance goals. | |
| | |
Actual MIP awards can be higher or lower than the target opportunity based on the results for each financial performance measure. Performance below the threshold for the goal will result in no payment for that performance goal. Performance at or above threshold can earn an award ranging from 50% of the target amount to a maximum of 200% of the target amount for maximum performance. In addition to the actual financial results achieved, the Compensation Committee, or the independent directors in the case of Mr. Beard, also considers individual performance over the course of the fiscal year for each NEO and may increase or decrease the MIP award as determined based on financial results by applying an individual performance modifier of between 0% and 125%, which can result in a maximum MIP payout of 250% of the target amount. Individual performance goals that factor into the individual performance modifier reflect functional results and/or institution performance appropriate for the NEO, as well as academic outcomes, organizational strength, and the advancement of Adtalem’s core values. Individual performance goals are designed to drive initiatives that support Adtalem’s strategy and further align leadership with Adtalem’s student-focused purpose. The maximum amount of 250% of target rewards exceptional performance compared to expectations, over-delivery of strategic initiatives, and/or achievement of initiatives not contemplated at the time goals were set. Actual earned MIP awards are determined after the fiscal year has ended and audited financial results have been completed (i.e., in the first quarter of the next fiscal year). Thus, MIP awards for fiscal year 2023 were determined and paid in the early part of fiscal year 2024, after the results for the fiscal year ended June 30, 2023 were confirmed. MIP financial performance measures and goals are typically set by the Compensation Committee in the first quarter of the year in which the performance is measured. | MIP Performance Measures The Compensation Committee determined that Adtalem revenue and adjusted earnings per share, along with institution revenue and adjusted operating income, effectively balance top line revenue growth and bottom-line profitability and results and are the most appropriate short-term metrics to support our business objectives. | |
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Adtalem Global Education Inc. | 2023 Proxy Statement 47 |
Proposal No. 3 Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers (“NEOs”)
In measuring financial performance, the Compensation Committee may adjust results for certain unusual, non-recurring, or other items to ensure the MIP rewards true operational performance as it is perceived by investors and as consistently measured. Appendix A details the adjustments made in the last three fiscal years.
In instances where an institution has not demonstrated performance commensurate with the potential award, the Compensation Committee may exercise negative discretion and reduce MIP payouts for individuals with oversight over the applicable institution. In the case of acquisitions and dispositions, the Compensation Committee generally does not include revenue, and corresponding earnings per share or operating income, in its evaluation of achievement against targets unless such expected revenue, and corresponding earnings per share or operating income, had been factored into the performance target. Similarly, revenue, and corresponding earnings per-share or operating income performance is typically adjusted for dispositions during the year.
The relative percentages assigned to the measures for each NEO(1) for fiscal year 2023 are as follows:
| | | | |
| | | | Adtalem |
| | Adtalem | | Adj. Earnings |
Name | | Revenue | | Per Share |
Stephen W. Beard | | 45% | | 55% |
Robert J. Phelan | | 45% | | 55% |
Douglas G. Beck | | 45% | | 55% |
Maurice Herrera | | 45% | | 55% |
Steven Tom | | 45% | | 55% |
2023 Performance Goals
Financial goals set for our MIP participants are derived from Adtalem’s fiscal year operating plans, which are recommended by Adtalem’s executive management team and approved by the Board at the beginning of each fiscal year. For fiscal year 2023, these plans translated to financial performance goals of $1,490.0 million of revenue and $4.30 of adjusted earnings per share.
The table below shows the threshold, target, and maximum goals for revenue and adjusted earnings per share under the fiscal year 2023 MIP.
| | | | | | | | | |
| | Plan | |||||||
Metric | | Threshold | | Target | | Maximum | |||
Adtalem Revenue | | $ | 1,328 | | $ | 1,490 | | $ | 1,565 |
Adtalem Adjusted EPS | | $ | 3.36 | | $ | 4.30 | | $ | 4.73 |
The fiscal year 2023 revenue target under the MIP was 7.8% higher than fiscal year 2022 actual results of $1,381.8 million, which reflected expected growth from all three reportable segments. The fiscal year 2023 adjusted earnings per share target goal under MIP was 38.3% higher than fiscal year 2022 actual results of $3.11, which, again reflected expected growth from all segments, lower interest expense, as well as the expected effect of cost control measures across all segments and home office.
The Compensation Committee considers the organization’s performance goals to represent the best estimate of what the organization could deliver if management, individually and collectively, were to materially satisfy its goals and objectives for the year. All goals are designed to be presentaggressive yet achievable, with the expectation that it would take extraordinary performance on the part of management to exceed them to the extent necessary to yield maximum incentive payouts under the MIP.
The Compensation Committee approves individual performance goals and objectives for the CEO at the beginning of each fiscal year. The CEO also works collaboratively with the other NEOs in developing their respective individual performance goals and in assigning weightings to such goals to place additional emphasis on higher priorities. Individual performance goals are factors in determining base salary adjustments, annual cash incentive compensation, and future awards of long-term incentive compensation. Individual performance goals intentionally include elements that can be rated objectively as well as, to a lesser extent, elements that are of a subjective nature. Individual performance goals are used to drive stretch performance across a broad range of areas considered critical to our strategy and purpose. This mix of objective and subjective criteria allows the evaluator — the independent members of the Board in the case of the CEO, and the CEO with input and approval from the Compensation Committee in the case of the other NEOs — to assess the individual’s performance against objective criteria, while utilizing his or her discretion to make adjustments based on the individual’s perceived contributions and other subjective criteria.
Adtalem Global Education Inc. | 2023 Proxy Statement 48 |
Proposal No. 3 Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers (“NEOs”)
A summary of the primary individual performance goals and objectives established for each of our NEOs follows:
● ● ● | |||
Stephen W. Beard | ● Grow top line revenue ● Deliver two-year value capture cost synergies ● Improve academic outcomes ● Strengthen performance against CEO competencies of strategy, stakeholder management, people management, and leadership culture. | ||
Robert J. Phelan | ● Build and develop a high performance team ● Deliver on financial objectives ● Drive execution of our transformation growth plan ● Meet or exceed value capture goal | ||
Douglas G. Beck | ● Continue to develop a top quality legal and regulatory department ● Maintain Adtalem’s compliance with applicable laws and regulations ● Maintain relationship with Department of Education ● Successfully limit Adtalem’s exposure to potential DeVry University liabilities ● Support Adtalem’s transformation initiatives | ||
Maurice Herrera | | ● Deliver on FY23 Plan ● Drive earned media to boost reputation of institutions ● Elevate data driven accountability ● Grow Dotcom traffic share and optimize UX ● Increase marketing team engagement ● Launch distinct and compelling brand campaign for all segments | |
Steven Tom | ● Deliver on FY23 financial objectives & commitment ● Meet or exceed FY23 value capture goal ● Power new and enhanced persistence capabilities for the institutions ● Lead a successful start to growth with purpose transformation ● Drive a market responsive enterprise product portfolio ● Innovate for the benefit of our institutions and students ● Accelerate growth and performance through people | ||
Adtalem Global Education Inc. | 2023 Proxy Statement 49 |
Proposal No. 3 Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers (“NEOs”)
Fiscal Year 2023 MIP Decisions
Based on an evaluation of organizational performance relative to MIP measures set at the beginning of fiscal year 2023, the final MIP awards were based on the following financial results, as adjusted for special items described in Appendix A:
| ● | Adtalem achieved 58.2% payout for the fiscal year 2023 revenue component; and |
| ● | Adtalem achieved 111.6% payout for the fiscal year 2023 adjusted earnings per share component. |
The table below shows the threshold, target, and maximum goals for revenue and adjusted earnings per share under the fiscal year 2023 MIP, the performance achieved, and the resulting payout.
| | | | | | | | | | | | | | | | | | |
| | Target Award | | | | | | | | | | | Actual Results | | Performance | | Payout as | |
| | Opportunity | | Plan | | (excluding | | Relative | | % of | ||||||||
Metric | | (Weighting) | | Threshold | | Target | | Maximum | | special items)(1) | | to Plan | | Target | ||||
Adtalem Revenue | | 45% | | $ | 1,328 | | $ | 1,490 | | $ | 1,565 | | $ | 1,451 | | 97.3% | | 58.2% |
Adtalem Adjusted EPS | | 55% | | $ | 3.36 | | $ | 4.30 | | $ | 4.73 | | $ | 4.35 | | 101.2% | | 111.6% |
Organization Performance | | 100% | | | | | | | | | | | | | | 99.4% | | 88% |
| (1) | See Appendix A for a reconciliation to reported results. |
Final MIP award calculations also took into consideration evaluations of individual performance for each NEO during the fiscal year. In the case of each of the NEOs, including Mr. Beard, the MIP award calculations included the application of an individual performance modifier of 125%. The independent directors, in the case of Mr. Beard, and the Compensation Committee, in the case of the other NEOs and taking into account the recommendations of Mr. Beard, determined that an individual performance modifier of 125% was appropriate based on the individual performance and contributions of each of the NEOs in fiscal year 2023 as described below. Based on all of these applicable factors, the Compensation Committee approved the following MIP awards to the NEOs:
| | | | | | | | | | |
| | Annual | | | | | | | | |
| | Target as a | | | | | | | | |
| | Percentage of | | Target Award | | Actual | | Percent of | ||
Name | | Base Salary | | Opportunity | | Award | | Target Earned | ||
Stephen W. Beard | | 120% | | $ | 1,101,600 | | $ | 1,205,839 | | 109% |
Robert J. Phelan | | 80% | | $ | 391,680 | | $ | 428,743 | | 109% |
Douglas G. Beck | | 70% | | $ | 367,710 | | $ | 402,505 | | 109% |
Maurice Herrera | | 60% | | $ | 266,220 | | $ | 291,411 | | 109% |
Steven Tom | | 60% | | $ | 244,800 | | $ | 267,964 | | 109% |
Set forth below, as an example of the MIP calculation for NEOs, is a summary of the calculation of the fiscal year 2023 award for Mr. Beard:
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Payout | | | | | | |
| | | | | | | | | | | | as a % of | | | | | | |
| | | | | | | | | | | | Target Award | | | | | | |
| | | | | | | | | | | | Opportunity | | | | | | |
| | | | | | | Performance | | | | Based on | | | | | | | |
| | Target Award | | | | | Achieved | | Performance | | Performance | | Target Award | | | | ||
| | Opportunity | | | | | (Excluding | | Relative | | Relative | | Opportunity | | Actual | |||
Metric | | (Weighting) | | Target | | Special Items) | | to Target | | to Target | | (Amount) | | Award | ||||
Adtalem Revenue | | 45% | | $ | 1,490 | | $ | 1,451 | | 97.3% | | 111.6% | | $ | 495,720 | | $ | 288,509 |
Adtalem Adjusted EPS | | 55% | | $ | 4.30 | | $ | 4.35 | | 101.2% | | 58.2% | | $ | 605,880 | | $ | 676,162 |
Organizational Performance | | 100% | | | | | | | | | | 88% | | $ | 1,101,600 | | $ | 964,671 |
Individual Performance Modifier | | | | | | | | | | | | 1.25x | | $ | — | | $ | 241,168 |
Total | | | | | | | | | | | | 109% | | $ | 1,101,600 | | $ | 1,205,839 |
In reviewing Mr. Beard’s performance, the independent directors evaluated his performance against each of his individual goals and determined that the application of a 125% individual performance modifier was warranted and appropriate given the financial, operational, and strategic results achieved during fiscal year 2023, as noted below:
| ● | Beat consensus for revenue and EPS every quarter |
| ● | Improved year-over-year total enrollment |
| ● | Exceeded two-year value capture cost synergy target |
| ● | Launched and began executing multi-year transformation strategy |
| ● | Returned $140 million to shareholders in share repurchases and reduced debt by $151 million |
| ● | Built out and strengthened leadership team and enhanced organizational culture |
Adtalem Global Education Inc. | 2023 Proxy Statement 50 |
Proposal No. 3 Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers (“NEOs”)
In determining MIP awards for the other NEOs, the Compensation Committee evaluated the NEOs against their individual goals taking into consideration the following performance highlights:
Robert J. Phelan | | Exceeded guidance for revenue and EPS each quarter Exceeded value capture cost synergy target Completed successful share repurchases and significantly reduced debt Significantly improved and developed a high performing team Drove accountability and support for the execution of the transformation strategy |
Douglas G. Beck | | Developed a dynamic and pragmatic approach to risk management Successfully engaged and established a relationship with the Department of Education Strengthened relationship with the Federal government and current Administration Successfully oversaw and managed ongoing litigation |
Maurice Herrera | Drove increased media to boost reputation of the institutions Elevated data driven accountability Grew dotcom traffic share and optimized UX Launched distinct and compelling brand campaign for all the institutions | |
Steven Tom | Successfully launched strategy to create holistic One Adtalem Exceeded value capture cost synergy target Powered new and enhanced persistence capabilities for the institutions Drove a market responsive enterprise product portfolio Shaped and launched artificial intelligence efforts |
Special Value Capture Incentive Opportunity
In November 2021, the Compensation Committee approved the Value Capture Incentive Opportunity, which was a special bonus program for fiscal years 2022 and 2023 that was designed to reward participants for identifying and executing on synergies related to the Walden University acquisition. Each of the NEOs, other than Mr. Beard, were participants in the Value Capture Incentive Opportunity. For participating executive officers, including each of the NEOs, payouts were tied to achieving pre-established realized levels of total cost synergies with funding equal to 3-5% of synergy cost targets, or $4 to $6 million. The Value Capture Incentive Opportunity payout for each participating executive officer upon achievement of the target level of cost synergies was $200,000, with the opportunity to earn a higher level of payout for exceeding the target level of cost synergies. One-half of the Value Capture Incentive Opportunity payout, or $100,000, was paid to each of the participating executive officers in fiscal year 2023 for the successful achievement of target cost synergies in fiscal year 2022. Based on the achievement of total cost synergies in excess of the target level of cost synergies as measured at the end of fiscal year 2023, each participating executive officer, including each of the NEOs other than Mr. Beard, received a Value Capture Incentive Opportunity payout of $160,000 in fiscal year 2024.
Long-Term Incentive Compensation
Long-term incentive compensation at Adtalem consists of different forms of equity-based awards. Beginning with fiscal year 2023, the Compensation Committee determined that it would no longer grant stock options and would grant equity-based awards only in the form of RSUs and PSUs. The elimination of stock options is intended to simplify the long-term incentive program and to shift more of the equity mix to performance-based equity awards. As a result, a significant portion of the equity-based awards granted under the annual long-term incentive program (60% of the executive officers’ annual awards) is granted in the form of PSUs with the remaining 40% granted in the form of RSUs. The Compensation Committee targets the value of long-term incentive compensation for NEOs to represent a substantial percentage of their total compensation opportunity. These incentives are intended to serve three complementary objectives of our compensation program:
| ● | Align executives’ long-term interests with those of our shareholders; |
| ● | Drive achievement of and reward executives for the delivery of long-term business results; and |
| ● | Promote long-term retention of key executives who are critical to our operations. |
How the Long-Term Incentive Plan Works
The Compensation Committee granted equity-based awards to each of the NEOs, including Mr. Beard, in August 2022 in the form of RSUs and in February 2023 in the form of PSUs based on both retrospective and prospective considerations and organizational and individual considerations. PSU grants were delayed until February 2023 to give the leadership team and the Compensation Committee time to complete Adtalem’s long-term strategic plan and set goals that would achieve the long-term strategic plan and that properly aligned management and shareholder interests. The Compensation Committee considered the same seven criteria described in the "Annual Base Salary Review" section above in determining the amount of these awards. Annual equity awards were delivered through a mix of RSUs and PSUs to provide a reasonable balance to the equity portfolio. All of the NEOs, including Mr. Beard, received an equity-based award with 60% of the long-term incentive opportunity granted as PSUs and 40% of the long-term incentive opportunity granted as RSUs.
Adtalem Global Education Inc. | 2023 Proxy Statement 51 |
Proposal No. 3 Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers (“NEOs”)
Restricted Stock Units (RSUs): RSUs align the interests of management with those of shareholders and reward long-term value creation. To promote retention, RSUs vest in equal annual installments over a three-year period beginning on the first anniversary of the grant date, subject to the NEO’s continuous service at Adtalem. The vesting schedule was changed from four-year ratable vesting to three-year ratable vesting beginning in fiscal year 2023 to align with majority market practice. Performance Share Units (PSUs): PSUs are designed to reward strong performance based on two financial performance measures. For fiscal year 2023, the Compensation Committee selected Revenue Growth and EBITDA Margin as the financial performance measures to focus executives on growth and profitability. In fiscal year 2023, PSUs granted to the NEOs were split equally among these two financial performance measures. These PSUs vest after three years based on the achievement of Revenue Growth and EBITDA Margin performance as compared to the goals set by the Compensation Committee based on performance averaged over the three-year period. The goals for the PSUs are based on the multi-year strategic plan. In some cases, stretch goals are built in to help bridge to anticipated future year targets to ensure we are appropriately working towards our long-term strategic plan. | Focusing on Long-Term Results The Compensation Committee believes that long-term equity compensation is an important retention tool and, therefore, chose to use a three-year ratable vesting schedule for grants of RSUs and a three-year cliff vesting schedule for PSUs, to encourage longer-term focus and retention. | |
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Fiscal Year 2023 Long-Term Incentive Decisions
For fiscal year 2023, NEOs received the following stock-based awards:
| | | | | | | | | |
| | | | | | | | 2023 Long-Term | |
Name | | RSUs | | PSUs | | Incentive Grant | |||
Stephen W. Beard | | $ | 2,399,899 | | $ | 3,409,058 | | $ | 5,808,957 |
Robert J. Phelan | | $ | 383,888 | | $ | 545,806 | | $ | 929,694 |
Douglas G. Beck | | $ | 205,853 | | $ | 292,714 | | $ | 498,567 |
Maurice Herrera | | $ | 174,061 | | $ | 247,432 | | $ | 421,493 |
Steven Tom | | $ | 160,152 | | $ | 227,216 | | $ | 387,368 |
Payouts from Fiscal Year 2021 PSU Awards
PSU awards granted to Mr. Beard in August 2020 vested in August 2023. The PSU awards were split evenly between ROIC and FCF per share targets over the three-year performance period. The other NEOs did not receive PSUs in August 2020.
For the August 2020 PSUs, the funded result for ROIC was 72.2% and the funded result for FCF per share was 77.2%. The tables below show the performance measures and targets established for the August 2020 PSUs, the performance achieved, and the resulting payout.
Performance Goals | Payout | |||||||||
Goal | Threshold | Target | Maximum | |||||||
ROIC | FY21-23 |
| 72.2% | |||||||
FCF per share | FY21-23 |
| 77.2% | |||||||
Payout of Chief Executive Officer’s Fiscal Year 2022 Long-Term Incentive Award
In connection with his appointment as President and CEO in September 2021, the Board granted a performance-based equity award to Mr. Beard in November 2021. Under the terms of this performance-based equity award, Mr. Beard received the opportunity to earn up to $2,500,000 in Adtalem common stock based on achievement of critical strategic milestones.
25% of Mr. Beard’s award ($625,000) was based on the successful divesture of the financial services business prior to December 31, 2022. As a result of the closing of the divestiture of the financial services business on March 10, 2022, this portion of Mr. Beard’s award vested on March 10, 2022 and Mr. Beard received 26,031 shares of Adtalem stock based on Adtalem’s closing stock price of $24.01 on March 10, 2022.
75% of Mr. Beard’s award ($1,875,000) was based on the achievement of cost synergy goals related to the Walden University acquisition. This portion of Mr. Beard’s award was split equally ($937,500 each) between (1) run rate cost synergies measured one year from the date of close of the Walden University acquisition (on August 12, 2022), and (2) total run rate cost synergies measured two years from the date of close of the Walden University acquisition (on August 12, 2023). If earned, the award would be settled in shares of Adtalem common stock, with the number of shares awarded based on Adtalem’s closing stock price on the applicable vesting dates. This portion of Mr. Beard’s award included an upside opportunity to earn additional shares if the total run rate cost synergies achieved upon completion of the two-year period exceeded the cost synergy goals. As a result of the
Adtalem Global Education Inc. | 2023 Proxy Statement 52 |
Proposal No. 3 Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers (“NEOs”)
achievement of actual run rate cost synergies in excess of the cost synergy goals, Mr. Beard received a stock payout on August 12, 2022 equal to $937,500, or 24,950 shares of Adtalem stock based on Adtalem’s closing stock price of $37.57 on August 12, 2022, and a stock payout equal to $1,406,250 (150% of the $937,500 target amount), or 31,875 shares of Adtalem stock based on Adtalem’s closing stock price of $44.12 on August 12, 2023.
Although the grant of this performance-based equity award to Mr. Beard was made in fiscal 2022 and was included in the Grant of Plan-Based Awards Table in the fiscal year 2022 proxy statement, the summary set forth above is intended to provide the details of the total payouts to Mr. Beard of this performance-based equity award.
SpecialSupplementalLong-TermIncentiveProgram
In connection with Adtalem’s multi-year transformational strategy (“Growth with Purpose”), the Compensation Committee considered providing supplemental compensation opportunities to a select group of Adtalem employees to motivate and reward the execution of the Growth with Purpose transformation. In furtherance of this objective, the Compensation Committee approved a supplemental incentive program, the Growth with Purpose Incentive Program, in early fiscal year 2024 that will reward participating employees for achieving specific transformation initiatives and superior financial results that will result in a step change in the organic growth trajectory of the business, and that will deliver record levels of profitability and drive value creation.
The Growth with Purpose Incentive Program is based on a two-year performance period covering fiscal years 2024 and 2025 and includes several different tiers of participating employees, with each tier provided a different level of equity and/or cash incentive award opportunity. Each of Adtalem’s executive officers, including Mr. Beard and the other NEOs, are participants in the top tier of the Growth with Purpose Incentive Program which provides for a grant of PSUs equal in value to 50% of the executive officer’s fiscal year 2024 annual long-term incentive award target opportunity as shown in the table below.
| | |
NEO | Annual Long-Term Incentive Award Target Opportunity | Growth with Purpose PSU Grant Value |
Steven W. Beard | $7,000,000 | $3,500,000 |
Robert J. Phelan | $998,784 | $499,392 |
Douglas G. Beck | $455,435 | $227,718 |
Maurice Herrera | $452,574 | $226,287 |
Steven Tom | $416,160 | $208,080 |
The PSUs will be earned based on the achievement of two equally weighted measures: revenue growth and adjusted EBITDA margin goals. Payouts are based upon actual financial performance as measured following the completion of fiscal year 2025. As with the PSUs that are granted annually under Adtalem’s long-term incentive program, the PSUs granted under the Growth with Purpose Incentive Program provide for no payout if actual financial performance is below threshold and for an increased payout if financial performance is above target (up to 200% of the target number of PSUs granted). Although the financial performance measures for the Growth with Purpose Incentive Program PSUs are the same financial performance measures as for the PSUs that were granted in fiscal year 2023 (revenue growth and adjusted EBITDA margin), the Growth with Purpose Incentive Program is designed to be supplemental to the annual PSU program and, accordingly, is based on the achievement of substantially higher levels of revenue growth and adjusted EBITDA margin performance as of the end of fiscal year 2025.
COMPENSATION SETTING PROCESS
Role of the Compensation Committee
The Compensation Committee determines the appropriate level of compensation for the CEO and other NEOs. The Compensation Committee reviews and approves all components of annual compensation (base salary, annual cash incentive, and long-term incentive) to ensure they align with the principles of Adtalem’s compensation program. In addition, the Compensation Committee meets periodically to review the design of the overall compensation program, approve performance targets and review management performance, and it assists in establishing CEO goals and objectives.
Each year, the Compensation Committee recommends CEO compensation to the independent members of the Board, taking into consideration the CEO’s performance evaluation and advice from the independent executive compensation consulting firm engaged by the Compensation Committee. In determining the CEO’s long-term incentive compensation, the Compensation Committee considers Adtalem’s absolute and relative performance, incentive awards to CEOs at comparable companies, past awards, and the CEO’s expected future contributions, as well as other factors it deems appropriate.
The Compensation Committee approves base salary, annual cash incentive, and long-term incentive compensation for Adtalem’s NEOs, except for the CEO whose compensation package is recommended by the Compensation Committee and approved by the independent members of the Board during executive session.
Role of the Executive Officers and Management
The CEO, in consultation with the Senior Vice President, Chief Human Resources Officer, provides the Compensation Committee with compensation recommendations for the other NEOs, including recommendations for annual base salary increases, annual cash incentive awards, and long-term incentive awards. These recommendations are based on market-competitive compensation data and the CEO’s assessment of each NEO’s performance in the prior year. While these
Adtalem Global Education Inc. | 2023 Proxy Statement 53 |
Proposal No. 3 Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers (“NEOs”)
recommendations are given significant weight, the Compensation Committee retains full discretion when determining compensation.
The Compensation Committee reviews and approves, with any modifications it deems appropriate, base salary, annual cash incentive awards, and long-term incentive awards for Adtalem’s NEOs.
Role of the Compensation Consultant
The Compensation Committee retains ultimate responsibility for compensation-related decisions. To add objectivity to the review process and inform the Compensation Committee of market trends and practices, the Compensation Committee engages the services of an independent executive compensation advisory firm. For fiscal year 2023, the Compensation Committee engaged Meridian as its independent executive compensation consultant.
Meridian reviewed Adtalem’s executive compensation structure and incentive plan designs and assessed whether the executive compensation program is competitive and supports the Compensation Committee’s goal to align the interests of executive officers with those of shareholders, students, and other stakeholders.
For fiscal year 2023, Meridian’s primary areas of assistance were:
| ● | Gathering information related to current trends and practices in executive compensation, including peer group and broader market survey data; |
| ● | Reviewing, analyzing, and providing recommendations for Adtalem’s list of peer group companies; |
| ● | Benchmarking competitive pay levels for NEOs and other executives; |
| ● | Advising on short-term and long-term incentive plan designs; |
| ● | Reviewing information and recommendations developed by management for the Compensation Committee and providing input on such information and recommendations to the Compensation Committee; |
| ● | Attending and participating in all Compensation Committee meetings and most non-employee director executive sessions, as well as briefings with the Compensation Committee chair and management prior to meetings; |
| ● | Reviewing with management and the Compensation Committee the materials to be used in Adtalem’s Proxy Statement; and |
| ● | Benchmarking the non-employee director compensation program. |
The Compensation Committee has the sole authority to approve the independent compensation consultant’s fees and terms of engagement. Thus, the Compensation Committee annually reviews its relationship with, and assesses the independence of, its independent consultant to ensure executive compensation consulting independence. The process includes a review of the services the independent consultant provides, the quality of those services, and fees associated with the services during the fiscal year. The Compensation Committee has assessed the independence of its independent consultants pursuant to applicable SEC rules and NYSE listing standards and has concluded that the independent consultants’ work for the Compensation Committee does not raise any conflict of interest.
Executive Compensation Peer Group
To ensure Adtalem continues to provide total executive compensation that is fair and competitively positioned in the marketplace, the Compensation Committee reviews the pay level, mix, and practices of peer group companies. The Compensation Committee does not target any specific percentile levels in establishing compensation levels and opportunities.
While including all large publicly-held, private sector higher education organizations, Adtalem’s peer group also includes a broader group of organizations in order to provide more comprehensive compensation data. Adtalem’s expanded peer group includes publicly-held organizations that provide services over an extended period of time. In consideration of Adtalem’s significant focus on healthcare education, which requires attracting and retaining seasoned healthcare professionals and executives, the peer group also includes healthcare services companies. Revenue of most of the peer group organizations is generally between one-half and two times Adtalem’s revenue.
The following peer group was used for fiscal year 20234:
2U Inc. | Chegg | John Wiley & Sons |
Amedisys | Chemed | Laureate Education |
American Public Education | Cross Country Healthcare | MEDNAX, Inc. |
AMN Healthcare | Ensign Group | Perdoceo Education |
Bright Horizons Family Solutions LLC | Graham Holdings Company | Strategic Education |
Brookdale Senior Living Inc. | Grand Canyon Education, Inc. | Stride |
4Adtalem removed two companies from its peer group for FY23: (i) Houghton Mifflin Harcourt Company, which was acquired in April 2022 and data was no longer available; and (ii) WW International, Inc., due to the different nature of its business.
Adtalem Global Education Inc. | 2023 Proxy Statement 54 |
Proposal No. 3 Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers (“NEOs”)
ADDITIONAL EXECUTIVE COMPENSATION PRACTICES
Deferred Compensation
Adtalem maintains the Nonqualified Deferred Compensation Plan that allows certain employees, including the NEOs, to defer up to 50% of salary and 100% of the MIP compensation until termination of service or certain other specified dates. Adtalem credits matching contributions to participants’ accounts to the extent they have elected to defer the maximum contributions under Adtalem’s Retirement Plan, which is a 401(k) plan, and their matching contributions are limited by the Internal Revenue Code of 1986, as amended (the “Code”) provisions.
The Nonqualified Deferred Compensation Plan enables the NEOs and other eligible employees with a certain level of annual compensation to save a portion of their income for retirement on a scale consistent with other employees not subject to IRS limits.
Adtalem has elected to fund its Nonqualified Deferred Compensation Plan obligations through a rabbi trust. The rabbi trust is subject to creditor claims in the event of an insolvency, but the assets held in the rabbi trust are not available for general corporate purposes. Participants have an unsecured contractual commitment by Adtalem to pay the amounts due under the Nonqualified Deferred Compensation Plan.
The value of deferred compensation amounts is quantified each year and this program is periodically reviewed for its competitiveness.
Other Benefits
NEOs are eligible to participate in a number of broad-based benefit programs, which are the same ones offered to most employees at Adtalem, including health, disability, and life insurance programs.
We do not offer a defined benefit pension plan, and, therefore, our Retirement Plan and the Nonqualified Deferred Compensation Plan are the only retirement savings vehicles for executives.
In general, we do not provide benefits or perquisites to our NEOs that are not available to other employees, with the exception of personal financial planning services and executive physicals.
Benefits and perquisites make up the smallest portion of each NEO’s total compensation package. The nature and quantity of perquisites provided by Adtalem did not change materially in fiscal year 2023 versus 2022, consistent with our philosophy that benefits and perquisites should not represent a meaningful component of our compensation program. The Compensation Committee periodically reviews the benefit and perquisite program to determine if adjustments are appropriate.
The “All Other Compensation” column of the 2023 Summary Compensation Table shows the amounts of benefit and perquisite compensation we provided for fiscal years 2021, 2022, and 2023 to each of the NEOs.
Employment Agreements
Adtalem has entered into employment agreements with each NEO that provide for:
| ● | Initial annual base salary, subject to annual increases (no decreases except in the case of an across-the-board reduction affecting all executives equally); |
| ● | Annual cash incentive opportunity under the MIP, targeted at a percentage of base salary; |
| ● | Eligibility to receive annual equity awards under Adtalem’s equity awards plan(s); |
| ● | Reimbursement of expenses consistent with Adtalem’s policy in effect at the time; and |
| ● | Severance benefits that will be provided upon certain terminations of employment, as further described on page 63 under the caption “2023 Potential Payments Upon Termination or Change-in-Control.” |
Adtalem Global Education Inc. | 2023 Proxy Statement 55 |
Proposal No. 3 Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers (“NEOs”)
Employment Agreements Employment agreements provide NEOs with a defined level of financial protection upon loss of employment. Adtalem believes that providing for such income continuity facilitates the hiring of qualified executives and results in greater management stability and lower unwanted management turnover. The Compensation Committee believes that the employment agreements provide: ● Security and incentives that help retain and attract top executives; ● Greater ability for Adtalem to retain key executives following an extraordinary corporate transaction; and ● Benefits to Adtalem including non-competition and non-solicitation covenants by NEOs. |
Separation Agreements
Change-in-Control
Adtalem provides benefits to its NEOs upon termination of employment from Adtalem in specific circumstances. These benefits are in addition to the benefits to which these NEOs would be generally entitled upon a termination of employment (e.g., vested retirement benefits accrued as of the date of termination, stock-based awards that are vested as of the date of termination and the right to elect continued health coverage pursuant to COBRA). In addition, Adtalem’s equity compensation plans, and the award agreements used to implement them, provide for accelerated vesting of outstanding equity awards in the event of a change-in-control of Adtalem, only in the event (a) Adtalem (or its successor) ceases to be publicly traded, (b) the successor to Adtalem fails to assume outstanding awards or to issue new awards in replacement of outstanding awards, or (c) if the participant is terminated without cause or resigns for good reason within two years following the change-in-control.
See “2023 Potential Payments Upon Termination or Change-in-Control” beginning on page 63 for a detailed description of potential payments and benefits to the NEOs under Adtalem’s compensation plans and arrangements upon termination of employment or a change of control of Adtalem.
OTHER EXECUTIVE COMPENSATION CONSIDERATIONS AND POLICIES
Stock Ownership Guidelines Stock ownership guidelines have been in place for our directors and executive officers since 2010 and are intended to align their interests with our shareholders by requiring them to maintain a significant ownership interest in the company. Each of our non-employee directors are expected to maintain ownership of Adtalem Common Stock valued at or equal to five times their annual retainer. For fiscal year 2023, required ownership levels for executive officers remained consistent with those put in place in fiscal year 2020 as described in the table below: | Linking Compensation to Stock Performance Stock ownership guidelines tie the compensation of the NEOs to our stock performance, since the increase or decrease in our stock price impacts their personal holdings. Currently, all NEOs and directors who are no longer subject to a phase-in period have met the minimum ownership requirements. | ||
| | | |
Position | NEOs | Number of Shares Equivalent to: |
Chief Executive Officer | Stephen W. Beard | 5 times base salary |
Chief Financial Officer | Robert J. Phelan | 3 times base salary |
All other executive officers | Douglas G. Beck, | 1 ½ times base salary |
Our directors and executive officers have five years following their initial election, date of appointment, or promotion to an executive officer position, as the case may be, to achieve their stock ownership level.
Shares that count toward satisfaction of the guidelines include Adtalem’s Common Stock directly and/or beneficially owned, Adtalem’s Common Stock held in Adtalem’s Retirement Plan, Adtalem’s Common Stock held in Adtalem’s Nonqualified Deferred Compensation Plan, and the pre-tax value of unvested RSUs.
Our stock ownership guidelines are deemed to continue to be met by an individual who has achieved the required ownership level but then falls below solely due to a decline in Adtalem’s Common Stock price. Absent extenuating circumstances, executives who have not yet met the guidelines at the end of their five-year phase-in period are required to retain, until the guidelines are satisfied, 100% of the after-tax shares received from option exercises or the vesting of RSUs or PSUs.
Incentive Compensation Recoupment Policy
Adtalem has adopted an incentive compensation recoupment policy that applies to all executive officers. The policy provides that, in addition to any other remedies available to Adtalem (but subject to applicable law), if the Board or any committee of the Board determines that it is appropriate, Adtalem may recover (in whole or in part) any incentive payment, commission, equity
Adtalem Global Education Inc. | 2023 Proxy Statement 56 |
Proposal No. 3 Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers (“NEOs”)
award, or other incentive compensation received by an executive officer of Adtalem to the extent that such incentive payment, commission, equity award, or other incentive compensation is or was paid on the basis of any financial results that are subsequently restated due to that executive officer’s conduct that is determined by the independent directors to have been knowingly or intentionally fraudulent or illegal. In addition, we anticipate adopting a revised incentive recoupment policy on or before December 1, 2023 that complies with recently adopted NYSE listing requirements.
Deductibility of Compensation
Adtalem analyzes the overall expense arising from aggregate executive compensation, as well as the accounting and tax treatment of such programs. Section 162(m) of the Code generally disallows a tax deduction to publicly traded companies for certain compensation in excess of $1 million per year paid to “covered employees.” “Covered employees” include the Chief Executive Officer, the Chief Financial Officer, and the three other most highly compensated officers. Historically, the company’s compensation plans were structured so that compensation would be performance-based and deductible under Section 162(m) of the Code. However, The Tax Cuts and Jobs Act enacted on December 22, 2017 eliminated the performance-based compensation exemption from the Section 162(m) $1 million per year dollar deduction limit, with an exception for certain “grandfathered agreements” in effect on November 2, 2017.
Although the Compensation Committee has not adopted a formal policy regarding tax deductibility of compensation paid to our executive officers, it continues to view deductibility as one of many factors to be considered in the context of its overall compensation philosophy. Accordingly, the Compensation Committee reserves the right to approve as it deems appropriate and in the best interests of Adtalem compensation arrangements for executive officers that are not fully deductible.
Compensation Risk Analysis
The Compensation Committee, with the assistance of Meridian as its consultant, conducted an annual assessment of our compensation program to ensure it does not encourage unnecessary or excessive risk taking that could have an adverse effect on Adtalem.
The risk assessment covered all compensation programs, including those in which our top executives and NEOs participate.
Through this process, Meridian and the Compensation Committee have concluded that Adtalem’s compensation programs do not encourage behaviors that could create material risk to the organization. More specifically, the Compensation Committee concluded that:
| ● | Adtalem’s compensation programs are well-designed to encourage behaviors aligned with the long-term interests of shareholders. |
| ● | There is appropriate balance in the executive compensation program structure to mitigate compensation-related risk with fixed and variable pay, cash and equity, corporate and business unit goals, financial and non-financial goals, and formulas and discretion. |
| ● | The Compensation Committee has approved policies to mitigate compensation risk, including stock ownership guidelines, insider-trading prohibitions, hedging and pledging prohibitions, and clawbacks. |
| ● | Additionally, the Compensation Committee exercises an appropriate level of independent oversight into compensation decisions and related risk. |
Prohibition on Hedging and Pledging
Our insider trading policy prohibits employees and directors from engaging in any transaction that is designed to hedge or offset any decrease in the market value of equity securities issued by Adtalem. In addition, except as expressly approved by our general counsel, employees and directors may not hold Adtalem securities in a margin account or pledge Adtalem securities as collateral for a loan. None of our executive officers or directors have requested approval to hold Adtalem securities in a margin account or to pledge Adtalem securities.
Adtalem Global Education Inc. | 2023 Proxy Statement 57 |
Proposal No. 3 Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers (“NEOs”)
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board hereby furnishes the following report to the shareholders of Adtalem in accordance with rules adopted by the SEC. The Compensation Committee has reviewed and discussed the Compensation Discussion & Analysis of this Proxy Statement with Adtalem’s management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion & Analysis be included in this Proxy Statement.
This report is submitted on behalf of the members of the Compensation Committee:
Kenneth J. Phelan, Chair
William W. Burke
Charles DeShazer
Sharon O’Keefe
The Compensation Committee Report set forth above does not constitute soliciting materials and should not be deemedincorporated by reference into any other Adtalem filing under the Securities Act or the Exchange Act, except to the extent that Adtalem specifically incorporates the Compensation Committee Report by reference.
Adtalem Global Education Inc. | 2023 Proxy Statement 58 |
Executive Compensation Tables
2023 SUMMARY COMPENSATION TABLE
This table shows the compensation of each of our NEOs for fiscal years ended June 30, 2023, 2022, and 2021.
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Non-Equity | | | | |
| | | | | | | | Stock | | Option | | Incentive Plan | | All Other | | |
Name and | | Fiscal | | Salary | | Bonus | | Awards | | Awards | | Compensation | | Compensation | | Total |
Principal Position | | Year | | ($)(1) | | ($)(2) | | ($)(3) | | ($)(4) | | ($)(5) | | ($)(6) | | ($) |
Stephen W. Beard | | 2023 | | 949,846 | | — | | 5,808,957 | | — | | 1,205,839 | | 89,452 | | 8,054,094 |
President and | | 2022 | | 828,466 | | — | | 6,916,139 | | 1,103,560 | | 258,388 | | 97,779 | | 9,204,332 |
Chief Executive Officer | | 2021 | | 600,020 | | — | | 1,033,340 | | 461,377 | | 619,200 | | 87,943 | | 2,801,880 |
Robert J. Phelan | | 2023 | | 506,585 | | — | | 929,694 | | — | | 528,743 | | 22,044 | | 1,987,066 |
Senior Vice President, | | 2022 | | 436,615 | | — | | 651,785 | | 38,089 | | 106,635 | | 67,295 | | 1,300,419 |
Chief Financial Officer | | 2021 | | 350,000 | | 60,000 | | 306,842 | | 47,697 | | 242,104 | | 37,493 | | 1,044,136 |
Douglas G. Beck | | 2023 | | 543,523 | | — | | 498,567 | | — | | 502,505 | | 61,977 | | 1,606,572 |
Senior Vice President, |
| 2022 | | 512,115 | | 170,000 | | 479,934 | | 120,070 | | 129,780 | | 30,084 | | 1,441,983 |
General Counsel, Corporate Secretary and Institutional Support Services | | 2021 |
| — | | — | | 1,199,824 | | — | | 17,490 | | — | | 1,217,314 |
Maurice Herrera | | 2023 | | 459,092 | | — | | 421,493 | | — | | 391,411 | | 116,163 | | 1,388,159 |
Senior Vice President, |
| 2022 | | 284,423 | | 475,000 | | 999,972 | | — | | 60,409 | | 62,087 | | 1,881,891 |
Chief Marketing Officer | | |
| | | | | | | | | | | | | |
Steven Tom | | 2023 | | 422,154 | | 612,000 | | 387,368 | | — | | 367,964 | | 27,467 | | 1,816,953 |
Senior Vice President, |
| | | | | | | | | | | | | | | |
Chief Customer Officer | | | | | | | | | | | | | | | | |
| (1) | This column shows the salaries paid by Adtalem to its NEOs in fiscal years 2023, 2022, and 2021. The following NEOs have elected to defer a portion of their salaries under the Nonqualified Deferred Compensation Plan: Mr. Beard ($120,823 for 2023, $144,767 for 2022, and $144,477 for 2021); and Mr. Beck ($45,589 for 2023 and $14,262 for 2022). Amounts shown are inclusive of these deferrals. |
| (2) | This column includes (i) the $60,000 sign-on bonus paid to Mr. Phelan in fiscal year 2021; (ii) the $170,000 sign-on bonus paid to Mr. Beck in fiscal year 2022; (iii) the $475,000 sign-on bonus paid to Mr. Herrera in fiscal year 2022; and (iv) the $612,000 retention bonus paid to Mr. Tom in fiscal year 2023. |
| (3) | This column includes a sign-on grant value of $500,155 to Mr. Phelan and $999,972 to Mr. Herrera delivered in RSUs in fiscal year 2022 and a sign-on grant value of $1,199,824 to Mr. Beck delivered in RSUs in fiscal year 2021. The amounts reported in the Stock Awards column represents the grant date fair value of awards of both RSUs and PSUs, which is an estimated value computed in accordance with FASB ASC Topic 718. The assumptions used for fiscal years 2023, 2022, and 2021 calculations can be found at Note 18: Stock-Based Compensation to our audited financial statements in Adtalem’s Annual Report on Form 10-K for the year ended June 30, 2023 and Note 17: Stock-Based Compensation to our audited financial statements in Adtalem’s Annual Report on Form 10-K for the years ended June 30, 2022 and 2021, respectively. The grant date fair values of the PSUs are based on the probable outcome of the performance conditions to which the PSUs are subject, and the shares the recipient would receive under such outcome. The 2023 Grants of Plan-Based Awards shows the values of PSU awards, assuming that the highest levels of the performance conditions are achieved. The grant date fair value of the PSUs is $40.43 for 2023. The grant date fair value of the PSU awards assuming achievement of maximum performance would be: Mr. Beard – $6,818,116; Mr. Phelan – $1,091,612; Mr. Beck – $585,428; Mr. Herrera – $494,864; and Mr. Tom – $454,432. |
| (4) | The amounts reported in the Options Awards column represent the grant date fair value, which is an estimated value computed in accordance with FASB ASC Topic 718. The assumptions used for fiscal years 2022 and 2021 calculations can be found at Note 17: Stock-Based Compensation to our audited financial statements in Adtalem’s Annual Report on Form 10-K for the years ended June 30, 2022 and 2021, respectively. |
| (5) | The MIP compensation reported in this column was earned in fiscal years 2023, 2022, and 2021 and paid in fiscal years 2024, 2023, and 2022, respectively, based upon the MIP guidelines. Certain NEOs have elected to defer a portion of their MIP compensation under the Nonqualified Deferred Compensation Plan, specifically: Mr. Beard ($120,584 for 2023, $25,839 for 2022, and $61,920 for 2021); and Mr. Beck ($40,250 for 2023 and $12,978 for 2022). Amounts shown are inclusive of these deferrals. In addition to the MIP shown in this column, Mr. Phelan, Mr. Beck, Mr. Herrera, and Mr. Tom each received $100,000 in fiscal year 2023 related to the value capture bonus. |
| (6) | The amounts indicated in the “all other compensation” column for 2023 include the following: |
| ● | Matching contributions credited under the Retirement Plan for Mr. Beard ($19,800); Mr. Phelan ($19,696); Mr. Beck ($20,590); Mr. Herrera ($13,311); and Mr. Tom ($27,023). |
| ● | Company contributions credited under the Nonqualified Deferred Compensation Plan for Mr. Beard ($51,577); and Mr. Beck ($26,601). |
| ● | Group life insurance premiums paid by Adtalem for Mr. Beard ($1,290); Mr. Phelan ($2,348); Mr. Beck ($2,411); Mr. Herrera ($1,124); and Mr. Tom ($444). |
| ● | Personal financial planning services for Mr. Beard ($16,785); and Mr. Beck ($12,375). |
| |
Adtalem Global Education Inc. | 2023 Proxy Statement 59 |
| ● | As part of Mr. Herrera’s offer of employment, and to cover the cost of Mr. Herrera’s relocation to the Company’s headquarters location, the Company agreed to provide and gross-up a monthly housing allowance. The total housing allowance and related tax gross-up provided to Mr. Herrera in fiscal year 2023 totaled $101,728. |
Employment Agreements with Chief Executive Officer and Other Named Executive Officers
Adtalem has entered into employment agreements with each of its NEOs, which are described on pages 63-65 under the caption “Employment Agreements.”
2023 GRANTS OF PLAN-BASED AWARDS
This table sets forth information regarding non-equity incentive plan awards and equity incentive plan awards granted to the NEOs in fiscal year 2023.
| | | | | | | | | | | | | | | | |
| | Estimated Future Payouts | | Estimated Future Payouts | | All Other | | | ||||||||
| | Under Non-Equity Incentive | | Under Equity Incentive | | Stock | | | ||||||||
| | Plan Awards(1) | | Plan Awards(5) | | Awards: | | Grant | ||||||||
| | | | | | | | | | | | | | Number of | | Date Fair |
| | | | | | | | | | | | | | Shares of | | Value of |
| | | | | | | | | | | | | | Stock or | | Stock |
Name / | | Threshold | | Target | | Maximum | | Threshold | | Target | | Maximum | | Units | | Awards |
Grant Date | | ($)(2) | | ($)(3) | | ($)(4) | | (#) | | (#) | | (#) | | (#) | | ($)(6) |
Stephen W. Beard | | | | | | | | | | | | | | | | |
| | — | | 1,101,600 | | 2,754,000 | | | | | | | | | | |
2/15/2023 | | | | | | | | 42,160 | | 84,320 | | 168,640 | | | | 3,409,058 |
8/24/2022 | | | | | | | | | | | | | | 60,390 | | 2,399,899 |
Robert J. Phelan | | | | | | | | | | | | | | | | |
| | — | | 391,680 | | 979,200 | | | | | | | | | | |
2/15/2023 | | | | | | | | 6,750 | | 13,500 | | 27,000 | | | | 545,806 |
8/24/2022 | | | | | | | | | | | | | | 9,660 | | 383,888 |
Douglas G. Beck | | | | | | | | | | | | | | | | |
| | — | | 367,710 | | 919,275 | | | | | | | | | | |
2/15/2023 | | | | | | | | 3,620 | | 7,240 | | 14,480 | | | | 292,714 |
8/24/2022 | | | | | | | | | | | | | | 5,180 | | 205,853 |
Maurice Herrera | | | | | | | | | | | | | | | | |
| | — | | 266,220 | | 665,550 | | | | | | | | | | |
2/15/2023 | | | | | | | | 3,060 | | 6,120 | | 12,240 | | | | 247,432 |
8/24/2022 | | | | | | | | | | | | | | 4,380 | | 174,061 |
Steven Tom | | | | | | | | | | | | | | | | |
| | — | | 244,800 | | 612,000 | | | | | | | | | | |
2/15/2023 | | | | | | | | 2,810 | | 5,620 | | 11,240 | | | | 227,216 |
8/24/2022 | | | | | | | | | | | | | | 4,030 | | 160,152 |
| (1) | Payouts under the MIP were based on performance in fiscal year 2023. Therefore, the information in the “Threshold,” “Target,” and “Maximum” columns reflect the range of potential payouts when the performance goals were set on November 9, 2022. The amounts actually paid under the MIP for fiscal year 2023 appear in the “Non-Equity Incentive Plan Compensation” column of the 2023 Summary Compensation Table. |
| (2) | Pursuant to the MIP, performance below a performance goal threshold will result in no payment with respect to that performance goal. |
| (3) | The amount shown in this column represents the target incentive payment under the MIP, which is calculated as a set percentage of base salary. |
| (4) | Pursuant to the MIP, the amount shown in this column represents the maximum incentive payment, 250% of the target. |
| (5) | PSUs were granted under the 2013 Incentive Plan. The awards consist of 50% with a target based on Revenue Growth over a period of three fiscal years and 50% with a target based on EBITDA Margin over a period of three fiscal years. PSUs will pay out 0% for below threshold performance, and between 50% of target payout for threshold performance and 200% of target for achieving maximum performance or above. Straight-line interpolation will be used to determine achievement between threshold and target. |
| (6) | This column shows the grant date fair value of RSUs granted on August 24, 2022 and PSUs (assuming payout at target value) granted on February 15, 2023 in fiscal year 2023, computed in accordance with FASB ASC Topic 718, which was $39.74 for RSUs and $40.43 for PSUs. |
Adtalem Global Education Inc. | 2023 Proxy Statement 60 |
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
This table sets forth information for each NEO with respect to stock options, RSUs, and PSUs held by the NEOs as of June 30, 2023.
| | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards | ||||||||||||
| | | | | | | | | | | | | | | | Equity |
| | | | | | | | | | | | | | | | Incentive |
| | | | | | | | | | | | | | Equity | | Plan |
| | | | | | | | | | | | | | Incentive | | Awards: |
| | | | | | | | | | | | | | Plan | | Market or |
| | | | | | | | | | | | | | Awards: | | Payout |
| | | | | | | | | | | | Market | | Number of | | Value of |
| | Number of | | Number of | | | | | | Number of | | Value of | | Unearned | | Unearned |
| | Securities | | Securities | | | | | | Shares or | | Shares or | | Shares, | | Shares, |
| | Underlying | | Underlying | | | | | | Units of | | Units of | | Units or | | Units or |
| | Unexercised | | Unexercised | | Option | | | | Stock That | | Stock That | | Other Rights | | Other Rights |
| | Options | | Options | | Exercise | | Option | | Have Not | | Have Not | | That Have | | That Have |
| | Exercisable | | Unexercisable | | Price | | Expiration | | Vested | | Vested | | Not Vested | | Not Vested |
Name | | (#) | | (#) | | ($) | | Date(1) | | (#)(2) | | ($)(3) | | (#)(4) | | ($)(5) |
Stephen W. Beard |
| 15,475 |
| — |
| 49.05 |
| 8/22/2028 | | | | | | | | |
|
| 16,162 |
| 5,388 |
| 43.39 |
| 8/28/2029 | | | | | | | | |
| | 18,862 | | 18,863 | | 32.03 | | 8/26/2030 | | | | | | | | |
| | 18,343 | | 55,032 | | 37.79 | | 9/8/2031 | | | | | | | | |
| | | | | | | | |
| 157,253 |
| 5,400,068 |
| 102,380 | | 4,453,229 |
Robert J. Phelan |
| 1,950 |
| 1,950 |
| 32.03 |
| 8/26/2030 | | | | | | | | |
| | 656 | | 1,969 | | 36.46 | | 8/25/2031 | | | | | | | | |
| | | | | | | | |
| 28,190 |
| 968,045 |
| 18,160 |
| 623,614 |
Douglas G. Beck |
| 2,068 |
| 6,207 |
| 36.46 |
| 8/25/2031 | | | | | | | | |
| | | | | | | | |
| 24,455 |
| 839,785 |
| 16,100 |
| 552,874 |
Maurice Herrera | | | | | | | | |
| 24,080 |
| 826,907 |
| 6,120 |
| 210,161 |
Steven Tom |
| 1,325 | | 3,975 | | 36.46 | | 8/25/2031 | | | | | | | | |
| | | | | | | | |
| 6,408 |
| 220,051 |
| 11,300 |
| 388,042 |
| (1) | The table below details the vesting schedule for stock option grants based on the expiration date of the relevant grant. In general, option grants vest 25% on each of the first four anniversaries of the date of grant. |
| | | | | | | | | | |
Option Expiration Dates | | Grant Dates | | Options Vesting Dates | ||||||
8/22/2028 | 8/22/2018 | 8/22/2019 | 8/22/2020 | 8/22/2021 | 8/22/2022 | |||||
8/28/2029 | 8/28/2019 | 8/28/2020 | 8/28/2021 | 8/28/2022 | 8/28/2023 | |||||
8/26/2030 | 8/26/2020 | 8/26/2021 | 8/26/2022 | 8/26/2023 | 8/26/2024 | |||||
8/25/2031 | 8/25/2021 | 8/25/2022 | 8/25/2023 | 8/25/2024 | 8/25/2025 | |||||
9/8/2031 | 9/8/2021 | 9/8/2022 | 9/8/2023 | 9/8/2024 | 9/8/2025 | |||||
| (2) | The table below details the vesting schedule for RSUs, which vest 25% on each of the first four anniversaries of the date for awards granted prior to fiscal year 2023. Beginning in fiscal year 2023, RSUs vest 33% on each of the first three anniversaries of the date of grant. In addition to the annual grant, Mr. Phelan’s received a RSU grant on May 12, 2021 as part of compensation upon his appointment as Interim Chief Financial Officer, which vests 100% on the third anniversary of the date of grant. Mr. Herrera received a RSU grant on November 10, 2021 as part of an initial sign-on award granted upon his appointment as Chief Marketing Officer, which vests 33% on each of the first, second, and third anniversaries of the date of grant. |
| | | | | | | | | | | | |
| | | | Number of RSUs Vesting | ||||||||
Name | | Grant Date | | Year 1 | | Year 2 | | Year 3 | | Year 4 | | Total |
Stephen W. Beard |
| 8/28/2019 |
| — |
| — |
| — |
| 1,153 |
| 1,153 |
Stephen W. Beard |
| 8/26/2020 |
| — |
| — |
| 4,032 |
| 4,033 |
| 8,065 |
Stephen W. Beard |
| 9/8/2021 |
| — |
| 29,215 |
| 29,215 |
| 29,215 |
| 87,645 |
Stephen W. Beard |
| 8/24/2022 |
| 20,130 |
| 20,130 |
| 20,130 |
| — |
| 60,390 |
Robert J. Phelan |
| 8/26/2020 |
| — |
| — |
| 417 |
| 418 |
| 835 |
Robert J. Phelan |
| 5/12/2021 |
| — |
| — |
| 5,440 |
| — |
| 5,440 |
Robert J. Phelan |
| 8/25/2021 |
| — |
| 390 |
| 390 |
| 390 |
| 1,170 |
Robert J. Phelan |
| 11/10/2021 |
| — |
| 3,695 |
| 3,695 |
| 3,695 |
| 11,085 |
Robert J. Phelan |
| 8/24/2022 |
| 3,220 |
| 3,220 |
| 3,220 |
| — |
| 9,660 |
Douglas G. Beck |
| 6/14/2021 |
| — |
| — |
| 7,785 |
| 7,785 |
| 15,570 |
Douglas G. Beck |
| 8/25/2021 |
| — |
| 1,235 |
| 1,235 |
| 1,235 |
| 3,705 |
Douglas G. Beck |
| 8/24/2022 |
| 1,726 |
| 1,727 |
| 1,727 |
| — |
| 5,180 |
Maurice Herrera |
| 11/10/2021 |
| — |
| 9,850 |
| 9,850 |
| — |
| 19,700 |
Maurice Herrera |
| 8/24/2022 |
| 1,460 |
| 1,460 |
| 1,460 |
| — |
| 4,380 |
Steven Tom |
| 8/25/2021 |
| — |
| 793 |
| 792 |
| 793 |
| 2,378 |
Steven Tom |
| 8/24/2022 |
| 1,343 |
| 1,343 |
| 1,344 |
| — |
| 4,030 |
| (3) | Represents the value derived by multiplying the number of shares of Common Stock covered by RSUs granted by $34.34 (the closing market price of Adtalem’s Common Stock on June 30, 2023). |
Adtalem Global Education Inc. | 2023 Proxy Statement 61 |
| (4) | The table below details the vesting schedule for PSUs. In general, PSUs vest following the completion of the applicable three-year performance period, except for Mr. Beard’s November 10, 2021 dated grants. As part of Mr. Beard’s initial sign-on award granted upon his appointment as President and CEO, Mr. Beard’s November 10, 2021 dated grants included an award with regards to achievement of cost synergy goals related to the Walden University acquisition, which vests 50% on each of the first and second anniversary of the date of the Walden University acquisition. For additional information on Mr. Beard’s initial sign-on award granted upon his appointment as President and CEO, please see “Payout of Chief Executive Officer’s Fiscal Year 2022 Long-Term Incentive Award” in the Compensation Discussion & Analysis section. |
| | | | | | |
| | | | Vesting | | Number of |
Name | | Grant Date | | Date | | PSUs Vesting |
Stephen W. Beard | 11/17/2020 | 8/26/2023 | 18,060 | |||
Stephen W. Beard(1) | 11/10/2021 | 8/12/2023 | $ 937,500 | |||
Stephen W. Beard | 2/15/2023 | 8/24/2025 | 84,320 | |||
Robert J. Phelan | 11/17/2020 | 8/26/2023 | 1,860 | |||
Robert J. Phelan | 11/10/2021 | 8/31/2024 | 2,800 | |||
Robert J. Phelan | 2/15/2023 | 8/24/2025 | 13,500 | |||
Douglas G. Beck | | 11/10/2021 | | 8/31/2024 | | 8,860 |
Douglas G. Beck | 2/15/2023 | 8/24/2025 | 7,240 | |||
Maurice Herrera | 11/10/2021 | 8/31/2024 | 6,120 | |||
Steven Tom | | 11/10/2021 | 8/31/2024 | 5,680 | ||
Steven Tom | | 2/15/2023 | 8/24/2025 | 5,620 |
| (1) | This award was issued at a set dollar value to be settled in shares based on the stock price on the future vesting date. |
| (5) | Represents the value derived by multiplying the number of shares of Common Stock covered by the PSUs by $34.34 (the closing market price of Adtalem’s Common Stock on June 30, 2023). The value provided assumes a PSU payout at target value. |
2023 OPTIONS EXERCISES AND STOCK VESTED
This table provides information for the NEOs concerning stock options that were exercised and RSUs and PSUs that vested during fiscal year 2023.
| | | | | | | | |
| | Option Awards | | Stock Awards | ||||
| | Number of | | | | Number of | | |
| | Shares Acquired | | Value Realized | | Shares Acquired | | Value Realized |
| | on Exercise | | on Exercise | | on Vesting | | on Vesting |
Name | | (#) | | ($)(1) | | (#) | | ($)(2) |
Stephen W. Beard |
| — | | — | | 67,022 | | 2,544,181 |
Robert J. Phelan |
| — | | — | | 7,427 | | 308,486 |
Douglas G. Beck |
| — | | — | | 9,020 | | 357,357 |
Maurice Herrera |
| — | | — | | 9,850 | | 422,664 |
Steven Tom |
| — | | — | | 792 | | 32,567 |
| (1) | Value Realized on Exercise. If the exercise was executed as part of a cashless transaction where the shares acquired were immediately sold, this represents the difference between the sales price of the shares acquired and the option exercise price multiplied by the number of shares of Common Stock covered by the options exercised. If the exercise was executed as part of a buy and hold transaction, this represents the difference between the closing market price of the Common Stock for the date of exercise of the option and the option exercise price multiplied by the number of shares of Common Stock covered by the options held. |
| (2) | Value Realized on Vesting. For Mr. Beard, this amount represents PSUs granted in August 2019 that vested in August 2022 and PSUs granted in November 2021 that vested in August 2022. For Mr. Beard, this amount represents RSUs granted in August 2018, August 2019, and August 2020 that vested in August 2022 and RSUs granted in September 2021 that vested in September 2022. For Mr. Phelan, this amount represents RSUs granted in February 2020 that vested in February 2023, RSUs granted in August 2020 and August 2021 that vested in August 2022, and RSUs granted in November 2021 that vested in November 2022. For Mr. Beck, this amount represents RSUs granted in June 2021 that vested in June 2023 and RSUs granted in August 2021 that vested in August 2022. For Mr. Herrera, this amount represents RSUs granted in November 2021 that vested in November 2022. For Mr. Tom, this amount represents RSUs granted in August 2021 that vested in August 2022. |
Adtalem Global Education Inc. | 2023 Proxy Statement 62 |
2023 NONQUALIFIED DEFERRED COMPENSATION
This table sets forth information about activity for NEOs in our Nonqualified Deferred Compensation Plan during fiscal year 2023.
| | | | | | | | |
| | Executive | | Registrant | | Aggregate | | Aggregate |
| | Contributions | | Contributions | | Earnings | | Balance at |
| | in Last | | in Last | | in Last | | Last Fiscal |
| | Fiscal Year | | Fiscal Year | | Fiscal Year | | Year End |
Name | | ($)(1) | | ($)(2) | | ($)(3) | | ($)(4) |
Stephen W. Beard |
| 120,823 | | 51,577 | | 2,629 | | 500,831 |
Robert J. Phelan |
| — | | — | | — | | — |
Douglas G. Beck |
| 45,589 | | 26,601 | | 5,044 | | 90,344 |
Maurice Herrera |
| — | | — | | — | | — |
Steven Tom |
| — | | — | | — | | — |
| (1) | Executive Contributions in Last Fiscal Year. The amount of executive contributions made by each NEO and reported in this column is included in each NEO’s compensation reported on the 2023 Summary Compensation Table, either in the “Salary” or “Non-Equity Incentive Plan Compensation” column. See footnotes 1 and 5 of the 2023 Summary Compensation Table for specific deferrals made by each NEO. |
| (2) | Registrant Contributions in Last Fiscal Year. The amount of Adtalem contributions made and reported in this column is included in each NEO’s compensation reported on the 2023 Summary Compensation Table in the “All Other Compensation” column. |
| (3) | Aggregate Earnings in Last Fiscal Year. These amounts represent the earnings in the Nonqualified Deferred Compensation Plan for fiscal year 2023. These amounts are not reported in the 2023 Summary Compensation Table. |
| (4) | Aggregate Balance at Last Fiscal Year End. The aggregate balance as of June 30, 2023 reported in this column for each NEO reflects amounts that either are currently reported or were previously reported as compensation in the 2023 Summary Compensation Table for current or prior years, except for the aggregate earnings on deferred compensation. |
NONQUALIFIED DEFERRED COMPENSATION PLAN
The Nonqualified Deferred Compensation Plan covers directors and selected key employees approved for participation by the Compensation Committee. All of the NEOs are eligible to participate in the Nonqualified Deferred Compensation Plan. Under the Nonqualified Deferred Compensation Plan as it applies to employees, participants may make an advance election to defer up to 50% of salary and up to 100% of MIP compensation until termination of service with Adtalem or certain other specified dates. Adtalem credits matching contributions to participants’ accounts under the Nonqualified Deferred Compensation Plan to the extent they have elected to defer the maximum amount under Adtalem’s Retirement Plan, and their matching contributions to the Retirement Plan are limited by applicable Code provisions. Adtalem may also credit participants’ accounts with discretionary contributions. Participants are fully vested in their own deferral and matching contributions, plus earnings, and will vest in discretionary contributions, if any, as determined by the Compensation Committee. Participants may elect to have their Nonqualified Deferred Compensation Plan accounts credited with earnings based on various investment choices made available by the Compensation Committee for this purpose. Participants may elect to have account balances paid in a lump sum or in installments. Distributions are generally made or commence in January of the year following termination of employment (but not earlier than six months after termination) or January of the year in which the specified payment date occurs. In the event of death before benefits commence, participants’ accounts will be paid to their beneficiaries in a lump sum.
2023 POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
Adtalem provides benefits to the NEOs upon termination of employment from Adtalem in specific circumstances. These benefits are in addition to the benefits to which these NEOs would be generally entitled upon a termination of employment (i.e., vested retirement benefits accrued as of the date of termination, stock-based awards that are vested as of the date of termination and the right to elect continued health coverage pursuant to COBRA). In addition, Adtalem’s equity compensation plans and the stock award agreements used to implement them provide for accelerated vesting of outstanding stock awards in the event of a change-in-control of Adtalem, only in the event (a) Adtalem (or its successor) ceases to be publicly traded, (b) the successor to Adtalem fails to assume outstanding awards or to issue new awards in replacement of outstanding awards, or (c) if the participant is terminated without cause or resigns for good reason within two years following the change-in-control.
Employment Agreements
MR. BEARD
Adtalem entered into an employment agreement with Mr. Beard effective as of his September 8, 2021 appointment as President and CEO. The employment agreement provides, among other things, that if his employment is terminated by Adtalem without “cause” or by Mr. Beard with “good reason,” and if he executes a release of claims, he will be entitled to a lump sum payment equal to 12 months of base salary and a prorated MIP award based on actual performance for the fiscal year and paid in a lump sum at the same time MIP awards are paid to other employees.
If such termination of employment occurs within 12 months of a “change-in-control,” and he executes a release of claims, he will be entitled to (i) a lump sum payment equal to two times base salary and the average of the MIP award paid to him for the prior two fiscal years; and (ii) accelerated vesting of all outstanding stock options.
Adtalem Global Education Inc. | 2023 Proxy Statement 63 |
OTHER NEOs
During fiscal year 2023, Adtalem was party to similar employment arrangements with each of the other NEOs: Mr. Phelan, Mr. Beck, Mr. Herrera, and Mr. Tom. These employment agreements provide, among other things, that if the NEO’s employment with Adtalem is terminated by Adtalem without “cause” or by the NEO with “good reason,” and the NEO executes a release of claims, then the NEO will be entitled to the following benefits:
| ● | One times the sum of their base salary plus target MIP award, payable in 12 equal monthly payments for Mr. Phelan and Mr. Tom and one and one-half times the sum of their base salary plus target MIP award, payable in 18 equal monthly payments for Mr. Beck and Mr. Herrera; |
| ● | A pro-rated MIP award (if employed for at least six months in the fiscal year during which termination occurs) based on actual performance for the relevant fiscal year, paid in a lump sum at the time MIP awards are paid to other employees; |
| ● | 12 months of continued health benefit plan coverage for Mr. Phelan, Mr. Herrera, and Mr. Tom and 18 months for Mr. Beck; and |
| ● | Access to a senior executive level outplacement program for 6 months for Mr. Phelan, Mr. Herrera, and Mr. Tom and 9 months for Mr. Beck. |
In addition, the employment arrangements provide that if such termination occurs within 12 months of a “change-in-control”, and the NEO executes a release of claims, then the NEO will be entitled to the following benefits:
| ● | One and one-half times the sum of their base salary plus target MIP award, payable in 18 equal monthly payments for Mr. Phelan, Mr. Herrera, and Mr. Tom and two times the sum of his base salary plus target MIP award, payable in 24 equal monthly payments for Mr. Beck; |
| ● | A pro-rated MIP award (if employed for at least six months in the fiscal year during which termination occurs) based on actual performance for the relevant fiscal year, paid in a lump sum at the time MIP awards are paid to other employees; |
| ● | 18 months of continued health benefit plan coverage for Mr. Phelan, Mr. Herrera, and Mr. Tom and 24 months for Mr. Beck at active employee rates following the termination date; and |
| ● | Access to a senior executive level outplacement program for 9 months for Mr. Phelan, Mr. Herrera, and Mr. Tom and 12 months for Mr. Beck. |
For purposes of all employment agreements:
| ● | “cause” means (i) the commission of a felony or other crime involving moral turpitude or the commission of any other act or omission involving misappropriation, dishonesty, fraud, illegal drug use, or breach of fiduciary duty, (ii) willful failure to perform duties as reasonably directed by the CEO, (iii) the NEO’s gross negligence or willful misconduct with respect to the performance of the NEO’s duties under the employment agreement, (iv) obtaining any personal profit not fully disclosed to and approved by Adtalem’s Board in connection with any transaction entered into by, or on behalf of, Adtalem, or (v) any other material breach of the employment agreement or any other agreement between the NEO and Adtalem; |
| ● | “change-in-control” shall have the meaning set forth in the 2013 Incentive Plan; and |
| ● | “good reason” means, without the NEO’s consent, (i) material diminution in title, duties, responsibilities or authority, (ii) reduction of base salary, MIP target, or employee benefits except for across-the-board changes for executives at the NEO’s level, (iii) exclusion from executive benefit/compensation plans, (iv) material breach of the employment agreement that Adtalem has not cured within 30 days after the NEO has provided Adtalem notice of the material breach which shall be given within 60 days of the NEO’s knowledge of the occurrence of the material breach, or (v) resignation in compliance with securities, corporate governance, or other applicable law (such as the US Sarbanes-Oxley Act) as specifically applicable to the NEO. For Mr. Beard, the definition of “good reason” also includes, without his consent, requiring him to relocate to an employment location more than 50 miles from his current employment location. |
EQUITY AWARD PLANS
The equity award agreements under which options, RSUs, and PSUs are held by employees, including the NEOs, provide for the immediate vesting of unvested options and RSUs and of PSUs at the target levels in the event of a change-in-control of Adtalem, only in the event (a) Adtalem (or its successor) ceases to be publicly traded, (b) the successor to Adtalem fails to assume outstanding awards or to issue new awards in replacement of outstanding awards, or (c) if the participant is terminated without cause or resigns for good reason within two years following the change-in-control.
The provisions of the equity award agreements under which options, RSUs, and PSUs were granted to employees, including the NEOs, provide the following:
| ● | If the participant’s employment is terminated due to death or disability (as defined in the agreement), options will become fully vested and exercisable for the remaining term of the option, RSUs will fully vest, and PSUs will continue to vest in accordance with their terms. |
| ● | If the participant’s employment terminates due to mutual agreement, the participant will be credited with one additional year of service for the purpose of determining vesting of options, RSUs, and PSUs. The participant’s options will remain exercisable |
Adtalem Global Education Inc. | 2023 Proxy Statement 64 |
| until the earlier of one year from termination or the expiration of the term of the option. PSUs that vest following a termination will be paid out when paid out to other PSU recipients. |
| ● | If the participant’s employment terminates due to retirement, options will continue to vest and be exercisable, and RSUs and PSUs will continue to vest in accordance with their respective terms. Retirement means the participant’s termination without cause after age 55 when the sum of his or her age and full years of service equals or exceeds 65. |
In August 2017, the Board adopted double-trigger vesting of equity awards as part of the 2013 Incentive Plan. In November 2017, Adtalem’s shareholders approved the FourthAmended 2013 Incentive Plan. As a result, vesting of equity awards granted since November 2017 (the “Awards”) will accelerate upon a change-in-control only in the event Adtalem (or its successor) ceases to be publicly traded, or the successor to Adtalem fails to assume outstanding Awards or to issue new awards in replacement of outstanding Awards. Under the double-trigger vesting rules, Awards will vest if a participant is terminated without cause or resigns for good reason within two years following a change-in-control. All awards issued prior to shareholder approval in November 2017 will continue to have a single-trigger vesting rules as described above.
2023 Potential Severance Payments
The tables set forth below quantify the additional benefits as described above that would be paid to each NEO under the following termination of employment or change-in-control events, had such an event occurred on June 30, 2023.
TERMINATION OF EMPLOYMENT — NO CHANGE-IN-CONTROL
| | | | | | | | | | | | | | | |
| | | Stephen W. | | | Robert J. | | | Douglas G. | | | Maurice | | | Steven |
Payment Type | | | Beard | | | Phelan | | | Beck | | | Herrera | | | Tom |
Salary: |
| $ | 918,000 |
| $ | 489,600 |
| $ | 787,950 |
| $ | 665,550 |
| $ | 408,000 |
MIP Target Amount: |
| $ | — |
| $ | 391,680 |
| $ | 551,565 |
| $ | 399,330 |
| $ | 244,800 |
Pro-Rated MIP: |
| $ | 1,205,839 |
| $ | 428,743 |
| $ | 402,505 |
| $ | 291,411 |
| $ | 267,964 |
Continued Health Coverage: |
| $ | 20,412 |
| $ | 20,412 |
| $ | 29,682 |
| $ | 19,320 |
| $ | — |
Outplacement Services: |
| $ | — |
| $ | 10,000 |
| $ | 15,000 |
| $ | 10,000 |
| $ | 10,000 |
TOTAL |
| $ | 2,144,251 |
| $ | 1,340,435 |
| $ | 1,786,702 |
| $ | 1,385,611 |
| $ | 930,764 |
TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE-IN-CONTROL
| | | | | | | | | | | | | | | |
| | | Stephen W. | | | Robert J. | | | Douglas G. | | | Maurice | | | Steven |
Payment Type | | | Beard | | | Phelan | | | Beck | | | Herrera | | | Tom |
Salary: |
| $ | 1,836,000 |
| $ | 734,400 |
| $ | 1,050,600 |
| $ | 665,550 |
| $ | 612,000 |
MIP Target Amount: |
| $ | 732,114 |
| $ | 587,520 |
| $ | 735,420 |
| $ | 399,330 |
| $ | 367,200 |
Pro-Rated MIP: |
| $ | — |
| $ | 428,743 |
| $ | 402,505 |
| $ | 291,411 |
| $ | 267,964 |
Continued Health Coverage: |
| $ | — |
| $ | 30,618 |
| $ | 39,576 |
| $ | 28,980 |
| $ | — |
Outplacement Services: |
| $ | — |
| $ | 15,000 |
| $ | 20,000 |
| $ | 15,000 |
| $ | 15,000 |
Value of Vesting of Unvested Stock |
| $ | 9,896,870 |
| $ | 1,596,164 |
| $ | 1,392,659 |
| $ | 1,037,068 |
| $ | 608,093 |
TOTAL |
| $ | 12,464,984 |
| $ | 3,392,445 |
| $ | 3,640,760 |
| $ | 2,437,339 |
| $ | 1,870,257 |
| (1) | The value of the unvested stock options is based on the difference between the exercise price and $34.34 (the closing market price of the Common Stock on June 30, 2023). The value of the RSUs and PSUs is based on the closing market price of the Common Stock on June 30, 2023. PSUs vest at the target level. |
CEO PAY RATIO
Pursuant to 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 disclose the median of the annual total compensation of all our employees (except our CEO) and the ratio of the annual total compensation of our CEO as disclosed in the 2023 Summary Compensation Table, to the annual total compensation of our median employee.
For fiscal year 2023, we identified the median employee by comparing the annual salary rate of pay for all individuals, excluding our CEO, who were employed by Adtalem on June 25, 2023 using information from our company payroll system. We included all full-time and part-time employees, including adjunct faculty and federal work-study student workers. Compensation was annualized for all employees who were hired by us in fiscal year 2023 but did not work for us for the entire year. No annualization was applied to any adjunct faculty as permitted under the rules. Fiscal year 2023 annual total compensation for the median employee was calculated in the same manner as reflected in the 2023 Summary Compensation Table for our CEO.
Based on the methodology described above, we have determined that fiscal year 2023 annual total compensation of our median employee was $40,846 The annual total compensation of our CEO for fiscal year 2023 was $8,054,094. The ratio of our CEO’s fiscal year 2023 annual total compensation to the fiscal year 2023 annual total compensation of our median employee is 197:1.
This CEO pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules. The CEO pay ratio reported by other companies may not be comparable to our CEO pay ratio reported above, because SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, apply certain exclusions, and make reasonable estimates and assumptions that reflect their compensation practices.
Adtalem Global Education Inc. | 2023 Proxy Statement 65 |
APPROVAL BY SHAREHOLDERS
We believe our executive compensation program achieves our compensation principles, properly aligns the interests of our NEOS and our shareholders, and is deserving of shareholder support. For these reasons, the Board recommends that the shareholders vote in favor of the following resolution:
“RESOLVED, that the compensation paid to the Adtalem Global Education Inc. named executive officers, as disclosed in the Company’s Proxy Statement for the 2023 Annual Meeting of Shareholders withpursuant to the opportunity to make a statement, if they desire to do so, and to be available to respond to appropriate questions from shareholders.
Approval by Shareholders
The ratificationrules of the selectionSecurities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables and any other related disclosures is hereby APPROVED.”
Approval of PricewaterhouseCoopers LLP as independent registered public accounting firm for DeVry for fiscal year 2014this proposal will require the affirmative vote of a majority of the shares of Common Stock of DeVry outstandingAdtalem represented at the Annual Meeting. Abstentions will be treated as a vote AGAINST the proposal, while broker non-votes, if any, will not be counted as votes represented and entitled to vote and, therefore, will have no effect on the record date. Unless otherwise indicated onresult of the vote for this proposal. See VOTING INFORMATION – Effect of Not Casting Your Vote. If you sign and return your proxy card but give no direction or complete the telephonic or internet voting procedures but do not specify how you want to vote your shares, the shares will be votedFOR ratification approval of the selectioncompensation paid to our named executive officers during the fiscal year ended June 30, 2023.
The vote approving the compensation paid to our NEOs during 2023 is advisory and not binding on the Company, the Board, or the Compensation Committee of PricewaterhouseCoopers LLPthe Board. However, the Compensation Committee of the Board expects to take into account the outcome of the vote as independent registered public accounting firmit considers our executive compensation program.
| The Board of Directors recommends a vote FOR the compensation of our named executive officers. |
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE TABLE
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between “compensation actually paid” (“CAP”) to our principal executive officer (“PEO”) and to our other non-PEO NEOs and certain financial performance of the Company. CAP, as determined under SEC requirements, does not reflect the actual amount of compensation earned, realized or received by our NEOs during a covered year. For further information concerning the Company’s pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to the Compensation Discussion & Analysis. Also refer to the 2023 Summary Compensation Table (“SCT”) for DeVryinformation on the SCT data presented below.
The pay versus performance table includes information for fiscal years ended June 30, 2023, 2022, and 2021.
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | ||
Fiscal Year | | SCT Total for First PEO | | SCT Total for Second PEO | | CAP to First PEO | | CAP to Second PEO | | Average SCT Total for non-PEO NEOs | | Average CAP to non-PEO NEOs | | Adtalem Total Shareholder Return | | Peer Group Total Shareholder Return | | Net Income | | Company Selected Measure: Revenue Growth (4) |
2023 |
| n/a | | 8,054,094 | | n/a | | 8,364,122 | | 1,699,688 | | 1,762,437 | | 110 | | 115 | | 93,358 | | 5.0% |
2022 |
| 6,276,069 | | 9,204,332 | | 6,757,452 | | 8,967,431 | | 1,851,310 | | 1,867,071 | | 115 | | 110 | | 310,991 | | 53.7% |
2021 |
| 8,528,433 | | n/a | | 10,373,072 | | n/a | | 1,766,966 | | 1,433,322 | | 114 | | 104 | | 70,027 | | 3.9% |
| (1) | Lisa W. Wardell is the First PEO for each of the years shown. Stephen W. Beard is the Second PEO for each of the years shown. The following non-PEO NEOs are included in the average amounts shown: |
2023: Robert J. Phelan, Douglas G. Beck, Maurice Herrera, and Steven Tom
2022: Robert J. Phelan, Douglas G. Beck, John W. Danaher, and Maurice Herrera
2021: Robert J. Phelan, Stephen W. Beard, Douglas G. Beck, Kathy Boden-Holland, and Michael O. Randolfi
| (2) | The following tables show amounts deducted from and added to the SCT total to calculate CAP. The fair value of the equity awards was determined consistent with the methodology used to determine the grant date fair value of the awards, with values changing primarily due to the change in stock price and our performance on the metrics applicable to those awards. |
Adtalem Global Education Inc. | 2023 Proxy Statement 66 |
First PEO SCT Total to CAP Reconciliation:
| | | | | | | | | | | | | | | | |
Fiscal Year | | SCT Total for First PEO | | Less: SCT Total Equity (Stock Awards + Option Awards) | | Plus: Fair Value as of Fiscal Year-End of Stock and Option Awards Granted in Covered Year | | Plus: Fair Value as of Vest Date of Stock and Option Awards Granted and Vested in Covered Year | | Plus: Change in Fair Value of Outstanding and Unvested Stock and Option Awards From Prior Years | | Plus: Change in Fair Value of Stock and Option Awards From Prior Years that Vested in the Covered Year | | Less: Fair Value as of Prior Fiscal Year-End of Stock and Option Awards Forfeited during the Covered Year | | CAP to First PEO |
2023 |
| n/a | | n/a | | n/a | | n/a | | n/a | | n/a | | n/a | | n/a |
2022 |
| 6,276,069 | | (4,999,803) | | 5,167,325 | | — | | 190,398 | | 123,463 | | — | | 6,757,452 |
2021 |
| 8,528,433 | | (5,785,373) | | 6,891,998 | | — | | 630,983 | | 107,031 | | — | | 10,373,072 |
Second PEO SCT Total to CAP Reconciliation:
| | | | | | | | | | | | | | | | |
Fiscal Year | | SCT Total for Second PEO | | Less: SCT Total Equity (Stock Awards + Option Awards) | | Plus: Fair Value as of Fiscal Year-End of Stock and Option Awards Granted in Covered Year | | Plus: Fair Value as of Vest Date of Stock and Option Awards Granted and Vested in Covered Year | | Plus: Change in Fair Value of Outstanding and Unvested Stock and Option Awards From Prior Years | | Plus: Change in Fair Value of Stock and Option Awards From Prior Years that Vested in the Covered Year | | Less: Fair Value as of Prior Fiscal Year-End of Stock and Option Awards Forfeited during the Covered Year | | CAP to Second PEO |
2023 |
| 8,054,094 | | (5,808,957) | | 6,417,116 | | — | | (286,448) | | (11,683) | | — | | 8,364,122 |
2022 |
| 9,204,332 | | (8,019,699) | | 7,168,073 | | 625,000 | | 53,564 | | (63,839) | | — | | 8,967,431 |
2021 |
| n/a | | n/a | | n/a | | n/a | | n/a | | n/a | | n/a | | n/a |
Non-PEO NEOs Average SCT Total to Average CAP Reconciliation:
| | | | | | | | | | | | | | | | |
Fiscal Year | | Average SCT Total for non-PEO NEOs | | Less: SCT Total Equity (Stock Awards + Option Awards) | | Plus: Fair Value as of Fiscal Year-End of Stock and Option Awards Granted in Covered Year | | Plus: Fair Value as of Vest Date of Stock and Option Awards Granted and Vested in Covered Year | | Plus: Change in Fair Value of Outstanding and Unvested Stock and Option Awards From Prior Years | | Plus: Change in Fair Value of Stock and Option Awards From Prior Years that Vested in the Covered Year | | Less: Fair Value as of Prior Fiscal Year-End of Stock and Option Awards Forfeited during the Covered Year | | Average CAP to non-PEO NEOs |
2023 |
| 1,699,688 | | (559,281) | | 617,862 | | — | | (36,114) | | 40,282 | | — | | 1,762,437 |
2022 |
| 1,851,310 | | (1,047,505) | | 1,078,377 | | — | | 3,532 | | (18,643) | | — | | 1,867,071 |
2021 |
| 1,766,966 | | (1,034,209) | | 1,159,225 | | — | | 58,941 | | 22,460 | | (540,061) | | 1,433,322 |
| (3) | Adtalem Total Shareholder Return (“TSR”) and Peer Group TSR assume a respective investment of $100 on June 30, 2020 in common stock and also assumes the reinvestment of dividends. Additionally, the Peer Group is weighted by the market capitalization of each component company. The Peer Group consists of American Public Education, Inc. (APEI), Graham Holdings Company (GHC), Grand Canyon Education, Inc. (LOPE), Laureate Education, Inc. (LAUR), Perdoceo Education Corporation (formerly known as Career Education Corporation) (PRDO), and Strategic Education, Inc. (formerly known as Strayer Education, Inc.) (STRA). It is consistent with the Peer Group described in our Form 10-K for fiscal year 2023. |
| (4) | Adtalem acquired Walden University on August 12, 2021 (during fiscal year 2022) and the timing of the acquisition is impacting Adtalem’s revenue growth percentages in fiscal year 2022 and 2023. |
MOST IMPORTANT FINANCIAL PERFORMANCE MEASURES
Included below are the most important metrics used to link CAP to our NEOs for fiscal year 2014.2023 and company performance.
| ● | Revenue Growth (which we selected as the “company selected measure” for purposes of the table set forth above |
| ● | Revenue |
| ● | Adjusted earnings per share |
| ● | Adjusted EBITDA margin |
Please see “Compensation Discussion & Analysis” for a description of our short-term and long-term executive compensation plans and our pay-for-performance philosophy, including more information on these performance measures and how they are taken into account in our executive compensation plans in determining compensation for our NEOs.
Adtalem Global Education Inc. | 2023 Proxy Statement 67 |
RELATIONSHIP BETWEEN “COMPENSATION ACTUALLY PAID” AND COMPANY PERFORMANCE
Below are graphs showing the relationship between CAP to our First PEO, Second PEO, and the average of the CAP to our non-PEO NEOs in 2021, 2022, and 2023 and (1) Adtalem TSR, (2) our Net Income, and (3) our Revenue Growth. In addition, the first graph below compares our TSR and peer group TSR for the indicated years.
Adtalem Global Education Inc. | 2023 Proxy Statement 68 |
The foregoing disclosures related to Pay Versus Performance shall not be deemed incorporated by reference by any general statement incorporating this Proxy Statement by reference into any other Adtalem filing under the Securities Act or under the Exchange Act, except to the extent that Adtalem specifically incorporates the information by reference.
EQUITY COMPENSATION PLAN INFORMATION
Adtalem currently maintains two equity compensation plans: the Amended and Restated Incentive Plan of 2005 and the Fourth Amended 2013 Incentive Plan. Adtalem’s shareholders have approved each of these plans.
The following table summarizes information, as of June 30, 2023, relating to these equity compensation plans under which Adtalem’s Common Stock is authorized for issuance.
| | | | | | | |
| | | | | | | Number of securities |
| | Number of | | | | | remaining available for |
| | securities to be | | Weighted-average | | future issuance under | |
| | issued upon exercise | | exercise price | | equity compensation | |
| | of outstanding | | of outstanding | | plans (excluding | |
| | options, awards, | | options, awards, | | securities reflected | |
| | warrants and rights | | warrants and rights | | in column | |
Plan Category | | (a)(1) | | (b) |
| (a))(c)(2) | |
Equity compensation plans approved by security holders |
| 2,273,834 | | $ | 36.02 |
| 2,730,474 |
Equity compensation plans not approved by security holders |
| — | |
| — |
| — |
Total |
| 2,273,834 | | $ | 36.02 |
| 2,730,474 |
| (1) | The number shown in column (a) is the number of shares that may be issued upon exercise of outstanding options and other equity awards granted under the shareholder-approved Amended and Restated Incentive Plan of 2005 (3,744 shares) and the Fourth Amended 2013 Incentive Plan (2,270,090 shares). |
| (2) | The number shown in column (c) is the number of shares that may be issued upon exercise of options or stock appreciation rights and other equity awards granted in the future under the Fourth Amended 2013 Incentive Plan. All of the shares remaining available for the grant of future awards of options, awards, warrants, and rights are available under the Fourth Amended 2013 Incentive Plan. No new awards may be granted under the Amended and Restated Incentive Plan of 2005. |
.
Adtalem Global Education Inc. | 2023 Proxy Statement 69 |
PROPOSAL NO. 4
Determine the Frequency of Shareholder Advisory Vote Regarding Compensation Awarded to Named Executive Officers
As required by Section 14(a)(2) of the Exchange Act and the related rules of the SEC, Adtalem is seeking an advisory, non-binding shareholder vote about how often Adtalem should present a “say-on-pay” vote such as that set forth in Proposal No. 3. A say-on-pay vote provides shareholders with the opportunity to vote on compensation awarded to Adtalem’s NEOs. Although the Board recommends holding a say-on-pay vote every year, shareholders have the option to vote for one of four choices – every year, every two years, or every three years – or shareholders may abstain from voting.Shareholders are not voting to approve or disapprove the Board’s recommendation.
Adtalem’s shareholders voted on a similar proposal in 2017 with approximately 82% of the votes cast voting to hold the say-on-pay vote every year. Adtalem continues to believe that the say-on-pay vote should be conducted every year to best enable shareholders to express timely their views on Adtalem’s executive compensation program and enable the Board and the Compensation Committee to determine current shareholder sentiment and take such sentiment into account when evaluating executive compensation.
As this is an advisory vote, the result will not be binding on Adtalem or the Board, although the Board will carefully consider the outcome of this vote, along with other relevant factors, when determining the frequency of the say-on-pay vote. Notwithstanding the Board’s recommendation and the outcome of the shareholder vote, the Board may in the future decide to conduct advisory say-on-pay votes on a less frequent basis and may vary its practice based on factors such as discussions with shareholders and the adoption of material changes to compensation programs.
APPROVAL BY SHAREHOLDERS
If a quorum is present at the Annual Meeting, the frequency that receives the highest number of votes cast (i.e., a plurality) will be deemed to be the frequency recommended by the shareholders. Abstentions and broker non-votes, if any, will not be counted as votes cast and will have no effect on the result of the vote for this proposal. See, VOTING INFORMATION – Effect of Not Casting Your Vote. Also, if you are a shareholder of record and you return your proxy to us by any of the means described under the heading “Voting Instructions,” without marking any of the choices for this proposal, your shares will be voted FOR the option of “1 YEAR” as the frequency with which we will hold a say-on-pay vote.
| The Board of Directors recommends an advisory vote for the option of 1 YEAR (as opposed to every 2 years or every 3 years) as the frequency with which our shareholders are provided an advisory vote on compensation awarded to Adtalem’s named executive officers. | |
PROPOSAL NO. 5
Amend the Company’s Restated Certificate of Incorporation to Reflect New Delaware Law Provisions Regarding Officer Exculpation
At the Annual Meeting, our shareholders will be asked to approve this Proposal No. 5 to amend the Company’s Restated Certificate of Incorporation (as amended to date, the “Certificate of Incorporation”), to include exculpation for certain officers of the Company (as defined by the Delaware General Corporation Law (“DGCL”)) from certain claims of breach of the fiduciary duty of care (the “Exculpation Amendment”).
Since the mid-1980’s the DGCL has permitted Delaware corporations (such as the Company) to limit or eliminate the personal liability of corporate directors for monetary damages resulting from a breach of the fiduciary duty of care, subject to certain limitations such as prohibiting exculpation for intentional misconduct or knowing violations of the law. These provisions are referred to as “exculpatory provisions” or “exculpatory protections.” Such a provision with respect to our directors already is contained in our Certificate of Incorporation.
Recently, the DGCL was amended to permit Delaware corporations to provide similar exculpatory protection for officers. This decision was due in part to the recognition that both officers and directors owe fiduciary duties to corporations; however, only directors were protected by the exculpatory provisions. In addition, Delaware courts have experienced an increase in litigation in which plaintiffs attempted to exploit the absence of protection for officers to prolong litigation and extract settlements from defendant corporations. In light of this legislative development, we are proposing to amend the existing exculpatory provision set forth in our Certificate of Incorporation to extend its protection from liability to certain of the Company’s officers in specific circumstances, as permitted by the DGCL.
As amended, the DGCL now allows corporations to protect officers, in addition to directors, from personal monetary liability under limited circumstances:
| ● | Exculpation is only available for breaches of the fiduciary duty of care. |
| ● | Exculpation is not available for breaches of the fiduciary duty of loyalty (which requires officers to act in good faith for the benefit of the corporation and its shareholders and not for personal gain). |
| ● | Exculpation is not available for acts or omissions that are not in good faith or that involve intentional misconduct or knowing violations of law. |
| ● | Exculpation is not available for any transaction in which the officer derived an improper personal benefit. |
| ● | Exculpation applies only to claims for monetary damages; claims against officers for equitable relief are available. |
| ● | Exculpation is not available in connection with derivative claims by or in the right of the corporation by a shareholder. |
The rationale for limiting the scope of liability of officers is to strike a balance between shareholders’ interest in accountability and their interest in the Company being able to attract and retain quality officers to work on its behalf. The Exculpation Amendment would eliminate the personal monetary liability for certain officers only in connection with direct claims brought by shareholders, subject to the limitations described above. As with the exculpatory provisions on our Certificate of Incorporation that pertain to directors, the Exculpation Amendment would not limit the liability of officers for any breach of the duty of loyalty to the Company or our shareholders, any acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, or any transaction from which the officer derived an improper personal benefit.
The Nominating & Governance Committee believes that there is a need for not only directors, but also officers, to remain free of the risk of financial ruin as a result of unintentional missteps. Further, the Nominating & Governance Committee noted that the proposed provision would not negatively affect shareholder rights. Therefore, taking into account the narrow class and type of claims for which liability would be eliminated, and the benefits the Nominating & Governance Committee believes would accrue to the Company and its shareholders in the form of an enhanced ability to attract and retain talented officers, the Nominating & Governance Committee recommended to the Board that the Certificate of Incorporation be amended to provide such exculpation to officers to the extent permitted by the DGCL.
The Board, based in part upon the recommendation of Directors recommendsthe Nominating & Governance Committee, believes that eliminating personal monetary liability for officers under certain circumstances is reasonable and appropriate. Claims against corporations for breaches of fiduciary duties are expected to continue increasing. Delaware corporations that fail to adopt officer exculpation provisions may experience a vote FOR disproportionate amount of nuisance litigation and disproportionately increased costs in the form of increased director and officer liability insurance premiums, as well as diversion of management attention from the business of the corporation. A number of companies have already adopted similar exculpation provisions. Further, the Board anticipates that similar exculpation provisions are likely to be adopted by our peers and others with whom we compete for executive talent. As a result, officer exculpation provisions may become necessary for Delaware corporations to attract and retain experienced and qualified corporate officers.
Adtalem Global Education Inc. | 2023 Proxy Statement 71 |
Proposal No. 2, ratification5 Amend the Company’s Restated Certificate of Incorporation to Reflect New Delaware Law Provisions Regarding Officer Exculpation
Accordingly, the Board determined that it is in the best interests of the selection of PricewaterhouseCoopers LLP as independent registered public accounting firm for DeVry for fiscal year 2014.
APPROVAL OF AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION TO CHANGE OUR NAME TO “DEVRY EDUCATION GROUP INC.”
As of August 21, 2013, the Board of Directors unanimously adopted a resolutionCompany and our shareholders to amend the Certificate of Incorporation as described herein. In order to take advantage of the amendment to the DGCL described above, we must amend our Certificate of Incorporation, as the protections do not apply automatically and must be embedded in a corporation’s certificate of incorporation to recommendbe effective.
Therefore, we ask our shareholders to vote on the following resolution:
“RESOLVED, that the Company’s shareholders approve an amendment to Article FirstTENTH (2) of our Restatedthe Company’s Certificate of Incorporation, which, following that amendment (if approved), shall read in its entirety as follows (proposed changes underlined and boldfaced):
“TENTH: * * *
(2) No director or officershall be personally liable to the Corporation or any of its shareholders for monetary damage for any breach of fiduciary duty as a director or officer, except for liability (i) for breach of the purposedirector’s or officer’s duty of changing our nameloyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for directors underpursuant to Section 174 of the GCL,or (iv) for any transaction from “DeVry Inc.” to “DeVry Education Group Inc.”
The proposed changes to Article First of our Restated Certificate of Incorporation are set forth below with additions indicatedwhich the director or officer derived an improper personal benefit, or (v) for officers in any action by underlining and deletions by strike out:
“FIRST: The nameor in the right of the Corporation isDeVRY INC.DeVRY EDUCATION GROUP INC. (hereinafter. Any repeal or modification of this ARTICLE TENTH by the “Corporation”).stockholders of the Corporation shall not adversely affect any right or protection of a director or officer of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modifications.”
APPROVAL BY SHAREHOLDERS
ReasonsYou have the option to vote FOR, AGAINST, or ABSTAIN with respect to adoption of the Exculpation Amendment. The affirmative vote of the holders of a majority of the shares outstanding on the record date for Name Change
After careful consideration, the BoardAnnual Meeting, represented in person or by proxy, will be required for the approval of Directors believes that the name change is in the best interestsExculpation Amendment. Abstentions and broker non-votes, if any, will be counted as votes cast AGAINST this proposal. See VOTING INFORMATION- Effect of DeVry and its shareholders. Our current name has been used for decades, and, for most of that time, DeVry Inc. was DeVry University. The Board of Directors believes that the name “DeVry Education Group Inc.” can better communicate that the organization is a diverse family of institutions that, together,Not Casting Your Vote. Also, If you are a global providershareholder of career-focused education. The Boardrecord and you return your proxy to us by any of Directors also believes that the new namemeans described under the heading “Voting Instructions,” without marking any of the choices for this proposal, your shares will improve awarenessbe voted FOR adoption of overall breadth of academic offerings at DeVry’s educational institutions, particularly at co-locations, where potential students can see the many career paths available through our institutions. The Board of Directors desires to retain “DeVry” in the name because research that it has reviewed shows that “DeVry” has very high name recognition and brand equity.
Effects of Name Change
Exculpation Amendment. If the Exculpation Amendment is approved by the shareholders approveat the proposed amendment to our Restated Certificate of Incorporation, the amendmentAnnual Meeting, it will become effective upon the filing of a certificatearticles of amendment to our Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, which would be filedexpected to occur shortly following the Annual Meeting. If our shareholders do not approve this Proposal No. 5, the changes described in this section will not be made.
| The Board of Directors recommends a vote FOR the amendment to the Certificate of Incorporation to provide for officer exculpation as permitted by Delaware law. | |
Adtalem Global Education Inc. | 2023 Proxy Statement 72 |
Voting Securities and Principal Holders
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below sets forth the number and percentage of outstanding shares of Common Stock beneficially owned by each person known by Adtalem to own beneficially more than 5% of our Common Stock, in each case as of September 22, 2023, except as otherwise noted.
| | | | | |
| | Amount and Nature of | | Percentage | |
Name | | Beneficial Ownership | | Ownership(1) | |
BlackRock, Inc. |
| 7,242,184 | (2) |
| 17.7% |
The Vanguard Group |
| 4,891,122 | (3) |
| 11.9% |
FMR LLC |
| 4,788,698 | (4) |
| 11.7% |
Ariel Investments, LLC |
| 3,809,879 | (5) |
| 9.3% |
Dimensional Fund Advisors LP |
| 3,766,795 | (6) |
| 9.2% |
| (1) | The percentage of beneficial ownership is based on 40,971,799 shares of Common Stock outstanding as of September 22, 2023. |
| (2) | The information shown was provided by BlackRock, Inc. in a Schedule 13G/A it filed with the SEC on January 26, 2023, indicating its beneficial ownership as of December 31, 2022 of 7,242,184 shares. BlackRock reported that it has sole voting power over 7,147,746 of these shares and sole dispositive power over all of these shares. The address of the principal business office of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055. |
| (3) | The information shown was provided by The Vanguard Group in a Schedule 13G/A it filed with the SEC on February 9, 2023, indicating its beneficial ownership as of December 30, 2022 of 4,891,122 shares. The Vanguard Group reported that it did not have sole voting power over any of these shares, shared voting power over 59,300 of these shares, sole dispositive power over 4,787,999 of these shares and shared dispositive power over 103,123 of these shares. The address of the principal business office of The Vanguard Group is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. |
| (4) | The information shown was provided by FMR LLC in a Schedule 13G/A it filed with the SEC on February 9, 2023, indicating its beneficial ownership as of December 30, 2022 of 4,788,698 shares. FMR LLC reported that it has sole voting power of 4,787,561 of these shares and sole dispositive power over all of these shares. The address of the principal business office of FMR LLC is 245 Summer Street, Boston, Massachusetts 02210. |
| (5) | The information shown was provided by Ariel Investments, LLC in a Schedule 13G/A it filed with the SEC on February 14, 2023, indicating its beneficial ownership as of December 31, 2022 of 3,809,879 shares. Ariel Investments, LLC reported that it has sole voting power over 3,454,362 of these shares and sole dispositive power over 3,809,879 of these shares. The address of the principal business office of Ariel Investments, LLC is 200 E. Randolph Street, Suite 2900, Chicago, IL 60601. |
| (6) | The information shown was provided by Dimensional Fund Advisors LP in a Schedule 13G/A it filed with the SEC on February 10, 2022, indicating its beneficial ownership as of December 30, 2022 of 3,766,795 shares. Dimensional Fund Advisers reported that it has sole voting power over 3,704,931 of these shares and sole dispositive power over all of these shares. The address of the principal business office of Dimensional Fund Advisors LP is 6300 Bee Cave Road, Building One, Austin, Texas 78746. |
SECURITY OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
The table below sets forth the number and percentage of outstanding shares of Common Stock beneficially owned by (1) each director of Adtalem, (2) each NEO listed on page 40, and (3) all directors and executive officers of Adtalem as a group, in each case as of September 22, 2023. Adtalem believes that each individual named has sole investment and voting power with respect to the shares of Common Stock indicated as beneficially owned by such person, except as otherwise noted. Unless otherwise
Adtalem Global Education Inc. | 2023 Proxy Statement 73 |
Voting Securities and Principal Holders
indicated, the address of each beneficial owner in the table below is care of Adtalem Global Education Inc. 500 West Monroe Street, Suite 1300, Chicago, Illinois 60661.
| | | | | | | | |
| | | | Stock Options | | | | |
| | | | Exercisable as of | | | | |
| | Common Stock | | September 22, 2023 | | | |
|
| | Beneficially | | and RSUs and | | | |
|
| | Owned Excluding | | PSUs Scheduled to | | Total Common | |
|
| | Options, RSUs, | | Vest within 60 days of | | Stock Beneficially | | Percentage |
Name of Beneficial Owner | | and PSUs(1) | | September 22, 2023(1) | | Owned | | Ownership(2) |
Non-Employee Directors | | | | | | | | |
William W. Burke |
| 10,341 | | 2,930 |
| 13,271 |
| * |
Charles DeShazer | | 2,996 | | 2,930 | | 5,926 | | * |
Mayur Gupta | | 2,612 | | 2,930 | | 5,542 | | * |
Donna J. Hrinak |
| 11,711 | | 2,930 |
| 14,641 |
| * |
Georgette Kiser |
| 10,948 | | 2,930 |
| 13,878 |
| * |
Liam Krehbiel |
| 10,000 | | 2,930 |
| 12,930 |
| * |
Michael W. Malafronte |
| 98,469 | | 2,930 |
| 101,399 |
| * |
Sharon L. O’Keefe |
| 8,132 | | 2,930 |
| 11,062 |
| * |
Kenneth J. Phelan |
| 12,625 | | 2,930 |
| 15,555 |
| * |
Lisa W. Wardell |
| 151,300 | | 584,154 |
| 190,410 |
| * |
Named Executive Officers | | | | | | | | |
Stephen W. Beard |
| 142,008 | | 113,791 |
| 309,199 |
| * |
Robert J. Phelan |
| 13,165 | | 6,957 |
| 45,988 |
| * |
Douglas G. Beck | | 14,110 | | 4,137 | | 40,794 | | * |
Maurice Herrera |
| 4,471 | | 9,850 |
| 32,251 |
| * |
Steven Tom |
| 2,071 | | 2,650 |
| 11,093 |
| * |
All directors and executive officers as a group (21 Persons) |
| 518,405 |
| 773,901 |
| 914,401 |
| 2.2% |
* | Represents less than 1% of the outstanding Common Stock. |
| (1) | “Common Stock Beneficially Owned Excluding Options, RSUs, and PSUs” includes stock held in joint tenancy, stock owned as tenants in common, stock owned or held by spouse or other members of the holder’s household, and stock in which the holder either has or shares voting and/or investment power, even though the holder disclaims any beneficial interest in such stock. Options exercisable as of September 22, 2023 and RSUs and PSUs that are scheduled to vest within 60 days after September 22, 2023 are shown separately in the “Stock Options Exercisable as of September 22, 2023 and RSUs and PSUs Scheduled to Vest within 60 days of September 22, 2023” column. |
| (2) | In accordance withSEC rules, the securities reflected in the “Stock Options Exercisable as of September 22, 2023 and RSUs and PSUs Scheduled to Vest within 60 days of September 22, 2023” column are deemed to be outstanding for purposes of calculating the percentage of outstanding securities owned by such person but are not deemed to be outstanding for the purpose of calculating the percentage owned by any other person. The percentages of beneficial ownership set forth below are calculated as of September 22, 2023 based on outstanding shares of 40,971,799. |
Adtalem Global Education Inc. | 2023 Proxy Statement 74 |
Additional Information
VOTING INSTRUCTIONS
You may vote shares of Common Stock that you owned as of September 22, 2023, which is the record date for the Annual Meeting. You may vote the following ways:
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BY TELEPHONE In the United States or Canada, you can vote your shares by calling 1-800-690-6903 | BY INTERNET You can vote your shares online at www.proxyvote.com | BY MAIL You can vote by mail by marking, dating, and signing your proxy card or voting instruction form and returning it in the accompanying postage-paid envelope | VIRTUALLY Attend the Annual Meeting online at www.virtualshareholdermeeting. com/ATGE2023. |
For telephone and internet voting, you will need the 16-digit control number included on your proxy card or in the instructions that accompanied your proxy materials.
Telephone and internet voting are available through 11:59 p.m. Eastern Time on Tuesday, November 7, 2023.
If you sign and return your proxy card but give no direction or complete the telephonic or internet voting procedures but do not specify how you want to vote your shares, the shares will be voted:
| ● | FOR the election of the ten nominees recommended for election to the Board; |
| ● | FOR ratification of PwC as Adtalem’s independent registered public accounting firm for 2024; |
| ● | FOR approval of the compensation paid to Adtalem’s named executive officers during 2023; |
| ● | 1 YEAR on the advisory vote to determine the frequency of the advisory vote to approve compensation of our named executive officers; |
| ● | FOR the proposal to amend Adtalem’s Restated Certificate of Incorporation to allow exculpation of officers; and |
| ● | With respect to any other matters properly presented at the Annual Meeting, the proxy committee appointed by the Board (and each of them with full powers of substitution) will vote in accordance with the Board’s recommendation, or if no recommendation is given, in their own discretion. |
Attending the Annual Meeting
To join the Annual Meeting, login at www.virtualshareholdermeeting.com/ATGE2023. You will need the 16-digit control number included on your proxy card or in the instructions that accompanied your proxy materials. The Annual Meeting will begin at 8:00 a.m. Central Standard Time on November 8, 2023. Online check-in will be available beginning at 7:45 a.m. Central Standard Time to allow for shareholders to log in and test the computer audio system. Please allow ample time for the online check-in process. A replay of the Annual Meeting will also be posted on our website at www.adtalem.com for at least thirty (30) days after the 2013meeting concludes.
Voting at the Annual Meeting
The way you vote your shares prior to the Annual Meeting will not limit your right to change your vote at the Annual Meeting if you attend virtually and vote by ballot. If you hold shares in street name and you want to vote at the Annual Meeting, you must obtain a valid legal proxy from the record holder of your shares at the close of business on the record date indicating that you were a beneficial owner of shares, as well as the number of shares of which you were the beneficial owner, on the record date, and appointing you as the record holder’s proxy to vote these shares. You should contact your bank, broker, or other intermediary for specific instructions on how to obtain a legal proxy.
Record Date
You may vote all shares of Common Stock that you owned as of the close of business on September 22, 2023, which is the record date for the Annual Meeting. On the record date, we had 40,971,799 shares of Common Stock outstanding and entitled to vote. Each share of Common Stock is entitled to one vote on each matter properly brought before the Annual Meeting.
While
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Submitting A Question at the Annual Meeting
You may submit a question before the meeting or during the meeting via our virtual shareholder meeting website, www.virtualshareholdermeeting.com/ATGE2023. If your question is properly submitted, we intend to respond to your question during the Annual Meeting. Questions on similar topics will be combined and answered together.
Technical Difficulties During the Annual Meeting
If we experience technical difficulties during the Annual Meeting (e.g. a temporary or prolonged power outage), our Chairman will determine whether the meeting can be promptly reconvened (if the technical difficulty is temporary) or whether the meeting will need to be reconvened on a later date (if the technical difficulty is more prolonged). In any situation, we will promptly notify shareholders of the decision via www.virtualshareholdermeeting.com/ATGE2023.
If you encounter technical difficulties accessing our Annual Meeting or asking questions during the Annual Meeting, a support line will be available on the login page of the virtual shareholder meeting website: www.virtualshareholdermeeting.com/ATGE2023.
Ownership of Shares
You may own shares of Common Stock in one or more of the following ways:
| ● | Directly in your name as the shareholder of record, including shares purchased through our Colleague Stock Purchase Plan or RSU awards issued to employees under our long-term incentive plans. |
| ● | Indirectly through a broker, bank or other intermediary in “street name.” |
| ● | Indirectly through the Adtalem Stock Fund of our Retirement Plan. |
If your shares are registered directly in your name, changeyou are the holder of record of these shares and we are sending proxy materials directly to you. As the holder of record, you have the right to give your proxy directly to our tabulating agent. If you hold your shares in street name, your broker, bank, or other intermediary is sending proxy materials to you and you may direct them how to vote on your behalf by completing the voting instruction form that accompanies your proxy materials.
Revocation of Proxies
You can revoke your proxy at any time before your shares are voted at the Annual Meeting if you:
| ● | Submit a written revocation to our General Counsel and Corporate Secretary, |
| ● | Submit a later-dated proxy or voting instruction form, |
| ● | Provide subsequent telephone or internet voting instructions, or |
| ● | Vote virtually at the Annual Meeting. |
VOTING INFORMATION
Effect of Not Casting Your Vote
If you hold your shares in street name, you will cause usreceive a voting instruction form that lets you instruct your bank, broker, or other nominee how to incur certain modest costs,vote your shares. Under NYSE rules, brokers are permitted to exercise discretionary voting authority on “routine” matters when voting instructions are not received from a beneficial owner ten days prior to the Boardshareholder meeting. The only “routine” matter on this year’s Annual Meeting agenda is Proposal No. 2 (Ratify selection of Directors believes thatPwC as independent registered public accounting firm).
If you hold your shares in street name, and you wish to have your shares voted on all matters in this Proxy Statement, please complete and return your voting instruction form. If you do not return your voting instruction form, your shares will not be voted on any potential confusion and costs associatedmatters with the name changeexception that your broker may vote in its discretion on Proposal No. 2. If you are a shareholder of record and you do not cast your vote, your shares will not be minimal and will be outweighed by the benefitsvoted on any of the name change.
The name changeproposals at the Annual Meeting, which will not have anyno effect on the rightsoutcome of our existing shareholders. In addition, changing our name will not affect the validity or transferability of stock certificates presently outstanding, and DeVry’s shareholders will not be required to exchange any certificates presently held by them. In the future, new stock certificates will be issued reflecting the name change.
In connection with our name change, we will not change our ticker symbol. Our ticker symbol on the NYSE will continue to be “DV”.
Approval by Shareholders
The adoption of the amendment to our Restated Certificateproposals with the exception of Incorporation to change our name to “DeVry Education Group Inc.” will requireProposal No. 5, which requires the affirmative vote of the holders of a majority of the shares of Common Stock of DeVry outstanding on the record date. Unless otherwise indicated ondate for the Annual Meeting.
If you are the holder of record of your shares and you return your proxy to us by any of these means outlined above under the heading “Voting Instructions” without choices for any proposal, the proxy the shares will be votedFOR the approval of the amendment to our Restated Certificate of Incorporation to change our name to “DeVry Education Group Inc.”
The Board of Directors recommends a vote FOR Proposal No. 3, amendment to our Restated Certificate of Incorporation to change our name to “DeVry Education Group Inc.”
APPROVAL OF THE DEVRY INC. INCENTIVE PLAN OF 2013
The Board has adopted the DeVry Inc. Incentive Plan of 2013 (the “2013 Plan”) and is recommending that shareholders approve the 2013 Plan at the Annual Meeting. The 2013 Plan is integral to DeVry’s compensation strategies and programs. The 2013 Plan will maintain the flexibility that DeVry needs to keep pace with its competitors and effectively recruit, motivate, and retain the caliber of colleagues essential for achievement of DeVry’s success.
The 2013 Plan will permit the Award of stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units, performance stock, performance stock units, stock awards, performance cash awards, annual management incentive awards, and other cash awards. In any given year, however, the Compensation Committee expects to approve only those types of awards as the Committee concludes are appropriate in light of DeVry’s circumstances and requirements. The Committee does not contemplate the award of all or even most of the various types of awards in any given year to any one recipient. Shareholder approval of the 2013 Plan will permit the performance-based awards discussed below to qualify for deductibility under Section 162(m) of the Internal Revenue Code.
Awards under the 2013 Plan are referred to as “Awards.” Those eligible for Awards under the 2013 Plan are referred to as “Participants.” Participants include all colleagues of DeVry and its subsidiaries and all non-employee directors of DeVry.
DeVry currently maintains the DeVry Inc. Incentive Plan of 2005 (the “2005 Plan”). Upon approval of the 2013 Plan by the shareholders, no further awards will be granted under the 2005 Plan, but all prior awards under the 2005 Plan will remain outstanding in accordance with their terms. If the 2013 Plan is not approved by the shareholders, the 2005 Plan will remain in effect.
As of August 31, 2013, approximately 1,221,917 shares were available for new awards under DeVry’s existing stock incentive plans (including the 2005 Plan) and there were approximately 5,092,992 shares subject to outstanding benefits under these plans. While the existing stock incentive plans (other than the 2005 Plan) will remain in place, they may not provide sufficient shares for market-competitive grant levels prior to the 2014 shareholder meeting.
A summary of the principal features of the 2013 Plan is provided below, but is qualified in its entirety by reference to the full text of the 2013 Plan that is attached to this Proxy Statement as Appendix A.
Shares Available for Issuance
The aggregate number of shares of Common Stock that may be issued under the 2013 Plan will not exceed 5,000,000, plus any shares subject to an existing award under the 2005 Plan that are forfeited after the approval of the 2013 Plan. Since there are a total of 4,079,365, as of August 31, 2013, shares subject to grants under the 2005 Plan, the maximum number of shares that could be granted under the 2013 Plan if all of the existing 2005 Plan award were forfeited is 9,079,365 (subject to the adjustment provisions discussed below). The 5,000,000 new shares represent 8% of the currently outstanding shares of Common Stock.
Administration and Eligibility
The 2013 Plan will be administered by the Compensation Committee of the Board (the “Committee”) which consists of two or more directors, each of whom will satisfy the requirements established for administrators acting under plans intended to qualify for exemption under Rule 16b-3 under the Securities Exchange Act of 1934 (“Exchange Act”), for outside directors acting under plans intended to qualify for exemption under Section 162(m) of the Internal Revenue Code and with any applicable requirements established by the New York Stock Exchange. The Committee will approve the aggregate Awards and the individual Awards for the most senior elected officers and non-employee directors, with the exception of the Chief Executive Officer. The Committee will recommend grants of Awards to the Chief Executive Officer, but actual award to the Chief Executive Officer will be grantedcommittee appointed by the Board with only the members of the Board who meet the requirements for membershipwill vote your shares on the Committee as described above participating in the decision. The Committee will delegate its authority to grant Awards to other Participants to the Chief Executive Officer or other designated officersunmarked proposals in accordance with the terms of the 2013 Plan. The Chief Executive Officer or such other officers authorizedBoard’s recommendation. Abstentions, directions to select colleagues to receive such optionwithhold authority, and broker non-votes (when a named entity holds shares and other Awardsfor a beneficial owner who has not provided voting instructions) will provide written notice of all such action to the Committee.
No Participant may receive in any fiscal year stock options relating to more than 50% of the total shares reserved under the Plan, or SARs relating to more than 50% of the total shares reserved under the Plan. The maximum amount that may be earned under performance cash awards by any Participant who is a covered employee within the meaning of Section 162(m) of the Internal Revenue Code (“Covered Employee”) in any fiscal year may not exceed $5,000,000, and the maximum number of shares that may be received by a Covered Employee under grants of performance stock and performance stock units in any fiscal year may not exceed 50% of the total shares reserved under the Plan. Each of the above limits on shares is subject to the adjustment provisions discussed below.
Awards
Stock Options
Stock options granted to Participants (“optionees”) may be either incentive stock options (“ISOs”) or nonqualified stock options (“NSOs”). NSOs and ISOs are collectively referred to as “Stock Options.” The exercise price of any Stock Option must be equal to or greater than the fair market value of the shares on the date of the grant. The terms of a Stock Option cannot exceed 10 years.
For purposes of the 2013 Plan, fair market value shall be determined in such manner as the Committee may deem equitable, or as required by applicable law or regulation. Generally, fair market value means the closing price on the last trading day preceding the day of the transaction, as reported for the New York Stock Exchange Composite Transactions in The Wall Street Journal.
At the time of grant, the Committee, Chief Executive Officer or other designated officer will determine when Options are exercisable and when they expire.
Payment for shares purchased upon exercise of a Stock Option must be made in fullconsidered present at the time of purchase. Payment may be made in cash, by the transfer to DeVry of shares owned by the Participant having a fair market value on the date of transfer equal to the option exercise price (or certification of ownership of such shares) or in such other manner as may be authorized by the Committee.
SARs
The Committee, Chief Executive Officer or other designated officer has the authority to grant SARs to Participants and to determine the number of shares subject to each SAR, the term of the SAR, the time or times at which the SAR may be exercised, the grant price of the SAR and all other terms and conditions of the SAR. A SAR is a right, denominated in shares, to receive, upon exercise of the right, in whole or in part, without payment to DeVry an amount, payable in shares, in cash or a combination thereof, that is equal to the excess of: (i) the fair market value of Common Stock on the date of exercise of the right; over (ii) the grant price of the award (which may not be less than the fair market value of the stock on the date of grant) multiplied by the number of shares for which the right is exercised. SARs may be granted either in tandem with a Stock Option or as an independent award. If a SAR is granted in tandem with a Stock Option it will have the same exercise price and terms, and the Participant will be permitted to exercise either the Stock Option or SAR, but not both.
Restricted Stock and Restricted Stock Units
Restricted Stock consists of shares which are transferred by DeVry to a Participant, subject to substantial risk of forfeiture and to restrictions on their sale or other transfer by the Participant. Restricted Stock Units are the right to receive shares at a future date in accordance with the terms of such award upon the attainment of certain conditions specified by the Committee, which are subject to substantial risk of forfeiture and restrictions on their sale or other transfer by the Participant. The Committee, Chief Executive Officer or other designated officer determines the eligible Participants to whom, and the time or times at which, grants of Restricted Stock or Restricted Stock Units will be made, the number of shares or units to be granted, the time or times within which the shares covered by such award will be subject to forfeiture, the time or times at which the restrictions will terminate, and all other terms and conditions of the award. Restrictions or conditions could include, but are not limited to, the attainment of performance goals (as described below), continuous service with DeVry, the passage of time or other restrictions or conditions.
Performance Stock and Performance Stock Units
Performance Stock consists of shares that are transferred by DeVry to a Participant, subject to substantial risk of forfeiture and to restrictions on their sale or other transfer by the Participant, which are based upon the attainment of performance goals specified by the Committee. Performance Stock Units are the right to receive shares or cash equal to the fair market value of such shares at a future date in accordance with the terms of such award and upon the attainment of performance goals specified by the Committee. The period of time during which the performance goals must be met shall not be less than twelve months, except in the case of a newly hired Participant.
The Award of Performance Stock Units to a Participant will not create any rights in such Participant as a shareholder of DeVry until the issuance of Common Stock with respect to an Award.
Performance Cash Awards
A Participant who is granted Performance Cash Awards has the right to receive a payment in cash upon the attainment of performance goals specified by the Committee. The period of time during which the performance goals must be met shall not be less than twelve months, except in the case of a newly hired Participant. The Committee may substitute shares of Common Stock for the cash payment otherwise required to be made pursuant to a Performance Cash Award.
Performance Goals
Awards of Restricted Stock, Restricted Stock Units, Performance Stock, Performance Stock Units, and Performance Cash Awards shall, and other incentives under the 2013 Plan may be made subject to the attainment of performance goals specified by the Committee, including but not limited to: cash flow; cost; ratio of debt to debt plus equity; profit before tax; economic profit; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; earnings per share; operating earnings; economic value added; ratio of operating earnings to capital spending; free cash flow; net profit; net revenues; revenue growth; price of the common stock; return on net assets, equity or shareholders’ equity; market share; total return to shareholders; or measurable student outcomes or satisfaction. Any performance goals may be used to measure the performance of DeVry as a whole or any business unit of DeVry and may be measured relative to a peer group or index. Any performance goals may be adjusted to include or exclude special items as described below.
If any such Award is made to a Covered Employee, then, unless the Committee determines that the Award is not intended to qualify as qualified performance-based compensationAnnual Meeting for purposes of Section 162(m)a quorum.
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Quorum and Required Vote
We will have a quorum and will be able to conduct the business of the Internal Revenue Code, the performance goals must be based only on one or more of the enumerated goals specified in the preceding paragraph, must be established by the earlier of the first 90 days or first one-quarter of the employment period to which the Award relates. In addition no amount may be paid to a Covered Employee pursuant to such an Award until the Committee has certified the extent to which the performance goals were met, and the Committee may not exercise its discretion to increase the amount paid to the Covered Employee.
Annual Management Incentive Awards
Management Incentive Awards will be paid out of an incentive pool equal to five percent of DeVry’s consolidated operating earnings for each calendar year. The incentive pool is automatically created for each fiscal year commencing with the fiscal year beginning July 1, 2014. The Committee may, by resolution adopted during the first 90 days of the fiscal year, allocate an incentive pool percentage to designated Participants for each fiscal year; butMeeting if the Committee does not adopt a different allocation, then 20% of the incentive pool shall be allocated to each person who is a “named executive officer” of DeVry for the fiscal year, as defined by Item 402(a)(3)(i) through (iii) (but not (iv)) of SEC Regulation S-K), determined as of the end of the fiscal year and disregarding any person who is a named executive office solely by reason of having served as principal executive officer or principal financial officer earlier in the fiscal year. In no event may the incentive pool percentage for any one Participant exceed 20% of the total pool, regardless of how many Participants are allocated a percentage. Consolidated operating earnings shall mean the consolidated earnings before income taxes of DeVry, computed in accordance with generally accepted accounting principles, but shall exclude the effects of special items, including (i) gains or losses on the disposition of a business, (ii) changes in tax or accounting regulations or laws, or (iii) the effect of a merger or acquisition, as determined in accordance with generally accepted accounting principles.
As soon as possible after the determination of the incentive pool for a fiscal year, the Committee shall certify each Participant’s allocated portion of the incentive pool based upon the percentage established in the preceding paragraph. The Participant’s incentive Award then shall be determined by the Committee (or, in the case of the Chief Executive Officer, the members of the Board who meet the requirements for membership on the Committee) based on the Participant’s allocated portion of the incentive pool subject to reduction in the sole discretion of the Committee (or Board). In no event may the portion of the incentive pool allocated to a
Participant be increased in any way, including as a result of the reduction of any other Participant’s allocated portion, and in no event shall any person be entitled to any Annual Management Incentive Award until the Committee (or Board) has affirmatively certified such person’s allocated share of the incentive pool and the final amount of such person’s payment.
The Annual Management Incentive Awards are designed to satisfy the requirements of Section 162(m) of the Internal Revenue Code while providing the Committee with flexibility to determine the appropriate amount of each Award. It is intended that the Annual Management Incentive Awards will provide the primary method of providing annual incentives for DeVry’s named executive officers, and that the named executive officers will not also be entitled to Performance Cash Awards for the same fiscal year in which they are eligible for an Annual Management Incentive Award except in unusual circumstances.
Stock Awards
The Committee, Chief Executive Officer or other designated officer may Award shares of Common Stock to Participants without payment therefor, as additional compensation for service to DeVry or a subsidiary. Stock Awards may be subject to other terms and conditions, which may vary from time to time and among colleagues, as the Committee determines to be appropriate. However, an outright grant of stock will not be made unless it is offered in exchange for cash compensation that has otherwise already been earned by the recipient.
Cash Awards
A cash Award consists of a monetary payment made by DeVry to a colleague as additional compensation for his or her services to DeVry or a subsidiary. A cash Award may be made in tandem with another Award or may be made independently of any other Award. Cash Awards may be subject to other terms and conditions, which may vary from time to time and among colleagues, as the Committee, Chief Executive Officer or other designated officer determines to be appropriate.
Amendment of the 2013 Plan
The Board or the Committee has the right and power to amend the 2013 Plan, provided, however, that neither the Board nor the Committee may amend the 2013 Plan in a manner which would impair or adversely affect the rights of the holder of an Award without the holder’s consent. No material amendment of the Plan, within the meaning of the New York Stock Exchange listing requirements or other applicable law, shall be made without shareholder approval.
Termination of the 2013 Plan
The Board may terminate the 2013 Plan at any time. Termination will not in any manner impair or adversely affect any Award outstanding at the time of termination. No Award shall be made more than ten years after the adoption of the Plan by the Board of Directors.
Committee’s Right to Modify Awards
Any Award granted may be modified, forfeited, or canceled, in whole or in part, by the Committee if and to the extent permitted in the 2013 Plan, or applicable agreement entered into in connection with an Award or with the consent of the Participant to whom such Award was granted. The Committee may grant Awards on terms and conditions different than those specified in the 2013 Plan to comply with the laws and regulations of any foreign jurisdiction, or to make the Awards more effective under such laws and regulations.
Subject to the requirements of Section 409A of the Internal Revenue Code, the Committee may permit or require a Participant to have amounts or shares of Common Stock that otherwise would be paid or delivered to the Participant as a result of the exercise or settlement of an Award under the 2013 Plan, other than a Stock Option or SAR, credited to a deferred compensation or stock unit account established for the Participant by the Committee on DeVry’s books of account.
Neither the Board nor the Committee may cancel any outstanding Stock Option or SAR for the purpose of reissuing the Stock Option or SAR to the Participant at a lower exercise price, reduce the exercise price of an
outstanding Stock Option or SAR, or permit any Stock Option or SAR to be repurchased or cancelled in exchange for any form of consideration at a time when the exercise price of the Stock Option or SAR exceeds the fair market value of the Common Stock.
Change in Control
Except as otherwise determined by the Committee at the time of grant of an Award, upon a Change in Control of DeVry, all performance goals shall be deemed achieved at target levels and all other terms and conditions met; all outstanding Stock Options and SARs shall become vested and exercisable; all restrictions on Restricted Stock and Performance Stock shall lapse; all Performance Cash Awards, Restricted Stock Units and Performance Stock Units shall be paid out as promptly as practicable; all Annual Management Incentive Awards shall be paid out based on the consolidated operating earnings of the immediately preceding year or such other method of payment as may be determined by the Committee at the time of Award or thereafter but prior to the Change in Control; and all Other Stock or Cash Awards shall be delivered or paid.
A “Change in Control” shall mean: (i) the sale or disposition by DeVry of all or substantially all of the assets of DeVry (or any transaction having a similar effect); (ii) the consummation of a merger or consolidation of DeVry with any other entity other than (A) a merger or consolidation which would result in the voting interests of DeVry outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting interests of the surviving entity) at least 50% of the combined voting power of the voting interests of DeVry or such surviving entity outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of DeVry (or similar transaction); or (iii) the acquisition, other than from DeVry, by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 25% or more of the then outstanding voting interests of DeVry but excluding, for this purpose, any such acquisition by DeVry or any of its affiliates, or by any employee benefit plan (or related trust) of DeVry or any of its affiliates.
Adjustments
In the event of any change affecting the shares of Common Stock by reason of stock dividend, stock split, reverse stock split, spin-off, recapitalization, merger, consolidation, reorganization, share combination, exchange of shares, stock rights offering, liquidation, extraordinary cash dividend, disaffiliation of a subsidiary or similar event, the Committee shall make such adjustments (if any) as it deems appropriate and equitable, in its discretion, to outstanding Awards to reflect such event, including without limitation, (1) adjustments in the aggregate number or class of shares which may be distributed under the Plan, the maximum number of shares which may be made subject to an Award in any calendar year and in the number, class and option price or other price of shares subject to the outstanding Awards granted under the Plan, (2) the substitution of other property (including, without limitation, other securities) for the stock covered by outstanding Awards, and (3) in connection with any disaffiliation of a subsidiary, arrangement for the assumption, or replacement with new Awards, of Awards held by Participants employed by the affected subsidiary by the entity that controls the subsidiary following the disaffiliation.
In the event of any merger, consolidation, or reorganization of DeVry with or into another corporation which results in DeVry’s outstanding securities being converted into or exchanged for different securities, cash, or other property, there shall be substituted on an equitable basis as determined by the Committee, for each share of common stock subject to an Award, the number and kind of shares of stock, other securities, cash, or other property to which holders of Common Stock of DeVry are entitled pursuant to the transaction.
Substitution and Assumption of Awards
Either the Board or the Committee may authorize the issuance of Awards in connection with the assumption of, or substitution for, outstanding benefits previously granted to individuals who become employees of DeVry or any subsidiary as the result of any merger, consolidation, acquisition of property or stock, or reorganization other than a Change in Control, upon such terms and conditions as it deems appropriate.
Reusage
If an Award of Stock Options, SARs, Restricted Stock, Restricted Stock Units, Performance Stock or Performance Stock, granted under the 2013 Plan or 2005 Plan expires or is terminated, surrendered or canceled without having been fully exercised, or without the issuance of all of the shares subject thereto, the shares covered by such Awards that are not issued will again be available for use under the 2013 Plan. The full number of shares with respect to which a SAR is exercised, and not merely the number of shares actually issued, shall be considered issued and not available for re-use. Shares that are withheld for the payment of the exercise price of an Option or SAR, or for the payment of income tax withholding, and shares covered by an Award that the Committee elects to settle in cash, shall all be treated as issued and not available for re-use.
Federal Income Tax Consequences
DeVry has been advised by counsel that the federal income tax consequences as they relate to Awards are as follows:
ISOs
An optionee does not generally recognize taxable income upon the grant or upon the exercise of an ISO, provided that the optionee exercises the option either while employed or within 90 days after terminating employment (one year in the case of a termination by reason of death or disability). Upon the sale of ISO shares, the optionee recognizes income in an amount equal to the difference, if any, between the exercise price of the ISO shares and the fair market value of those shares on the date of sale. The income is taxed at long-term capital gains rates if the optionee has not disposed of the stock within two years after the date of the award of the ISO and has held the shares for at least one year after the date of exercise and DeVry is not entitled to a federal income tax deduction. The holding period requirements are waived when an optionee dies.
The exercise of an ISO may in some cases trigger liability for the alternative minimum tax.
If an optionee sells ISO shares before having held them for at least one year after the date of exercise and two years after the date of grant, the optionee recognizes ordinary income to the extent of the lesser of: (i) the gain realized upon the sale, or (ii) the difference between the exercise price and the fair market value of the shares on the date of exercise. Any additional gain is treated as long-term or short-term capital gain depending upon how long the optionee has held the ISO shares prior to disposition. In the year of disposition, DeVry receives a federal income tax deduction in an amount equal to the ordinary income which the optionee recognizes as a result of the disposition.
NSOs
An optionee does not recognize taxable income upon the grant of an NSO. Upon the exercise of such a Stock Option, the optionee recognizes ordinary income to the extent the fair market value of the shares received upon exercise of the NSO on the date of exercise exceeds the exercise price. DeVry receives an income tax deduction in an amount equal to the ordinary income that the optionee recognizes upon the exercise of the Stock Option. The amount of income realized by the optionee is added to the optionee’s tax basis for the stock acquired, and any additional gain or loss realized by the optionee or other disposition of the stock is generally treated as a capital gain or loss.
Restricted Stock or Performance Stock
A Participant who receives an Award of Restricted Stock or Performance Stock does not generally recognize taxable income at the time of the Award. Instead, the Participant recognizes ordinary income in the first taxable year in which his or her interest in the shares becomes either: (i) freely transferable, or (ii) no longer subject to substantial risk of forfeiture. The amount of taxable income is equal to the fair market value of the shares.
A Participant may elect to recognize the income at the time he or she receives Restricted Stock or Performance Stock in an amount equal to the fair market value of the Restricted Stock or Performance Stock (less any cash paid for the shares) on the date of the Award.
DeVry receives a compensation expense deduction in an amount equal to the ordinary income recognized by the Participant in the taxable year in which restrictions lapse (or in the taxable year of the Award if, at that time, the Participant had filed a timely election to accelerate recognition of income).
Other Awards
In the case of an exercise of a SAR or an Award of Restricted Stock Units, Performance Stock Units, or Common Stock or cash, the Participant will generally recognize ordinary income in an amount equal to any cash received and the fair market value of any shares received on the date of payment or delivery. In that taxable year, DeVry will receive a federal income tax deduction in an amount equal to the ordinary income which the Participant has recognized.
Code Section 409A
Certain types of Awards under the 2013 Plan may be considered forms of nonqualified deferred compensation subject to the requirements of Section 409A of the Internal Revenue Code. If such Awards do not comply with the requirements of Section 409A, the recipients of such Awards could be subject to taxation on the value of the Awards at the time they are no longer considered subject to a substantial risk of forfeiture (rather than when paid), and could also be subject to a penalty tax equal to 20% of the value of the Award as well as other penalties. The 2013 Plan has been drafted with the intent of complying with the requirements of Section 409A, but DeVry is not liable to any Participant for any tax penalties that may be imposed as a result of Section 409A or otherwise.
Million Dollar Deduction Limit
Under Section 162(m) of the Internal Revenue Code, DeVry may not deduct compensation of more than $1,000,000 that is paid to an individual who, on the last day of the taxable year, is either DeVry’s principal executive officer or is one of the three other most highly-compensated officers (other than the principal financial officer) for that taxable year as reported in DeVry’s Proxy Statement. The limitation on deductions does not apply to certain types of compensation, including qualified performance-based compensation. DeVry believes that Awards in the form of Stock Options, Performance Stock, Performance Stock Units, Performance Cash Awards, SARs, and cash payments under Management Incentive Awards under the 2013 Plan constitute qualified performance-based compensation and, as such, will be exempt from the $1,000,000 limitation on deductible compensation. However, the Committee has the authority to make such performance Awards to DeVry’s named executive officers which do not qualify for the qualified performance-based compensation exemption if the Committee determines such Awards to be prudent.
Miscellaneous
A new benefits table is not provided because no award have been granted under the 2013 Plan and all Awards are discretionary. On September 30, 2013, the closing price of the Common Stock was $ .
Approval by Shareholders
The approval of the DeVry Inc. Incentive Plan of 2013 will require the affirmative vote of a majority of the shares of Common Stock of DeVry outstanding on the record date. Unless otherwise indicated on the proxy, the shares will be votedFOR the approval of the DeVry Inc. Incentive Plan of 2013.
The Board of Directors recommends a vote FOR Proposal No. 4, approval of the DeVry Inc. Incentive Plan of 2013.
ADVISORY VOTE ON EXECUTIVE COMPENSATION
Pursuantvotes that shareholders are entitled to Section 14A of the Securities Exchange Act of 1934, as amended, wecast are required to submit to shareholders a resolution subject to an advisory vote to approve the compensation of our named executive officers. The current frequency of the advisory vote on executive compensation is annually, with the vote for the current year being taken pursuant to this Proposal No. 5. The next such vote will occur at DeVry’s 2014 Annual Meeting of Shareholders.
The Board of Directors encourages shareholders to carefully review the “Executive Compensation” section of this Proxy Statement beginning on page 32 and the “Compensation Discussion and Analysis” beginning on page 19 for a thorough discussion of our compensation program for named executive officers. The overall goals of our compensation program are to serve the essential purpose of the organization, which are to empower students to achieve their educational and career goals, and to maximize the long-term return to our stakeholders. We designed our program to:
Align named executive officer compensation with academic, student outcome and financial objectives;
Attract, motivate and retain high-quality executives; and
Reward organizational and individual performance.
The key elements of our executive compensation program are:
Annual base salary;
Annual cash incentive; and
Long-term incentive.
DeVry aims to provide total cash compensation to each NEO that is market-competitive, combining a stable base salary element with two at-risk elements (annual cash incentive awards and long-term incentive awards) available to be earned based upon individual and organizational performance. We believe this approach helps reinforce a culture of performance by recognizing individual potential and rewarding results. As part of our compensation philosophy, we believe we should pay our NEOs total compensation that is competitive with other alternatives available to them in the marketplace and that a significant portion of each NEO’s total compensation should be variable — with both upside potential and downside risk — depending upon the performance of DeVry and of the individual. In addition, we believe we should maintain a clear, straightforward and transparent approach to our executive compensation program.
Accordingly, the following resolution is submitted for an advisory shareholder votepresent at the Annual Meeting, of Shareholders:
RESOLVED, thateither virtually or by proxy. At the compensation paid2023 Annual Meeting, to DeVry’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, includingelect directors and adopt the Compensation Discussionother proposals, the following votes are required under our governing documents and Analysis, compensation tables and narrative discussion, is hereby approved.Delaware corporate law:
PROPOSAL | VOTE REQUIRED | EFFECT OF | EFFECT OF | ||||
1 | Election of directors | Approval of the majority of shares represented at the Annual Meeting | Treated as vote against | No effect on | |||
2 | Ratify selection of PwC as independent | Approval of the majority of shares represented at the Annual Meeting | Treated as | No effect on | |||
3 | Advisory vote to approve the compensation | Approval of the majority of shares represented at the Annual Meeting | Treated as | No effect on | |||
4 | Advisory vote to determine the frequency of advisory vote to approve compensation of named executive officers** | | The frequency that receives the highest number of votes cast will be deemed to be the frequency selected by the shareholders | | No effect on the outcome | | No effect on the outcome |
5 | Approval of amendment to Restated Certificate of Incorporation providing for exculpation of officers | | Approval of the majority of shares outstanding on the record date | | Treated as | | Treated as |
Approval by Shareholders
* A broker non-vote occurs when a broker submits a proxy but does not vote for an item because it is not a “routine” item and the broker has not received voting instructions from the beneficial owner. As described under “Effect of Not Casting Your Vote” above, your broker may vote in its discretion only on Proposal No. 2 (Ratify selection of PwC as independent registered public accounting firm). Because brokers are entitled to vote on Proposal No. 2 without voting instructions from the beneficial owner, there will be no broker non-votes on this proposal. ** Advisory/Non-binding. In accordance with Adtalem’s Restated Certificate of Incorporation, a majority of PROXY SOLICITATION Officers and other employees of Adtalem may solicit proxies by mail, personal interview, telephone, facsimile, electronic means, or via the internet without additional compensation. None of these individuals will receive special compensation for soliciting votes, which will be The approval of the compensation of DeVry’s named executive officers will require the affirmative the shares of Common Stock of DeVry outstanding on the record date. As this is an advisory vote, the result will not be binding on DeVry, the Board of Directors or the Compensation Committee, although the Board of Directors and the Compensation Committee will carefully consider the outcome of the vote when evaluating our compensation program. Unless otherwise indicated on the proxy, the shares represented and entitled to vote at the Annual Meeting must be voted “FOR.” Notwithstanding the foregoing, Adtalem will take into account the weight of investor support for the compensation for its NEOs based on the percentage of shares that are present at the meeting or represented by proxy at the meeting and entitled to vote on the proposal that have voted “FOR” the proposal. In evaluating the weight of investor support for the compensation of Adtalem’s NEOs, abstentions will be counted as shares present at the meeting and will have the effect of a vote against the proposal. Broker non-votes will not be counted as shares entitled to vote on the matter and will have no impact on the vote’s outcome. With respect to the advisory vote on the frequency of holding the shareholder advisory vote regarding compensation awarded to the NEOs (Proposal No. 4), you may vote “1 YEAR,” “2 YEARS,” “3 YEARS,” or “ABSTAIN.” If you elect to “ABSTAIN,” the abstention does not count in the determination of which alternative receives the highest number of votes cast.votedFORperformed in addition to their regular duties, and some of them may not necessarily solicit proxies. Adtalem also has made arrangements with brokerage firms, banks, record holders, and other fiduciaries to forward proxy solicitation materials to the approvalbeneficial owners of shares they hold on your behalf. Adtalem will reimburse these intermediaries for reasonable out-of-pocket expenses. We have hired Innisfree M&A Incorporated to help us distribute and solicit proxies. Adtalem will pay Innisfree $20,000 plus expenses for these services. Adtalem will pay the compensationcost of DeVry’s named executive officers.
The Board of Directors recommends a vote FOR Proposal No. 5, approval of the compensation of DeVry’s named executive officers.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 2013, Connie R. Curran (Chair), Christopher B. Begley, Lyle Logan, Fernando Ruiz and William T. Keevan served on the Compensation Committee. No member of the Compensation Committee was, during fiscal year 2013, an officer or employee of DeVry, was formerly an officer of DeVry, or had any relationship requiring disclosure by DeVry as a related party transaction under Item 404 of Regulation S-K. During fiscal year 2013, none of DeVry’s executive officers served on the board of directors or the compensation committee of any other entity, any officers of which served either on DeVry’s board of directors or its Compensation Committee.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that DeVry’s Directors, executive officers and holders of more than 10% of DeVry’s Common Stock file reports of ownership and changes in ownership of Common Stock with the Securities and Exchange Commission. During the fiscal year ended June 30, 2013, no filings were made after the reporting deadline except, due to administrative error, each of Gregory S. Davis, Eric P. Dirst, Daniel Hamburger, William B. Hughson, Donna Jennings, Sharon Thomas Parrott, David J. Pauldine, Steven Riehs and John P. Roselli filed one late report on Form 4, in each case reporting the automatic disposition of Common Shares upon vesting of Full-Value Shares for tax-withholding purposes.
SHAREHOLDER PROPOSALS — 2014FOR 2024 ANNUAL MEETING
Shareholder proposals intended to be presented at the 20142024 Annual Meeting of Shareholders in reliance on Rule 14a-8 under the Securities Exchange Act of 1934 must be received by DeVryAdtalem no later than June 10, 2014,6, 2024, to be eligible for inclusion in the Proxy Statementproxy statement and form of proxy for the meeting. Any such proposal also must meet the other requirements of the rules of the SEC relating to shareholder proposals. Also, under DeVry’sAdtalem’s By-Laws, other proposals and director nominations by shareholders that are not included in the Proxy Statementproxy statement will be considered timely and may be eligible for presentation at that meeting only if they are received by DeVryAdtalem in the form of a written notice, directed to the attention of DeVry’sAdtalem’s General Counsel and Corporate Secretary, not later than August 10, 2014.2024. The notice must contain the information required by the By-Laws.
Adtalem Global Education Inc. | 2023 Proxy Statement 77 |
AVAILABILITY OF FORM 10-K
A copy of DeVry’s 2013Adtalem’s 2023 Annual Report on Form 10-K (including the financial statements and financial statement schedules)statements), as filed with the Securities and Exchange Commission,SEC, may be obtained without charge upon written request to the officeattention of theAdtalem’s General Counsel and Corporate Secretary of DeVry at DeVryAdtalem Global Education Inc., 3005 Highland Parkway, Downers Grove,500 West Monroe Street, Suite 1300, Chicago, IL 60515-5799.60661. A copy of DeVry’sAdtalem’s Form 10-K and other periodic filings also may be obtained on DeVry’sAdtalem’s investor relations website at www.devryinc.cominvestors.adtalem.com/financials/sec-filing and from the Securities and Exchange Commission’sSEC’s EDGAR database at www.sec.gov.
HOUSEHOLDING Adtalem delivers only one Notice of Annual Meeting and Proxy Statement and the 2023 Annual Report to multiple shareholders sharing the same address unless it has received different instructions from one or more of them. This method of delivery is known as “householding.” Householding reduces the number of mailings you receive, saves on printing and postage costs, and helps the environment. Adtalem will, upon written or oral request, promptly deliver a separate copy of the Notice of Annual Meeting and Proxy Statement and 2023 Annual Report to a shareholder at a shared address. If you would like to change your householding election, request that a single copy of this or future proxy materials be sent to your address, or request a separate copy of this or future proxy materials, you should submit this request by writing Broadridge Householding Department, 51 Mercedes Way, Edgewood, New York 11717 or calling 1-866-540-7095. DELINQUENT SECTION 16(a) REPORTS Under U.S. securities laws, directors, certain officers, and persons holding more than 10% of our common stock must report their initial ownership of our common stock and any changes in their ownership to the SEC. The SEC has designated specific due dates for these reports and we must identify in this Proxy Statement those persons who did not file these reports when due. Based solely on our review of copies of the reports filed with the SEC and the written representations of our directors and executive officers, we believe that all reporting requirements for fiscal year 2023 were complied with by each person who at any time during the 2023 fiscal year was a director or an executive officer or held more than 10% of our common stock except for the following: Due to the late receipt of a report, Ms. Wardell inadvertently filed a Form 4 one day late on February 3, 2023 to report the withdrawal of the cash value of phantom shares held under the Company’s nonqualified deferred compensation plan. OTHER BUSINESS
The Board of Directors is aware of no other matter that will be presented for action at this meeting.Annual Meeting. If any other matter requiring a vote of the shareholders properly comes before the Annual Meeting, the proxy committee will vote and act according to their best judgment.
By Order of the Board of Directors
Douglas G. Beck
Senior Vice President, General Counsel, Corporate Secretary and Institutional Support Services
Adtalem Global Education Inc. | 2023 Proxy Statement 78 |
Appendix A – Summary of Special Items Excluded for Performance Assessment
The Compensation Committee has the discretion to adjust the financial inputs used in calculating the target award percentages for the MIP and long-term incentive plans. The Compensation Committee evaluates potential adjustments using the following framework:
| Align treatment with shareholders’ view of results; |
| 2. | Encourage management to make the best long-term decisions for Adtalem’s stakeholders; and |
| 3. | Remain generally consistent with past practice. |
ROIC, which is used as a performance threshold for PSUs granted in fiscal years 2021 and is expressed as a percentage, is calculated as Adjusted Net Income divided by the average of the beginning and ending balances of the summation of long-term debt and shareholders’ equity.
RECONCILIATION OF FISCAL YEAR 2023 ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE FOR PERFORMANCE ASSESSMENTS TO REPORTED NET INCOME AND EARNINGS PER SHARE
For fiscal year 2023, Adtalem’s calculation of adjusted net income, which is a performance metric factoring in ROIC and adjusted earnings per share, which is a performance metric factoring in the determination of MIP payouts, were adjusted from reported net income and earnings per share for the following special items:
| ● | Exclusion of restructuring expense primarily related to plans to achieve synergies with the Walden University acquisition and real estate consolidations at Walden, Medical and Veterinary, and Adtalem’s home office; |
| ● | Exclusion of business integration expense, which includes expenses related to the Walden acquisition and certain costs related to growth transformation initiatives; |
| ● | Exclusion of intangible amortization expense on acquired intangible assets; |
| ● | Exclusion of gain on sale of assets for Adtalem’s Chicago, Illinois campus facility; |
| ● | Exclusion of write-off of debt discount and issuance costs and gain on extinguishment of debt related to prepayments of debt, reserves related to significant litigation, and impairment of an equity investment; and |
| ● | Exclusion of discontinued operations, primarily from costs related to DeVry University. |
| ● | In addition for the determination of ROIC, the inclusion of the |
The following table reconciles these adjustments to the most directly comparable GAAP information:
| | | | | | |
| | in thousands | | per share | ||
Net income, as reported | | $ | 93,358 | | $ | 2.05 |
Exclusions: |
| | | | | |
Restructuring charges (pretax) | | $ | 18,817 | | $ | 0.41 |
Business integration expense (pretax) | | $ | 42,661 | | $ | 0.94 |
Intangible amortization expense (pretax) | | $ | 61,239 | | $ | 1.34 |
Gain on sale of assets (pretax) | | $ | (13,317) | | $ | (0.29) |
Write-off of debt discount and issuance costs, gain on extinguishment of debt, litigation reserve, and investment impairment (pretax) | | $ | 19,226 | | $ | 0.42 |
Income tax impact of above exclusions | | $ | (31,997) | | $ | (0.70) |
Discontinued operations (after tax) | | $ | 8,394 | | $ | 0.18 |
Net income, as adjusted for determination of MIP payout | | $ | 198,381 | | $ | 4.35 |
Inclusion of Financial Services (target estimate) | | $ | 33,000 | | | |
Net income, as adjusted for determination of ROIC | | $ | 231,381 | | | |
Long-term debt and shareholders' equity: | |
| | | | |
Fiscal year 2023, as reported | | $ | 2,165,619 | | | |
Fiscal year 2022, as reported | | $ | 2,364,282 | | | |
Average for determination of ROIC | | $ | 2,264,951 | | | |
ROIC | |
| 10.2% | | | |
FISCAL YEAR 2023 FCF PER SHARE FOR PERFORMANCE ASSESSMENTS
For fiscal year 2023, Adtalem’s calculation of adjusted FCF was adjusted for the cash impact from special items (as discussed above).
| | | |
| | (in thousands, except | |
| | per share amounts) | |
Net cash provided by operating activities-continuing operations |
| $ | 205,684 |
Capital expenditures |
| $ | (37,008) |
FCF |
| $ | 168,676 |
Cash impact from special items | | $ | 25,707 |
Inclusion of Financial Services (target estimate) |
| $ | 45,600 |
FCF, as adjusted for determination of FCF |
| $ | 239,983 |
Diluted shares |
| $ | 45,600 |
FCF per share |
| $ | 5.26 |
RECONCILIATION OF FISCAL YEAR 2022 ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE FOR PERFORMANCE ASSESSMENTS TO REPORTED NET INCOME AND EARNINGS PER SHARE
For fiscal year 2022, Adtalem’s calculation of adjusted net income, which is a performance metric factoring in ROIC and adjusted earnings per share, which is a performance metric factoring in the determination of MIP payouts, were adjusted from reported net income and earnings per share for the following special items:
| ● | Exclusion of |
| |
| ● | Exclusion of CEO transition costs related to acceleration of stock-based compensation expense; |
| ● | Exclusion of restructuring expense primarily related to plans to achieve synergies with the Walden University acquisition and real estate consolidations at Medical and Veterinary and Adtalem’s home office; |
| ● | Exclusion of business acquisition and integration expense, which includes expenses related to the Walden University acquisition; |
| ● | Exclusion of intangible amortization expense on acquired intangible assets; |
| ● | Exclusion of pre-acquisition interest expense, write-off of debt discount and issuance costs, and gain on extinguishment of debt, which relates to financing arrangements in connection with the Walden University acquisition and prepayment of debt; |
| ● | Exclusion of interest savings from debt prepayments; and |
| ● | Exclusion of discontinued operations, primarily from the operations of Financial Services and costs related to DeVry University. |
| ● | In addition for the determination of ROIC, the inclusion of the actual net income impact related to the Financial Services segment realized within discontinued operations prior to its divestiture on March 10, 2022. |
The following table reconciles these adjustments to the most directly comparable GAAP information:
| | | | | | |
| | in thousands | | per share | ||
Net income, as reported |
| $ | 317,705 | | $ | 6.57 |
Exclusions: | | | | | | |
Deferred revenue adjustment (pretax) |
| $ | 8,561 | | $ | 0.18 |
CEO transition costs (pretax) |
| $ | 6,195 | | $ | 0.13 |
Restructuring charges (pretax) |
| $ | 25,628 | | $ | 0.53 |
Business acquisition and integration expense (pretax) |
| $ | 53,198 | | $ | 1.09 |
Intangible amortization expense (pretax) |
| $ | 97,274 | | $ | 1.99 |
Pre-acquisition interest expense, write-off of debt discount and issuance costs, and gain on extinguishment of debt (pretax) |
| $ | 48,804 | | $ | 1.00 |
Debt prepayment interest savings (pretax) |
| $ | (12,420) | | $ | (0.25) |
Income tax impact of above exclusions |
| $ | (48,489) | | $ | (0.99) |
Discontinued operations (after tax) |
| $ | (347,532) | | $ | (7.18) |
Net income, as adjusted for determination of MIP payout |
| $ | 148,924 | | $ | 3.05 |
Inclusion of Financial Services | | $ | 33,070 | | | |
Net income, as adjusted for determination of ROIC | | $ | 181,994 | | | |
Long-term debt and shareholders' equity: | | | | | | |
Fiscal year 2022, as reported |
| $ | 2,364,282 | | | |
Fiscal year 2021, as reported |
| $ | 2,392,070 | | | |
Average for determination of ROIC |
| $ | 2,378,176 | | | |
ROIC | | | 7.7% | | | |
FISCAL YEAR 2022 FCF PER SHARE FOR PERFORMANCE ASSESSMENTS
Incentive PlanFor fiscal year 2022, Adtalem’s calculation of 2013adjusted FCF was adjusted for the cash impact from special items (as discussed above).
| | | |
| | (in thousands, except | |
| | per share amounts) | |
Net cash provided by operating activities-continuing operations |
| $ | 163,825 |
Capital expenditures |
| $ | (31,054) |
FCF |
| $ | 132,771 |
Cash impact from special items | | $ | 48,294 |
Cash impact from debt prepayment interest savings | | $ | (3,607) |
Inclusion of Financial Services | | $ | 29,792 |
FCF, as adjusted for determination of FCF | | $ | 207,250 |
Diluted shares | | | 48,804 |
FCF per share |
| $ | 4.25 |
RECONCILIATION OF FISCAL YEAR 2021 ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE FOR PERFORMANCE ASSESSMENTS TO REPORTED NET INCOME AND EARNINGS PER SHARE
1.Purpose; Relationship to 2005 Plan. The purposesFor fiscal year 2021, Adtalem’s calculation of adjusted net income, which is a performance metric factoring in ROIC and adjusted earnings per share, which is a performance metric factoring in the DeVry Inc. Incentive Plandetermination of 2013 (the “Plan”) are (i) to encourage outstanding individuals to accept or continue employment with DeVry Inc. (“DeVry” orMIP payouts, were adjusted from reported net income and earnings per share for the “Company”)following special items:
| ● | Exclusion of restructuring charges primarily related to Adtalem’s home office and ACAMS real estate consolidations, and a write-down of EduPristine’s assets; |
| ● | Exclusion of business acquisition and integration expense, which includes expenses related to the Walden University acquisition; |
| ● | Exclusion of pre-acquisition interest expense, which relates to financing arrangements in connection with the Walden University acquisition; and |
| ● | Exclusion of discontinued operations, primarily from the operations of Adtalem Brazil and costs related to DeVry University. |
In addition, the amount of pre-acquisition debt was adjusted from the long-term debt and its subsidiaries or to serve as directors of DeVry, and (ii) to furnish maximum incentive to those persons to improve operations and increase profits and to strengthen the mutuality of interest between those persons and DeVry’s stockholders by providing them stock options and other stock and cash incentives.shareholders’ equity calculation.
The Company currently maintainsfollowing table reconciles these adjustments to the DeVry Inc. Incentive Planmost directly comparable GAAP information:
| | | | | | |
| | in thousands | | per share | ||
Net income, as reported |
| $ | 76,909 | | $ | 1.49 |
Exclusions: | | | | | | |
Restructuring charges (pretax) |
| $ | 9,804 | | $ | 0.19 |
Business acquisition and integration expense (pretax) |
| $ | 31,593 | | $ | 0.61 |
Pre-acquisition interest expense (pretax) |
| $ | 26,746 | | $ | 0.52 |
Income tax impact of above exclusions |
| $ | (16,501) | | $ | (0.32) |
Discontinued operations (after tax) |
| $ | 25,127 | | $ | 0.49 |
Adjusted net income |
| $ | 153,678 | | $ | 2.98 |
Long-term debt and shareholders' equity: | | | | | | |
Fiscal year 2021, as reported |
| $ | 2,392,070 | | | |
Exclusion of pre-acquisition debt | | $ | (800,000) | | | |
Fiscal year 2021, as adjusted | | $ | 1,592,070 | | | |
Fiscal year 2020, as reported |
| $ | 1,604,421 | | | |
Average for determination of ROIC |
| $ | 1,598,246 | | | |
ROIC | | | 9.6% | | | |
FISCAL YEAR 2021 FCF PER SHARE FOR PERFORMANCE ASSESSMENTS
For fiscal year 2021, Adtalem’s calculation of 2005 (the “2005 Plan”)adjusted FCF was adjusted for the cash impact from special items (as discussed above). Upon approval
| | | |
| | (in thousands, except | |
| | per share amounts) | |
Net cash provided by operating activities-continuing operations |
| $ | 223,158 |
Capital expenditures |
| $ | (48,664) |
FCF |
| $ | 174,494 |
Cash impact from special items | | $ | 17,803 |
FCF, as adjusted for determination of FCF | | $ | 192,297 |
Diluted shares | | | 51,645 |
FCF per share |
| $ | 3.72 |
Adtalem Global Education Inc. | 2023 Proxy Statement A-3 |
We believe that certain non-GAAP financial measures provide investors with useful supplemental information regarding the Plan byunderlying business trends and performance of Adtalem’s ongoing operations as seen through the stockholders pursuanteyes of management and are useful for period-over-period comparisons. We use these supplemental non-GAAP financial measures internally in our assessment of performance and budgeting process. However, these non-GAAP financial measures should not be considered as a substitute for, or superior to, Section 23, no further grants will be made under the 2005 Plan, but all prior grants under the 2005 Plan will remain outstandingmeasures of financial performance prepared in accordance with their terms. If the Plan is not approved by the stockholders, the 2005 Plan will remainGAAP. The following are non-GAAP financial measures used in effect.this Proxy Statement: Adjusted Earnings Per Share, Free Cash Flow Per Share, Adjusted Net Income, and Adjusted EBITDA Margin.
2.Administration. The Plan will be administered by the Compensation Committee (the “Committee”)
Adtalem Global Education Inc. | 2023 Proxy Statement A-4 |
(a) the Securities and Exchange Commission may establish for administrators acting under plans intended to qualify for exemption under Rule 16b-3 or its successor under the Securities Exchange Act of 1934 (the “Exchange Act”);
(b) the New York Stock Exchange may establish pursuant to its rule-making authority; and
(c) the Internal Revenue Service may establish for outside directors acting under plans intended to qualify for exemption under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).
The Committee shall have the authority to construe and interpret the Plan and any awards granted thereunder, to establish and amend rules for Plan administration, to change the terms and conditions of options and other awards at or after grant (subject to Section 19), and to make all other determinations which it deems necessary or advisable for the administration of the Plan. The determinations of the Committee shall be made in accordance with their judgment as to the best interests of DeVry and its stockholders and in accordance with the purposes of the Plan. A majority of the members of the Committee shall constitute a quorum, and all determinations of the Committee shall be made by a majority of its members. Any determination of the Committee under the Plan may be made without notice or meeting of the Committee, in writing signed by all the Committee members. The Committee shall authorize the Company’s chief executive officer (the “CEO”) or one or more other officers of the Company to (i) select employees to participate in the Plan, (ii) determine, from the total number of option shares and other awards approved by the Committee, the number of option shares and other awards to be granted to such participants, and (iii) determine the applicable terms and conditions of such awards, except in each case with respect to awards to officers subject to Section 16 of the Exchange Act or officers who are or may become “covered employees” within the meaning of Section 162(m) of the Code (“Covered Employees”). Any reference in the Plan to the Committee (other than in Section 19) shall include such authorized officer or officers. The CEO or such other officer(s) authorized to select employees to receive such option shares and other awards shall provide written notice of all such action to the Committee.
Awards to the CEO shall be approved by a subcommittee of the Board consisting of all directors who meet the requirements of (a), (b) and (c) above, which shall constitute the “compensation committee” as defined in Section 162(m) of the Code for purposes of such awards.
3.Participants. Participants may consist of all employees of DeVry and its subsidiaries and all non-employee directors of DeVry. Any corporation or other entity in which a 50% or greater interest is at the time directly or indirectly owned by DeVry shall be a subsidiary for purposes of the Plan. Designation of a participant in any year shall not require the Committee to designate that person to receive an award in any other year or to receive the same type or size of award as granted to the participant in any other year or as granted to any other
participant in any year. The Committee or, if authorized pursuant to Section 2 hereof, the CEO or one or more other officers of the Company shall consider all factors deemed relevant in selecting participants and in determining the type and amount of their respective awards.
4.Shares Available under the Plan. There is hereby reserved for issuance under the Plan an aggregate of 5,000,000 shares of DeVry common stock. If there is (i) a lapse, expiration, termination or cancellation of any Stock Option or other award granted under the Plan or the 2005 Plan prior to the issuance of shares thereunder or (ii) a forfeiture of any shares of restricted stock or shares subject to stock awards granted under the Plan or the 2005 Plan prior to vesting, the shares subject to these options or other awards shall be added to the shares available for awards under the Plan. Shares covered by an award granted under the Plan shall not be counted as used unless and until they are actually issued and delivered to a participant; provided that shares that are withheld for payment of the exercise price of a Stock Option, or for payment of tax withholding, shall be treated as issued. The total number of shares covered by a Stock Appreciation Right, rather than the net number of shares issued, shall be counted as used upon exercise of the right. In addition, any shares covered by a Stock Option, Stock Appreciation Right, or an award of Restricted Stock, Restricted Stock Units, or Performance Shares shall be treated as issued even if the award is settled in cash. All shares issued under the Plan may be either authorized and unissued shares or issued shares reacquired by DeVry. During any fiscal year, no individual participant may receive Stock Options relating to more than 50% of the total number of shares reserved pursuant to the first sentence of this Section 4 (as amended from time to time), and no individual participant may receive Stock Appreciation Rights relating to more than 50% of the total number of shares reserved pursuant to the first sentence of this Section 4 (as amended from time to time). The shares reserved for issuance and the limitations set forth above shall be subject to adjustment in accordance with Section 15 hereof. All of the available shares (without adjustment) may, but need not, be issued pursuant to the exercise of Incentive Stock Options.
5.Types of Awards. Awards under the Plan shall consist of Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Stock, Performance Stock Units, Performance Cash Awards, Annual Management Incentive Awards and Other Stock or Cash Awards, all as described below.
6.Stock Options. Stock Options may be granted to participants, at any time as determined by the Committee. The Committee or, if authorized pursuant to Section 2 hereof, the CEO or one or more other officers of the Company shall determine the number of shares subject to each option and whether the option is an Incentive Stock Option. The option price for each option shall be determined by the Committee, but shall not be less than 100% of the fair market value of DeVry’s common stock on the date the option is granted. Each option shall expire at such time as the Committee shall determine at the time of grant. Options shall be exercisable at such time and subject to such terms and conditions as the Committee shall determine; provided, however, that no option shall be exercisable later than the tenth anniversary of its grant. The option price, upon exercise of any option, shall be payable to DeVry in full by (a) cash payment or its equivalent, (b) tendering previously acquired shares having a fair market value at the time of exercise equal to the option price or certification of ownership of such previously-acquired shares, (c) delivery of a properly executed exercise notice, together with irrevocable instructions to a broker to promptly deliver to DeVry the amount of sale proceeds from the option shares or loan proceeds to pay the exercise price and any withholding taxes due to DeVry, and (d) such other methods of payment as the Committee, at its discretion, deems appropriate. In no event shall the Committee (a) cancel any outstanding Stock Option for the purpose of reissuing the option to the participant at a lower exercise price or reduce the option price of an outstanding option, or (b) cause any Stock Option to be repurchased or otherwise cancelled in exchange for a payment of any form of consideration if the exercise price is greater than the fair market value of the shares covered by the Stock Option.
7.Stock Appreciation Rights. Stock Appreciation Rights (“SARs”) may be granted to participants at any time as determined by the Committee. The Committee or, if authorized pursuant to Section 2 hereof, the CEO or one or more other officers of the Company shall determine the number of SARs to be granted to each participant. A SAR may be granted in tandem with a Stock Option granted under this Plan or on a free-standing basis. The grant price of a tandem SAR shall be equal to the option price of the related option. The grant price of a free-standing SAR shall be equal to the fair market value of DeVry’s common stock on the date of its grant. A SAR may be exercised upon such terms and conditions and for the term as the Committee in its sole discretion
determines; provided, however, that the term shall not exceed the option term in the case of a tandem SAR or ten years in the case of a free-standing SAR. Upon exercise of a SAR, the participant shall be entitled to receive payment from DeVry in an amount determined by multiplying the excess of the fair market value of a share of common stock on the date of exercise over the grant price of the SAR by the number of shares with respect to which the SAR is exercised. The payment may be made in cash or stock, at the discretion of the Committee. In no event shall the Committee (a) cancel any outstanding SAR for the purpose of reissuing the right to the participant at a lower exercise price or reduce the exercise price of an outstanding SAR, or (b) cause any SAR to be repurchased or otherwise cancelled in exchange for a payment of any form of consideration if the grant price is greater than the fair market value of the shares covered by the SAR.
8.Restricted Stock and Restricted Stock Units. Restricted Stock and Restricted Stock Units may be awarded to participants under such terms and conditions as shall be established by the Committee. The Committee or, if authorized pursuant to Section 2 hereof, the CEO or one or more other officers of the Company shall determine the amount or number of Restricted Stock and Restricted Stock Units to be granted to each participant. Restricted Stock Units provide participants the right to receive shares at a future date upon the attainment of certain conditions specified by the Committee. Restricted Stock and Restricted Stock Units shall be subject to such restrictions and conditions as the Committee determines, including, without limitation, any of the following:
(a) a prohibition against sale, assignment, transfer, pledge, hypothecation or other encumbrance for a specified period; or
(b) a requirement that the holder forfeit such shares or units in the event of termination of employment during the period of restriction.
All restrictions shall expire at such times as the Committee shall specify.
9.Performance Stock and Performance Stock Units. The Committee or, if authorized pursuant to Section 2 hereof, the CEO or one or more other officers of the Company shall designate the participants to whom shares of Performance Stock and Performance Stock Units are to be awarded and determine the number of shares, the length of the performance period and the other terms and conditions of each such award; provided the stated performance period will not be less than 12 months except in the case of a newly hired participant. Each award of Performance Stock shall consist of a number of shares of stock that shall be issued upon the grant of the award, but shall be subject to forfeiture if the stated performance goals are not achieved, and each award of Performance Share Units shall entitle the participant to a payment in the form of shares of common stock upon the attainment of performance goals, in both cases subject to such other terms and conditions as the Committee may specify.
Notwithstanding satisfaction of any performance goals, the number of shares issued under a Performance Stock award may be adjusted by the Committee on the basis of such further consideration as the Committee in its sole discretion shall determine. The maximum number of shares of Performance Stock and Performance Stock Units that may be earned by any Covered Employee in any fiscal year shall not exceed 50% of the total number of shares reserved pursuant to the first sentence of this Section 4 (as amended from time to time). The Committee may, in its discretion, make a cash payment equal to the fair market value of shares of common stock otherwise required to be issued to a participant pursuant to a Performance Stock Unit award.
10.Performance Cash Awards. The Committee or, if authorized pursuant to Section 2 hereof, the CEO or one or more other officers of the Company shall designate the participants to whom Performance Cash Awards (“Performance Cash Awards”) are to be awarded and determine the number of units and the terms and conditions of each such award; provided the stated performance period will not be less than 12 months except in the case of a newly hired participant. Each Performance Cash Award shall entitle the participant to a payment in cash upon the attainment of performance goals and other terms and conditions specified by the Committee.
Notwithstanding the satisfaction of any performance goals, the amount to be paid under a Performance Cash Award may be adjusted by the Committee on the basis of such further consideration as the Committee in its sole discretion shall determine. The maximum amount earned by a Covered Employee in any fiscal year may not
exceed $5,000,000. The Committee may, in its discretion, substitute actual shares of common stock for the cash payment otherwise required to be made to a participant pursuant to a Performance Cash Award.
11.Annual Management Incentive Awards. For each fiscal year commencing with the fiscal year beginning July 1, 2014, there is hereby established an incentive pool equal to 5% of DeVry’s consolidated operating earnings for the fiscal year. The Committee may, by resolution adopted during the first 90 days of the fiscal year, allocate an incentive pool percentage to each designated participant for each fiscal year; but if the Committee does not adopt a different allocation, then 20% of the incentive pool shall be allocated to each person who is a “named executive officer” of the Company for the fiscal year, as defined by Item 402(a)(3)(i) through (iii) (but not (iv)) of SEC Regulation S-K), determined as of the end of the fiscal year and disregarding any person who is a named executive office solely by reason of having served as principal executive officer or principal financial officer earlier in the fiscal year. In no event may the incentive pool percentage for any one participant exceed 20% of the total pool, regardless of how many participants are allocated a percentage. Consolidated operating earnings shall mean the consolidated earnings before income taxes of the Company, computed in accordance with generally accepted accounting principles, but shall exclude the effects of Special Items. Special Items shall include (i) gains or losses on the disposition of a business, (ii) changes in tax or accounting regulations or laws, or (iii) the effect of a merger or acquisition, as determined in accordance with generally accepted accounting principles.
As soon as possible after the determination of the incentive pool for a fiscal year, the Committee shall certify each participant’s allocated portion of the incentive pool based upon the percentage established in the preceding paragraph. The participant’s incentive award then shall be determined by the Committee (or, in the case of the CEO, the outside members of the Board as provided in the last paragraph of Section 2) based on the participant’s allocated portion of the incentive pool subject to reduction in the sole discretion of the Committee. In no event may the portion of the incentive pool allocated to a participant be increased in any way, including as a result of the reduction of any other participant’s allocated portion, and in no event shall any person be entitled to any Annual Management Incentive Award under this Section 11 until the Committee has affirmatively certified such person’s allocated share of the incentive pool and the final amount of such person’s payment.
12.Other Stock or Cash Awards. In addition to the incentives described in Sections 6 through 11 above, the Committee may grant other incentives payable in cash or in common stock under the Plan as it determines to be in the best interests of DeVry and subject to such other terms and conditions as it deems appropriate; provided an outright grant of stock will not be made unless it is offered in exchange for cash compensation that has otherwise already been earned by the recipient.
13.Performance Criteria. Awards of Stock Options, SARs, Performance Stock, Performance Stock Units, Performance Cash Awards and other incentives under the Plan may be made subject to the attainment of performance goals relating to one or more business criteria, including, but not limited to, cash flow; cost; ratio of debt to debt plus equity; profit before tax; economic profit; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; earnings per share; operating earnings; economic value added; ratio of operating earnings to capital spending; free cash flow; net profit; net sales; sales growth; price of DeVry common stock; return on net assets, equity or stockholders’ equity; market share; total return to stockholders; or measurable student outcomes or satisfaction (“Performance Criteria”). Any Performance Criteria may be used to measure the performance of the Company as a whole or any business unit of the Company and may be measured relative to a peer group or index. Any Performance Criteria may include or exclude Special Items (as defined in section 11 above). In all other respects, Performance Criteria shall be calculated in accordance with the Company’s financial statements, generally accepted accounting principles, or under a methodology established by the Committee not later than the issuance of an award.
Notwithstanding the foregoing, any award of Performance Stock, Performance Stock Units, or Performance Cash Awards to a Covered Employee shall be subject to the following requirements, unless the Committee determines at the time of grant that the award is not intended to constitute “qualified performance based compensation” for purposes of Section 162(m) of the Code:
(a) The Performance Criteria for such award shall be established by the earlier of the first 90 days, or the first 25%, of the period of service to which the award relates (which may be the period commencing on the
participant’s date of employment, even if the Performance Criteria takes into account periods prior to such date), and at a time when achievement of the Performance Criteria is substantially uncertain.
(b) The Performance Criteria for such award shall be limited to one or more of the specific Performance Criteria listed above, and shall be stated in terms so that a third party having knowledge of the relevant performance results could calculate the amount to be paid pursuant to the award; provided that the foregoing shall not preclude the Committee from exercising negative discretion to reduce a Covered Employee’s award based upon other criteria, including its subjective evaluation of the Covered Employee, to the extent permitted by the terms of the award.
(c) The Committee may not in any event increase the amount of compensation payable to the Covered Employee upon the attainment of the Performance Criteria.
(d) Payment to the Covered Employee may not be made unless the Committee has certified the extent to which the Performance Criteria have been satisfied.
14.Change in Control. Except as otherwise determined by the Committee at the time of grant of an award, upon a Change in Control of DeVry, all performance goals shall be deemed achieved at target levels and all other terms and conditions met; all outstanding Stock Options and SARs shall become vested and exercisable; all restrictions on Restricted Stock and Performance Stock shall lapse; all Performance Cash Awards, Restricted Stock Units and Performance Stock Units shall be paid out as promptly as practicable; all Annual Management Incentive Awards shall be paid out based on the consolidated operating earnings of the immediately preceding year or such other method of payment as may be determined by the Committee at the time of award or thereafter but prior to the Change in Control; and all Other Stock or Cash Awards shall be delivered or paid. A “Change in Control” shall mean:
(i) the sale or disposition by the Company of all or substantially all of the assets of the Company (or any transaction having a similar effect);
(ii) the consummation of a merger or consolidation of the Company with any other entity other than (A) a merger or consolidation which would result in the voting interests of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting interests of the surviving entity) at least 50% of the combined voting power of the voting interests of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction); or
(iii) the acquisition, other than from the Company, by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 25% or more of the then outstanding voting interests of the Company but excluding, for this purpose, any such acquisition by the Company or any of its affiliates, or by any employee benefit plan (or related trust) of the Company or any of its affiliates.
15.Adjustment Provisions.
(a) In the event of any change affecting the shares of DeVry Common Stock by reason of stock dividend, stock split, reverse stock split, spin-off, recapitalization, merger, consolidation, reorganization, share combination, exchange of shares, stock rights offering, liquidation, extraordinary cash dividend, disaffiliation of a subsidiary or similar event, the Committee shall make such adjustments (if any) as it deems appropriate and equitable, in its discretion, to outstanding awards to reflect such event, including without limitation, (1) adjustments in the aggregate number or class of shares which may be distributed under the Plan, the maximum number of shares which may be made subject to an award in any year and in the number, class and option price or other price of shares subject to the outstanding awards granted under the Plan; (2) the substitution of other property (including, without limitation, other securities) for the stock covered by outstanding awards; and (3) in connection with any disaffiliation of a subsidiary, arrangement for the assumption, or replacement with new awards, of awards held by participants employed by the affected subsidiary by the entity that controls the subsidiary following the disaffiliation.
(b) In the event of any merger, consolidation or reorganization of DeVry with or into another corporation which results in the outstanding common stock of DeVry being converted into or exchanged for different securities, cash or other property, or any combination thereof, there shall be substituted, on an equitable basis as determined by the Committee in its discretion, for each share of common stock then subject to an award granted under the Plan, the number and kind of shares of stock, other securities, cash or other property to which holders of common stock of DeVry will be entitled pursuant to the transaction.
16.Substitution and Assumption of Awards. The Board of Directors or the Committee may authorize the issuance of awards under this Plan in connection with the assumption of, or substitution for, outstanding awards previously granted to individuals who become employees of DeVry or any subsidiary as a result of any merger, consolidation, acquisition of property or stock, or reorganization other than a Change in Control, upon such terms and conditions as the Committee may deem appropriate.
17.Nontransferability. Each award granted under the Plan shall not be transferable otherwise than by will or the laws of descent and distribution and each Stock Option and SAR shall be exercisable during the participant’s lifetime only by the participant or, in the event of disability, by the participant’s personal representative. In the event of the death of a participant, exercise of any award or payment with respect to any award shall be made only by or to the executor or administrator of the estate of the deceased participant or the person or persons to whom the deceased participant’s rights under the award shall pass by will or the laws of descent and distribution. Notwithstanding the foregoing, at its discretion, the Committee may permit the transfer of an award other than an Incentive Stock Option by the participant, on a general or specific basis, subject to such terms and conditions as may be established by the Committee.
18.Taxes. DeVry shall be entitled to withhold the amount of any tax attributable to any amounts payable or shares deliverable under the Plan, after giving the person entitled to receive such payment or delivery notice and DeVry may defer making payment or delivery as to any award, if any such tax is payable until indemnified to its satisfaction. A participant may pay all or a portion of any required withholding taxes arising in connection with the exercise of a Stock Option or SAR or the receipt of shares hereunder by electing to have DeVry withhold shares of common stock, having a fair market value equal to the amount required to be withheld. All awards under this Plan are intended to be exempt from, or to satisfy, the requirements of Section 409A of the Code, and to the maximum extent permitted by law the Plan and all award agreements shall be so interpreted and administered. Without limiting the generality of the foregoing, if any participant is a “specified employee” at the time that he incurs a “separation from service”, as both such terms are defined by Section 409A, any amount that becomes payable to such participant by reason of such separation from service that constitutes a form of deferred compensation subject to Section 409A shall not be paid until the earlier of the first day of the seventh month following the month that includes the separation from service or the date of the participant’s death. Notwithstanding the foregoing, in no event shall the Company, the members of the Committee, or any other person have any obligation to indemnify or reimburse any participant for any additional taxes or penalties imposed on such participant by reason of Section 409A.
19.Duration, Amendment and Termination. No award shall be granted more than ten years after the date of adoption of this Plan by the Board of Directors; provided, however, that the terms and conditions applicable to any award granted on or before such date may thereafter be amended or modified by mutual agreement between DeVry and the participant, or such other person as may then have an interest therein. The Board of Directors or the Committee may amend the Plan from time to time or terminate the Plan at any time. However, no such action, and no amendment or modification of an award, shall reduce the amount of any existing award or change the terms and conditions thereof in a manner that is adverse to the interests of the participant, without the participant’s consent, except as otherwise permitted. No amendment to the Plan that is material, within the meaning of New York Stock Exchange listing requirements or other applicable law, shall be made without stockholder approval.
20.Fair Market Value. The fair market value of DeVry’s common stock at any time shall be determined in such manner as the Committee may deem equitable, or as required by applicable law or regulation.
21.Other Provisions.
(a) Any award under the Plan may also be subject to other provisions (whether or not applicable to an award granted to any other participant) as the Committee determines appropriate, including provisions intended to comply with federal or state securities laws and stock exchange requirements, understandings or conditions as to the participant’s employment, requirements or inducements for continued ownership of common stock after exercise or vesting of awards, forfeiture of awards in the event of termination of employment shortly after exercise or vesting, or breach of noncompetition or confidentiality agreements following termination of employment, or provisions permitting the deferral of the receipt of an award for such period and upon such terms as the Committee shall determine.
(b) In the event any award under this Plan is granted to an employee who is employed or providing services outside the United States and who is not compensated from a payroll maintained in the United States, the Committee may, in its sole discretion, modify the provisions of the Plan as they pertain to such individuals to comply with applicable law, regulation or accounting rules.
(c) The Committee, in its sole discretion, but subject to the requirements of Section 409A of the Code, may permit or require a participant to have amounts or shares of common stock that otherwise would be paid or delivered to the participant as a result of the exercise or settlement of an award under the Plan (other than a Stock Option or SAR) credited to a deferred compensation or stock unit account established for the participant by the Committee on the Company’s books of account.
22.Governing Law. The Plan and any actions taken in connection herewith shall be governed by and construed in accordance with the laws of the state of Delaware (without regard to applicable Delaware principles of conflict of laws).
23.Stockholder Approval. The Plan was adopted by the Board of Directors on May 15, 2013, subject to stockholder approval. The Plan and any awards granted thereunder shall be null and void if stockholder approval is not obtained at the next annual meeting of stockholders; provided, however, that to the extent that any such award could have been made under the terms of the 2005 Plan, such award shall remain in effect and be treated as having been made under the 2005 Plan.
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500 West Monroe Street, Suite 1300 Chicago, IL 60661 312-651-1400 www.adtalem.com Transfer Agent and Registrar Computershare Investor Services, L.L.C. 462 South 4th Street Suite 1600 Louisville, KY 40202 Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP One North Wacker Drive Chicago, Illinois 60606 Financial Information and Reports Adtalem routinely issues press releases and quarterly and annual financial reports. To receive this information please write to us at: Adtalem Global Education Inc., Investor Relations, 500 West Monroe Street, Suite 1300, Chicago, IL 60661, call +1 312-906-6600, or visit the | Investor Relations Jay Spitzer, CFA Vice President, Investor Relations +1 312-906-6600 Annual Meeting The annual meeting of shareholders of Adtalem Global Education Inc. will be held entirely online on Wednesday, November 8, 2023 at 8:00 a.m. Central Standard Time at: www.virtualshareholdermeeting.com/ATGE2023. Annual Mailing Holders of common stock of record at the close of business on September 22, 2023 are entitled to vote at the meeting. A notice of meeting, proxy statement, and proxy card and/or voting instructions were provided to shareholders with this Annual Report. Common Stock Adtalem’s stock is traded on the New York Stock Exchange and Corporate Governance To review the Company’s corporate governance guidelines, Board committee charters, and code of | |||
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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Directors 1a. Stephen W. Beard 1b. William W. Burke 1c. Mayur Gupta 1d. Donna J. Hrinak 1e. Georgette Kiser 1f. Liam Krehbiel 1g. Michael W. Malafronte 1h. Sharon L. O’Keefe 1i. Kenneth J. Phelan 1j. Lisa W. Wardell Nominees: The Board of Directors recommends that you vote FOR all of the nominees listed in Item 1.
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| The Board of Directors recommends you vote FOR proposals 2 and 3. The Board of Directors recommends you vote FOR proposal 5. The Board of Directors recommends you vote 1 YEAR on the following | ||||||||||||||||||||||
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proposal. Please date and sign below exactly as your name(s) appear(s) hereon. Joint owners should all sign. When signing in a representative capacity (such as for an estate, trust, corporation or partnership), please indicate title or capacity. NOTE: To transact such other business as may properly come before the meeting or any adjournment thereof. ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! For Against Abstain For Against Abstain For Against Abstain ! ! ! 1 Year 2 Years 3 Years Abstain ! ! ! ! ! ! ! VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. Eastern Time on November 7, 2023 for shares held directly and by 11:59 P.M. Eastern Time on November 3, 2023 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/ATGE2023 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. Eastern Time on November 7, 2023 for shares held directly and by 11:59 P.M. Eastern Time on November 3, 2023 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. SCAN TO VIEW MATERIALS & VOTEw | ||||||||||||||||||||||
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
M62747-P43205
DATE AND RETURN PROMPTLY IN ENCLOSED PREPAID ENVELOPE. (Continued and to be signed on reverse side.) PROXY |
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ADTALEM GLOBAL EDUCATION INC. Annual Meeting of Shareholders November Central Standard Time Via live webcast at www.virtualshareholdermeeting.com/ATGE2023. This proxy is solicited on behalf of the Board of Directors. The undersigned hereby appoints 8, 2023, or any adjournment of the meeting. You can virtually attend the meeting online by visiting www.virtualshareholdermeeting.com/ATGE2023. The shares represented by this Proxy will be voted as specified. If no choice is specified, this Proxy will be voted as recommended by the Board of Directors. The proxies are authorized, in their discretion, to vote such shares upon any other business that may properly come before the Annual Meeting. | ||||||||||||||
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