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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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Strayer Education, Inc.
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(Name of Registrant as Specified in Its Charter)
Strayer Education, Inc.
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STRAYER EDUCATION, INC.
1025 FIFTEENTH STREET, N.W.
WASHINGTON, D.C. 20005
(202) 408-2424
Dear Fellow Stockholder:
You are cordially invited to attend the 2001 Annual Meeting of Stockholders
of Strayer Education, Inc., a Maryland corporation, to be held at 10:00 A.M.
LOCAL TIME ON MAY 21, 2001, at the Sheraton National Hotel, Columbia Pike and
Washington Boulevard, in ARLINGTON, VIRGINIA.
At this year's meeting, you will vote on (i) the election of six directors,
(ii) the approval of an amended stock option plan (which updates the existing
plan to address changes in law and practice since the original plan was adopted
in 1996), (iii) the ratification of the appointment of the independent auditors
and (iv) any other matters that may properly come before the meeting. We have
attached a notice of meeting and a proxy statement that contain more information
about these items and the meeting.
Your vote is important. We encourage you to sign and return your proxy
before the meeting so that your shares will be represented and voted at the
meeting even if you cannot attend in person.
We look forward to seeing you at the 2001 Annual Meeting of Stockholders.
Sincerely,
/s/ ROBERT S. SILBERMAN
ROBERT S. SILBERMAN
President and Chief Executive Officer
April 27, 2001
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STRAYER EDUCATION, INC.
1025 FIFTEENTH STREET, N.W.
WASHINGTON, D.C. 20005
(202) 408-2424
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 2001 Annual Meeting of Stockholders of Strayer Education, Inc., will be
held at the Sheraton National Hotel, Columbia Pike and Washington Boulevard in
Arlington, Virginia, on May 21, 2001, at 10:00 a.m. for the following purposes:
1. To elect six (6) directors to the Board of Directors to serve for a
term of one year and until their respective successors are elected and
qualified.
2. To approve the Strayer Education, Inc. 1996 Stock Option Plan,
which has been amended to address changes in law and industry practice, and
to provide the Board of Directors with increased flexibility in making
option grants.
3. To ratify the appointment of PriceWaterhouseCoopers LLP as the
independent public accountants for the Corporation.
4. To consider and act upon such other business as may properly come
before the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN,
DATE AND PROMPTLY RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE
ENCLOSED STAMPED ENVELOPE.
By Order of the Board of Directors
/s/ JENNIE D. SEATON
Jennie D. Seaton
Secretary
Washington, D.C.
April 27, 2001
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STRAYER EDUCATION, INC.
1025 FIFTEENTH STREET, N.W.
WASHINGTON, D.C. 20005
(202) 408-2424
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 2001
This Proxy Statement is furnished on or about April 27, 2001, to
stockholders of Strayer Education, Inc. (the "Corporation"), 1025 Fifteenth
Street, N.W., Washington, D.C. 20005, in connection with the solicitation by the
Board of Directors of the Corporation of proxies to be voted at the 2001 Annual
Meeting of Stockholders (the "Annual Meeting"). The Annual Meeting will be held
at 10:00 a.m. local time on May 21, 2001, at the Sheraton National Hotel,
Columbia Pike and Washington Boulevard, in Arlington, Virginia.
The cost of soliciting proxies will be borne by the Corporation. Copies of
solicitation material may be furnished to brokers, custodians, nominees and
other fiduciaries for forwarding to beneficial owners of shares of the
Corporation's common stock, and normal handling charges may be paid for such
forwarding service. Solicitation of proxies may be made by the Corporation by
mail or by personal interview, telephone and telegraph by officers and other
management employees of the Corporation, who will receive no additional
compensation for their services.
Any stockholders giving a proxy pursuant to this solicitation may revoke it
at any time prior to exercise of the proxy by giving notice of such revocation
to the Secretary of the Corporation at its executive offices at 1025 Fifteenth
Street, N.W., Washington, D.C. 20005, or by attending the meeting and voting in
person.
At the close of business on April 26, 2001, there were 15,524,206 shares of
the common stock of the Corporation outstanding and entitled to vote at the
meeting. Only stockholders of record on April 26, 2001 will be entitled to vote
at the meeting, and each share will have one vote.
VOTING INFORMATION
At the Annual Meeting votes will be counted by written ballot. A majority
of the shares entitled to vote will constitute a quorum for purposes of the
Annual Meeting. The election of the Board of Directors' nominees for directors
will require the affirmative vote of a plurality of the shares present in person
or represented by proxy and entitled to vote in the election of directors.
Approval of the Option Plan, ratification of the appointment of the independent
auditors and any other business which may properly come before the Annual
Meeting, or any adjournments thereof, will require the affirmative vote of a
majority of the shares present in person or represented by proxy and entitled to
vote thereon. Under Maryland law and the Corporation's Articles of Incorporation
and By-laws, the aggregate number of votes entitled to be cast by all
stockholders present in person or represented by proxy at the Annual Meeting,
whether those stockholders vote "For," "Against" or abstain from voting, will be
counted for purposes of determining the minimum number of affirmative votes
required for approval of such matters, and the total number of votes cast "For"
each of these matters will be counted for purposes of determining whether
sufficient affirmative votes have been cast. An abstention from voting on a
matter by a stockholder present in person or represented by proxy at the
meeting, other than the election of directors, has the same legal effect as a
vote "Against" the matter even though the stockholder or interested parties
analyzing the results of the voting may interpret such a vote differently.
Broker non-votes will have the effect of reducing the number of shares
considered present and entitled to vote on the matter.
A stockholder may, with respect to the election of directors, (i) vote for
the election of all named director nominees, (ii) withhold authority to vote for
all named director nominees or (iii) vote for the election of all named director
nominees other than any nominee with respect to whom the stockholder withholds
authority to vote by so indicating in the appropriate space on the proxy card.
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Proxies properly executed and received by the Corporation prior to the
meeting and not revoked, will be voted as directed therein on all matters
presented at the meeting. In the absence of specific direction from a
stockholder, proxies will be voted for the election of all named director
nominees. If a proxy indicates that all or a portion of the shares represented
by such proxy are not being voted with respect to a particular proposal, such
non-voted shares will not be considered present and entitled to vote on such
proposal, although such shares may be considered present and entitled to vote on
other proposals and will count for the purpose of determining the presence of a
quorum.
PROPOSAL 1
ELECTION OF DIRECTORS
Six directors are to be elected by the holders of our common stock. It is
intended that the votes represented by the proxies will be cast for the election
as directors (for a term of one year or until their successors are chosen and
qualified) of the persons listed below. Each of the nominees is currently a
director of the Corporation. There are six other members of our board of
directors who will be elected by the purchasers of our series A preferred stock
pursuant to the terms of a preferred stock purchase agreement entered into as of
November 27, 2000 ("Purchase Agreement"), by and among the Corporation, and New
Mountain Partners, L.P. and DB Capital Investors, L.P., upon the closing of the
transactions contemplated thereby. The following table presents information
concerning persons nominated for election as directors of the Corporation and a
separate table presents information concerning the directors who are elected by
the holders of our series A preferred stock, including their current membership
on committees of the Board of Directors, principal occupations or affiliations
during the last five years and certain other directorships held.
NOMINEES FOR COMMON STOCK DIRECTORS
Robert S. Silberman........ Member -- Executive Committee. Executive in
residence at New Mountain Capital, LLC from August
2000 to March 2001. From March 1999 to August 2000,
Mr. Silberman served as president and chief
operating officer of CalEnergy Company, Inc., the
unregulated, independent power subsidiary of
Midamerican Energy Holdings Company. From July 1995
to March 1999, Mr. Silberman served first as
CalEnergy's vice president of corporate development
and subsequently as senior vice president and chief
administrative officer. From March 1993 to July
1995, Mr. Silberman was assistant to the chairman
and chief executive officer of International Paper
Company. From 1989 to 1993, Mr. Silberman served in
several senior positions in the U.S. Department of
Defense, including as Assistant Secretary of the
Army. Mr. Silberman, age 43, has been a director of
the Corporation and our president and chief
executive officer since March 2001.
Dr. Charlotte Beason....... Nurse at the U.S. Department of Veterans
Affairs/Health Care Reform Office, since 1992. Dr.
Beason, age 53, has been a director of the
Corporation since July 1996 and has been a member
of the Board of Trustees of Strayer University (the
"University") since 1995.
Roland Carey............... Member -- Compensation Committee. Mr. Carey has
been an instructor with the Louisa County Public
School System of Virginia and chairman of The
Middle School Building Leadership Team since August
1999. Prior to his current position, Mr. Carey was
the program coordinator at the Carl Sandburg
School, for more than twelve years. Mr. Carey, age
61, has been a director of the Corporation since
July 1996 and a member of the Board of Trustees of
the University since 1990.
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Todd A. Milano............. Member -- Compensation Committee. President and
chief executive officer of Central Pennsylvania
Business School since 1989. Mr. Milano, age 48, has
been a director of the Corporation since July 1996
and served as the vice chairman of the Board of
Trustees of the University from 1992 to 1999.
Dr. Jennie D. Seaton....... Dr. Seaton retired from her position as assistant
dean of Virginia Commonwealth University in 1994.
She shared in a variety of academic and
administrative posts at Virginia Commonwealth
University since 1975. Dr. Seaton, age 71, has been
a director of the Corporation since July 1996 and
has been a member of the Board of Trustees of the
University since 1990. In addition, Dr. Seaton was
elected to vice chairman of the Board of Trustees
of the University in 1999.
G. Thomas Waite, III....... Member -- Audit Committee. Treasurer and chief
financial officer of the Humane Society of the
United States, since 1993. In 1992, Mr. Waite was
the director of commercial management of The
National Housing Partnership. Mr. Waite, age 49,
has been a director of the Corporation since July
1996 and has been a member of the Board of Trustees
of the University since 1994.
INFORMATION CONCERNING PREFERRED STOCK DIRECTORS
The following table presents information concerning persons who are elected
to our board of directors by purchasers of our series A preferred stock pursuant
to the terms of the Purchase Agreement. These directors were initially elected
to our board of directors in March 2001 following the closing in escrow of the
sale of our series A preferred stock, with the exception of William E. Brock,
who was elected in April 2001.
Steven B. Klinsky.......... Member -- Executive Committee. Founder, managing
member and chief executive officer of New Mountain
Capital, LLC since December 1999. From 1986 to
December 1999, Mr. Klinsky was a general partner of
Forstmann Little & Co., a private equity firm. Mr.
Klinsky, age 44, became our non-executive chairman
of the board in March 2001.
William E. Brock........... Founder and chairman of BRIDGES LearningSystems,
Inc., an education services company, since 1996.
From 1988 to 1995, Mr. Brock was the founder and
chairman of the Brock Group, a firm specializing in
international trade, investment and human
resources. From 1992 to 1993, Mr. Brock chaired the
Wingspread Group on Higher Education. From 1985 to
1987, Mr. Brock served as the United States
Secretary of Labor. From 1981 to 1985, Mr. Brock
served as the United States Special Trade
Representative. From 1977 to 1980, Mr. Brock was
the chairman of the Republican National Committee.
Mr. Brock also served as a Senator from the State
of Tennessee from 1971 to 1976. Mr. Brock, age 70,
currently serves on the boards of the following
philanthropic, educational and economic
organizations: the Committee for Economic
Development, Jobs for the Future, Kids Voting USA,
the Council for Excellence in Government, the SCANS
2000 Center, Comptroller General's Advisory Board,
and the Council for Basic Education.
Steven K. Dollinger........ Member -- Audit Committee and Executive Committee.
Director of DB Capital Partners, Inc. since March
2000. Mr. Dollinger started at
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DB Capital as a vice president in August 1998. From
July 1994 to August 1998, Mr. Dollinger, age 34,
was first an associate and subsequently a vice
president of Kidd Kamm & Company, a middle market
private equity firm.
Gary S. Gensler............ Member -- Audit Committee. Served in the Department
of Treasury from September 1997 to January 2001,
first as Assistant Secretary for Financial Markets
and then as Under Secretary for Domestic Finance.
From 1988 to September 1997, Mr. Gensler was a
partner of The Goldman Sachs Group, L.P., an
international investment banking firm. From 1995 to
September 1997, Mr. Gensler, age 43, served as
co-head of finance, responsible for controllers and
treasury, for Goldman Sachs worldwide.
Robert R. Grusky........... Member -- Compensation Committee and Executive
Committee. Member and principal of New Mountain
Capital, LLC since January 2000. Since January
2000, Mr. Grusky has also been the managing member
of the limited liability company that is the
general partner of Hope Capital Partners, L.P., a
public equities investment partnership. From 1998
to January 2000, Mr. Grusky served as president of
RSL Investments Corporation, the primary investment
vehicle for Ronald S. Lauder, and from April 1997
to January 2000, Mr. Grusky served as senior
advisor to Mr. Lauder. From 1985 to 1993, Mr.
Grusky was employed at Goldman, Sachs & Co. as a
member of its mergers and acquisitions department,
and from 1993 to 1997 as a senior professional in
its principal investment area. Since November 1999,
Mr. Grusky, age 43, has served as a director of
deltathree, Inc.
J. David Wargo............. Principal of New Mountain Capital, LLC. since
December 1999. Since January 1993, Mr. Wargo has
also been the president of Wargo & Company, Inc.,
an investment management company. From 1989 to
1992, Mr. Wargo was a managing director and senior
analyst of The Putnam Companies, a Boston-based
investment management company. From 1986 to 1989,
Mr. Wargo was a partner of Marble Arch Partners and
a senior vice president from 1985 to 1986. Mr.
Wargo, age 47, is also a director of Gemstar-TV
Guide International, Inc., Liberty Digital, Inc.
and On Command Corporation.
BOARD COMMITTEES
In March 2001, following the escrow closing of the purchase and sale of our
series A preferred stock, we expanded our Board of Directors to include the
appointment of six directors by the purchasers of our series A preferred stock
and the Board appointed Robert S. Silberman president and chief executive
officer.
The Board of Directors has established an Audit Committee, an Executive
Committee and a Compensation Committee and has no nominating committee.
Selection of nominees for the Board is made by the entire Board of Directors.
For the year ended December 31, 2000, the Audit Committee was composed of
Messrs. Carey and Waite, Dr. Beason, and former directors Stanley G. Elmore and
Stephen C. Eastham. The Audit Committee is currently composed of Messrs.
Dollinger, Gensler and Waite. The Audit Committee is responsible for reviewing
the internal accounting procedures of the Corporation and the results and scope
of the audit and other services provided by the Corporation's independent
auditors, consulting with the Corporation's independent auditors and
recommending the appointment of independent auditors to the Board of Directors.
The Audit Committee met three times during the year ended December 31, 2000;
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each member of the Audit Committee attended this meeting. The Audit Committee
has adopted a written charter, attached as Exhibit A to this proxy statement.
All of the members of the Audit Committee are independent, as independence is
defined in Rule 4200(a)(15) of The National Association of Securities Dealers'
Listing Standards. A report of the Audit Committee is included in this proxy
statement.
For the year ended December 31, 2000, the Compensation Committee was
composed of Mr. Milano and former director Donald T. Benson. The Compensation
Committee is currently composed of Messrs. Carey, Grusky and Milano. The
Compensation Committee has the authority and performs all of the duties related
to the compensation of management of the Corporation, including determining
policies and practices, changes in compensation and benefits for management,
determination of employee benefits and all other matters relating to employee
compensation, including matters relating to the administration of the Option
Plan. The Compensation Committee met once during the year ended December 31,
2000; both members of the Compensation Committee attended this meeting. In April
2001, the Compensation Committee met and (i) reviewed and approved the
employment agreement for Mr. Silberman and (ii) reviewed, approved and set the
terms of the stock option grants to Messrs. Silberman, Steffey and McArthur, and
Ms. Hlavinka.
For the year ended December 31, 2000, the Executive Committee was composed
of Dr. Seaton and former directors Ron K. Bailey and Stanley G. Elmore. The
Executive Committee is currently composed of Messrs. Silberman, Klinsky,
Dollinger and Grusky. The Executive Committee has the authority to exercise all
of the powers and authority of the Board of Directors in the management of the
business and affairs of the Corporation in order to undertake such duties and
responsibilities as the Board of Directors may authorize by resolution from time
to time. The Executive Committee met once during the year ended December 31,
2000; each member of the Executive Committee attended this meeting.
ATTENDANCE AT MEETINGS
During the year ended December 31, 2000, the Board of Directors held four
(4) meetings, each of which were attended by at least seventy-five percent of
the directors.
DIRECTORS' FEES
Directors who are employees receive no additional compensation for serving
as directors. All directors are reimbursed for expenses incurred in connection
with their attendance at Board and Committee meetings, and during the year ended
December 31, 2000 non-employee directors received $2,000 in compensation for
each meeting attended.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Securities Exchange Act of 1934 requires the Corporation's directors,
executive officers and 10% stockholders to file reports of beneficial ownership
of equity securities of the Corporation and to furnish copies of such reports to
the Corporation. Based on a review of such reports, the Corporation believes
that, during the fiscal year ended December 31, 2000, all such filing
requirements were met.
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BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the ownership
of our common stock as of April 26, 2001, by each person known by us to be the
beneficial owner of more than five percent (5%) of the outstanding shares of our
common stock, each of our directors, and all executive officers and directors as
a group. The information presented in the table is based upon the most recent
filings with the Securities and Exchange Commission by those persons or upon
information otherwise provided by those persons to us.
SHARES
BENEFICIALLY
NAMES OF BENEFICIAL OWNERS OWNED(1) PERCENTAGE OWNED
- -------------------------- ------------ ----------------
Ron K. Bailey and Beverly W. Bailey(2).................... 8,175,000 52.7%
Kayne Anderson Rudnick Investment Management LLC(3)
1800 Avenue of the Stars
Los Angeles, CA 90067................................... 1,373,719 8.9%
T. Rowe Price Associates, Inc.(4)
100 East Pratt Street
Baltimore, MD 21202..................................... 1,447,600 9.3%
DB Capital Partners, L.P.(5).............................. 8,175,000 52.7%
New Mountain Partners, L.P.(5)............................ 8,175,000 52.7%
Robert S. Silberman....................................... 6,000
Scott W. Steffey..........................................
Steven A. McArthur........................................ 1,000
Charlotte Beason(6)....................................... 2,550 *
Roland Carey.............................................. 0 *
Steven K. Dollinger.......................................
Gary S. Gensler........................................... 3,000
Robert R. Grusky..........................................
Steven B. Klinsky(5)...................................... 8,175,000
Todd A. Milano............................................ 14,410 *
Jennie D. Seaton.......................................... 2,050 *
G. Thomas Waite, III...................................... 3,128 *
J. David Wargo............................................
Harry T. Wilkins.......................................... 47,000 *
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (14
PERSONS)................................................ 8,254,138 53.2%
---------
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* Less than one percent
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of common stock subject
to options or warrants currently exercisable or exercisable within 60 days
are deemed outstanding for purposes of computing the percentage ownership of
the person holding such options or warrants but are not deemed outstanding
for purposes of computing the percentage ownership of any other person.
Except where indicated otherwise, and subject to community property laws
where applicable, the persons named in the table above have sole voting and
investment power with respect to all shares of common stock shown as
beneficially owned by them.
(2) Includes 1,000,000 shares held by the Bailey Family Foundation. Mr. Bailey,
our former president and chief executive officer, and his wife have agreed
to tender 7,175,000 shares of common stock pursuant to the tender offer we
commenced on April 17, 2001. As of the date of this proxy statement, the
tender offer is expected to close on May 15, 2001. Mr. and Mrs. Bailey have
also granted to New
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Mountain Partners, L.P. and DB Capital Investors, L.P. an irrevocable proxy to
vote all of their shares of common stock until the tender offer closes.
(3) Based on a Schedule 13G filed with the Securities and Exchange Commission on
February 9, 2001. These securities are owned by various individual and
institutional investors for whom Kayne Anderson Rudnick Investment
Management, LLC serves as investment adviser with power to direct
investments and/or sole power to vote the securities. For purposes of the
reporting requirements of the Securities Exchange Act of 1934 (the "1934
Act"), Kayne Anderson Rudnick Investment Management is deemed to be a
beneficial owner of these securities; however, Kayne Anderson Rudnick
Investment Management expressly disclaims that it is, in fact, the
beneficial owner of these securities.
(4) Based on a Schedule 13G filed with the Securities and Exchange Commission on
February 12, 2001. These securities are owned by various individual and
institutional clients for whom T. Rowe Price Associates, Inc. ("Price
Associates") serves as investment adviser with power to direct investments
and/or sole power to vote the securities. For purposes of the reporting
requirements of the Securities Exchange Act, Price Associates is deemed to
be the beneficial owner of these securities; however, Price Associates
expressly disclaims that it is, in fact, the beneficial owner of these
securities.
(5) Mr. and Mrs. Bailey granted an irrevocable proxy to DB Capital Partners,
L.P. and New Mountain Partners, L.P. DB Capital Partners, Inc. is the
general partner of DB Capital Partners, L.P. New Mountain Investments, L.P.
("NMI") is New Mountain Partners, L.P.'s general partner and New Mountain
GP, LLC ("NM") is NMI's general partner. Steven B. Klinsky is the sole
member of NM. Mr. Klinsky disclaims beneficial ownership of the shares of
common stock that New Mountain Partners, L.P. holds the right to vote.
(6) Includes currently exercisable options to purchase 800 shares.
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COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth annual and long-term compensation for the
fiscal years ended December 31, 1998, 1999 and 2000 for services in all
capacities to the Corporation of the chief executive officer and chief financial
officer. None of the Corporation's other executive officers received a total
annual salary and bonus in excess of $100,000 during such periods.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION AWARDS
----------------------------------
ANNUAL COMPENSATION SECURITIES
------------------------- UNDERLYING ALL OTHER
NAME AND POSITION YEAR SALARY BONUS OPTIONS/SAR'S COMPENSATION(1)(2)
- ----------------- ---- -------- ------- ------------- ------------------
Ron K. Bailey.............. 1998 $107,546 -- -- $2,289
President 1999 $ 54,900 -- -- $1,236
2000 $ 50,000 -- -- $1,238
Harry T. Wilkins........... 1998 $104,000 -- -- $2,218
Chief Financial Officer 1999 $105,120 -- -- $2,240
2000 $115,000 $30,000 -- $2,786
- ---------------
(1) Reflects (i) $2,151, $1,098 and $1,238 in matching contributions made by the
University to the University's 401(k) plan for Mr. Bailey in 1998, 1999 and
2000 respectively, and (ii) $138 in premiums paid by the University for life
insurance for Mr. Bailey in each of 1998, 1999 and 2000.
(2) Reflects (i) $2,080, $2,102 and $2,786 in matching contributions made by the
University to the University's 401(k) plan for Mr. Wilkins in 1998, 1999 and
2000 respectively, and (ii) $138 in premiums paid by the University for life
insurance for Mr. Wilkins in 1998, 1999 and 2000.
In March 2001, Robert S. Silberman was named president and chief executive
officer and Scott W. Steffey was named executive vice president and chief
operating officer. In April 2001, Steven A. McArthur joined as senior vice
president and general counsel and Lysa Hlavinka joined as vice president of
marketing and public relations.
OPTION GRANTS
The Option Plan was adopted in July 1996. There were no options granted to
the named executive officers during the year ended December 31, 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS
FISCAL YEAR-END(#) AT FISCAL YEAR END($)(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ----------- ----------- ------------- ----------- -------------
Ron K. Bailey........ 0 $0 0 0 0 $0
Harry T. Wilkins..... 0 $0 150,000 0 $2,833,875 $0
- ---------------
(1) Total value of unexercised in-the-money options is based on the closing
price of the common stock of $25.525 per share on December 29, 2000 minus
the exercise price of the options.
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PERFORMANCE GRAPH
The following performance graph compares the Corporation's cumulative
stockholder return on its Common Stock since the Corporation's initial public
offering on July 25, 1996 with The NASDAQ Stock Market (U.S.) Index and a
self-determined peer group consisting of Apollo Group Inc., ITT Educational
Services Inc., Devry Inc. and Whitman Education Group Inc. At present there is
no comparative index for the education industry. Although the Securities and
Exchange Commission ("SEC") requires the Corporation to present such a graph for
a five-year period, the Common Stock has been publicly traded only since July
25, 1996 and, as a result, the following graph commences as of such date. This
graph is not deemed to be "soliciting material" or to be filed with the SEC or
subject to the SEC's proxy rules or to the liabilities of Section 18 of the
Securities Act of 1934 ("1934 Act"), and the graph shall not be deemed to be
incorporated by reference into any prior or subsequent filing by the Corporation
under the Securities Act or the Securities Exchange Act.
COMPARISON OF 53 MONTH CUMULATIVE TOTAL RETURN*
Among Strayer Education, Inc.,
The NASDAQ Stock Market (U.S.) Index and a Peer Group
[PERFORMANCE LINE GRAPH]
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7/25/96 12/96 12/97 12/98 12/99 12/00
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Strayer Education,
Inc. 100.00 231.39 501.01 538.18 304.12 398.10
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NASDAQ Stock Market
(U.S.) 100.00 121.36 148.65 209.62 389.56 234.39
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Peer Group 100.00 116.99 151.14 204.63 118.53 253.59
- --------------------------------------------------------------------------------------
*$100 invested on 7/25/96 in stock or index -- including reinvestment of
dividends fiscal year ending December 31.
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Corporation's Board of Directors established the Compensation Committee
in July 1996, and the Committee determined and acted upon compensation decisions
as described below in 2000 and will continue to do so in future years. Decisions
on compensation of the Corporation's executives officers generally will be made
by the Compensation Committee of the Board of Directors. No member of the
Compensation Committee is an employee of the Corporation. During 2000, the
Committee consisted of Mr. Milano and former director Donald T. Benson. All
decisions by the Compensation Committee relating to the compensation of the
Corporation's executive officers will be reviewed by its full Board, except for
decisions concerning grants under the Option Plan, which will be made solely by
the Committee in order for the grants to satisfy certain requirements under the
1934 Act. The Compensation Committee now consists of Messrs. Grusky, Casey and
Milano. The Committee met in April 2001 and reviewed and approved the employment
agreement for Mr. Silberman, and determined the option grants to Messrs.
Silberman, Steffey and McArthur, and Ms. Hlavinka.
Compensation Policies Toward Executive Officers
The Compensation Committee believes that the Corporation's executive
compensation policies and programs serve the interests of the Corporation and
its stockholders. The Compensation Committee's executive compensation policies
are intended to provide competitive levels of compensation that reflect the
Corporation's annual and long-term performance goals, reward superior corporate
performance, recognize individual initiative and achievements, and assist the
Corporation in attracting and retaining qualified executives. Compensation
levels are based on a number of factors, including a comparison of compensation
levels with other educational institutions. The Board of Directors and the
Compensation Committee also believe that longer-term incentives are appropriate
to motivate and retain key personnel and that stock ownership by management is
beneficial in aligning management's and stockholders' interests in the
enhancement of stockholder value.
Other Compensation Plans. The Corporation maintains a retirement plan (the
"401(k) Plan") intended to qualify under Sections 401(a) and 401(k) of the
Internal Revenue Code of 1986, as amended. The 401(k) Plan is a defined
contribution plan that covers all full-time employees of the Corporation of at
least 21 years of age, employed by the Corporation for at least one year.
Employees may contribute up to 10% of their annual wages (subject to an annual
limit prescribed by the Internal Revenue Code) as pretax, salary deferral
contributions. The Corporation may, in its discretion, match employee
contributions up to a maximum of 15% of annual wages. The Corporation also
maintains an Employee Stock Purchase Plan (the "Employee Purchase Plan"). The
purpose of the Employee Purchase Plan is to enable eligible full-time employees
of the Corporation, through payroll deductions, to purchase shares of our Common
Stock. The Employee Purchase Plan is administered by the Compensation Committee.
Compensation Deductibility Policy. Under Section 162(m) of the Internal
Revenue Code and applicable Treasury regulations, no tax deduction is allowed
for annual compensation in excess of $1 million paid to the five most highly
compensated executive officers. Performance-based compensation that has been
approved by stockholders, however, is excluded from the $1 million limit if,
among other requirements, the compensation is payable only upon attainment of
pre-established, objective performance goals and the board committee that
establishes such goals consists only of "outside directors" as defined for
purposes of Section 162(m). All of the members of the Compensation Committee
qualify as "outside directors." The Compensation Committee intends to maximize
the extent of tax deductibility of executive compensation under the provisions
of Section 162(m) so long as doing so is compatible with its determinations as
to the most appropriate methods and approaches for the design and delivery of
compensation to executive officers of the Corporation.
Benefits. Benefits offered to key executives are largely those that are
offered to the general employee population, such as group health and life
insurance coverage and participation in the Corporation's 401(k) Plan.
Mr. Bailey's Compensation.
Ron K. Bailey retired as President and Chief Executive Officer of the
Corporation on March 16, 2001. Mr. Bailey was entitled to an annual salary of
$150,000 per year pursuant to the terms of his employment agreement. At the
request of Mr. Bailey, the Compensation Committee reduced Mr. Bailey's salary to
$50,000 per year in 2000.
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Mr. Wilkins' Compensation.
Mr. Wilkins is paid an annual salary of $115,000 per year, $2,786 in
matching contributions made by the University to the University's 401(k) plan
for Mr. Wilkins, and $138 in premiums paid by the University for life insurance
for Mr. Wilkins in 2000.
Submitted on behalf of the Compensation Committee for 2000:
Todd A. Milano
AUDIT COMMITTEE REPORT
The Audit Committee of the Strayer Education, Inc. Board of Directors is
composed of three independent directors and operates under a written charter
adopted by the Board of Directors which is attached to this report. For the
fiscal year ended December 31, 2000, the Audit Committee was composed of Messrs.
Carey and Waite, Dr. Beason, and former directors Stanley G. Elmore and Stephen
C. Eastham. The Audit Committee is currently composed of G. Thomas Waite, III
(Chair), Steven K. Dollinger and Gary Gensler. The Committee recommends to the
Board of Directors the selection of the Corporation's independent accountants.
The management of the Corporation is responsible for the Corporation's
internal controls and financial reporting process. PricewaterhouseCoopers LLP,
the Corporation's independent accountants, are responsible for performing an
independent audit of the Corporation's financial statements in accordance with
generally accepted auditing standards and to provide a report thereon. The
Committee's responsibility is to monitor and oversee these processes.
In connection with this responsibility, during 2000 the Committee met and
held discussions with management and the independent accountants. Management
represented to the Committee that the Corporation's consolidated financial
statements were prepared in accordance with generally accepted accounting
principles, and the Committee reviewed and discussed the consolidated financial
statements with management and PricewaterhouseCoopers. The Committee also
discussed with PricewaterhouseCoopers the matters required to be discussed by
Statement on Auditing Standards No. 61 (Communications with Audit Committees).
The Committee has received from PricewaterhouseCoopers the written
disclosures and the letter required by Independence Standards Board Standard No.
1 (Independence Discussions with Audit Committees) and has discussed with
PricewaterhouseCoopers its independence.
Based upon the review and discussions referred to above, the Committee,
consisting of the members for fiscal year ended December 31, 2000, recommended
to the Board of Directors that the audited financial statements for the year
2000 be included in the Corporation's annual report on Form 10-K for the year
ended December 31, 2000, filed with the Securities and Exchange Commission.
Submitted on behalf of the Audit Committee for 2000:
G. Thomas Waite, III
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
In April 2001, the Corporation entered into an employment agreement with
Mr. Silberman. The employment agreement provides for an initial three-year term,
expiring on December 31, 2004, but is automatically extended for an additional
year commencing on January 1, 2002 and each January 1 thereafter, unless the
Corporation or Mr. Silberman has given written notice by September 30 of the
immediately preceding year that it or Mr. Silberman, as the case may be, does
not wish to extend the term of the agreement. For his services, Mr. Silberman is
entitled to receive an annual salary of $350,000 plus a performance bonus based
on his overall performance. Mr. Silberman was also granted options to purchase
350,000 shares of the Corporation's stock at $33.6875 per share. These options
vest in three equal annual installments beginning March 16, 2002, and have a
seven-year term.
In the event that Mr. Silberman is terminated by the Corporation without
cause, he is entitled to receive a lump-sum payment of any earned but unpaid
salary, bonus and benefits, plus an amount equal to three times his base salary
and, in the event of a termination upon a change in control of the Corporation,
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three times his latest bonus actually paid. The agreement also contains
covenants restricting Mr. Silberman from competing with the Company for three
years after his termination of employment and requires Mr. Silberman to keep
confidential the Corporation's proprietary information.
The University also entered into an employment agreement with Mr. Harry T.
Wilkins, Chief Financial Officer of the Corporation, in July 1996. The
employment agreement contains a covenant restricting Mr. Wilkins from competing
with the University for three years after the termination of his employment and
requires Mr. Wilkins to keep confidential the Corporation's proprietary
information..
CERTAIN TRANSACTIONS WITH FORMER MANAGEMENT
Lease of Campus Facilities
The Corporation has long-term noncancelable operating leases for eleven of
its various campus locations. The rents on these leases are subject to an annual
increase based on a stipulated price index. Of the eleven campus locations
(including the Distance Learning Center in Lorton, Virginia), four of the
campuses, including the Washington, D.C. campuses and three of the Virginia
campuses, were leased from corporations which are wholly-owned by Mr. Bailey,
the Corporation's former president and chief executive officer and majority
stockholder. Rent paid to Mr. Bailey under these operating leases and the Takoma
Park lease prior to its purchase for the years ended December 31, 1998, 1999 and
2000 was $2,199,363, $2,040,167 and $1,836,565, respectively. During 1999, the
Corporation acquired its Takoma Park campus from Mr. Bailey for $1,024,000. The
Corporation currently believes that the leases with Mr. Bailey are on terms at
least as favorable to the Corporation as terms reached in an arm's length
transaction. Future minimum rental commitments for all of the Corporation's
eleven leases, including the four campuses leased from Mr. Bailey, as of
December 31, 2000 was as follows (in thousands):
AMOUNT PAYABLE TO AN
TOTAL LEASE AFFILIATE OF MR. BAILEY
COMMITMENTS INCLUDED IN TOTAL
----------- ------------------------
2001.................................................. 5,029 1,881
2002.................................................. 4,554 1,881
2003.................................................. 4,106 1,881
2004.................................................. 3,274 1,881
2005.................................................. 2,988 1,881
Thereafter............................................ 2,231 849
------- -------
$22,182 $10,254
======= =======
Each of the leases with Mr. Bailey has a 10-year term expiring in 2006. The
Corporation has the option under each lease to purchase at any time during the
term of the lease the related campus facility at its discretion at the fair
market value of such facility as determined by independent appraisers.
The Corporation may lease additional campus facilities from entities owned
or controlled by Mr. Bailey. Any such leases will have market terms as
determined by an independent appraiser and be subject to the approval of a
majority of independent directors.
PROPOSAL 2
APPROVAL OF THE OPTION PLAN
This section provides a summary of the terms of the Strayer Education, Inc.
1996 Stock Option Plan, as amended (the "Option Plan"), and the proposal to
approve the Option Plan.
The Board of Directors approved the Option Plan on April 23, 2001, subject
to approval from our stockholders at this meeting. The purpose of the Option
Plan is to advance our interests by providing eligible individuals an
opportunity to acquire or increase a proprietary interest in the Corporation,
which thereby will create a stronger incentive for those individuals to expend
maximum effort for the growth and success of the Corporation, and will encourage
such eligible individuals to remain in the employ of the Corporation.
The Board of Directors has determined that certain amendments to the 1996
Stock Option Plan, originally adopted on July 24, 1996 prior to our initial
public offering, are appropriate in order to address
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certain changes in applicable law, to conform to current industry practices in
granting equity awards, and to provide the Board of Directors with increased
flexibility in making option grants. APPROVAL OF OUR STOCKHOLDERS IS ALSO
REQUIRED SO THAT THE OPTIONS GRANTED UNDER THE OPTION PLAN MAY QUALIFY FOR THE
"PERFORMANCE-BASED" COMPENSATION EXCEPTION UNDER SECTION 162(M) OF THE INTERNAL
REVENUE CODE.
Section 162(m) of the Code limits our tax deduction for compensation paid
to the executive officers named in the summary compensation table in this proxy
to $1 million unless certain requirements are met, including a requirement that
an option plan contain a limit on the number of shares an individual grantee may
receive under the option plan. As required by Section 162(m), the Option Plan
contains a limit on the number of shares of common stock which may be granted to
an individual under the Option Plan. The amendments included in the Option Plan
change this limit from 500,000 shares over the life of the Option Plan for
grants of options to any one individual to 350,000 shares per year for grants of
options to any one individual. Section 162(m) and the regulations under this
section of the Code require that this revised individual limit be approved by
our stockholders.
On April 26, 2001, the Record Date, the number of shares of Common Stock
reserved for issuance under the Option Plan was equal to two million five
hundred thousand (2,500,000) shares of Common Stock. On the Record Date, the
closing price of our Common Stock was $41.03 per share and there were twenty-one
participants in the Option Plan and options to purchase 76,069 shares of Common
Stock had been granted.
In 2001, the Compensation Committee of the Board of Directors has granted
the following options to purchase shares of our Common Stock to our executive
officers, subject to approval of the Option Plan by the stockholders at this
meeting:
Robert S. Silberman........................................ 350,000
President and Chief Executive Officer
Scott W. Steffey........................................... 250,000
Executive Vice President and Chief Operating Officer
Steven A. McArthur......................................... 125,000
Senior Vice President and General Counsel
Lysa Hlavinka.............................................. 10,000
Vice President of Marketing and Public Relations
The options granted to the foregoing individuals have an exercise price of
$33.6875 per share, representing the fair market value on the date of grant,
vest in three equal annual installments and have a seven-year term.
Other than as described above, because participation and the types of
awards under the Option Plan are subject to the discretion of the Compensation
Committee, the benefits or amounts that will be received by any participant or
groups of participants if the Option Plan is approved are not currently
determinable. On the Record Date, there were approximately five executive
officers, 407 employees and seven non-employee directors of the Corporation and
its subsidiaries who were eligible to participate in the Option Plan.
In the judgment of the Board of Directors, an initial or increased grant
under the Option Plan will be a valuable incentive and will serve to the
ultimate benefit of our stockholders by aligning more closely the interests of
Option Plan participants with those of our stockholders. The affirmative vote of
a majority of the shares of Common Stock voted at the Annual Meeting is required
to approve the Option Plan. Unless otherwise indicated, properly executed
proxies will be voted "FOR" Proposal 2 to approve the Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE APPROVAL
OF THE OPTION PLAN.
DESCRIPTION OF THE OPTION PLAN
A description of the terms of the Option Plan is set forth below. The
following summary is qualified in its entirety by the terms of the Option Plan,
a copy of which is attached as Exhibit B to this proxy statement.
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Administration. The Option Plan is administered by the Compensation
Committee of the Board of Directors. Subject to the terms of the plan, the
Compensation Committee may select participants to receive awards, determine the
types of awards and terms and conditions of awards, and interpret provisions of
the Option Plan.
Common Stock Reserved for Issuance under the Plan. The Common Stock to be
issued under the Option Plan consists of authorized but unissued shares and
treasury shares, to the extent permitted by law. If any shares covered by an
award are not purchased or are forfeited, or if an award otherwise terminates
without delivery of any Common Stock, then the number of shares of Common Stock
counted against the aggregate number of shares available under the plan with
respect to the award will, to the extent of any such forfeiture or termination,
again be available for making awards under the Option Plan.
Eligibility. Awards may be made under the Option Plan to employees,
consultants, officers and directors (including non-employee directors) of the
Corporation or any of our affiliates, or to any other person that the Board of
Directors determines is in our best interests.
Amendment or Termination of the Plan. The Board of Directors may terminate
or amend the Plan at any time and for any reason. The Option Plan shall
terminate in any event on April 23, 2011. Amendments will be submitted for
stockholder approval to the extent required by the Internal Revenue Code or
other applicable laws.
Options. The Option Plan permits the granting of options to purchase
shares of Common Stock that are intended to qualify as incentive stock options
under the Internal Revenue Code, as well as options that do not qualify as
incentive stock options or that are granted to non-employee directors of the
Corporation or a subsidiary.
The exercise price of each stock option may not be less than 100% of the
fair market value of our Common Stock on the date of grant. The fair market
value of our Common Stock is generally the closing price of the Common Stock on
the Nasdaq Stock Market on the day the option is granted. In the case of certain
10% stockholders who receive incentive stock options, the exercise price may not
be less than 110% of the fair market value of the Common Stock on the date of
grant. An exception to these requirements is made for options that we grant in
substitution for options held by employees of companies that we acquire. In such
a case the exercise price is adjusted to preserve the economic value of the
employee's stock option from his or her former employer. In no event will the
exercise price of an option be less than the par value of a share of Common
Stock on the date of grant.
The term of each option is fixed by the Compensation Committee and may not
exceed 10 years from the date of grant. Options may be made exercisable in
installments. The exercisability of options may be accelerated by the
Compensation Committee. The Compensation Committee determines at what time or
times each option may be exercised and the period of time, if any, after
termination of employment during which options may be exercised. In general,
options may exercised for a period of one year if the grantee's termination of
employment is due to the grantee's death or permanent and total disability.
In general, a grantee may pay the exercise price of an option by cash,
certified check, by tendering shares of Common Stock, or, under certain
circumstances, by means of a cashless exercise.
Stock options granted under the Option Plan may not be sold, transferred,
pledged or assigned other than by will or under applicable laws of descent and
distribution.
Non-Employee Director Option Grants. The Option Plan provides that
eligible directors are directors elected to serve at or after the 2001 meeting
of our stockholders who are not officers or other salaried employees of us or
our subsidiaries. Partners and employees of our preferred stockholders are not
eligible directors. Each eligible director is granted an option to purchase
10,000 shares on the tenth (10th) trading day after the date of the first annual
meeting of our stockholders following the eligible director's initial election
to the Board of Directors. This award of 10,000 shares is made automatically and
does not require any further Board of Director action. The option price of this
award will be the average of the closing prices of the Common Stock for the
first ten (10) trading days after the annual meeting increased by the interest
rate on five-year treasury notes applicable on that day. The number of shares to
be granted to eligible directors is subject to adjustment in the event of a
stock split or other similar event. The Option
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Plan previously provided that directors who were not officers or other salaried
employees of the Corporation or its subsidiaries would be eligible to receive an
annual option grant of 1,000 shares of Common Stock.
Other Awards. The Option Plan provides that the Compensation Committee may
also grant restricted stock, which are shares of stock subject to restrictions,
conditions or other terms, to persons eligible to receive grants under the
Option Plan. No more than twenty percent of the shares reserved for issuance
under the Option Plan is available as restricted stock.
Effect of Certain Corporate Transactions. Certain change of control
transactions involving us, such as a sale of the Corporation, may cause awards
granted under the Option Plan to vest, unless the awards are continued or
substituted for in connection with the change of control transaction.
Adjustments for Stock Dividends and Similar Events. The Compensation
Committee will make appropriate adjustments in outstanding awards and the number
of shares available for issuance under the Option Plan, including the individual
limitations on options, to reflect Common Stock dividends, stock splits and
other similar events.
Section 162(m) of the Internal Revenue Code. Section 162(m) of the
Internal Revenue Code limits publicly held companies, such as the Corporation,
to an annual deduction for federal income tax purposes of $1 million for
compensation paid to their covered employees. However, performance-based
compensation is excluded from this limitation. The Option Plan is designed to
permit the Compensation Committee to grant options that qualify as
performance-based for purposes of satisfying the conditions of Section 162(m).
To qualify as performance-based:
(i) the compensation must be paid solely on account of the attainment
of one or more pre-established, objective performance goals;
(ii) the performance goal under which compensation is paid must be
established by a compensation committee comprised solely of two or more
directors who qualify as outside directors for purposes of the exception;
(iii) the material terms under which the compensation is to be paid
must be disclosed to and subsequently approved by stockholders of the
corporation before payment is made in a separate vote; and
(iv) the compensation committee must certify in writing before payment
of the compensation that the performance goals and any other material terms
were in fact satisfied.
In the case of compensation attributable to stock options, the performance
goal requirement (summarized in (i) above) is deemed satisfied, and the
certification requirement (summarized in (iv) above) is inapplicable, if the
grant or award is made by the compensation committee; the plan under which the
option is granted states the maximum number of shares with respect to which
options may be granted during a specified period to an employee; and under the
terms of the option, the amount of compensation is based solely on an increase
in the value of the common stock after the date of grant. The maximum number of
shares of Common Stock subject to options that can be awarded under the Option
Plan to any person is 350,000 shares per year.
FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options. The grant of an option will not be a taxable
event for the grantee or for us. A grantee will not recognize taxable income
upon exercise of an incentive stock option (except that the alternative minimum
tax may apply), and any gain realized upon a disposition of the Common Stock
received pursuant to the exercise of an incentive stock option will be taxed as
long-term capital gain if the grantee holds the shares of Common Stock for at
least two years after the date of grant and for one year after the date of
exercise (the "holding period requirement"). We will not be entitled to any
business expense deduction with respect to the exercise of an incentive stock
option, except as discussed below.
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For the exercise of an option to qualify for the foregoing tax treatment,
the grantee generally must be our employee or an employee of one of our
subsidiaries from the date the option is granted through a date within three
months before the date of exercise of the option.
If all of the foregoing requirements are met except the holding period
requirement mentioned above, the grantee will recognize ordinary income upon the
disposition of the Common Stock in an amount generally equal to the excess of
the fair market value of the Common Stock at the time the option was exercised
over the option exercise price (but not in excess of the gain realized on the
sale). The balance of the realized gain, if any, will be capital gain. We will
be allowed a business expense deduction to the extent the grantee recognizes
ordinary income, subject to our compliance with Section 162(m) of the Internal
Revenue Code and to certain reporting requirements.
Non-Qualified Options. The grant of an option will not be a taxable event
for the grantee or for us. Upon exercising a non-qualified option, a grantee
will recognize ordinary income in an amount equal to the difference between the
exercise price and the fair market value of the Common Stock on the date of
exercise. Upon a subsequent sale or exchange of shares acquired pursuant to the
exercise of a non-qualified option, the grantee will have taxable gain or loss,
measured by the difference between the amount realized on the disposition and
the tax basis of the shares of Common Stock (generally, the amount paid for the
shares plus the amount treated as ordinary income at the time the option was
exercised).
If we comply with applicable reporting requirements and with the
restrictions of Section 162(m) of the Internal Revenue Code, we will be entitled
to a business expense deduction in the same amount and generally at the same
time as the grantee recognizes ordinary income.
Restricted Stock. A grantee who is awarded restricted stock will not
recognize any taxable income for federal income tax purposes in the year of the
award, provided that the shares of Common Stock are subject to restrictions
(that is, the restricted stock is nontransferable and subject to a substantial
risk of forfeiture). However, the grantee may elect under Section 83(b) of the
Internal Revenue Code to recognize compensation income in the year of the award
in an amount equal to the fair market value of the Common Stock on the date of
the award, determined without regard to the restrictions. If the grantee does
not make such a Section 83(b) election, the fair market value of the Common
Stock on the date the restrictions lapse will be treated as compensation income
to the grantee and will be taxable in the year the restrictions lapse. If we
comply with applicable reporting requirements and subject to the restrictions of
Section 162(m) of the Internal Revenue Code, we will be entitled to a business
expense deduction in the same amount and generally at the same time as the
grantee recognizes ordinary income.
THE BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF THE OPTION PLAN IS IN THE
BEST INTERESTS OF ALL STOCKHOLDERS AND, ACCORDINGLY, RECOMMENDS A VOTE FOR
PROPOSAL 2. YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the accounting firm of
PriceWaterhouseCoopers LLP to serve as the Corporation's independent public
accountants for the fiscal year ending December 31, 2001. PriceWaterhouseCoopers
has acted as the Corporation's independent public accountants for the fiscal
year ended December 31, 2000. Representatives of PriceWaterhouseCoopers are
expected to be present at the stockholders' meeting and will have an opportunity
to make a statement if they desire and to respond to appropriate questions. The
ratification of the appointment of PriceWaterhouseCoopers requires the approval
of a majority of the votes cast at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE CORPORATION'S INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2001.
Audit Fees. PriceWaterhouseCoopers billed the Corporation $89,600 for
professional services rendered for the audit of our annual financial statements
for the year 2000 and the review procedures of the financial statements included
in our Forms 10-Q for the year 2000.
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Financial Information Systems Design and Implementation
Fees. PriceWaterhouseCoopers did not perform any financial information systems
design or implementation services for us during the year 2000.
All Other Fees. PriceWaterhouseCoopers billed us $138,220 for all other
professional services rendered for the year 2000, which includes $120,350
related to the sale of our series A convertible preferred stock to New Mountain
Partners L.P. and DB Capital Investors, L.P. and the tender offer, and $17,870
related to tax advisory services.
The Audit Committee has considered whether the provision of non-audit
services is compatible with maintaining the principal accountant's independence.
STOCKHOLDER PROPOSALS
All stockholder proposals intended to be presented at the 2002 Annual
Meeting of Stockholders must be received by the Corporation no later than
January 21, 2002 and must otherwise comply with rules of the SEC for inclusion
in the Corporation's proxy statement and form of proxy relating to the meeting.
SEC rules also establish a different deadline for submission of stockholder
proposals that are not intended to be included in the Corporation's proxy
statement with respect to discretionary voting. The discretionary voting
deadline for the Corporation's 2002 Annual Meeting is April 6, 2002. If a
stockholder gives notice of such a proposal after the discretionary voting
deadline, the Corporation's proxy holders will be allowed to use their
discretionary voting authority to vote against the stockholder proposal when and
if the proposal is raised at the Corporation's 2002 Annual Meeting of
Stockholders.
OTHER MATTERS
The Corporation knows of no other matters to be presented for action at the
Annual Meeting other than those mentioned above. However, if any other matters
should properly come before the meeting, it is intended that the persons named
in the accompanying proxy card will vote on such matters in accordance with
their best judgment.
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EXHIBIT A
STRAYER EDUCATION, INC.
AUDIT COMMITTEE CHARTER
PURPOSE
The Audit Committee of the Board of Directors shall assist the board in
monitoring (1) the integrity of the financial statements of the Company, (2) the
Company's compliance with legal and regulatory requirements and (3) the
independence and performance of the Company's internal and external auditors.
COMPOSITION
The membership of the Audit Committee shall consist of at least three
members of the Board of Directors, who shall serve at the pleasure of the Board
of Directors and be designated by the full Board of Directors, and who shall
meet the following criteria:
1. Each member of the Audit Committee must be an independent director
within the meaning of the applicable rules of any securities exchange on
which the company's securities are traded or, if applicable, the Nasdaq
Stock Market.
2. Each member of the Audit Committee must be able to read and
understand fundamental financial statements, including the company's
balance sheet, income statement, and cash flow statement, or become able to
do so within a reasonable period of time after his or her appointment to
the Audit Committee.
3. At least one member of the Audit Committee shall have past
employment experience in finance or accounting, requisite professional
certification in accounting, or other comparable experience or background
which results in the individual's financial sophistication, including being
or having been a chief executive officer, chief financial officer or other
senior officer with financial oversight responsibilities.
DUTIES
The Audit Committee shall:
1. Make regular reports to the Board of Directors.
2. Review and reassess the adequacy of this Charter annually and
recommend any proposed changes to the Board of Directors for approval.
3. Review the annual audited financial statements with management and
the Company's independent auditors, including major issues regarding
accounting and auditing principles and practices, including accounting
policies and the use of significant estimates, as well as the Company's
system of internal controls.
4. Determine whether to recommend to the Board of Directors that the
annual audited financial statements be included in the Company's annual
report on Form 10-K.
5. Review with management and the Company's independent auditors any
significant financial reporting issues raised by them in connection with
the preparation of the Company's financial statements.
6. Review proposed major changes to the Company's auditing and
accounting principles and practices that are brought to the attention of
the Audit Committee by independent auditors, internal auditors or
management.
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7. Recommend to the Board of Directors the independent auditors to be
engaged.
8. Confirm and assure the independence of the independent auditors by:
a. Obtaining from the independent auditors a formal written
statement delineating all relationships between the independent auditors
and the Company, consistent with Independence Standards Board Standard
1.
b. Actively engaging in a dialogue with the independent auditors
with respect to any disclosed relationships or services that may impact
the objectivity and independence of the independent auditors.
c. Taking, or recommending that the full Board of Directors take,
appropriate action to oversee the independence of the independent
auditors.
9. Review the performance of the independent auditors and, if so
determined by the Audit Committee, recommend that the Board of Directors
replace the independent auditors.
10. Review accounting and financial human resources and succession
planning with the Company, and the appointment and replacement of the
senior internal auditing executive, if any.
11. Review any significant reports to management prepared by the
internal auditing department, if any, and management's responses.
12. Meet with the independent auditors prior to the audit to review
the planning and staffing of the audit.
13. Discuss with the independent auditors the matters required to be
discussed by Statements on Auditing Standards Nos. 61 and 90 relating to
the conduct of the audit.
14. Review with the independent auditors any management letter
provided by the auditors and management's response to that letter.
15. Prepare the report required by the rules of the Securities and
Exchange Commission to be included in the Company's annual proxy statement.
16. Review with the Board of Directors as necessary in the Audit
Committee's judgment the Company's policies and procedures regarding
compliance with applicable laws and regulations and with the Company's code
of conduct, if any.
17. Review with counsel legal matters that are brought to the Audit
Committee's attention and that may have a material impact on the financial
statements, the Company's compliance policies and material reports or
inquiries received from regulatory bodies.
18. Meet at least annually with the chief financial officer, the
senior internal auditing executive, if any, and the independent auditor in
separate executive sessions.
POWERS
The Audit Committee shall have the power to conduct or authorize
investigations into any matters within the committee's scope of
responsibilities. The Audit Committee shall be empowered to retain independent
counsel, accountants, or others to assist it in the conduct of any
investigation. The Audit Committee may ask members of management or others to
attend its meeting and provide pertinent information as necessary.
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23
RELATIONSHIP WITH AUDITORS AND BOARD OF DIRECTORS
The Company's independent auditors are ultimately accountable to the Board
of Directors of the Company and to the Audit Committee, as representatives of
the stockholders of the Company. The Board of Directors and the Audit Committee,
as representatives of the Company's stockholders, have ultimate authority and
responsibility to select, evaluate, and, where appropriate, replace the
independent auditors. While the Audit Committee has the responsibilities and
powers set forth in this Charter, it is not the duty of the Audit Committee to
plan or conduct audits or to determine that the Company's financial statements
are complete and accurate and are in accordance with generally accepted
accounting principles. This is the responsibility of management and independent
auditors. Nor is it the duty of the Audit Committee to conduct investigations,
to resolve disagreements, if any, between management and independent auditors or
to assure compliance with laws and regulations and the Company's code of
conduct, if any.
A-3
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EXHIBIT B
AMENDED
STRAYER EDUCATION, INC.
1996 STOCK OPTION PLAN
APRIL 23, 2001
25
TABLE OF CONTENTS
PAGE
----
1. PURPOSE..................................................... B-1
2. ADMINISTRATION.............................................. B-1
2.1. Board................................................. B-1
2.2. Committee............................................. B-1
2.3. No Liability.......................................... B-2
3. STOCK....................................................... B-2
4. ELIGIBILITY................................................. B-2
5. EFFECTIVE DATE AND TERM..................................... B-2
5.1. Effective Date........................................ B-2
5.2. Term.................................................. B-2
6. GRANT OF OPTIONS............................................ B-2
6.1. General............................................... B-2
6.2. Eligible Directors (Non-Employee Directors)........... B-3
7. LIMITATION ON INCENTIVE STOCK OPTIONS....................... B-3
8. OPTION AGREEMENTS........................................... B-3
9. OPTION PRICE................................................ B-3
10. TERM AND EXERCISE OF OPTIONS................................ B-4
10.1. Term................................................. B-4
10.2. Exercise by Optionee................................. B-4
10.3. Option Period and Limitations on Exercise............ B-4
10.4. Method of Exercise................................... B-4
11. TRANSFERABILITY OF OPTIONS.................................. B-5
12. TRANSFERABILITY OF STOCK PURCHASED PURSUANT TO INCENTIVE
STOCK OPTION................................................ B-5
13. TERMINATION OF EMPLOYMENT................................... B-5
14. RIGHTS IN THE EVENT OF DEATH OR DISABILITY.................. B-5
14.1. Death................................................ B-5
14.2. Disability........................................... B-6
15. RESTRICTED STOCK............................................ B-6
15.1. Grant of Restricted Stock............................ B-6
15.2. Restrictions......................................... B-6
15.3. Restricted Stock Certificates........................ B-7
15.4. Rights of Holders of Restricted Stock................ B-7
15.5. Termination of Employment............................ B-7
15.6. Purchase of Restricted Stock......................... B-7
15.7. Delivery of Stock.................................... B-7
16. USE OF PROCEEDS............................................. B-7
17. SECURITIES LAWS............................................. B-7
18. EXCHANGE ACT: RULE 16b-3.................................... B-8
19. AMENDMENT AND TERMINATION................................... B-8
B-i
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PAGE
----
20. EFFECT OF CHANGES IN CAPITALIZATION......................... B-8
20.1. Changes in Stock..................................... B-8
20.2. Reorganization With Corporation Surviving............ B-9
20.3. Other Reorganizations; Sale of Assets or Stock....... B-9
20.4. Adjustments.......................................... B-9
20.5. No Limitations on Corporation........................ B-10
21. WITHHOLDING................................................. B-10
22. DISCLAIMER OF RIGHTS........................................ B-10
23. NONEXCLUSIVITY.............................................. B-10
B-ii
27
AMENDED
STRAYER EDUCATION, INC.
1996 STOCK OPTION PLAN
STRAYER EDUCATION, INC., a Maryland corporation (the "Corporation"), sets
forth herein the terms of the 1996 Stock Option Plan, as amended as of April 23,
2001 (the "Plan") as follows:
1. PURPOSE
The Plan is intended to advance the interests of the Corporation by
providing eligible individuals (as designated pursuant to Section 4 hereof) an
opportunity to acquire or increase a proprietary interest in the Corporation,
which thereby will create a stronger incentive to expend maximum effort for the
growth and success of the Corporation and its subsidiaries and will encourage
such eligible individuals to remain in the employ of the Corporation or that of
one or more of its subsidiaries. Each stock option granted under the Plan (an
"Option") is intended to be an "incentive stock option" ("Incentive Stock
Option") within the meaning of Section 422 of the Internal Revenue Code of 1986,
or the corresponding provision of any subsequently enacted tax statute, as
amended from time to time (the "Code"), except (a) to the extent that any such
Option would exceed the limitations set forth in Section 7 hereof, (b) for
Options specifically designated at the time of grant as not being "incentive
stock options" and (c) for Options granted to directors who are not officers or
other employees of the Corporation or any subsidiary.
2. ADMINISTRATION
2.1. BOARD
The Plan shall be administered by the board of directors of the Corporation
(the "Board"), which shall have the full power and authority to take all actions
and to make all determinations required or provided for under the Plan or any
Award granted or Award Agreement entered into hereunder and all such other
actions and determinations not inconsistent with the specific terms and
provisions of the Plan deemed by the Board to be necessary or appropriate to the
administration of the Plan or any Award granted or Award Agreement entered into
hereunder. The interpretation and construction by the Board of any provision of
the Plan or of any Award granted or Award Agreement entered into hereunder shall
be final and conclusive. For purposes of the Plan an Award shall mean the grant
of an Option or Restricted Stock and an Award Agreement shall mean an Option
Agreement (as defined in Section 8) or a Restricted Stock Agreement (as defined
in Section 15).
2.2. COMMITTEE
The Board may from time to time appoint a Stock Option Committee (the
"Committee") which may, in the discretion of the Board, be the Compensation
Committee of the Board. The Board, in its sole discretion, may provide that the
role of the Committee shall be limited to making recommendations to the Board
concerning any determinations to be made and actions to be taken by the Board
pursuant to or with respect to the Plan, or the Board may delegate to the
Committee such powers and authorities related to the administration of the Plan,
as set forth in Section 2.1 hereof, as the Board shall determine, consistent
with the Certificate of Incorporation and Bylaws of the Corporation and
applicable law. In the event that the Plan or any Award granted or Award
Agreement entered into hereunder provides for any action to be taken by or
determination to be made by the Board, such action may be taken by or such
determination may be made by the Committee if the power and authority to do so
has been delegated to the Committee by the Board as provided for in this Section
2.2. Unless otherwise expressly determined by the Board, any such action or
determination by the Committee shall be final and conclusive.
B-1
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2.3. NO LIABILITY
No member of the Board or of the Committee shall be liable for any action
or determination made, or any failure to take or make an action or
determination, in good faith with respect to the Plan or any Award granted or
Award Agreement entered into hereunder.
3. STOCK
The stock that may be issued pursuant to Awards granted under the Plan
shall be shares of Common Stock of the Corporation (the "Stock"), which shares
may be treasury shares or authorized but unissued shares. The number of shares
of Stock that may be issued pursuant to Awards granted under the Plan shall not
exceed in the aggregate two million five hundred thousand (2,500,000) shares of
Stock, which number of shares is subject to adjustment as provided in Section 20
hereof; provided further that no more than twenty percent (20%) of the shares of
Stock may be issued pursuant to the grant of Restricted Stock. If any Award is
forfeited, expires, terminates or is terminated for any reason prior to exercise
in full, the shares of Stock that were subject to the unexercised or forfeited
portion of such Award shall be available for future Awards granted under the
Plan.
4. ELIGIBILITY
Awards may be granted under the Plan to any: (i) officer or employee of the
Corporation or any "subsidiary corporation" thereof within the meaning of
Section 424(f) of the Code (a "Subsidiary"), (ii) director (including a
non-employee director), (iii) consultant, or (iv) other person determined to be
in the best interests of the Corporation as the Board shall determine and
designate from time to time prior to expiration or termination of the Plan. An
individual may hold more than one Award, subject to such restrictions as are
provided herein.
5. EFFECTIVE DATE AND TERM
5.1. EFFECTIVE DATE
The Plan shall become effective as of the date of adoption by the Board,
subject to stockholders' approval of the Plan within one year of such effective
date; provided, however, that upon approval of the Plan by the stockholders of
the Corporation, all Awards granted under the Plan on or after the effective
date shall be fully effective as if the stockholders of the Corporation had
approved the Plan on the effective date. If the stockholders fail to approve the
Plan within one year of such effective date, any Awards granted hereunder shall
be null, void and of no effect.
5.2. TERM
The Plan shall terminate on April 23, 2011.
6. GRANT OF OPTIONS
6.1. GENERAL
The Plan shall become effective as of the date of adoption by the Board.
Subject to the terms and conditions of the Plan, the Board may, at any time and
from time to time prior to the date of termination of the Plan, grant to such
eligible individuals as the Board may determine ("Optionees") Options to
purchase such number of shares of the Stock on such terms and conditions as the
Board may determine, including any terms or conditions which may be necessary to
qualify such Options as "incentive stock options" under Section 422 of the Code.
Without limiting the foregoing, the Board may at any time, with the consent of
the Optionee, amend the terms of outstanding Options or issue new Options in
exchange for the surrender and cancellation of outstanding Options. The date on
which the Board approves the grant of an Option (or such later date as is
specified by the Board) shall be considered the date on which such Option is
granted. The maximum number of shares of Stock subject to Options that can be
awarded under
B-2
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the Plan to any person in a single calendar year is 350,000 shares; which number
shall be subject to adjustment in accordance with Section 20.
6.2. ELIGIBLE DIRECTORS (NON-EMPLOYEE DIRECTORS)
For purposes of this Section 6.2 an "Eligible Director" means a person
elected to serve on the Board at or after the 2001 meeting of the Corporation's
stockholders who is not an officer or other salaried employee of the Corporation
or any Subsidiary; provided, that, partners and employees of preferred
stockholders of the Corporation shall not be Eligible Directors. Each Eligible
Director shall be granted an Option to purchase 10,000 shares on the 10th
trading day after the date of the first annual meeting of the Corporation's
stockholders following the Eligible Director's initial election to the Board.
This Award of 10,000 shares shall be made automatically and shall not require
any further Board action. The Option Price of this Award shall be the average of
the closing prices of the Corporation's Stock for the first 10 trading days
after the annual meeting multiplied by the sum of one (1) plus the interest rate
on five year treasury notes applicable on that day. The foregoing number of
shares shall be subject to adjustment pursuant to Section 20 below.
7. LIMITATION ON INCENTIVE STOCK OPTIONS
An Option (other than an Option described in Section 1(b) hereof) shall
constitute an Incentive Stock Option only to the extent that the aggregate fair
market value (determined at the time the Option is granted) of the Stock with
respect to which Incentive Stock Options are exercisable for the first time by
any Optionee during any calendar year (under the Plan and all other plans of the
Optionee's employer corporation and its parent and subsidiary corporations
within the meaning of Section 422(d) of the Code) does not exceed $100,000. This
limitation shall be applied by taking Options into account in the order in which
such Options were granted.
8. OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by written
agreements ("Option Agreements") to be executed by the Corporation and the
Optionee, in such form or forms as the Board shall from time to time determine.
Option Agreements covering Options granted from time to time or at the same time
need not contain similar provisions; provided, however, that all such Option
Agreements shall comply with all terms of the Plan and any applicable employment
agreement.
9. OPTION PRICE
The purchase price of each share of the Stock subject to an Option (the
"Option Price") shall be fixed by the Board, shall be not less than the fair
market value of a share of the Stock covered by the Option and shall be stated
in each Option Agreement. In the case of an Option that is intended to
constitute an Incentive Stock Option, the Option Price shall be not less than
the fair market value of a share of the Stock covered by the Option; provided,
however, that in the event the Optionee would otherwise be ineligible to receive
an Incentive Stock Option by reason of the provisions of Sections 422(b)(6) and
424(d) of the Code (relating to stock ownership of more than 10 percent), the
Option Price of an Option which is intended to be an Incentive Stock Option
shall be not less than the greater of par value or 110 percent of the fair
market value of a share of the Stock covered by the Option at the time such
Option is granted.
In the event that the Stock is listed on an established national or
regional stock exchange, is admitted to quotation on the National Association of
Securities Dealers Automated Quotation System, or is publicly traded in an
established securities market, in determining the fair market value of the
Stock, the Board shall use the closing price of the Stock on such exchange or
system or in such market (the highest such closing price if there is more than
one such exchange or market) on the date the Option is granted (or, if there is
no such closing price, then the Board shall use the mean between the highest bid
and lowest asked
B-3
30
prices or between the high and low prices on such date), or, if no sale of the
Stock has been made on such day, on the next preceding day on which any such
sale shall have been made.
10. TERM AND EXERCISE OF OPTIONS
10.1. TERM
Each Option granted under the Plan shall terminate and all rights to
purchase shares thereunder shall cease upon the expiration of 10 years from the
date such Option is granted, or on such date prior thereto as may be fixed by
the Board and stated in the Option Agreement relating to such Option; provided,
however, that in the event the Optionee would otherwise be ineligible to receive
an Incentive Stock Option by reason of the provisions of Sections 422(b)(6) and
424(d) of the Code (relating to stock ownership of more than 10 percent), an
Option granted to such Optionee which is intended to be an Incentive Stock
Option shall in no event be exercisable after the expiration of five years from
the date it is granted.
10.2. EXERCISE BY OPTIONEE
Only the Optionee receiving an Option (or, in the event of the Optionee's
legal incapacity or incompetency, the Optionee's guardian or legal
representative, and in the case of the Optionee's death, the Optionee's estate)
may exercise the Option.
10.3. OPTION PERIOD AND LIMITATIONS ON EXERCISE
Each Option granted under the Plan shall be exercisable in whole or in part
at any time and from time to time over a period commencing on or after the date
of grant of the Option and ending upon the expiration or termination of the
Option, as the Board shall determine and set forth in the Option Agreement
relating to such Option. Without limitation of the foregoing, the Board, subject
to the terms and conditions of the Plan, may in its sole discretion provide that
an Option may not be exercised in whole or in part for any period or periods of
time during which such Option is outstanding as the Board shall determine and
set forth in the Option Agreement relating to such Option. Any such limitation
on the exercise of an Option contained in any Option Agreement may be rescinded,
modified or waived by the Board, in its sole discretion, at any time and from
time to time after the date of grant of such Option, so as to accelerate the
time at which the Option may be exercised. Notwithstanding any other provisions
of the Plan, no Option shall be exercisable in whole or in part prior to the
date the Plan is approved by the stockholders of the Corporation as provided in
Section 5.1 hereof.
10.4. METHOD OF EXERCISE
An Option that is exercisable hereunder may be exercised by delivery to the
Corporation on any business day, at its principal office addressed to the
attention of the Board, of written notice of exercise, which notice shall
specify the number of shares for which the Option is being exercised, and shall
be accompanied by payment in full of the Option Price of the shares for which
the Option is being exercised. Payment of the Option Price for the shares of
Stock purchased pursuant to the exercise of an Option shall be made, as
determined by the President and set forth in the Option Agreement pertaining to
an Option, (a) in cash or by certified check payable to the order of the
Corporation; (b) through the tender to the Corporation of shares of Stock, which
shares shall be valued, for purposes of determining the extent to which the
Option Price has been paid thereby, at their fair market value (determined in
the manner described in Section 9 hereof ) ("Fair Market Value") on the date of
exercise; or (c) by a combination of the methods described in Sections 10.4(a)
and 10.4 (b) hereof; provided, however, that the Board may in its discretion
impose and set forth in the Option Agreement pertaining to an Option such
limitations or prohibitions on the use of shares of Stock to exercise Options as
it deems appropriate. Payment in full of the Option Price need not accompany the
written notice of exercise provided the notice directs that the Stock
certificate or certificates for the shares for which the Option is exercised be
delivered to a licensed broker acceptable to the Corporation as the agent for
the individual exercising the Option and, at the time such Stock certificate or
certificates are delivered, the broker tenders to the Corporation cash (or cash
B-4
31
equivalents acceptable to the Corporation) equal to the Option Price; provided,
further, that additional shares of Stock may be withheld upon a broker-assisted
cashless exercise for the purpose of paying withholding taxes in accordance with
Section 21. An attempt to exercise any Option granted hereunder other than as
set forth above shall be invalid and of no force and effect.
Promptly after the exercise of an Option and the payment in full of the
Option Price of the shares of Stock covered thereby, the individual exercising
the Option shall be entitled to the issuance of a Stock certificate or
certificates evidencing such individual's ownership of such shares. A separate
Stock certificate or certificates shall be issued for any shares purchased
pursuant to the exercise of an Option which is an Incentive Stock Option, which
certificate or certificates shall not include any shares which were purchased
pursuant to the exercise of an Option which is not an Incentive Stock Option. An
individual holding or exercising an Option shall have none of the rights of a
stockholder until the shares of Stock covered thereby are fully paid and issued
to such individual and, except as provided in Section 20 hereof, no adjustment
shall be made for dividends or other rights for which the record date is prior
to the date of such issuance.
11. TRANSFERABILITY OF OPTIONS
No Option shall be assignable or transferable by the Optionee to whom it is
granted, other than by will or the laws of descent and distribution.
12. TRANSFERABILITY OF STOCK PURCHASED PURSUANT TO INCENTIVE STOCK OPTION
An Optionee shall be required to give notice to the Corporation if Stock
acquired pursuant to an Incentive Stock Option is sold, pledged, assigned,
transferred or otherwise disposed of by the Optionee within two years from the
date of grant of such Incentive Stock Option or within one year after the
transfer of such Stock to the Optionee; provided, however, that a transfer to a
trustee, receiver, or other fiduciary in any insolvency proceeding, as described
in Section 422(c)(3) of the Code shall not be deemed to be such a disposition.
13. TERMINATION OF EMPLOYMENT
The Board may provide, by inclusion of appropriate language in any Option
Agreement or applicable employment agreement, that an Optionee may (subject to
the general limitations on exercise set forth in Section 10.3 hereof), in the
event of termination of employment of the Optionee with the Corporation or a
Subsidiary, exercise an Option, in whole or in part, at any time subsequent to
such termination of employment and prior to termination of the Option pursuant
to Section 10.2 hereof, either subject to or without regard to any installment
limitation on exercise imposed pursuant to Section 10.3 hereof, as the Board, in
its sole and absolute discretion, shall determine and set forth in the Option
Agreement. Whether a leave of absence or leave on military or government service
shall constitute a termination of employment for purposes of the Plan shall be
determined by the Board, which determination shall be final and conclusive. For
purposes of the Plan only and unless otherwise stated in the applicable Award
Agreement, an Optionee's change in position or duties shall not result in
interrupted or terminated employment, so long as such Grantee continues to be an
employee, officer, director of, or consultant to the Corporation or a
Subsidiary.
14. RIGHTS IN THE EVENT OF DEATH OR DISABILITY
14.1. DEATH
If an Optionee dies while employed by the Corporation or a Subsidiary or
within the period following the termination of employment during which the
Option is exercisable under Section 13 or 14.2 hereof, the executors,
administrators, legatees or distributees of such Optionee's estate shall have
the right (subject to the general limitations on exercise set forth in Section
10.3 hereof), at any time within one year after the date of such Optionee's
death and prior to termination of the Option pursuant to Section 10.1 hereof, to
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32
exercise any Option held by such Optionee at the date of such Optionee's death,
to the extent such Option was exercisable immediately prior to such Optionee's
death; provided, however, that the Board may provide by inclusion of appropriate
language in any Option Agreement or applicable employment agreement that, in the
event of the death of an Optionee, the executors, administrators, legatees or
distributees of such Optionee's estate may exercise an Option (subject to the
general limitations on exercise set forth in Section 10.3 hereof), in whole or
in part, at any time subsequent to such Optionee's death and prior to
termination of the Option pursuant to Section 10.1 hereof, either subject to or
without regard to any installment limitation on exercise imposed pursuant to
Section 10.3 hereof, as the Board, in its sole and absolute discretion, shall
determine and set forth in the Option Agreement.
14.2. DISABILITY
If an Optionee terminates employment with the Corporation or a Subsidiary
by reason of the "permanent and total disability" (within the meaning of Section
22(e) (3) of the Code) of such Optionee, then such Optionee shall have the right
(subject to the general limitations on exercise set forth in Section 10.3
hereof), at any time within one year after such termination of employment and
prior to termination of the Option pursuant to Section 10.1 hereof, to exercise,
in whole or in part, any Option held by such Optionee at the date of such
termination of employment, to the extent such Option was exercisable immediately
prior to such termination of employment; provided, however, that the Board may
provide, by inclusion of appropriate language in any Option Agreement or
applicable employment agreement, that an Optionee may (subject to the general
limitations on exercise set forth in Section 10.3 hereof), in the event of the
termination of employment of the Optionee with the Corporation or a Subsidiary
by reason of the "permanent and total disability" (within the meaning of Section
22(e)(3) of the Code) of such Optionee, exercise an Option, in whole or in part,
at any time subsequent to such termination of employment and prior to
termination of the Option pursuant to Section 10.1 hereof, either subject to or
without regard to any installment limitation on exercise imposed pursuant to
Section 10.3 hereof, as the Board, in its sole and absolute discretion, shall
determine and set forth in the Option Agreement. Whether a termination of
employment is to be considered by reason of "permanent and total disability" for
purposes of the Plan shall be determined by the Board, which determination shall
be final and conclusive.
15. RESTRICTED STOCK
15.1. GRANT OF RESTRICTED STOCK
The Board may from time to time grant shares of Stock subject to
restrictions ("Restricted Stock") to persons eligible to receive Awards under
Section 4 hereof ("Grantees"), subject to such restrictions, conditions and
other terms, if any, as the Board may determine. Awards of Restricted Stock may
be made for no consideration (other than par value of the shares which is deemed
paid by services already rendered).
15.2. RESTRICTIONS.
At the time a grant of Restricted Stock is made, the Board may, in its sole
discretion, establish a period of time (a "restricted period") applicable to
such Restricted Stock. Each Award of Restricted Stock may be subject to a
different restricted period. The Board may, in its sole discretion, at the time
a grant of Restricted Stock is made, prescribe restrictions in addition to or
other than the expiration of the restricted period, including the satisfaction
of corporate or individual performance objectives. Restricted Stock may not be
sold, transferred, assigned, pledged or otherwise encumbered or disposed of
during the restricted period or prior to the satisfaction of any other
restrictions prescribed by the Board with respect to such Restricted Stock.
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15.3. RESTRICTED STOCK CERTIFICATES.
The Corporation shall issue, in the name of each Grantee to whom Restricted
Stock has been granted, stock certificates representing the total number of
shares of Restricted Stock granted to the Grantee, as soon as reasonably
practicable after the Grant Date. The Board may provide in an Award Agreement
that either (i) the Secretary of the Corporation shall hold such certificates
for the Grantee's benefit until such time as the Restricted Stock is forfeited
to the Corporation or the restrictions lapse, or (ii) such certificates shall be
delivered to the Grantee, provided, however, that such certificates shall bear a
legend or legends that comply with the applicable securities laws and
regulations and makes appropriate reference to the restrictions imposed under
the Plan and the Award Agreement.
15.4. RIGHTS OF HOLDERS OF RESTRICTED STOCK.
Unless the Board otherwise provides in an Award Agreement, holders of
Restricted Stock shall have the right to vote such Stock and the right to
receive any dividends declared or paid with respect to such Stock. The Board may
provide that any dividends paid on Restricted Stock must be reinvested in shares
of Stock, which may or may not be subject to the same vesting conditions and
restrictions applicable to such Restricted Stock. All distributions, if any,
received by a Grantee with respect to Restricted Stock as a result of any stock
split, stock dividend, combination of shares, or other similar transaction shall
be subject to the restrictions applicable to the original Grant.
15.5. TERMINATION OF EMPLOYMENT.
Unless the Board otherwise provides in an Award Agreement, in applicable
employment agreement, or in writing after the Award Agreement is issued, upon
the termination of a Grantee's employment with the Corporation or a Subsidiary,
any shares Restricted Stock held by such Grantee that have not vested, or with
respect to which all applicable restrictions and conditions have not lapsed,
shall immediately be deemed forfeited. Upon forfeiture of Restricted Stock, the
Grantee shall have no further rights with respect to such Award, including but
not limited to any right to vote Restricted Stock or any right to receive
dividends with respect to shares of Restricted Stock.
15.6. PURCHASE OF RESTRICTED STOCK.
The Grantee shall be required, to the extent required by applicable law, to
purchase the Restricted Stock from the Corporation at a purchase price equal to
the greater of (i) the aggregate par value of the shares of Stock represented by
such Restricted Stock or (ii) the purchase price, if any, specified in the Award
Agreement relating to such Restricted Stock.
15.7. DELIVERY OF STOCK.
Upon the expiration or termination of any restricted period and the
satisfaction of any other conditions prescribed by the Board, the restrictions
applicable to shares of Restricted Stock, and, unless otherwise provided in the
Award Agreement, a stock certificate for such shares shall be delivered, free of
all such restrictions, to the Grantee or the Grantee's beneficiary or estate, as
the case may be.
16. USE OF PROCEEDS
The proceeds received by the Corporation from the sale of Stock pursuant to
Options or Restricted Stock granted under the Plan shall constitute general
funds of the Corporation.
17. SECURITIES LAWS
The Corporation shall not be required to sell or issue any shares of Stock
under any Award if the sale or issuance of such shares would constitute a
violation by the individual exercising the Award or by the Corporation of any
provisions of any law or regulation of any governmental authority, including,
without limitation, any federal or state securities laws or regulations. If at
any time the Corporation shall
B-7
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determine, in its discretion, that the listing, registration or qualification of
any shares subject to the Award upon any securities exchange or under any state
or federal law, or the consent of any government regulatory body, is necessary
or desirable as a condition of, or in connection with, the issuance or purchase
of shares, the Award may not be exercised in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Corporation,
and any delay caused thereby shall in no way affect the date of termination of
the Award. Specifically in connection with the Securities Act of 1933, as
amended (the "Securities Act"), upon exercise of any Award or the lapse of
restrictions of any Award, unless a registration statement under the Securities
Act is in effect with respect to the shares of Stock covered by such Award, the
Corporation shall not be required to sell or issue such shares unless the
Corporation has received evidence satisfactory to the Corporation that the
Optionee may acquire such shares pursuant to an exemption from registration
under the Securities Act. Any determination in this connection by the
Corporation shall be final and conclusive. The Corporation may, but shall in no
event be obligated to, register any securities covered hereby pursuant to the
Securities Act. The Corporation shall not be obligated to take any affirmative
action in order to cause the exercise of an Award or the issuance of shares
pursuant to an Award to comply with any law or regulation of any governmental
authority. As to any jurisdiction that expressly imposes the requirement that an
Option shall not be exercisable unless and until the shares of Stock covered by
such Option are registered or are subject to an available exemption from
registration, the exercise of such Option (under circumstances in which the laws
of such jurisdiction apply) shall be deemed conditioned upon the effectiveness
of such registration or the availability of such an exemption.
18. EXCHANGE ACT: RULE 16b-3
During any time when the Corporation has a class of equity security
registered under Section 12 of the Securities Exchange Act of 1934 it is the
intent of the Company that Awards pursuant to the Plan and the exercise of
Options granted hereunder will qualify for the exemption provided by Rule 16b-3
under the Exchange Act. To the extent that any provision of the Plan or action
by the Board does not comply with the requirements of Rule 16b-3, it shall be
deemed inoperative to the extent permitted by law and deemed advisable by the
Board, and shall not affect the validity of the Plan. In the event that Rule
16b-3 is revised or replaced, the Board may exercise its discretion to modify
this Plan in any respect necessary to satisfy the requirements of, or to take
advantage of any features of, the revised exemption or its replacement.
19. AMENDMENT AND TERMINATION
The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Awards have not been
granted. The Corporation also may retain the right in an Award Agreement to
cause a forfeiture of the shares or gain realized by an Optionee or Grantee on
account of the Optionee taking actions in "competition with the Corporation," as
defined in the applicable Award Agreement. Furthermore, the Corporation may, in
the Award Agreement, retain the right to annul the grant of an Option if the
holder of such grant was an employee of the Corporation or a Subsidiary and is
terminated "for cause," as defined in the applicable Award Agreement. Except as
permitted under Section 20 hereof, no amendment, suspension or termination of
the Plan shall, without the consent of the Optionee or Grantee, alter or impair
rights or obligations under any Award theretofore granted under the Plan.
20. EFFECT OF CHANGES IN CAPITALIZATION
20.1. CHANGES IN STOCK
If the number of outstanding shares of Stock is increased or decreased or
changed into or exchanged for a different number or kind of shares or other
securities of the Corporation by reason of any recapitalization,
reclassification, stock split-up, combination of shares, exchange of shares,
stock dividend or other distribution payable in capital stock, or other increase
or decrease in such shares effected without receipt of consideration by the
Corporation, occurring after the effective date of the Plan, a proportionate
B-8
35
and appropriate adjustment shall be made by the Corporation in the number and
kind of shares for which Awards are outstanding, so that the proportionate
interest of the Optionee or Grantee immediately following such event shall, to
the extent practicable, be the same as immediately prior to such event. Any such
adjustment in outstanding Options shall not change the aggregate Option Price
payable with respect to shares subject to the unexercised portion of the Option
outstanding but shall include a corresponding proportionate adjustment in the
Option Price per share.
20.2. REORGANIZATION WITH CORPORATION SURVIVING
Subject to Section 20.3 hereof, if the Corporation shall be the surviving
corporation in any reorganization, merger or consolidation of the Corporation
with one or more other corporations, any Award theretofore granted pursuant to
the Plan shall pertain to and apply to the securities to which a holder of the
number of shares of Stock subject to such Award would have been entitled
immediately following such reorganization, merger or consolidation, with a
corresponding proportionate adjustment of the Option Price per share so that the
aggregate Option Price thereafter shall be the same as the aggregate Option
Price of the shares remaining subject to the Option immediately prior to such
reorganization, merger or consolidation.
20.3. OTHER REORGANIZATIONS; SALE OF ASSETS OR STOCK
Upon the dissolution or liquidation of the Corporation, or upon a merger,
consolidation or reorganization of the Corporation with one or more other
corporations in which the Corporation is not the surviving corporation, or upon
a sale of substantially all of the assets of the Corporation to another
corporation, or upon any transaction (including, without limitation, a merger or
reorganization in which the Corporation is the surviving corporation) approved
by the Board that results in any person or entity (other than persons who are
holders of stock of the Corporation at the time the Plan is approved by the
Stockholders and other than an Affiliate) owning 80 percent or more of the
combined voting power of all classes of stock of the Corporation, the Plan and
all Options outstanding hereunder shall terminate, except to the extent
provision is made in connection with such transaction for the assumption of the
Options theretofore granted, or for the substitution for such Options of new
options covering the stock of a successor corporation, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kinds of shares and
exercise prices, in which event the Plan and Options theretofore granted shall
continue in the manner and under the terms so provided.
In the event of any such termination of the Plan, each Optionee shall have
the right (subject to the general limitations on exercise set forth in Section
10.3 hereof and except as otherwise specifically provided in the Option
Agreement relating to such Option), immediately prior to the occurrence of such
termination and during such period occurring prior to such termination as the
Board in its sole discretion shall designate, to exercise such Option in whole
or in part, whether or not such Option was otherwise exercisable at the time
such termination occurs, but subject to any additional limitations that the
Board may, in its sole discretion, include in any Option Agreement. The Board
shall send written notice of an event that will result in such a termination to
all Optionees not later than the time at which the Corporation gives notice
thereof to its stockholders. Unless otherwise provided in the applicable
Restricted Stock Agreement, all restrictions applicable to Awards of Restricted
Stock shall lapse immediately prior to the occurrence of an event described in
the first paragraph of this Section 20.3.
20.4. ADJUSTMENTS
Adjustments under this Section 20 relating to stock or securities of the
Corporation shall be made by the Board, whose determination in that respect
shall be final and conclusive. No fractional shares of Stock or units of other
securities shall be issued pursuant to any such adjustment, and any fractions
resulting from any such adjustment shall be eliminated in each case by rounding
downward to the nearest whole share or unit.
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36
20.5. NO LIMITATIONS ON CORPORATION
The grant of an Award pursuant to the Plan shall not affect or limit in any
way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.
21. WITHHOLDING
The Corporation shall have the right to withhold, or require an Optionee or
Grantee to remit to the Corporation, an amount sufficient to satisfy any
applicable federal, state or local withholding tax requirements imposed with
respect to exercise of Options or lapse of restrictions or other taxable event
with respect to Restricted Stock. To the extent permissible under applicable
tax, securities and other laws and authorized by the Corporation in the Award
Agreement or at the time of such payment, the Optionee or Grantee may satisfy a
tax withholding requirement by directing the Corporation to apply shares of
Stock to which the Optionee or Grantee is entitled as a result of the exercise
of an Option or grant of Restricted Stock to satisfy withholding requirements
under this Section 21.
22. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Award granted or Award Agreement entered
into pursuant to the Plan shall be construed to confer upon any individual the
right to remain in the employ of the Corporation or any Subsidiary, or to
interfere in any way with the right and authority of the Corporation or any
Subsidiary either to increase or decrease the compensation of any individual at
any time, or to terminate any employment or other relationship between any
individual and the Corporation or any Subsidiary. The obligation of the
Corporation to pay any benefits pursuant to the Plan shall be interpreted as a
contractual obligation to pay only those amounts described herein, in the manner
and under the conditions prescribed herein. The Plan shall in no way be
interpreted to require the Corporation to transfer any amounts to a third party
trustee or otherwise hold any amounts in trust or escrow for payment to any
participant or beneficiary under the terms of the Plan.
23. NONEXCLUSIVITY
Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of the Corporation for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of stock options or restricted stock
otherwise than under the Plan.
* * *
The Plan was duly adopted and approved by the Board on July 24, 1996 and
was duly approved by the stockholders of the Corporation on July 24, 1996. On
March 16, 2001, the Board and stockholders of the Corporation approved an
amendment to the Plan increasing the maximum number of shares of Common Stock
that may be issued pursuant to awards granted under the Plan to 2,500,000. The
Plan was further amended by the Board on April 23, 2001, and approved by the
stockholders of the Corporation on May 16, 2001.
B-10
37
[x] PLEASE MARK YOUR __ |
VOTES AS IN THIS | |
EXAMPLE | |
|______
NOMINEES: Nominees: Robert S. Silberman,
1. PROPOSAL 1: FOR AGAINST FOR ALL* Todd A. Milano, Dr. Jennie D. Seaton,
Election of Six Roland Carey, G. Thomas Waite, III,
Directors by all [ ] [ ] [ ] and Dr. Charlotte Beason
Common
Stockholders:
*(except nominees written below)
- ------------------------------------
FOR AGAINST ABSTAIN
Proposal 2. Approval of the 1996 Stock [ ] [ ] [ ]
Option Plan, as amended:
Proposal 3. Proposal to ratify the appointment [ ] [ ] [ ]
of PriceWaterhouseCoopers as
independent public accountants
for the Corporation.
The proxies are authorized to vote in their discretion on any other matters that
properly may come before the Annual Meeting to the extent set forth in the proxy
statement.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER. HOWEVER, IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF DIRECTORS, FOR THE APPROVAL OF THE 1996 STOCK OPTION
PLAN, AS AMENDED, FOR THE RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS AS THE CORPORATION'S INDEPENDENT PUBLIC ACCOUNTANTS, AND
IN THE BEST DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTERS.
The undersigned hereby acknowledges prior receipt of a copy of the Notice of
Annual Meeting of Stockholders and proxy statement dated April 27, 2001, and
hereby revokes any proxy or proxies heretofore given. This Proxy may be revoked
at any time before it is voted by delivering to the Secretary of the Corporation
either a written revocation of proxy or a duly executed proxy bearing a later
date, or by appearing at the Annual Meeting and voting in person.
If you receive more than one proxy card, please sign and return all cards in the
accompanying envelope.
[ ] I PLAN TO ATTEND THE MAY 21, 2001 ANNUAL STOCKHOLDERS MEETING
___________________________________________________________ DATE ______, 2001
Signature of Stockholder or Authorized Representative
NOTE: Please date and sign exactly as name appears hereon. Each executor,
administrator, trustee, guardian, attorney-in-fact and other fiduciary should
sign and indicate his or her full title. In the case of stock ownership in the
name of two or more persons, both persons should sign.
38
REVOCABLE PROXY
STRAYER EDUCATION, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 2001
The undersigned stockholder hereby appoints Robert S. Silberman, Scott W.
Steffey and Harry T. Wilkins, or any of them, attorneys and proxies of the
undersigned, with full power of substitution and with authority in each of them
to act in the absence of the other, to vote and act for the undersigned at the
Annual Meeting of Stockholders of the Corporation to be held on Monday, May 21,
2001 at 10:00 a.m. (Eastern time) at the Sheraton National Hotel, in Arlington,
Virginia, and at any adjournments thereof, in respect of all shares of the
Common Stock of the Corporation which the undersigned may be entitled to vote,
on the following matters:
PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY TO ENSURE A QUORUM
AT THE MEETING. IT IS IMPORTANT WHETHER YOU OWN FEW OR MANY SHARES. DELAY IN
RETURNING YOUR PROXY MAY SUBJECT THE CORPORATION TO ADDITIONAL EXPENSE.
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
(CONTINUED AND TO BE DATED AND SIGNED ON REVERSE SIDE.)
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SEE REVERSE
SIDE
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