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DEF 14C
APOLLO EDUCATION GROUP INC filed this Form DEF 14C on 12/29/2014
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our compensation structure. The Compensation Committee also obtains legal advice regarding executive compensation matters from its independent outside legal counsel.
The Compensation Committee periodically seeks input from our Chief Executive Officer and other senior executive officers with respect to certain items of compensation, including their recommendations regarding the parameters of the annual variable cash bonus program, the bonus amounts to be paid under that program and their proposals regarding long-term equity incentive awards. The information provided to the Compensation Committee also includes tally sheets for each named executive officer detailing:
The components of the named executive officer’s compensation for the current and two prior fiscal years, including cash compensation, equity-based compensation, 401(k) company match contributions and perquisites; and
Potential payouts under the termination of employment and change of control provisions of our Executive Officer Severance Pay Plan, the named executive officer’s applicable equity compensation plans, and, if applicable, the named executive officer’s employment agreement.
The tally sheets bring together in one place all of the elements of actual and potential future compensation of the named executive officers. This allows the Compensation Committee to analyze both the individual elements of compensation (including the compensation mix) and the aggregate total amount of actual and projected compensation.
All final decisions regarding executive officer compensation are made solely by the Compensation Committee and are based on a number of factors, including its independent evaluation of management proposals, its own internal deliberations and the input provided by its independent compensation consultant.
Interaction with Compensation Consultants
Since fiscal year 2006, the Compensation Committee has retained the services of Pearl Meyer as its independent compensation consultant to assist with its periodic review of existing compensation programs for our executive officers and the formulation and implementation of new executive compensation arrangements. In addition, Pearl Meyer has assisted the Compensation Committee with related projects, such as establishing equity retention guidelines for the executive officers and non-employee directors, evaluating non-employee director compensation levels and providing advice and relevant market data with respect to the design of various cash and equity-based executive compensation programs.
The Compensation Committee retains Pearl Meyer directly, although in carrying out its assignments, Pearl Meyer may also interact with our management to the extent necessary and appropriate. Pearl Meyer has not been retained to perform any consulting or advisory services for our management.
COMPENSATION PROCESS
Benchmarking and Pay Levels
We begin our process of deciding how to compensate our named executive officers by considering the competitive market data provided by our independent compensation consultant, Pearl Meyer, and the Company’s executive compensation team.
In order to determine competitive compensation practices, the Compensation Committee relies on compensation data provided by Pearl Meyer. The data is derived principally from surveys of compensation practices of comparable companies, including general survey data compiled and presented by Pearl Meyer and additional data developed by Pearl Meyer from public filings of selected companies that the Compensation Committee considers appropriate comparators for the purposes of developing executive compensation benchmarks. With advice and recommendations from Pearl Meyer, we conduct an annual review of our comparator companies and the criteria used for selection of those comparator companies to determine whether any changes to those comparators are appropriate. We generally target cash compensation with reference to the median of comparator companies and total direct compensation with reference to the 75th percentile of comparator companies. When necessary, additional market data is used to supplement comparator company data.
In April 2013, with the assistance of Pearl Meyer, the Compensation Committee reviewed and revised the approach used to select new companies for inclusion as comparators used to benchmark fiscal year 2014 compensation (“2014 Comparators”). Pearl Meyer recommended that we revise the selection criteria to narrow both the market capitalization and price-to-sales ratio in order to better reflect the Company’s then-current state. The 2014 Comparators’ financial criteria consisted of the following financial criteria: (i) market capitalization in the range of $1 billion to $6.5 billion, (ii) price-to-sales ratio in the range of 0.25 to 1.0, (iii) annual revenue in the range of $2 billion to $10 billion, and (iv) meeting at least one of the following criteria: (a) an average return on equity for the past five years greater than 19%, (b) an average return on invested capital for the past five years greater than 10% or (c) average free cash flow over the past five years in the range of $350 million to $2 billion.

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