The table below illustrates each named executive officer’s percentage of Realizable Compensation over the three fiscal year period ending with our 2013 fiscal year compared to his or her target total direct compensation (salary, target bonus and grant-date value of long-term equity incentive awards) over that period.
Target Total Direct Compensation
(Excluding Retention Grants)
Total Realizable Compensation
(Including 2011 RSU Retention Grants)
Total Realizable Compensation as a Percentage of Target Total Direct Compensation
Dr. Sperling’s special retirement bonus (discussed below) was also excluded from this analysis.
During the 2013 fiscal year, there were a number of factors that created significant concerns regarding the retention of our executive officers and other key leaders, including the following: (i) the significant drop in the stock price significantly eroded the intended retentive value of compensation delivered in prior fiscal years, (ii) the regulatory and macroeconomic environment resulted in uncertainty and challenges for the for-profit education industry, and (iii) the changes in leadership occasioned by Dr. Sperling’s decision to retire effective December 31, 2012. In order to help ensure the stability and retention of our leadership team as we faced these challenges, we undertook the following actions:
November 2012 Cash Retention Awards. In November 2012, the Compensation Committee approved special service-vesting cash retention awards for certain of the Company’s executive officers and other key individuals, including the following named executive officers:
Cash Retention Award Amount
These awards vest in two (2) successive equal installments on September 15, 2013 and September 15, 2014, upon the individual’s continued employment through each particular vesting date.
Retention Stock Option Award for Mr. Cappelli. In December 2012, the Compensation Committee approved a special retention stock option grant for Mr. Cappelli. This grant became effective on March 14, 2013 with a grant date award value of $2,891,400 and resulted in an option to purchase 600,000 shares with a term of four years.
March 2013 Cash Retention Awards. In March 2013, the Compensation Committee approved additional special service-vesting cash retention awards for the Company’s executive leadership team as well as a larger group of other key individuals, including the following named executive officers:
Cash Retention Award Amount
These awards vest in three (3) successive equal installments on March 29, 2014, March 29, 2015 and March 29, 2016, upon the individual’s continued employment through each particular vesting date. The first installment was paid in April 2013, but is subject to a repayment obligation if the executive voluntarily terminates employment or is terminated for cause prior to the March 29, 2014 vesting date for such installment.