V. FISCAL YEAR 2013 COMPENSATION DECISIONS
Set forth below are the primary components of annual total direct compensation. We also made retention awards during fiscal year 2013 that are discussed in the Executive Summary.
The named executive officers recommended to the Compensation Committee, who concurred, to forego any increase in base salary level for the 2013 fiscal year, except that Mr. Sperling’s annual base salary was increased from $100,000 to $700,000 commensurate with his appointment to Chairman of the Board effective December 31, 2012 and Ms. Bishop’s annual base salary was increased from $390,000 to $420,000 commensurate with her appointment to Vice Chairman of the Board.
The following chart lists the named executive officers who have employment agreements, the minimum level of annual base salary (if any) required under those agreements and their base salary levels for the 2013 fiscal year:
No Stated Minimum
Dr. Sperling did not receive a salary increase for the 2013 fiscal year. He retired effective December 31, 2012 and has not been receiving any base salary since that time.
Pursuant to the terms of his September 2012 letter agreement, Mr. Cappelli agreed to waive the automatic base salary increase from $700,000 to $750,000 for the period from September 1, 2012 to August 31, 2013, provided for by his April 2011 employment agreement.
Mr. D’Amico did not receive a salary increase for the 2013 fiscal year.
Annual Cash Incentive Plan
The potential cash incentives under our executive officer cash incentive plan for the 2013 fiscal year were tied to the Company’s attainment of certain financial and non-financial performance targets that were established for such year. The financial metrics were tied to operating income for the 2013 fiscal year (weighted at 50% of the total bonus potential) and net revenue for such year (weighted at 30%). An additional non-financial performance metric, weighted at 20% of the total bonus potential, was tied to employee productivity, as measured in terms of the relationship between employee headcount and the number of students enrolled in degree programs at the University of Phoenix.
For each financial and non-financial performance goal, we established a threshold, target and maximum performance level with the payouts for attainment of each target determined in accordance with the following schedule:
Level of Attainment for the Particular Performance Goal
Payout Percentage for that Particular Performance Goal
The conversion factor for any percentage between threshold level and target level or between target level and maximum level is interpolated on a straight-line basis between the two applicable levels.