UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of
1934
Date of Report (Date of Earliest Event Reported): November 22, 2011
Apollo Group, Inc.
(Exact name of registrant as specified in its charter)
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Arizona
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0-25232
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86-0419443
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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4025 S. Riverpoint Parkway, Phoenix,
Arizona
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85040
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(Address of principal executive offices)
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(Zip Code)
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Registrants telephone number, including area code: (480) 966-5394
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Section 5 Corporate Governance and Management
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
(e) Material Compensatory Plan, Contract or Arrangement.
Approval of 2012 Fiscal Year Executive Officer Bonus Plan.
On November 22, 2011, the Compensation Committee (the
Compensation Committee) of the Board of Directors of Apollo Group, Inc. (the Company) approved the terms of the 2012 fiscal year bonus plan under the Companys Executive Officer Incentive Performance Bonus Plan (the
2012 Plan). The key features of the 2012 Plan may be summarized as follows:
Participants.
All of the
Companys executive officers will be eligible to participate in the 2012 Plan, including the following individuals, who are the named executive officers in the Companys Shareholders Information Statement dated December 21, 2010 and
filed on Schedule 14C with the Securities and Exchange Commission on December 21, 2010:
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Name
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Position
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Dr. John G. Sperling
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Executive Chairman of the Board
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Charles B. Edelstein
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Co-Chief Executive Officer
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Gregory W. Cappelli
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Co-Chief Executive Officer
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Joseph L. DAmico
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President and Chief Operating Officer
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Brian L. Swartz
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Senior Vice President and Chief Financial Officer
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Dr. William J. Pepicello
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President, University of Phoenix
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For Dr. Sperling and Messrs. Edelstein, Cappelli and DAmico, the target bonus opportunity was
set at 100% of their annual base salary, and for Mr. Swartz and Dr. Pepicello, the target bonus was set at 75%. Annual base salary will be weighted to reflect any salary adjustments effected during the 2012 fiscal year, but in no event
will the bonus amount paid to any participant exceed Five Million Dollars ($5,000,0000).
Performance Goals
. The
Compensation Committee established five separate performance goals under the 2012 Plan.
The first goal, weighted sixty percent (60%) for purposes of determining the
potential cash bonus amount for each participant, is tied to the Companys operating income for the 2012 fiscal year. The Companys operating income will be determined in accordance with accounting principles generally accepted in the
United States (GAAP) on a consolidated basis but will be subject to certain pre-established exclusions and adjustments approved by the Compensation Committee for such fiscal year. The following levels of threshold, target and maximum
attainment of the operating income performance goal for the 2012 fiscal year have been set by the Compensation Committee.
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Threshold
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Target
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Maximum
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$661 Million
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$764 Million
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$882 Million
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The second performance goal,
weighted ten percent (10%), is tied to the Companys net revenue for the 2012 fiscal year. The Companys revenue will be determined in accordance with GAAP on a consolidated basis but will be subject to certain pre-established exclusions
and adjustments approved by the Compensation Committee for such fiscal year. The following levels of threshold, target and maximum attainment of the net revenue performance goal for the 2012 fiscal year have been set by the Compensation Committee:
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Threshold
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Target
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Maximum
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$4.2 Billion
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$4.3 Billion
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$4.4 Billion
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Note that the threshold, target and maximum levels of operating income and revenue stated above are
applicable solely for purposes of determining the potential bonus amounts payable per 2012 plan participant. The goals at those specified levels are subject to certain non-GAAP adjustments and add-backs, including an add-back of the amounts paid
under the 2012 plan as well as any profit sharing distribution made to the Companys employees for the 2012 fiscal year, that will not be taken into account in the calculation of the Companys revenue and operating income for the 2012
fiscal year that will be reportable in the Companys financial statements for that year. In addition, certain levels represent stretch goals intended to provide an incentive for plan participants to achieve a more challenging level
of financial performance in order to qualify for the maximum bonus amount payable under the 2012 plan. For the foregoing reasons, the levels set under the 2012 plan are not intended to serve as guidance to the market as to the Companys
expected levels of revenue and operating income for the 2012 fiscal year, nor are they intended in any way to modify or alter the existing outlook the Company has provided the market with respect to projected financial results for the 2012 fiscal
year.
The third performance goal, weighted ten percent (10%), will be
measured in terms of independently-conducted surveys of University of Phoenix (UOPX) students addressing a particular measure of student satisfaction. Actual goal attainment will be assessed in terms of the percentage of responding UOPX
students who score the measured item favorably, as averaged on the basis of the responses submitted in each of the quarterly surveys conducted over the last three fiscal quarters of the 2012 fiscal year. The Compensation Committee has set specific
percentages, as averaged over the three surveyed fiscal quarters, for purposes of measuring performance goal attainment at threshold, target and maximum levels.
The fourth performance goal, weighted ten percent (10%), will be measured in terms of independently-conducted surveys, one addressing three particular
measures of UOPX faculty engagement at the University and the other addressing three particular measurers of Company-wide employee engagement. Actual goal attainment will be assessed in terms of the average of (i) the aggregated percentage of
responding UOPX faculty members who score the three measured items favorably and (ii) the aggregated percentage of responding Company employees who score their three measured items favorably. The aggregated percentage of favorable responses
received for the three measured items in the faculty engagement survey will be added to the aggregated percentage of favorable responses received for the three measured items in the employee engagement survey, and the combined aggregated percentages
will then be divided by two to determine the average aggregated percentage of such favorable responses. The Compensation Committee has set specific threshold, target and maximum levels for such average aggregated percentage.
The fifth and final performance goal, weighted ten percent (10%), will be measured
in terms of the improvement made by the individual UOPX campuses in (i) responding to student concerns on a timely basis at the campus point of origin and (ii) responding on a timely basis to external agents or agencies addressing
individual student concerns and complaints. Specific levels of attainment have been set for threshold, target and maximum levels.
Potential Cash Incentive Payment.
The potential cash incentive payable to each participant will be based on the actual attained level of each performance goal. Accordingly, the percentage of the
target bonus amount assigned to each performance goal will be multiplied by the applicable factor (ranging from 0.5 at threshold to 2.0 at maximum level attainment). Should a performance goal be attained at a level between threshold and target or
between target and maximum, then the applicable factor for the calculation of the potential cash bonus amount attributable to that performance goal shall be interpolated between those two levels on a straight linear basis.
Actual Cash Incentive Payment.
The cash bonus amount calculated for each participant on the basis of the attained levels of the
five performance goals may be reduced by the Compensation Committee by up to thirty percent (30%) in the event the Committee determine that such a reduction is warranted based on its overall assessment of company and individual performance.
The actual bonus attributable to the attainment of the 2012 fiscal year performance goals
will be paid to each participant who continues in the Companys employ through the end of the 2012 fiscal year. In addition, pro-rated bonuses will be paid to participants who do not complete the applicable service requirement by reason of
death or disability.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Apollo Group, Inc.
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November 28, 2011
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By:
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/s/ Brian L. Swartz
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Name: Brian L. Swartz
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Title: Senior Vice President and Chief Financial Officer
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