DEF 14A 1 a2017proxystatement.htm DEF 14A Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.______)
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Filed by a Party other than the Registrant  o
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x
Definitive Proxy Statement
o
Definitive Additional Materials
o
Soliciting Material under §240.14a-12
Bridgepoint Education, Inc.
(Name of Registrant as Specified In Its Charter)


(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
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bpinewlogo1a02a02.jpg
8620 Spectrum Center Blvd.
San Diego, California 92123

NOTICE OF 2017 ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Bridgepoint Education, Inc.:
Notice is hereby given that the 2017 Annual Meeting of Stockholders (the “Annual Meeting”) of Bridgepoint Education, Inc., a Delaware corporation, will be held on Wednesday, May 10, 2017 at 9:00 a.m., Pacific Time, for the following purposes:
1.
To elect two Class II directors, Dale Crandall and Ryan Craig, for a three-year term to expire at the 2020 Annual Meeting of Stockholders;
2.
To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2017;
3.
To approve the amendment and restatement of the Bridgepoint Education, Inc. 2009 Stock Incentive Plan;
4.
To approve on an advisory, non-binding basis the compensation of our named executive officers as presented in the proxy statement accompanying this notice;
5.
To approve on an advisory, non-binding basis the frequency of the stockholder advisory vote on executive compensation; and
6.
To transact such other business as may be properly brought before the Annual Meeting or any adjournment thereof.
The Annual Meeting will be a completely virtual meeting of stockholders. To participate, vote or submit questions during the Annual Meeting via live webcast, please visit www.virtualshareholdermeeting.com/BPI2017. You will not be able to attend the Annual Meeting in person.
We have also elected to provide access to our proxy materials over the Internet under the Securities and Exchange Commission's “notice and access” rules. We believe these rules allow us to provide you with the information you need while reducing our delivery costs and the environmental impact of the Annual Meeting. Our Board of Directors has fixed the close of business on March 15, 2017 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting and at any adjournment or postponement thereof. Our proxy materials were first sent or given on March 29, 2017 to all stockholders as of the record date.
Whether or not you expect to attend the Annual Meeting via live webcast, please vote at your earliest convenience. You may vote over the Internet, by telephone or, if you request to receive printed proxy materials, by mailing a proxy or voting instruction card. You may also vote your shares during the Annual Meeting. Submitting your proxy in advance of the Annual Meeting will not prevent you from voting your shares during the Annual Meeting, as your proxy is revocable at your option as described in the proxy statement accompanying this notice. Please review the instructions regarding each of your voting options described in the proxy statement, as well as in the Notice of Internet Availability of Proxy Materials or proxy card you received by mail.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The accompanying proxy statement and our Annual Report on Form 10-K for the year ended December 31, 2016 are available to view and download at http://materials.proxyvote.com/10807M. We also encourage you to review our 2016 Annual Report available on our website at http://bpiannualreport2016.com/.
By Order of the Board of Directors,
 
/s/ Diane L. Thompson
Diane L. Thompson
Executive Vice President, Secretary and General Counsel
San Diego, California
March 29, 2017




BRIDGEPOINT EDUCATION, INC.

Table of Contents





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8620 Spectrum Center Blvd.
San Diego, California 92123

2017 PROXY STATEMENT

General Information
The Board of Directors (the “Board”) of Bridgepoint Education, Inc., a Delaware corporation (“Bridgepoint,” “the company,” “we,” “us” or “our”), has made these proxy materials available to you on the Internet or, upon your request, has delivered these proxy materials to you in connection with the solicitation of proxies for use at the 2017 Annual Meeting of Stockholders (the “Annual Meeting”). The Annual Meeting will be held live via Internet webcast on Wednesday, May 10, 2017 at 9:00 a.m., Pacific Time, or at any adjournment or postponement thereof, for the purposes stated herein. These proxy materials were first sent or given on March 29, 2017 to all stockholders as of the record date.
Internet Availability of Proxy Materials
Under rules adopted by the Securities and Exchange Commission (the “SEC”), we may furnish proxy materials, including this proxy statement and our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on March 7, 2017, to our stockholders by providing access to such documents on the Internet instead of mailing printed copies. Most of you will not receive printed copies of the proxy materials unless you request them. Instead, the Notice of Internet Availability of Proxy Materials (the “Notice”), which was mailed to most of you, will instruct you as to how you may access and review all of the proxy materials on the Internet. The Notice also instructs you as to how you may submit your proxy on the Internet. If you would like to receive printed copies of our proxy materials by mail, please follow the instructions in the Notice for requesting such materials. If you request printed copies of the proxy materials by mail, the materials you receive will include the proxy card or voting instruction form for the Annual Meeting. The proxy materials are available to view and download at http://materials.proxyvote.com/10807M. We also encourage you to review our 2016 Annual Report available on our website at http://bpiannualreport2016.com/.
Participating in the Annual Meeting
We will host the Annual Meeting live via Internet webcast. You will not be able to attend the Annual Meeting in person. A summary of the information you need in order to attend the Annual Meeting online is provided below:
Any stockholder may listen to the Annual Meeting and participate live via the Internet at www.virtualshareholdermeeting.com/BPI2017. The live Internet webcast will begin on May 10, 2017 at 9:00 a.m., Pacific Time.
Stockholders may vote and submit questions during the Annual Meeting live via the Internet.
To enter the meeting, please have your 16-digit control number, which is available on the Notice or, if you received a printed copy of the proxy materials, your proxy card. If you do not have your 16-digit control number, you will be able to listen to the meeting only. You will not be able to vote or submit questions during the meeting.
Instructions regarding how to connect and participate live via the Internet, including how to demonstrate proof of stock ownership, are posted at www.virtualshareholdermeeting.com/BPI2017.
Voting Rights and Outstanding Shares
Only stockholders that owned our common stock at the close of business on March 15, 2017, the record date for the Annual Meeting, are entitled to notice of, and to vote at, the Annual Meeting. On the record date, 28,446,167 shares of our common stock were outstanding. Each share of our common stock that you own entitles you to one vote on each matter to be voted upon at the Annual Meeting. We will have a quorum to conduct the business of the Annual Meeting if the holders of a majority of the outstanding shares of our common stock entitled to vote are present, in person or by proxy. Abstentions and broker non-votes (i.e., shares of common stock held by a broker, bank or other agent that are represented at the meeting, but


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which the broker, bank or other agent is not empowered to vote on a particular proposal) will be counted for purposes of determining whether a quorum is present at the Annual Meeting.
Proposals for the Annual Meeting
There are five proposals scheduled to be voted on at the Annual Meeting:
Elect two Class II directors, Dale Crandall and Ryan Craig, for a three-year term to expire at the 2020 Annual Meeting of Stockholders.
Ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2017.
Approve the amendment and restatement of the Bridgepoint Education, Inc. 2009 Stock Incentive Plan (the “2009 Plan”).
Approve on an advisory, non-binding basis the compensation of our named executive officers as presented in this proxy statement.
Approve on an advisory, non-binding basis the frequency of the stockholder advisory vote on executive compensation.
Voting Requirements to Approve Each Proposal
Proposal 1 - Election of Class II Directors. Directors are elected by a plurality of the votes present in person or represented by proxy and entitled to vote at a meeting at which a quorum is present. If a quorum is present, the two nominees for Class II director receiving the highest number of votes will be elected as Class II directors. Abstentions and broker non-votes will have no effect on the outcome of the vote. There is no cumulative voting for the election of Class II directors.
Proposal 2 - Ratification of the Appointment of Deloitte & Touche LLP. The proposal to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017 must be approved by the affirmative vote of a majority of the shares present in person or by proxy and entitled to vote at a meeting at which a quorum is present. Abstentions are deemed to be votes cast and have the same effect as votes “AGAINST” the proposal. This proposal is considered a routine or “discretionary” matter on which your broker, bank or other agent will be able to vote on your behalf even if it does not receive instructions from you; therefore, no broker non-votes are expected to exist in connection with this proposal.
Proposal 3 - Amendment and Restatement of the 2009 Plan. The proposal to approve the amendment and restatement of the 2009 Plan must be approved by the affirmative vote of a majority of the shares present in person or by proxy and entitled to vote at a meeting at which a quorum is present. Abstentions are deemed to be votes cast and have the same effect as votes “AGAINST” the proposal. This proposal is considered a “non-discretionary” matter on which your broker, bank or other agent will not be able to vote on your behalf if it does not receive instructions from you; therefore, there may be broker non-votes in connection with this proposal. If you hold your shares in “street name” and you do not instruct your broker, bank or other agent how to vote your shares on this proposal, no vote will be cast on your behalf on this proposal. Therefore, it is critical that you indicate your vote on this proposal if you want your vote to be counted.
Proposal 4 - Advisory vote on executive compensation. The proposal to approve on an advisory, non-binding basis the compensation of our named executive officers as presented in this proxy statement must be approved by the affirmative vote of a majority of the shares present in person or by proxy and entitled to vote at a meeting at which a quorum is present. Abstentions are deemed to be votes cast and have the same effect as votes “AGAINST” the proposal. This proposal is considered a “non-discretionary” matter on which your broker, bank or other agent will not be able to vote on your behalf if it does not receive instructions from you; therefore, there may be broker non-votes in connection with this proposal. If you hold your shares in “street name” and you do not instruct your broker, bank or other agent how to vote your shares on this proposal, no vote will be cast on your behalf on this proposal. Therefore, it is critical that you indicate your vote on this proposal if you want your vote to be counted.
Proposal 5 - Advisory vote on the frequency of the stockholder advisory vote on executive compensation. The proposal to approve on an advisory, non-binding basis the frequency of the shareholder advisory vote on executive compensation will be decided by a plurality of the votes cast, which means that the frequency option (every year, every two years or every three years) receiving the highest number of votes will be considered the frequency recommended by our stockholders. Abstentions and broker non-votes will have no effect on the outcome of the vote.


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Voting Shares Registered in Your Name
If you are a stockholder of record, you may vote in one of four ways:
Vote via the Internet following the instructions included with your Notice or proxy card;
Vote by telephone following the instructions included with your proxy card;
Complete, sign, date and return your proxy card by mail; or
Vote during the Annual Meeting live via the Internet by following the instructions posted at www.virtualshareholdermeeting.com/BPI2017.
Votes submitted via the Internet or by telephone must be received by 11:59 p.m., Eastern Time, on May 9, 2017. Proxy cards submitted by mail must be received no later than May 9, 2017 to be voted at the Annual Meeting. Submitting your proxy via the Internet, by telephone or by mail will not affect your right to vote during the Annual Meeting live via the Internet. For additional information, please see “Revocability of Proxies” below.
Voting Shares Registered in the Name of a Broker, Bank or Other Agent
Most beneficial owners holding stock in “street name” will receive instructions for voting their shares from their broker, bank or other agent. A number of brokers and banks participate in a program provided through Broadridge Financial Solutions, Inc. (“Broadridge”) that allows stockholders to grant their proxy to vote shares by means of the telephone or Internet. If your shares are held in an account with a broker or bank participating in the Broadridge program, you may vote by telephone by calling the number shown on the voting instruction form received from your broker or bank, or you may vote via the Internet at Broadridge's website at http://www.proxyvote.com. You may also vote during the Annual Meeting live via the Internet by following the instructions posted at www.virtualshareholdermeeting.com/BPI2017.
Revocability of Proxies
If you are a stockholder of record, once you have submitted your proxy by mail, telephone or Internet, you may revoke it at any time before it is voted at the Annual Meeting. You may revoke your proxy in any one of the following three ways:
You may submit another proxy marked with a later date (which automatically revokes your earlier proxy) by mail or telephone or via the Internet by the applicable deadline as described above;
You may provide written notice that you wish to revoke your proxy to our Secretary at Bridgepoint Education, Inc., Attn: Secretary, 8620 Spectrum Center Blvd, San Diego, California 92123 by no later than the close of business on Tuesday, May 9, 2017; or
You may attend the Annual Meeting and submit your vote live via the Internet. Attendance at the Annual Meeting live via the Internet will not, by itself, cause your previously granted proxy to be revoked.
If you are a beneficial owner holding shares in street name, you may change your vote by submitting new voting instructions to your broker, bank or other agent in accordance with the instructions they provided (see “Voting Shares Registered in the Name of a Broker, Bank or Other Agent” above).
Tabulation of Votes
A representative from Broadridge will act as inspector of elections and tabulate the votes at the Annual Meeting. All shares represented by valid proxies received before the Annual Meeting will be voted. If you submit a valid proxy containing instructions regarding how to vote with respect to any matter to be acted upon, your shares will be voted in accordance with those instructions. If you submit a valid proxy with no instructions, then your shares will be voted by the individuals we have designated as proxies for the Annual Meeting “FOR” the election of each of the Class II director nominees under Proposal 1, "FOR" Proposal 2, Proposal 3 and Proposal 4, and for a frequency of "every three years" with respect to Proposal 5. In addition, the individuals that we have designated as proxies for the Annual Meeting will have discretionary authority to vote your shares with respect to any other business that may properly come before the Annual Meeting or any adjournment or postponement thereof.
Voting Results
Preliminary voting results are expected to be announced at the Annual Meeting. Voting results will be tallied by the inspector of elections and reported in a Current Report on Form 8-K (the “Form 8-K”) that we will file with the SEC within


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four business days of the Annual Meeting. If the voting results reported in the Form 8-K are preliminary, we will subsequently file an amendment to the Form 8-K to report the final voting results within four business days of the date on which the final voting results are known.
Proxy Solicitation
This proxy solicitation is made by the Board and we will bear the entire cost of soliciting proxies for the Annual Meeting, including costs associated with the preparation, assembly, printing and mailing of the proxy materials and any additional information furnished to stockholders. We will provide copies of the proxy materials to brokers, banks and other agents holding shares of our common stock in their name for the benefit of others for forwarding to the beneficial owners. We may reimburse such brokers, banks or other agents for their costs associated with forwarding the proxy materials to the beneficial owners. We have retained The Proxy Advisory Group, LLC ("Proxy Advisory Group"), a proxy advisory and solicitation firm, to assist with the solicitation of proxies. Proxy Advisory Group will be paid approximately $18,000 for these and other advisory services in connection with the Annual Meeting. Proxy solicitations will be made primarily through the mail, but may be supplemented by telephone, facsimile, Internet or personal solicitation by Proxy Advisory Group, or by our directors, executive officers, employees or other agents without additional compensation to such individuals.
Householding of Proxy Materials
The SEC has adopted rules that permit brokers, banks and other agents to satisfy the delivery requirements for proxy statements and annual reports by delivering a single proxy statement and annual report to two or more stockholders sharing the same address. This process, which is commonly referred to as “householding,” can provide added convenience for our stockholders and additional cost savings for us.
This year, a number of brokers, banks and other agents with account holders who are our stockholders will be “householding” our proxy materials. A single proxy statement and annual report will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker, bank or other agent that they will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent to the householding of communications. If at any time you no longer wish to participate in householding and would prefer to receive a separate proxy statement and annual report, please either (i) notify your broker, bank or other agent, (ii) direct your written request to Bridgepoint Education, Inc., Attn: Investor Relations, 8620 Spectrum Center Blvd, San Diego, California 92123, or (iii) contact us by phone at 1-866-475-0317 x11620. Upon receipt of any such written or oral request, we undertake to promptly deliver free of charge a separate copy of the proxy statement and/or annual report, as applicable, to a stockholder at a shared address to which a single copy of these documents was delivered. Stockholders who currently receive multiple copies of the proxy statement and annual report at their address and would like to request householding of their communications should notify their broker, bank or other agent.
Stockholder Proposals for the 2018 Annual Meeting of Stockholders
Stockholders may present proper proposals for inclusion in our proxy statement and for consideration at our next annual meeting of stockholders by submitting their proposals in writing to our Secretary in a timely manner, as described below.
For a stockholder proposal, including a proposal for the nomination of directors, to be considered for inclusion in our proxy statement for the 2018 Annual Meeting of Stockholders, our Secretary must receive the written proposal at our principal executive offices no later than November 29, 2017; provided, however, that in the event we hold the 2018 Annual Meeting of Stockholders more than 30 days before or after the one-year anniversary of the Annual Meeting, we will disclose the new deadline by which stockholder proposals must be received in our earliest possible Quarterly Report on Form 10-Q or, if impracticable, by any means reasonably calculated to inform stockholders. In addition to being timely submitted, stockholder proposals must otherwise comply with the requirements of Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Proposals should be addressed to: Bridgepoint Education, Inc., Attn: Secretary, 8620 Spectrum Center Blvd, San Diego, California 92123.
Our bylaws also establish an advance notice procedure for stockholders who wish to nominate a director or present a proposal before an annual meeting of stockholders but do not intend for the nomination or proposal to be included in our proxy statement for such annual meeting of stockholders. For a stockholder to properly bring business before the 2018 Annual Meeting of Stockholders, the stockholder must give timely notice thereof in writing to our Secretary, which notice must contain the information specified in our bylaws. To be timely, the written notice must be received at our principal executive offices:
not earlier than the close of business on February 9, 2018; and


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not later than the close of business on March 11, 2018.
If we hold the 2018 Annual Meeting of Stockholders more than 30 days before or after the one-year anniversary of the Annual Meeting, then in order to be timely, notice of a stockholder proposal that is not intended to be included in our proxy statement must be received:
not earlier than the close of business on the 90th day prior to the 2018 Annual Meeting of Stockholders; and
not later than the close of business on the later of (i) the 60th day prior to the 2018 Annual Meeting of Stockholders or (ii) if we first make a public announcement of the date of the 2018 Annual Meeting of Stockholders fewer than 70 days before the date of such meeting, the close of business on the 10th day following the day on which we first make a public announcement of the date of the 2018 Annual Meeting of Stockholders.
Stockholders are advised to review our bylaws, which contain additional requirements with respect to advance notice of stockholder proposals. If a stockholder who has notified us of his or her intention to present a proposal at an annual meeting of stockholders does not appear in person or by proxy at such meeting to present his or her proposal, we are not required to present the proposal for a vote at such meeting. While the Board will consider stockholder proposals that are properly brought before the 2018 Annual Meeting of Stockholders, we reserve the right to omit from our proxy statement for the 2018 Annual Meeting of Stockholders proposals that we are not required to include under the Exchange Act, including Rule 14a-8 thereunder.


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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents certain information with respect to the beneficial ownership of our common stock as of March 15, 2017 by (i) each person we know to be the beneficial owner of 5% or more of our outstanding shares of common stock, (ii) each named executive officer and director and (iii) all executive officers and directors as a group. Information with respect to beneficial ownership is based on a review of our stock transfer records and on the Schedules 13D and 13G that have been filed with the SEC by or on behalf of the stockholders listed below. Except as indicated by the footnotes below, we believe, based on the information available to us, that the persons named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws.
Percentage of beneficial ownership is calculated based on 28,446,167 shares of common stock outstanding on March 15, 2017. We have determined beneficial ownership in accordance with SEC rules. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed as outstanding shares of common stock subject to stock options held by that person that are currently exercisable or exercisable within 60 days of March 15, 2017. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. Except as otherwise indicated in the footnotes below, the address of each beneficial owner listed in the table is c/o Bridgepoint Education, Inc., 8620 Spectrum Center Blvd, San Diego, California 92123.
 
 
Number of Shares Held
 
Number of Shares
Subject to Options
Exercisable
within 60 Days
 
Total Shares
Beneficially Owned
Name of Beneficial Owner
 
 
 
Number
 
%
Principal Stockholders
 
 
 
 
 
 
 
 
Warburg Pincus Private Equity VIII, L.P.(1)
 
9,638,285

 

 
9,638,285

 
33.9
%
Directors and Executive Officers
 
 
 
 
 
 
 
 
Andrew S. Clark(2)
 
570,831

 
1,548,295

 
2,119,126

 
7.1
%
Ryan Craig
 
7,981

 
43,344

 
51,325

 
*

Dale Crandall
 
19,381

 
55,021

 
74,402

 
*

Patrick T. Hackett(3)
 
9,646,266

 
43,344

 
9,689,610

 
34.0
%
Robert Hartman
 
51,511

 
45,348

 
96,859

 
*

Christopher M. Henn
 
19,135

 
65,371

 
84,506

 
*

Kevin Royal
 
10,213

 
13,197

 
23,410

 
*

Jane L. McAuliffe
 
13,988

 
249,567

 
263,555

 
*

Victor Nichols
 
3,021

 
21,492

 
24,513

 
*

Diane L. Thompson
 
49,065

 
204,835

 
253,900

 
*

All Directors and Executive Officers as a Group (14 Persons)
 
10,414,595

 
2,370,963

 
12,785,558

 
41.5
%
*
Less than one percent.
(1)
The stockholder is Warburg Pincus Private Equity VIII, L.P. (“Warburg Pincus”). Warburg Pincus Partners LLC (“WP Partners”), a subsidiary of Warburg Pincus & Co. (“WP”), is the general partner of Warburg Pincus. WP is the managing member of WP Partners. Warburg Pincus is managed by Warburg Pincus LLC (“WP LLC”). Warburg Pincus, WP Partners, WP and WP LLC are collectively referred to herein as the “Warburg Pincus Entities.” Charles R. Kaye and Joseph P. Landy are each Managing General Partners of WP and Co-Chief Executive Officers and Managing Members of WP LLC and may be deemed to control the Warburg Pincus Entities. Each of the Warburg Pincus Entities, Mr. Kaye and Mr. Landy has shared voting and investment control of all of the shares of stock referenced above. Each of Mr. Kaye, Mr. Landy and the Warburg Pincus Entities disclaims beneficial ownership of the stock (other than the stock owned of record by such person or entity), except to the extent of any indirect pecuniary interest therein. The address of the Warburg Pincus Entities, Mr. Kaye and Mr. Landy is 450 Lexington Avenue, New York, New York 10017.
(2)
Includes 513,444 shares of common stock held by the Clark Family Trust, dated July 8, 1998.
(3)
Mr. Hackett is a Partner of WP and a Member and Managing Director of WP LLC. 9,638,285 of the shares indicated as held by Mr. Hackett are included because of his affiliation with the Warburg Pincus Entities. See footnote (1) above for additional information. Mr. Hackett disclaims beneficial ownership of all shares owned by the Warburg Pincus Entities except to the extent of any indirect pecuniary interest therein. Mr. Hackett's address is c/o Warburg Pincus LLC, 450 Lexington Avenue, New York, NY 10017.


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PROPOSAL 1
ELECTION OF DIRECTORS
Board Composition
The Board consists of six members. Our bylaws provide that the number of directors will be fixed from time to time by resolution of the Board. All directors hold office until their successors have been elected and qualified or until their earlier death, resignation, disqualification or removal. We have divided the terms of office of the directors into three classes:
Class I, whose term expires at the 2019 Annual Meeting of Stockholders;
Class II, whose term expires at the 2017 Annual Meeting of Stockholders; and
Class III, whose term expires at the 2018 Annual Meeting of Stockholders.
Class I consists of Messrs. Robert Hartman and Victor K. Nichols, Class II consists of Messrs. Dale Crandall and Ryan Craig, and Class III consists of Messrs. Andrew S. Clark and Patrick T. Hackett. At each annual meeting of stockholders, the successors to directors whose terms then expire will serve from the time of election and qualification until the third annual meeting following election and until their successors are duly elected and qualified. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one third of the directors.
Nominees for Election at the Annual Meeting
The Nominating and Governance Committee recommended, and the Board nominated, Messrs. Dale Crandall and Ryan Craig as nominees for election to the Board as Class II directors at the Annual Meeting. If elected, Messrs. Dale Crandall and Ryan Craig will continue as directors and their terms will expire at the 2020 Annual Meeting of Stockholders.
Information about the Board of Directors
The names and certain information regarding each member of the Board, including the nominees for election to the Board as Class II directors at the Annual Meeting, are set forth below. The following information has been furnished to us by the directors.
Andrew S. Clark, age 51, has served as our Chief Executive Officer and a director since November 2003 and as our President since February 2009. Mr. Clark also served from March 2005 to December 2008 on the Board of Trustees for Ashford University and served on the Board of Trustees of University of the Rockies from September 2007 to August 2010. Prior to joining us in November 2003, Mr. Clark consulted with several private equity firms examining the postsecondary education sector. Prior to 2003, Mr. Clark worked for Career Education Corporation as Divisional Vice President of Operations and Chief Operating Officer for American InterContinental University in 2002. From 1992 to 2001, Mr. Clark worked for Apollo Group, Inc. (University of Phoenix), where he served in various management roles, culminating in his position as Regional Vice President for the Mid-West region from 1999 to 2001. Mr. Clark earned an M.B.A. from the University of Phoenix and a B.A. from Pacific Lutheran University. Mr. Clark brings to the Board over 19 years of experience in the postsecondary education sector, as well as a deep understanding of our business and its history that he has acquired since he launched Bridgepoint Education in 2004.
Ryan Craig, age 45, has served as a director of our company since November 2003. Mr. Craig is a founding partner of University Ventures, an investment fund focused on innovation from within higher education. Prior to University Ventures, he founded and served as President of Wellspring, an organization providing treatment programs for overweight and obese adolescents. From 2001 to 2004, Mr. Craig was an Associate at Warburg Pincus LLC in the education sector. From 1999 to 2001, Mr. Craig served as Vice President Business Development for Fathom, a consortium of universities, museums and libraries. From 1994 to 1996, he worked as a consultant with McKinsey & Company. Mr. Craig earned a B.A. from Yale University and a J.D. from Yale Law School. Mr. Craig currently serves on the boards of nine privately held companies. Mr. Craig brings to the Board extensive expertise in the postsecondary education sector and a long history with our business, which enables him to provide key strategic vision.
Dale Crandall, age 75, has served as a director of our company since December 2008. Mr. Crandall founded Piedmont Corporate Advisors, Inc., a private financial consulting firm, in 2003 and currently serves as its President. From April 2000 to June 2002, Mr. Crandall served as the President and Chief Operating Officer of Kaiser Foundation Health Plan Inc. and Kaiser Foundation Hospitals. From June 1998 to March 2000, Mr. Crandall served as the Senior Vice President and Chief Financial Officer of Kaiser Foundation Health Plan Inc. and Kaiser Foundation Hospitals. Mr. Crandall also serves as a director for


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Ansell Limited, Endurance International Group, Inc. and two private companies. Within the last five years, Mr. Crandall also served as a director for Coventry Health Care, Inc. and as lead trustee for The Dodge & Cox Mutual Funds. Mr. Crandall earned a B.A. from Claremont McKenna College and an M.B.A. from the University of California, Berkeley, and is a certified public accountant (inactive). Mr. Crandall brings to the Board a strong foundation in financial reporting and accounting matters for complex organizations, as well as executive leadership and management experience.
Patrick T. Hackett, age 55, has served as a director of our company since March 2008 and as Chairman of the Board since February 2009. Based in New York, Mr. Hackett joined Warburg Pincus in 1990 and focuses on investments in technology, media and telecommunications. Mr. Hackett also is a member of the firm's executive management group. Previously, he was the Vice President of Cove Capital Associates, a private merchant banking partnership, and prior to that a Partner with private equity firm Acadia Partners. Mr. Hackett also serves as a trustee on the board of Stamford Health System, and previously served as a director of Yodlee from February 2008 to November 2015 and Nuance Communications, Inc. from January 2009 to August 2014. Mr. Hackett graduated from the University of Pennsylvania with a B.A. in Chemistry, and holds a B.S. in Economics from the Wharton School at the University of Pennsylvania. As a director and Chairman of the Board, Mr. Hackett brings leadership expertise to the Board, with a focus on corporate strategy and corporate governance, which has been gained through his experience as a director and investor in technology companies.
Robert D. Hartman, age 68, has served as a director of our company since November 2006. Mr. Hartman is currently a private investor. From 1979 to September 2005, Mr. Hartman served in various management roles for Universal Technical Institute, including President, Chief Executive Officer and Chairman of the Board. During the 1980’s, Mr. Hartman served as Chairman of the Arizona State Board for Private Postsecondary Education and was Founder and Chairman of the Western Council of Private Career Schools. Mr. Hartman currently serves on the board of one privately held company. Mr. Hartman earned an M.B.A. from DePaul University and a B.A. from Michigan State University. Mr. Hartman provides the Board with the insight generated by decades of experience in the postsecondary education sector, as well as experience in management and corporate governance.
Victor K. Nichols, age 60, has served as a director of our company since September 2014. Mr. Nichols is currently the CEO of Valassis, a $2 billion revenue marketing media company operating across North America and Europe, with 7000 team members serving 55,000 business clients. Mr. Nichols is leading a transformation of this business on behalf of the owners MacAndrews and Forbes. He currently sits on public and charitable company boards and advisory committees, including Bank of Hawaii Corporation, Crystal Cove Alliance and the Economic Leadership Council of UCSD. Mr. Nichols worked at Experian, a leading global information services company, in various positions since 2007, including Chief Executive Officer, North America and Managing Director, Global Consumer Services, Chief Executive Officer, United Kingdom and Europe, Middle East, and Africa, and Group President. From 2000 to 2007, Mr. Nichols worked for Wells Fargo & Company, a diversified financial services company, as its Chief Information Officer and member of its Management Committee. From 1994 to 2000, Mr. Nichols served as President and Chief Executive Officer of Vicor Corporation, an advanced technology engineering company. From 1992 to 1994 and from 1986 to 1989, Mr. Nichols worked for Bank of America Corporation, a financial and bank holding company, in various positions, including Senior Vice President, Interstate Banking Integration and Senior Vice President, Consumer Loan Services. From 1989 to 1992, Mr. Nichols worked as the President of Safeguard Business Systems, Inc., a systems and services company catering to small business clients globally. Mr. Nichols also held various sales and marketing positions with IBM Corporation, an information technology company, from 1980 to 1986. Mr. Nichols holds a B.A. in Economics from the University of California, San Diego and an M.B.A. from the University of California, Berkeley. Mr. Nichols brings to the Board extensive business and leadership experience across multiple industries, which enables him to provide key operational and management perspective.
Involvement in Certain Legal Proceedings
In June 2003, Mr. Clark acquired and subsequently hired the management of Foundation College, an education provider that conducted campus-based training programs through the California Employment Training Panel. Due to a significant decrease in state funding, the business filed for bankruptcy in December 2005. Other than the foregoing, there are currently no legal proceedings, and during the past 10 years there have been no legal proceedings, that are material to the evaluation of the ability or integrity of any of our directors or director nominees.
Nominating Agreement with Warburg Pincus
In February 2009, we entered into a nominating agreement with Warburg Pincus. Under the nominating agreement, as long as Warburg Pincus beneficially owns at least 15% of the outstanding shares of our common stock, we agree, subject to our fiduciary obligations, to nominate and recommend to our stockholders that two individuals designated by Warburg Pincus be elected to the Board. If at any time Warburg Pincus beneficially owns less than 15% but more than 5% of the outstanding shares of our common stock, we agree, subject to our fiduciary obligations, to nominate and recommend to our stockholders


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that one individual designated by Warburg Pincus be elected to the Board. One individual affiliated with Warburg Pincus, Mr. Hackett, currently serves on the Board.
Vote Required
Directors are elected by a plurality of the votes present in person or represented by proxy and entitled to vote at a meeting at which a quorum is present. Shares represented by proxy will be voted, if authority to do so is not withheld, for the election of the two nominees for election as Class II directors named above. Abstentions and broker non-votes will be counted as present for purposes of determining the presence of a quorum. If a quorum is present, the two nominees for Class II director receiving the highest number of votes will be elected as Class II directors. Abstentions and broker non-votes will have no effect on the outcome of the vote. The proxy holders may not vote the proxies for a greater number of persons than the number of nominees named. If any nominee should be unavailable for election as a result of an unexpected occurrence, shares will be voted for the election of such substitute nominee as the Board may propose. Each person nominated for election has agreed to serve if elected, and the Board has no reason to believe that any nominee will be unable to serve.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION
AS A CLASS II DIRECTOR OF EACH NOMINEE LISTED ABOVE.


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CORPORATE GOVERNANCE
Director Independence
The Board has affirmatively determined that Messrs. Craig, Crandall, Hackett, Hartman and Nichols have no material relationships with us (either directly or as a partner, shareholder or officer of an organization that has a relationship with us) and, accordingly, each of the foregoing members of the Board were determined to be independent under the rules of the New York Stock Exchange (“NYSE”). Mr. Clark is not independent under NYSE rules because he is employed by us.
In determining whether directors were independent under NYSE rules, the Board considered the matters discussed in the section entitled “Certain Relationships and Related Transactions” below. Additionally, with respect to certain transactions described in that section, the Board considered that Mr. Hackett participates as a general partner in the profits of a fund controlled by WP LLC that is a significant investor in iParadigms, LLC, and also that Mr. Hartman is a limited partner of such fund, and concluded that these relationships did not constitute material relationships with us and that Messrs. Hackett and Hartman were independent notwithstanding such transactions. There are no family relationships between any of our directors and executive officers.
Leadership Structure of the Board of Directors
Pursuant to our bylaws and Corporate Governance Guidelines, the Board has the following general leadership structure:
The positions of Chief Executive Officer and Chairman of the Board are separate, but may be held by the same individual. The positions of Chief Executive Officer and Chairman of the Board are currently held by Messrs. Clark and Hackett, respectively.
The Chairman of the Board presides at meetings of the Board and, so long as the Chairman of the Board is an independent director, also presides at executive sessions of the non-management and/or independent directors.
If the Chairman of the Board is not an independent director, the independent directors will appoint one independent director to serve as “lead independent director.” In that scenario, the lead independent director will preside at executive sessions of the non-management and/or independent directors, preside at meetings of the Board in the absence of the Chairman of the Board, review agendas for meetings of the Board with the Chief Executive Officer and Chairman of the Board, and assume such other functions as the Board may deem appropriate.
The Chief Executive Officer and the Chairman of the Board jointly establish the agenda for each meeting of the Board, though any director may request the inclusion of items on the agenda.
Our Corporate Governance Guidelines are available on our website at http://www.bridgepointeducation.com under “Investor Relations — Corporate Governance Highlights.” Because Mr. Hackett currently serves as Chairman of the Board and is an independent director, the Board does not currently have a lead independent director. The Board has determined that this leadership structure, specifically the separation of the Chief Executive Officer and Chairman of the Board positions, is appropriate for our company because, in the judgment of the Board, an independent Chairman of the Board (or lead independent director, if the Chairman of the Board is not an independent director) is best positioned to express to management the views of the Board (and, particularly, the independent directors) and to provide constructive feedback to the Chief Executive Officer regarding management's performance.
Board Committees
The Board has an Audit Committee, a Compensation Committee and a Nominating and Governance Committee. These committees operate under written charters, which are available on our website at http://www.bridgepointeducation.com under “Investor Relations — Corporate Governance Highlights.” The Board has determined that all members of these committees satisfy the applicable independence requirements under NYSE rules. The members of the committees are identified in the table below.


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Director
 
Audit Committee
 
Compensation Committee
 
Nominating and Governance Committee
Dale Crandall
 
Chair
 
Member
 
Ryan Craig
 
Member
 
 
Chair
Patrick T. Hackett
 
 
Chair
 
Robert Hartman
 
Member
 
 
Member
Victor K. Nichols
 
Member
 
Member
 
The Audit Committee is responsible primarily for overseeing (i) the services provided by our independent registered public accounting firm, (ii) the integrity of our financial statements and internal control over financial reporting, and (iii) risk management, internal audit and our compliance with legal and regulatory requirements. Mr. Crandall, the Chair of the Audit Committee, has been determined by the Board to be an audit committee financial expert. The Audit Committee held eight meetings in 2016.
The Compensation Committee is responsible primarily for evaluating and approving all compensation plans, policies and programs as they affect our executive officers, administering our equity compensation plans, and reviewing the compensation of the Board. The Performance Award Subcommittee of the Compensation Committee is responsible for evaluating and approving all long-term incentive compensation awards granted to our employees. The Performance Award Subcommittee is comprised solely of “outside directors” as defined in federal income tax laws and regulations. For information regarding the Compensation Committee's processes and procedures, including (i) the scope of authority of the Compensation Committee and (ii) the role of executive officers and compensation consultants in determining or recommending the amount or form of executive and director compensation, see “Executive Compensation — Compensation Discussion and Analysis” below. The Compensation Committee held five meetings in 2016.
The Nominating and Governance Committee is responsible primarily for identifying, evaluating and recommending to the Board nominees for election or appointment to the Board and committees of the Board, evaluating the performance and independence of the Board and of individual directors, and evaluating the adequacy of our corporate governance practices. The Nominating and Governance Committee held four meetings in 2016.
Meetings of the Board of Directors and Board Committees
The Board has regularly scheduled meetings at least quarterly, and the committees of the Board usually meet at least as often. Our independent directors hold executive sessions without management present at least once per quarter. During 2016, the Board held seven meetings. Each director attended at least 75% of the aggregate number of meetings held by the Board and all applicable committees of the Board during the period that he served. It is our policy to encourage members of the Board to attend our annual meetings of stockholders; six directors attended the 2016 Annual Meeting of Stockholders.
Role of the Board of Directors in Risk Oversight
Management is responsible for day-to-day risk management at our company. The role of the Board is to provide oversight of the processes designed to identify, assess and monitor key risks and risk mitigation activities. The Board fulfills its risk oversight responsibilities through (i) the receipt of reports directly from managers responsible for the management of particular business risks and (ii) the receipt of reports from each committee chair regarding such committee's oversight of specific risk topics.
Delegation of Risk Oversight
The Board has delegated oversight of specific risk areas to its committees. For example, the Audit Committee is tasked with overseeing risk management at our company with respect to financial matters and the adequacy of our internal control over financial reporting. Pursuant to its charter, the Audit Committee is required, among other things, to discuss with management our policies with respect to risk assessment and risk management, including guidelines and procedures to govern the process by which risk assessment and risk management are handled, and to review our major risk exposures and the steps management has taken to monitor, control and report such exposures. The Audit Committee typically has these discussions with management at least once per quarter, and the Chair of the Audit Committee subsequently reports on these discussions to the full Board. Similarly, the Compensation Committee assists the Board in overseeing risks arising from our compensation policies and practices, and the Nominating and Governance Committee assists the Board in overseeing risks associated with corporate governance, director and executive officer succession planning, board membership and board structure. The Board then discusses significant risk management issues with the Chief Executive Officer and other members of the management team and recommends appropriate action.


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Enterprise Risk Management
At the direction of the Board and the Audit Committee, we have developed and implemented an enterprise risk management (“ERM”) process for our company. The ERM process is managed by a steering committee comprised of representatives from each of our company's principal business units in consultation with our executive team. The ERM steering committee meets at least quarterly to evaluate current risks, identify new risks, quantify the likelihood and potential impact of such risks, and develop mitigation plans for such risks. Additionally, each quarter a representative of the ERM steering committee presents to, and receives feedback from, the Board regarding our outstanding risks and related mitigation plans.
Recoupment Policy
To help mitigate risk, the Board has adopted a Policy on Recoupment of Compensation (the “Recoupment Policy”) pursuant to which certain key employees may be directed to return to us performance-based compensation they previously received if either:
there is a restatement of any of our financial statements previously filed with the SEC (regardless of whether there was any misconduct), other than those due to changes in accounting principles, and the restated financial results would have resulted in a lesser amount of performance-based compensation being paid to them; or
their intentional misconduct, gross negligence or failure to report intentional misconduct or gross negligence by one of our employees (or service providers) either (i) was a contributing factor or partial factor to having to restate any of our financial statements previously filed with the SEC or (ii) constituted fraud, bribery or any other unlawful act, or contributed to another person's fraud, bribery or other unlawful act, which in each case adversely impacted our finances, business and/or reputation.
In the event of a restatement of our financial statements, the Compensation Committee will review performance-based compensation awarded or paid to the key employees that was attributable to performance during the applicable time periods. To the extent permitted by applicable law, the Compensation Committee will make a determination as to whether, and how much, compensation is to be recouped by us on an individual basis. If there has been no misconduct as described above, any recoupment of compensation will be limited to a three-year lookback period from the date the financial or accounting irregularity was discovered by us and brought to the attention of the Compensation Committee.
Moreover, if the Compensation Committee determines that a key employee has engaged in misconduct, the Compensation Committee may take such actions with respect to such employee as it deems to be in our best interests and necessary to remedy the misconduct and prevent its recurrence. To the extent permitted by applicable law, such actions can include, among other things, recoupment of compensation (which would not be limited to the three-year lookback period referenced above), adjustment of future compensation, cancellation of grants or vesting of equity-based compensation, recoupment of profits gained by such employee on any stock issued to such employee regardless of when issued, and/or disciplinary actions up to and including termination of employment. The Compensation Committee's power to determine the appropriate remedy is in addition to, and not in replacement of, remedies imposed by law enforcement agencies, regulators or other authorities.
Communications with the Board of Directors
We have adopted a formal process by which security holders and other interested parties may communicate with the Board, which policy is available on our website at http://www.bridgepointeducation.com under “Investor Relations — Corporate Governance Highlights.” Interested parties may send communications to the non-management members of the Board. Communications to the Board must either be in writing and sent care of the Secretary by mail to our offices at 8620 Spectrum Center Blvd, San Diego, California 92123, or delivered via e-mail to secretary@bridgepointeducation.com. This centralized process will assist the Board in reviewing and responding to stockholder and interested party communications in an appropriate manner. The name of any specific intended recipient should be noted in the communication. All communications must be accompanied by the following information:
if the person submitting the communication is a security holder, a statement of the type and amount of securities of our company the person holds;
if the person submitting the communication is not a security holder and is submitting the communication to the non-management directors as an interested party, the nature of the person's interest in our company;
any special interest, meaning an interest not in the capacity of a stockholder of our company, of the person in the subject matter of the communication; and
the address, telephone number and e-mail address, if any, of the person submitting the communication.


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Communications should be addressed to the attention of the Secretary and should not exceed 500 words in length, excluding the information required to accompany the communication as described above. The Board has instructed the Secretary to forward such correspondence to the Board; however, before forwarding any correspondence, the Board has also instructed the Secretary to review such correspondence and, in the Secretary's discretion, not to forward certain items if they are deemed of a personal, illegal, commercial, offensive or frivolous nature or otherwise inappropriate for director consideration.
Consideration of Director Nominees
Director Qualifications
The Nominating and Governance Committee evaluates all incumbent, replacement or additional nominees for election as directors, taking into account (i) all factors the committee considers appropriate, which may include career specialization, relevant technical skills or financial acumen, diversity of viewpoint and industry knowledge, and (ii) the following minimum qualifications:
Each director nominee must have displayed the highest personal and professional ethics, integrity and values, and sound business judgment;
Each director must be highly accomplished in his or her respective field, with superior credentials and recognition and broad experience at the administrative and/or policy making level in business, government, education, technology or public interest;
Each director must have relevant expertise and experience, and be able to offer advice and guidance to the Chief Executive Officer based on that expertise and experience;
Each director must be able to represent all of our stockholders and be committed to enhancing long-term stockholder value; and
Each director must have sufficient time available to devote to activities of the Board and to enhance his or her knowledge of our business.
In determining whether to recommend a director for re-election to the Board, the Nominating and Governance Committee also considers the director's past attendance at meetings and participation in and contributions to the activities of the Board and any applicable committees of the Board.
The Nominating and Governance Committee does not have a formal policy governing the consideration of diversity in identifying nominees for director.
Stockholder Recommendations and Nominees
The Nominating and Governance Committee has not received director candidate recommendations from our stockholders and does not have a formal policy regarding consideration of such recommendations. The Board believes this is appropriate, as any recommendations received from stockholders will be evaluated in the same manner as potential nominees suggested by members of the Board or management. Stockholders wishing to recommend a candidate for director should write to our Secretary at Bridgepoint Education, Inc., Attn: Secretary, 8620 Spectrum Center Blvd, San Diego, California 92123.
To be considered, the recommendation of a director candidate must include the following written information: (i) the stockholder's name and contact information; (ii) a statement that the writer is a stockholder and is proposing a candidate for consideration by the Nominating and Governance Committee; (iii) the name of, and contact information for, the candidate and a statement that the candidate is willing to be considered and serve as a director, if nominated and elected; (iv) a statement of the candidate's business, educational experience and qualifications; (v) information regarding each of the factors listed under “Director Qualifications” above sufficient to enable the Nominating and Governance Committee to evaluate the candidate; (vi) a statement of the value that the candidate would add to the Board; (vii) a statement detailing any relationship between the candidate and any customer, supplier or competitor of our company; (viii) detailed information about any relationship or understanding between the proposing stockholder and the candidate; and (ix) a list of three character references, including complete contact information for such references. To give the Nominating and Governance Committee sufficient time to evaluate a recommended director candidate for the 2018 Annual Meeting of Stockholders, the recommendation should be received by our Secretary at our principal executive offices no later than November 29, 2017, which is the 120th calendar day before the first anniversary of the date our proxy statement was mailed to stockholders in connection with the Annual Meeting.


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In addition, our bylaws permit stockholders to nominate directors for consideration at an annual meeting. For a description of the process for nominating directors in accordance with our bylaws, see “Stockholder Proposals for the 2018 Annual Meeting of Stockholders” above.
Identification and Evaluation of Nominees for Director
The Nominating and Governance Committee uses a variety of methods for identifying and evaluating nominees for director. The Nominating and Governance Committee regularly assesses the appropriate size and composition of the Board, the needs of the Board and each committee of the Board, and the qualifications of candidates in light of these needs. Candidates may come to the attention of the Nominating and Governance Committee through stockholders, management, current members of the Board or search firms. The evaluation of these candidates may be based solely upon information provided to the Nominating and Governance Committee or may also include discussions with persons familiar with the candidate, an interview of the candidate or other actions the Nominating and Governance Committee deems appropriate, including the use of third parties to review candidates.
Code of Ethics
We have adopted a written Code of Ethics applicable to the Board and our officers and employees, including our principal executive officer, principal financial officer and principal accounting officer, in accordance with the rules of the NYSE and the SEC. The Code of Ethics is available on our website at http://www.bridgepointeducation.com under “Investor Relations — Corporate Governance Highlights.”
Compensation Committee Interlocks and Insider Participation
Messrs. Crandall, Hackett, Nichols and Sarma were members of the Compensation Committee during 2016. Mr. Sarma served on the Compensation Committee until his resignation from the Board on August 17, 2016.
During 2016, no executive officer of our company (i) served as a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served on our Compensation Committee, (ii) served as a director of another entity, one of whose executive officers served on our Compensation Committee, or (iii) served as a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served as a director of our company.
Director Compensation
The following table presents compensation information for our non-employee directors for 2016. Mr. Clark's compensation is presented in the Summary Compensation Table below and the related explanatory tables. Mr. Clark does not receive any additional compensation for his services as a director.
Name
 
Fees Earned or
Paid in Cash ($)
 
Option Awards
($)(1)
 
Stock Awards
($)(2)
 
Total ($)
Dale Crandall
 
77,500


 
64,705


 
30,711

 
 
172,916

Ryan Craig
 
61,250


 
64,705


 
30,711

 
 
156,666

Patrick T. Hackett
 
62,500


 
64,705


 
30,711

 
 
157,916

Robert Hartman
 
60,000


 
64,705


 
30,711

 
 
155,416

Victor K. Nichols
 
62,500

 
 
64,705

 
 
30,711

 
 
157,916

(1)
Represents the grant date fair value of the stock option award, computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. Assumptions used to calculate this amount are included in Note 16, “Stock-Based Compensation,” to our annual consolidated financial statements for the year ended December 31, 2016, which are included in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on March 7, 2017.
(2)
Represents the grant date fair value of the restricted stock unit award, computed in accordance with FASB ASC Topic 718. The valuation methodology used to calculate this amount is discussed in Note 16, “Stock-Based Compensation,” to our annual consolidated financial statements for the year ended December 31, 2016, which are included in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on March 7, 2017.


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The following table presents the number of unvested and vested options outstanding for each non-employee director as of December 31, 2016.
Director
 
Total Number of Shares Subject to Options Outstanding
 
Number of Shares Subject to Vested Options Outstanding
Dale Crandall
 
57,921

 
48,911

Ryan Craig
 
43,344

 
34,334

Patrick T. Hackett
 
43,344

 
34,334

Robert Hartman
 
58,745

 
49,735

Victor K. Nichols
 
24,834

 
11,527

The following table presents our non-employee director compensation program effective for 2016. The Compensation Committee reviews director compensation annually, including fees, retainers and equity compensation, as well as total compensation, and makes recommendations to the Board regarding the compensation program. The Compensation Committee works with Mercer, LLC, a compensation consultant, in determining appropriate changes to director compensation.
Position
 
Annual Cash
Retainer ($)
 
Annual
Option Award ($)
Annual
Restricted Stock Unit Award ($)
Continuing Director
 
45,000

 
 
30,000

(2)
30,000

(3)
Audit Committee Chair
 
15,000

(1)
 

 

 
Compensation Committee Chair
 
10,000

(1)
 

 

 
Nominating and Governance Committee Chair
 
5,000

(1)
 

 

 
Audit Committee Member
 
10,000

 
 

 

 
Compensation Committee Member
 
7,500

 
 

 

 
Nominating and Governance Committee Member
 
5,000

 
 

 

 
(1)
The annual cash retainer for serving as committee chair was paid in addition to the annual cash retainer for committee membership.
(2)
The stock option award has a 10-year term and an exercise price equal to the fair market value of our common stock on the date of grant, and will vest in full on the first anniversary of the date of grant, subject to the continuing service of the director. The stock option may vest in full or in part in connection with a Change of Control (as defined in the 2009 Plan).
(3)
The restricted stock units vest in full on the first anniversary of the date of grant, subject to the continuing service of the director.


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EXECUTIVE OFFICERS
Our executive officers are appointed by, and serve at the discretion of, the Board. Each executive officer is a full-time employee of Bridgepoint. The names of our executive officers and their ages, titles and biographies are set forth below:
Name
 
Age
 
Position
Andrew S. Clark
 
51
 
CEO and President and Director
Kevin Royal
 
52
 
Executive Vice President/Chief Financial Officer
Christopher M. Henn
 
56
 
Executive Vice President/Chief Operating Officer
Jane McAuliffe
 
50
 
Executive Vice President of External Affairs/Chief Academic Officer
Diane L. Thompson
 
61
 
Executive Vice President, Secretary and General Counsel
Vickie L. Schray
 
57
 
Executive Vice President of Regulatory Affairs and Public Policy
Marc Brown
 
49
 
Senior Vice President/Chief Human Resources Officer
Thomas McCarty
 
52
 
Senior Vice President/Chief Marketing Officer
Anurag Malik
 
41
 
Senior Vice President/Chief Information Officer
Andrew S. Clark has served as our Chief Executive Officer and as a director of our company since November 2003 and as our President since February 2009. Mr. Clark also served from March 2005 to December 2008 on the Board of Trustees for Ashford University and served on the University of the Rockies Board of Trustees from September 2007 to August 2010. Prior to joining us in November 2003, Mr. Clark consulted with several private equity firms examining the postsecondary education sector. Prior to 2003, Mr. Clark worked for Career Education Corporation as Divisional Vice President of Operations and Chief Operating Officer for American InterContinental University in 2002. From 1992 to 2001, Mr. Clark worked for Apollo Group, Inc. (University of Phoenix), where he served in various management roles, culminating in his position as Regional Vice President for the Mid-West region from 1999 to 2001. Mr. Clark earned an M.B.A. from the University of Phoenix and a B.A. from Pacific Lutheran University.
Kevin Royal joined us in October 2015 and currently serves as our Executive Vice President/Chief Financial Officer. From April 2009 to May 2015, Mr. Royal was Senior Vice President, Chief Financial Officer, Treasurer and Secretary of Maxwell Technologies, Inc., a developer, manufacturer and marketer of energy storage and power delivery solutions. From May 2005 until April 2009, Mr. Royal was senior vice president and chief financial officer of Blue Coat Systems, Inc., a previously Nasdaq-listed developer and provider of application delivery network technology. From December 1996 until May 2005, Mr. Royal held a series of senior finance positions, culminating with his appointment as vice president and chief financial officer of Novellus Systems, Inc., an S&P 500 company that manufactures, markets and services semiconductor capital equipment. Before Mr. Royal joined Novellus, he spent 10 years with Ernst & Young LLP, where he became a certified public accountant. Mr. Royal currently serves as a director of one private company. Mr. Royal received his Bachelor of Business Administration from Harding University.
Christopher M. Henn joined us in April 2015 as our Executive Vice President/Chief Operating Officer. Since 2000, Mr. Henn, has served in various senior management positions with Esurance, a multi-line insurance company offering vehicle and property coverage, most recently serving as Managing Director – Product from 2012 to 2015, and as Managing Director/Chief Operating Officer from 2006 to 2011. While at Esurance, Mr. Henn oversaw operations including product development and management activities, compliance, licensing, contact center, internal audits, retention and corporate services, among others, and played a key role in expanding Esurance's business both in terms of product offerings and national reach. Prior to joining Esurance, Mr. Henn served in various management positions with Nationwide Insurance from 1994 to 2000, culminating in his position as Vice President – Auto Product from 1999 to 2000. Mr. Henn also served as Vice President – Product Management for Coronet Insurance from 1992 to 1993, and held positions of increasing responsibility with Progressive Insurance Corporation from 1981 to 1991, culminating in his position as Vice President/Senior Product Manager from 1989 to 1991. Mr. Henn earned a B.A. in Economics from John Carroll University.
Jane McAuliffe joined us in July 2005 and currently serves as our Executive Vice President of External Affairs/Chief Academic Officer. Prior to Dr. McAuliffe's appointment as Executive Vice President of External Affairs/Chief Academic Officer in January 2011, Dr. McAuliffe served as our Senior Vice President/Chief Academic Officer, from November 2008 to December 2010, and as our Vice President of Academic Affairs, from September 2007 to November 2008. Dr. McAuliffe also served as Chancellor/President of Ashford University from July 2005 to December 2010. From 2003 to 2005, Dr. McAuliffe served as President of Argosy University/Sarasota Campus in Sarasota, Florida. Prior to 2003, Dr. McAuliffe served in various management roles, including Vice President for Academic Affairs at American InterContinental University in 2002, and Dean, Associate Dean and Program Director in the College of Education at the University of Phoenix from 1996 to 2002. Dr. McAuliffe earned a Ph.D., M.A. and B.A. from Arizona State University.


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Diane L. Thompson joined us in December 2008 and currently serves as our Executive Vice President, Secretary and General Counsel. Prior to her appointment as Executive Vice President, Secretary and General Counsel in October 2015, Ms. Thompson served as our Senior Vice President, Secretary and General Counsel. From September 1997 to November 2008, Ms. Thompson served in various management roles for Apollo Group, Inc. (University of Phoenix). From November 2000 to February 2006, Ms. Thompson served as Vice President/Counsel for Apollo Group, Inc. (University of Phoenix) and from March 2006 to November 2008, Ms. Thompson served as Chief Human Resources Officer. From October 1992 to July 1996, Ms. Thompson served as an attorney in the Pima County Attorney's Office in Tucson Arizona. Ms. Thompson earned a B.A. from St. Cloud University, an M.A. from Antioch University and a J.D. from the University of Arizona College of Law.
Vickie L. Schray joined us in January 2011 and currently serves as our Executive Vice President, Regulatory Affairs and Public Policy. Prior to Ms. Schray's appointment as Executive Vice President, Regulatory Affairs and Public Policy in October 2016, Ms. Schray served as our Senior Vice President, Regulatory Affairs and Public Policy and also previously served as our Vice President Regulatory Affairs. Ms. Schray has over 20 years of experience in postsecondary education and has worked at the federal, state and institutional level. From 1998 to 2010, Ms. Schray served in various leadership positions with the U.S. Department of Education, including Acting Deputy Assistant Secretary in the Office of Postsecondary Education, Senior Policy Analyst in the Office of the Under Secretary, and as the Deputy Director for the Secretary of Education's Commission on the Future of Higher Education. Before her work with the Department of Education, Ms. Schray consulted for the National School-to-Work Opportunities Office and was Deputy Director of the National Skill Standards Board. Ms. Schray earned an M.S. at Portland State University and a B.S. at Oregon State University.
Marc Brown joined us in July 2014 and has served as our Senior Vice President/Chief Human Resources Officer since that time. Prior to joining us, Mr. Brown served as the Vice President of Human Resources and Corporate Communications for Provide Commerce, an e-commerce retailer, from June 2011 to July 2014. From 2003 to 2011, Mr. Brown held various Vice President positions at PETCO Animal Supplies, Inc. and Encore Capital Group in San Diego, most recently serving as VP, HR for PETCO, a retailer of animal products and services, from May 2007 to July 2011. For the 20 years prior, Mr. Brown held various human resources, training and organizational development roles in large companies, including UnitedHealthcare, Best Buy, Honeywell, The Williams Companies and Bell Atlantic. Mr. Brown holds an M.S. from American University and a B.S. from Virginia Tech.
Thomas McCarty joined us in January 2017 and has served as our Senior Vice President/Chief Marketing Officer since that time. Prior to joining us, from January 2013 to December 2016, Mr. McCarty led his own marketing and management consulting firm, where his clients ranged from institutions of higher education to medium-sized businesses and non-profits. From October 2007 to November 2013, Mr. McCarty served in several roles at Apollo Education Group, a private education provider, including Senior Vice President of University Strategy for the University of Phoenix and Senior Vice President Product Marketing for Apollo Group Marketing. Prior to his employment with Apollo Education Group, Mr. McCarty led Aptimus, Inc., an online advertising network, as the General Manager of the education business from 2005 to 2007. Mr. McCarty holds an MBA in marketing from San Francisco State University and a bachelor’s degree from University of California, Berkeley.
Anurag Malik joined us in August 2016 and has served as our Senior Vice President/Chief Information Officer since that time. Prior to joining us, Mr. Malik served as Senior Vice President of Information Systems at SolarCity, a provider of full-service solar power systems, from April 2014 to August 2016. At SolarCity, he was responsible for new product development, quality assurance, IT and development operations, database administration, downstream analytics and business intelligence. From June 2012 to April 2014, Mr. Malik held the position of Vice President of Data Management for State Compensation Insurance Fund, a workers’ compensation insurance provider, where he led the development of the enterprise data warehouse and set up a big data solution. From September 2011 to June 2012, Mr. Malik served as Vice President of Data Management & Technical Operations for SendMe, Inc., a provider of direct to consumer mobile entertainment services, and prior to that he held the position of Senior Manager Business Intelligence for Esurance, Inc., a multi-line insurance company offering vehicle and property coverage. Mr. Malik holds an MBA with a major in Finance from the Wharton School of the University of Pennsylvania and a Bachelor of Technology degree from the Indian Institute of Technology.
Involvement in Certain Legal Proceedings
In June 2003, Mr. Clark acquired and subsequently hired the management of Foundation College, an education provider that conducted campus-based training programs through the California Employment Training Panel. Due to a significant decrease in state funding, the business filed for bankruptcy in December 2005. Other than the foregoing, there are currently no legal proceedings, and during the past 10 years there have been no legal proceedings, that are material to the evaluation of the ability or integrity of any of our executive officers. There are no family relationships between any of our executive officers and directors.


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EXECUTIVE COMPENSATION
Compensation Committee Report
The following Compensation Committee Report shall not be deemed to be “soliciting material” or to otherwise be considered “filed” with the SEC, nor shall such information be deemed incorporated by reference into any filing of ours under the Securities Act or the Exchange Act except to the extent we specifically incorporate it by reference into such filing.

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the section entitled “Compensation Discussion and Analysis” be included in this proxy statement.

COMPENSATION COMMITTEE:
Dale Crandall
Patrick T. Hackett (Chair)
Victor K. Nichols

Compensation Discussion and Analysis
This Compensation Discussion and Analysis provides information about the material elements of compensation that are paid or awarded to, or earned by, our named executive officers (“NEOs”), which includes our principal executive officer, our principal financial officer, and our three other most highly compensated executive officers. For fiscal year 2016, the NEOs were:
Andrew S. Clark, President and Chief Executive Officer (“CEO”);
Kevin Royal, Executive Vice President/Chief Financial Officer;
Christopher M. Henn, Executive Vice President/Chief Operating Officer;
Jane L. McAuliffe, Executive Vice President of External Affairs/Chief Academic Officer; and
Diane L. Thompson, Executive Vice President, Secretary and General Counsel.
This Compensation Discussion and Analysis describes the compensation practices that were followed in fiscal year 2016, the numerical and other information contained in the Summary Compensation Table and related tables presented below, and actions taken regarding executive compensation before January 1, 2016 and after December 31, 2016 that we believe are necessary to understand our NEOs' compensation during fiscal year 2016.
Compensation Philosophy and Objectives
The Compensation Committee is responsible for determining the compensation of our executive officers, including our NEOs. For fiscal year 2016, the Compensation Committee had three primary objectives in setting executive compensation: (i) to incentivize and reward our executive officers for maintaining and enhancing the quality of our educational institutions, (ii) to align the interests of our executive officers with our stockholders by encouraging our executive officers to increase the growth and profitability of our company, particularly as measured by revenue, EBITDA and certain qualitative measures, and (iii) to ensure our compensation program is competitive relative to the total compensation paid to executives in the same or similar positions and with similar responsibilities at peer companies.
Executive Summary
Role of Comparative Market Data and Compensation Consultant. The Compensation Committee uses comparative market data to help determine the compensation of our executive officers, including our NEOs, and retained Mercer, LLC (“Mercer”), a compensation consultant, to formulate a report and advise the Compensation Committee regarding our compensation programs and executive compensation levels for fiscal year 2016.
Say-on-Pay Vote at 2014 Annual Meeting of Stockholders. At our 2014 Annual Meeting of Stockholders, we held an advisory, non-binding vote to approve the compensation of our NEOs, referred to as the say-on-pay vote. Our stockholders approved the compensation of our NEOs, with over 99% of the votes cast voted in favor of the say-on-pay proposal. The Compensation Committee believes this result affirms our stockholders' support of our approach to executive compensation.
Elements of Executive Compensation. The compensation of our executive officers generally consists of an annual base salary, an annual performance-based cash bonus, annual grants of long-term incentive plan awards, such as


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stock options, restricted stock units (“RSUs”) and performance cash, and certain other benefits. The Compensation Committee believes that a substantial portion of the total compensation of our NEOs and other executive officers should be variable and tied to performance. Based on input from Mercer and Mr. Clark, our CEO, the Compensation Committee reviewed and set our NEOs' annual base salaries and performance-based cash bonus targets, and awarded stock options, RSUs and performance cash to our NEOs. Each of these elements is discussed in further detail below under the headings “2016 Annual Base Salaries,” “2016 Short Term Incentive Plan” and “2016 Long-Term Incentive Plan Awards,” as applicable.
The following chart sets forth the percentage breakdown of targeted total direct compensation for each of our NEOs for fiscal year 2016. Targeted total direct compensation consists of: (i) annual base salary, (ii) targeted annual performance-based cash bonus, (iii) long-term option awards (the fair value of stock options on the date of grant), (iv) long-term stock awards (the fair value of RSUs on the date of grant) and (v) long-term performance cash awards. The annual performance-based cash bonuses and the long-term performance cash awards reflected in the table below are targeted amounts (based on 100% achievement of the applicable performance goals), rather than actual bonus amounts or performance cash earned during fiscal year 2016. Actual performance-based cash bonus payouts and actual performance cash earned for achievement of the applicable fiscal year 2016 performance goals are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.
2016 Targeted Total Direct Compensation
a2017proxyst_chart-48646a01.jpg
Variable, at-risk compensation in the form of targeted annual and long-term incentive compensation comprises the majority of targeted total direct compensation. This allocation is consistent with the Compensation Committee's compensation philosophy and objectives, specifically to incentivize and reward our executive officers for maintaining and enhancing the quality of our educational institutions and to further align the interests of our executive officers with our stockholders.
2016 Short Term Incentive Plan. In March 2016, the Compensation Committee adopted the 2016 Short Term Incentive Plan (the “2016 STI Plan”) for our executive officers, which provides for an annual performance-based cash bonus based on the achievement of company-wide performance targets related to specified qualitative metrics, EBITDA and revenue, weighted at 40%, 30% and 30%, respectively. The Compensation Committee believed this plan was appropriate to motivate our executive officers, including our NEOs, to achieve our strategic and operational objectives.


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2016 Long-Term Incentive Plan Awards. In March 2016, the Performance Award Subcommittee awarded stock options, RSUs and performance cash to our NEOs and other executive officers under the 2009 Plan. The Performance Award Subcommittee believed these equity awards were appropriate to motivate and retain our NEOs and other executive officers, and to incentivize them to continue efforts to build long-term stockholder value.
Severance and Change of Control Arrangements. The Compensation Committee believes that reasonable severance benefits are necessary to attract and retain qualified executives, and are important because it may be difficult for such executives to find comparable employment within a short period of time following certain qualifying terminations. The Compensation Committee has also determined to provide change of control benefits for our NEOs and other executive officers to reduce the uncertainty surrounding a potential change of control, which could result in the departure or distraction of such executives to the detriment of the Company and our stockholders. None of our executive officers, including our NEOs, are entitled to any gross up for change of control excise taxes. For additional information, see “Change of Control Arrangements” and “Other Payments upon Termination of Employment” below.
Risk Mitigation. The Board has adopted a Policy on Recoupment of Compensation that requires our NEOs and other executive officers to return performance-based compensation to us under certain circumstances, including in the event of certain restatements of our financial statements or the executive's intentional misconduct or gross negligence. We also have an Insider Trading Policy that restricts our NEOs and other employees from entering into any speculative or hedging transactions with respect to our securities. For more information, see “Recoupment Policy” and “Transactions in Our Securities” below.
Stock Ownership Guidelines. In December 2011, the Board, upon the recommendation of the Compensation Committee, adopted our Stock Ownership Guidelines to help align the interests of our executive officers with those of our stockholders. The Stock Ownership Guidelines provide that our NEOs and other executive officers, within five years of becoming subject to the guidelines, shall achieve the requisite level of ownership of our common stock. The covered executives may not sell shares of our common stock unless they will satisfy the applicable ownership guidelines following the sale. In May 2013, the guidelines were expanded to cover non-employee directors. For additional information, see “Stock Ownership Guidelines” below.
Role of Compensation Consultant and Use of Comparative Market Data
The Compensation Committee uses comparative market data to help determine the compensation of our NEOs and other executive officers, and enlists the assistance of compensation consultants generally to (i) construct and propose to the Compensation Committee a list of peer group companies, (ii) compare the compensation of each of our executive officers, including our NEOs, to the compensation of similarly situated executive officers at such peer group companies and (iii) advise the Compensation Committee regarding the proper amount and mix of compensation to be paid.
To assist in determining fiscal year 2016 executive compensation, management engaged Mercer to review and assess our executive compensation programs and practices and to develop observations and recommendations based on such analysis. Mercer selected a broad peer group of similarly-sized public companies in the private education sector to conduct its analysis, which group is shown below.
Career Education Corp
Universal Technical Institute, Inc.
DeVry Education Group, Inc.
Capella Education Co.
School Specialty Inc.
K12 Inc.
ITT Educational Services, Inc.
Grand Canyon Education, Inc.
Lincoln Educational Services Corp.
2U, Inc.
Strayer Education, Inc.
American Public Education, Inc.
The Compensation Committee determined that the peer group selected by Mercer was appropriate based on the revenues, market values, revenue growth and EBITDA margins of such companies as compared to our company. Mercer supplemented the peer group data with data from national compensation surveys, such as the 2015 US HRPEN Compensation Survey and the 2015 US CUPA Salary Survey, for comparison to other for-profit post-secondary education companies, as well as data from broad, general industry surveys for companies between $300 million and $1.2 billion in revenue (based on our projected revenue for fiscal year 2016 at the time). In assessing such data, Mercer applied premiums or discounts to survey matches to reflect differences in job responsibilities and/or revenue scope between our company and the survey data. In November 2015, Mercer provided a written report summarizing its findings to the Compensation Committee (the “2015 Mercer Report”).
We initially engaged Mercer to consult for us with respect to 2009 executive compensation, and Mercer has continued to consult for us on compensation matters since that time. While the Compensation Committee takes Mercer's recommendations


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into consideration in making decisions regarding executive compensation, the Compensation Committee is not obligated to follow Mercer's recommendations, and may instead determine to pay amounts and/or forms of compensation other than as recommended by Mercer.
Role of Stockholder Say-on-Pay Votes in Determining Compensation
We provide our stockholders with the opportunity to cast an advisory, non-binding vote regarding the compensation of our NEOs once every three years, referred to as the say-on-pay vote. At our 2014 Annual Meeting of Stockholders held on May 28, 2014, over 99% of the votes cast on the say-on-pay proposal were voted in favor of the proposal. The Compensation Committee believes this result affirms our stockholders' support of our approach to executive compensation, and did not change our approach in fiscal year 2016 based on such result. The Compensation Committee will continue to consider the outcome of any future say-on-pay votes, including the results of the say-on-pay vote being conducted at the Annual Meeting, when evaluating our executive compensation practices and making future compensation decisions for our NEOs.
Role of Executive Officers in Determining Compensation
Mr. Clark, our CEO, reviews the reports prepared by Mercer (and reviewed specifically the 2015 Mercer Report), which reports are prepared in conjunction with, and based on prior input from, the Compensation Committee. Mr. Clark then makes recommendations to the Compensation Committee regarding the amount and form of compensation he believes should be paid to our executive officers, other than himself. While the Compensation Committee takes Mr. Clark's recommendations into consideration in making decisions regarding executive compensation, the Compensation Committee is not obligated to follow his recommendations and may instead determine to pay amounts and/or forms of compensation other than as recommended by Mr. Clark. With respect to the amounts and forms of compensation that are paid to Mr. Clark, the Compensation Committee and Mr. Clark may engage in limited discussion regarding his compensation, but any final decisions regarding his compensation are made by the Compensation Committee when he is not present.
Elements of Executive Compensation
The compensation of our executive officers, including our NEOs, generally consists of four components:
annual base salary;
annual performance-based cash bonus;
annual grants of long-term incentive plan awards, such as stock options, RSUs and performance cash; and
certain other benefits, including severance and change of control arrangements.
The Compensation Committee believes that a substantial portion of the total compensation of our NEOs and other executive officers should be variable and tied to performance (specifically, performance-based cash bonuses and long-term incentive plan awards) to align the executives' compensation with measures that correlate with our long-term business objectives and stock price performance.
Role of annual base salaries. Annual base salaries provide our NEOs and other executive officers with a base level of monthly income to compensate them for services rendered during the fiscal year. The Compensation Committee annually reviews the annual base salaries of our NEOs and other executive officers, and may adjust annual base salaries based on its subjective evaluation of a variety of factors, including the nature and responsibility of the position, the impact, contribution, expertise and experience of the individual executive, competitive market information regarding salaries to the extent available and relevant, the importance of retaining the individual executive along with the competitiveness of the market for the individual executive's talent and services, and the recommendations of our CEO (except in the case of his own base salary).
Role of annual performance-based cash bonus. The Compensation Committee awards performance-based cash bonuses to motivate and reward our NEOs and other executive officers for achieving annual performance objectives that are established by the Compensation Committee.
Role of long-term incentive plan awards. Long-term incentive plan awards, such as stock options, RSUs and performance cash, create a substantial retention incentive and also encourage our NEOs and other executive officers to focus on our long-term business objectives and build long-term stockholder value. The Performance Award Subcommittee's practice is to grant long-term incentive plan awards to each executive officer, including our NEOs, annually. In fiscal year 2016, such grants were comprised of stock options, RSUs and performance cash. The annual long-term incentive plan awards generally vest over a period of years subject to the executive's continuing service with the company in order to provide the intended retentive value. The performance cash also require the achievement of certain performance goals as a condition to vesting in order to encourage an increase in the growth and profitability of our company. The Performance Award Subcommittee believes stock options and


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RSUs align the interests of our NEOs and other executive officers with stockholders because the value of such equity securities increases or decreases with changes in our stock price.
Role of severance and change of control arrangements and certain other benefits. Arrangements regarding compensation upon termination of employment or a change of control are also an element of compensation for our NEOs and other executive officers. Severance benefits are intended to attract and retain qualified executives. Change of control benefits for our NEOs and other executive officers serve to minimize the disruption that would be caused by the departure or distraction of any of our executive officers to the detriment of our company and our stockholders in the event of a potential change of control. We also provide our NEOs and other executive officers with employee benefits, including health and welfare benefits and participation in a 401(k) retirement savings plan and nonqualified deferred compensation plan, and certain perquisites. For additional information regarding the roles of these elements in our overall compensation program, see “Change of Control Arrangements,” “Other Payments upon Termination of Employment” and “Employee Benefits and Perquisites” below.
CEO Compensation Relative to Other Named Executive Officers
The Compensation Committee believes that CEO compensation should be greater than that of the other NEOs because his responsibilities for the management and strategic direction of the company are significantly greater and he has substantial additional obligations as the CEO. The difference between the CEO's and the other NEOs' compensation is derived in large part from variable compensation, particularly stock option awards, which will only create value for the CEO if our share value appreciates, RSUs, which increase in value when our share value appreciates, and performance cash, which vests only upon the achievement of certain performance goals. The Compensation Committee believes it is desirable to provide a significant amount of variable, performance-based compensation to the CEO to continue to motivate him toward the achievement of long-term business objectives and the creation of long-term stockholder value.
2016 Annual Base Salaries
After reviewing and considering the 2015 Mercer Report, and after discussing compensation principles and philosophy, the Compensation Committee determined that annual base salaries of our NEOs for fiscal year 2016 should remain consistent with annual base salaries for fiscal year 2015 as follows:
Name
 
2015 Annual
Base Salary ($)
 
2016 Annual
Base Salary ($)
Andrew S. Clark
 
725,000

 
725,000

Kevin Royal
 
375,000

 
375,000

Christopher M. Henn
 
415,000

 
415,000

Jane L. McAuliffe
 
340,000

 
340,000

Diane L. Thompson
 
390,000

 
390,000

2016 Short Term Incentive Plan
In March 2016, the Compensation Committee adopted the 2016 STI Plan. Under the 2016 STI Plan, the payment of annual performance-based cash bonuses to our NEOs and other executive officers was based on the achievement of corresponding company-wide performance goals related to EBITDA, revenue and quality, weighted 30%, 30% and 40%, respectively. “EBITDA” is a non-GAAP financial measure that is defined to mean net income plus interest expense, less interest income, plus income tax expense, and plus depreciation and amortization. There were no individual performance metrics in the 2016 STI Plan. The performance goal related to quality required the achievement by the company in fiscal year 2016 of certain quality metrics (collectively, the “2016 Quality Metrics”) based on:
student retention;
cohort default rate - the rate calculated by the U.S. Department of Education of student defaults over two-year and three-year measuring periods for each educational institution;
90/10 ratio - a ratio based on the percentage of revenues an institution derives from Title IV programs (an institution loses eligibility to participate in Title IV programs if it derives more than 90% of its revenues from Title IV program funds for two consecutive fiscal years);
net promoter score - a customer loyalty metric; and
employee engagement.


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The target bonus amounts for Mr. Clark, Mr. Royal and Mr. Henn for fiscal year 2016 were 100%, 50% and 75%, respectively, of their respective annual base salaries, as set forth in their respective employment agreements. See “Employment Agreements” below. The target bonus amounts for Dr. McAuliffe and Ms. Thompson for fiscal year 2016 were determined by the Compensation Committee to be equal to 55% and 35%, respectively, of their respective annual base salaries. In setting the target bonus amounts for Dr. McAuliffe and Ms. Thompson, the Compensation Committee considered the performance-based bonuses paid to similarly situated executives at the companies within our peer group, as well as each individual's level of responsibility, experience and expertise.
The Compensation Committee further determined that (i) the bonus amount for each executive for achieving the threshold performance would be 50% of the executive's target bonus amount (based on achievement of threshold performance for each performance goal), (ii) the maximum bonus amount for each executive for achievement of the performance goal related to the 2016 Quality Metrics would be 100% of that portion of the executive's target bonus amount and (iii) the maximum bonus amount for each executive for achieving maximum performance with respect to the EBITDA and revenue performance goals would be 200% of that portion of the executive's target bonus amount. See “Grants of Plan-Based Awards” below for the specific threshold, target and maximum performance-based cash bonus amounts that each NEO was eligible to earn in fiscal year 2016. The Compensation Committee believed that such amounts were generally comparable to performance-based bonuses paid to similarly situated executives at the companies within our peer group, and would provide the desired amount of retention and incentive for each executive.
For the EBITDA and revenue performance goals, the Compensation Committee had the discretion to award amounts that fell in between the target and maximum amounts for achievement of performance goals between the target and maximum levels, and for each of the three performance goals, the Compensation Committee had discretion to award a lesser amount than the target amount for achievement of performance goals below the target level but above the threshold. If none of the three performance goal thresholds were achieved, no performance-based cash bonuses would be paid.
In determining whether and the extent to which the company achieved the 2016 Quality Metrics, the Compensation Committee evaluated three primary (but not exclusive) criteria: (i) comparison with prior year; (ii) comparison with peers; and (iii) comparison with internal expectations. Accordingly, the Compensation Committee considered Ashford University's two-year cohort default rate for the 2015 federal fiscal year, three-year cohort default rate for the 2014 federal fiscal year and 90/10 ratio for 2016, as well as our student retention rate, net promoter score and employee engagement for fiscal year 2016. Assessing the quality metric information presented by management as a whole, the Compensation Committee determined that four out of the five 2016 Quality Metrics were achieved at or above the target level. The Compensation Committee determined the threshold revenue goal of $534.9 million was not achieved but the EBITDA goal of $25.5 million was achieved above the threshold level on an as-adjusted basis. The Compensation Committee used adjusted EBITDA in determining the achievement of the EBITDA goal under the 2016 STI Plan because in setting the threshold, target and maximum EBITDA goals for fiscal year 2016, the Compensation Committee understood EBITDA to exclude one-time charges such as restructuring and impairment costs and legal settlement expenses, and the exclusion of these charges is reflected in the calculation of adjusted EBITDA. Based on its assessment, the Compensation Committee approved a cash bonus for each NEO equal to 51% of such executive's target bonus amount, comprised of (i) 35% of the target bonus amount as a result of the achievement of four-fifths of the 2016 Quality Metrics at or above the target level, multiplied by the 40% weighting of the 2016 Quality Metrics component of the annual bonus, and (ii) 16% of the target bonus amount as a result of the achievement of the EBITDA goal above the threshold level and the 30% weighting of the EBITDA component of the annual bonus.
The amount of the performance-based cash bonus earned by each NEO is shown in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table below.
Performance Target (in millions)
 
Actual 2015
 
Threshold
Amount for
2016
 
Target Amount
for 2016
 
Maximum
Amount for
2016
 
Actual 2016
 
 
 

 

 

 

 

 
Revenue
 
$
561.7

 
$
534.9

 
$
563.0

 
$
591.2

 
$
527.1

 
EBITDA
 
$
45.5

 
$
25.5

 
$
31.9

 
$
38.3

 
$
26.1

(1
)
(1)
EBITDA calculated on an as-adjusted basis.



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2016 Long-Term Incentive Plan Awards
In March 2016, the Performance Award Subcommittee, with input from Mercer, approved the award of stock options, RSUs and performance cash to our NEOs and other executive officers pursuant to the 2009 Plan. The number of shares subject to the stock options and underlying the RSUs, as well as the vesting and other terms of the equity awards, are summarized under “Outstanding Equity Awards at Fiscal Year End” below. The dollar amount subject to the performance cash awards, as well as the vesting and other terms of the performance cash awards, are summarized under “Grants of Plan-Based Awards” below. Achievement of the EBITDA and revenue performance goals applicable to the performance cash awards was determined in the same manner as described with respect to the 2016 STI Plan under “2016 Short Term Incentive Plan” above. The Performance Award Subcommittee determined that the number of shares subject to the stock options and underlying the RSUs and the dollar amount subject to the performance cash awards granted to each of our NEOs and other executive officers were in each case appropriate given the outstanding equity awards held by each executive and the long-term incentive plan awards granted to similarly situated executives at the companies in our peer group. In addition, the Performance Award Subcommittee considered the retentive value of the long-term incentive plan awards, as well as the importance of aligning the interests of our NEOs and other executive officers with those of our stockholders.
Policy Regarding Deductibility of Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended (“Section 162(m)”), generally disallows a tax deduction to public companies for compensation over $1 million per year paid to the chief executive officer and the three most highly compensated executive officers (not including the chief financial officer). However, certain compensation that qualifies as “performance-based” compensation as determined under Section 162(m) is generally exempt from this deduction limit.
The Compensation Committee generally intends to structure the performance-based portion of our executive compensation, when feasible, to comply with exemptions set forth in Section 162(m) so that the compensation remains tax deductible to us. Nevertheless, the Compensation Committee believes that in certain circumstances factors other than tax deductibility take precedence when determining the forms and levels of executive compensation most appropriate and in the best interests of our company and our stockholders. Given the difficult regulatory and legislative environment we face and the competitive market for outstanding executive talent, the Compensation Committee believes it is important to retain the flexibility to design compensation programs consistent with its overall executive compensation philosophy even if some executive compensation is not fully tax deductible to us. Accordingly, the Compensation Committee may from time to time deem it appropriate to approve elements of compensation for certain executive officers that are not fully tax deductible under Section 162(m).
Change of Control Arrangements
The Compensation Committee has determined to provide change of control benefits for our NEOs because it recognizes that, as is the case with many publicly held corporations, the possibility of a change of control exists and the uncertainty and questions that a potential change of control may raise could result in the departure or distraction of our executives to the detriment of our company and our stockholders. The payments and benefits to be received by our NEOs upon the consummation of a change of control are discussed under “Potential Payments upon Termination and Change of Control“ below.
The Compensation Committee determined that “single trigger” treatment for the acceleration of vesting of stock options, and in certain circumstances, RSUs and performance cash awards, upon the consummation of a change of control is appropriate because (i) it helps retain key employees during change of control discussions, especially senior executive officers for whom long-term incentive plan awards represent a significant portion of their total compensation package, (ii) it is difficult to replicate underlying performance goals, where applicable to long-term incentive plan awards, after a change of control, (iii) the company that made the original long-term incentive plan grant will no longer exist after a change of control (and employees should not necessarily be required to have the fate of their outstanding long-term incentive plan awards tied to the new company's future success), and (iv) it ensures ongoing employees are treated similarly to terminated employees with respect to outstanding long-term incentive plan awards.
A termination of the NEO's employment following a change of control is required for such executive to receive the remainder of the change of control benefits, which is referred to as a “double trigger.” For Messrs. Clark, Royal and Henn, these benefits are set forth in their respective employment agreements; for Dr. McAuliffe and Ms. Thompson, these benefits are set forth in our Executive Severance Plan and the Severance Agreements executed by Dr. McAuliffe and Ms. Thompson thereunder. The Compensation Committee believes that a “double trigger” is appropriate for executives to receive the remainder of the change of control benefits, particularly payments of cash, because it prevents an unintended windfall to the executives in the event of a friendly change of control while still providing them with appropriate incentives to cooperate in negotiating any change of control in which they believe they may lose their employment.


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The Compensation Committee further believes that if an NEO's employment is not terminated following a change of control, but such executive experiences a defined set of adverse circumstances regarding such executive's employment following a change of control, then such executive should have the opportunity (during the two-year period immediately following the change of control) to elect to resign for “good reason” and receive the same severance benefits that such executive would have received if such executive's employment was terminated without “cause” during such time. The payments and benefits to be received by Messrs. Clark, Royal and Henn, Dr. McAuliffe and Ms. Thompson in the event of a termination without “cause” or resignation for “good reason” within two years following the consummation of a change of control are discussed under “Potential Payments upon Termination and Change of Control” below.
Other Payments upon Termination of Employment
The Compensation Committee believes that reasonable severance benefits for our NEOs are necessary to attract and retain qualified executives and limit the ability of our competitors to hire away our best talent, and are important because it may be difficult for such executives to find comparable employment within a short period of time following certain qualifying terminations. For Messrs. Clark, Royal and Henn, severance benefits are set forth in their respective employment agreements; for Dr. McAuliffe and Ms. Thompson, these benefits are set forth in our Executive Severance Plan and the Severance Agreements executed by Dr. McAuliffe and Ms. Thompson thereunder. The payments and benefits to be received by our NEOs in the event of a termination without cause, resignation for good reason, termination for death or termination for disability are discussed under “Potential Payments upon Termination and Change of Control” below. The severance benefits for Mr. Clark, our CEO, last longer than those provided to the other NEOs in recognition of the fact that it typically takes longer for a chief executive officer to find employment in a comparable position. Our NEOs may be eligible for additional severance benefits if there is a termination of employment or resignation for good reason within two years following the consummation of a change of control, as discussed under “Change of Control Arrangements” above.
Employee Benefits and Perquisites
Health and Welfare Benefits. We offer employee benefits to our NEOs and other executive officers for the purpose of meeting the current and future health and security needs for themselves and their families. These benefits, which are generally offered to all eligible employees, include medical, dental and life insurance benefits, short-term disability pay, long-term disability insurance and flexible spending accounts for medical expense reimbursements. We also have a Senior Management Benefit Plan (the “Benefit Plan”) in which our NEOs and other executive officers are eligible to participate. The Benefit Plan is a fully insured plan and provides an annual benefit of up to $100,000 per participant (including the participant's eligible dependents) for unreimbursed medical expenses during a calendar year that are not covered by our major medical plan. Additionally, the Benefit Plan provides worldwide medical assistance services, including locating the nearest medical facility, finding an attorney and making arrangements for emergency medical evacuation.
401(k) Retirement Savings Plan. We also offer our employees a 401(k) retirement savings plan (the “401(k) Plan”) in which our NEOs and other executive officers are eligible to participate. The 401(k) Plan is a defined contribution plan established in accordance with Section 401(a) of the Internal Revenue Code of 1986, as amended. Employees may make contributions (pre-tax or after-tax) into the 401(k) Plan up to annual limits prescribed by the Internal Revenue Service. We also make matching contributions under the 401(k) Plan up to certain limits, including for our NEOs who participate in the 401(k) Plan.
Nonqualified Deferred Compensation Plan. Our NEOs and other executive officers are also eligible to participate in the Bridgepoint Education Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”), pursuant to which certain of our highly compensated employees are permitted to defer up to 80% of their annual base salary and up to 100% of their annual performance bonus and any performance-based compensation into such plan. We do not make any contributions to the Deferred Compensation Plan on behalf of any participant, including any NEO, other than to contribute the matching contributions we would have made to the 401(k) Plan on such participant's behalf in the event the participant's contributions to the 401(k) Plan are required to be reduced pursuant to applicable 401(k) Plan contribution limitations. To the extent our NEOs elect to participate in the Deferred Compensation Plan, they may elect to receive distributions while they are still working for us or they may elect to receive distributions (i) at termination of employment or retirement, (ii) in the event of disability, death or financial hardship, or (iii) in the event we undergo a change of control. Investment gains or losses credited to a participant's account in the Deferred Compensation Plan are based on investment elections made by the participant from prescribed mutual fund investment options. Each participant in the Deferred Compensation Plan makes his or her own individual investment elections and may change any such investment election at any time.
Perquisites. Perquisites do not comprise a material element of our executive compensation program. With respect to executive attendance at sporting and entertainment events, we believe there is no incremental cost to us associated with the personal use by our NEOs and their guests and family members of tickets to various sporting and entertainment events that we


25



have acquired at no additional cost in connection with our corporate sponsorships of various organizations. Accordingly, no amounts related to these items are included in the compensation of our NEOs in the Summary Compensation Table below.
Recoupment Policy
The Board has adopted a Policy on Recoupment of Compensation (the “Recoupment Policy”) which requires our NEOs and other executive officers to return performance-based compensation to us if:
there is a restatement of any of our financial statements previously filed with the SEC (regardless of whether there was any misconduct), other than those due to changes in accounting principles, and the restated financial results would have resulted in a lesser amount of performance-based compensation being paid to the executive; or
the executive's intentional misconduct, gross negligence or failure to report intentional misconduct or gross negligence by one of our employees (or service providers) either (i) was a contributing factor or partial factor to us having to restate any of our financial statements previously filed with the SEC or (ii) constituted fraud, bribery or any other illegal act (or contributed to another person's fraud, bribery or other illegal act), which in each case adversely impacted our finances, business and/or reputation.
In adopting the Recoupment Policy, the Board felt that the potential requirement to repay certain performance-based compensation upon events such as those described above would provide the requisite level of deterrent to curtail both risky and unethical behavior on the part of our NEOs and other executive officers. We believe the Recoupment Policy is appropriate given the types and amounts of performance-based compensation we pay our NEOs and other executive officers, and that such policy incentivizes them to take only those risks that they determine are calculated to reward our stockholders without material adverse risk to our company.
Stock Ownership Guidelines
To help align the interests of our executive officers with those of our stockholders, in December 2011 the Board, upon the recommendation of the Compensation Committee, adopted Stock Ownership Guidelines applicable to our NEOs and other executive officers. The Stock Ownership Guidelines provide that our executives, within five years of becoming subject to the Stock Ownership Guidelines, must achieve the requisite level of stock ownership, as set forth below. In May 2013, the Stock Ownership Guidelines were expanded to also cover stock ownership by our non-employee directors. The stock ownership thresholds in effect under the Stock Ownership Guidelines are as follows:
CEO - A number of shares equal to the quotient of (i) an amount equal to six times base salary, divided by (ii) the stock price at the date of calculation.
Executive Vice Presidents - A number of shares equal to the quotient of (i) an amount equal to three times base salary, divided by (ii) the stock price at the date of calculation.
Senior Vice Presidents - A number of shares equal to the quotient of (i) an amount equal to two times base salary, divided by (ii) the stock price at the date of calculation.
Non-Employee Directors - A number of shares equal to the quotient of (i) an amount equal to three times the annual retainer for service on the Board (excluding retainers for committee or chair service), divided by (ii) the stock price at the date of calculation.
The applicable date of calculation is the date of grant of annual equity awards or the date of a contemplated sale by the executive or director, whichever is later. The covered executives and directors may not sell shares of our common stock unless they will satisfy the applicable ownership guidelines following the sale.
Transactions in Our Securities
We have an Insider Trading Policy that, among other things, prevents employees, officers and directors from engaging in speculative or hedging transactions in our securities (such as prepaid variable forwards, equity swaps, collars and exchange funds), or from holding our securities in a margin account or otherwise pledging our securities as collateral for a loan, except in each case as may be specifically permitted by the Insider Trading Policy compliance officer in advance. Transactions in publicly traded options such as put options, call options or other derivative securities on an exchange or in any other organized market are expressly prohibited. Additionally, no employee, including our NEOs, or director may engage in short sales of our securities.


26



Process for Granting Equity Awards
All stock options granted to our NEOs and other executive officers are granted with an exercise price equal to or above the fair market value of the underlying stock on the date of grant. We do not grant stock options, or any other form of equity compensation, in anticipation of the release of material non-public information. Similarly, we do not time the release of material non-public information based on stock option or other equity award grant dates.
The Compensation Committee has adopted an Equity Award Grant Policy under which management submits recommendations of equity awards to the Performance Award Subcommittee at the committee's regular quarterly meetings. Such recommendations include the type of award proposed to be granted, the recipient, and the size and special terms or conditions of any such award. Any equity awards approved by the Performance Award Subcommittee are granted as of the date of such quarterly meeting, unless a future effective date of grant is specifically authorized. Typically, equity awards are granted by the Performance Award Subcommittee pursuant to either a live or telephonic meeting. However, the Performance Award Subcommittee may also authorize the grant of equity awards pursuant to a unanimous written consent. If equity awards are authorized by unanimous written consent, the effective date of the grant (and the date upon which any stock option will have its exercise price determined) is the date on which our Secretary has received all signatures to the unanimous written consent, unless a future effective date of grant is specifically authorized.
Tax and Accounting Considerations
While the Compensation Committee generally considered the financial accounting and tax implications of its executive compensation decisions, neither element was a material consideration in the compensation awarded to our NEOs and other executive officers during fiscal year 2016.


27



Summary Compensation Table
The following table summarizes the total compensation earned by each of our NEOs for 2016, 2015 and 2014.
Name and Principal Position
 
Year
 
Salary
($)
 
Bonus
($)(1)
 
Stock Awards ($)(2)
 
Option
Awards
($)(3)
 
Non-Equity
Incentive
Plan
Compensation
($)(4)
 
Changes in Pension Value and Nonqualified Deferred Compensation Earnings
($)(5)
 
All Other
Compensation
($)(6)
 
Total ($)
Andrew S. Clark
 
2016
 
725,000

 

 
504,719

 
1,061,859

 
620,840

 

 
60,321

 
2,972,739

Chief Executive Officer/
 
2015
 
725,000

 

 
1,646,013

 
999,127

 
391,500

 

 
59,942

 
3,821,582

President
 
2014
 
705,481

 

 
1,650,759

 
859,359

 
290,000

 

 
78,057

 
3,583,656

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kevin Royal
 
2016
 
375,000

 

 
170,817

 
359,424

 
180,625

 

 
48,321

 
1,134,187

Executive Vice President/
 
2015
 
82,212

 

 
250,004

 

 
25,313

 

 
7,415

 
364,944

Chief Financial Officer
 
2014
 

 

 

 

 

 

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Christopher M. Henn
 
2016
 
415,000

 

 
187,973

 
395,431

 
252,237

 

 
114,401

 
1,365,042

Executive Vice President/
 
2015
 
287,307

 
500,000

 
1,115,191

 
378,943

 
168,075

 

 
75,267

 
2,524,783

Chief Operating Officer
 
2014
 

 

 

 

 

 

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Jane L. McAuliffe
 
2016
 
340,000

 

 
171,876

 
361,649

 
180,370

 

 
56,605

 
1,110,500

     Executive Vice President/
 
2015
 
339,692

 

 
652,563

 
340,423

 
100,980

 

 
52,115

 
1,485,773

     Chief Academic Officer
 
2014
 
321,115

 

 
634,766

 
257,815

 
72,600

 

 
54,237

 
1,340,533

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diane L. Thompson
 
2016
 
390,000

 

 
119,985

 
252,360

 
129,285

 

 
44,096

 
935,726

Executive Vice President,
 
2015
 
389,538

 

 
576,600

 
237,617

 
73,710

 

 
37,958

 
1,315,423

Secretary and General Counsel
 
2014
 
364,904

 

 
601,534

 
196,427

 
52,500

 

 
34,791

 
1,250,156

(1)
Represents a one-time cash bonus payment received by Mr. Henn in connection with his commencement of employment on April 13, 2015.
(2)
Represents the fair market value of any RSUs and performance stock units (“PSUs”) awarded to the NEOs in each fiscal year, computed in accordance with FASB ASC Topic 718. The RSUs are further described under “Compensation Discussion and Analysis — 2016 Equity Awards” above, and the RSUs and PSUs are further described under “Outstanding Equity Awards at Fiscal Year End” below.
(3)
Represents the aggregate grant date fair value of stock option awards granted to the NEOs in each fiscal year, computed in each case in accordance with FASB ASC Topic 718. Assumptions used to calculate these amounts are described in Note 16, “Stock-Based Compensation,” to our annual consolidated financial statements for the year ended December 31, 2016, which are included in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on March 7, 2017.
(4)
Represents the performance-based cash awards earned in each fiscal year. The performance-based cash bonus awards earned by the NEOs under the 2016 STI Plan are described under “Compensation Discussion and Analysis — 2016 Short Term Incentive Plan,” the long-term performance cash awards earned by the NEOs under the 2009 Plan are described under “Compensation Discussion and Analysis — 2016 Long Term Incentive Plan Awards” above, and both performance-based cash awards are discussed under “Grants of Plan-Based Awards” below.
(5)
There are no nonqualified deferred compensation earnings reflected in this column because no NEO received above-market or preferential earnings on such compensation.
(6)
Represents (i) payments for health, life and disability insurance premiums, (ii) medical expense reimbursements received under the Senior Management Benefit Plan, (iii) 401(k) Plan matching contributions, (iv) nonqualified deferred compensation plan contributions (only to contribute the matching contributions we would have made to the 401(k) Plan on the NEO's behalf because the NEO's contributions to the 401(k) Plan were required to be reduced pursuant to applicable 401(k) plan contribution limitations), (v) in the case of Mr. Clark only, legal expense reimbursements and (vi) in the case of Mr. Henn only, housing allowance amounts. Payments for health insurance premiums reflect the full amount paid on behalf of the NEOs rather than the portion in excess of that paid for non-executives. Prior period amounts have been revised to reflect this presentation. For a breakdown of the amounts comprising the “All Other Compensation” column, see the All Other Compensation Detail table below.


28



All Other Compensation Detail
Name
 
Year
 
Qualified
Retirement Plan
Employer Match ($)
 
Employer Deferred Compensation Plan Contributions ($)
 
Health, Life and
Disability Insurance
Premiums and Medical Reimbursements ($)
 
 Reimbursement of Legal or Housing Expenses ($)
 
All Other Compensation Total ($)
Andrew S. Clark
 
2016
 
12,000

 

 
48,321

 

 
60,321

 
 
2015
 
12,000

 

 
43,624

 
4,318

 
59,942

 
 
2014
 
8,750

 

 
69,307

 

 
78,057

 
 
 
 
 
 
 
 
 
 
 
 
 
Kevin Royal
 
2016
 

 

 
48,321

 

 
48,321

 
 
2015
 

 

 
7,415

 

 
7,415

 
 
 
 
 
 
 
 
 
 
 
 
 
Christopher M. Henn
 
2016
 

 

 
49,401

 
65,000

 
114,401

 
 
2015
 

 

 
30,267

 
45,000

 
75,267

 
 
 
 
 
 
 
 
 
 
 
 
 
Jane L. McAuliffe
 
2016
 
8,500

 

 
48,105

 

 
56,605

 
 
2015
 
8,492

 

 
43,623

 

 
52,115

 
 
2014
 
8,372

 

 
45,865

 

 
54,237

 
 
 
 
 
 
 
 
 
 
 
 
 
Diane L. Thompson
 
2016
 
11,700

 

 
32,396

 

 
44,096

 
 
2015
 
11,250

 

 
26,708

 

 
37,958

 
 
2014
 
11,346

 

 
23,445

 

 
34,791

Grants of Plan-Based Awards
The following table provides information regarding grants of plan-based awards to each of our NEOs during 2016.
Name
 
Grant Date
 
Approval Date
 
Estimated Future Payouts Under Non-Equity Incentive Plan Awards
 
All Other Stock Awards: Number of Shares of Stock or Units (#)
 
All Other
Option
Awards:
Number of
Securities
Underlying
Options (#)
 
Exercise
Price
or Base
Price of
Option
Awards
($/Sh)
 
Grant
Date Fair
Value of
Stock and Option
Awards (3)($)
 
 
 
Threshold ($)
 
Target ($)
 
Maximum ($)
 
 
 
 
Andrew S. Clark
 

 

 
362,500

 
725,000

 
1,450,000

(1)

 

 

 

 
 

 

 
246,167

 
492,333

 
492,333

(2)

 

 

 

 
 
3/29/2016

 
3/18/2016

 

 

 

 
47,660

 

 

 

 
 
3/29/2016

 
3/18/2016

 

 

 

 

 
100,270

 
10.59

 
1,061,859

Kevin Royal
 

 

 
23,438

 
46,875

 
93,750

(1)

 

 

 

 
 

 

 
83,334

 
166,667

 
166,667

(2)

 

 

 

 
 
3/29/2016

 
3/18/2016

 

 

 

 
16,130

 

 

 

 
 
3/29/2016

 
3/18/2016

 

 

 

 

 
33,940

 
10.59

 
359,425

Christopher M. Henn
 

 

 
155,625

 
311,250

 
622,500

(1)

 

 

 

 
 

 

 
91,667

 
183,333

 
183,333

(2)

 

 

 

 
 
3/29/2016

 
3/18/2016

 

 

 

 
17,750

 

 

 

 
 
3/29/2016

 
3/18/2016

 

 

 

 

 
37,340

 
10.59

 
395,431

Jane L. McAuliffe
 

 

 
93,500

 
187,000

 
374,000

(1)

 

 

 

 
 

 

 
83,334

 
166,667

 
166,667

(2)

 

 

 

 
 
3/29/2016

 
3/18/2016

 

 

 

 
16,230

 

 

 

 
 
3/29/2016

 
3/18/2016

 

 

 

 

 
34,150

 
10.59

 
361,649

Diane L. Thompson
 

 

 
68,250

 
136,500

 
273,000

(1)

 

 

 

 
 

 

 
58,500

 
117,000

 
117,000

(2)

 

 

 

 
 
3/29/2016

 
3/18/2016

 

 

 

 
11,330

 

 

 

 
 
3/29/2016

 
3/18/2016

 

 

 

 

 
23,830

 
10.59

 
252,360

(1)
The threshold, target and maximum amounts shown in the table correspond to the amounts the Compensation Committee determined to pay to the NEOs as performance-based cash bonuses pursuant to the 2016 STI Plan based upon the achievement of certain performance goals relating to EBITDA, revenue and various quality measures. The threshold, target and maximum amounts shown above assume


29



threshold, target and maximum achievement, respectively, for each of the three weighted performance goals. For additional information regarding the 2016 STI Plan, including the performance-based cash bonuses, performance targets and methodology for determining bonus amounts, see “Compensation Discussion and Analysis — 2016 Short Term Incentive Plan” above. Actual payouts to the NEOs under the 2016 STI Plan for achievement of the 2016 performance goals are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table above.
(2)
The threshold, target, and maximum amounts shown in the table correspond to the amounts the Compensation Committee determined to pay to the NEOs as long-term performance cash awards pursuant to the 2009 Plan based upon the achievement of certain performance goals relating to EBITDA and revenue. The threshold, target and maximum amounts shown above assume threshold, target and maximum achievement, respectively, for each of the two weighted performance goals. For additional information regarding the long-term performance cash awards, see “Compensation Discussion and Analysis — 2016 Long Term Incentive Plan Awards” above. The amount of long-term performance cash actually earned by the NEOs under the 2009 Plan for achievement of the performance goals is reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table above.  The earned long-term performance cash will vest in four equal annual installments beginning on March 29, 2017, subject to the NEOs continued service with us through each vesting date.
(3)
Represents the grant date fair value of the respective awards of stock options and RSUs, computed in accordance with FASB ASC Topic 718. Assumptions used to calculate these amounts are described in Note 16, “Stock-Based Compensation,” to our annual consolidated financial statements for the year ended December 31, 2016, which are included in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on March 7, 2017.


30



Outstanding Equity Awards at Fiscal Year End
The following table shows the number of shares of our common stock subject to outstanding stock options, RSUs and PSUs held by our NEOs as of December 31, 2016.
 
 
Outstanding Equity Awards at Fiscal Year End
 
 
Option Awards
 
Stock Unit Awards
Name
 
Number of
securities
underlying
unexercised options
(#) exercisable
 
Number of
securities
underlying
unexercised
options (#)
unexercisable
 
Option
exercise
price ($)
 
Option expiration date
 
Number of stock units that have not vested (#)
 
Market value of stock units that have not vested ($)(1)
Andrew S. Clark
 
17,782

 

 
$
0.59

 
11/27/2017

(2)
 

 
 

 
 
 
666,666

 

 
$
10.50

 
4/14/2019

(3)(4)
 

 
 

 
 
 
30,045

 

 
$
0.59

 
11/27/2017

(2)
 

 
 

 
 
 
114,399

 

 
$
0.59

 
11/27/2017

(2)
 

 
 

 
 
 
125,100

 

 
$
15.81

 
8/5/2020

(4)(5)
 

 
 

 
 
 
134,160

 

 
$
17.10

 
3/31/2021

(4)(6)
 

 
 

 
 
 
122,750

 

 
$
24.75

 
3/30/2022

(4)(7)
 

 
 

 
 
 
114,569

 
11,331

 
$
10.23

 
3/29/2023

(4)(8)
 

 
 

 
 
 
76,534

 
37,696

 
$
14.50

 
3/29/2024

(4)(9)
 

 
 

 
 
 
45,560

 
60,392

 
$
9.43

 
3/29/2025

(4)(10)
 

 
 

 
 
 

 
100,270

 
$
10.59

 
3/29/2026

(4)(11)
 

 
 

 
 
 

 

 
$

 

 
 
17,057

(12)
 
172,787

 
 
 

 

 
$

 

 
 
29,800

(13)
 
301,874

 
 
 

 

 
$

 

 
 
145,659

(14)
 
1,475,526

 
 
 

 

 
$

 

 
 
68,068

(15)
 
689,529

 
 
 

 

 
$

 

 
 
38,262

(16)
 
387,594

 
 
 

 

 
$

 

 
 
52,363

(17)
 
530,437

 
 
 

 

 
$

 

 
 
47,660

(18)
 
482,796

 
Kevin Royal
 

 
33,940

 
$
10.59

 
3/29/2026

(4)(11)
 


 

 
 
 

 

 
$

 

 
 
16,361

(19)
 
165,737

 
 
 

 

 
$

 

 
 
16,130

(18)
 
163,397

 
Christopher M. Henn
 
16,235

 
23,362

 
$
9.57

 
4/13/2025

(4)(20)
 

 
 

 
 
 

 
37,340

 
$
10.59

 
3/29/2026

(4)(11)
 

 
 

 
 
 

 

 
$

 

 
 
14,268

(21)
 
144,535

 
 
 

 

 
$

 

 
 
45,719

(22)
 
463,133

 
 
 

 

 
$

 

 
 
25,906

(23)
 
262,428

 
 
 

 

 
$

 

 
 
17,750

(18)
 
179,808

 
Jane L. McAuliffe
 
57,030

 

 
$
10.50

 
4/14/2019

(3)(4)
 

 
 

 
 
 
7,524

 

 
$
15.81

 
8/5/2020

(4)(5)
 

 
 

 
 
 
13,545

 

 
$
17.10

 
3/31/2021

(4)(6)
 

 
 

 
 
 
49,100

 

 
$
24.75

 
3/30/2022

(4)(7)
 

 
 

 
 
 
45,009

 
4,451

 
$
10.23

 
3/29/2023

(4)(8)
 

 
 

 
 
 
22,961

 
11,309

 
$
14.50

 
3/29/2024

(4)(9)
 

 
 

 
 
 
15,523

 
20,577

 
$
9.43

 
3/29/2025

(4)(10)
 

 
 

 
 
 

 
34,150

 
$
10.59

 
3/29/2026

(4)(11)
 

 
 

 
 
 

 

 
$

 

 
 
6,700

(12)
 
67,871

 
 
 

 

 
$

 

 
 
8,940

(13)
 
90,562

 
 
 

 

 
$

 

 
 
69,538

(14)
 
704,420

 
 
 

 

 
$

 

 
 
32,496

(15)
 
329,184

 
 
 

 

 
$

 

 
 
13,036

(16)
 
132,055

 
 
 

 

 
$

 

 
 
17,841

(17)
 
180,729

 
 
 

 

 
$

 

 
 
16,230

(18)
 
164,410

 
Diane L. Thompson
 
21,931

 

 
$
10.50

 
4/14/2019

(3)(4)
 

 
 

 
 
 
29,200

 

 
$
15.81

 
8/5/2020

(4)(5)
 

 
 

 
 
 
30,960

 

 
$
17.10

 
3/31/2021

(4)(6)
 

 
 

 
 
 
38,870

 

 
$
24.75

 
3/30/2022

(4)(7)
 
 
 
 
 
 
 
 
28,638

 
2,832

 
$
10.23

 
3/29/2023

(4)(8)
 
 
 
 
 
 
 
 
17,494

 
8,616

 
$
14.50

 
3/29/2024

(4)(9)
 
 
 
 
 
 
 
 
10,835

 
14,363

 
$
9.43

 
3/29/2025

(4)(10)
 

 
 

 
 
 

 
23,830

 
$
10.59

 
3/29/2026

(4)(11)
 

 
 

 
 
 

 

 
$

 

 
 
4,265

(12)
 
43,204

 
 
 

 

 
$

 

 
 
6,810

(13)
 
68,985

 


31



 
 

 

 
$

 

 
 
74,823

(14)
 
757,957

 
 
 

 

 
$

 

 
 
34,965

(15)
 
354,195

 
 
 

 

 
$

 

 
 
9,099

(16)
 
92,173

 
 
 

 

 
$

 

 
 
12,453

(17)
 
126,149

 
 
 

 

 
$

 

 
 
11,330

(18)
 
114,773

 
(1)
Based on the closing price of our common stock of $10.13 as reported by the NYSE on December 31, 2016.
(2)
These stock options were granted under our 2005 Stock Incentive Plan (the “2005 Plan”) on November 27, 2007, with an exercise price equal to the fair market value of one of our common shares on the date of grant. For time-based stock options, the vesting commencement date was November 27, 2007.
(3)
These stock options were granted under the 2009 Plan on April 14, 2009, with an exercise price equal to the price at which shares were offered to the public in our initial public offering. The vesting commencement date was April 14, 2009.
(4)
These stock options vest as follows, subject to the NEO's continued service with us: (i) 25% of the option vests on the first anniversary of the vesting commencement date, (ii) an additional 2% of the option vests on each monthly anniversary of the vesting commencement date for the 33 months following the first anniversary of the vesting commencement date and (iii) an additional 3% of the option vests on each of the 46th, 47th and 48th monthly anniversaries of the vesting commencement date.
(5)
These stock options were granted under the 2009 Plan on August 5, 2010, with an exercise price equal to the regular session closing price of our common stock as reported by the NYSE on the date of grant. The vesting commencement date was August 5, 2010.
(6)
These stock options were granted under the 2009 Plan on March 31, 2011, with an exercise price equal to the regular session closing price of our common stock as reported by the NYSE on the date of grant. The vesting commencement date was March 31, 2011.
(7)
These options were granted under the 2009 Plan on March 30, 2012, with an exercise price equal to the regular session closing price of our common stock as reported by the NYSE on the date of grant. The vesting commencement date was March 30, 2012.
(8)
These options were granted under the 2009 Plan on March 29, 2013, with an exercise price equal to the regular session closing price of our common stock as reported by the NYSE on the date of grant. The vesting commencement date was March 29, 2013.
(9)
These options were granted under the 2009 Plan on March 29, 2014, with an exercise price equal to the regular session closing price of our common stock as reported by the NYSE on the date of grant. The vesting commencement date was March 29, 2014.
(10)
These options were granted under the 2009 Plan on March 29, 2015, with an exercise price equal to the regular session closing price of our common stock as reported by the NYSE on the date of grant. The vesting commencement date was March 29, 2015.
(11)
These options were granted under the 2009 Plan on March 29, 2016, with an exercise price equal to the regular session closing price of our common stock as reported by the NYSE on the date of grant. The vesting commencement date was March 29, 2016.
(12)
These RSUs were granted under the 2009 Plan on March 29, 2013, and 25% of the RSUs will vest and be delivered to the NEO on each anniversary of the grant date, subject to the NEO's continuing service with us through each such date.
(13)
These RSUs were granted under the 2009 Plan on March 29, 2014, and 25% of the RSUs will vest and be delivered to the NEO on each anniversary of the grant date, subject to the NEO's continuing service with us through each such date.
(14)
These PSUs were granted under the 2009 Plan on December 18, 2014, and 25% of the PSUs may be earned during each of the calendar years 2015, 2016, 2017 and 2018 based on the achievement of the applicable performance target for such calendar year. Any PSUs earned during the applicable calendar year will vest on March 15 of the following year, subject to the NEO's continued service with us through each such date.
(15)
These PSUs were granted under the 2009 Plan on March 18, 2015, and 25% of the PSUs may be earned during each of the calendar years 2015, 2016, 2017 and 2018 based on the achievement of the applicable performance target for such calendar year. Any PSUs earned during the applicable calendar year will vest on March 15 of the following year, subject to the NEO's continued service with us through each such date.
(16)
These RSUs were granted under the 2009 Plan on March 29, 2015, and 25% of the RSUs will vest and be delivered to the NEO on each anniversary of the grant date, subject to the NEO's continuing service with us through each such date.
(17)
These PSUs were granted under the 2009 Plan on March 29, 2015, and 25% of the PSUs may be earned during each of the following 12-month periods based on the achievement of the applicable performance target for such period: March 29, 2015 to March 28, 2016; March 29, 2016 to March 28, 2017; March 29, 2017 to March 28, 2018; and March 29, 2018 to March 28, 2019. Any PSUs earned during the applicable 12-month period will vest on the March 29 immediately following such period, subject to the NEO's continued service with us through each such date.
(18)
These RSUs were granted under the 2009 Plan on March 29, 2016, and 25% of the RSUs will vest and be delivered to the NEO on each anniversary of the grant date, subject to the NEO's continuing service with us through each such date.


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(19)
These RSUs were granted under the 2009 Plan on October 1, 2015, and 50% of the RSUs will vest and be delivered to the NEO on each of the first and second anniversaries of the grant date, subject to the NEO's continuing service with us through each such date.
(20)
These options were granted under the 2009 Plan on April 13, 2015, with an exercise price equal to the regular session closing price of our common stock as reported by the NYSE on the date of grant. The vesting commencement date was April 13, 2015.
(21)
These RSUs were granted under the 2009 Plan on April 13, 2015, and 25% of the RSUs will vest and be delivered to the NEO on each anniversary of the grant date, subject to the NEO's continuing service with us through each such date.
(22)
These PSUs were granted under the 2009 Plan on April 13, 2015, and 25% of the PSUs may be earned during each of the following 12-month periods based on the achievement of the applicable performance target for such period: March 29, 2015 to March 28, 2016; March 29, 2016 to March 28, 2017; March 29, 2017 to March 28, 2018; and March 29, 2018 to March 28, 2019. Any PSUs earned during the applicable 12-month period will vest on the March 29 immediately following such period, subject to the NEO's continued service with us through each such date.
(23)
These RSUs were granted under the 2009 Plan on April 13, 2015, and 50% of the RSUs will vest and be delivered to the NEO on each of the first and second anniversaries of the grant date, subject to the NEO's continuing service with us through each such date.
Option Exercises and Stock Vested in 2016
The following table provides information for the NEOs regarding (i) stock options exercised during 2016, including the total number of shares acquired upon exercise and the aggregate value realized before payment of any applicable withholding tax and broker commissions, and (ii) RSUs vested during 2016.
 
 
Option Awards
 
Stock Awards