DEF 14A 1 a2021proxystatement.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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Check the appropriate box:
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xDefinitive Proxy Statement
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oSoliciting Material under §240.14a‑12

2U, 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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Notice of 2021
Annual Meeting of Stockholders
and Proxy Statement




Thursday, June 3, 2021 — 3:00 P.M., Eastern Time
Online only at: www.virtualshareholdermeeting.com/TWOU2021



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“I sit here today steadfast and confident in our collective resilience and strength.”
April 19, 2021
Dear Fellow Stockholder:
I am pleased to invite you to attend our 2021 Annual Meeting of Stockholders, to be held virtually on June 3, 2021 at 3:00 p.m., Eastern Time. You can attend the Annual Meeting by visiting www.virtualshareholdermeeting.com/TWOU2021, where you will be able to listen to the meeting live, submit questions and vote online.
Details regarding the Annual Meeting and the various matters to be acted upon during the Annual Meeting are described in the accompanying Notice of 2021 Annual Meeting of Stockholders and the proxy statement.
We have elected to provide our proxy materials over the Internet under the Securities and Exchange Commission’s “notice and access” rules. We will send stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) with instructions for accessing the proxy materials, including our proxy statement and Annual Report to Stockholders and a list of the matters to be considered at the meeting. The Notice will also provide instructions on how to vote your shares and how to request a paper copy of the proxy materials by mail.
You can ensure that your shares are represented at the Annual Meeting by promptly voting over the Internet, voting by telephone or by completing and mailing a proxy or voting card if you receive printed proxy materials. If you hold shares through a broker or other nominee in “street name,” you will need to follow the voting instructions provided by your broker or nominee.
On behalf of the Board of Directors of 2U, Inc., I would like to express our appreciation for your ownership and continued support of 2U, Inc. We look forward to speaking with you at the Annual Meeting.
Sincerely,
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CHRISTOPHER “CHIP” PAUCEK
Co-Founder & Chief Executive Officer



Notice of 2021 annual meeting
of stockholders.
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Date & Time
June 3, 2021 (Thursday)
3:00 p.m. (Eastern Time)
Location
Online at: www.virtualshareholdermeeting.com/TWOU2021
Who Can Vote
Stockholders as of April 9, 2021 are entitled to vote
Stockholders of 2U, Inc.:
The 2021 Annual Meeting of Stockholders (the “Meeting”) of 2U, Inc. (the “Company”) will be held virtually via live webcast at: www.virtualshareholdermeeting.com/TWOU2021 on June 3, 2021, beginning at 3:00 p.m., Eastern Time. You will be able to attend the Meeting online, vote and submit your questions at the website listed above during the Meeting. We are holding the Meeting for the following purposes, which are more fully described in the accompanying proxy statement:
Voting Matters:
Proposals For Further Details
1.To elect four Class I directors, nominated by the Board of Directors of the Company, to serve on the Board of Directors until the Company’s 2024 annual meeting of stockholders and until their successors are duly elected and qualified or until their earlier death, resignation or removal
Page 12
2.To approve, on a non-binding advisory basis, the compensation of the Company’s Named Executive Officers
Page 35
3.To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the 2021 fiscal year
Page 57
4.To consider a stockholder proposal to elect each director annually, if properly presented at the meeting
Page 59
We will also consider any other business that properly comes before the Meeting or any adjournment thereof. On or about April 19, 2021, we will mail to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access the proxy materials for our Meeting, including our Annual Report to Stockholders for the year ending December 31, 2020. The Notice will also provide instructions on how to vote your shares and how to request a paper copy of the proxy materials by mail.
A list of stockholders entitled to vote at the Meeting will be available for inspection by any stockholder for any purpose germane to the Meeting, during regular business hours, for a period of ten days prior to the Meeting. To inspect the list, email our Investor Relations department at investorinfo@2u.com. The list will also be available during the Meeting by following the instructions located at: www.virtualshareholdermeeting.com/TWOU2021.
Your vote is important. Whether or not you plan to attend the Meeting, and no matter how many shares you own, please vote your shares or submit your proxy promptly in advance of the Meeting by using one of the methods described in the proxy materials. Any stockholder attending the Meeting may vote online during the Meeting, even if you have already returned a proxy card or voted over the Internet. If you hold shares through a broker or other nominee in “street name,” you should follow the voting instructions provided to you by such broker or other nominee.
By Order of the Board of Directors,
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Christopher “Chip” Paucek
Co-Founder & Chief Executive Officer
April 19, 2021
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Internet
www.proxyvote.com
Phone
1-800-690-6903
Mail
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided
 
Important Notice Regarding the Availability of Proxy Materials for the Stockholders’ Meeting to Be Held on June 03, 2021
This Notice of Annual Meeting and Proxy Statement and the 2020 Annual Report are available at: www.proxyvote.com or on our investor relations website at: http://investor.2u.com.
 
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Table of contents.
Page

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2021 Proxy Statement
5


Proxy statement summary.
The below summary is intended to highlight certain key information contained in this Proxy Statement. As it is only a summary, it does not contain all of the information that you should consider. We strongly encourage you to read the complete Proxy Statement as well as our 2020 Annual Report to Stockholders before casting your vote.
Voting matters & board recommendations
ProposalBoard RecommendationPage
1Election of four Class I director nominees
FOR
each nominee
12
Paul A. Maeder
Christopher J. Paucek
Gregory K. Peters
Robert M. Stavis
2Advisory approval of executive compensationFOR35
3Ratification of appointment of KPMG LLP as Company’s independent registered public accounting firm for fiscal 2021FOR57
4Advisory approval of stockholder proposal to elect each director annuallyNONE59
Financial and business highlights
The Company delivered strong results in 2020, marked by significant achievements in revenue growth, margin improvement and progress towards positive free cash flow. These results were driven by higher student demand across our portfolio, operational and marketing efficiencies, and continued investment in launching new in-demand offerings. The events of 2020 validated the importance of high-quality, digital education. In a challenging operational environment, we continued to build, deliver and support a growing variety of lifelong learning opportunities for students.
Generated $775 million in revenue, up 35% compared to 2019.
Strengthened our balance sheet, ending 2020 with a cash balance of $519 million.
Launched over 100 new offerings, including graduate and undergraduate degrees, boot camps, and short courses.
Enrolled 99,000 new students across our suite of offerings.
Provided critical support to existing and new university clients, including flexible models to help universities address their reopening plan needs.
Added six new university clients, including Michigan State, Ohio State, Amherst, Colgate, Norfolk State, and Stanford.
Delivered operating cash flow of $29.6 million, a $81.6 million improvement compared to 2019.
Significantly increased addressable market with first undergraduate degree program launches.

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PROXY STATEMENT SUMMARY
Board and corporate governance highlights
Director nominee matrix.
Director Nominee
Director Since
Independence
Committee Membership
Paul A. Maeder, 67
General Partner, Highland Capital Partners
2010
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Audit Committee
Christopher J. Paucek, 50
Co-Founder and Chief Executive Officer, 2U, Inc.
2012
None
Gregory K. Peters, 50
Chief Operating Officer and Chief Product Officer, Netflix, Inc.
2018
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Audit Committee
Robert M. Stavis, 58
Partner, Bessemer Venture Partners
2011
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Audit Committee
Board snapshot.
Diversity and independence
GENDER DIVERSITY
RACIAL / ETHNIC DIVERSITY
INDEPENDENCE
AGE
TENURE
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Qualifications and experience
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2021 Proxy Statement
7

PROXY STATEMENT SUMMARY
Governance best practices.
We believe that good corporate governance is important to achieve success and to ensure that we are managed for the long-term benefit of our stockholders. We believe that the following corporate governance policies, guidelines and practices adopted by our Board of Directors (“Board” or “Board of Directors”) reflect many current best practices:


image_181.jpg   All directors with the exception of Mr. Paucek, our Chief Executive Officer, are independent

image_181.jpg   We have separate Chair and Chief Executive Officer roles

image_181.jpg   All directors attended greater than 75% of Board meetings held during 2020

image_181.jpg   At least annually, the Board and its Committees conduct a self-evaluation to determine whether they are functioning effectively

image_181.jpg   Directors have full and free access to management and, as necessary, appropriate independent advisors
image_181.jpg   We have three standing Board Committees, all of which are comprised solely of independent directors

image_181.jpg   We have a diverse Board in terms of gender, race and ethnicity, experience and skills

image_181.jpg   We have a limit on outside directorships

image_181.jpg   We have regular executive sessions of independent directors

image_181.jpg   We perform an annual review of director compensation against peers


Please see the section entitled “Corporate Governance and Board Matters” of this Proxy Statement for a more detailed description of our Board structure and governance practices.
Executive compensation highlights
2020 executive compensation program.
Our Compensation Committee designs our executive compensation programs with the goal of attracting, retaining and motivating talented executives, while simultaneously promoting the achievement of key financial and strategic performance measures and aligning the incentives of our executives with the creation of value for our stockholders. For 2020, our Compensation Committee introduced meaningful changes to our executive compensation program based on feedback from stockholders and the consideration of best practices in corporate governance: The overall design of our compensation program for 2020 is summarized below:
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PROXY STATEMENT SUMMARY
Key changes for 2021 executive compensation program.
For 2021, we have continued to evolve and enhance our executive compensation programs in response to stockholder feedback and in line with our compensation philosophy. For example, we introduced PRSUs that are eligible to vest based on achievement of financial metrics in order to further align our NEO’s compensation with the Company’s financial objectives. Performance against these financial metrics will be measured over three one-year performance periods, with vesting occurring at the end of the three year period. We also lengthened the performance period for the PRSUs eligible to vest based on the Company’s total stockholder return as compared to companies comprising the Russell 3000 Index to three years in order to align the interests of NEOs and stockholders over a longer period and provide a balance of short- and long-term performance measurement periods.
2020 CEO total direct compensation pay mix.
The Compensation Committee evaluates our executive compensation program annually to ensure it is consistent with our short- and long-term goals given the dynamic nature of our business and the market in which we compete. In evaluating Mr. Paucek’s compensation, the Compensation Committee evaluates total direct compensation, which is generally comprised of a mix of cash compensation, in the form of base salary and annual cash incentive bonus, and long-term incentive compensation in the form of equity awards. This total direct compensation mix has been designed so that the elements of variable, or “at-risk”, pay represent a substantial portion of the total direct compensation opportunity awarded to Mr. Paucek. By dedicating a meaningful percentage of Mr. Paucek’s total direct compensation opportunity to these variable “at-risk” pay elements, rather than fixed pay elements, the Compensation Committee believes that we are able to better link Mr. Paucek’s compensation with the Company’s performance. The following chart illustrates the breakdown of Mr. Paucek’s target total direct compensation pay mix for 2020.


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2021 Proxy Statement
9

PROXY STATEMENT SUMMARY
Executive compensation best practices.
Below we summarize the executive compensation practices we have implemented to help drive executive performance, as well as practices we have chosen not to implement because we believe such practices do not support our stockholders’ long-term interests.
What
we
do.
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Emphasize Pay-for-Performance
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Annual “Say-on-Pay” Vote
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Compensation Recovery (“Clawback”) Policy
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Independent Compensation Consultant
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Use Double-Trigger Change in Control Provisions
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Annual Executive Compensation Review
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Avoid Undue Risk-Taking
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NEO and Director Stock Ownership Guidelines
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Limited Perquisites

What
we
don’t
do.
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No Hedging or Pledging
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No Excise Tax Gross-Ups
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No Special Welfare or Health Benefits
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No Guaranteed Compensation Increases
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No Guaranteed Bonuses
Please see the section entitled “Compensation Discussion and Analysis” of this Proxy Statement for a more detailed description of the compensation paid to our NEOs in 2020, our compensation philosophy and other compensation practices.
ESG highlights
We recognize the impact a business can have on its surrounding community and environment and believe that an organization has the responsibility to be a good corporate citizen. We also value our employees and recognize the critical roles that they play in the achievement of our long-term goals and overall success. Below is a summary of certain ESG highlights from 2020.
Human Capital Societal Impact & Community Involvement
Employees receive tuition reimbursement benefit and access to skills development trainings
Employees receive stipends for home office improvements and Wi-Fi support
Great Place to Work Certification for third consecutive year
Launched scholarship fund to provide technical boot camps to under-represented minorities
Volunteer paid time-off and Company-sponsored “Days of Service”
Regular support to regional non-profits aligned with our mission
Diversity, Equity & InclusionEnvironmental Impact
Diverse Board and executive team
Provide comprehensive diversity training
Implemented comprehensive DE&I plan
Named to Bloomberg 2020 Gender-Equality Index
Online offerings reduce need for travel, commuting and construction of additional facilities
Several offerings educate students on sustainability matters
Major offices designed to reduce greenhouse gas emissions by energy efficient design
Please see the section entitled “Environmental, Social and Governance (ESG) Matters” of this Proxy Statement for a more detailed description of our corporate responsibility and ESG programs.
10

PROXY STATEMENT SUMMARY
Our COVID-19 response
The COVID-19 pandemic presented unprecedented challenges for businesses, local and national governments, families and individuals. As the pandemic spread globally in 2020, we implemented significant changes to our business that we determined were in the best interest of our employees, university clients, and our local communities.
Employees.
The well-being, both physical and mental, of our employees and their families has been our top priority and we implemented several new programs to support and engage with our employees in these challenging circumstances.
Early transition to work from home
Employee surveys to assess wellness and additional support needs
Access to new wellness resources, including meditation and mental health support
Stipends for home-office improvements and Wi-Fi access
Infrastructure support for employees with power supply obstacles
Company-wide "Daily Dose of Team Time" call to foster employee engagement and connection
Virtual versions of our annual employee events to reinforce Company culture
University clients.
We ensured the continuity of our business and provided unique solutions to our university clients.
Immediately shifted our boot camp offerings and other campus-based experiences from physical classrooms to online
Developed a virtual course production tool called “Studio-in-a Box” which allowed faculty to continue creating high-quality video content from their homes in collaboration with our development teams
Offered training programs for our university clients' campus-based faculty on best practices for successful online teaching through No Back Row® PRO
Offered new solutions to provide continuity and support for university clients to conduct classes online, including 2UOS Essential and 2UOS Plus
Developed a virtual field placement program, which allowed students in clinical graduate programs to fulfill the field placement component of their programs remotely
Our community.
We provided support to our local community and others impacted by the COVID-19 pandemic.
In our April “Days of Service” initiative, we raised money to support United Way’s COVID-relief fund
Together with certain university clients, we started scholarship funds to provide access to our technical boot camps to those most impacted by the COVID-19 pandemic
We supported the local public schools in Prince George’s County, Maryland by providing our No Back Row® PRO training and Studio-in-a-Box kit to teachers and by funding a scholarship program for graduating seniors
We provided our No Back Row® PRO training to our U.S.-based community partners to help them continue their work supporting and mentoring young students virtually
Questions and answers about the proxy materials and voting
Please see the section entitled “Questions and Answers About the Proxy Materials and Voting” of this Proxy Statement for answers to common questions about the Meeting, voting, attendance, submitting a proposal for next year’s annual meeting of stockholders, and other procedures.
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2021 Proxy Statement
11


Corporate governance and board matters.
Proposal one
Election of directors
Pursuant to the Company’s Amended and Restated Certificate of Incorporation, the Board is “classified,” which means that it is divided into three classes of directors based on the expiration of their terms. Under the classified board arrangement, directors are elected to terms that expire on the annual meeting date three years following the annual meeting at which they were elected, and the terms are “staggered” so that the terms of approximately one-third of the directors expire each year. We believe having a staggered Board divided by classes provides stability and continuity on our Board.
The Board, upon recommendation of the Nominating and Corporate Governance Committee, has nominated the following Class I directors to hold office until the 2024 Annual Meeting of Stockholders and until their respective successors have been duly elected and qualified or until their earlier death, resignation or removal:
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PAUL A. MAEDER
CHRISTOPHER J. PAUCEK
GREGORY K. PETERS
ROBERT M. STAVIS
All nominees currently serve as Class I directors of the Company. Each nominee has consented to serve as a director if elected at the Meeting. Should a nominee become unavailable to accept election as a director, the persons named in the enclosed proxy will vote the shares that such proxy represents for the election of such other person as the Board may nominate. We have no reason to believe that any of the nominees will be unable to serve.



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THE BOARD OF DIRECTORS RECOMMENDS VOTING “FOR” THE ELECTION OF EACH OF THE FOUR CLASS I DIRECTOR NOMINEES.


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CORPORATE GOVERNANCE AND BOARD MATTERS
The board of directors
Board snapshot.
Our Board currently consists of 12 members. Other than our Chief Executive Officer, our Board is comprised of entirely independent directors. We believe it is essential to have directors representing diversity in many areas, including but not limited to race, ethnicity, gender, background, and professional experience.
Director NameAgeClass and PositionTerm
Expires
Other Public
Company Board
Service
Paul A. Maederimage_22a.jpg
67Class I Director and Chair of the Board2021
Christopher J. Paucekimage_22a.jpg
50Class I Director2021
Gregory K. Petersimage_22a.jpg
50Class I Director20211
Robert M. Stavisimage_22a.jpg
58Class I Director2021
Timothy M. Haley66Class II Director20222
Valerie B. Jarrett64Class II Director20223
Earl Lewis65Class II Director2022
Coretha M. Rushing65Class II Director20221
Sallie L. Krawcheck56Class III Director2023
John M. Larson69Class III Director2023
Edward S. Macias77Class III Director2023
Alexis Maybank46Class III Director2023
image_112.jpg Director Nominees

Diversity and independence
GENDER DIVERSITY
RACIAL / ETHNIC DIVERSITY
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AGE
TENURE
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INDEPENDENCE
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2021 Proxy Statement
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CORPORATE GOVERNANCE AND BOARD MATTERS
Summary of director qualifications and experience
Each of our directors brings to our Board a wealth of varied experience derived from serving as executives, financial experts, subject matter experts, board members and/or industry leaders. We have worked hard to ensure diversity of backgrounds and perspectives in the board room, which we believe enhances oversight of our business strategy and our corporate governance practices.
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Education Industry
Provides valuable knowledge of our industry and the university clients we serve
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Finance Expertise / Capital Allocation
Provides Board financial skills necessary to inform oversight of financial performance and reporting, internal controls, capital structure and long‑term strategic planning
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Government / Public Policy
Provides Board an understanding of the regulatory environment in which we operate
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Enterprise Risk Management
Assists Board in overseeing risks facing the Company, including risks related by cybersecurity and data privacy
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Human Capital / Talent Management /
Inclusion and Diversity
Assists Board in overseeing executive compensation, employee engagement and framework for attraction and development of high‑performing employees
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Technology
Assists Board in overseeing our product development strategy and provides insight to management as we seek to enhance the student experience
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CORPORATE GOVERNANCE AND BOARD MATTERS
Directors.


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Background:
Mr. Maeder has served on our Board since 2010 and as Chair of our Board since November 2012. Mr. Maeder is a General Partner of Highland Capital Partners, a venture capital firm he cofounded in 1987 and serves as the Chief Financial Officer of Highland Transcend Partners I Corp. He currently serves on the boards of several private companies. Mr. Maeder served as a director of Imprivata, Inc. from February 2002 to July 2016 and of Carbon Black, Inc. from September 2015 to February 2019. He holds a B.S.E. in Aerospace and Mechanical Sciences from Princeton University, an M.S.E. in Mechanical Engineering from Stanford University and an M.B.A. from Harvard Business School.
Qualifications:
Our Board believes that Mr. Maeder’s extensive experience investing in the online higher education and software industries and his experience serving as a board member for numerous companies enable him to make valuable contributions to the Board.
PAUL A. MAEDER
Independent
Age: 67
Director since: 2010
Committees: Audit




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Background:
Mr. Paucek is a cofounder of the Company and has served as our Chief Executive Officer and as a member of our Board since 2012. He previously served as our President and Chief Operating Officer from April 2008 through December 2011. Prior to 2U, Mr. Paucek served as the Chief Executive Officer of Smarterville, Inc., the parent company of Hooked on Phonics, from 2007 until 2008. From 2004 to 2007, Mr. Paucek served as Vice President of Business Development and President of Educate Products for Educate, Inc. In 2004, Mr. Paucek served as Deputy Campaign Manager for the successful reelection campaign of United States Senator Barbara Mikulski. Mr. Paucek began his career in 1993 by cofounding Cerebellum Corporation, the media company behind the awardwinning educational Standard Deviants television program and video series, and he led Cerebellum as CoChief Executive Officer until 2003. Mr. Paucek holds a B.A. from The George Washington University and an M.B.A. from the KenanFlagler Business School of the University of North Carolina at Chapel Hill.
Qualifications:
Our Board believes that Mr. Paucek’s knowledge of the Company as one of our cofounders, and his broad experience leading education companies, enable him to make valuable contributions to the Board.
CHRISTOPHER J. PAUCEK
Age: 50
Director since: 2012


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2021 Proxy Statement
15

CORPORATE GOVERNANCE AND BOARD MATTERS


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Background:
Mr. Peters was appointed to our Board in March 2018. Mr. Peters joined Netflix, Inc. in 2008 and currently serves as the Chief Operating Officer and Chief Product Officer, responsible for designing, building and optimizing the customer experience. From 2015 to July 2017, Mr. Peters served as the International Development Officer of Netflix, responsible for global partnerships with consumer electronics companies, Internet service providers and multichannel video program distributors. From July 2013 to 2015, Mr. Peters served as the Chief Streaming and Partnerships Officer of Netflix. Prior to joining Netflix in 2008, Mr. Peters was Senior Vice President of Consumer Electronics Products for Macrovision Solutions Corp. (later renamed Rovi Corporation) and held positions at Mediabolic Inc., Red Hat Network and Wine.com. Mr. Peters currently serves on the board of directors of Highland Transcend Partners I Corp. Mr. Peters holds a B.S. in Physics and Astrophysics from Yale University.
Qualifications:
Our Board believes that Mr. Peters’ technology and product expertise enable him to make valuable contributions to the Board.
Other Current Public Boards:
Highland Transcend Partners I Corp.
GREGORY K.
PETERS
Independent
Age: 50
Director since: 2018
Committees: Audit




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Background:
Mr. Stavis has served on our Board since 2011. Mr. Stavis has been a Partner at Bessemer Venture Partners, a venture capital firm, since 2000. He currently serves on the boards of several private companies. Prior to joining Bessemer, Mr. Stavis was an independent private equity investor. Prior to that, he served in various positions at Salomon Smith Barney, including as Co‑Head of Global Arbitrage Trading. Mr. Stavis holds a B.A.S. in Engineering from the University of Pennsylvania’s School of Engineering and Applied Sciences and a B.S. in Economics from the University of Pennsylvania’s Wharton School.
Qualifications:
Our Board believes that Mr. Stavis’s broad experience investing in the emerging software technology industry and his experience serving as a board member for numerous companies enable him to make valuable contributions to the Board.
ROBERT M. STAVIS
Independent
Age: 58
Director since: 2011
Committees: Audit (Chair)




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Background:
Mr. Haley has served on our Board since 2010. Mr. Haley is a founding partner of Redpoint Ventures, a venture capital firm, and has been a Managing Director of the firm since 1999. Mr. Haley was also the Managing Director of Institutional Venture Partners, a venture capital firm, from 1998 to 2010. From 1986 to 1998, Mr. Haley was the President of Haley Associates, an executive recruiting firm in the high technology industry. Mr. Haley currently serves on the board of directors of Netflix, Inc. and Zuora Inc. Mr. Haley holds a B.A. from Santa Clara University.
Qualifications:
Our Board believes that Mr. Haley’s broad experience investing in software, consumer Internet and digital media industries, and his experience serving as a board member for numerous companies, enable him to make valuable contributions to the Board.
Other Current Public Boards:
Netflix, Inc.
Zuora Inc.
TIMOTHY M. HALEY
Independent
Age: 66
Director since: 2010
Committees: Nominating and Corporate Governance (Chair)


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CORPORATE GOVERNANCE AND BOARD MATTERS


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Background:
Dr. Lewis was appointed to our Board at the time of the initial public offering of the Company’s shares in April 2014. Dr. Lewis, a fellow of the American Academy of Arts and Sciences, is the Thomas C. Holt Distinguished Professor of History and AfroAmerican and African Studies and Public Policy at the University of Michigan and founding director of the Center for Social Solutions. From March 2013 to March 2018, Dr. Lewis served as President of The Andrew W. Mellon Foundation, a philanthropic organization committed to advancing higher education, the arts and civil society. From January 2013 to March 2013, he served as President-designate of the Mellon Foundation. Prior to joining the Mellon Foundation, Dr. Lewis served as Provost and Executive Vice President for Academic Affairs at Emory University from 2004 to December 2012. He also held a variety of faculty positions at the University of California at Berkeley and the University of Michigan from 1984 through 2004, and served as Vice Provost for Academic Affairs—Graduate Studies and Dean of the Horace H. Rackham School of Graduate Studies at the University of Michigan from 1998 to 2004. Dr. Lewis holds a B.A. from Concordia College and an M.A. and Ph.D. from the University of Minnesota.
Qualifications:
Our Board believes that Dr. Lewis’s broad experience in academia, both as a faculty member and as an administrator at leading universities, allows him to make valuable contributions to the Board.
EARL LEWIS
Independent
Age: 65
Director since: 2014
Committees: Audit




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Background:
Ms. Rushing has served on our Board since 2016. She currently serves as the President of CR Consulting Alliance LLC and as a Managing Director and Executive Mentor for Merryck & Company, a global executive coaching firm. Ms. Rushing currently serves on the board of directors of Benefitfocus.com, Inc. She also serves as an external Board and HR advisor to several private company boards of directors. From May 2006 to December 2019 she served as Corporate Vice President and Chief Human Resources Officer of Equifax Inc. Prior to that, she served as an Executive Coach and HR Consultant with Atlanta-based Cameron Wesley LLC. Prior to joining Cameron Wesley, she was Senior Vice President, Chief Human Resources Officer of The Coca-Cola Company, where she was employed from 1996 until 2004. Prior to that, she worked in several senior level positions for Pizza Hut (a division of PepsiCo) and IBM. Ms. Rushing was Chair of the Board for the Society of Human Resource Management until January 2019, an organization of approximately 350,000 global human resource professionals, and currently serves as Board Chair Emeritus. Ms. Rushing holds a B.S. in Industrial Psychology from East Carolina University and an M.S. in Education from The George Washington University.
Qualifications:
Our Board believes that Ms. Rushing’s broad experience in human resources at leading Fortune 500 companies, enables her to make valuable contributions to the Board.
Other Current Public Boards:
Benefitfocus.com, Inc.

CORETHA M. RUSHING
Independent
Age: 65
Director since: 2016
Committees: Compensation


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2021 Proxy Statement
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CORPORATE GOVERNANCE AND BOARD MATTERS


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Background:
Ms. Jarrett has served on our Board since December 2017. She is an acclaimed civic leader, business executive and attorney. She currently serves as a Senior Advisor to the Obama Foundation and Attn: and is a Distinguished Senior Fellow at the University of Chicago Law School. Ms. Jarrett currently serves on the boards of directors of Ralph Lauren Corporation, Walgreens Boots Alliance and Lyft, Inc. and several private companies. During the Obama administration, from January 2008 to January 2016, Ms. Jarrett served as Senior Advisor to the President of the United States, where she oversaw the Office of Public Engagement and Intergovernmental Affairs and chaired the White House Council on Women and Girls. Prior to joining the Obama administration, Ms. Jarrett was co-chair of the Obama-Biden transition team. Ms. Jarrett began her career in politics in 1987, working as Deputy Corporation Counsel for Finance and Development in the administration of Mayor Harold Washington in Chicago. She subsequently was Deputy Chief of Staff for Mayor Richard M. Daley and later served as Commissioner of the Department of Planning and Development and chaired the Chicago Transit Board. From 1995 until she joined the Obama administration, Ms. Jarrett served in various senior positions, including Chief Executive Officer, of the Habitat Company, a Chicago real estate development and management firm. She has also served on numerous corporate and civic boards, including Chair of the Board of Trustees of the University of Chicago Medical Center, Chair of the Board of Trustees of the University of Chicago, Chair of the Board of the Chicago Stock Exchange and was a director of the Federal Reserve Bank of Chicago. Ms. Jarrett holds a B.A. from Stanford University and a J.D. from the University of Michigan Law School.
Qualifications:
Our Board believes that Ms. Jarrett’s broad experience in public policy enables her to make valuable contributions to the Board.
Other Current Public Boards:
Ralph Lauren Corporation
Walgreens Boots Alliance
Lyft, Inc.
VALERIE B. JARRETT
Independent
Age: 64
Director since: 2017
Committees: Nominating and Corporate Governance




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Background:
Ms. Krawcheck was appointed to our Board as of the initial public offering of the Company’s shares in April 2014. Ms. Krawcheck is the Chief Executive Officer and co-founder of Ellevest, an investment platform for women that was founded in 2016. Ms. Krawcheck was the President of Global Wealth & Investment Management for Bank of America from August 2009 to September 2011. Prior to joining Bank of America, Ms. Krawcheck held a variety of senior executive positions at Citigroup from 2002 to 2008, including Chief Executive Officer of its Smith Barney division, Chief Financial Officer of Citigroup and Chief Executive Officer and Chair of Citi Global Wealth Management. She served as a director of BlackRock Inc. from 2009 to 2011 and Dell Inc. from 2006 to 2009. Ms. Krawcheck holds a B.A. from the University of North Carolina at Chapel Hill and an M.B.A. from Columbia University.
Qualifications:
Our Board believes that Ms. Krawcheck’s financial acumen and broad experience serving in leadership roles with financial and investment firms enables her to make valuable contributions to the Board.
SALLIE L. KRAWCHECK
Independent
Age: 56
Director since: 2014
Committees: Nominating and Corporate Governance



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Background:
Mr. Larson has served on our Board since June 2009. Mr. Larson has served as the Executive Chair of Triumph Higher Education Group, Inc., a culinary education company, since 2010. He also has served as President of Triumph Group, Inc., a company that advises and invests in domestic and international education companies, since 2008. Mr. Larson founded and served as President, Chief Executive Officer and director of Career Education Corporation, or CEC, a publicly held post-secondary education company, from its inception in 1994 through his retirement from the company in 2006, including as Chair of the Board from 2000 to 2006. He became Chair Emeritus of CEC in 2006 and continues to serve in that position. He holds a B.S. in Business Administration from the University of California at Berkeley.
Qualifications:
Our Board believes that Mr. Larson’s deep knowledge of the higher education industry and his experience founding and leading a publicly held education company enable him to make valuable contributions to the Board.
JOHN M. LARSON
Independent
Age: 69
Director since: 2009
Committees: Compensation (Chair)




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Background:
Dr. Macias has served on our Board since November 2014. Dr. Macias is currently the Provost Emeritus and Barbara and David Thomas Distinguished Professor Emeritus in Arts & Sciences at Washington University in St. Louis. Previously, Dr. Macias was the chief academic officer of Washington University in St. Louis for 25 years, before stepping down from his position as Provost and Executive Vice Chancellor in June 2013. During his tenure as Provost, Dr. Macias provided leadership in curriculum, budget and capital project development initiatives. Dr. Macias has broad experience and knowledge in higher education administration and innovation in academic settings. Following his tenure as Provost, Dr. Macias was nominated to lead the school’s effort to explore its approach to online education and to leverage advances in education technology to enhance its reach and impact. Dr. Macias currently serves on the boards of Casa de Salud, Shakespeare Festival of St. Louis and the St. Louis Mosaic Project. He is an emeritus member of the boards of Colgate University and Mary Institute and St. Louis Country Day School. Dr. Macias holds a B.S. in Chemistry from Colgate University and a doctorate in Chemistry from Massachusetts Institute of Technology.
Qualifications:
Our Board believes that Dr. Macias’s substantial knowledge of the higher education industry and his vast experience as Provost and Executive Vice Chancellor of Washington University in St. Louis enable him to make valuable contributions to the Board.
EDWARD S. MACIAS
Independent
Age: 77
Director since: 2014
Committees: Nominating and Corporate Governance




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Background:
Ms. Maybank has served on our Board since December 2018. She is an internet entrepreneur and currently serves as the Founder and Chief Executive Officer of Creative Beauty, Inc. From 2016 until December 2017 she served as the Co-Founder and Chief Executive Officer of Project September. Prior to co-founding Project September, she co-founded Gilt Groupe and served as its founding Chief Executive Officer from 2007 to 2008 and in several other executive roles, including Chief Strategy Officer, Chief Marketing Officer and President of Gilt Home and Kids from 2008 to 2014. Prior to co-founding Gilt Groupe in 2007, Ms. Maybank was General Manager of eCommerce for AOL Media Networks and served in various senior roles at eBay. Ms. Maybank holds a B.S. from Harvard University and an M.B.A. from Harvard Business School.
Qualifications:
Our Board believes that Ms. Maybank’s experience in e-commerce and scaling rapidly growing technology companies enable her to make valuable contributions to the Board.
ALEXIS MAYBANK
Independent
Age: 46
Director since: 2018
Committees: Compensation



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Board composition and structure
Board purpose and structure.
The mission of the Board is to provide strategic guidance to the Company’s management, to monitor the performance and ethical behavior of the Company’s management, and to maximize the long-term financial return to the Company’s stockholders, while considering and appropriately balancing the interests of other stakeholders and constituencies. The Board is comprised of twelve directors. The authorized number of directors may be changed only by resolution approved by a majority of our Board. 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. The division of our Board into three classes with staggered three-year terms may delay or prevent a change in our management or a change of control.
Board leadership.
Our Board currently has an independent Chair, Mr. Maeder, who has the authority, among other things, to call and preside over Board meetings, including meetings of the independent directors, and to set meeting agendas. Accordingly, the Chair of the Board has substantial ability to shape the work of the Board. We believe that separation of the positions of Chair of the Board and Chief Executive Officer reinforces the independence of the Board in its oversight of the business and affairs of the Company. In addition, we believe that having an independent Chair of the Board creates an environment that is more conducive to objective evaluation and oversight of management’s performance, increasing management accountability and improving the ability of the Board to monitor whether management’s actions are in the best interests of the Company and its stockholders. As a result, we believe that having an independent Chair of the Board enhances the effectiveness of the Board as a whole.
Director independence.
Our Nominating and Corporate Governance Committee and our Board have undertaken a review of the independence of our current directors and considered whether any director has a material relationship with us that could compromise their ability to exercise independent judgment in carrying out their responsibilities. As a result of this review, our Nominating and Corporate Governance Committee and our Board determined that Messrs. Haley, Larson, Lewis, Macias, Maeder, Peters and Stavis, and Mses. Jarrett, Krawcheck, Maybank and Rushing, representing eleven of our twelve current directors, are “independent directors,” as defined under applicable Nasdaq listing standards and the rules of the United States Securities and Exchange Commission (“SEC”).
As part of the process of affirmatively determining whether a director is "independent" under applicable Nasdaq listing standards and SEC rules, the Nominating and Corporate Governance Committee and the Board also determined that none of Messrs. Haley, Larson, Lewis, Macias, Maeder, Peters and Stavis, and Mses. Jarrett, Krawcheck, Maybank, and Rushing have any other “material relationship” with the Company that could interfere with their ability to exercise independent judgment.
The Board includes one management director, Mr. Paucek, who is the Company’s Chief Executive Officer. The Nominating and Corporate Governance Committee and the Board have determined that Mr. Paucek is not independent under applicable Nasdaq listing standards and SEC rules.
As part of its annual evaluation of director independence, the Nominating and Corporate Governance Committee and the Board examine (among other things) whether any transactions or relationships exist currently (or existed during the past three years) between each independent director and the Company, its subsidiaries, affiliates, equity investors, or independent auditors and the nature of those relationships under the applicable Nasdaq listing standards and SEC rules. The Nominating and Corporate Governance Committee and the Board also examine whether there are (or have been within the past year) any transactions or relationships between each independent director and any executive officer of the Company or its affiliates. As a result of this evaluation, the Nominating and Corporate Governance Committee and the Board have affirmatively determined that each independent director is independent under those criteria.
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CORPORATE GOVERNANCE AND BOARD MATTERS
Executive sessions of non-management directors.
In order to promote discussion among the non-management directors, the Board regularly holds executive sessions (i.e., meetings of non-management directors without management present) to review such topics as the non-management directors determine. Mr. Maeder presides as Chair during the executive sessions of the Board. The non-management directors of the Board met in executive session 4 times during 2020.
Committees of the board of directors.
The Board has established standing committees in connection with the discharge of its responsibilities. These committees include an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The Board has adopted written charters for each of these committees and all such charters can be obtained without charge on the Company’s website at: http://investor.2u.com.
Audit committee
 
Members:
ROBERT M. STAVIS (CHAIR)  Independent
Meetings during 2020: 6
 
Earl Lewis  Independent
Paul A. Maeder  Independent
Gregory K. Peters  Independent
Report of the Audit Committee: Page 58
 
Our Audit Committee oversees the Company’s corporate accounting and financial reporting processes. The principal duties and responsibilities of our Audit Committee include:
appointing and retaining an independent registered public accounting firm to serve as independent auditor to audit our consolidated financial statements, overseeing and evaluating the independent auditor’s work and determining the independent auditor’s compensation;
approving in advance all audit services and non-audit services to be provided to us by our independent auditor;
establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls, auditing or compliance matters, as well as for the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters;
reviewing and discussing with management and our independent auditor the results of the annual audit and the independent auditor’s review of our quarterly consolidated financial statements; and
conferring with management and our independent auditor about the scope, adequacy and effectiveness of our internal accounting controls, the objectivity of our financial reporting and our accounting policies and practices.
Our Board has determined that the composition of our Audit Committee meets the criteria for independence under, and the functioning of our Audit Committee complies with, the applicable requirements of the Sarbanes-Oxley Act of 2002, the Nasdaq listing standards and SEC rules and regulations. The Board has determined that all members of the Audit Committee are financially literate and possess “financial sophistication” within the meaning of the Nasdaq listing standards. The Board has also determined that Ms. Stavis is an “audit committee financial expert,” as defined by SEC rules and regulations.

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Compensation committee
 
Members:
JOHN M. LARSON (CHAIR)  Independent
Meetings during 2020: 7
 
Alexis Maybank  Independent
Coretha M. Rushing  Independent
Report of the Compensation Committee: Page 48
 
Our Compensation Committee oversees the Company’s compensation policies, plans and programs. The principal duties and responsibilities of our Compensation Committee include:
establishing and approving, and making recommendations to the Board regarding, performance goals and objectives relevant to the compensation of our Chief Executive Officer, evaluating the performance of our Chief Executive Officer in light of those goals and objectives and setting, or recommending to the full Board for approval, the Chief Executive Officer’s compensation, including incentive-based and equity-based compensation, based on that evaluation;
setting the compensation of our other executive officers, based in part on recommendations of the Chief Executive Officer;
exercising administrative authority under our stock plans and employee benefit plans;
establishing policies and making recommendations to our Board regarding director compensation; and
reviewing and discussing with management the compensation discussion and analysis that we may be required from time to time to include in SEC filings.
Our Board has determined that the composition of our Compensation Committee satisfies the applicable independence requirements under, and the functioning of our Compensation Committee complies with the applicable requirements of, Nasdaq listing standards and SEC rules and regulations. Each member of the Compensation Committee is also a “non-employee director,” as defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
As provided under the Compensation Committee’s charter, the Compensation Committee may delegate its authority to subcommittees as the Compensation Committee deems appropriate, consistent with applicable law and the Nasdaq listing standards. Under its charter, the Compensation Committee has the authority to retain, at the Company’s expense, such counsel, consultants, experts and other professionals as it deems necessary. For additional information regarding the role of executive officers and compensation consultants in setting director and executive compensation, see the section entitled “Compensation Discussion and Analysis.
Nominating and corporate governance committee
 
Members:
TIMOTHY M. HALEY (CHAIR)  Independent
Meetings during 2020: 4
 
Edward S. Macias  Independent
Valerie Jarrett  Independent
Sallie L. Krawcheck  Independent
 
Our Nominating and Corporate Governance Committee oversees the Company’s corporate governance practices. The principal duties and responsibilities of the Nominating and Corporate Governance Committee include:
assessing the need for new directors and identifying individuals qualified to become directors;
recommending to the Board the persons to be nominated for election as directors and to each of the Board’s committees;
assessing individual director performance, participation and qualifications;
developing and recommending to the Board corporate governance principles;
monitoring the effectiveness of the Board and the quality of the relationship between management and the Board; and
overseeing a periodic evaluation of the Board’s performance.
Our Board has determined that the composition of our Nominating and Corporate Governance Committee satisfies the applicable independence requirements under, and the functioning of our Nominating and Corporate Governance Committee complies with the applicable requirements of, Nasdaq listing standards and SEC rules and regulations.
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CORPORATE GOVERNANCE AND BOARD MATTERS
Board’s role and responsibilities
Risk oversight.
The Board oversees a company-wide approach to risk management that is carried out by management. The Board determines the appropriate risk for the Company generally, assesses the specific risks faced by the Company and reviews the steps taken by management to manage those risks. While the Board maintains the ultimate oversight responsibility for the risk management process, its committees oversee risk in certain specified areas. Management is accountable for day-to-day risk management efforts, including creation of appropriate risk management programs and policies. Management provides regular reports to the Audit Committee concerning financial, tax, legal and compliance related risks and the Company’s experts report to the Board on cybersecurity.
Board
Oversees major risks
Strategic and competitive
Financial
Operational
Legal and regulatory

  
   
Audit  Compensation
Nominating and Corporate
Governance
Primary areas of risk oversight
Financial statement and reporting
Major financial and other business risk exposure
Internal controls
Legal and compliance
Data privacy
Cybersecurity
Related party transactions
Conflicts of interest
Primary areas of risk oversight
Executive compensation policies & practices, including pay equity among executives
Non-employee director compensation policies and practices
Talent development and retention
Primary areas of risk oversight
Governance structure and processes
Board and chair succession planning
Board composition and function
Board independence
Compliance with code of conduct
Executive succession planning
Management
Responsible for day-to-day risk management efforts, including creation of appropriate risk management programs and policies
Internal Audit function provides review and recommendations regarding design and effectiveness of internal controls and risk management processes
Nomination of directors.
The Nominating and Corporate Governance Committee is responsible for identifying, screening and recommending candidates to the Board for Board membership. When formulating its recommendations, the Nominating and Corporate Governance Committee also considers advice and recommendations from others as it deems appropriate. The Nominating and Corporate Governance Committee is responsible for assessing the appropriate balance of criteria required of Board members.
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The Nominating and Corporate Governance Committee may apply several criteria in selecting nominees. At a minimum, it considers (a) whether a nominee can read and understand basic financial statements and is over 21 years of age, (b) whether a nominee has demonstrated, by significant accomplishment in their field, an ability to make a meaningful contribution to the Board’s oversight of the business and affairs of the Company and (c) whether a nominee possesses the highest personal and professional integrity, ethics and values. Additional factors that the Nominating and Corporate Governance Committee may consider include a candidate’s specific experiences and skills, independence, expertise, diversity, business judgment, time availability in light of other commitments, dedication, conflicts of interest and such other relevant factors as it considers appropriate in the context of the needs of the Board. Although the Company has no formal diversity policy, the Board believes that diversity is an important consideration in Board composition, with diversity being broadly construed to mean a variety of opinions, perspectives, experiences and backgrounds, including gender, race and ethnicity differences, as well as other differentiating characteristics, all in the context of the requirements of the Board at that point in time.
The Nominating and Corporate Governance Committee considers candidates recommended by stockholders pursuant to the the Nominating and Corporate Governance Committee’s policy for considering stockholder recommendations of director nominees. The Nominating and Corporate Governance Committee’s policy is available free of charge on the Company’s website at: http://investor.2u.com. Pursuant to the policy, and at its next appropriate meeting following receipt of a recommendation, the Nominating and Corporate Governance Committee will consider all director candidates recommended by the Company’s stockholders provided such recommendation is delivered in a timely manner and in the proper form, as specified in the policy. All director nominees so submitted by the Company’s stockholders will be evaluated in the same manner as recommendations received from management or members of the Board.
Environmental, social and governance (ESG) matters.
We recognize the impact that a business can have on its surrounding community and environment and believe that an organization has the responsibility to be a good corporate citizen. We also value our employees and recognize the critical roles that they play in the achievement of our long-term goals and overall success. The following is a summary of some of the steps we have taken to create a safe, inclusive and positive workplace for our employees and to provide meaningful relationships and a lasting impact in our local communities. Additional information can be found in our ESG report at: http://investor.2u.com.
Societal impact
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We believe that higher education is a powerful driver of upward social mobility. 2U is increasing access to learning opportunities for people around the world by building, delivering and supporting more than 500 digital and in-person educational offerings, including graduate degrees, undergraduate degrees, professional certificates, boot camps and short courses. The following is a summary of some of the ways we believe we are positively impacting society:
Together with our university clients, we have positively transformed the lives of more than 300,000 students and lifelong learners to date.
Compared to the national average, our graduate degree programs enroll a higher percentage of diverse students.
The average actual cost and debt burden of attending a 2U-powered program is often less than on-campus programs due to ongoing income students can earn and room and board savings.
Together with several university clients, we launched a $3 million scholarship fund to provide access to our technical boot camps at reduced rates. This initiative focused on reaching Black, Latinx and indigenous communities as well as women and individuals from low income households.
Our offerings in fields requiring clinical placements, such as nursing, public health, social work and counseling have produced over 18,000 graduates. Our team of placement specialists facilitates clinical placements for students in their local communities, allowing them to make an impact in those communities after their graduation.
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CORPORATE GOVERNANCE AND BOARD MATTERS
Human capital
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We believe that our employees are our greatest asset and that when people feel appreciated and included, they can be more creative, innovative and better serve our university clients and students. We are committed to having a workforce that will enable the long-term success of our business. The following is a summary of certain programs we have implemented to help us attract, retain and inspire key talent and highlights of workplace recognitions we received for 2020:
We offer a total rewards program for our employees that is market-competitive and merit-based. To foster a sense of ownership and align the interests of employees and stockholders, we have a broad-based stock compensation program that provides performance and service-based restricted stock units to eligible employees. We also offer eligible employees the ability to participate in our Employee Stock Purchase Program, which enables them to purchase stock at a discount. We provide comprehensive benefits for employees and their families, which are tailored to the various geographies in which we operate.
We provide a range of employee development programs and opportunities for employees to develop the skills they need to be successful. Our learning and development teams create and teach a variety of live courses and employees have free access to a library of learning resources via LinkedIn Learning. In addition, we offer a tuition reimbursement benefit that allows eligible employees and their family members to receive reimbursement for certain of our offerings.
We actively promote a number of benefits and programs to support the health and welfare of our employees, including on-site gyms and access to online health and wellness resources including meditation and mental health support.
We participate in the Great Place to Work survey to measure and track employee engagement annually. In 2020, 84% of US employees reported feeling that 2U is a great place to work and the Company was certified as a Great Place to Work for the third consecutive year.
In 2020, the COVID-19 pandemic provided unique challenges to our employees, underscoring the importance of our employee wellness initiatives. Our priority during the COVID-19 pandemic was to safeguard the health of our employees and their families. We implemented several new programs to support and engage with our employees in these challenging circumstances as set forth in more detail in the Section entitled “Proxy Statement Summary — Our Response to the COVID-19 Pandemic”.
Diversity, equity and inclusion
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We believe an equitable and inclusive environment with diverse teams produces more creative solutions and results in better outcomes for our university clients and students. We continue to strive to attract, retain and promote diverse talent at all levels of the organization and we are proud to have a Board and executive team that bring diverse ideas and backgrounds to the table. Our Board is 33% women and 33% people of color and our executive team is 25% women and 31% people of color. We have incorporated diversity, equity and inclusion (“DE&I”) into the fabric of our corporate culture, as demonstrated by some of our recent initiatives and recognitions described below:
Since 2018, we have had a diversity and inclusion committee, known as MOSAIC, that serves as a liaison with our Chief Executive Officer, Chief People Officer and other members of management on diversity and inclusion issues.
We maintain Business Resource Networks (“BRNs”) which foster a diverse and inclusive workplace aligned with our mission and business goals and reflect our commitment to create and sustain a diverse workplace. We currently have BRNs representing the following groups and their allies: Black/African American, Women, LGBTQ+, Asian and Pacific Islander and Latinx.
We include diversity-related measures as key goals in our annual company-wide operating plan.
The Company was one of 380 companies included on the Bloomberg 2020 Gender-Equality Index for its commitment to advancing women in the workplace through measurement and transparency.
We take pay equity seriously and conduct regular internal assessments on pay disparities and make adjustments as necessary.
We provide employees training on unconscious bias, non-discrimination and harassment and allyship to drive engagement, mitigate bias and encourage more inclusive behavior.
We have adopted a supplier diversity policy to ensure that our Company's suppliers reflect 2U's commitment to diversity.
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Several partnerships with our university clients seek to advance DE&I principles. For example, our partnership with Netflix and Norfolk State University, one of the nation’s leading Historically Black Colleges and Universities (HBCUs), seeks to increase Black representation in the technology sector by offering 2U-powered boot camps to current students and recent alumni of Norfolk State University.
The heightened awareness of social inequalities and the unrest that marked 2020 highlighted the importance of our DE&I commitment. In 2020, we specifically engaged our BIPOC employees through a series of town halls, listening sessions and two-way dialogue that included our CEO and our entire executive team. As a result of this engagement, and with the leadership of our new VP of DE&I, we adopted a DE&I plan setting forth the Company’s short- and long-term commitments and goals around DE&I.
Community involvement
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We are committed to making an impact in our local communities through volunteering, financial donations, scholarships and other forms of engagement. The following is a summary of some of the ways we sought to impact our community in 2020:
Through the Company’s corporate social responsibility program, called 2U Engage, we support regional non-profits whose work aligns with our mission of providing access to education – Denver Kids, Inc., College Track, Higher Achievement, Communities in Schools, Ikamvayouth, Seeds, Take Stock in Children and The Marcy Lab School. Through these community partnerships, our employees are able to give back to their local communities through volunteering, fundraising, in-kind donations and pro-bono services.
In our US offices, we host Days of Service, a bi-annual event that allows 2U employees to give back to their communities through volunteering and donations. In Cape Town, we host “Days of Activism” throughout the year that focus on bringing awareness to gender-based violence and inequality.
Employees receive “Volunteer Paid Time Off” and are encouraged to use this time to make a difference in their communities.
We partnered with the International Rescue Committee to launch a 2U-sponsored scholarship program for IRC employees.
We partnered with the workforce development agency in Prince George’s County, Maryland and the George Washington University College of Professional Studies to launch a scholarship fund to provide our technical boot camps to local residents.
Environmental impact
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Our digital offerings enable students to access educational offerings without moving or regularly commuting to a campus location. In addition, we are working to integrate sustainability initiatives into our general business practices. The following is a summary of some of the programs we have put in place to reduce the impact that our operations have on the environment:
We provide flexibility to allow employees to work remotely, including remote access to applications and collaboration tools to reduce the environmental cost associated with commuting and travel.
We have implemented a print management system to reduce paper and printing use.
We responsibly manage and dispose of our electronic waste by e-cycling or wiping and donating electronics to be repurposed at other organizations.
We limit our electrical and cooling needs by maintaining minimal IT equipment running on-premise, instead relying on cloud providers.
Our Denver office is LEED certified.
All of our major offices (Lanham, Denver, Brooklyn and Cape Town), are designed to reduce greenhouse emissions by energy conservation and energy efficiency efforts, including through setting lights at 75%, relying on sensors to turn off lights when not in use and using Energy Star-rated appliances and WaterSense plumbing fixtures.
We have many educational offerings focused on sustainability. For example, we have short courses on the following topics: Sustainable Fashion, Business Sustainability Management, and Energy Efficiency and Sustainability.
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CORPORATE GOVERNANCE AND BOARD MATTERS
Stockholder engagement.
We welcome and value the views and insights of our stockholders and conduct regular outreach to connect with our stockholders to ensure open lines of communications. Our investor relations team, along with our CEO and CFO, regularly meet with stockholders to discuss our business results, strategy and capital structure, among other topics. In addition, we invite stockholders to provide input on matters related to our board composition, executive compensation, corporate governance and environmental and social responsibility matters. In 2020, we proactively reached out to stockholders representing approximately 70% of our shares outstanding and held meetings with stockholders representing approximately 50% of our shares outstanding.
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These meetings included members of management and, where appropriate, members of our Board. No significant concerns were raised by stockholders regarding our compensation programs and several noted the meaningful changes to the Company's executive compensation programs implemented for 2020. We received some feedback from certain stockholders on the structure of the Company's long-term equity incentive program, which is reflected in the changes the Compensation Committee implemented to the executive compensation program for 2021. We believe it is important to continue to engage with our stockholders on a regular basis to understand their perspectives and to give them a voice in shaping our governance and executive compensation policies and practices.
Communications with the board of directors.
The Board has established a process to receive communications from stockholders and other interested parties. Stockholders and other interested parties may contact any member (or all members) of the Board, any Board committee or any chair of any such committee by mail. To communicate with the Board, the non-management directors, any individual directors or committee of directors, correspondence should be addressed to the Board or any such individual directors or committee of directors by either name or title. All such correspondence should be sent to the Company at 2U, Inc., 7900 Harkins Road, Lanham, Maryland 20706, Attn: Corporate Secretary.
All communications received as set forth above will be opened by the Corporate Secretary who will determine whether the communication should be presented to the Board. The purpose of this screening is to avoid providing the Board communications that are irrelevant or inappropriate (such as advertisements, solicitations and hostile communications). Following this review, if appropriate, the Corporate Secretary will distribute the communication to the Board, the non-management directors, an individual director or committee of directors, as appropriate.
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2021 Proxy Statement
27

CORPORATE GOVERNANCE AND BOARD MATTERS
Board of directors policies and processes
Overview.
We are committed to conducting our business in a way that reflects best practices, as well as the highest standards of legal and ethical conduct. We want to be a company of integrity and to be perceived as such by everyone who comes in contact with us. To that end, the Board has approved a comprehensive system of corporate governance documents. These documents meet or exceed the requirements established by the Nasdaq listing standards and by SEC rules and are reviewed periodically and updated as necessary to reflect changes in regulatory requirements and evolving oversight practices. These policies embody the principles, policies, processes and practices followed by the Board, executive officers and employees in governing the Company, and serve as a flexible framework for sound corporate governance.
Board meetings and attendance.
During 2020, including both regularly scheduled and special meetings, our Board met a total of 7 times, the Audit Committee met a total of 6 times, the Compensation Committee met a total of 7 times and the Nominating and Corporate Governance Committee met a total of 4 times. During 2020, each of the Company’s directors attended at least 75% of the aggregate of the total number of meetings of the Board that occurred while he or she was serving as a director and the total number of meetings held by any of the committees of the Board on which such director served. During 6 meetings of the Audit Committee, the Audit Committee met privately with the Company’s independent registered public accounting firm.
Director attendance at annual meeting.
Although we do not have a formal policy with respect to directors’ attendance at our annual meeting of the stockholders, all directors are encouraged to attend the annual meeting of stockholders. Ten people who were directors of the Company as of such date attended our last annual meeting.
Corporate governance guidelines.
We have adopted Corporate Governance Guidelines that address the composition of the Board, criteria for Board membership and other Board governance matters. Our Corporate Governance Guidelines are available on our website at: http://investor.2u.com.
Code of business conduct and ethics for employees, executive officers and directors.
We have adopted a Code of Business Conduct and Ethics, or the Code of Conduct, applicable to all of our employees, executive officers and directors, in accordance with Nasdaq listing standards and applicable SEC rules. The Code of Conduct is available on our website at: http://investor.2u.com. The Nominating and Corporate Governance Committee of our Board is responsible for overseeing the Code of Conduct and must approve any waivers of the Code of Conduct for employees, executive officers and directors. Any amendments to the Code of Conduct, or any waivers of its requirements, will be disclosed in accordance with Nasdaq listing standards and applicable SEC rules. We intend to satisfy the disclosure requirements under the Exchange Act regarding an amendment to or waiver of a provision of the Code of Conduct by posting such information on our website.
Whistleblower procedures.
In accordance with the Sarbanes-Oxley Act, we have established procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls, or auditing matters and for the confidential, anonymous submission of concerns regarding such matters. If an individual has a concern regarding questionable accounting, internal accounting controls or auditing matters or the reporting of fraudulent financial information, such individual may report their concern by sending a letter (which may be anonymous at the discretion of the reporting person) to us at our principal executive offices to the attention of the Compliance Officer (as defined in our Whistleblower Policy) or Chair of the Audit Committee. Individual employees may also report their concerns by telephone, email or online (which may be anonymous at the discretion of the reporting person) by using our ethics reporting system. The Audit Committee will be promptly notified of all complaints received that relate to accounting, internal accounting controls, or auditing matters.
28

CORPORATE GOVERNANCE AND BOARD MATTERS
Transactions with related parties.
Review and approval of transactions with related parties
All related party transactions are reviewed and, as appropriate, may be approved or ratified by the Audit Committee. If a director is involved in the transaction, he may not participate in any review, approval or ratification of such transaction. Related party transactions are approved by the Audit Committee only if, based on all of the facts and circumstances, they are in, or not inconsistent with, the best interests of the Company and the best interests of our stockholders, as the Audit Committee determines in good faith. The Audit Committee takes into account, among other factors it deems appropriate, whether the transaction is on terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related party’s interest in the transaction.
Related person transaction policy
The Company has adopted a written related person transaction policy that sets forth our procedures for the identification, review, consideration and approval or ratification of related person transactions. For purposes of our policy only, a related person transaction is a transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we and any related person are, were or will be participants in which the amount involved exceeds $120,000. Transactions involving compensation for services provided to us as an employee or director are not covered by this policy. A related person is any executive officer, director or beneficial owner of more than 5% of any class of our voting securities, including any of their immediate family members and any entity owned or controlled by such persons.
Under the policy, if a transaction has been identified as a related person transaction, including any transaction that was not a related person transaction when originally consummated or any transaction that was not initially identified as a related person transaction prior to consummation, our management must present information regarding the related person transaction to our Audit Committee, or, if Audit Committee approval would be inappropriate, to another independent body of our Board, for review, consideration and approval or ratification. The presentation must include a description of, among other things, the material facts, the interests, direct and indirect, of the related persons, the benefits to us of the transaction and whether the transaction is on terms that are comparable to the terms available to or from, as the case may be, an unrelated third party or to or from employees generally. Under the policy, we collect information that we deem reasonably necessary from each director, executive officer and, to the extent feasible, significant stockholder to enable us to identify any existing or potential related person transactions and to effectuate the terms of the policy. In addition, under our Code of Business Conduct and Ethics, our employees and directors have an affirmative responsibility to disclose any transaction or relationship that reasonably could be expected to give rise to a conflict of interest. In considering related person transactions, our Audit Committee, or other independent body of our Board, will take into account the relevant available facts and circumstances, including, but not limited to:
the risks, costs and benefits to us;
the impact on a director’s independence in the event that the related person is a director, immediate family member of a director or an entity with which a director is affiliated;
the availability of other sources for comparable services or products; and
the terms available to or from, as the case may be, unrelated third parties or to or from employees generally.
The policy requires that, in determining whether to approve, ratify or reject a related person transaction, our Audit Committee, or other independent body of our Board, must consider, in light of known circumstances, whether the transaction is in, or is not inconsistent with, our best interests and those of our stockholders, as our Audit Committee, or other independent body of our Board, determines in the good faith exercise of its discretion.
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CORPORATE GOVERNANCE AND BOARD MATTERS
Certain related person transactions
There have been no transactions since January 1, 2020 to which we have been a participant in which the amount involved exceeded or will exceed $120,000, and in which any of our directors, executive officers or holders of more than five percent of our capital stock, or any members of their immediate family, had or will have a direct or indirect material interest, other than compensation arrangements which are described under the section entitled “Executive Compensation.” For a description of severance arrangements that we have entered into with some of our executive officers, please see the section entitled “Potential Payments Upon Termination of Employment and in Connection with Change of Control Arrangements.”
Director evaluations.
Our Board believes that, as an aspect of its commitment to sound corporate governance, it is important to regularly assess its functioning and to identify opportunities for improvement. Under the direction of our Nominating and Corporate Governance Committee, on an annual basis, each of our directors evaluates the overall Board and the functioning of the Board’s committees. As part of the evaluation, each Board member provides input on topics such as corporate governance issues, Board and committee culture, structure and meeting process, interactions with management and quality and quantity of information provided to the Board. The feedback received is compiled and reviewed by the Nominating and Corporate Governance Chair and the results are discussed with the full Board. Matters that require further assessment or additional follow-up are addressed at future Board or committee meetings, as applicable.
Director compensation
Overview of director compensation program.
Our Board has approved a compensation program for non-employee directors designed to attract, retain and reward qualified directors and align the financial interests of the non-employee directors with those of our stockholders. The Compensation Committee reviews pay levels for non-employee directors on an annual basis with assistance from an independent compensation consultant retained by the Compensation Committee. The compensation consultant conducts a comprehensive assessment of our director compensation program, including a comparative review of our current director compensation program against the same peer group used for executive compensation purposes, which is identified below under the section entitled “Process for Setting Compensation—Compensation Peer Group”. The Compensation Committee then, based in part on compensation consultant’s report, provides a recommendation to the full Board with respect to our director compensation program. On an annual basis, the full Board approves the non-employee director compensation program. For purposes of our non-employee director compensation program, our year runs from April 1st through March 31st.
Pursuant to this compensation program, non-employee directors are paid an annual retainer fee and granted equity awards for their service on the Board. Committee chairs are each paid additional retainer fees and granted additional equity awards for service in these capacities. Members of the Audit Committee are granted an additional equity award for service in this capacity. Upon initial appointment to our Board, each non-employee director is granted RSUs with a grant date fair value of $50,000. These awards vest on the first anniversary of the applicable vesting commencement date, which is typically on or around April 1 of the applicable year for annual equity awards. We reimburse our non-employee directors for their reasonable expenses incurred in attending meetings of our Board and committees thereof. Christopher J. Paucek, our Chief Executive Officer, is also a director, but does not receive any additional compensation for his service as a director.

30

CORPORATE GOVERNANCE AND BOARD MATTERS
2020 director compensation.
In April 2020, upon the recommendation of the Compensation Committee and based on the annual review and assessment of our director compensation program provided by the independent compensation consultant, our Board changed the structure of the annual equity award for non-employee directors to be comprised solely of RSUs that vest in full on the one year anniversary of the vesting commencement date. The Board did not make any changes to the value of the annual cash or equity retainers, the annual equity award or the equity awards for service as Chair of the Board or a committee or service as an Audit Committee member. For the compensation year starting on April 1, 2020, our non-employee directors were entitled to receive the following annual compensation for their service on the Board:
Position
Cash or Equity
 Retainer ($)
Equity Grants($)
Board Chair5,000 15,000 
Board Member25,000200,000
Audit Committee Chair5,00015,000
Compensation Committee Chair5,0005,000
Nominating and Corporate Governance Committee Chair5,0005,000
Non-Chair Audit Committee Members5,000
The following table provides information about the compensation earned for service on our Board by each of our non-employee directors during 2020.
Name
Fees Earned or
Paid in Cash
($)(1)
Stock Awards
($)(2)
Total
($)
Timothy M. Haley30,000204,978 234,978 
Valerie B. Jarrett25,000200,000 225,000 
Sallie L. Krawcheck25,000200,000 225,000 
John M. Larson30,000204,978 234,978 
Earl Lewis25,000204,978 229,978 
Edward S. Macias25,000200,000 225,000 
Paul A. Maeder30,000219,964 249,964 
Alexis Maybank25,000200,000 225,000 
Gregory K. Peters25,000204,978 229,978 
Coretha M. Rushing25,000200,000 225,000 
Robert M. Stavis30,000214,986 244,986 
(1)In 2020, all non-employee directors elected to receive their cash retainers in the form of an RSU award. Each director received 984 RSUs, in lieu of the $25,000 cash retainer for service as a Board member, representing a grant date fair value of $24,994. Messrs. Haley, Larson, Maeder and Stavis received an additional 196 RSUs, in lieu of the $5,000 cash retainer for service as Chair of our Board or Chair of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, as applicable, having a grant date fair value of $4,978. All of such RSUs vested in a single installment on April 1, 2021.
(2)The amounts in this column reflect the grant date fair value for stock awards in accordance with ASC Topic 718. The fair value of each stock award is measured based on the closing price of our common stock on the date of grant. These RSU awards vested in a single installment on April 1, 2021.
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2021 Proxy Statement
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CORPORATE GOVERNANCE AND BOARD MATTERS
The following table provides information about outstanding stock awards and stock options held by each of our non-employee directors as of December 31, 2020. Prior to 2014, the stock options were granted under our 2008 Stock Incentive Plan (the “2008 Plan”) and, since 2014, have been granted under our Amended and Restated 2014 Equity Incentive Plan (the “2014 Plan”). The stock awards were granted under our 2014 Plan.
NameStock AwardsOption Awards
Timothy M. Haley10,576 12,659 
Valerie B. Jarrett10,384 6,410 
Sallie L. Krawcheck10,184 42,009 
John M. Larson10,576 24,398 
Earl Lewis10,380 42,009 
Edward S. Macias10,184 19,133 
Paul A. Maeder11,166 24,398 
Alexis Maybank10,471 5,284 
Gregory K. Peters10,486 5,788 
Coretha M. Rushing10,184 12,696 
Robert M. Stavis10,970 24,398 
Director stock ownership guidelines.
In April 2020, we adopted stock ownership guidelines for our non-employee directors. Within five years from becoming subject to the guidelines our non-employee directors are required to own shares of our common stock with a value at least equal to three times of their annual cash retainer, excluding any fees for serving as Chair of the Board or serving as Chair of a committee or member of the Audit Committee.
Shares counted towards meeting the ownership guidelines include (i) shares owned directly or indirectly, (ii) shares held by a qualifying trust, (iii) shares held by a 401(k) plan or other qualified pension or profit-sharing plan for the benefit of the non-employee director and (iv) shares underlying vested restricted stock units where settlement of such shares has been deferred. Each non-employee director remains subject to the stock ownership guidelines as long as they remain in their role. Exceptions to the guidelines may be made in the case of extraordinary circumstances, such as personal hardship, in the Nominating and Corporate Governance Committee’s sole discretion.
Stock ownership requirement for non-employee directors:

3x
annual cash retainer


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Our executive officers.
Executive officers
The following table sets forth information concerning our current executive officers, including their age, as of April 19, 2021:
NameAgePosition
Christopher J. Paucek50Chief Executive Officer and Director
Paul S. Lalljie48Chief Financial Officer
Mark J. Chernis54Chief Operating Officer
James Kenigsberg45Chief Technology Officer
Matthew J. Norden39Chief Legal Officer
John B. Ellis53Chief Accounting Officer
Current executive officer biographies
CHRISTOPHER J. PAUCEK
See biography of Christopher J. Paucek in the section entitled “Corporate Governance and Board Matters—The Board of Directors."
PAUL S. LALLJIE
Paul S. Lalljie has served as our Chief Financial Officer since October 2019. Prior to that, he served as Chief Financial Officer for Neustar, Inc. from June 2009 to February 2018. From February 2000 until his appointment as Chief Financial Officer, Mr. Lalljie held various leadership positions at Neustar, Inc., including Senior Vice President, Interim Chief Financial Officer and Treasurer, Vice President, Financial Planning & Analysis, and Vice President, Finance and Investor Relations.
MARK J. CHERNIS
Mr. Chernis has served as our Chief Operating Officer since May 2018. Prior to that, he served on our Board since January 2009, including as Audit Committee chair from July 2016 to April 2018. From 2011 until May 2018, Mr. Chernis served in various senior roles at Pearson, including as the Senior Vice President of Strategic Partnerships and Investments from January 2014 to 2018 and President & Chief Operating Officer of the K-12 Technology Division from June 2011 to January 2014. Previously, Mr. Chernis was the President and Chief Operating Officer of SchoolNet from March 2008 until its acquisition by Pearson in 2011. From 1984 to 2007, Mr. Chernis held various positions at The Princeton Review, most recently serving as its President from 1995 to November 2007. Mr. Chernis also currently serves on the boards of several private companies. Mr. Chernis holds a B.A. from Vassar College.
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2021 Proxy Statement
33

OUR EXECUTIVE OFFICERS
JAMES KENIGSBERG
Mr. Kenigsberg has served as our Chief Technology Officer since July 2010 and previously as Chief Information Officer from September 2008 to June 2010. From 2000 to 2008, Mr. Kenigsberg held various leadership positions at The Princeton Review, including from 2004 to 2008 as Vice President of application development and product development. Prior to that, he served as technical project manager at Ogilvy & Mathers in 2000 and as project engineer at Thomson Reuters from 1998 to 2000. Mr. Kenigsberg attended Hunter College.
MATTHEW J. NORDEN
Mr. Norden has served as our Chief Legal Officer since December 2019 and previously served as Co-General Counsel from August 2017 to December 2019, Deputy General Counsel from November 2014 to August 2017 and as Associate General Counsel from September 2013 to November 2014. From June 2010 to September 2013, Mr. Norden served as Vice President and General Counsel of TOMS Shoes. Prior to that, he was an associate at the law firm Skadden, Arps, Slate, Meagher and Flom, LLP. Mr. Norden holds a B.A. in Psychology from The George Washington University, a J.D. from Georgetown University Law Center and an M.B.A. from the Kenan-Flagler Business School of the University of North Carolina at Chapel Hill.
JOHN B. ELLIS
Mr. Ellis has served as our Chief Accounting Officer since May 2018. Prior to that, he served in various roles at Newell Brands, a global consumer products company, including as Vice President Finance, Transformation from February 2017 to December 2017, Vice President Treasurer & Finance Operations from December 2014 to February 2017, Vice President, Corporate Controller & Chief Accounting Officer from December 2007 to December 2014 and Vice President, Mergers and Acquisitions from June 2003 to December 2007. Mr. Ellis started his career at Ernst & Young where during his ten years at the firm, he served in various accounting advisory and assurance roles. Mr. Ellis is a CPA and holds a B.B.A. in Accounting from Loyola University Maryland and an M.B.A. from Johns Hopkins University.

34


Executive compensation.
Proposal two
Advisory vote to approve the company’s executive compensation
The Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Exchange Act require a separate, nonbinding “say-on-pay” stockholder vote to approve the compensation of Named Executive Officers. The Board currently intends to hold this vote annually, and the next such vote is expected to occur at the 2022 annual meeting of stockholders. The compensation paid to our Named Executive Officers and the Company’s overall executive compensation policies and procedures are described in the “Compensation Discussion and Analysis” and the tabular disclosure (together with the accompanying narrative disclosure) in this Proxy Statement.
This proposal gives you, as a stockholder, the opportunity to endorse or not endorse the compensation paid to the Company’s Named Executive Officers through the following resolution:
“RESOLVED, that the stockholders of the Company approve, on an advisory basis, the compensation of our Named Executive Officers as disclosed in the Compensation Discussion and Analysis section and the tabular disclosure regarding Named Executive Officer compensation (together with the accompanying narrative disclosure) in this Proxy Statement.”
Because your vote is advisory, it will not be binding upon the Board and may not be construed as overruling any decision by the Board. However, the Compensation Committee will consider the outcome of the vote when evaluating the effectiveness of our compensation policies and procedures and in connection with its future executive compensation determinations.



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THE BOARD OF DIRECTORS RECOMMENDS VOTING “FOR” THE APPROVAL OF THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS AS DESCRIBED IN THIS PROXY STATEMENT.

Compensation discussion and analysis
This Compensation Discussion and Analysis provides an overview of the material components of our executive compensation program during fiscal year 2020 for:
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CHRISTOPHER J.
PAUCEK
PAUL S. LALLJIEMARK J. CHERNISJAMES KENIGSBERGMATTHEW J. NORDEN
our Chief Executive
Officer and Director
our Chief Financial
Officer
our Chief Operating
Officer
our Chief Technology
Officer
our Chief Legal Officer
We refer to these individuals collectively in this Compensation Discussion and Analysis and the accompanying compensation tables as our Named Executive Officers or NEOs. The compensation provided to our NEOs for fiscal year 2020 is set forth in detail in the Summary Compensation Table and other tables that follow this section, as well as the accompanying footnotes and narratives relating to those tables. This section also discusses our executive compensation philosophy, objectives and design; how and why the Compensation Committee of our Board arrived at the specific compensation policies and decisions involving our NEOs during fiscal year 2020; the role of our outside compensation consultant; and the peer group used in evaluating executive officer compensation.
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2021 Proxy Statement
35

EXECUTIVE COMPENSATION
This Compensation Discussion and Analysis contains forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation plans and arrangements. The actual compensation plans and arrangements that we adopt may differ materially from currently anticipated plans and arrangements as summarized in this Compensation Discussion and Analysis.
Executive summary.
Financial and business highlights
The Company delivered strong results in 2020, marked by significant achievements in revenue growth, margin improvement and progress towards positive free cash flow. These results were driven by higher student demand across our portfolio, operational and marketing efficiencies, and continued investment in launching new in-demand offerings. The events of 2020 validated the importance of high-quality, digital education. In a challenging operational environment, we continued to build, deliver and support a growing variety of lifelong learning opportunities for students.
Generated $775 million in revenue, up 35% compared to 2019.
Strengthened our balance sheet, ending 2020 with a cash balance of $519 million.
Launched over 100 new offerings, including graduate and undergraduate degrees, boot camps, and short courses.
Enrolled 99,000 new students across our suite of offerings.
Provided critical support to existing and new university clients, including flexible models to help universities address their reopening plan needs.
Added six new university clients, including Michigan State, Ohio State, Amherst, Colgate, Norfolk State, and Stanford.
Delivered operating cash flow of $29.6 million, a $81.6 million improvement compared to 2019.
Significantly increased addressable market with first undergraduate degree program launches.
2020 executive compensation program highlights
Consistent with our general compensation philosophy, we strive to provide a compensation package to each NEO that is competitive, rewards achievement of our business objectives, and aligns the interests of our NEOs with our stockholders. Our 2020 compensation actions and decisions reflect the Company’s strong financial results and business performance and the significant contributions our NEOs made to drive this success.
The Compensation Committee took the following key actions with regard to our executive compensation program for fiscal 2020:
Cash Compensation: Adjusted the base salaries for Mr. Paucek and Mr. Norden to maintain market competitiveness. Adopted a bonus plan that aligned NEOs' short-term incentive opportunity with the Company’s focus on profitable revenue growth. The bonus plan provided for no bonus payout unless threshold levels of both revenue and adjusted EBITDA performance were achieved and over-performance was capped.
Long-Term Equity Incentive Compensation: Approved a long-term equity compensation program for NEOs comprised 75% of performance-based restricted stock units (“PRSUs”) eligible to vest based on the Company total stockholder return (“TSR”) relative to the TSR of the companies in the Russell 3000 Index (“market-PRSUs”) and 25% of time-based restricted stock units (“RSUs”).
Severance Plan: Approved a severance plan to provide standardized severance benefits to NEOs and to address the Company’s objectives to attract and retain executive talent.
Stock Ownership and Clawback Policies: Adopted stock ownership guidelines and a clawback policy applicable to all NEOs to align executive interests with stockholders and mitigate risk.
36

EXECUTIVE COMPENSATION
Key changes for 2021 executive compensation program
We have continued to evolve and enhance our executive compensation programs in response to stockholder feedback and in line with our compensation philosophy. Our 2021 executive compensation program is balanced but continues to be highly-leveraged – a significant portion of each NEO’s compensation is variable and based on results achieved. For example, we have implemented the following enhancements for 2021:
Increased alignment of our NEOs’ compensation with achievement of the Company’s financial objectives by introducing PRSUs that are eligible to vest based on Company achievement of financial metrics, with performance measured over three one-year performance periods.
Improved the retentive features of our long-term equity incentive compensation by adjusting our NEOs’ annual equity award mix to be comprised of 50% PRSUs and 50% RSUs.
Balanced short- and long-term performance measurement periods by lengthening the performance period for the market-PRSUs to three years.
Introduced achievement of diversity, equity and inclusion goals as a performance category the Compensation Committee will consider in determining payouts under the 2021 bonus plan.
2020 performance highlights
As detailed further below, the cornerstone of our compensation philosophy is pay-for-performance. In 2020, we performed well against the performance measures relevant for the variable components of our executive compensation program.
2020 BONUS PLAN
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PRSUs - 2U TSR RELATIVE TO RUSSELL 3000
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2021 Proxy Statement
37

EXECUTIVE COMPENSATION
Payouts under the Company’s annual performance-based bonus plan for 2020 and determination of the achievement percentage for the first performance period of the PRSUs granted in October 2019 and January 2020 reflected actual performance without any adjustments due to the COVID-19 pandemic. We will continue to monitor the uncertainty created by the COVID-19 pandemic, and will take steps to address the challenges of long-term goal setting in our executive compensation programs.
Executive compensation best practices
We endeavor to maintain good governance standards in our executive compensation policies and practices. Below is a summary of the executive compensation practices we have implemented to help drive executive performance, as well as practices we have chosen not to implement because we believe such practices do not support our stockholders’ long-term interests.
What
we
do.
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Emphasize Pay-for-Performance – A significant portion of NEO compensation is “at-risk” based on Company performance, to align the interests of our NEOs and stockholders.
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Annual “Say-on-Pay” Vote – We conduct our “say-on-pay” vote annually to allow our stockholders to provide their direct input on our executive compensation program, policies and practices.
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Compensation Recovery (“Clawback”) Policy – We maintain a “clawback” policy for the recovery of incentive cash and equity compensation, in the event of a financial restatement.
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Independent Compensation Consultant – Our Compensation Committee directly retains an independent compensation consultant.
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Use Double-Trigger Change in Control Provisions – Our time-based equity awards contain a “double-trigger” payment provision in connection with a change in control.
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Annual Executive Compensation Review – The Compensation Committee conducts an annual review and approval of our compensation strategy, including a review and determination of our compensation peer group.
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Avoid Undue Risk-Taking – Our compensation policies and practices are designed to discourage risks that are reasonably likely to have a material adverse effect.
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Director and NEO Stock Ownership Guidelines – All of our NEOs and non-employee directors are subject to robust stock ownership guidelines.
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Limited Perquisites – We provide limited perquisites or other personal benefits to our NEOs.

What
we
don’t
do.
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No Hedging or Pledging – We prohibit margin, hedging, pledging or other similar transactions in our securities.
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No Excise Tax Gross-Ups – We do not provide our NEOs with excise tax gross-ups.
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No Special Welfare or Health Benefits – Our NEOs participate in broad-based Company-sponsored health and welfare benefit programs on the same basis as our other full-time, salaried employees.
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No Guaranteed Compensation Increases – We do not provide automatic or pre-scheduled increases in base salary for NEOs.
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No Guaranteed Bonuses – We do not provide guaranteed bonuses for NEOs.
Compensation of our named executive officers.
Compensation philosophy and objectives
We operate in a highly fragmented, rapidly evolving and competitive market, and we believe that our ability to compete and succeed in this environment is directly correlated to our ability to recruit, incentivize and retain skilled teams in technology, content development, marketing and other business areas. The market for skilled personnel in the technology industry is highly competitive. Further, because of the significant nature of each new university client relationship, our senior management team is heavily involved in the identification and sales process for each university client, and their expertise is critical in navigating the complex approval processes of large nonprofit colleges and universities. Our compensation program is designed to attract and retain talented individuals who possess the skills necessary to create long-term value for our stockholders, grow our business while maintaining our dedicated focus on quality, and assist in the achievement of our strategic goals.
38

EXECUTIVE COMPENSATION
The key elements of our total compensation philosophy include the following:
Pay-for-Performance
 
Attract, Motivate and Retain Top Talent
A significant portion of the annual compensation of our NEOs should vary with annual business performance and each individual’s contribution to that performance.
Provide market-competitive compensation and employee benefits that allow us to hire and retain high-caliber individuals at all levels.
Align Interests with Stockholders
Transparency and Consistency
Align the interests of NEOs and stockholders through the risks and rewards of ownership of our common stock.
Provide an equitable framework for making compensation decisions and use clear financial metrics to enhance transparency and facilitate communication of compensation decisions.
Fiscal 2020 compensation details
Our executive compensation program is designed to reflect our compensation philosophy and typically consists of three components: base salary, annual cash bonus opportunity and long-term incentive awards. Consistent with our compensation philosophy, the target total direct compensation pay mix of our CEO and other NEOs for has been heavily weighted towards at-risk compensation.
2020 CEO PAY MIX  2020 AVERAGE NEO PAY MIX
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2021 Proxy Statement
39

EXECUTIVE COMPENSATION
The table below summarizes how the various components of our executive compensation program are designed to achieve our compensation objectives:
Compensation
Type
Compensation
Element
Objective 2020 Structure
  
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Base Salary
Reward individual contributions and compensate executives for day-to-day responsibilities

Fixed cash compensation
 
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Annual
Performance-
Based Bonus
Drive targeted corporate business goals as measured by financial metricsBased on achievement of revenue and adjusted EBITDA targets
 
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Long-Term
Equity
Compensation
Performance-Based Restricted Stock Units
Motivate executives to achieve key long-term strategic financial objectives and stock price appreciation; provides retention incentive75% of annual equity award; vests annually based on relative TSR over three one-year performance periods
Time-Based Restricted Stock Units
Encourage executive stock ownership and stockholder-alignment; provides retention incentive25% of annual equity award; vests annually over three years
Base salary
We provide base salaries to our NEOs and other employees to compensate them for services rendered day-to-day during the year and provide a level of stable fixed compensation. Each NEO’s initial base salary was established as the result of an arm’s-length negotiation with the individual at the time of hiring, and is reviewed annually, as well as at the time of a promotion or other change in responsibilities. We generally do not apply specific formulas to determine changes in base salary. Rather, our Compensation Committee oversees the review of base salaries for our NEOs on an annual basis following the completion of the fiscal year and makes adjustments as it determines to be reasonable and necessary based on the factors set forth in the section entitled “Process for Setting Compensation—Role of Compensation Committee”.
In January 2020, in connection with its annual review of our executive compensation program, our Compensation Committee approved increases to the base salaries of Mr. Paucek and Mr. Norden, and determined to maintain the base salaries of the other NEOs at current levels. Our Compensation Committee based these decisions on various factors, including review of the market data analysis provided by the independent compensation consultant, individual performance and contribution to the Company, level of experience and responsibilities, criticality and uniqueness of roles and the recommendation of the CEO (other than with respect to his own base salary).
Named Executive Officer
2020 Base Salary
($)(1)

2019 Base Salary
($)(1)

Percentage
Increase
Christopher J. Paucek660,000
(2)
561,00018%
Paul S. Lalljie515,000515,000— 
Mark J. Chernis515,000515,000
(3)
— 
James Kenigsberg410,000410,000— 
Matthew J. Norden400,000360,000
(4)
11%
(1)For 2020, base salary changes were effective January 1, 2020. For 2019, base salary changes were effective April 1, 2019. Therefore, 2019 base salaries set forth in the Summary Compensation Table are less than the amounts stated in these columns because our NEOs received their prior year base salaries from January 1st through March 31st of 2019.
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(2)Effective April 1, 2020, at Mr. Paucek’s request, the Compensation Committee reduced his base salary to his base salary in effect for 2019, which reduction remained in effect until July 1, 2020. Therefore, Mr. Paucek’s 2020 base salary set forth in the Summary Compensation Table is less than the amount stated in this column.
(3)Mr. Chernis’ base salary was $433,000 from April 1, 2019 through October 16, 2019. On October 16, 2019, the Compensation Committee approved an increase to Mr. Chernis’ base salary to $515,000 in consideration of Mr. Chernis’ additional responsibilities following the Trilogy acquisition and in an effort to maintain internal pay equity following Mr. Lalljie’s hiring as Chief Financial Officer.
(4)Mr. Norden’s base salary was $328,000 from April 1, 2019 through November 16, 2019. On November 16, 2019, Mr. Norden’s base salary was increased to $360,000 in connection with his promotion to Chief Legal Officer.
Performance-based annual bonuses
We use performance-based annual cash bonuses to motivate our employees, including our NEOs, to achieve our short-term financial and operational objectives while making progress towards our longer-term goals. Each NEO’s initial target bonus percentage was established as the result of an arm’s length negotiation with the individual at the time of hiring, and is reviewed annually, as well as at the time of a promotion or other change in responsibilities. At the beginning of each year, the Compensation Committee determines the structure of the annual cash bonus plan for the year and sets the target bonus opportunities for each NEO based on the factors set forth in “Process for Setting Compensation—Role of Compensation Committee”.
2020 bonus plan – target bonus opportunities
In February 2020, the Compensation Committee set the target annual bonus opportunities for each NEO and determined not to make any changes to the target bonus percentages that were in effect for 2019. The Compensation Committee based this decision on various factors, including review of the market data analysis provided by the independent compensation consultant, the recommendation of the CEO (other than with respect to his own target bonus opportunity) and the Compensation Committee’s belief that higher base salaries for Mr. Paucek and Mr. Norden and higher annual equity award amounts for certain other NEOs would maintain the competitiveness of our NEOs’ target total direct compensation.
Under the bonus plan in effect for 2020 (“2020 Bonus Plan”), the target annual bonus opportunity of each NEO was as follows:
Named Executive Officer
2020 Eligible Base
Compensation ($)
Target Bonus
Percentage
Target Bonus
Payout ($)
Christopher J. Paucek660,000100%660,000
Paul S. Lalljie515,000100%515,000
Mark J. Chernis515,000100%515,000
James Kenigsberg410,00070%287,000
Matthew J. Norden400,00060%240,000
2020 bonus plan – corporate performance measures
At the beginning of each fiscal year, the Compensation Committee determines the structure of the annual cash bonus plan, including which performance measures should be used and the correlation between achievement levels for each performance measure and funding of the bonus pool. For the 2020 Bonus Plan, the Compensation Committee selected revenue and adjusted EBITDA, each measured on a consolidated basis. The Compensation Committee selected these performance measures because the Compensation Committee believed these performance measures align our NEO incentive opportunities with the Company’s focus on profitable revenue growth. Adjusted EBITDA, a non-GAAP measure, is defined as net income or net loss, as applicable, before net interest income (expense), taxes, depreciation and amortization expense, foreign currency gains or losses, deferred revenue fair value adjustments, transaction costs, integration costs, restructuring-related costs, shareholder activism costs, certain litigation-related costs, consisting of fees for certain non-ordinary course litigation and other proceedings, impairment charges, losses on debt extinguishment and stock-based compensation expense.
The target levels for the revenue and adjusted EBITDA performance measures were based on our 2020 goals and were set at levels necessary to provide a competitive overall compensation package and to motivate employees to achieve aggressive growth and profitability targets. The Compensation Committee believed these targets were achievable, but appropriately challenging, based on market climate and internal forecasting. The Compensation Committee retained discretion to make appropriate adjustments to the 2020 Bonus Plan, positively or negatively, based on additional considerations or extraordinary events.
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Funding of the bonus pool under the 2020 Bonus Plan was contingent on achievement of a minimum threshold level for each performance measure and was capped at a maximum achievement level for each performance measure. The revenue measure generally increased the bonus pool by 5% for every 1% of achievement above the target performance level for revenue up to 102.9% and 10% for every 1% of achievement above 103% of the target performance level for revenue (up to the maximum). The revenue measure generally decreased the bonus pool by 10% for every 1% of shortfall below the target performance level for revenue (down to the threshold). The adjusted EBITDA measure generally increased the bonus pool by 1.5% for every 1% achievement over the target performance level for adjusted EBITDA (up to the maximum) and generally decreased the bonus pool by 1% for every 1% of shortfall below the target performance level for adjusted EBITDA (down to the threshold). Performance between achievement levels is interpolated on a straight-line basis.
The achievement levels for each performance measure necessary for the bonus pool to be funded at the threshold, target or maximum level and the corresponding funding percentages were as follows:
Performance
Performance Metric
2020 Target
(in millions)
Below
Threshold
ThresholdTargetMaximum
Revenue$750.2 < 93%93%100%107%
Adjusted EBITDA$6.1 < 93%93%100%107%
Funding(1)
Bonus Pool Funding (as a percentage of target)0%23%100%170.5%
(1)Bonus pool funds at 0% if Company performance against either the revenue or adjusted EBITDA target falls below 93% of the target.
For 2020, our performance against the targets for the performance measures was $774.5 million, or 103% of target, with respect to revenue, and $16.1 million, or 263% of target, with respect to adjusted EBITDA. The performance with respect to adjusted EBITDA was over the maximum achievement allowed by the 2020 Bonus Plan, and therefore was capped at the maximum — 107% of target. In February 2020, the Compensation Committee determined to make the following payouts under the 2020 Bonus Plan to our NEOs based on the Company’s performance against the corporate performance measures:
Named Executive OfficerBonus Payout ($)% of Target Bonus
Christopher J. Paucek792,000120%
Paul S. Lalljie618,000120%
Mark J. Chernis618,000120%
James Kenigsberg344,400120%
Matthew J. Norden288,000120%
Long-term incentive compensation
We use long-term incentive compensation in the form of equity awards to align the interests of our employees, including our NEOs, with the interests of our stockholders. We believe that if our employees own shares of our common stock in amounts that are significant to them, they will have a strong incentive to act to maximize long-term stockholder value. Prior to 2020, we relied on options to purchase shares of our common stock and RSUs as the principal vehicles for delivering long-term incentive compensation opportunities to our NEOs. Starting in 2020, the Compensation Committee replaced options with PRSUs partly in response to shareholder feedback that a larger portion of our equity awards be tied to performance metrics. We believe that PRSUs provide an appropriate long-term incentive for recipients and align the interests of recipients and stockholders. RSUs, while also providing an appropriate long-term incentive to recipients, effectively manage dilution to existing investors and provide greater transparency and predictability to NEOs. In determining the size of the equity awards granted to our NEOs, the Compensation Committee considers the factors set forth in the section entitled “Process for Setting Compensation—Role of Compensation Committee”. The Compensation Committee also considers the dilutive effect of our long-term incentive compensation practices, and the overall impact that these equity awards, as well as awards to other employees, will have on stockholder value. The Compensation Committee also applies its subjective judgment to determine the appropriate size of each NEO’s equity award.
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The size of the annual equity award granted to each NEO is based on a target dollar value. The number of PRSUs and RSUs granted to each NEO is calculated by dividing the appropriate portion of the total dollar value consisting of PRSUs or RSUs, as applicable, by the value of a share of our common stock on the grant date.
2020 equity awards
In 2020, our NEOs' annual equity awards were comprised of 75% market-PRSUs and 25% RSUs.
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The RSUs vest in equal annual installments over a three year period. The market-PRSUs are eligible to vest, if at all, based on the Company’s relative TSR as compared to the TSR of the companies that comprise the Russell 3000 Index, as measured over three one-year performance periods commencing on January 1, 2020, 2021 and 2022, respectively. At the end of a performance period, the number of market-PRSUs that vest will be determined based on the Company’s relative TSR, applying a multiplier based on a framework set by the Compensation Committee prior to the start of the applicable performance period. The table below sets forth the award multiplier framework applicable to the first performance period of the market-PRSUs granted in January 2020, with performance between any of the following levels interpolated on a straight-line basis:
2U TSR Compared to Index(1)
Award Multiplier
< 25th percentile0%
25th percentile50%
50th percentile100%
> 75th percentile200%
(1)Prior to the start of the second performance period, the Compensation Committee determined that the same award multipliers would apply to the second performance period of the market-PRSUs granted in January 2020. The Compensation Committee will set the award multipliers applicable to the third performance period of the market-PRSUs granted in January 2020 prior to the start of the third performance period.
In determining the amount of each NEO's equity award, the Compensation Committee took into consideration the market data analysis provided by the independent compensation consultant, individual performance and contribution to the Company, level of experience and responsibilities, criticality and uniqueness of roles and the recommendations of our Chief Executive Officer (except with respect to his own equity award). Equity awards made to NEOs in 2020 also reflected the Compensation Committee’s desire to retain our NEOs during a period the Compensation Committee believed would be critical to the Company’s growth and long-term strategic success. The equity awards granted to the NEOs in 2020 were as follows:
Named Executive Officer
RSUs Granted
(number of shares)
(#)
RSUs Granted
(grant date fair value)
($)
PRSUs Granted
(number of shares)(1)
(#)
PRSUs Granted
(grant date fair value)(1)
($)
Christopher J. Paucek118,5612,324,981118,561 2,661,694 
Paul S. Lalljie59,2801,162,48159,280 1,330,836 
Mark J. Chernis59,2801,162,48159,280 1,330,836 
James Kenigsberg(2)
34,421674,99642,108 945,324 
Matthew J. Norden28,684562,49328,684 643,956 
(1)Only the award multipliers for the first performance period of the PRSUs were set in 2020. Therefore, amounts shown represent one-third of the total number of PRSUs granted to each NEO or one-third of the total value of the PRSUs awarded to each NEO, as applicable, in accordance with applicable accounting rules. The Compensation Committee considered the full value of the PRSU award when making the grant.
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(2)PRSUs granted include an additional 7,687 PRSUs, with a grant date fair value of $172,573, which were inadvertently omitted at the time Mr. Kenigsberg received the one-time award of PRSUs in October 2019.
In January 2021, the Compensation Committee determined that for the first performance period, the Company’s TSR was in the 85th percentile as compared to the TSR of the companies that comprise the Russell 3000 Index, and accordingly, 200% of the PRSUs eligible to be earned for the first performance period vested.
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2019 PRSU grant and achievement
In October 2019, the Compensation Committee granted market-PRSUs to certain employees, including our NEOs (other than our CEO) that were designed to drive leadership stability and encourage executive continuity. These market-PRSUs are eligible to vest, if at all, based on the Company’s relative TSR as compared to the TSR of the companies that comprise the Russell 3000 Index, as measured over one, two and three year performance periods, each commencing on October 1, 2019. At the end of a performance period, the number of market-PRSUs that vest will be determined based on the Company’s relative TSR as set forth in the table below (which applies to all three performance periods), with performance between any of the following levels interpolated on a straight-line basis:
2U TSR Compared to IndexAward Multiplier
< 25th percentile0%
25th percentile50%
50th percentile100%
> 75th percentile200%
In October 2020, the Compensation Committee determined that for the first performance period, the Company’s TSR was in the 96th percentile as compared to the TSR of the companies that comprise the Russell 3000 Index, and accordingly, 200% of the PRSUs eligible to be earned for the first performance period vested.
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Process for setting compensation.
Role of compensation committee
The Compensation Committee is primarily responsible for establishing, approving and adjusting compensation arrangements for our NEOs, including our Chief Executive Officer, and for reviewing and approving corporate goals and objectives relevant to these compensation arrangements, evaluating executive performance and considering factors related to the performance of the Company, including accomplishment of our long-term business and financial goals. The Compensation Committee reviews the compensation of our executive officers, including our NEOs, on an annual basis, or more frequently in certain situations, to ensure the executives are properly incentivized, and makes adjustments as necessary. In determining base salaries, bonus targets and equity incentive awards for our NEOs, our Compensation Committee considers the following factors:
our performance in the previous year, based on financial and non-financial metrics;
the NEO’s historical compensation levels;
the NEO’s role, responsibilities and skills;
the proposed compensation packages for other NEOs (internal pay equity);
compensation trends and the market compensation for comparable positions;
individual performance as compared to our expectations and objectives;
our desire to drive short- and long-term results that are in the best interests of our stockholders; and
our outlook and operating plan for the upcoming year.
As part of this review, the Compensation Committee is provided with relevant information, such as the competitive market data described further below, to use as a reference when setting each individual compensation element and target total direct compensation levels.
Role of management
In carrying out its responsibilities, our Compensation Committee works with members of our management, including our Chief Executive Officer, Chief Financial Officer, Chief People Officer, Chief Legal Officer, and other human resources, finance, and legal professionals. Typically, our management assists the Compensation Committee by providing information on corporate and individual performance and management’s perspective and recommendations on compensation matters. Our Chief Executive Officer, Chief Financial Officer, Chief People Officer, Chief Legal Officer and other members of our human resources, finance and legal departments may attend meetings of the Compensation Committee to present information and answer questions. Our Chief Executive Officer may also make recommendations to the Compensation Committee regarding compensation for our NEOs, other than for himself, because of his daily involvement with our NEOs. Our Compensation Committee solicits and reviews our Chief Executive Officer’s recommendations as one of several factors in making compensation decisions, along with recommendations and market data obtained from our compensation consultant, and the Compensation Committee’s own independent judgment. No NEO participates directly in the final deliberations or determinations regarding their own compensation package.
Role of compensation consultant
The Compensation Committee is authorized to retain the services of executive compensation advisors, as it sees fit, in connection with oversight of our executive compensation program. With respect to the Compensation Committee's independent compensation consultant, the Compensation Committee conducts an annual assessment of the consultant’s performance and re-appoints the consultant each year. In mid-2019, the Compensation Committee re-appointed Compensia to advise on our executive compensation programs and practices and our executive compensation decisions for 2020 given its expertise in the technology industry and its knowledge of our peer companies. During mid-2019 and early 2020, Compensia provided the following services as requested by the Compensation Committee:
evaluated the efficacy of our existing compensation strategy and practices in supporting and reinforcing our long-term strategic goals relative to market norms;
reviewed and assessed our peer group of companies to understand competitive market compensation practices;
provided and analyzed compensation market data;
reviewed and assessed our current NEO compensation practices and equity profile relative to our peers;
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provided information regarding executive retention strategies;
provided data regarding market practices for severance and change in control plans; and
reviewed and assessed whether our non-employee director compensation policy is appropriate for a publicly traded company, including providing compensation market data.
During 2020, Compensia did not perform work for the Company other than the services detailed above. The Compensation Committee assessed each of the independence factors established by the SEC and Nasdaq and concluded that the engagement of Compensia did not raise any conflict of interest with the Company or any of its directors or executive officers. Compensia attended certain Compensation Committee meetings and preparatory meetings with certain executive officers, as requested by the Compensation Committee or management.
In mid-2020, the Compensation Committee conducted a competitive process for the selection of a new compensation consultant, and in October, 2021, the Compensation Committee decided to engage Willis Towers Watson to advise the Compensation Committee regarding the Company's executive compensation programs and practices and its executive compensation decisions for 2021.
Compensation peer group
As part of its deliberations, the Compensation Committee considers competitive market data and related analysis on executive compensation levels and practices that is provided by its independent compensation consultant. In October 2019, our Compensation Committee reviewed comparative executive compensation data provided by the independent compensation consultant and identified our compensation peer group for 2020 compensation decisions based generally on the selection criteria described below.
Selection CriteriaCriteria Range
Revenue (last four quarters).3x – 3x the Company’s last four quarters of revenue as of September 2019
Market Capitalization.25x – 4x the Company’s 30-day average market cap as of September 2019
Revenue GrowthHigh
In general, the Compensation Committee believes that revenue is a more important factor in evaluating size of potential peer companies than market capitalization since market capitalization can fluctuate due to factors unrelated to a company’s underlying performance. In addition to the selection criteria noted above, the Compensation Committee sought to include U.S. headquartered companies that operate in the cloud-based SaaS or adjacent Internet software and services market. Potential peer group companies were evaluated based on the most recent data available as of September 2019. With the assistance of the independent compensation consultant, the Compensation Committee ultimately identified our peer group for 2020 compensation decisions, consisting of the following 19 companies.
Alarm.com
Benefitfocus
Chegg
Cornerstone OnDemand
Coupa Software
Eventbrite
Grubhub
Guidewire Software
Hubspot
Instructure
LivePerson
LogMeIn
New Relic
Paylocity Holdings
Pluralsight
Q2 Holdings
SVMK
Tenable Holdings
Zuora
This compensation peer group differed from our compensation peer group approved by the Compensation Committee for 2019 compensation decisions due to certain companies being removed because they were acquired or no longer deemed comparable in terms of market capitalization and other companies being added because they fell within the parameters identified by the Compensation Committee for our peer group as described above.
In performing the executive compensation assessment for 2020, the independent compensation consultant used market data that reflected a 75/25 blend of (1) compensation data from the peer group above and (2) Radford custom survey data for software companies with $500 million to $1 billion in annual revenues. Collectively, we refer to the peer group data and the Radford data as the “market data.”
We believe that peer group and other market comparisons are useful guidelines to measure the competitiveness of our compensation practices. The Compensation Committee has not adopted any formal benchmarking guidelines, but it generally uses the range of the 50th percentile to the 75th percentile of our peers as a reference point during the course of its deliberations. The Compensation Committee maintains discretion to set levels of executive compensation above or below peer levels based upon distinguishing factors such as our internal pay equity and compensation budget, individual performance and contribution to the Company, an executive’s level of experience and responsibilities, and comparability of roles within other peer companies.
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Consideration of annual “say-on-pay” voting results
Our stockholders have the opportunity to cast an annual advisory vote on our executive compensation programs (“say-on-pay vote”). Our 2020 proxy statement described our executive compensation programs for fiscal year 2019 and the meaningful changes we implemented for 2020 based on feedback from our stockholders and the Compensation Committee’s consideration of best practices in corporate governance.
At the Company’s 2020 annual meeting of stockholders, the Company’s advisory vote to approve executive compensation (“say-on-pay vote”) for fiscal year 2019 garnered stockholder support of 98% of the shares present or represented by proxy. Given the strong level of support evidenced by last year’s say-on-pay vote, the Compensation Committee determined that our stockholders were generally supportive of the executive compensation philosophy and program set forth in our 2020 proxy statement, which described both our executive compensation programs for fiscal year 2019 and the meaningful changes we implemented for 2020 based on feedback from our stockholders and the Compensation Committee’s consideration of best practices in corporate governance.
Other compensation policies.
Compensation recovery policy
Our Board of Directors has adopted a compensation recovery (“clawback”) policy providing that, in the event of a restatement of financial results due to the material non-compliance by the Company with any financial reporting requirement under the federal securities laws, the Company may recover from any executive officer any incentive compensation erroneously paid or awarded in excess of what would have been paid under the accounting restatement. This policy covers any bonus, incentive payment or other cash compensation or equity-based award granted, earned, vested and/or received by an executive officer on or after the effective date of the policy and during the three year period preceding the date on which we are required to prepare the accounting restatement.
Executive stock ownership guidelines
In April 2020, we adopted stock ownership guidelines for our NEOs. Within five years from becoming subject to the guidelines our NEOs are required to own shares of our common stock with a value at least equal to the following:
Chief Executive Officer
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3x annual base salary
Chief Financial Officer
image_1601a.jpg
2x annual base salary
Other Covered Executives (Including all other NEOs)
image_1611a.jpg
1x annual base salary
Shares counted towards meeting the ownership guidelines include (i) shares owned directly or indirectly, (ii) shares held by a qualifying trust, (iii) shares held by a 401(k) plan or other qualified pension or profit-sharing plan for the benefit of the executive and (iv) shares underlying vested restricted stock units where settlement of such shares has been deferred. Each executive remains subject to the stock ownership guidelines as long as they remain in their role. Exceptions to the guidelines may be made in the case of extraordinary circumstances, such as personal hardship, in the Nominating and Corporate Governance Committee’s sole discretion.
Employment arrangements
Please see “Potential Payments Upon Termination of Employment and in Connection with Change of Control Arrangements” for information regarding the severance provisions for our NEOs.
Anti-hedging and anti-pledging policies
Our insider trading policy provides that no one subject to the policy, which includes all Company officers, directors and employees, as well as consultants and contractors who may have access to inside information (each, an “Insider”) may engage in the purchase of financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds), or other transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of Company securities. Our insider trading policy further provides that no Insider may engage in hedging or monetization transactions involving our securities, pledge our securities as collateral for a loan, or hold our securities in a margin account.
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Risk assessment
The Compensation Committee has reviewed the Company’s compensation programs for employees, including NEOs, and has concluded that these programs do not create risks that are reasonably likely to have a material adverse effect on the Company. In reaching this conclusion, the Compensation Committee considered the following factors:
The Company’s compensation programs are well-designed to encourage behaviors aligned with the long-term interests of stockholders;
The Company’s compensation programs include design features that reduce the likelihood of excessive risk taking, such as reasonable performance targets, capped incentive compensation payouts, a balance of cash and stock-based incentives;
The Company maintains policies to mitigate compensation risk, including stock ownership guidelines and a claw-back policy; and
The Compensation Committee exercises an appropriate level of independent oversight of compensation decisions and related risk.
Policy regarding 10b5-1 plans for directors and executive officers
We typically encourage our executive officers and members of our Board to adopt plans in accordance with Exchange Act Rule 10b5-1 for sales of securities which they beneficially own, and our Insider Trading Policy expressly provides that such individuals may not trade in our equity securities during “blackout” periods.
Compensation committee report*
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussions, we recommended to the Board, and the Board approved that the Compensation Discussion and Analysis be included in this Proxy Statement.
Submitted by the Compensation Committee
JOHN M. LARSON (CHAIR)
ALEXIS MAYBANK
CORETHA M. RUSHING
*The Compensation Committee Report does not constitute soliciting material, and shall not be deemed to be filed or incorporated by reference into any other filing of 2U under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that 2U specifically incorporates the Compensation Committee Report by reference therein.
Compensation committee interlocks and insider participation.
No director who served on the Compensation Committee during 2020 is a former or current officer or employee of the Company or any of its subsidiaries. In addition, during the last completed fiscal year, none of our executive officers has served as a member of the board of directors or compensation committee of any other entity that has or has had one or more of its executive officers serving as a member of our Board or Compensation Committee.
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Executive compensation tables
2020 summary compensation table.
The following table sets forth summary information regarding compensation earned during the years ended December 31, 2020, 2019 and 2018 by our NEOs. The following table includes all compensation earned by our NEOs for the respective periods, regardless of whether such amounts were actually paid during that period.
Name and
Principal Position
Year
Salary
($)
Bonus
($)
Stock
Awards
($)(1)
Option
Awards
($)(2)
Non-Equity
Incentive Plan
Compensation
($)(3)
All Other
Compensation
($)(4)
Total
($)
Christopher J. Paucek
Chief Executive Officer
2020649,9734,986,675792,0005,7006,434,348
2019557,0423,299,8792,749,9875,6006,612,508
2018541,2505,374,89510,624,956378,8753,66716,923,643
Paul S. Lalljie(5)
Chief Financial Officer
2020534,8082,493,317618,0005,7003,651,825
201989,735250,0004,999,9865,339,721
2018
Mark J. Chernis
Chief Operating Officer
2020534,8082,493,317618,0005,7003,651,825
2019444,6043,223,4771,449,9945,6005,123,675
2018249,8831,674,9041,674,964223,1253543,823,230
James Kenigsberg
Chief Technology Officer
2020425,7691,620,320344,4002,7152,393,204
2019403,3351,902,031874,9655,6003,185,931
2018385,625749,968749,962188,9565,5002,080,011
Matthew J. Norden
Chief Legal Officer
2020412,0841,206,449288,0005,5881,912,121
2019327,8771,094,946374,98574,8041,872,612
2018
(1)Amounts shown represent the grant date fair value for stock awards granted to the NEOs, calculated in accordance with ASC Topic 718. The grant date fair value of each market-PRSU is based on the probable outcome of the market-based performance conditions on the grant date and was determined using a Monte Carlo model that utilizes stock volatility, dividend yield and the Company’s TSR relative to the TSR of the companies in the Russell 3000 Index. For more information on the assumptions we used to calculate the grant date fair values for PRSUs containing market-based vesting conditions, see Note 11 to our audited consolidated financial statements included in our Annual Report on Form 10-K filed on February 25, 2021. Amounts shown for 2019 for Mr. Lalljie, Mr. Chernis, Mr. Kenigsberg and Mr. Norden include the one-time grant of PRSUs made in October 2019, as further described in the section entitled “Compensation Discussion and Analysis—Compensation of our Named Executive Officers—Long-Term Incentive Compensation—2019 PRSU Grant and Achievement” and PRSUs granted in lieu of the opportunity to earn 2019 cash bonuses, which were subject to financial performance conditions. The maximum potential values of the PRSUs, based on the closing price per share of our common stock on the grant date were: for Mr. Paucek, $4,649,962 for the PRSUs granted in January 2020 and $621,488 for the PRSUs granted in respect of our 2019 bonus plan; for Mr. Lalljie, $2,324,962 for the PRSUs granted in January 2020 and $1,999,995 for the PRSUs granted in October 2019; for Mr. Chernis, $2,324,962 for the PRSUs granted in January 2020, $2,899,971 for the PRSUs granted in October 2019 and $365,577 for the PRSUs granted in respect of our 2019 bonus plan; for Mr. Kenigsberg, $1,651,476 for the PRSUs granted in January 2020, $1,499,985 for the PRSUs granted in October 2019 and $313,088 for the PRSUs granted in respect of our 2019 bonus plan; and for Mr. Norden, $1,124,986 for the PRSUs granted in January 2020, $749,976 for the PRSUs granted in October 2019 and $276,943 for the PRSUs granted in respect of our 2019 bonus plan. The grant date fair value of each RSU and PRSU subject to financial performance conditions is based on the closing price of our stock on the date of grant.
(2)Amounts shown represent the grant date fair value for stock options granted to the NEOs, calculated in accordance with ASC Topic 718. The grant date fair value of each stock option is estimated based on the fair market value on the grant date using the Black-Scholes option pricing model. For more information on the assumptions used in calculating the grant date fair value of the options, see Note 11 to our audited consolidated financial statements included in our Annual Report on Form 10-K filed on February 25, 2021.
(3)Amounts shown represent the cash amounts paid under our bonus plans. See the section entitled “Compensation Discussion and Analysis—Compensation of our Named Executive Officers—Performance-Based Annual Bonuses” for additional information regarding the 2020 bonus payments.
(4)Amounts shown represent 401(k) matching contributions paid by us. For Mr. Norden, amounts shown for 2019 also include tuition reimbursement payments.
(5)Mr. Lalljie commenced employment on October 14, 2019. The amount shown in the 2019 “Bonus” column for Mr. Lalljie represents a one-time signing bonus paid to Mr. Lalljie in connection with his commencement of employment.
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2021 Proxy Statement
49

EXECUTIVE COMPENSATION
2020 grants of plan-based awards.
The following table sets forth certain information with respect to all plan-based awards granted to our NEOs during the 2020 fiscal year. All awards were issued under our 2014 Plan.
Estimated Possible Payouts
Under Non-Equity
Incentive Plan Awards(1)
Estimated Possible Payouts
Under Equity
Incentive Plan Awards(2)
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)(3)
Grant Date
Fair Value
of Stock
and Option
Awards
($)(4)
Name
Grant
Type
Grant Date
Threshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Target
(#)
Maximum
(#)
Christopher J. PaucekBonusN/A151,800660,0001,125,300
PRSUs01/29/202059,280118,561237,1222,661,694
RSUs01/29/2020118,5612,324,981
Paul S. LalljieBonusN/A118,450515,000878,075
PRSUs01/29/202029,64059,280118,5601,330,836
RSUs01/29/202059,2801,162,481
Mark J. ChernisBonusN/A118,450515,000878,075
PRSUs01/29/202029,64059,280118,5601,330,836
RSUs01/29/202059,2801,162,481
James KenigsbergBonusN/A66,010287,000489,335
PRSUs01/29/20203,8437,68715,374172,573
PRSUs01/29/202017,21034,42168,842772,751
RSUs01/29/202034,421674,996
Matthew J. NordenBonusN/A55,200240,000409,200
PRSUs01/29/202014,34228,68457,368643,956
RSUs01/29/202028,684562,493
(1)Amounts shown represent the threshold, target and maximum amounts that could be paid under our 2020 Bonus Plan, as discussed in the section entitled “Compensation Discussion and Analysis—Compensation of our Named Executive Officers—Performance-Based Annual Bonus.” Actual cash incentive awards earned in fiscal year 2020 by the NEO under our 2020 Bonus Plan are shown in the column titled "Non-Equity Incentive Plan Compensation" in the Summary Compensation Table.
(2)Represents PRSUs granted to the NEOs during 2020. Amounts shown represent the number of shares of common stock eligible to vest at threshold, target and maximum levels of performance. In January 2021, the Compensation Committee determined that the achievement percentage applicable for the first performance period of these PRSUs was 200%.
(3)Represents time-based RSUs granted to the NEOs during 2020, which vest annually over three years, subject to the NEO's continued employment through each applicable vesting date.
(4)Amounts shown represent the grant date fair value for PRSU and RSUs, as applicable, calculated in accordance with ASC Topic 718. The fair value of each RSU is based on the closing price of our common stock on the grant date. The fair value of each PRSU is based on the probable outcome of the market-based performance conditions on the grant date and was determined using a Monte Carlo model that utilizes stock volatility, dividend yield and the Company’s TSR relative to the TSR of the companies in the Russell 3000 Index. For more information on the assumptions we used to calculate the grant date fair values for PRSUs containing market-based vesting conditions, see Note 11 to our audited consolidated financial statements included in our Annual Report on Form 10-K filed on February 25, 2021.
50

EXECUTIVE COMPENSATION
Outstanding equity awards at 2020 fiscal year end.
The following table provides information about outstanding stock options and stock awards held by each of our NEOs as of December 31, 2020. These stock options were granted under our 2008 Plan and our 2014 Plan and these stock awards were granted under our 2014 Plan.
Option AwardsStock Awards
Number of Securities
Underlying Unexercised
Options
Option
Exercise
Price
($)
Option
Expiration
Date
  
Number of
Units That
Have Not
Vested
(#)(1)
Market
Value of
Units That
Have Not
Vested
($)(2)
Equity
Incentive
Plan Awards:
Number of
Unearned
Units That
Have Not
Vested
(#)(3)
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Units That
Have Not
Vested
($)(2)
NameGrant DateExercisable
Unexercisable(1)
Christopher J. Paucek05/08/2013130,618— 5.7505/08/2023
11/26/2013175,000— 8.4510/04/2023
12/19/2013175,000— 8.4510/04/2023
03/06/2014157,350— 11.0003/06/2024
04/01/201580,515— 25.5204/01/2025
04/01/201690,862— 22.6704/01/2026
04/01/201757,4615,22439.6604/01/20277,565302,676
04/01/201846,93223,46784.0304/01/202816,364654,724
04/01/201872,900118,462
(4)
84.0304/01/202822,314
(5)
892,783
04/01/201934,59648,43572.0204/01/202928,6381,145,806
01/29/2020118,561
(6)
4,743,626237,1229,487,251
Paul S. Lalljie10/14/201939,239
(7)
1,569,95278,4763,139,825
10/14/2019117,716
(7)
4,709,817
01/29/202059,280
(6)
2,371,793118,5604,743,586
Mark J. Chernis01/17/201350,000— 5.7501/17/2023
04/11/20147,389— 12.9404/01/2024
04/01/20154,048— 25.5204/01/2025
04/05/20164,957— 23.0704/05/2026
04/04/20172,899— 39.6904/04/2027
05/22/201822,61711,30891.6405/22/20287,912316,559
05/22/20183,5091,75591.6405/22/20281,22849,132
04/01/201918,24225,53872.0204/01/202915,100604,151
10/01/2019118,9004,757,189
01/29/202059,280
(6)
2,371,793118,5604,743,586
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2021 Proxy Statement
51

EXECUTIVE COMPENSATION
Option Awards
Stock Awards
Number of Securities
Underlying Unexercised
Options
Option
Exercise
Price
($)
Option
Expiration
Date
Number of
Units That
Have Not
Vested
(#)(1)
Market
Value of
Units That
Have Not
Vested
($)(2)
Equity
Incentive
Plan Awards:
Number of
Unearned
Units That
Have Not
Vested
(#)(3)
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Units That
Have Not
Vested
($)(2)
NameGrant DateExercisable
Unexercisable(1)
James
Kenigsberg
07/14/201110,000— 3.0806/27/2021
02/13/201250,000— 3.0802/13/2022
02/28/20125,124— 3.0802/28/2022
02/25/201314,589— 5.7502/25/2023
03/06/201413,421— 11.0003/06/2024
04/01/201513,503— 25.5204/01/2025
04/01/201634,073— 22.6704/01/2026
04/01/201611,666— 22.6704/01/2026
04/01/201728,7302,61239.6604/01/20273,782151,318
04/01/201812,7996,40084.0304/01/20284,463178,565
04/01/201911,00715,41172.0204/01/20299,112364,571
10/01/201961,5002,460,615
01/29/202034,421
(6)
1,377,18479,0903,164,391
Matthew J.
Norden
11/26/20132,084— 8.4510/01/2023
03/06/20142,743— 11.0003/06/2024
01/02/2015914— 19.4801/02/2025
04/01/20151,752— 25.5204/01/2025
04/01/20164,985— 22.6704/01/2026
04/01/20178,4351,08839.6604/01/20271,57663,056
10/01/20171,14130156.0410/01/20271686,722
04/01/20186,3993,20084.0304/01/20282,23289,302
04/01/20194,7176,60572.0204/01/20293,905156,239
05/22/20191,229
(8)
49,172
10/01/201930,7481,230,227
01/29/202028,684
(6)
1,147,64757,3682,295,294
(1)Except as otherwise noted, (i) all stock options shown vest 25% on the first anniversary of their grant date, and the remaining 75% vest thereafter in 36 equal monthly installments, (ii) the expiration date of all stock options shown is 10 years after the grant date, (iii) each RSU vests as to 25% on the first, second, third and fourth anniversaries of its grant date and (iv) the vesting of each equity award is subject to the NEO's continued employment through each applicable vesting date.
(2)Amounts shown are determined by multiplying the number of units that have not vested by $40.01 (the closing price of our common stock on the last trading day of fiscal year 2020).
(3)Represents PRSUs granted pursuant to our 2014 Plan. The PRSUs granted in October 2019 are reported assuming the achievement of the maximum performance level for each of the applicable TSR performance periods. The shares underlying these PRSUs are eligible to vest based on the Company’s relative TSR as compared to the TSR of the companies that comprise the Russell 3000 Index, as measured over one, two and three year performance periods each commencing on October 1, 2019. See the section entitled “Compensation Discussion and Analysis—Compensation of our Named Executive Officers—Long-Term Incentive Compensation—2019 PRSU Grant and Achievement” for additional information about these awards. The PRSUs granted in January 2020 are reported assuming the achievement of the maximum performance level. The shares underlying these PRSUs are eligible to vest based on the Company’s relative TSR as compared to the TSR of the companies that comprise the Russell 3000 Index, as measured over a one-year performance period commencing on January 1, 2020. See the section entitled “Compensation Discussion and Analysis—Compensation of our Named Executive Officers—Long-Term Incentive Compensation—2020 Equity Awards” for additional information about these awards.
(4)The award vests in equal monthly installments over a seven-year period.
(5)The award vests in equal annual installments over a seven-year period.
(6)The award vest in equal annual installments over a three-year period.
(7)The award vests in equal annual installments on October 1, 2020, 2021 and 2022.
(8)The award vests 50% on May 22, 2021 and 50% on May 22, 2022.
52

EXECUTIVE COMPENSATION
2020 option exercises and stock vested.
The following table provides information about the exercise of stock options and vesting of stock awards for each of our NEOs during the year ended December 31, 2020.
Option AwardsStock Awards
NameNumber of
Shares Acquired
on Exercise
(#)
Value Realized
on Exercise
($)(1)(3)
Number of
Shares Acquired
on Vesting
(#)
Value Realized
on Vesting
($)(2)(3)
Christopher J. Paucek48,3011,602,27140,780756,469
Paul S. Lalljie117,7174,101,260
Mark J. Chernis69,5142,257,925
James Kenigsberg20,000590,40049,0621,494,520
Matthew J. Norden21,812680,225
(1)Amounts shown represent the value realized upon exercise of stock options calculated by multiplying (i) the difference between the closing price of our common stock on the date of exercise and the exercise price of the option award by (ii) the number of shares of common stock acquired upon exercise.
(2)Amounts shown represent the value realized upon vesting of the award calculated by multiplying (i) the number of shares of common stock that vested by (ii) the closing price of our common stock on the date of vesting.
(3)Not all of the shares acquired upon exercise of stock options or vesting of stock awards were sold by the NEOs. Therefore, NEOs may continue to be at risk for subsequent changes in the value of these shares.
Pension benefits.
Our executive officers, including our NEOs, did not participate in, or otherwise receive any benefits under, any defined benefit pension plan sponsored by us during the year ended December 31, 2020.
Nonqualified deferred compensation.
Our executive officers, including our NEOs, did not earn any nonqualified deferred compensation benefits from us during the year ended December 31, 2020.
Potential payments upon termination of employment and in connection with change of control arrangements.
Severance pay and change in control plan
On February 14, 2020, the Compensation Committee adopted a Severance Pay and Change in Control Plan (as amended, the “Severance Plan”) applicable to each of our NEOs. The Severance Plan was adopted to provide standardized severance benefits to current and future participants in the event of a participant’s termination without cause or resignation for good reason and supersedes any pre-existing severance benefits. Benefits under the Severance Plan are determined based on whether a participant is designated as a Tier I Participant, Tier II Participant or Tier III Participant. Mr. Paucek is designated as a Tier I Participant and each of Mr. Lalljie, Mr. Chernis, Mr. Norden, and Mr. Kenigsberg is a Tier II Participant.
Under the Severance Plan, in the event of termination of a NEO’s employment by the Company without “Cause” or, a resignation by the NEO for “Good Reason”, the NEO will receive, in addition to a prorated bonus for the year of termination (based on actual performance for the full-year):
(i)An amount equal to one times (or 1.5 times for Mr. Paucek) the sum of the NEO’s annual base salary plus target bonus; and
(ii)Payment or reimbursement of the full monthly cost for continued coverage for the NEO and the NEO’s eligible dependents under the Company’s group health plans pursuant to COBRA for up to 12 months following termination (or 18 months for Mr. Paucek).

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2021 Proxy Statement
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EXECUTIVE COMPENSATION
If, however, a NEO’s employment is terminated by the Company without Cause or by the NEO for Good Reason during the three month period prior to a Change in Control or the 12 month period following a Change in Control, the NEO will receive, in lieu of the payments and benefits describe above, a prorated bonus for the year of termination (based on actual performance for the full year) and:
(i)An amount equal to 1.5 times (or 2 times for Mr. Paucek) the sum of the NEO’s annual base salary plus target annual bonus, generally payable in a lump sum; and
(ii)An amount equal to the product of 1.02, multiplied by 12 (or 18 for Mr. Paucek), multiplied by the monthly premium for the cost of insuring the NEO and the NEO’s eligible dependents under the Company’s group health plans in which the NEO participated immediately prior to the date of such termination, generally payable in a lump sum.
For purposes of the Severance Plan as applied to the NEO:
“Cause” generally means the occurrence of any of the following events: (i) such participant’s indictment for, or conviction or plea of guilty or nolo contendere to, any felony or any crime involving moral turpitude under the laws of the United States or any state thereof; (ii) such participant’s commission of, or participation in, a fraud or act of willful dishonesty against the Company, or any intentional and unlawful harassment or discrimination in the course of such participant’s employment with the Company; (iii) such participant’s intentional, material violation of any contract or agreement between such participant and the Company which (if curable) is not cured within fifteen (15) days of written notice by the Company to such participant; (iv) such participant’s intentional and unauthorized use or disclosure of confidential information, which results, or would reasonably be expected to result, in material harm to the Company or its affiliates; or (v) such participant’s gross misconduct in connection with the performance of his duties.
“Good Reason” generally means the occurrence of any of the following events without the participant’s express written consent: (i) the continual assignment of duties that are not commensurate in any material respect with such participant’s position, or a material diminution in such participant’s position, authority, reporting lines or responsibilities, including, without limitation, such participant ceasing to have the same status, offices, titles and seniority with the Company (or the Company’s successor in interest or its ultimate parent resulting from a change in control) or to be in charge of a principal business unit, division or function (such as sales, administration or finance) of the Company (or such successor or ultimate parent) in which such participant had been in charge immediately prior to such diminution; (ii) a material reduction in such participant’s annual base salary and/or annual target incentive opportunity; (iii) a relocation of such participant’s principal work location to a location that is thirty five (35) miles or more from Washington, DC and results in a material increase in such participant’s commute from his primary residence; or (iv) the Company’s material violation of any written contract or agreement between such participant and the Company, including the Severance Plan.
The payments pursuant to the Severance Plan are in addition to, and not in lieu of, any accrued but unpaid salary, bonuses and/or employee welfare and other benefits to which a NEO is entitled.
Any outstanding awards under any equity-based or other long-term performance incentive compensation plan or program of the Company will generally be subject to and treated in accordance with the terms and conditions of the applicable plan, program, and/or award agreement.
Severance Plan benefits are generally subject to the NEO’s timely execution, delivery, and non-revocation of a general release of claims and compliance with applicable restrictive covenants.
Change in control equity acceleration
The terms of option and time-based RSU award agreements under our 2014 Plan provide that options and time-based RSUs, respectively, granted to our NEOs will vest and become exercisable if their employment is terminated without cause or for good reason on or within 12 months after a change in control or if the awards are not assumed or substituted in the change in control on terms that preserve their intrinsic value. With respect to the PRSUs granted to our NEOs in October 2019, in the event of a change in control during the-three year performance period, a number of shares equal to (i) the prorated portion of the target PRSUs eligible to be earned during the applicable performance period multiplied by (ii) the applicable achievement percentage based on the Company’s TSR prior to the change in control using the Company’s stock price at such time, will be earned and will vest immediately. The remaining PRSUs will convert to time-based units that vest on the last day of the original performance period, subject to accelerated vesting upon termination without cause or for good reason on or within 12 months following the change in control or if the awards are not assumed or substituted in the change in control on terms that preserve their intrinsic value. With respect to the PRSUs granted to our NEOs in January 2020, in the event of a change in control, if the achievement percentage is 100% or higher, a number of shares equal to (i) the total number of PRSUs eligible to be earned for any performance period with an end date following the change of control multiplied by (ii) the applicable achievement percentage based on the Company’s TSR prior to the change in control using the Company’s stock price at such time, will be earned and will vest immediately. However, if the achievement percentage is lower than 100%, a number of shares equal to (i) the prorated portion of the target number of PRSUs eligible to be earned during the applicable performance
54

EXECUTIVE COMPENSATION
period multiplied by (ii) the applicable achievement percentage based on the Company’s TSR prior to the change in control using the Company’s stock price at such time, will be earned and will vest immediately. The remaining PRSUs will convert to time-based units that vest on the last day of the original performance period subject to accelerated vesting upon termination without cause or for good reason on or within 12 months following the change in control or if the awards are not assumed or substituted in the change in control on terms that preserve their intrinsic value.
The table below provides an estimate of the value of the compensation due to each of our NEOs in the events described below, assuming that the change in control or termination of employment was effective on December 31, 2020, under the conditions described above and assuming a per-share stock price of $40.01, the price of our common stock on that date. The actual amounts to be paid can only be determined at the time of the termination of employment or change in control, as applicable.
Involuntary
Termination
Change in Control Followed by
Involuntary Termination
NameCash
($)
Equity
($)
Total
($)
Cash
($)
Equity
($)(1)
Total
($)
Christopher J. Paucek1,685,587
(2)
— 1,685,587 2,016,299
(4)
44,820,41746,836,716 
Paul S. Lalljie1,053,725
(3)
— 1,053,725 1,311,699
(5)
17,336,93318,648,632 
Mark J. Chernis1,053,537
(3)
— 1,053,537 1,311,508
(5)
14,892,26316,203,771 
James Kenigsberg697,015
(3)
— 697,015 902,016
(5)
11,932,44312,834,459 
Matthew J. Norden655,043 
(3)
— 655,043 855,344 
(5)
5,849,5026,704,846 
(1)The value of accelerated vesting of stock options, RSUs and PRSUs is based on the market price of our common stock at December 31, 2020 of $40.01 per share less, in the case of options, the per share exercise prices of the stock options outstanding. The PRSUs granted in October 2019 and January 2020 are reported assuming an achievement percentage of 100%.
(2)Represents (i) 1.5x annual base salary, (ii) target annual bonus for 2020, and (iii) continued healthcare coverage pursuant to COBRA for 18 months.
(3)Represents (i) 1x annual base salary, (ii) target annual bonus for 2020, and (ii) continued healthcare coverage pursuant to COBRA for 12 months.
(4)Represents (i) 2x annual base salary, (ii) target annual bonus for 2020, and (iii) 1.02x the cost of continued healthcare coverage pursuant to COBRA for 18 months.
(5)Represents (i) 1.5x annual base salary, (ii) target annual bonus for 2020, and (iii) 1.02x the cost of continued healthcare coverage pursuant to COBRA for 12 months.
Securities authorized for issuance under equity compensation plans.
The following table provides certain information as of December 31, 2020, with respect to our equity compensation plans (after giving effect to shares issued and/or vesting on such date):
Equity Compensation Plan Information
Plan Category
Number of securities
to be issued
upon exercise of
outstanding options,
warrants and rights(1)
Weighted-average
exercise price of
outstanding
options,
warrants and
rights
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column(a))(2)
Equity compensation plans approved by
security holders(3)
3,916,867 $35.63 6,881,203 
Equity compensation plans not approved by security holders— — — 
Total3,916,867 6,881,203 
(1)In addition to options, warrants and rights, our 2014 Plan allows awards to be made in the form of shares of RSUs or other forms of equity-based compensation. As of December 31, 2020, 4,365,315 shares of the Company’s common stock were subject to outstanding RSUs and PRSUs (at the target level of performance for outstanding PRSUs) issued under our 2014 Plan. RSUs are not taken into account for purposes of determining the weighted average exercise price in the table above.
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2021 Proxy Statement
55

EXECUTIVE COMPENSATION
(2)This number reflects 6,214,809 shares available for future issuance under our 2014 Plan and 666,394 shares available for issuance under our 2017 Employee Stock Purchase Plan (the “ESPP”) as of December 31, 2020. No shares remain available for future issuance under our 2008 Plan. As of December 31, 2020, no shares were subject to outstanding purchase rights under the ESPP.
(3)Under the terms of our 2014 Plan, the number of shares of the Company’s common stock that may be issued under the 2014 Plan will automatically increase on January 1st of each year, for a period of ten years, from January 1, 2015 continuing through January 1, 2024, by 5% of the total number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year, or a lesser number of shares as may be determined by the Board.
CEO pay ratio disclosure
As required by Section 953(b) of Dodd Frank and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our “median employee” and the annual total compensation of Christopher J. Paucek, our Chief Executive Officer, during 2020. We consider the pay ratio specified to be a reasonable estimate, calculated in a manner intended to be consistent with Item 402(u) of Regulation S-K.
For 2020, our last completed fiscal year:
The estimated median of the annual total compensation of all employees of the Company (excluding the CEO) was $49,669;
The annual total compensation of our CEO, as reported in the Summary Compensation Table of this proxy statement was $6,434,348; and
The ratio of the annual total compensation of our CEO to the median employee’s annual total compensation is 130:1. Note that we have a large number of temporary or seasonal employees that may teach a course or boot camp in one semester but are not permanent employees. Excluding these employees, the estimated median of the annual total compensation of all employees of the Company (excluding the CEO) was $67,385 and the ratio of the annual total compensation of our CEO to the median employee's annual total compensation is 95:1.
To determine the median of the annual total compensation of all employees of the Company (other than the CEO), the methodology and the material assumptions, adjustments and estimates that we used were as follows:
We selected December 31, 2020 as the date upon which we would identify our employee population and median employee.
Using our tax and payroll records, we determined that, as of December 31, 2020, our employee population consisted of approximately 6,606 employees globally, including active full-time, part-time, seasonal and temporary employees.
As permitted by SEC rules, we determined to exclude all of our employees located in Mexico and Australia, which constituted approximately 0.4% of our total employee population.
We used taxable compensation, as determined in each applicable employing jurisdiction, during the 2020 fiscal year as a consistently applied compensation measure to identify our median employee. In making this determination, we annualized the compensation of all permanent employees hired during 2020. For South African employees, we converted taxable compensation to U.S. dollars using the rand to dollar exchange rate in effect on December 31, 2020.
Once our median employee was identified in the manner described above, we calculated the annual total compensation of the median employee using the same methodology that we used to determine the annual total compensation of the CEO, as reported in the Summary Compensation Table of this proxy statement.
It should be noted that the SEC pay ratio disclosure rules allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
56


Audit matters.
Proposal three
Ratification of appointment of independent registered public accounting firm
The Audit Committee appointed KPMG LLP, independent registered public accounting firm, to audit the consolidated financial statements of the Company for the fiscal year ending December 31, 2021. As a matter of good corporate governance, the Company’s stockholders will be requested to ratify the Audit Committee’s selection at the Meeting. KPMG LLP has audited the Company’s consolidated financial statements since 2013.
Although there is no requirement that KPMG LLP’s appointment be terminated if the ratification fails, the Audit Committee will consider the appointment of other independent registered public accounting firms if the stockholders choose not to ratify the appointment of KPMG LLP. The Audit Committee may terminate the appointment of KPMG LLP as our independent registered public accounting firm without the approval of the stockholders whenever the Audit Committee deems such termination appropriate.
KPMG LLP has affirmed that they are not aware of any relationships between KPMG LLP and the Company that may reasonably be thought to bear on their independence.
A representative of KPMG LLP is expected to be present (virtually) at the Meeting. The representative will have the opportunity to make a statement if he or she desires to do so and is expected to be available to respond to appropriate stockholder questions at the Meeting.
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THE BOARD OF DIRECTORS RECOMMENDS VOTING “FOR” THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
Independent registered public accounting firm fees
Aggregate fees for professional services rendered by KPMG LLP for the years ended December 31, 2020 and 2019, were:
Type of Fee20202019
Audit Fees(1)
Annual audit$1,780,054$2,626,414
Statutory audits340,485313,763
Comfort letters309,617
Total Audit Fees2,430,1562,940,177
Audit-Related Fees
Tax Fees(2)
12,000
All Other Fees(3)
1,780
Total Fees$2,443,936$2,940,177
(1)Audit fees consisted of work performed in connection with the audit of our consolidated financial statements and internal controls included in our registration statements on Form S-3, our Annual Reports on Form 10-K, the reviews of the unaudited quarterly financial statements included in our Quarterly Reports on Form 10-Q and statutory audit fees in overseas jurisdictions.
(2)Tax fees consisted of services related to tax planning and advisory services, tax consultations and tax compliance services.
(3)All other fees consisted of products and services related to an online accounting research tool.
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2021 Proxy Statement
57

AUDIT MATTERS
Pre-approval of audit and permissible non-audit services
The Audit Committee has established in its charter a policy that every engagement of the Company’s independent registered public accounting firm to perform audit or permissible non-audit services on behalf of the Company or any of its subsidiaries requires pre-approval from the Audit Committee or its designee before such independent registered public accounting firm is engaged to provide those services. Under this policy, the Audit Committee may provide pre-approval for a particular defined task or scope of work, subject to a specific budget and for up to one year. The Audit Committee may also delegate pre-approval authority to one or more of the Audit Committee’s members, and the Audit Committee has delegated to the Chair of the Audit Committee the authority to pre-approve services (other than the annual engagement) provided that any pre-approval decisions are reported to the Audit Committee at the next scheduled meeting. Our independent registered public accounting firm may not be retained to perform the non-audit services specified in Section 10A(g) of the Exchange Act. All fees described in the table above were approved by the Audit Committee.
Audit committee report*
The Board has ultimate authority and responsibility for effective corporate governance, including the role of oversight of the management of 2U. The Audit Committee’s purpose is to assist the Board in fulfilling its responsibilities to the Company and its stockholders by overseeing the accounting and financial reporting processes of 2U, the audits of 2U’s consolidated financial statements and the qualifications, selection and performance of the Company’s independent registered public accounting firm.
The Audit Committee reviews our financial reporting process on behalf of the Board. The Audit Committee relies on the expertise and knowledge of management and the independent auditor in carrying out its oversight responsibilities. Management has the primary responsibility for establishing and maintaining effective systems of internal and disclosure controls, for preparing financial statements, and for the public reporting process. KPMG LLP, 2U’s independent registered public accounting firm, is responsible for expressing opinions on the conformity of the Company’s audited financial statements with generally accepted accounting principles and on our internal control over financial reporting.
With respect to the fiscal year ended December 31, 2020, the Audit Committee, among other things: oversaw the integrity of the Company’s financial statements and financial reporting processes, oversaw compliance with legal and regulatory requirements, reviewed the external auditors’ qualifications and independence (including auditor rotation), and evaluated the external auditors’ performance.
The Audit Committee has reviewed and discussed with management and KPMG LLP the audited consolidated financial statements for the year ended December 31, 2020. The Audit Committee also discussed with KPMG LLP all matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the Securities and Exchange Commission. In addition, the Audit Committee has received from KPMG LLP the written disclosures and letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding KPMG LLP’s communications with the Audit Committee concerning independence, and the Audit Committee has had discussions with KPMG LLP regarding its independence from the Company and its management.
Based on the reviews and discussions described above, the Audit Committee recommended to our Board, and the Board approved, inclusion of the audited consolidated financial statements for the fiscal year ended December 31, 2020 in our Annual Report on Form 10-K for the year ended December 31, 2020 for filing with the SEC. The Audit Committee and the Board have selected KPMG LLP as the Company’s independent registered public accounting firm for fiscal year 2021.
Submitted by the Audit Committee
ROBERT M. STAVIS (CHAIR)
EARL LEWIS
PAUL A. MAEDER
GREGORY K. PETERS
*The Audit Committee Report does not constitute soliciting material, and shall not be deemed to be filed or incorporated by reference into any other filing of 2U under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that 2U specifically incorporates the Audit Committee Report by reference therein.
58


Stockholder Proposal.
Proposal four
Stockholder proposal to elect each director annually
In accordance with SEC rules, we have set forth below a stockholder proposal, along with the supporting statement of the stockholder proponent, for which we and our Board accept no responsibility. The stockholder proposal is required to be voted upon at the Meeting only if properly presented at the Meeting. As explained below, our Board has decided not to oppose the stockholder proposal and makes no voting recommendation to stockholders.
The Company has been notified that James McRitchie, 9295 Yorkship Court, Elk Grove, California 95758, the beneficial owner of at least $2,000 in market value of the Company’s common stock on the date the proposal was submitted and for at least the preceding twelve months, intends to present the following proposal at the Meeting. Mr. McRitchie has authorized John Chevedden to act on his behalf regarding the proposal:
RESOLVED: 2U Inc. (“Company”) shareholders ask that our Company take all the steps necessary to reorganize the Board of Directors into one class with each director subject to election each year for a one-year term.
Arthur Levitt, former Chairman of the Securities and Exchange Commission said, “In my view it’s best for the investor if the entire board is elected once a year. Without annual election of each director shareholders have far less control over who represents them.”
Almost 90% of S&P 500 and Fortune 500 companies, worth more than one Trillion dollars have adopted this important proposal topic since 2012. Annual elections are widely viewed as a corporate governance best practice. Annual election of each director could make directors more accountable, and thereby contribute to improved performance and increased company value.
Shareholder resolutions on this topic won 14 of 15 votes at companies in 2019 and 2020, according to data compiled by ProxyInsight as of November 20, 2020, most by a wide margin.
According to one of our largest shareholders, BlackRock: “Directors should be elected annually to discourage entrenchment and allow shareholders sufficient opportunity to exercise their oversight of the board.” Vanguard generally votes for proposals to declassify an existing board and votes against management or shareholder proposals to create a classified board.
According to Equilar, “A classified board creates concern among shareholders because poorly performing directors may benefit from an electoral reprieve. Moreover, a fraternal atmosphere may form from a staggered board that favors the interests of management above those of shareholders. Since directors in a declassified board are elected and evaluated each year, declassification promotes responsiveness to shareholder demands and pressures directors to perform to retain their seat. Notably, proxy advisory firms ISS and Glass Lewis both support declassified structures.”
This proposal should also be evaluated in the context of our Company’s overall corporate governance as of the date of this submission: Shareholders cannot call special meetings. Shareholders have no right to act by written consent. At our 2018 annual meeting, 88.6% of shares were voted in favor of director nominees be elected by the affirmative vote of the majority of votes cast, with a plurality vote standard retained for contested director elections, that is, when the number of director nominees exceeds the number of board seats.

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2021 Proxy Statement
59

STOCKHOLDER PROPOSALS

Our board is locked into an outdated governance structure that reduces accountability to shareholders, increasing the likelihood of stagnation. We should not risk Zombies on Board: Investors Face the Walking Dead (https://www.msci.com/www/blog-posts/zombies-on-board-investorsface/02161045315).
Please vote for: Elect Each Director Annually – Proposal Four
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THE BOARD OF DIRECTORS MAKES NO RECOMMENDATION TO STOCKHOLDERS REGARDING THIS PROPOSAL
The Board has considered the stockholder proposal relating to declassification of the Board, and has decided not to oppose the proposal and to make no voting recommendation to stockholders. The proposal, which is advisory in nature, would constitute a recommendation to the Board if approved by stockholders. The Board recognizes that board classification is a controversial topic and believes that there are valid arguments in favor of, and in opposition to, classified boards. The Board wants to use this proposal to provide an opportunity for stockholders to express their views on this subject without being influenced by any recommendation the Board might take.
Supporters of classified boards contend, among other things, that a classified board can:
promote stability and continuity of leadership, since at any given time, there are experienced directors serving on the board who are familiar with the company, its business and its long-term strategic goals;
enhance a board’s ability to respond to takeover bids by making it more difficult for an unsolicited bidder to gain control of a company;
enhance the independence of non-management directors by providing them a longer assured term of office, thereby insulating them from pressures from special interest groups; and
remain accountable to stockholders in that stockholders have the opportunity to evaluate and elect a portion of the board on an annual basis and all directors are required to uphold their fiduciary duties to the company and its stockholders.
Opponents of classified boards often make arguments such as those set forth in the proponent’s supporting statement.
For the foregoing reasons, the Board has decided not to oppose the stockholder proposal and makes no voting recommendation to stockholders regarding Proposal 4, the stockholder proposal to elect each director annually. The Board will take into consideration the views of stockholders on the proposal when determining whether to put forth a management proposal by the Company to amend the Company’s amended and restated certificate of incorporation to declassify the Board at a subsequent meeting of stockholders.
60


Security ownership of certain beneficial owners and management.
The following table sets forth the beneficial ownership of our common stock as of April 1, 2021 by:
each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our common stock;
each of our Named Executive Officers;
each of our directors; and
all of our current executive officers and directors as a group.
We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules include shares of common stock issuable pursuant to the exercise of stock options or warrants that are either immediately exercisable or exercisable on or before May 31, 2021, which is 60 days after April 1, 2021. These shares are deemed to be outstanding and beneficially owned by the person holding those options or warrants for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. For certain stockholders, the percentage ownership assumes the exercise of options. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.
Except as otherwise noted below, the address for persons listed in the table is c/o 2U, Inc., 7900 Harkins Road, Lanham, Maryland 20706.
Name of Beneficial OwnerSharesPercentage
Principal Stockholders:
ARK Investment Management LLC(1)
13,261,57717.9 %
Sumitomo Mitsui Trust Holdings, Inc. / Nikko Asset Management Americas, Inc.(2)
6,272,3708.5 %
The Vanguard Group(3)
6,223,7338.4 %
Arrowmark Colorado Holdings, LLC(4)
6,008,9188.1 %
Wellington Management Group LLP(5)
4,483,2126.1 %
Executive Officers and Directors
Christopher J. Paucek(6)
1,432,011 1.9 %
Paul S. Lalljie(7)
150,938 *
Mark J. Chernis(8)
293,901 *
James Kenigsberg(9)
306,647 *
Matthew J. Norden(10)
95,489 *
John M. Larson(11)
239,227 *
Edward S. Macias(12)
51,557 *
Paul A. Maeder(13)
125,757 *
Robert M. Stavis(14)
224,983 *
Timothy M. Haley(15)
78,377 *
Sallie L. Krawcheck(16)
72,233 *
Earl Lewis(17)
59,324 *
Coretha M. Rushing(18)
27,760 *
Valerie B. Jarrett(19)
17,279 *
Gregory K. Peters