DEF 14A 1 atge3585121-def14a.htm DEFINITIVE PROXY STATEMENT

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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. )

Filed by the Registrant Filed by a Party other than the Registrant      

CHECK THE APPROPRIATE BOX:
  Preliminary Proxy Statement
Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
  Definitive Additional Materials
Soliciting Material Under Rule 14a-12

Adtalem Global Education Inc.

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

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About Us

#WEAREADTALEM

Adtalem Global Education is a workforce solutions provider and the parent organization of Adtalem Educacional do Brasil (IBMEC, Damásio and Wyden institutions), American University of the Caribbean School of Medicine, Association of Certified Anti-Money Laundering Specialists, Becker Professional Education, Chamberlain University, EduPristine, OnCourse Learning, Ross University School of Medicine and Ross University School of Veterinary Medicine.

STUDENT FOCUSED

Empowering individuals is the meaning behind our name – Adtalem Global Education. Adtalem (pronunciation: ad TAL em) is Latin for “To Empower.”

           
MISSION   VISION   PURPOSE
   
We provide global access to knowledge that transforms lives and enables careers.   To create a dynamic global community of life-long learners who improve the world.   We empower students to achieve their goals, find success and make inspiring contributions to our global community.

WE ARE
9
institutions and companies

    

MORE THAN
11,300
colleagues

 

OPERATING IN
21
different countries

WITH
56
operating campuses

As of June 30, 2019. The number of colleagues above includes more than 9,000 full- and part-time employees and approximately 2,300 independent contractors. The number of countries above reflects countries where we have locations or corporate entities.


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Message from our Chairman of the Board, President and CEO

October 3, 2019

To Our Shareholders:

Fiscal 2019 was a transitional year for Adtalem as we made bold moves to streamline our business into a leading workforce solutions provider. We completed the divestures of DeVry University and Carrington College — critical milestones in our strategy to refocus our three vertical businesses to better support our employer partners. We also expanded our portfolio through the acquisition of OnCourse Learning, an exciting new financial services company that gives us expanded customer reach in financial services markets. This portfolio repositioning has allowed us to leverage our strengths in the degree offering and test preparation and certification areas of workforce solutions, narrow our focus to those industries with attractive supply and demand imbalances and pivot ahead of the market with strategic customer relationships. Operationally, despite facing significant headwinds in Brazil, we delivered modest revenue and EPS growth in fiscal year 2019. The progress we made during the year reflects our steadfast commitment to executing on our long-term strategic goals.

At our Investor Day in May 2019, we unveiled a refreshed and updated strategy that will position Adtalem to better address the global workforce skills gap and permit us to better serve our markets in a more competitive and comprehensive way. As part of this strategy, not only will we work to empower students, but we will also form long-lasting partnerships with employers that aim to upskill and augment their workforces. This will reinforce Adtalem’s leadership position as the industry shifts towards providing employer-ready candidates, flexible, ongoing training and lifelong learning for employees. I’m incredibly proud of the traction we’ve already seen as our organization has embraced our vision to become a leading workforce solutions provider.

Our segments largely performed well during the year, as we continued to focus on creating superior student outcomes and improving student diversity, which we believe is an important competitive advantage for Adtalem.

Within our Medical and Healthcare segment, we achieved strong results on improving student outcomes through improved NCLEX pass rates at Chamberlain and record-high first-time residency attainment rates at the American University of the Caribbean School of Medicine (AUC) and the Ross University School of Medicine (RUSM). As a part of our commitment to increase diversity amongst doctors in the U.S., we executed six agreements over the year with Historically Black Colleges and Universities and Hispanic Serving Institutions to bring qualified students from these schools into RUSM. With more than 15 students representing all six HBCUs already enrolled, these partnerships are off to a great start, and we aim to build the pipeline in fiscal 2020.

“As we begin fiscal 2020, we remain focused on accelerating growth by executing on our transformational workforce solutions provider strategy which will expand our customer base, product offerings and markets.”


Our Financial Services segment continued its trajectory of remarkable revenue growth, driven not only by sustained, double-digit growth in ACAMS, but also through growing momentum at Becker, a brand we reinvigorated with a strengthened core CPA value proposition, expanded CPE product offerings and more flexible delivery options. Through these efforts, we have been able to broaden our presence as a workforce solutions provider.

We did, however, face a number of challenges within our Business and Law segment in Brazil, such as delays in government funding, unfavorable currency exchange rates and increased pricing competition, which materially impacted our revenue within this segment. As a result, we implemented substantial administrative and back-office cost savings in the segment to mitigate the impact of these factors, and we began to see the benefit of these actions in the fourth quarter of fiscal 2019. At the same time, we did not waver on our commitment to maintaining the quality of student outcomes, which we believe is a testament to the operational strength of our team.

As we begin fiscal 2020, we remain focused on accelerating growth by executing on our transformational workforce solutions provider strategy which will expand our customer base, product offerings and markets. We continue to partner with educational institutions and employer partners to deliver upskilling and more workforce-ready employees, including Northeastern University where we partnered to launch AI for financial services in the fall of 2019, and Oschner Health Systems where we colocated our Chamberlain University campus. We also recently strengthened our experienced, global leadership team with the addition of Mike Randolfi, our Chief Financial Officer. Mike will play a critical role as we build upon our strong foundation to deliver improving and consistent financial performance. Together, our team is committed to unlocking value creation opportunities as a workforce solutions provider and aligning our business with our mission and student commitments to drive long-term growth and enhanced profitability.

On behalf of our entire Adtalem Global Education team and Board of Directors, I would like to thank you — my fellow shareholders — for your continued support for the work we are doing. The Adtalem community is working to deliver transformative academic outcomes and financial returns, and we truly appreciate your confidence in this mission.

Lisa W. Wardell
Chairman of the Board, President & CEO

2019 Proxy Statement       1


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Notice of Annual Meeting of Shareholders

DATE AND TIME PLACE RECORD DATE
November 6, 2019
8:00 a.m. Mountain Standard Time
Pointe Hilton
Tapatio Cliffs Resort
11111 North 7th Street
Phoenix, Arizona 85020
September 17, 2019

ITEMS OF BUSINESS

Board Voting
Recommendation
Proposal No. 1: Elect the directors named in the attached Proxy Statement to serve until the 2020 Annual Meeting of Shareholders FOR each director nominee
Proposal No. 2: Ratify selection of PricewaterhouseCoopers LLP as independent registered public accounting firm FOR
Proposal No. 3: Say-on-pay: Advisory vote to approve the compensation of our named executive officers FOR
Proposal No. 4: Approve the Adtalem Global Education Inc. 2019 Employee Stock Purchase Plan FOR

Shareholders will also consider such other business as may come properly before the Annual Meeting or any adjournment thereof.

This notice and Proxy Statement, voting instructions, and Adtalem Global Education Inc.’s 2019 Annual Report to Shareholders are being mailed to shareholders beginning on or about October 4, 2019.

Stephen W. Beard
Chief Operating Officer, General Counsel and Corporate Secretary

REVIEW YOUR PROXY STATEMENT AND VOTE IN ONE OF FOUR WAYS:

VIA THE INTERNET BY TELEPHONE BY MAIL IN PERSON
Visit the web site listed on your proxy card Call the telephone number on your proxy card Sign, date and return your proxy card in the enclosed envelope Attend the Annual Meeting in Phoenix, Arizona For directions: https://www.tapatiocliffshilton.com/hotel-location/

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on November 6, 2019. Our Proxy Statement and the Adtalem Global Education Inc. Annual Report for 2019 are available online at www.proxyvote.com or at our investor relations website, http://investors.adtalem.com/.

2       Adtalem Global Education Inc.


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Proxy Summary

This summary highlights selected information about the items to be voted on at the annual meeting. It does not contain all of the information that you should consider in deciding how to vote. You should read the entire proxy statement carefully before voting.

OUR BOARD OF DIRECTORS

Director Nominees

Diverse mix of backgrounds, current and former CEOs and a former finance executive at a leading global company

Director
Since
Other Public
Company Boards
Committee Memberships
      Name and Principal Occupation       Age                   ACA     AUD     COM     ER     NG

Steven M. Altschuler, M.D. INDEPENDENT
Managing Director, Healthcare Ventures, at Ziff Capital Partners

65

2018

2

William W. Burke(1) LEAD INDEPENDENT DIRECTOR
President and Founder, Austin Highlands Advisors, LLC

60

2017

1

Donna J. Hrinak INDEPENDENT
Corporate Vice President, The Boeing Company President, Boeing Latin America

68

2018

 

Georgette Kiser INDEPENDENT
Managing Director and Chief Information Officer, The Carlyle Group

51

2018

2

Lyle Logan INDEPENDENT
Executive Vice President and Managing Director, The Northern Trust Company

60

2007

1

Michael W. Malafronte INDEPENDENT
Managing Partner, International Value Advisers, LLC and President, IVA Funds

45

2016

Lisa W. Wardell(2)
Chairman of the Board, President and CEO, Adtalem Global Education

50

2008

1

James D. White(3) INDEPENDENT
Retired Board Chair, CEO and President Jamba, Inc.

58

2015

1


Academic Quality
Committee
    Audit and Finance
Committee
    Nominating &
Governance Committee
    Compensation
Committee
    External Relations
Committee
    Audit Committee
Financial Expert
    Committee
Chair

(1) Appointed as Lead Independent Director effective as of July 16, 2019
(2) Appointed as Chairman of the Board on July 16, 2019
(3) Served as Chairman of the Board through July 16, 2019

2019 Proxy Statement       3


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Proxy Summary

Board Highlights

BOARD INDEPENDENCE

     

87.5%
of our current directors are independent, including our lead independent director (“Lead Independent Director”), each of our five committees are composed entirely of independent directors, and our CEO is the only member of management who serves as a director

TENURE



AGE



BOARD DIVERSITY

SKILLS AND EXPERIENCE


CORPORATE GOVERNANCE HIGHLIGHTS

Shareholder Engagement

We conduct regular outreach and engagement with our shareholders and value their insight and feedback. Although our 2018 say-on-pay vote received majority shareholder approval, our Board of Directors (“Board”) and management team were disappointed to have not received the robust shareholder support we have enjoyed in the past. During the past 12 months, we have actively sought to understand what actions we could take to address shareholder concerns.

OUR OUTREACH
We reached out to our shareholders representing approximately 80% of shares owned.
OUR PARTICIPANTS
To ensure access to key roles in Adtalem’s corporate governance and the executive compensation planning process, participants varied per call and included:

The Chairman of our Compensation Committee
Our Vice President of Investor Relations
Our Senior Vice President of Human Resources
Our Chief Operating Officer, General Counsel and Corporate Secretary

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Proxy Summary

What We Heard, and What We Have Done in Response

What We Heard What We Have Done When Effective Learn More
Questions about the design of our performance share units (PSUs)         Changed our PSU design to base calculations solely on average performance over three years         Started with PSUs granted in August 2019 (fiscal year 2020)         Page 39
Questions about the fiscal year 2018 equity grant to our CEO Did not grant additional equity to our CEO in fiscal year 2019, as promised Fiscal year 2019 Page 51
Enhanced our disclosure regarding the fiscal year 2018 equity grant This proxy statement Page 51
Questions about our CEO’s individual performance goals under our Management Incentive Plan (“MIP”) Enhanced our disclosure regarding our CEO’s individual performance goals This proxy statement Page 48

Recent Enhancements

Our Board continually monitors best practices in corporate governance and, consistent with feedback from shareholders and other stakeholders, has taken the following actions in recent years:

 

2019

     
   
Appointed a Lead Independent Director when our CEO was appointed as our Chairman of the Board
Enhanced our proxy statement to focus on disclosures in key areas of investor interest
Increased stock ownership requirements for our Chief Operating Officer and other executive officers
     
 

2018

 
   
Broadened our shareholder outreach program and increased Board involvement
 
     
 

2017

 
   
Adopted proxy access (3%, 3 years, group up to 20 shareholders, greater of 2 directors or 20%)
Amended By-laws to provide for majority voting with plurality carve out for contested elections
Approved Director resignation requirement upon change of principal job responsibilities
Added a Lead Independent Director requirement when our Chairman of the Board is not independent
Adopted outside Board service limits
     
 

2016

 
   
Established policy allowing shareholders owning 25% of our outstanding Common Stock to call a special meeting
 
     
 

2015

 
   
Declassified Board
Did not renew shareholder rights plan

2019 Proxy Statement       5


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Proxy Summary

Ongoing Best Practices

    BOARD COMMITTEES
   
We have five Board committees – Academic Quality, Audit and Finance, Compensation, External Relations, and Nominating & Governance
The Chair of each committee, in consultation with the committee members, determines the frequency and length of committee meetings
Our Board and each of its committees are authorized to retain independent advisors at Adtalem’s expense

    DIRECTOR STOCK OWNERSHIP
   
60% of our non-employee directors’ annual compensation (excluding fees for other additional roles) is in the form of restricted stock units (“RSUs”)
Our non-employee directors (other than those who are affiliated with our shareholders) are subject to a policy requiring their ownership of shares with a value equal to or in excess of three times their annual retainer

    CONTINUOUS IMPROVEMENT
   
New directors receive a tailored, two-day, live training program about Adtalem and its institutions from management
Our directors are encouraged to participate in director-oriented training programs
The Board annually undergoes a self-assessment process to critically evaluate its performance at a committee and Board level

    COMMUNICATION
   
Our Board promotes open and frank discussions with senior management
Our directors have access to all members of management

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Proxy Summary

EXECUTIVE COMPENSATION HIGHLIGHTS

Strong linkage of pay to individual, institutional and financial performance

Balanced compensation program aligning performance to interests of shareholders, students and other stakeholders


Our Compensation Framework

2017, 2018 AND 2019 COMPENSATION SNAPSHOT

      Objective Time
Horizon
Performance
Measures
Additional Explanation
Salary
(cash)
Reflect experience, market competition and scope of responsibilities Assessment of performance in prior year
 
 

Annual
Incentive
(cash)

MIP

Short-term operational business priorities

1 year

Revenue*
Earnings Per Share
Individual Goals
 NEW For 2019, individual goals for institutional leaders are 100% focused on performance measures relating to the institutions they lead.
 
 

Long Term
Incentive
(“LTI”)
(equity)

Stock Options

Reward stock price growth and retain key talent

4 year ratable

Stock price growth

Granted in 2019, 2018 and 2017 (other than CEO in 2019)
Represents 40% of NEO LTI**

RSUs

Align interests of management and shareholders, and retain key talent

Granted in 2019, 2018 and 2017 (other than CEO in 2019 and 2018)
Represents 20-30% of NEO LTI**

ROIC PSUs

Reward achievement of multi-year financial goals, align interests of management and shareholders, and retain key talent

3 year

Return on invested capital (“ROIC”)
Stock price growth
Granted in 2019, 2018 and 2017 (other than CEO in 2019)
Represents 30-40% of NEO LTI**
FCF PSUs granted only in 2019
Mission-based PSUs: granted in 2018 and 2017
 NEW FCF
PSUs
Free cash flow (“FCF”) per share
Stock Price Growth
 DISCONTINUED 
Mission-
Based PSUs
Student Outcomes
Stock Price Growth
Vest only if 10% EBITDA margin achieved

* A portion of the MIP payout for our named executive officers (“NEOs”) who are executive leaders of business segments and business units is also based on the revenue and operating income at such executive’s business segment or business unit.
** In 2018, Ms. Wardell received 50% of her NEO LTI in the form of stock options. In 2018, Mr. Patel, as Group President of Financial Services, received no stock options and his NEO LTI consisted of 50% RSUs, including a new hire grant, and 50% PSUs, divided into 60% PSUs with financial targets relating to Financial Services segment performance and 40% ROIC PSUs.

  CEO COMPENSATION  
    
   Our CEO did not receive an equity award grant in 2019. The CEO’s 2018 LTI award was “front-loaded” and intended to include the award value for both 2018 and 2019. On an annualized basis, the 2018 LTI award represented approximately 69% and 67% of the CEO’s pay for 2018 and 2019, respectively.   

2019 Proxy Statement       7


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Proxy Summary

SUSTAINABILITY AND COMMUNITY RELATIONS

Adtalem is committed to a holistic approach to our communities, providing quality learning and working opportunities, caring for the places where we operate, and conducting our business in a transparent and responsible manner. We advanced our environmental, social and governance (“ESG”) strategy during fiscal year 2019, and remained steadfastly focused on our overarching philosophy of stewardship.

  ADTALEM GLOBAL EDUCATION SUSTAINABILITY STRATEGY  
    
  
Adtalem’s ESG practices support our purpose – to empower students to achieve their goals, find success and make inspiring contributions to our global community. Adtalem aims to empower and enhance the communities in which we teach, learn and work by operating sustainably, maintaining responsible governance standards and supporting our global community.
  

Environmental Practices       Social Practices       Governance Practices

This was a year of enhancing our environmental activities by advancing efforts to use resources wisely including energy use, emissions reduction and reducing our consumption of plastic and paper products.

Our TEACH values—Teamwork, Energy, Accountability, Community and Heart—shape how we work together to fulfill our promise to students, members and each other. We joined the Historically Black Colleges and Universities (“HBCU”) Challenge of the Congressional Black Caucus, to invest in creating strategic collaborations with HBCUs and work to increase diversity in key workforce sectors.

Adtalem is committed to the highest standards of corporate conduct, and we pride ourselves on our governance standards and transparency. We adopted additional practices under the Association of Governing Boards standards for the boards for our four Title IV-participating institutions including digital board books, standard meeting sequences and quarterly agenda checklists.

 

Community Investment

Community Engagement

Empower Scholarship Fund

We contribute to the well-being of local communities through support of philanthropic organizations and student, faculty and employee volunteer efforts. Through the Adtalem Global Education Foundation and our additional corporate giving efforts, Adtalem’s total fiscal year 2019 community investment equaled $910,750.

Our team is passionate about giving back to the communities in which we work, live and teach, and to helping those in need. Around the world this year, we collectively used our skills and volunteered our time providing healthcare and dental services, supporting the fight against human trafficking, and hosting hands-on medical career experience programs for high school students. Additionally, during the Adtalem Month of Service, Chicagoland employees stepped out of the office and volunteered more than 1,000 hours at various community organizations, including public schools and local food pantries.

The Empower Scholarship Fund increased its total dollars and number of recipients by awarding $703,000 in scholarships to 325 students. The fund strives to help keep education within reach by providing financial support to qualifying students. Established in 2000, the fund provides scholarships (restricted and unrestricted) to current students, especially those with the greatest need who have established a successful academic track record.

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Proxy Summary

DIVERSITY AND INCLUSION

At Adtalem, we are committed to driving diversity at the top and creating an inclusive culture throughout the organization. To us, diversity and inclusion needs to be intentional to be impactful. We don’t just welcome differences, we celebrate them. In fact, we believe bringing together diverse teams and innovative ideas is the best way to serve our diverse students and members, and we work collaboratively, committed to the idea that inclusion leads to innovation and high performance.

BOARD DATA LEADERSHIP DATA
The composition of our Board reflects our intentional approach to diversity. The Adtalem senior leadership team is nearly 80% diverse when considering gender and ethnicity.
 
   

EMPLOYEE DATA

STUDENT DATA

Our employee base in the U.S. is predominantly female and includes a stronger minority representation than the U.S. labor force. Globally, our employee base is approximately half female.

The student population at our Title IV institutions is similarly diverse in gender and ethnicity.

Please note: Adtalem colleague diversity metrics are for U.S. employees only. Board data is as of October 3, 2019; all other data is as of June 30, 2019 and represents those who chose to report. Student data is for fall 2018 enrollment at Adtalem’s Title IV institutions.

2019 Proxy Statement       9


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Table of Contents

1       MESSAGE FROM OUR CHAIRMAN OF THE BOARD, PRESIDENT AND CEO
2 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
3 PROXY SUMMARY
3 Our Board of Directors
4 Corporate Governance Highlights
7 Executive Compensation Highlights
8 Sustainability and Community Relations
9 Diversity and Inclusion
11 PROPOSAL NO. 1 ELECTION OF DIRECTORS
12 Board Composition
20 Director Nominating Process
20 Board Succession Planning
22 Board Structure and Operations
26 Key Board Responsibilities
29 Board Practices and Policies
29 Director Compensation
31 PROPOSAL NO. 2 RATIFY SELECTION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
31 Selection and Engagement of Independent Registered Public Accounting Firm
31 Pre-Approval Policies
32 Audit Fees and Other Fees
33 Audit and Finance Committee Report
35 PROPOSAL NO. 3 SAY-ON-PAY: ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
36 Compensation Discussion & Analysis
58 Compensation Committee Report
59 EXECUTIVE COMPENSATION TABLES
59 2019 Summary Compensation Table
61 2019 Grants of Plan-Based Awards
62 2019 Outstanding Equity Awards at Fiscal Year-End
64 2019 Options Exercises and Stock Vested
64 2019 Nonqualified Deferred Compensation
65 Deferred Compensation Plan
65 2019 Potential Payments Upon Termination or Change-In-Control
68 CEO Pay Ratio
69 PROPOSAL NO. 4 APPROVAL OF ADTALEM GLOBAL EDUCATION INC. 2019 EMPLOYEE STOCK PURCHASE PLAN
69 Summary Description of the 2019 ESPP
72 VOTING SECURITIES AND PRINCIPAL HOLDERS
72 Equity Compensation Plan Information
72 Security Ownership of Certain Beneficial Owners
73 Security Ownership by Directors and Executive Officers
73 Delinquent Section 16(a) Reports
74 ADDITIONAL INFORMATION
74 Voting Instructions
75 Voting Information
76 Proxy Solicitation
76 Shareholder Proposals for 2020 Annual Meeting
77 Availability of Form 10-K
77 Other Business
A-1 APPENDIX A – SUMMARY OF SPECIAL ITEMS EXCLUDED FOR PERFORMANCE ASSESSMENT
B-1 APPENDIX B – ADTALEM GLOBAL EDUCATION INC. 2019 EMPLOYEE STOCK PURCHASE PLAN

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PROPOSAL NO. 1
Election of Directors

Following the resignation of Ann Weaver Hart as a director effective August 28, 2019, the size of the Board was reduced to eight directors. The Board has nominated all of Adtalem’s eight sitting directors and recommends their re-election, each for a term to expire in 2020. All of the nominees have consented to serve as directors if elected at the Annual Meeting.

It is intended that all shares represented by a proxy in the accompanying form will be voted for the election of each of Steven M. Altschuler, M.D., William W. Burke, Donna J. Hrinak, Georgette Kiser, Lyle Logan, Michael W. Malafronte, Lisa W. Wardell and James D. White as directors unless otherwise specified in such proxy. A proxy cannot be voted for more than eight persons. In the event that a nominee becomes unable to serve as a director, the proxy committee will vote for the substitute nominee that the Board designates. The Board has no reason to believe that the nominees will become unavailable for election.

Each nominee for election as a director is listed below, along with a brief statement of his or her current principal occupation, business experience and other information, including directorships in other public companies held as of the date of this Proxy Statement or within the previous five years. Under the heading “Relevant Experience,” we describe briefly the particular experience, qualifications, attributes or skills that led to the conclusion that these nominees should serve on the Board. As explained below under the caption “Director Nominating Process,” the Nominating & Governance Committee looks at the Board as a whole, attempting to ensure that it possesses the characteristics that the Board believes important to effective governance.

Approval by Shareholders

The election of each of the eight nominees for director listed below requires the affirmative vote of a majority of the shares of Common Stock of Adtalem represented at the Annual Meeting. Adtalem maintains a majority voting standard for uncontested elections (where the number of nominees is the same as the number of directors to be elected), so for a nominee to be elected as a member of the Board, the nominee must receive the affirmative vote of a majority of the shares of Common Stock of Adtalem represented at the Annual Meeting. Shareholders may not cumulate their votes in the election of directors. If a nominee for re-election fails to receive the requisite majority vote where the election is uncontested, such director must promptly tender his or her resignation to Adtalem’s Chairman, CEO and President or Adtalem’s Chief Operating Officer, General Counsel and Corporate Secretary, subject to acceptance by the Board.

Unless otherwise indicated on the proxy, the shares will be voted FOR each of the nominees identified above.

    The Board of Directors recommends a vote FOR each of the nominees identified above.

2019 Proxy Statement     11


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Proposal No. 1 Election of Directors

BOARD COMPOSITION

Director Nominees

Steven M. Altschuler, M.D., Independent
Managing Director, Healthcare Ventures, Ziff Capital Partners

Age: 65
Director since: 2018

Committees:
Academic Quality (Chair)
Audit and Finance

Career Highlights

Dr. Altschuler has been a director of Adtalem since May 2018. Since 2018, Dr. Altschuler has served as Managing Director, Healthcare Ventures at Ziff Capital Partners. Dr. Altschuler is the former Executive Vice President for Health Affairs at the University of Miami and Chief Executive Officer of UHealth – the University of Miami Health System (2016-2017). At the University of Miami, he led the transformation of the UHealth clinical delivery system into a CMS, Perspective Payment System exempt unified academic medical center under a single state license. He also led the transformation of the academic enterprise to create new patient oriented Translational Institutes and a new research model based around Core Science Institutes.

Previously, Dr. Altschuler served as CEO for The Children’s Hospital of Philadelphia (“CHOP”) from 2000 to 2015. He led CHOP’s transformation from a traditional academic medical center and specialty hospital to a world leader in pediatric health care, research, education and advocacy for children. Under his leadership, CHOP experienced the largest growth since its founding in 1855, building a care network that provides primary, specialty and urgent care at more than 50 locations in the greater Philadelphia area. He retired from CHOP in 2015.

Dr. Altschuler completed a pediatric internship and residency at Children’s Hospital Medical Center in Boston and completed a fellowship in gastroenterology and nutrition at CHOP. He also served as a faculty member and Chair of the Department of Pediatrics at the Perelman School of Medicine at the University of Pennsylvania prior to becoming CEO of CHOP.

Dr. Altschuler received his MD and bachelor’s degree in Mathematics from Case Western Reserve University.

Board Service

Dr. Altschuler is currently a director on the board of directors of Weight Watchers International, Inc. (NASDAQ: WW), where he serves on the audit committee and the compensation and benefits committee. He is also on the board of Spark Therapeutics, Inc. (NASDAQ: ONCE), a leading gene therapy company created to develop and commercialize the preclinical and clinical programs advanced at CHOP and other institutions. He serves on the Spark Therapeutics, Inc. audit and compliance committee, compensation committee and nominating and corporate governance committee. Dr. Altschuler previously served on the board of directors of Mead Johnson Nutrition Co., a company specializing in pediatric nutrition (acquired by Reckitt Benckiser Group PLC in 2017).

Relevant Experience

Mr. Altschuler’s comprehensive, first-hand knowledge of technology, business and medical education matters at the senior strategic level adds valuable experience to the Board.

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Proposal No. 1 Election of Directors

William W. Burke, Lead Independent Director
President and Founder, Austin Highlands Advisors, LLC

Age: 60
Director since: 2017

Committees:
Audit and Finance (Chair)
Compensation

Career Highlights

Mr. Burke has been a director of Adtalem since January 2017. He has served as our Lead Independent Director since July 2019. Since November 2015, Mr. Burke has served as President of Austin Highlands Advisors, LLC, a provider of corporate advisory services. He served as Executive Vice President & Chief Financial Officer of IDEV Technologies, a peripheral vascular devices company, from November 2009 until the company was acquired by Abbott Laboratories in August 2013. From August 2004 to December 2007, he served as Executive Vice President & Chief Financial Officer of ReAble Therapeutics, a diversified orthopedic device company which was sold to The Blackstone Group in a going private transaction in 2006 and subsequently merged with DJO Incorporated in November 2007. Mr. Burke remained with ReAble Therapeutics until June 2008. From 2001 to 2004, he served as Chief Financial Officer of Cholestech Corporation, a medical diagnostic products company.

Mr. Burke received his bachelor’s degree in Finance from The University of Texas at Austin and an MBA from The Wharton School of the University of Pennsylvania.

Board Service

Mr. Burke has served on numerous public and private company boards including serving as a lead independent director. He has served on the board of Tactile Systems Technology, Inc. (Nasdaq: TCMD) since 2015 and serves on its audit committee and compensation and organization committee. He previously served on the board of Invuity, Inc. (acquired by Stryker Corp. in 2018), LDR Holding Corporation (acquired by Zimmer Biomet in July 2016) and Medical Action Industries (acquired by Owens & Minor in October 2014).

Relevant Experience

Mr. Burke’s experience as a senior executive and board member of multiple public companies, and his extensive understanding of financing, acquisition and operating strategy, enhances the Board’s capabilities from both a strategic and governance perspective.

2019 Proxy Statement     13


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Proposal No. 1 Election of Directors

Donna J. Hrinak, Independent
Vice President, Boeing International
President, Boeing Latin America

Age: 68
Director since: 2018

Committees:
Academic Quality
Audit and Finance

Career Highlights

Ms. Hrinak has been a director of Adtalem since October 2018. As President of Boeing Latin America, Ms. Hrinak opened Boeing’s first three offices in the region and oversees all aspects of operations, from commercial and defense product sales to research and technology. She came to Boeing from her role as Vice President Global Public Policy and Governmental Affairs/Vice President for Public Policy at PepsiCo and also held a role at Kraft Foods, where she managed the Latin American and European Corporate Affairs teams. Prior to that, she served as a Senior Counselor for Trade and Competition at the law firm of Steel Hector & Davis and held a role with the strategic advisory firm of Kissinger McLarty Associates.

Before entering the private sector, Ms. Hrinak was a career officer in the U.S. Foreign Service, and served as U.S. Ambassador in Brazil, Venezuela, Bolivia and the Dominican Republic, as well as Deputy Assistant Secretary in the State Department.

She holds a bachelor’s degree in Multidisciplinary Social Science from Michigan State University and also attended The George Washington University and the University of Notre Dame School of Law.

Relevant Experience

Ms. Hrinak’s extensive experience at the senior level in both the public and private sector overseeing complex multi-cultural organizations brings insight to the Board directly applicable to the organization’s international scope.

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Proposal No. 1 Election of Directors

Georgette Kiser, Independent
Operating Executive, The Carlyle Group

Age: 51
Director since: 2018

Committees:
External Relations
Nominating & Governance

Career Highlights

Ms. Kiser has been a director of Adtalem since May 2018. She is an Operating Executive at The Carlyle Group where she is advising across the firm and in particular, the firm’s Global Technology and Solutions organization and previously served as Managing Director and Chief Information Officer. Prior to her role at The Carlyle Group, she was in various executive roles at T. Rowe Price from 1996 to 2015, including Vice President and Head of Enterprise Solutions and Capabilities. She was a Senior Systems Analyst at United States Fidelity and Growth Insurance Information Systems from 1995 to 1996. She was a consultant and Software Engineer at Martin Marietta Management Data Systems from 1993 to 1995, and a Software Design Engineer in the Aerospace Division of the General Electric Company from 1989 to 1993.

She received a bachelor’s degree in mathematics with a concentration in computer science from the University of Maryland, a M.S. in mathematics from Villanova University, and an MBA from the University of Baltimore.

Board Service

Starting in 2019, Ms. Kiser has served on the boards of Aflac (NYSE: AFL), a leading supplemental insurer, and Jacobs (NYSE: JEC), a leading, global professional services company. She serves on the compensation committee for Aflac and the compensation committee and nominating and corporate governance committee for Jacobs.

Relevant Experience

Ms. Kiser’s experience in information technology at the senior leadership level in organizations with an international reach brings expertise to Adtalem which will enhance both the Board’s oversight of the Business and Law vertical as well as Adtalem’s internal technology matters.

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Proposal No. 1 Election of Directors

Lyle Logan, Independent
Executive Vice President and Managing Director, The Northern Trust Company

Age: 60
Director since: 2007

Committees:
External Relations (Chair)
Compensation

Career Highlights

Mr. Logan has been a director of Adtalem since November 2007. Mr. Logan has been Executive Vice President and Managing Director, Global Financial Institutions Group of The Northern Trust Company since 2009. He previously served as Senior Vice President and Head of Chicago Private Banking within the Personal Financial Services business unit of The Northern Trust Company from 2000 to 2005. Prior to 2000, he was Senior Vice President in the Private Bank and Domestic Portfolio Management Group at Bank of America.

Mr. Logan received his bachelor’s degree in accounting and economics from Florida A&M University and his master’s degree in finance from the University of Chicago Graduate School of Business.

Board Service

Mr. Logan has served as a director of Heidrick & Struggles International Inc. (Nasdaq: HSII), an international executive search firm, since 2015. In addition to being the lead independent director at Heidrick & Struggles International Inc., he also serves on its audit and finance committee and nominating and board governance committee.

Relevant Experience

Mr. Logan’s experience in senior leadership positions with leading banking and investment management organizations adds perspective and an understanding of global investment markets to the Board’s consideration of finance and investment management matters.

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Proposal No. 1 Election of Directors

Michael W. Malafronte, Independent
Managing Partner, International Value Advisers and President of IVA Funds

Age: 45
Director since: 2016

Committees:
Compensation (Chair)
Audit and Finance
Nominating & Governance

Career Highlights

Mr. Malafronte has been a director of Adtalem since June 2016. Mr. Malafronte is a Founding Partner of International Value Advisers, LLC (“IVA”) and serves as Managing Partner. He is responsible for overseeing all aspects of IVA, including company strategy and managing resources. He also serves as President of IVA Funds. Prior to founding IVA in 2007, Mr. Malafronte was a Senior Vice President at Arnhold and S. Bleichroeder Advisers, LLC where he worked for two years as a senior analyst for the First Eagle Funds, owned by Arnhold & S. Bleichroeder Advisers, LLC. There he worked under Charles de Vaulx and Jean-Marie Eveillard within the Global Value Group for the value funds, including the First Eagle Overseas, Global, U.S. Value Funds as well as the offshore funds, inclusive of the Sofire Fund Ltd. Similarly, he was responsible for covering the oil and gas, media, real estate, financial services and retail industries on a global basis, as well as companies within the United Kingdom, Germany, and Japan. Moreover, Mr. Malafronte was responsible for covering the larger names within the portfolio such as Pargesa Holdings, ConocoPhillips, Petroleo Brasileiro, SK Corp., News Corp., Dow Jones and Comcast.

Prior to the First Eagle Funds, Mr. Malafronte worked for nine years as a Portfolio Manager at Oppenheimer & Close, a dually-registered broker dealer and investment adviser; an adviser on three domestic hedge funds, one offshore partnership and a registered investment adviser and broker dealer. While at Oppenheimer & Close, Mr. Malafronte assisted in the launch of a domestic hedge fund in 1996 and an offshore partnership in 1998. Mr. Malafronte was responsible for all facets of portfolio management for the investment partnerships, including idea generation, in-depth research and stock selection. In addition to that, he was also responsible for hiring and training both operations staff and research analysts.

Mr. Malafronte earned his bachelor’s degree in Finance from Babson College.

Board Service

Mr. Malafronte currently serves as a director of IVA Fiduciary Trust. Mr. Malafronte previously served on the boards of two publicly traded companies: Bresler & Reiner Inc. (2002-2008) and Century Realty Trust (2005-2006).

Relevant Experience

Mr. Malafronte’s experience as a financial analyst covering institutions globally, and as a founder of a global investment firm, provides the Board with a firm understanding of Adtalem’s shareholders’ perspective and deeply informs Adtalem’s financial planning.

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Proposal No. 1 Election of Directors

Lisa W. Wardell, Chief Executive Officer
Chairman of the Board, President and CEO, Adtalem Global Education

Age: 50
Director since: 2008

Career Highlights

Ms. Wardell has been a director of Adtalem since November 2008 and was appointed as the President and CEO of Adtalem in 2016 and Chairman of the Board on July 16, 2019. Ms. Wardell was previously the Executive Vice President and Chief Operating Officer of The RLJ Companies (“RLJ”), a diversified holding company with portfolio companies in the financial services, asset management, real estate, hospitality, media and entertainment, and gaming industries for 12 years. In her role at RLJ, Ms. Wardell closed $40 million in automotive dealership acquisitions and served as the Executive Vice President of RML Automotive, the 19th largest automotive dealership group in the U.S., and served on the Board of Naylor, Inc., an RLJ Equity Partners’ portfolio company. In addition, Ms. Wardell served as the primary RLJ fundraiser for a $610 million money management fund and managed a hotel development project in West Africa. In 2010, Ms. Wardell served as the Chief Financial Officer of a special purpose acquisition company that formed RLJ Entertainment, Inc., where she subsequently served as a director. Prior to joining RLJ, Ms. Wardell was a Principal at Katalyst Venture Partners, a private equity firm that invested in startup technology companies in the media and communications industries from 1999 to 2003. From 1998 to 1999, Ms. Wardell worked as a senior consultant for Accenture, a global management consulting, technology services and outsourcing company. From 1994 to 1996, Ms. Wardell was an attorney with the Federal Communications Commission where she worked in the commercial wireless division.

Ms. Wardell received her undergraduate bachelor’s degree in political science and African studies from Vassar College, her J.D. degree from Stanford University, and her master’s degree in finance and entrepreneurial management from The Wharton School of Business at the University of Pennsylvania.

Among numerous recognitions, she was recently selected by Black Enterprise magazine as one of the “300 Most Powerful Executives in Corporate America” (2017) and has been featured on Savoy Magazine’s™ Power 300: Most Influential Black Corporate Directors list (2017 and 2016). Ms. Wardell is often featured for her strategic insights by media outlets, including Bloomberg, Fortune, Politico, Investor’s Business Daily, Inside Higher Ed and the Chronicle of Higher Education, among others.

Board Service

In addition to her work at Adtalem, Ms. Wardell serves on the board for Lowe’s Companies, Inc. (NYSE: LOW), a Fortune 50 home improvement company, since 2018; THINK450, the innovation engine of the National Basketball Players Association, supporting NBA players and their development away from the game, since 2018; and Global Citizen, a nonprofit organization engaging individuals to take action towards ending extreme poverty. She is also a member of The Business Council, the Executive Leadership Council, CEO Action for Diversity and Inclusion and the Fortune CEO Initiative. Ms. Wardell served on the board of directors of Christopher and Banks, Inc. from 2011 to 2017. She also served as a director of RLJ Entertainment, Inc. from 2012 to 2015.

Relevant Experience

Ms. Wardell’s role as CEO of Adtalem, which gives her deep and current knowledge of Adtalem’s academic and business operations and strategy, makes her an essential member of the Board. Additionally, her experience as a senior business executive in private equity, operations and strategy and financial analysis, including mergers and acquisitions, together with her previous experience with a federal regulatory agency, give her important perspectives on the issues that come before the Board. These include business, strategic, financial and regulatory matters.

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Proposal No. 1 Election of Directors

James D. White, Independent
Retired Chairman, CEO and President, Jamba, Inc.

Age: 58
Director since: 2015

Committees:
Nominating & Governance (Chair)
Academic Quality

Career Highlights

Mr. White has been a director of Adtalem since June 2015. In 2016, he retired from his role as Board Chair, President and CEO of Jamba, Inc., where he successfully led the company turnaround and the transformation of Jamba Juice from a made-to-order smoothie shop to a healthy active lifestyle brand with over 850 retail locations globally. Prior to Jamba, Inc., Mr. White served as Senior Vice President of Consumer Brands at Safeway, Inc. from 2005 to 2008. Prior to Safeway, Mr. White served as Senior Vice President of Business Development, North America at the Gillette Company from 2002 to 2005. He also served in executive positions at Nestle Purina from 1987 to 2005, including Vice President, Customer Interface Group from 1999 to 2002. Mr. White began his career at the Coca-Cola Company.

Mr. White received his MBA from Fontbonne University and holds a bachelor’s of science degree from the University of Missouri, Columbia and was a 2018 Fellow in Stanford’s Distinguished Careers Institute.

Board Service

Mr. White currently serves on the board of The Simple Goods Foods Company (Nasdaq: SMPL), a food company, since 2019. He previously served as board chair of Jamba, Inc. from December 2008 until January 2016. He was a director of Daymon Worldwide, Inc. from February 2010 until March 2017 and was appointed as board chair in 2016. He served on the board of Panera Bread from January 2016 until July 2017. Mr. White also served on the board of CallidusCloud from 2016 to 2018, and on the board of Hillshire Brands Company and Keane Inc. He currently serves on the board of Panera Bread Company (a subsidiary of JAB Holdings), a private restaurant company, and Schnucks Markets, Inc., a private grocery company.

Relevant Experience

Mr. White brings to the Board a background in marketing and strategic planning, gained in senior business leadership roles with Jamba, Inc., Safeway, Inc. and The Gillette Company, Inc. His global leadership experience also adds important perspectives to matters that come before the Board.

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Proposal No. 1 Election of Directors

DIRECTOR NOMINATING PROCESS

The Nominating & Governance Committee is responsible for making recommendations of nominees for directors to the Board. The Nominating & Governance Committee’s goal is to put before our shareholders candidates who, with the incumbent directors, will constitute a board that has the characteristics necessary to provide effective oversight for the growing, complex, global educational operations of Adtalem and reflects the broad spectrum of students that Adtalem serves. The Nominating & Governance Committee seeks a diversity of thought, background, experience and other characteristics in its candidates. To this end, Adtalem’s Governance Principles provide that nominees are to be selected on the basis of, among other things, knowledge, experience, skills, expertise, diversity, personal and professional integrity, business judgment, time availability in light of other commitments, absence of conflicts of interest and such other relevant factors that the Nominating & Governance Committee considers appropriate in the context of the interests of Adtalem, its Board and its shareholders.

BOARD SUCCESSION PLANNING

We are committed to ensuring that our Board represents the right balance of experience, tenure, independence, age and diversity. Additionally, our Governance Principles provide that a director is required to retire from our Board when he or she reaches the age of 72, although on the recommendation of the Nominating & Governance Committee, our Board may waive this requirement if a waiver is in the best interests of Adtalem. Over the last five years, our Nominating & Governance Committee has led the gradual transformation of our Board, with six of our eight directors joining the Board since 2015.

When considering nominees, the Nominating & Governance Committee seeks to ensure that the Board as a whole possesses, and individual members possess at least two of, the following characteristics or expertise in the following areas:

Leadership
Strategic vision
Business judgment
Management experience
Experience as a CEO or similar function
Experience as a CFO or accounting and finance expertise
Industry knowledge
Healthcare, medical and related education and services
Education sector and accreditation
Mergers, acquisitions, joint ventures and strategic alliances
Public policy experience, particularly in higher education
Regulatory experience
Human capital management and/or compensation expertise
Global markets and international experience
Corporate governance
BOARD REFRESHMENT

6 New Directors
6 Retirements

ANNUAL PROCESS FOR NOMINATION
1       Identify Candidates
Directors
Management
Shareholders
Independent Search Firm
     
 
 
 
2 Nominating & Governance Committee Review
Review qualifications
Consider diversity
Examine Board composition and balance
Review independence and potential conflicts
Meet with potential nominees
     
     
     
     
 
3 Recommend Slate
 
4 Full Board Review and Nomination
 
5 Shareholder Review and Election

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Proposal No. 1 Election of Directors

The Nominating & Governance Committee has implemented this policy by evaluating each prospective director nominee as well as each incumbent director on the criteria described above, and in the context of the composition of the full Board, to determine whether she or he should be nominated to stand for election or re-election. In screening director nominees, the Nominating & Governance Committee also reviews potential conflicts of interest, including interlocking directorships and substantial business, civic, and social relationships with other members of the Board that could impair the prospective nominee’s ability to act independently.

IDENTIFICATION AND CONSIDERATION OF NEW NOMINEES

In identifying potential nominees and determining which nominees to recommend to the Board, the Nominating & Governance Committee has retained the advisory services of Heidrick & Struggles, an international executive search firm. In connection with each vacancy, the Nominating & Governance Committee develops a specific set of ideal characteristics for the vacant director position. The Nominating & Governance Committee looks at director candidates that it has identified and any identified by shareholders on an equal basis using these characteristics and the general considerations identified above.

SHAREHOLDER NOMINATIONS

The Nominating & Governance Committee will not only consider nominees that it identifies, but will consider nominees submitted by shareholders in accordance with the advance notice process for shareholder nominations identified in the By-Laws. Under this process, all shareholder nominees must be submitted in writing to the attention of Adtalem’s Chief Operating Officer, General Counsel and Corporate Secretary, 500 West Monroe Street, Chicago, IL 60661, not less than 90 days prior to the anniversary of the immediately preceding annual meeting of shareholders. As a result, a shareholder nomination must be submitted by August 7, 2020. Such shareholder’s notice shall be signed by the shareholder of record who intends to make the nomination (or his duly authorized proxy) and shall also include, among other things, the following information:

the name and address, as they appear on Adtalem’s books, of such shareholder and the beneficial owner or owners, if any, on whose behalf the nomination is made;
the number of shares of Adtalem’s Common Stock which are beneficially owned by such shareholder or beneficial owner or owners;
a representation that such shareholder is a holder of record entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to make the nomination;
the name and residence address of the person or persons to be nominated;
a description of all arrangements or understandings between such shareholder or beneficial owner or owners and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination is to be made by such shareholder;
such other information regarding each nominee proposed by such shareholder as would be required to be disclosed in solicitations of proxies for elections of directors, or would otherwise be required to be disclosed, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including any information that would be required to be included in a proxy statement filed pursuant to Regulation 14A had the nominee been nominated by the Board; and
the written consent of each nominee to be named in a proxy statement and to serve as a director if so elected.

In addition to candidates submitted through this advance notice By-Law process for shareholder nominations, shareholders may also request that a director nominee be included in Adtalem’s proxy materials in accordance with the proxy access provision in the By-Laws. Any shareholder or group of up to 20 shareholders holding both investment and voting rights to at least 3% of Adtalem’s outstanding Common Stock continuously for at least three years may nominate the greater of (i) two or (ii) 20% of the Adtalem directors to be elected at an annual meeting of shareholders. Such requests must be received not less than 120 days nor more than 150 days prior to the anniversary date of the immediately preceding annual meeting of shareholders. As a result, any notice given by or on behalf of a shareholder pursuant to these provisions of the bylaws (and not pursuant to Rule 14a-18 of the Exchange Act) must be received no earlier than June 9, 2020 and no later than July 9, 2020. However, if we hold our 2020 Annual Meeting of Shareholders more than 30 days from the first anniversary of this year’s Annual Meeting, then in order for notice by the shareholder to be timely, such notice must be received not later than the close of business on the tenth day following the day on which notice of the date of the annual meeting was mailed or public disclosure of the date of the annual meeting was made, whichever first occurs.

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Proposal No. 1 Election of Directors

In addition to candidates submitted through these By-Law process for shareholder nominations, shareholders may also recommend candidates by following the procedures set forth below under the caption “Communications with Directors.”

Director Independence

The Board annually reviews the continuing independence of Adtalem’s non-employee directors under applicable laws and rules of the New York Stock Exchange (“NYSE”). The Board, excluding any director who is the subject of an evaluation, reviews and evaluates director transactions or relationships with Adtalem, including the results of any investigation, and makes a determination with respect to whether a conflict or violation exists or will exist or whether a director’s independence is or would be impaired.

The Board has considered whether each director has any material relationship with Adtalem (either directly or as a partner, shareholder or officer of an organization that has a relationship with Adtalem) and has otherwise complied with the requirements for independence under the applicable listing standards of the NYSE.

As a result of this review, the Board affirmatively determined that, with the exception of Ms. Wardell, all of Adtalem’s current directors, and all of Adtalem’s former directors who served as a director during fiscal year 2019, are “independent” of Adtalem and its management within the meaning of the applicable NYSE rules. Ms. Wardell is considered an inside director because of her employment as President and CEO of Adtalem.

The Board considered the relationship between Adtalem and The Northern Trust Company, a wholly-owned subsidiary of Northern Trust Corporation. Adtalem maintains depository accounts with The Northern Trust Company and conducts a significant portion of its disbursement activity through these accounts. Mr. Logan, one of our directors, is Executive Vice President and Managing Director, Global Financial Institutions Group, with Northern Trust Global Investments, a business unit of The Northern Trust Company. In fiscal year 2019, Adtalem incurred approximately $250,000 in fees to The Northern Trust Company, which were partially offset against compensating balance credits earned on an average monthly outstanding balance of approximately $16.0 million. The Board concluded, after considering (i) that the relationship with The Northern Trust Company predates Mr. Logan joining the Board, (ii) that Mr. Logan has had no involvement in the Adtalem banking transactions, (iii) the lack of materiality of the transactions to Adtalem and to The Northern Trust Company, and (iv) the fact that the terms of the transactions are not preferential either to Adtalem or to The Northern Trust Company, that the relationship is not a material one for purposes of the NYSE listing standards and would not influence Mr. Logan’s actions or decisions as a director of Adtalem.

BOARD STRUCTURE AND OPERATIONS

Summary of Board and Committee Structure

Adtalem’s Board held 7 meetings during fiscal year 2019, consisting of 4 regular meetings and 3 special meetings. Currently, the Board has five standing committees: Academic Quality, Audit and Finance, Compensation, External Relations, and Nominating & Governance. The following table identifies each standing committee, its members and chairs, its key responsibilities and the number of meetings held during fiscal year 2019. Current copies of the charters of each of these committees, a current copy of Adtalem’s Governance Principles, and a current copy of Adtalem’s Code of Conduct and Ethics can be found on Adtalem’s website, www.adtalem.com, and are also available in print to any shareholder upon request from Adtalem’s Chief Operating Officer, General Counsel and Corporate Secretary, 500 West Monroe Street, Chicago, IL 60661. The Board has determined that each of the members of the Audit and Finance, Compensation, and Nominating & Governance committees is independent within the meaning of applicable laws and NYSE listing standards in effect at the time of determination.

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Proposal No. 1 Election of Directors

Academic Quality Committee

Members Meetings in fiscal year 2019
Steven M. Altschuler, M.D. (Chair)*
Donna J. Hrinak
James D. White
4

* Ann Weaver Hart served as Chair during fiscal year 2019.

Key Responsibilities

Supports improvement in academic quality and assures that the academic perspective is heard and represented at the highest policy-setting level and incorporated in all of Adtalem’s activities and operations
Reviews the academic programs, policies and practices of Adtalem’s institutions
Evaluates the academic quality and assessment process and evaluates curriculum and programs

Audit and Finance Committee

Members Meetings in fiscal year 2019 Report
William W. Burke (Chair)
Steven M. Altschuler, M.D.
Donna J. Hrinak
Michael W. Malafronte
9 Page 33

Key Responsibilities

Monitors Adtalem’s financial reporting processes, including its internal control systems and the scope, approach and results of audits
Selects and evaluates Adtalem’s independent registered public accounting firm, subject to ratification by the shareholders
Reviews and recommends to the Board Adtalem’s financing policies and actions related to investment, capital structure and financing strategies
Reviews and approves any potential related party transactions

The Board has determined that Mr. Burke is qualified as an audit committee financial expert.

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Proposal No. 1 Election of Directors

Compensation Committee

Members Meetings in fiscal year 2019 Report
Michael W. Malafronte (Chair)
William W. Burke
Lyle Logan
5 Page 58

Key Responsibilities

Oversees all compensation practices and reviews eligibility criteria and award guidelines for Adtalem’s compensation program
Reviews and approves, following discussions with the other independent members of the Board, CEO annual goals and objectives
Evaluates the CEO’s performance against established annual goals and objectives
Recommends CEO compensation to the other independent members of the Board for approval
Reviews and approves recommendations made by the CEO for executive officers, including base salary, annual incentive and equity compensation
Approves all LTI grants delivered in the form of options
Reviews and recommends to the Board compensation paid to non-employee directors

External Relations Committee

Members* Meetings in fiscal year 2019
Lyle Logan (Chair)
Georgette Kiser
4

* Ann Weaver Hart also served on this committee during fiscal year 2019.

Key Responsibilities

Provides awareness and oversight of Adtalem’s external relations strategy, policy and practice
Monitors, analyzes and effectively manages legislative and regulatory policy trends, issues and risks
Develops recommendations to the Board with regard to formulating and adopting policies, programs and communications strategy related to legislative, regulatory and reputational risk
Oversees risks and exposures related to higher education public policy, as well as compliance with laws, regulations applicable to Adtalem

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Proposal No. 1 Election of Directors

Nominating & Governance Committee

Members* Meetings in fiscal year 2019
James D. White (Chair)
Georgette Kiser
Michael W. Malafronte
4

* Ann Weaver Hart also served on this committee during fiscal year 2019.

Key Responsibilities

Reviews Board and committee structure and leads the Board self-evaluation process
Assesses Board needs and periodically conducts director searches and recruiting to ensure appropriate Board composition
Recommends candidates for nomination as directors to the Board
Oversees and conducts planning for CEO and director succession and potential related risks
Recommends governance policies and procedures

Board Leadership Structure

Pursuant to our Governance Principles, the Board believes that it should be free to make its selection of the Chairman of the Board and the CEO in the way that it deems best for Adtalem and its shareholders at any given point of time. In order to ensure continued Board independence, the Board has adopted a policy that, in the event the Chairman of the Board and CEO roles are combined, or the Chairman of the Board is not otherwise independent, the Board shall appoint a Lead Independent Director. In July 2019, the Board elected Lisa Wardell, who has served on our Board since November 2008 and as our President and CEO since May 2016, as Chairman of the Board. In accordance with our Governance Principles, the Board concurrently appointed William Burke to serve as our Lead Independent Director. In evaluating the Board’s leadership structure, the Board considered the relevant merits of combining the roles of Chairman of the Board and Chief Executive Officer and appointing a strong Lead Independent Director, compared with keeping the roles of Chairman of the Board and CEO separate. The Board concluded that Ms. Wardell was the person best suited to serve as Chairman of the Board at this time, providing consistent leadership, alignment between the Board and management and a unified voice for Adtalem as it continues its transformation to a leading workforce solutions provider. In addition, the Board reaffirmed its commitment to independent board leadership by appointing Mr. Burke as our Lead Independent Director. Prior to Ms. Wardell’s appointment as our Chairman of the Board, during fiscal year 2019, James White, an independent director, served as Chairman of the Board. During fiscal year 2019, the Board met in executive session without employee directors or other employees present at each regular Board meeting. Mr. White, as Adtalem’s non-executive Chairman of the Board, presided over these sessions.

In furtherance of our Board’s role in overall strategy and succession planning, our Lead Independent Director actively engages with our Chairman/CEO on such matters. In addition, our Governance Principles provide that the Lead Independent Director:

sets the agenda for, calls meeting of and leads executive sessions of the independent directors and reports to the Chairman of the Board, as appropriate, concerning such meetings;
acts as a liaison between the Chairman of the Board and the independent directors;
advises the Chairman of the Board as to the quality, quantity and timeliness of the flow of information from management that is necessary for the independent directors to effectively and responsibly perform their duties;
when appropriate, makes recommendations to the Chairman of the Board about calling full meetings of the Board;
serves as a resource to consult with the Chairman of the Board and other Board members on corporate governance practices and policies and assumes the primary leadership role in addressing issues of this nature if, under the circumstances, it is inappropriate for the Chairman of the Board to assume such leadership; and
performs such other duties as requested by the Board or Nominating & Governance Committee and as set forth in the Governance Principles.

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Proposal No. 1 Election of Directors

  OUR LEAD INDEPENDENT DIRECTOR  
    
   During his career, Mr. Burke has served in executive leadership roles at several companies and, during his service on multiple public company boards, has served as a lead independent director, audit committee chairman and compensation committee chairman. Mr. Burke also continues to serve as Chair of our Audit and Finance Committee.   

Director Attendance

During fiscal year 2019, our Board met seven (7) times. Each of Adtalem’s directors attended at least 85% of the meetings of the Board and Board committees on which they served that occurred during their respective time of service on the Board in fiscal year 2019.

All of our directors who were directors at the time were present at the 2018 Annual Meeting of Shareholders, held in November 2018. Our Board encourages all of its members to attend the Annual Meetings but understands there may be situations that prevent such attendance.

Director Continuing Education

Members of the Board are encouraged to participate in continuing education and enrichment classes and seminars. During fiscal year 2019, the following directors attended the following classes and seminars: (i) Mr. Burke, a Board Leadership Fellow with the National Association of Corporate Directors (“NACD”) attended NACD’s conferences on (a) Dealing with Disruption: Board Agility and Resilience in a VUCA World and (b) Innovation from Within; and attended training hosted by Carnegie Mellon University on, and received a CERT certificate in, Cybersecurity Oversight; (ii) Ms. Kiser attended Corporate Board Compensation Committee training by Mercer; (iii) Ms. Wardell completed a NACD Board Leadership Master Fellowship recertification program; and (iv) Mr. White attended and was a panelist at (a) the Stanford Directors College and (b) the Directors Academy NextGen Directors Program.

Board Self-Evaluation

Each year our Board undertakes a self-evaluation process to critically evaluate its performance. Additionally, each committee conducts a self-evaluation to monitor its performance and effectiveness. Results of the evaluations are summarized and discussed at Board and committee meetings.

KEY BOARD RESPONSIBILITIES

Strategic Oversight

The Board has an active role in our overall strategies. The Board actively reviews and provides guidance on Adtalem’s long-term strategies and annual operating plan. Management reports its progress in executing on Adtalem’s strategies and operating plan throughout the year. In addition, throughout the year, segment leadership will report to the Board regarding individual segment strategies and operating plans. The Board also periodically reviews and provides oversight to management on Adtalem’s ESG strategy.

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Proposal No. 1 Election of Directors

Risk Oversight

Adtalem’s full Board is responsible for assessing major risks facing Adtalem and overseeing management’s plans and actions directed toward the mitigation and/or elimination of such risk. The Board has assigned specific elements of the oversight of risk management of Adtalem to committees of the Board, as summarized below. Each committee meets periodically with members of management and, in some cases, with outside advisors regarding the matters described below and, in turn, reports to the full Board at least after each regular meeting regarding any findings.

Board/Committee          Primary Areas of Risk Oversight

Full Board

Reputation
Legal and regulatory compliance and ethical business practices
Strategic planning
Major organizational actions
Education public policy

Academic
Quality Committee

Academic quality
Accreditation
Curriculum development and delivery
Student persistence
Student outcomes

Audit and
Finance Committee

Accounting and disclosure practices
Information technology
Cybersecurity
Financial controls
Risk management policies and procedures
Legal and regulatory compliance, including compliance and ethics program
Related party transactions
Capital structure
Investments
Foreign exchange

Compensation
Committee

Compensation practices
Talent development
Retention
Management succession planning

External
Relations Committee

Accreditation
Higher education public policy
Compliance with laws and regulations applicable to Adtalem

Nominating &
Governance Committee

Corporate and institutional governance structures and processes
Board composition and function
Board and Chairman of the Board succession

Succession Planning and Human Capital Management

The Board recognizes that one of its most important duties is to ensure continuity in Adtalem’s senior leadership by overseeing the retention and development of executive talent and planning for the effective succession of our CEO and the executive leadership team. In order to ensure that the succession planning and leadership development process supports and enhances our long-term strategic objectives, the Board periodically consults with our CEO and Senior Vice President of Human Resources on Adtalem’s business goals, the skills and experience necessary to help Adtalem achieve those goals, our organizational needs, our leadership pipeline, the succession plans for critical leadership positions and our talent development and leadership initiatives. Talent and leadership development, including succession planning, is a top priority of our CEO and the senior executive team. Our CEO seeks input from members of our Board regarding candidates for executive positions and other key roles.

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Proposal No. 1 Election of Directors

Sustainability

We recognize that ESG practices and goals are at the forefront of our shareholders’ minds because our approach to these areas can provide insight into our corporate behavior, long-term performance and sustainability. Our ESG practices support our purpose - to empower students to achieve their goals, find success and make inspiring contributions to our global community. We aim to empower and enhance the communities in which we teach, learn and work by operating sustainably, maintaining responsible governance standards, and supporting our global community. We continue to measure our performance and set new goals in areas including academic and policy standards; diversity and inclusion of Adtalem suppliers; and energy and waste reduction programs.

Outreach and Engagement

We value the opinions of our shareholders and believe regular, proactive communications with our shareholders to be in the long-term best interests of Adtalem. Our investor communications and outreach include annual investor day meetings, investor conferences and quarterly conference calls. These calls are open to the public and are available live and as archived webcasts on our website. Additionally, we reach out at least annually to our largest shareholders to invite feedback. We hold individual calls with shareholders who accept our invitation to allow for open, meaningful discussions. We share any feedback received from our shareholders with our Board.

COMMUNICATIONS WITH DIRECTORS

Shareholders and other interested parties wishing to communicate with the Board, our Lead Independent Director, or any member or committee of the Board are encouraged to send any communication to our Chief Operating Officer, General Counsel and Corporate Secretary, Adtalem Global Education Inc., 500 West Monroe Street, Chicago, IL 60661 and should prominently indicate on the outside of the envelope that it is intended for the Board, the independent directors as a group, or a committee or an individual member of the Board. Any such communication must be in writing, must set forth the name and address of the shareholder (and the name and address of the beneficial owner, if different), and must state the form of stock ownership and the number of shares beneficially owned by the shareholder making the communication. Adtalem’s Chief Operating Officer, General Counsel and Corporate Secretary will compile and promptly forward all communications to the Board except for spam, junk mail, mass mailings, resumes or other forms of job inquiries, surveys, business solicitations or advertisements.

Communicating Accounting Complaints

Shareholders, Adtalem employees and other interested persons are encouraged to communicate or report any complaint or concern regarding financial statement disclosures, accounting, internal accounting controls, auditing matters or violations of Adtalem’s Code of Conduct and Ethics (collectively, “Accounting Complaints”) to the General Counsel of Adtalem at the following address:

Chief Operating Officer, General Counsel and Corporate Secretary
Adtalem Global Education
500 West Monroe Street
Chicago, IL 60661

Accounting Complaints also may be submitted in a sealed envelope addressed to the Chair of the Audit and Finance Committee, in care of the General Counsel, at the address indicated above, and labeled with a legend such as: “To Be Opened Only by the Audit and Finance Committee.” Any person making such a submission who would like to discuss an Accounting Complaint with the Audit and Finance Committee should indicate this in the submission and should include a telephone number at which he or she may be contacted if the Audit and Finance Committee deems it appropriate.

Adtalem employees may also report Accounting Complaints using any of the reporting procedures specified in Adtalem’s Code of Conduct and Ethics. All reports by employees shall be treated confidentially and may be made anonymously. Adtalem will not discharge, demote, suspend, threaten, harass or in any manner discriminate against any employee in the terms and conditions of his or her employment based upon any lawful actions taken by such employee with respect to the good faith submission of Accounting Complaints.

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Proposal No. 1 Election of Directors

BOARD PRACTICES AND POLICIES

Certain Relationships and Related Person Transactions

It is Adtalem’s policy that the Audit and Finance Committee review, approve or ratify all related party transactions in which Adtalem participates and in which any related person has a direct or indirect material interest and the transaction involves or is expected to involve payments of $120,000 or more in the aggregate per fiscal year. Our legal staff is primarily responsible for gathering information from the directors and executive officers, including annual questionnaires completed by all our directors, director nominees and executive officers. The Audit and Finance Committee will review the relevant facts and circumstances of all related party transactions, including whether the transaction is on terms comparable to those that could be obtained in arm’s length dealings with an unrelated third party and the extent of the related party’s interest in the transaction. No member of the Audit and Finance Committee may participate in any approval of a related party transaction to which he or she is a related party.

Various Adtalem policies and procedures, including the Code of Conduct and Ethics, which applies to Adtalem’s directors, officers and all other employees, and annual questionnaires completed by all Adtalem directors, director nominees and executive officers, require disclosure of related person transactions or relationships that may constitute conflicts of interest or otherwise require disclosure under applicable Securities and Exchange Commission (“SEC”) rules.

There were no related party transactions in fiscal year 2019 that required approval under our policies and procedures or the rules and regulations of the SEC.

Governance Principles/Code of Ethics

Our Board has adopted Governance Principles that set forth expectations for directors, director qualifications, director retirement, director independence standards, board committee structure and functions and other policies for Adtalem’s governance. We have adopted a Code of Conduct and Ethics applicable to all colleagues including directors, officers, and full- and part-time colleagues and faculty of Adtalem Global Education Inc. and its subsidiaries. These documents are available on Adtalem’s website at https://www.adtalem.com/about-us/ organizational-governance.html. Any amendments or waivers of the Code of Conduct and Ethics will be disclosed at this website address.

DIRECTOR COMPENSATION

The director compensation program was reviewed in the second half of fiscal year 2018, and the annual retainer was increased to $85,000 starting in the fourth quarter of fiscal year 2018. In fiscal year 2019, non-employee directors, continued to receive an annual retainer of $85,000, paid quarterly. In fiscal year 2019, our non-executive Chairman of the Board received an additional annual retainer of $120,000, the Chair of the Audit and Finance Committee received an additional annual retainer of $22,500, the Chair of the Compensation Committee was entitled to receive an additional retainer of $17,500, and the chairs of each of the other committees received an additional annual retainer of $10,000 for their roles as committee chairs. During fiscal year 2020, Ms. Wardell, our Chairman of the Board, CEO and President, will not receive any additional compensation for her service as Chairman of the Board and Mr. Burke will receive an additional annual retainer of $35,000 for his service as Lead Independent Director. Directors were reimbursed for any reasonable and appropriate expenditures attendant to Board membership. Mr. Malafronte, who was originally appointed to the Board in 2016 pursuant to a Support Agreement, has declined all compensation for his service.

Under the Adtalem Nonqualified Deferred Compensation Plan, a director could elect to defer all or a portion of the cash retainer. Any amount so deferred is, at the director’s election, valued as if invested in various investment choices made available by the Compensation Committee for this purpose, and is payable in cash installments, or as a lump-sum on or after termination of service as a director, or at a later date specified by the director. No non-employee directors deferred any portion of their compensation in fiscal year 2019.

As long-term incentive compensation for directors, each non-employee director received RSUs with an approximate value of $125,000 directly following the 2018 Annual Meeting of Shareholders. Each RSU represents the right to receive one share of Common Stock following the satisfaction of the vesting period. All RSUs granted in November 2018 vest upon the one-year anniversary of the grant date.

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Proposal No. 1 Election of Directors

This table discloses all director compensation provided in fiscal year 2019 to the directors of Adtalem for their service as directors (other than Ms. Wardell who received no compensation for her service as a director and will receive no additional compensation as Chairman of the Board; Ms. Wardell’s compensation as President and CEO is set forth in the Summary Compensation Table).

Name       Fees Earned or 
Paid in Cash 
($) 
      Stock
Awards
($)(1)
      Total
($)
Steven M. Altschuler, M.D.            85,000 124,969 209,969
William W. Burke 127,500 (2)  124,969 252,469
Ann Weaver Hart(3) 95,000 124,969 219,969
Donna J. Hrinak(4) 63,750 124,969 188,719
Georgette Kiser 85,000 124,969 209,969
Lyle Logan 119,000 (5)  124,969 243,969
Michael W. Malafronte
Ronald L. Taylor(6) 89,250 (7)  89,250
James D. White 215,000 124,969 339,969

(1) The amounts reported in the Stock Awards column represent the grant date fair value of 2,230 RSUs granted on November 6, 2018 to each of the directors named above, computed in accordance with FASB ASC Topic 718. The assumptions made in determining the valuations of these awards can be found at Note 5: Stock-Based Compensation to our audited financial statements in Adtalem’s Annual Report on Form 10-K for the year ended June 30, 2019. The number of RSUs granted to each of the directors named above was determined by dividing $125,000 by $56.04, which represents the fair market value of a share of Common Stock on the November 6, 2018 award date, and rounding to the nearest 10 shares.
(2) This amount includes $20,000 in cash Mr. Burke received as compensation for his services as a member of the board of trustees of an Adtalem institution.
(3) Ms. Hart resigned from the Board effective in August, 2019.
(4) Ms. Hrinak was appointed to the Board in October, 2018.
(5) This amount includes $24,000 in cash Mr. Logan received as compensation for his services as a member of the board of trustees of an Adtalem institution.
(6) Mr. Taylor chose not to stand for re-election at the November, 2018 Annual Meeting of Shareholders.
(7) This amount includes $68,000 in cash Mr. Taylor received as compensation for his services as a member of the board of trustees of an Adtalem institution.
The table below discloses the aggregate number of RSUs outstanding at June 30, 2019 for each non-employee director listed above.

Name       RSUs
Outstanding
(#)
Steven M. Altschuler, M.D. 2,230
William W. Burke 2,230
Ann Weaver Hart(1) 2,230
Donna J. Hrinak 2,230
Georgette Kiser 2,230
Lyle Logan 2,230
Michael W. Malafronte
Ronald L. Taylor(2)
James D. White 2,230

(1) Ms. Hart resigned as a director effective in August, 2019.
(2) Mr. Taylor chose not to stand for re-election at the November, 2018 Annual Meeting of Shareholders.

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PROPOSAL NO. 2
Ratify Selection of PricewaterhouseCoopers LLP as Independent Registered Public Accounting Firm

Subject to shareholder ratification, the Audit and Finance Committee of the Board has reappointed PricewaterhouseCoopers LLP (“PwC”), as independent registered public accounting firm for Adtalem and its subsidiaries for fiscal year 2020. The Board recommends to the shareholders that the selection of PwC as independent registered public accounting firm for Adtalem and its subsidiaries be ratified. If the shareholders do not ratify the selection of PwC, the selection of independent registered public accounting firm will be reconsidered by the Audit and Finance Committee. Representatives of PwC are expected to be present at the Annual Meeting with the opportunity to make a statement, if they desire to do so, and to be available to respond to appropriate questions from shareholders.

APPROVAL BY SHAREHOLDERS

Proposal No. 2 to ratify the selection of PwC as independent registered public accounting firm for Adtalem for fiscal year 2020 will require the affirmative vote of a majority of the shares of Common Stock of Adtalem represented at the Annual Meeting. Unless otherwise indicated on the proxy, the shares will be voted FOR ratification of the selection of PwC as independent registered public accounting firm for Adtalem for fiscal year 2020.

    The Board of Directors recommends a vote FOR the ratification of the appointment of PwC as Adtalem’s independent registered public accounting firm for fiscal year 2020.

SELECTION AND ENGAGEMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit and Finance Committee, at each of its regularly scheduled meetings, and on an interim basis as required, reviews all engagements of PwC for audit and all other services. Prior to the Audit and Finance Committee’s consideration for approval, management provides the Audit and Finance Committee with a description of the reason for and nature of the services to be provided along with an estimate of the time required and approximate cost. Following such review, each proposed service is approved, modified or denied as appropriate. A record of all such approvals is maintained in the files of the Audit and Finance Committee for future reference. All services provided by PwC during the past two years were approved by the Audit and Finance Committee prior to their undertaking.

PRE-APPROVAL POLICIES

The Audit and Finance Committee has adopted a policy for approving all permitted audit, audit-related, tax and non-audit services to be provided by PwC in advance of the commencement of such services, except for those considered to be de minimis by law for non-audit services. Information regarding services performed by the independent registered public accounting firm under this de minimis exception is presented to the Audit and Finance Committee for information purposes at each of its meetings. There is no blanket pre-approval provision within this policy. For fiscal years 2018 and 2019, none of the services provided by PwC were provided pursuant to the de minimis exception to the pre-approval requirements contained in the applicable rules of the SEC. Audit and Finance Committee consideration and approval generally occurs at a regularly scheduled Audit and Finance Committee meeting. For projects that require an expedited decision because the independent registered public accounting firm should begin prior to the next regularly scheduled meeting, requests for approval may be circulated to the Audit and Finance Committee by mail, telephonically or by other means for its consideration and approval. When deemed necessary, the Audit and Finance Committee has delegated pre-approval authority to its Chair. Any engagement of the independent registered public accounting firm under this delegation will be presented for informational purposes to the full Audit and Finance Committee at their next meeting.

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Proposal No. 2 Ratify Selection of PricewaterhouseCoopers LLP as Independent Registered Public Accounting Firm

AUDIT FEES AND OTHER FEES

The Audit and Finance Committee appointed PwC as Adtalem’s independent registered public accounting firm for the fiscal year ended June 30, 2019. Adtalem’s shareholders ratified the engagement at the Annual Meeting of Shareholders on November 6, 2018. In addition to engaging PwC to audit the consolidated financial statements for Adtalem and its subsidiaries for the year and review the interim financial statements included in Adtalem’s Quarterly Reports on Form 10-Q filed with the SEC, the Audit and Finance Committee also engaged PwC to provide various other audit and audit related services — e.g., auditing of Adtalem’s compliance with student financial aid program regulations.

The Sarbanes-Oxley Act of 2002 prohibits an independent public accountant from providing certain non-audit services for an audit client. Adtalem engages various other professional service providers for these non-audit services as required. Other professional advisory and consulting service providers are engaged where the required technical expertise is specialized and cannot be economically provided by employee staffing. Such services include, from time to time, business and asset valuation studies, and services in the fields of law, human resources, information technology, employee benefits and tax structure and compliance.

Audit fees declined in 2019 as a result of the divestitures of DeVry University and Carrington College. Additionally, during fiscal year 2018, we incurred significant tax fees related to tax reform and tax planning that did not recur in fiscal year 2019. The aggregate amounts included in Adtalem’s financial statements for fiscal year 2019 and 2018 for fees billed or to be billed by PwC for audit and other professional services, respectively, were as follows:

     Fiscal Year
2019
     Fiscal Year
2018
Audit Fees $ 3,256,546 $ 4,637,875
Audit-Related Fees $ $
Tax Fees $ 495,707 $ 1,115,000
All Other Fees $ 18,000 $ 58,000
Total $ 3,770,253 $ 5,810,875

AUDIT FEES — Includes all services performed to comply with generally accepted auditing standards in conjunction with the annual audit of Adtalem’s financial statements and the audit of internal controls over financial reporting. In addition, this category includes fees for services in connection with Adtalem’s statutory and regulatory filings, consents and review of filings with the SEC such as the annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Also included are services rendered in connection with the required annual audits of Adtalem’s compliance with the rules and procedures promulgated for the administration of federal and state student financial aid programs.

AUDIT-RELATED FEES — No audit-related fees were billed to us by PwC for fiscal years 2018 and 2019.

TAX FEES — Includes all services related to tax compliance, tax planning, tax advice, assistance with tax audits and responding to requests from Adtalem’s tax department regarding technical interpretations, applicable laws and regulations, and tax accounting. Adtalem’s Audit and Finance Committee has considered the nature of these services and concluded that these services may be provided by the independent registered public accounting firm without impairing its independence.

ALL OTHER FEES — Includes subscriptions for online accounting research services, fees for access to disclosure checklist, fees to prepare a human resource benchmarking study, and fees for a Carrington College Federal Perkins Loan close-out audit.

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Proposal No. 2 Ratify Selection of PricewaterhouseCoopers LLP as Independent Registered Public Accounting Firm

AUDIT AND FINANCE COMMITTEE REPORT

To Our Shareholders:

The Audit and Finance Committee of Adtalem consists of four independent directors. The members of the Audit and Finance Committee meet the independence and financial literacy requirements of the NYSE and additional, heightened independence criteria applicable to members of the Audit and Finance Committee under SEC and NYSE rules. In fiscal year 2019, the Audit and Finance Committee held nine meetings. The Audit and Finance Committee has adopted, and annually reviews, a charter outlining the practices it follows. The charter conforms to the SEC’s implementing regulations and to the NYSE listing standards.

Management is responsible for Adtalem’s internal controls and the financial reporting process by which it prepares the financial statements. Adtalem’s independent registered public accounting firm is responsible for performing an independent audit of the annual financial statements of Adtalem and expressing an opinion on those statements. The principal duties of the Audit and Finance Committee include:

Monitoring Adtalem’s financial reporting processes, including its internal control systems;

Selecting Adtalem’s independent registered public accounting firm, subject to ratification by the shareholders;

Evaluating the independent registered public accounting firm’s independence;

Monitoring the scope, approach and results of the annual audits and quarterly reviews of financial statements and discussing the results of those audits and reviews with management and the independent registered public accounting firm;

Overseeing the effectiveness of Adtalem’s internal audit function and overall risk management processes;

Discussing with management and the independent registered public accounting firm the nature and effectiveness of Adtalem’s internal control systems; and

Reviewing and recommending to the Board Adtalem’s financing policies and actions related to investment, capital structure and financing strategies.

During fiscal year 2019, at each of its regularly scheduled meetings, the Audit and Finance Committee met with the senior members of the Adtalem’s financial management team. Additionally, the Audit and Finance Committee had separate private sessions, on a quarterly basis, with Adtalem’s independent registered public accounting firm, Adtalem’s Chief Operating Officer, General Counsel and Corporate Secretary, Adtalem’s Chief Financial Officer and Treasurer, and Adtalem’s Senior Director, Internal Audit.

The Audit and Finance Committee is updated periodically on the process management uses to assess the adequacy of Adtalem’s internal control systems over financial reporting, the framework used to make the assessment and management’s conclusions on the effectiveness of Adtalem’s internal controls over financial reporting. The Audit and Finance Committee also discusses with Adtalem’s independent registered public accounting firm Adtalem’s internal control assessment process, management’s assessment with respect thereto and the evaluation by Adtalem’s independent registered public accounting firm of its system of internal controls over financial reporting.

The Audit and Finance Committee annually evaluates the performance of Adtalem’s independent registered public accounting firm, including the senior audit engagement team, and determines whether to reengage the current independent registered public accounting firm. As a threshold matter, the Audit and Finance Committee satisfies itself that the most recent Public Company Accounting Oversight Board (“PCAOB”) inspection report pertaining to the current firm does not contain any information that would render inappropriate its continued service as Adtalem’s independent public accountants, including consideration of the public portion of the report and discussion in general terms of the types of matters covered in the non-public portion of the report. The Audit and Finance Committee also considers the quality and efficiency of the previous services rendered by the current auditors and the auditors’ technical expertise and knowledge of Adtalem’s global operations and industry. Based on this evaluation, the Audit and Finance Committee decided to reengage, and recommend ratification of, PwC as Adtalem’s independent registered public accounting firm for fiscal year 2020. The Audit and Finance Committee reviewed with members of Adtalem’s senior management team and PwC the overall audit scope and plans, the results of internal and external audit examinations, evaluations by management and PwC of Adtalem’s internal controls over financial reporting and the quality of Adtalem’s financial reporting. Although the Audit and Finance Committee has the sole authority to appoint Adtalem’s independent registered public accounting firm, the Audit

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Proposal No. 2 Ratify Selection of PricewaterhouseCoopers LLP as Independent Registered Public Accounting Firm

and Finance Committee recommends that the Board ask the shareholders, at their annual meeting, to ratify the appointment of Adtalem’s independent registered public accounting firm. With respect to Adtalem’s audited financial statements for fiscal year 2019, the Audit and Finance Committee has:

Reviewed and discussed the audited financial statements with management;
Met with PwC, Adtalem’s independent registered public accounting firm, and discussed the matters required to be discussed by the PCAOB; and
Received the written disclosures and the letter from PwC required by the applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit and Finance Committee concerning independence, and has discussed its independence with PwC.

In reliance upon the Audit and Finance Committee’s reviews and discussions with both management and PwC, management’s representations and the report of PwC on Adtalem’s audited financial statements, the Audit and Finance Committee recommended to the Board that the audited financial statements for the fiscal year ended June 30, 2019 be included in Adtalem’s Annual Report on Form 10-K filed with the SEC.

In addition, the Audit and Finance Committee has re-appointed, subject to shareholder ratification, PwC as Adtalem’s independent registered public accounting firm for fiscal year 2020.

This Audit and Finance Committee Report is not to be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or under the Exchange Act, except to the extent that Adtalem specifically incorporates this Audit and Finance Committee Report by reference, and is not otherwise to be deemed filed under such acts.

William W. Burke, Chair
Steven M. Altschuler, M.D.
Donna J. Hrinak
Michael W. Malafronte

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PROPOSAL NO. 3
Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers

Pursuant to Section 14A of the Exchange Act, we are required to submit to shareholders a resolution subject to an advisory vote to approve the compensation of our NEOs. The current frequency of the advisory vote on executive compensation is annually, with the vote for the current year being taken pursuant to this Proposal No. 3. The next such vote will occur at Adtalem’s 2020 Annual Meeting of Shareholders.

The Board encourages shareholders to carefully review the “Executive Compensation Tables” section of this Proxy Statement beginning on page 59 and the “Compensation Discussion & Analysis” beginning on page 36 for a thorough discussion of our compensation program for NEOs. The overall goals of our compensation program are to serve the essential purposes of the organization, which are to empower students to achieve their educational and career goals, and to maximize the long-term return to our stakeholders. We designed our program to:

Align NEO compensation with academic, student outcome and financial objectives;
Attract, motivate and retain high-quality executives; and
Reward organizational and individual performance.

The key elements of our executive compensation program are:

Annual base salary;
Annual cash incentives under our MIP; and
Long-term incentives.

Adtalem aims to provide total compensation to each NEO that is market-competitive, combining a stable base salary element with two at-risk elements (annual cash incentive awards and long-term incentive awards) available to be earned based upon individual and organizational performance. We believe this approach helps reinforce a culture of performance by recognizing individual potential and rewarding results. As part of our compensation philosophy, we believe we should provide our NEOs with total compensation opportunities that are competitive with other alternatives available to them in the marketplace and that a significant portion of each NEO’s total compensation should be variable — with both upside potential and downside risk — depending upon the performance of Adtalem and of the individual. In addition, we believe we should maintain a clear, straightforward and transparent approach to our executive compensation program.

Accordingly, the following resolution is submitted for an advisory shareholder vote at the Annual Meeting:

RESOLVED, that the compensation paid to Adtalem’s NEOs, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion & Analysis, compensation tables and narrative discussion, is hereby approved.

APPROVAL BY SHAREHOLDERS

The approval of the compensation of Adtalem’s NEOs will require the affirmative vote of a majority of the shares of Common Stock of Adtalem represented at the Annual Meeting. As this is an advisory vote, the result will not be binding on Adtalem, the Board or the Compensation Committee, although management, the Board and the Compensation Committee will carefully consider the outcome of the vote when evaluating our compensation program. Unless otherwise indicated on a shareholder’s proxy, the shares will be voted FOR the approval of the compensation of Adtalem’s NEOs.

    The Board of Directors recommends a vote FOR the approval of the compensation of Adtalem’s named executive officers.

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Proposal No. 3 Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers

COMPENSATION DISCUSSION & ANALYSIS

The following pages summarize our executive compensation program for our NEOs. Our 2019 NEOs are: 

               
Lisa W. Wardell Patrick J. Unzicker Stephen W. Beard Kathy Boden Holland Mehul R. Patel
Chairman of the Board, President and Chief Executive Officer Former Senior Vice President, Chief Financial Officer and Treasurer Chief Operating Officer, General Counsel and Corporate Secretary Group President, Medical and Healthcare Education Group President, Financial Services

Executive Summary

Adtalem’s executive compensation program is designed to reward leaders for delivering strong financial results and building shareholder value. We firmly believe that academic quality and a strong student-centric focus lead to growth and, therefore, we have incorporated measures into our executive compensation program to recognize leadership for their roles in improving student academic performance and outcomes.

This executive compensation program structure enables us to provide a competitive total compensation package while aligning our leaders’ interests with those of our shareholders and other stakeholders. The following chart highlights key objectives behind the development, review and approval of our NEOs’ compensation.

COMPENSATION OBJECTIVES

Our executive compensation program is designed to:

   ALIGN INCENTIVES             COMPETE FOR TALENT             REWARD PERFORMANCE   
        
Our purpose is to empower our students to achieve their goals, find success and make inspiring contributions to the global community. Success in realizing our purpose drives growth, which leads to creation of sustainable, long-term value for our shareholders. Our compensation program is distinguished by its alignment not only with our shareholders, but also with our students, whose success is critical to our organization’s success. Our compensation program is designed to attract, retain and motivate high-performing employees, particularly our key executives who are critical to our operations. Our compensation decisions take into account the competitive landscape for talent.

We reward outstanding performance through:

A short-term incentive program focusing our executives on achieving strong financial results and superior academic and student outcomes, through individual performance objectives, and
A long-term incentive program providing a mix of equity vehicles designed to reward long-term financial performance and shareholder value creation.

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Proposal No. 3 Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers

During fiscal year 2018, the Compensation Committee, in consultation with its independent advisor FW Cook, conducted a comprehensive review of the current executive compensation program and assessed the extent to which the current program was aligned with shareholder interests and maximized focus on the key strategic priorities as Adtalem moves forward. The Compensation Committee also considered shareholder feedback received through Adtalem’s ongoing shareholder outreach efforts conducted over the last several years.

Based on this review, at the August 2018 meeting, the Compensation Committee approved certain changes to the design of our executive compensation program for fiscal year 2019 and forward, which are intended to:

Enhance pay differentiation among executives for different levels of performance achieved;
Provide more upside reward and downside risk for exceptional performance over time; and
Incentivize and reward a thoughtful growth mentality.

1. Shifted Focus on Mission-Based Goals to Management Incentive Plan (“MIP”)

The Compensation Committee decided to more effectively emphasize academic quality and academic student outcomes by shifting such measures from being a component of our PSU long-term incentives to the annual short-term MIP. The Compensation Committee believes the annual short-term MIP is the best compensation component to drive focus from year-to-year on these key performance measures. Considering how quickly academic standards and measurement mechanisms change, we believe the quality of goal setting on these academic measures will be stronger with the increased ability to understand and set expectations and appropriately elevate goals on an annual basis. The performance goals established each year are directly overseen by the Academic Quality Committee to ensure appropriate goals are set for each institution within Adtalem’s portfolio. Starting in fiscal year 2019, the entirety of the 30% weighting on individual goals for each of our higher education institutional leaders is solely focused on these academic performance measures.

2. Introduction of Free Cash Flow (“FCF”) per Share as Long-Term Incentive Measure

Starting with the August 2018 (fiscal 2019) grants, 50% of the PSU grants is based on FCF per share; the remaining 50% is based on three-year average return on invested capital (“ROIC”), consistent with prior PSU grants. The Compensation Committee believes these two performance measures create better alignment with shareholder interests and the appropriate long-term focus on sustainable value creation for the organization. The Compensation Committee and the organization believe that consistently strong academic quality and strong student outcomes drive the long-term success of the organization. In order to achieve the long-term financial goals associated with the PSUs, management must maintain high academic quality and strong student outcomes each year.

SUBSEQUENT SHAREHOLDER OUTREACH

To ensure access to key roles in Adtalem’s corporate governance and the executive compensation planning process, participants varied per call and included:

The Chairman of our Compensation Committee
Our Vice President of Investor Relations
Our Senior Vice President of Human Resources
Our Chief Operating Officer, General Counsel and Corporate Secretary

Adtalem employs a proactive investor relations approach, involving management and the Board, with ongoing outreach and interactive dialogue with investors to seek input on topics including corporate governance, executive compensation, and strategy. Our goal is to provide transparency to ensure there is a clear understanding of our business and our operating and financial performance through one-on-one discussions, non-deal road shows, and investor conferences.

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Proposal No. 3 Say-on-pay: Advisory Vote to Approve the Compensation of Our Named Executive Officers

We value our shareholders’ opinions on the design and effectiveness of our executive compensation program. Despite our ongoing engagement with shareholders and the Compensation Committee’s best intentions for our executive compensation program to support our business strategy and strongly align with shareholders’ interests, at our Annual Meeting of Shareholders in November 2018, only 55% of the votes cast in our advisory say-on-pay shareholder vote approved our executive compensation package. In response to the lower level of support for say-on-pay, the Compensation Committee led an extensive shareholder outreach initiative over the course of the past twelve months.

This outreach initiative was designed to assist our Compensation Committee in fully understanding the perspectives of our shareholders, including those that supported and those that did not support our say-on-pay vote in November 2018, with respect to executive compensation. During this engagement, we reached out to shareholders that collectively owned approximately 80% of our outstanding Common Stock and had discussions with shareholders owning more than 40% of our outstanding Common Stock. Given that Institutional Shareholder Services (“ISS”) recommended an against vote on our say-on-pay advisory vote in November 2018, we also engaged ISS to better understand their vote recommendation policies and their comments on our program as highlighted in their report following our 2018 proxy statement. This effort supplemented the ongoing communications between our management and shareholders, as well as contact with shareholders prior to our 2018 annual meeting, through various engagement channels including in-person or telephonic meetings. We have continued our shareholder outreach efforts throughout fiscal year 2019 and into fiscal year 2020.

Present at these meetings was a mix of executive leadership, including representation from our Legal, Investor Relations and Human Resources functions, and in many cases, our Compensation Committee Chair, Michael Malafronte.

Shareholders that provided feedback were supportive of our overall compensation program design. The majority of the shareholders we met with were supportive of the metrics for the PSUs which include ROIC and FCF per share. Some of our shareholders suggested we consider relative metrics in the future, but no shareholder identified the PSU metrics as problematic. The majority of the shareholders who provided feedback were supportive of our current equity mix. Shareholders were positive about moving our academic metrics to the MIP. They were also supportive of our use of revenue and earnings per share as MIP performance measures.

While shareholders were generally favorable about the overall design of our compensation program, some of our shareholders expressed a desire to better understand the Compensation Committee’s rationale behind the fiscal year 2018 two-year grant to our CEO and what impact one feature of our PSU design had over several years. During the course of these discussions, some shareholders suggested we provide more detail on our CEO’s performance against her individual MIP objectives.

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We have addressed these three themes below and throughout this disclosure and will continue to engage our shareholder base and consider our shareholders’ feedback in our ongoing evaluation of the overall executive compensation program design:

What We Heard How We Responded

Questions regarding the design feature of the PSUs that allowed for payout calculations to be based on the greater of the sum of individual annual performance or the average performance over three years

 
Beginning with fiscal 2020 PSU grants (grants made in August 2019), payouts will be based solely on three-year average performance.
The design feature was intended to maintain the executive team’s focus on results throughout the three-year period, regardless of performance in a single year. The payouts under the PSUs have never resulted in an increase greater than 7% as a result of this feature.

Questions regarding the two-year front-loaded long-term incentive award to our CEO in fiscal year 2018

 
We have enhanced our disclosure under “CEO Long-Term Incentive Compensation” starting on page 51 of this proxy statement regarding the 2018 grant to our CEO.
We fulfilled our commitment not to grant any additional equity award to our CEO in fiscal 2019. Throughout this proxy statement, we have annualized the two-year grant to show that on a normalized basis, our CEO’s compensation is in line with our peer group for both fiscal years 2018 and 2019.
Although we have no plans to make a similar grant in the future, our Compensation Committee has committed to conduct additional shareholder outreach prior to considering any such action in the future.

Questions about individual performance goals under our MIP

 
We have enhanced our disclosure under “Fiscal Year 2019 MIP Decisions” starting on page 48 of this proxy statement regarding our CEO’s performance against individual objectives to provide additional information to our shareholders regarding the decision-making process and rationale for the payout of the individual portion of the MIP for fiscal year 2019.

Shareholders have responded positively to these changes during our discussions.

Adtalem and the Compensation Committee will continue to engage its shareholder base in the future to understand shareholder concerns, particularly in connection with potential changes to its compensation or governance practices.

PAY-FOR-PERFORMANCE FOCUS

We use both short- and long-term incentives to reward NEOs for delivering strong business results, increasing shareholder value and improving student outcomes. With our pay-for-performance philosophy, an executive can earn in excess of target levels when his or her performance exceeds established objectives. And, if performance falls below established objectives, our incentive plans pay below target levels, which in some cases could be nothing at all.

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CEO 2019 TARGET COMPENSATION MIX
(WITH LTI NORMALIZED)
(1)(2)
      OTHER NEO 2019 TARGET
COMPENSATION MIX(1)
     

(1) Excludes perquisites.
(2) In August 2018, a two-year, “front-loaded” LTI award was granted to the CEO consisting of approximately 50% in stock options and 50% in PSUs (25% focused on ROIC and 25% focused on academic outcomes). The Board, upon the recommendation and approval of the Compensation Committee, approved this grant to drive Ms. Wardell’s focus on critically important academic and financial performance metrics over the next several years. This grant represents the totality of LTI that Ms. Wardell received over the course of fiscal year 2018 and fiscal year 2019. The graph above presents an annualized value of this award (i.e., 50%).

Program Design:

The actual value realized from the annual MIP award can range from zero, if threshold performance targets are not met, to up to 200% of targeted amounts for exceptional organizational performance.

Our long-term incentive program consists of equity-based awards whose value ultimately depends on our total shareholder return performance. A significant portion of the long-term component (50% for the CEO’s fiscal 2018 front-loaded award and 30–40% of the other NEOs annual awards) is granted in the form of PSUs, the number of which are earned based on our three-year performance versus ROIC and FCF per share goals. If the minimum levels of performance are not met, no PSUs are earned; if the minimum levels of performance are met, payout can range from 50% to 150% of the target number of PSUs.

Performance Assessment: Our Compensation Committee uses a comprehensive, well-defined and rigorous process to assess organizational and individual performance. We believe the performance measures for our incentive plans focus management on the appropriate objectives for the creation of short- and long-term shareholder value as well as academic quality and organizational growth.

2019 COMPENSATION DECISIONS AND ACTIONS

Key Fiscal Year 2019 Compensation Decisions

  BASE SALARY  Page 44  
    
   Reflecting Adtalem’s commitment to offering market competitive compensation to our key executives, the Compensation Committee approved salary increases for several NEOs to reward performance and maintain market competitiveness.   

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  ANNUAL INCENTIVES  Page 45  
    
  

For fiscal year 2019 for the CEO, 85% of the MIP award was based on Adtalem’s financial performance as reflected in earnings per share and revenue, reflecting our CEO’s key responsibility in leading Adtalem’s financial growth. The remaining 15% was based on individual performance. For fiscal year 2019 for the other NEOs, as in fiscal years 2017 and 2018, 70% of the MIP award was based on financial performance at Adtalem (earnings per share and revenue) or at the institutions for which the NEO is responsible (operating income and revenue), and the remaining 30% was based on individual performance.

Following the end of fiscal year 2019, the MIP award in total across all measures was paid at 98% of target for the CEO and between 101% and 110% of target for the other NEOs, reflecting the financial performance of Adtalem and its institutions and individual contributions for fiscal year 2019.

  

  LONG-TERM INCENTIVES  Page 49  
    
  

In fiscal year 2019, NEOs other than the CEO received long-term incentive grants consisting of service-vesting stock options, performance-vesting PSUs, and service-vesting RSUs. As previously discussed, the CEO did not receive an equity award in fiscal year 2019.

Performance share awards granted in 2016 to Ms. Wardell and Mr. Unzicker, which included both financial and mission-based PSUs, vested in 2019. The financial-based PSUs were based on ROIC over a three-year period and based on our strong financial performance, vested with an overall payout of 118% of target. Mission-based PSUs, which are based on both absolute and relative academic goals at our various institutions, vested with an overall payout of 104% of target.

  

Factors Guiding our Decisions

Executive compensation program objectives, philosophy and principles;

Shareholder input, including say-on-pay vote;

Adtalem’s mission, vision, purpose and “TEACH” values;

Market norms, trends and best pay practices;

Financial performance of Adtalem and its individual institutions;

Advice of independent outside compensation consultant; and

Student academic performance and outcomes.

The following provides a more in-depth discussion of our performance in these areas that helped drive the Compensation Committee’s evaluation of performance, and ultimately, compensation decisions for fiscal year 2019.

2019 Financial and Operational Highlights

Adtalem’s fiscal year 2019 financial results reflect continued growth in its Medical and Healthcare and Financial Services segments, with revenue increasing 4.2% and 13.6%, respectively. Business and Law revenue decreased 16.6%, primarily due to headwinds in Brazil, including a delay in funding under the “Fundo de Financiamento Estudantil” or “Students Financing Fund” program and negative foreign currency exchange. Nonetheless, through substantial expense reduction initiatives, Adtalem achieved fiscal year 2019 earnings per share, excluding special items, of $2.84. See Appendix A for a reconciliation to reported results.

Significant progress was made in transforming Adtalem into a leading workforce solutions provider in fiscal 2019. We completed the divestitures of DeVry University and Carrington College, streamlined our three core verticals to support our enterprise growth strategy and expanded the financial services customer base through our acquisition of OnCourse Learning (“OCL”).

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The results of DeVry University and Carrington College are presented as discontinued operations within Adtalem’s Annual Report on Form 10-K attached herein. Also see “Note 2: Discontinued Operations” to the consolidated financial statements for further discussion. On May 31, 2019, Adtalem completed the acquisition of 100% of the equity interests of OCL. DeVry University, Carrington College and OCL’s revenue and operating income were not included in actual fiscal year 2019 results for MIP performance purposes. See Appendix A for a reconciliation to reported results.

While fiscal year 2019 revenue was below our expectations, earnings per share, excluding special items and OCL results, exceeded our expectations, each as reflected in our fiscal year 2019 operating plan, which served as the basis for our fiscal year 2019 MIP financial performance targets. As a result, the portions of executive officer MIP awards based on Adtalem revenue and earnings per share paid out at 81.6% and 115.9% of target, respectively.

FY 2019 REVENUE       FY 2019 EARNINGS PER SHARE
     

* Adjusted results adjusted to exclude impact of special items and the impact of the May 31, 2019 OCL acquisition. See Appendix A for a reconciliation to reported results.

EXECUTIVE COMPENSATION GOVERNANCE AND PRACTICES

  WHAT WE DO         WHAT WE DON’T DO  
           
Pay for economic and academic performance
Solicit and value shareholder opinions about our compensation practices
Deliver total direct compensation primarily through variable pay
Set challenging short- and long-term incentive award goals
Provide strong oversight that ensures adherence to incentive grant regulations and limits
Maintain robust stock ownership requirements
Adhere to an incentive compensation recoupment (clawback) policy
Offer market-competitive benefits
Consult with an independent advisor on executive pay practices, plan designs and assessing external competitive pay levels
Provide guaranteed salary increases
Provide tax gross-ups
Provide single-trigger change-in-control severance
Re-price stock options or exchange underwater options for other awards or cash
Pay dividends on unvested performance-based RSUs
Provide excessive perquisites
Offer a defined benefit pension or supplemental executive retirement plan
Permit hedging or pledging of Adtalem Common Stock
Reward executives without a link to performance

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Executive Compensation

PRINCIPLES OF EXECUTIVE COMPENSATION

The Compensation Committee uses the following Principles of Executive Compensation to assess Adtalem’s executive compensation program and to provide guidance to management on the Compensation Committee’s expectations for the overall executive compensation structure:

Principle Purpose

Stewardship/Sustainability

     
Reinforce Adtalem’s purpose and long-term vision
Motivate and reward sustained long-term growth in shareholder value
Uphold long-term interests of all stakeholders (including students, employees, employers, shareholders and taxpayers)
Focus on sustaining and enhancing the quality and outcomes of education programs
Promote continued differentiation and expansion of Adtalem’s programs

Accountability

Ensure financial interests and rewards are tied to executive’s area of impact and responsibility (division, geography and function)
Require timing of performance periods to match timing of employee’s impact and responsibility (short-, medium- and long-term)
Emphasize quality, service and academic and career results
Articulate well defined metrics, goals, ranges, limits and results
Motivate and reward achievement of strategic goals, with appropriate consequences for failure
Comply with all legislation and regulation

Alignment

Promote commonality of interest with all stakeholders (including students, employees, employers, owners and taxpayers)
Reflect and reinforce Adtalem’s values and culture
Promote commonality of interests across business units, geography and up, down and across chain of command
Provide a balance between short- and long-term performance

Engagement

Attract and retain high quality talent and provide for organizational succession
Provide market competitive total compensation and benefits packages at all levels
Promote consistent employee development at all levels
Motivate urgency, creativity and dedication to Adtalem’s purpose
Clearly communicate the link between pay and performance

Transparency

Clear communication of compensation structure, rationale and outcomes to all employees and shareholders
Simple and understandable structure that is easy for internal and external parties to understand
Reasonable and logical relationship between pay at different levels
Based on systematic goals that are objective and clear, with appropriate level of discretion

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2019 EXECUTIVE COMPENSATION FRAMEWORK

Adtalem’s fiscal year 2019 incentive compensation program for executives was designed to link compensation performance with the full spectrum of our business goals, some of which are short-term, while others take several years or more to achieve:

COMPENSATION SNAPSHOT

      Objective Time
Horizon
Performance
Measures
Additional Explanation
Salary
(cash)
Reflect experience, market competition and scope of responsibilities Assessment of performance in prior year
 
 

Annual
Incentive
(cash)

MIP

Short-term operational business priorities

1 year

Revenue*
Earnings Per Share
Individual Goals
 NEW Starting in 2019, individual goals for institutional leaders are 100% focused on performance measures relating to the institutions they lead.
 
 

Long Term
Incentive
(equity)

Stock Options

Reward stock price growth and retain key talent

4 year ratable

Stock price growth

No grant to CEO in 2019
Represents 40% of NEO LTI

RSUs

Align interests of management and shareholders, and retain key talent

No grant to CEO in 2019
Represents 20-30% of NEO LTI

ROIC PSUs

Reward achievement of multi-year financial goals, align interests of management and shareholders, and retain key talent

3 year

ROIC
Stock price growth
No grant to CEO in 2019
Represents 30-40% of NEO LTI
 NEW FCF
PSUs
FCF per share
Stock Price Growth

*

A portion of the MIP payout for executive leadership of business segments and business units is also based on the revenue and operating income at such executive’s business segment or business unit.

ANALYSIS OF 2019 EXECUTIVE COMPENSATION

Annual Base Salary

Annual base salaries for NEOs are intended to reflect the scope of their responsibilities, the experience they bring to their roles, and the current market compensation for similar roles outside Adtalem. Once established, base salaries are reviewed annually to reflect the executive’s prior performance and respond to changes in market conditions. The table below lists the seven criteria the Compensation Committee uses to determine changes to salary from one year to the next.

Base salary adjustments are made based on seven criteria:
1. Adtalem’s overall financial performance compared to operating plan
2. Executive’s performance against established individual goals and objectives
3. Executive’s effectiveness in instilling a culture of academic quality, teamwork, student service and integrity
4. Executive’s expected future contributions
5. Comparison to peer group and other available market data
6. Merit increase parameters set for all colleagues in the organization
7. Discretion based on interaction and observation through the year

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Fiscal Year 2019 Base Salary Decisions

In August 2018, the Board, based on the Compensation Committee’s recommendation in consultation with FW Cook increased the base salary of Ms. Wardell, Adtalem’s President and CEO, by 8% for fiscal year 2019, bringing her salary to $1,100,000, effective September 2018 for fiscal year 2019. The increase was intended to ensure Ms. Wardell’s compensation was competitive with compensation practices at Adtalem’s peer companies and to reward her strong performance. The Compensation Committee wanted to recognize the CEO’s successful recruitment of several key executives who were seen as pivotal for the transformation and growth of the organization; the successful negotiation of agreements to transition DeVry University and Carrington College to new owners; and her success in leading Adtalem through the recovery from the fall 2017 hurricanes that devastated the islands of Dominica and St. Maarten. Of particular note, the Compensation Committee wanted to recognize the CEO’s pace, energy and drive in helping Adtalem navigate through a tumultuous period and set the stage for transformation and growth.

Based upon relevant, available market data and Ms. Wardell’s assessment of each NEO’s performance for the prior year, Ms. Wardell recommended to the Compensation Committee the annual base salary of each of the other NEOs at the outset of fiscal year 2019. Ms. Wardell’s recommendations regarding the NEOs were made in consultation with the Senior Vice President of Human Resources and the Chief Financial Officer. These recommendations were based upon their experience with and analysis of the market at that time, their monitoring of the compensation levels at other organizations in Adtalem’s market and Ms. Wardell’s assessment of each NEO’s performance for the prior year. Our CEO does not participate in discussions regarding her own compensation.

      FY2018       FY2019       Percent
Change
Lisa W. Wardell $ 1,015,000 $ 1,100,000 8%
Patrick J. Unzicker $ 512,500 $ 525,313 2.5%
Stephen W. Beard(1) $ 475,000 $ 546,250 13%
Kathy Boden Holland(2) $ 575,000 $ 575,000 0%
Mehul R. Patel $ 430,000 $ 447,200 4%

(1) Mr. Beard received a salary increase of 15% at the beginning of fiscal year 2019 as noted above; Mr. Beard was later promoted to Chief Operating Officer, in addition to continuing to serve as General Counsel and Corporate Secretary, and received a promotional increase in salary to $587,219 on January 9, 2019.
(2) Ms. Boden Holland was hired on May 9, 2018 and did not receive a salary increase for fiscal year 2019.

Annual Cash Incentive Compensation

The annual cash incentive, delivered through the MIP, provides NEOs with the opportunity to earn rewards based on the achievement of organizational and institutional performance, as well as, individual performance.

How The MIP Works

MIP target award opportunities for each NEO are set by the Compensation Committee based on factors including external surveys of practices for positions with similar levels of responsibility. These targets, which are expressed as a percentage of base salary, are then reviewed at the beginning of each fiscal year based on updated market compensation data.

The MIP provided Adtalem’s CEO with a target award opportunity of 105% of base salary and other NEOs with a target award opportunity of 70% of base salary. For fiscal year 2019, the target award opportunity for Mr. Beard increased to 70% (from 60%). No other changes were made to the MIP target award opportunity as a percentage of base salary for the other NEOs.

Creating a Strong Link to Pay-for-Performance

We believe the MIP payouts made to our NEOs for fiscal year 2019 support our executive compensation objective of pay-for-performance by rewarding our NEOs to the extent they met or exceeded pre-established individual performance goals and financial performance goals related to the institutions they oversee.


Actual awards can be higher or lower than the target opportunity based on the results for each performance measure. Performance below the threshold for the goal will result in no payment for that performance goal. Performance at or above threshold can earn an award ranging from 50% to 200% of the target amount. The maximum amount of 200% of target rewards exceptional performance compared to expectations, over-delivery of strategic initiatives, and/or achievement of initiatives not contemplated at the time goals were set.

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Actual earned awards are determined after the fiscal year has ended and audited financial results have been substantially completed (i.e., in the beginning of the next fiscal year). Thus, MIP awards for fiscal year 2019 were determined and paid in the early part of fiscal year 2020, after the results for the fiscal year ended June 30, 2019 were confirmed. The payout is based on specific Adtalem earnings per share, Adtalem revenue, institution operating income and institution revenue measures set by the Compensation Committee prior to the start of the year in which the performance is measured, in addition to individual performance.

In measuring performance, the Compensation Committee may adjust results for certain unusual, non-recurring or other items to ensure the MIP rewards true operational performance as it is perceived by investors and as consistently measured. Appendix A details the adjustments made in the last three fiscal years.

MIP Performance Measures

The Compensation Committee determined that Adtalem earnings per share and revenue, along with institution operating income and revenue, effectively balance top line revenue growth and bottom line profitability and results and are the most appropriate short-term metrics to support our business objectives.


In instances where an institution has not demonstrated performance commensurate with the potential award, the Compensation Committee may exercise negative discretion and reduce MIP payouts for individuals with oversight over the applicable institution. In the case of acquisitions, the Compensation Committee does not include revenue, and corresponding earnings per share or operating income, from acquisitions in their evaluation of achievement against targets unless such expected revenue, and corresponding earnings per share or operating income, had been factored into the performance target.

In addition to the actual results achieved, the Compensation Committee also considers individual performance over the course of that fiscal year for each NEO. Individual performance goals reflect functional results and/or institution performance appropriate for the executive, as well as academic outcomes, organizational strength and the advancement of Adtalem’s core values. Individual performance goals are designed to drive initiatives that support Adtalem’s strategy and further align leadership with Adtalem’s student-focused purpose.

The relative percentages assigned to the measures for each NEO for fiscal year 2019 are as follows:

      Organizational, Institution and Individual Performance
Measure Allocation
Adtalem
Earnings
Per Share
      Adtalem
Revenue
      Institution
Operating
Income
      Institution
Revenue
      Individual
Performance
Lisa W. Wardell 45% 40% 15%
Patrick J. Unzicker 40% 30% 30%
Stephen W. Beard 40% 30% 30%
Kathy Boden Holland 20% 10% 25% 15% 30%
Mehul R. Patel 20% 10% 25% 15% 30%

2019 Performance Goals

Financial goals set for our MIP participants are derived from Adtalem’s fiscal year operating plans, which are recommended by Adtalem’s executive management team and approved by the Board at the beginning of each fiscal year. For fiscal year 2019, these plans translated to financial performance goals of $2.67 of earnings per share and revenue of $1,285.1 million.

The table below shows the threshold, target, and maximum goals for earnings per share and revenue under the fiscal 2019 MIP, the performance achieved, and the resulting payout.

Plan     Actual Results
(excluding
special items)
(1)
Performance
Relative to Plan
Metric Threshold Target Maximum Payout %
Adtalem Revenue      $ 1,156.59      $ 1,285.10      $ 1,542.12                 $ 1,237.93 96.30%      81.60%
Adtalem Earnings Per Share $ 2.14 $ 2.67 $ 3.74 $ 2.84     106.40% 115.90%

(1) See Appendix A for a reconciliation to reported results.

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Performance below the threshold level results in no payout for that measure. Payout for performance between levels is interpolated, and payout is capped at 200% of target for each measure.

The fiscal year 2019 revenue target under the MIP was 4.4% higher than fiscal year 2018 actual results of $1,239.7 million (as restated from $1,715.5 million reported in last year’s proxy to reflect the completed divestitures of DeVry University and Carrington College) which reflected expected growth in the Medical and Healthcare and Financial Services segments, offset by a decline in the Business and Law segment. The 2019 earnings per share target goal under MIP was set lower than 2018 actual results, due to expected lower operating margins driven by costs reallocated to continuing operations that were previously allocated to DeVry University and Carrington College and expected higher interest and taxes.

The focus in fiscal year 2019 was to align Adtalem’s portfolio to be positioned for growth as a leading workforce solutions provider and to complete the divestitures of DeVry University and Carrington College. Adtalem does not disclose the particular institutional or segment performance goals utilized in its MIP due to the confidential nature of such information and the competitive harm that could result from its disclosure. The Compensation Committee considers the organization’s performance goals to represent the best estimate of what the organization could deliver if management, individually and collectively, were to materially satisfy its goals and objectives for the year. All goals are designed to be aggressive yet achievable, with the expectation that it would take extraordinary performance on the part of management to exceed them to the extent necessary to yield maximum incentive payouts under the MIP.

The Compensation Committee approves individual performance goals and objectives for the CEO at the beginning of each fiscal year. The CEO also works collaboratively with the other NEOs in developing their respective individual performance goals and in assigning weightings to such goals to place additional emphasis on tactical priorities. Individual performance goals are factors in determining base salary adjustments, annual cash incentive compensation and future awards of long-term incentive compensation. Individual performance goals intentionally include elements that can be rated objectively as well as, to a lesser extent, elements that are of a subjective nature. Individual performance goals are used to drive stretch performance across a broad range of areas considered critical to our strategy and purpose. This mix of objective and subjective criteria allows the evaluator — the independent members of the Board in the case of the CEO, and the CEO with input and approval from the Compensation Committee in the case of the other NEOs — to assess the individual’s performance against objective criteria, while utilizing his or her discretion to make adjustments based on the individual’s perceived contributions and other subjective criteria.

A summary of the primary individual performance goals and objectives established for each of our NEOs follows:

Lisa W. Wardell
(Chairman of the Board,
President and CEO)
     
Financial and operating performance
Recruitment and development of a high performing team
Academic outcomes and student success
Strategic growth initiatives
Patrick J. Unzicker
(Former SVP, CFO
and Treasurer)
Board relationships and professional development
Financial and operating performance
Recruitment and development of a high performing team
Strategy, capital allocation, and portfolio management
Stephen W. Beard
(COO, General Counsel and
Corporate Secretary)
Recruitment and development of a high performing team
Financial and operating performance
High performing non-legal functions
Professional development
Kathy Boden Holland
(Group President, Medical
& Healthcare Education)
Adtalem and vertical strategy
Academic outcomes and student success
Financial and operating performance
Recruitment and development of a high performing team
Mehul R. Patel
(Group President,
Financial Services)
Execute organic growth strategy
Expand presence through M&A and partnership efforts
Continue to implement and optimize operating model
Professional development

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Fiscal Year 2019 MIP Decisions

Based on an evaluation of organizational performance relative to MIP measures set at the beginning of fiscal year 2019, the final MIP awards were partially based on the following financial results, as adjusted for special items described in Appendix A:

Adtalem achieved 106.4% of the target fiscal year 2019 earnings per share performance goal of $2.67 per share; and
Adtalem achieved 96.3% of the target fiscal year 2019 performance goal of $1,285.1 million in revenue.

In addition, a portion of the MIP awards for Mr. Patel and Ms. Boden Holland were based on results from the performance of the institutions they oversee. Final MIP award calculations also took into consideration evaluations of individual performance for each NEO during the course of the fiscal year. Based on all of this applicable factors, the Compensation Committee approved the following MIP awards to the NEOs:

       Annual
Target as a
Percentage of
Base Salary
      FY2019
Target Award
Opportunity
      FY2019
Actual Award
      Percent of Target
Paid Based on
FY2019 Performance
Lisa W. Wardell 105%     $ 1,155,000      $ 1,135,605 98%
Patrick J. Unzicker 70% $ 367,719 $ 370,808 101%
Stephen W. Beard(1) 70% $ 385,673 $ 388,913 101%
Kathy Boden Holland 70% $ 402,500 $ 405,226 101%
Mehul R. Patel 70% $ 313,040 $ 344,772 110%

(1) Target and actual payout for Mr. Beard is shown on a pro-rated basis based on his promotional date of January 9, 2019.

Set forth below, as an example of the MIP calculation for NEOs, is a summary of the calculation of the fiscal year 2019 award for Ms. Wardell:

Target Award
Opportunity
(Weighting)
      Target      
Performance
Achieved
(Excluding
Special Items)
     Performance
Relative
to Target
     Payout
as a % of
Target Award
Opportunity
based on
Performance
Relative
to Target
     Target Award
Opportunity
($ Amount)
     Actual
Award
Adtalem Earnings 45% $ 2.67         $ 2.84 106.4% 115.9%      $ 519,750 $ 602,482
Per Share
Adtalem Revenue 40% $ 1,285.1M $ 1,237.9M 96.3% 81.6% $ 462,000 $ 377,198
Individual Performance 15%         90% $ 173,250 $ 155,925
TOTAL           98% $ 1,155,000 $ 1,135,605

In reviewing the CEO’s performance, the Compensation Committee evaluated Ms. Wardell’s performance against each of her individual goals and determined a 90% payout for the individual performance component of her MIP award (which represents 15% of the total MIP opportunity) was appropriate. Specifically, the Compensation Committee believed Ms. Wardell was successful in developing a new enterprise strategy process; securing accreditor approval for the DeVry University and Carrington College divestitures and successfully transitioning both DeVry University and Carrington College to new owners; relocating RUSM to a new campus on the island of Barbados; driving a focus on academic quality that resulted in achievement of targets for first-time pass rates for Chamberlain University nursing students on the National Council Licensure Examination students and first-time pass rates for RUSM and AUC students on the U.S. Medical Licensing Examination tests; successfully completing the OCL acquisition; and continuing to drive greater pace, agility and accountability through the culture of the organization. The Compensation Committee identified Ms. Wardell’s individual goal relating to setting and achieving external targets for growth as not fully attained during fiscal year 2019.

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The Compensation Committee evaluated the other NEOs against their individual goals taking into consideration the following performance highlights:

Patrick J. Unzicker Delivered the divestitures of DeVry University and Carrington College and supported the achievement of operating income performance through strong spending controls.
Stephen W. Beard Delivered the divestitures of DeVry University and Carrington College, successfully restructured and rebuilt the Legal and M&A teams, significantly improved several non-Legal functions, successfully acquired OCL, and developed the new enterprise strategy process
Kathy Boden Holland       Significantly improved academic outcome targets, built a strong team at the vertical level, made progress on the HBCU articulation agreements, identified several med/vet expansion opportunities, exceeded operating income targets through strong spending controls, and successfully on-boarded a new leader for Chamberlain University of Health Sciences.
Mehul R. Patel Delivered organic growth in key businesses, turned around Becker Professional Education, developed and expanded key partnerships and built strong leadership teams at the business unit level.

Long-Term Incentive Compensation

Long-term incentive compensation at Adtalem consists of stock options, RSUs, and PSUs. The Compensation Committee targets the value of long-term incentive compensation for NEOs to represent a substantial percentage of their total compensation opportunity. These incentives are intended to serve three complementary objectives of our compensation program:

Promote long-term retention of key executives who are critical to our operations,
Reward executives for the delivery of long-term business results, and
Align executives’ long-term interests with those of our shareholders.

How The Long-Term Incentive Plan Works

The Compensation Committee granted equity awards to each of the NEOs other than the CEO in August 2018 based on both retrospective and prospective considerations and organizational and individual considerations. The Compensation Committee took into account the same seven criteria described in the “Annual Base Salary” section above in determining the amount of these awards. Awards were delivered through a mix of stock-based vehicles to provide a reasonable balance to the equity portfolio:

Tier         Name         Stock Options         RSUs         PSUs
CFO and Group Presidents Patrick J. Unzicker 40% 20% 20% ROIC/20% FCF
Kathy Boden Holland per share
Mehul R. Patel
Home Office Functional Leaders Stephen W. Beard 40% 30% 15% ROIC/15% FCF
per share

Stock Options: Stock options reward long-term value creation through increases in stock price. To promote retention, stock option grants vest in equal installments over a four-year period beginning on the first anniversary of the grant date, subject to the NEO’s continuous service at Adtalem. The Compensation Committee granted incentive stock options (“ISOs”) with a value of up to the $100,000 Internal Revenue Service (“IRS”) limitation applicable to each one-year vesting period. To the extent this limitation was met for any NEO, the remaining portion of the stock option award was issued in the form of non-qualified stock options. The Compensation Committee recognizes that Adtalem may not receive a tax deduction for ISOs, but weighed this consideration against the tax benefit ISOs provide to employees and the additional enhancement to Adtalem’s ability to attract and retain executives. The Compensation Committee determined it was in Adtalem’s best interest to continue utilizing ISOs in the manner described.


Focusing on Long-Term Results

The Compensation Committee believes that long-term equity compensation is an important retention tool and, therefore, chose to use a four-year ratable vesting schedule for grants of stock options and RSUs and a three-year cliff vesting schedule for PSUs, to encourage longer-term focus and retention.

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Restricted Stock Units (RSUs): RSUs align the interests of management with those of shareholders and reward long-term value creation. To promote retention, RSUs vest in equal installments over a four-year period beginning on the first anniversary of the grant date, subject to the NEO’s continuous service at Adtalem.

Performance Share Units (PSUs): PSUs are designed to reward strong performance based on two financial indicators, ROIC and FCF per share, to focus executives on profitability and effective capital allocation. In fiscal year 2019, PSUs granted to Mr. Unzicker, Mr. Beard, Ms. Boden Holland, and Mr. Patel were split equally among these two components. These PSUs vest after three years based on ROIC and FCF per share performance, respectively, as compared to the goals outlined in the following tables:

  ROIC Performance Goals (FY19-21)
Performance Period       Threshold
(50% Payout)
      Target
(100% Payout)
      Maximum
(150% Payout)
Fiscal Year 2019 7.50% 10.00% 12.50%
Fiscal Year 2020 8.50% 11.00% 13.50%
Fiscal Year 2021 9.50% 12.00% 14.50%
3-Year Goal 8.50% 11.00% 13.50%

  FCF Per Share Performance Goals (FY19-21)
Performance Period       Threshold
(50% Payout)
      Target
(100% Payout)
      Maximum
(150% Payout)
Fiscal Year 2019             $ 1.61               $ 2.30               $ 2.99
Fiscal Year 2020 $ 2.13 $ 3.04 $ 3.95
Fiscal Year 2021 $ 3.05 $ 4.36 $ 5.66
3-Year Goal $ 2.26 $ 3.23 $ 4.20

At the start of the performance period, annual ROIC and FCF per share goals are set for each fiscal year, and three-year average ROIC goals are set for the full performance period. Similar to goals for the MIP, these goals are based on the multi-year strategic plan. In some cases, stretch goals are built in to help bridge to out-year targets to ensure we are appropriately working towards our long-term strategic plan. In addition, in some cases, we conduct a “nearest neighbor” analysis, examining our closest competitors to ensure we are positioning ourselves appropriately in the market compared to peers in the industry.

Vesting of the 2019 PSUs are determined as the greater of the sum of the individual payout for each of the three years in the cycle, or the payout based on the three-year average ROIC performance. Vesting for performance between threshold and target and between target and maximum is determined by straight-line interpolation.

The 2019 PSUs grants were made prior our receipt of shareholder feedback regarding the design feature calculating payouts based on the greater of the sum of individual annual performance or performance averaged over three years. In response to shareholder feedback, beginning with grants made in fiscal year 2020, PSU vesting will be based only on performance averaged over three-years.

Fiscal Year 2019 Long-Term Incentive Decisions

For fiscal year 2019, NEOs received the following stock-based awards:

      Stock
Options
      RSUs       PSUs       Total Value of
2019 Long-Term
Incentive Grant
Lisa W. Wardell  – as reported $   $          $
– LTI normalized(1) $ 2,457,657   $ 2,249,943 $ 4,707,600
Patrick J. Unzicker $ 303,161 $ 139,793 $ 279,586 $ 722,540
Stephen W. Beard $ 324,666 $ 225,140 $ 224,649 $ 774,456
Kathy Boden Holland $ 324,666 $ 150,093 $ 300,186 $ 774,945
Mehul R. Patel $ 251,236 $ 115,758 $ 231,516 $ 598,510

(1) “LTI normalized” reflects the annualized value of LTI for the CEO provided in fiscal year 2018.

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CEO Long-Term Incentive Compensation

The CEO’s equity grant for fiscal year 2018 (granted in August 2017) was a front-loaded, two-year award valued at approximately $9.4 million. This 2018 grant represented Ms. Wardell’s long-term incentive awards for both fiscal year 2018 and fiscal year 2019. Therefore, Ms. Wardell did not receive any form of long-term incentive award in fiscal year 2019. This grant was determined by the Board and Compensation Committee to drive Ms. Wardell’s focus on critically important academic and financial metrics over the next several years, given the divestitures of DeVry University and Carrington College and the transformative nature of the corporate changes.

Impact of 2018 grant on total compensation for fiscal years 2018 and 2019:

Lisa Wardell Compensation       Salary       Stock
Awards
      Option
Awards
      Non-Equity
Incentive
Compensation
      All Other
Compensation
      Total
2018 – LTI as reported $ 1,000,529 $ 4,499,886 $ 4,915,314        $ 1,190,869           $ 115,611 $ 11,722,209
2018 – LTI normalized(1) $ 1,000,529 $ 2,249,943 $ 2,457,657 $ 1,190,869 $ 115,611 $ 7,014,609
2019 – No LTI grant $ 1,083,654 $ $ $ 1,135,605 $ 153,935 $ 2,373,194
2019 – LTI normalized(1) $ 1,083,654 $ 2,249,943 $ 2,457,657 $ 1,135,605 $ 153,935 $ 7,080,794

(1) “LTI normalized” means the fiscal year 2018 stock award and option award values granted in fiscal year 2018 divided by two to annualize the LTI value across fiscal year 2018 and fiscal year 2019.

On a normalized basis, for fiscal year 2018 and fiscal year 2019, the amount of Ms. Wardell’s total compensation was consistent with the external market and our goal to incentivize Ms. Wardell to deliver strategic corporate results.

The Compensation Committee believed the front-loaded equity award strengthened alignment between the CEO’s earned compensation and the shareholder value that would be created if she delivered on the transformation, particularly since several of the key strategic initiatives needed to happen in fiscal year 2018. To increase the focus on long-term growth, the 2018 grant deviated from our standard annual equity mix by not granting any time-vesting RSUs and instead granting 50% PSUs and 50% stock options. Additionally, while our typical annual LTI plan includes stock options vesting equally over four years, vesting of the 2018 stock options was back-end loaded, with 50% vesting on each of the third and fourth anniversaries of the grant date.

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Review of Performance Share Payouts from Fiscal Year 2016 Awards

Performance share awards granted in August 2016 to Ms. Wardell and Mr. Unzicker, which included both financial and mission-based PSUs, vested in 2019. The financial measure was ROIC, and the academic measures were based on achieving various academic milestones. The tables below show the performance measures and targets established for the August 2016 PSUs, the performance achieved, and the resulting payout.

Performance Goals Payout
(as a %
of Target)
Goal       Weighting       Threshold
(50% Payout)
      Target
(100% Payout)
      Maximum
(150% Payout)
     
Financial-Based PSUs
ROIC     100%    

117.7%

Academic-Based PSUs
DeVry University - Undergraduate
Session to Session Persistence(1)
20%

150.0%

Chamberlain - BSN NCLEX
1st Time Pass Rate(2)
25%

26.3%

RUSM & AUC - USMLE 1st Time
Pass Rate (Step1)(3)
10%

138.5%

RUSM & AUC - USMLE 1st Time
Pass Rate (Step2 - CK)(3)
10%

91.3%

RUSM & AUC - USMLE 1st Time
Pass Rate (Step2 - CS)(3)
10%

107.4%

Carrington - Retention(1) 10%

119.7%

Adtalem Brasil - General Course
Index (“IGC”)
15%

142.2%

Total Payout as a % of Target (Academic PSUs):

103.6%


(1) For the above three-year calculation, DeVry University and Carrington performance was deemed to be met at the target level for fiscal year 2019 due to the timing of the divestitures.
(2) Chamberlain payout was determined based on fiscal year 2019 performance that exceeded the threshold target.
(3) Medical school goals shown reflect the following for the three-year performance period: threshold is equal to the international medical school pass rate norm; maximum is equal to the US medical school pass rate norm; and target is equal to the midpoint between threshold and maximum.

COMPENSATION SETTING PROCESS

Role of the Compensation Committee

The Compensation Committee determines the appropriate level of compensation for the CEO and other NEOs. The Compensation Committee reviews and approves all components of annual compensation (base salary, annual cash incentive and long-term incentive) to ensure they align with the principles of Adtalem’s compensation program. In addition, the Compensation Committee meets periodically to review the design of the overall compensation program, approve performance targets and review management performance, and it assists in establishing CEO goals and objectives.

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Each year, the Compensation Committee recommends CEO compensation to the Board, taking into consideration the CEO’s performance evaluation and advice from the independent executive compensation consulting firm engaged by the Compensation Committee. In determining the CEO’s long-term incentive compensation, the Compensation Committee considers Adtalem’s absolute and relative performance, incentive awards to CEOs at comparable companies, past awards and the CEO’s expected future contributions, as well as other factors it deems appropriate.

The Compensation Committee approves base salary, annual cash incentive and long-term incentive compensation for Adtalem’s NEOs, except for the CEO whose compensation package is recommended by the Compensation Committee and approved by the independent members of the Board during executive session.

Role of the Executive Officers and Management

The CEO, in consultation with the Senior Vice President, Human Resources and the Chief Financial Officer, provides the Compensation Committee with compensation recommendations for the other NEOs, including recommendations for annual base salary increases, annual cash incentive awards, and long-term incentive awards. Our Chief Financial Officer does not participate in discussions regarding his compensation. These recommendations are based on market-competitive compensation data and the CEO’s assessment of each NEO’s performance in the prior year. While these recommendations are given significant weight, the Compensation Committee retains full discretion when determining compensation.

The Compensation Committee reviews and approves, with any modifications it deems appropriate, base salary, annual cash incentive awards and long-term incentive awards for Adtalem’s NEOs. The compensation package for the CEO is recommended by the Compensation Committee and approved by the independent members of the Board during executive session.

Role of the Compensation Consultant

The Compensation Committee retains ultimate responsibility for compensation-related decisions. To add objectivity to the review process and inform the Compensation Committee of market trends and practices, the Compensation Committee engages the services of an independent executive compensation advisory firm. For fiscal year 2019, the Compensation Committee engaged FW Cook as its independent executive compensation consultant.

FW Cook analyzed Adtalem’s executive compensation structure and plan designs and assessed whether the executive compensation program is competitive and supports the Compensation Committee’s goal to align the interests of executive officers with those of shareholders, students and other stakeholders.

For fiscal year 2019, FW Cook’s primary areas of assistance were:

Gathering information related to current trends and practices in executive compensation, including peer group and broader market survey data;
Reviewing, analyzing and providing recommendations for Adtalem’s list of peer group companies;
Reviewing information developed by management for the Compensation Committee and providing input on such information to the Compensation Committee;
Attending and participating in all Compensation Committee meetings and most non-employee director executive sessions, as well as briefings with the Compensation Committee chair and management prior to meetings; and
Reviewing with management and the Compensation Committee the materials to be used in Adtalem’s Proxy Statement.

In the second half of fiscal year 2018, FW Cook also conducted a review of our non-employee director compensation program and recommended an annual retainer rate that was applicable throughout fiscal year 2019. Refer to “Director Compensation” beginning on page 29 for more detail.

The Compensation Committee has the sole authority to approve the independent compensation consultant’s fees and terms of the engagement. Thus, the Compensation Committee annually reviews its relationship with, and assesses the independence of, FW Cook to ensure executive compensation consulting independence. The process includes a review of the services FW Cook provides, the quality of those services, and fees associated with the services during the fiscal year. The Compensation Committee has assessed the independence of FW Cook pursuant to applicable SEC rules and NYSE listing standards and has concluded that FW Cook’s work for the Compensation Committee does not raise any conflict of interest.

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Executive Compensation Peer Group

To ensure Adtalem continues to provide total executive compensation that is fair and competitively positioned in the marketplace, the Compensation Committee reviews the pay level, mix and practices of peer group companies. The Compensation Committee does not target any specific percentile levels in establishing compensation levels and opportunities.

While including all large publicly-held, private sector higher education schools, Adtalem’s peer group also includes a broader group of organizations in order to provide more comprehensive compensation data. Adtalem’s expanded peer group includes publicly-held organizations that provide services over an extended period of time. In consideration of Adtalem’s significant focus on healthcare education, which requires attracting and retaining seasoned healthcare professionals and executives, the peer group also includes healthcare services companies. Revenue of most of the peer group organizations is generally between one-half and two times Adtalem’s revenue.

Based on the recommendation of FW Cook, in February 2019, the Compensation Committee approved changes to the peer group. The Compensation Committee removed the following companies from the prior year analysis due to their disparate size and/or lack of customer or human resources market alignment:

Select Medical Holdings Corporation
Encompass Health
H&R Block
Gartner

Additionally, the Compensation Committee added the following companies to the prior year analysis, due to their stronger market alignment for executive talent and business focus:

Strategic Education
Chemed
Tivity
Chegg

Adtalem’s resulting peer group is composed of:

Amedisys Cross Country Healthcare Laureate Education
AMN Healthcare Services Ensign Group MEDNAX, Inc.
Bright Horizons Family Solutions LLC Graham Holdings Company Service Corp. International
Brookdale Senior Living Inc. Grand Canyon Education, Inc. Strategic Education
Career Education Corp. Houghton Mifflin Harcourt Tivity Health
Chegg John Wiley & Sons Weight Watchers
Chemed K12

ADDITIONAL EXECUTIVE COMPENSATION PRACTICES

Deferred Compensation

Adtalem maintains the Nonqualified Deferred Compensation Plan that allows certain employees, including the NEOs, to defer up to 50% of salary and 100% of the MIP compensation until termination of service or certain other specified dates. Adtalem credits matching contributions to participants’ accounts to the extent they have elected to defer the maximum contributions under Adtalem’s Success Sharing Retirement Plan, which is a 401(k) plan, and their matching contributions are limited by the Internal Revenue Code of 1986, as amended (the “Code”) provisions.

The Nonqualified Deferred Compensation Plan enables the NEOs and other eligible employees with a certain level of annual compensation to save a portion of their income for retirement on a scale consistent with other employees not subject to IRS limits.

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The Nonqualified Deferred Compensation Plan is not 100% funded by Adtalem and participants have an unsecured contractual commitment by Adtalem to pay the amounts due under such plan.

The value of deferred compensation amounts is quantified each year and this program is periodically reviewed for its competitiveness.

Other Benefits

NEOs are eligible to participate in a number of broad-based benefit programs, which are the same ones offered to most employees at Adtalem, including health, disability and life insurance programs.

We do not offer a defined benefit pension plan, and, therefore, our Success Sharing Retirement Plan and the Nonqualified Deferred Compensation Plan are the only retirement savings vehicles for executives.

In general, we do not provide benefits or perquisites to our NEOs that are not available to other employees, with the exception of personal financial planning services.

Benefits and perquisites make up the smallest portion of each NEO’s total compensation package. The nature and quantity of perquisites provided by Adtalem did not change materially in fiscal year 2018 versus 2019, consistent with our philosophy that benefits and perquisites should not represent a meaningful component of our compensation program. The Compensation Committee periodically reviews the benefit and perquisite program to determine if adjustments are appropriate.

The “All Other Compensation” column of the 2019 Summary Compensation Table shows the amounts of benefit and perquisite compensation we provided for fiscal years 2017, 2018 and 2019 to each of the NEOs.

Employment Agreements

Adtalem has entered into employment agreements with each employed NEO that provide for:

Initial annual base salary, subject to annual increases (no decreases except in the case of an across-the-board reduction affecting all executives equally);
Annual cash incentive opportunity under the MIP, targeted at a percentage of base salary;
Benefits and perquisites generally available to senior management;
Reimbursement of expenses consistent with Adtalem’s policy in effect at the time; and
Severance benefits that will be provided upon certain terminations of employment, as further described on pages 65-67 under the caption “2019 Potential Payments Upon Termination or Change-in-Control.”

Employment Agreements

Employment agreements provide NEOs with a guaranteed level of financial protection upon loss of employment. Adtalem believes that providing for such income continuity results in greater management stability and lower unwanted management turnover.

The Compensation Committee believes that agreements provide:

Security and incentives that help retain and attract top executives;
Greater ability for Adtalem to retain key executives following an extraordinary corporate transaction; and
Benefits to Adtalem including non-competition and non-solicitation covenants by NEOs.

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Change-in-Control

Adtalem provides benefits to its NEOs upon termination of employment from Adtalem in specific circumstances. These benefits are in addition to the benefits to which these NEOs would be generally entitled upon a termination of employment (e.g., vested retirement benefits accrued as of the date of termination, stock-based awards that are vested as of the date of termination and the right to elect continued health coverage pursuant to COBRA). In addition, as of November 8, 2017, when our shareholders approved the Fourth Amended and Restated Incentive Plan of 2013 (the “2013 Incentive Plan”), Adtalem’s equity compensation plans, and the award agreements used to implement them, provide for accelerated vesting of outstanding equity awards in the event of a change-in-control of Adtalem, only in the event (a) Adtalem (or its successor) ceases to be publicly traded, (b) the successor to Adtalem fails to assume outstanding Awards or to issue new awards in replacement of outstanding Awards, or (c) if the participant is terminated without cause or resigns for good reason within two years following the change-in-control. Awards issued prior to November 8, 2017 provide for accelerated vesting in the event of a change-in-control.

See “2019 Potential Payments Upon Termination or Change-in-Control” on pages 65-67 for a detailed description of potential payments and benefits to the NEOs under Adtalem’s compensation plans and arrangements upon termination of employment or a change of control of Adtalem.

OTHER EXECUTIVE COMPENSATION CONSIDERATIONS AND POLICIES

Stock Ownership Guidelines

Stock ownership guidelines have been in place for our directors and executive officers since 2010 and are intended to align their interests with our shareholders by requiring them to be subject to the same long-term stock price volatility our shareholders experience. Each of our non-employee Board members, except for Mr. Malafronte, are expected to maintain ownership of Adtalem Common Stock valued at or equal to three times their annual retainer. Mr. Malafronte, who was appointed to the Board pursuant to a Support Agreement between Adtalem and a shareholder, IVA, and who has declined all compensation for his service, is not subject to the ownership guidelines.

In February 2019, our Board increased the required ownership value for certain executive officers, including certain of our NEOs, to better reflect market practice and the scope of their roles as described in the table below:

Linking Compensation to Stock Performance

Stock ownership guidelines tie the compensation of the NEOs to our stock performance, since the increase or decrease in our stock price impacts their personal holdings. Currently, all NEOs and directors who are no longer subject to a phase-in period have met the minimum ownership requirements.



Position NEOs Number of Shares
Equivalent to:
Change:
CEO         Lisa W. Wardell         5 times base salary         No change
CFO Patrick J. Unzicker 3 times base salary No change
COO Stephen W. Beard 3 times base salary Increased from 2 times
Key operational leaders Mehul R. Patel
Kathy Boden Holland
2 times base salary No change
All other executive officers 1 ½ times base salary Increased from equal to

Our directors and executive officers have five years following their election, date of appointment or promotion to an executive officer position, as the case may be, to achieve their stock ownership level. Additionally, our executive officers have until the later of five years from their appointment or adoption of the increased guidelines to achieve the new stock ownership levels.

Shares that count toward satisfaction of the guidelines include Adtalem’s Common Stock directly and/or beneficially owned, Adtalem’s Common Stock held in Adtalem’s Success Retirement Plan, Adtalem’s Common Stock held in Adtalem’s Nonqualified Deferred Compensation Plan, and the after-tax value of unvested RSUs and PSUs and/or vested in-the-money options, provided that these make up no more than 50% of the ownership expectation.

Our stock ownership guidelines are deemed to continue to be met by an individual who has achieved the required ownership level but then falls below solely due to a decline in Adtalem’s Common Stock price. Absent exigent circumstances, executives who have not yet met the guidelines at the end of their five-year phase-in period are required to retain, until the guidelines are satisfied, 100% of the after-tax shares received from option exercises or the vesting of RSUs or PSUs.

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Incentive Compensation Recoupment Policy

Adtalem has adopted an incentive compensation recoupment policy that applies to all executive officers. The policy provides that, in addition to any other remedies available to Adtalem (but subject to applicable law), if the Board or any committee of the Board determines that it is appropriate, Adtalem may recover (in whole or in part) any incentive payment, commission, equity award or other incentive compensation received by an executive officer of Adtalem to the extent that such incentive payment, commission, equity award or other incentive compensation is or was paid on the basis of any financial results that are subsequently restated due to executive officer conduct that is determined by the independent directors to have been knowingly or intentionally, fraudulent or illegal.

Deductibility of Compensation

Adtalem analyzes the overall expense arising from aggregate executive compensation, as well as the accounting and tax treatment of such programs. Section 162(m) of the Code generally disallows a tax deduction to publicly traded companies for certain compensation in excess of $1 million per year paid to “covered employees.” Prior to the recent enactment of the Tax Cuts and Jobs Act, “covered employees” were defined as the CEO and the three other most highly compensated officers, other than the CFO, employed at year-end, and compensation that satisfied the Code’s requirements for performance-based compensation was not subject to the deduction limitation. However, the performance-based exception from the deduction limitation has now been repealed under the Tax Cuts and Jobs Act and the definition of “covered employees” has been expanded to include, among others, the CFO and certain former executive officers, effective for taxable years beginning after December 31, 2017, subject to certain transition relief.

From and after January 21, 2018, compensation awarded in excess of $1,000,000 to our NEOs will generally not be deductible. The Compensation Committee views the tax deductibility of executive compensation as one factor to be considered in the context of its overall compensation philosophy. The Compensation Committee reviews each material element of compensation on a continuing basis and believes that shareholder interests are best served by not restricting the Compensation Committee’s discretion and flexibility in crafting compensation programs, even though such programs may result in certain non-deductible compensation expenses. Accordingly, the Compensation Committee has approved and may in the future approve compensation arrangements for executive officers that are not fully deductible.

Compensation Risk Analysis

The Compensation Committee, with the assistance of its consultant, FW Cook, conducted an annual assessment of our compensation program to ensure it does not encourage unnecessary or excessive risk taking that could have an adverse effect on Adtalem.

The risk assessment covered all compensation programs, including those in which our top executives and NEOs participate.

Through this process, FW Cook and the Compensation Committee have concluded that Adtalem’s compensation programs do not encourage behaviors that could create material risk to the organization. More specifically, the Compensation Committee concluded that:

Adtalem’s compensation programs are well-designed to encourage behaviors aligned with the long-term interests of shareholders.
There is appropriate balance in the executive compensation program structure to mitigate compensation-related risk with fixed and variable pay, cash and equity, corporate and business unit goals, financial and non-financial goals, and formulas and discretion.
The Compensation Committee has approved policies to mitigate compensation risk, including stock ownership guidelines, insider-trading prohibitions, and clawbacks.
Additionally, the Compensation Committee exercises an appropriate level of independent oversight into compensation decisions and related risk.

Prohibition on Hedging and Pledging

Our insider trading policy prohibits employees and directors from engaging in any transaction that is designed to hedge or offset any decrease in the market value of equity securities issued by Adtalem. In addition, except as expressly approved by our general counsel, employees and directors may not hold Adtalem securities in a margin account or pledge Adtalem securities as collateral for a loan. None of our executive officers or directors have requested approval to hold Adtalem securities in a margin account or to pledge Adtalem securities.

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COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Board hereby furnishes the following report to the shareholders of Adtalem in accordance with rules adopted by the SEC. The Compensation Committee has reviewed and discussed the Compensation Discussion & Analysis of this Proxy Statement with Adtalem’s management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion & Analysis be included in this Proxy Statement.

This report is submitted on behalf of the members of the Compensation Committee:

Michael W. Malafronte, Chair
William W. Burke
Lyle Logan

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Executive Compensation Tables

2019 SUMMARY COMPENSATION TABLE

This table shows the compensation of each of our NEOs for fiscal years ended June 30, 2019, June 30, 2018 and June 30, 2017, respectively.

Name and
Principal Position
Year Salary
($)(1)
Bonus
($)(2)
Stock
Awards
($)(3)
Option
Awards
($)(4)
Non-Equity
Incentive Plan
Compensation
($)(5)
All Other
Compensation(6)
($)
Total
($)
Lisa W. Wardell
Chairman of the Board,
Chief Executive Officer
and President
      2019         1,083,654             (7)       (7)        1,135,605       153,935       2,373,194
2018   1,000,529 4,499,886 (7)  4,915,314 (7)  1,190,869 115,611 11,722,209
2017 929,423 2,684,087 1,741,417 1,000,485 41,668 6,397,080
Patrick J. Unzicker(8)
Former Senior Vice
President, Chief Financial
Officer and Treasurer

2019 522,849 419,379 303,161 370,808 51,545 1,667,742
2018 492,788 540,027 393,181 407,289 42,733 1,876,018
2017 410,000 298,338 193,389 294,483 31,419 1,227,629
Stephen W. Beard(9)
Chief Operating Officer,
General Counsel and
Corporate Secretary
2019 535,700 449,790 324,666 388,913 23,341 1,722,410
Kathy Boden Holland(10)
Group President,
Medical and Healthcare
2019 575,000 450,279 324,666 405,226 39,054 1,794,225
Mehul R. Patel
Group President,
Financial Services
2019 443,892 347,274 251,236 344,772 46,337 1,433,511
2018 337,385   250,000 529,816 215,827 13,490 1,346,518

(1) This column shows the salaries paid by Adtalem to its NEOs in fiscal years 2019, 2018 and 2017. The following NEOs have elected to defer a portion of their salaries under the Nonqualified Deferred Compensation Plan: Ms. Wardell ($32,510 for 2019, $30,016 for 2018 and $14,096 for 2017); Mr. Unzicker ($10,457 for 2019, $9,856 for 2018 and $8,200 for 2017); Ms. Boden Holland ($35,385 for 2019); and Mr. Patel ($13,317 for 2019 and $10,237 for 2018). Amounts shown are inclusive of these deferrals.
(2) This column includes the $250,000 signing bonus paid to Mr. Patel in fiscal year 2018.
(3) The amounts reported in the Stock Awards column represents the grant date fair value of awards of both PSUs and RSUs, which is an estimated value computed in accordance with FASB ASC Topic 718. The assumptions used for fiscal years 2019, 2018 and 2017 calculations can be found at Note 5: Stock-Based Compensation to our audited financial statements in Adtalem’s Annual Report on Form 10-K for the year ended June 30, 2019; Note 5: Stock-Based Compensation to our audited financial statements in Adtalem’s Annual Report on Form 10-K for the year ended June 30, 2018; and Note 6: Stock-Based Compensation to our audited financial statements in Adtalem’s Annual Report on Form 10-K for the year ended June 30, 2017, respectively. The grant date fair values of the PSUs are based on the probable outcome of the performance conditions to which the PSUs are subject, and the shares the recipient would receive under such outcome. The 2019 Grants of Plan-Based Awards shows the values of PSU awards assuming that the highest levels of the performance conditions are achieved.
(4) The amounts reported in the Options Awards column represents the grant date fair value, which is an estimated value computed in accordance with FASB ASC Topic 718. The assumptions used for fiscal years 2019, 2018 and 2017 calculations can be found at Note 5: Stock-Based Compensation to our audited financial statements in Adtalem’s Annual Report on Form 10-K for the year ended June 30, 2019; Note 5: Stock-Based Compensation to our audited financial statements in Adtalem’s Annual Report on Form 10-K for the year ended June 30, 2018; and Note 6: Stock-Based Compensation to our audited financial statements in Adtalem’s Annual Report on Form 10-K for the year ended June 30, 2017, respectively.

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(5) The MIP compensation reported in this column was earned in fiscal years 2019, 2018 and 2017 and paid in fiscal years 2020, 2019 and 2018, respectively, based upon the MIP guidelines. Certain NEOs have elected to defer a portion of their MIP compensation under the Nonqualified Deferred Compensation Plan, specifically: Ms. Wardell ($113,560 for 2019, $119,087 for 2018 and $100,049 for 2017) and Ms. Boden Holland ($392,246 for 2019). Amounts shown are inclusive of these deferrals.
(6) The amounts indicated in the “all other compensation” column for 2019 include the following:
Matching and success sharing contributions credited under the Success Sharing Retirement Plan for Ms. Wardell ($19,163), Mr. Unzicker ($18,819); Mr. Beard ($22,540); Ms. Boden Holland ($11,421) and Mr. Patel ($16,907).
Company contributions credited under the Nonqualified Deferred Compensation Plan for Ms. Wardell ($125,746); Mr. Unzicker ($31,916); Ms. Boden Holland ($26,391) and Mr. Patel ($28,720).
Group life insurance premiums paid by Adtalem for Ms. Wardell ($1,026); Mr. Unzicker ($810); Mr. Beard ($801); Ms. Boden Holland ($1,242) and Mr. Patel ($710).
Personal financial planning services for Ms. Wardell ($8,000).
(7) Ms. Wardell’s equity grant for fiscal year 2018 (granted in August 2017) was a front-loaded, two-year award valued at approximately $9.4 million. The Board and Compensation Committee have determined that this grant represents Ms. Wardell’s long-term incentive awards for both fiscal year 2018 and fiscal year 2019. Ms. Wardell has not received, and will not receive, any form of long-term incentive award in fiscal year 2019. This grant was determined by the Board and Compensation Committee to drive Ms. Wardell’s focus on performance over the next several years on key academic and financial metrics.
(8) Mr. Unzicker was succeeded by Mr. Michael Randolfi as Senior Vice President and Chief Financial Officer in August 2019.
(9) Mr. Beard joined Adtalem as our General Counsel on February 1, 2018. On January 9, 2019, Mr. Beard was named Chief Operating Officer in addition to General Counsel.
(10) Ms. Boden Holland joined Adtalem as an officer on May 9, 2018.

Employment Agreements with Chief Executive Officer and Other Named Executive Officers

Adtalem has entered into employment agreements with each of its NEOs, which are described on pages 65-66 under the caption “Employment Agreements.”

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2019 GRANTS OF PLAN-BASED AWARDS

This table sets forth information regarding non-equity incentive plan awards, equity incentive plan awards, RSUs and stock options granted to the NEOs in fiscal year 2019.

Grant Date Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1)
Estimated Future Payouts
Under Equity Incentive
Plan Awards(5)
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(6)
  Exercise
or Base
Price of
Option
Awards
($/sh)(7)
Grant
Date Fair
Value of
Stock and
Option
Awards(8)
Threshold
($)(2)
Target
($)(3)



Maximum
($)(4)
Threshold
(#)
Target
(#)
Maximum
(#)
Lisa W. Wardell                                                          
577,500 1,155,000 2,310,000
Patrick J. Unzicker
183,860 367,719 735,438
8/22/2018 2,850 5,700 8,550 $279,586
8/22/2018 14,450 49.05 $303,161
8/22/2018 2,850 $139,793
Stephen W. Beard
192,837 385,673 (9) 771,346
8/22/2018 2,290 4,580 6,870 $224,650
8/22/2018 15,475 49.05 $324,666
8/22/2018 4,590 $225,140
Kathy Boden Holland
201,250 402,500 805,000
8/22/2018 3,060 6,120 9,180 $300,186
8/22/2018 15,475 49.05 $324,666
8/22/2018 3,060 $150,093
Mehul R. Patel
156,520 313,040 626,080
8/22/2018 2,360 4,720 7,080 $231,516
8/22/2018 11,975 49.05 $251,236
8/22/2018 2,360 $115,758

(1) Payouts under the MIP were based on performance in fiscal year 2019. Therefore, the information in the “Threshold,” “Target” and “Maximum” columns reflect the range of potential payouts when the performance goals were set on August 22, 2018. The amounts actually paid under the MIP for fiscal year 2019 appear in the “Non-Equity Incentive Plan Compensation” column of the 2019 Summary Compensation Table.
(2) Pursuant to the MIP, performance below a performance goal threshold will result in no payment with respect to that performance goal. If a performance goal threshold is met, then the amount shown in this column represents the minimum incentive payment, 50% of the target.
(3) The amount shown in this column represents the target incentive payment under the MIP, which is calculated as a set percentage of base salary.
(4) Pursuant to the MIP, the amount shown in this column represents the maximum incentive payment, 200% of the target.
(5) PSUs were granted under the 2013 Incentive Plan. The awards consist of 50% with a target based on ROIC over a period of three fiscal years and 50% with a target based on FCF per share over a period of three fiscal years. PSUs will pay out anywhere between 0% for below threshold performance, 50% of target payout for threshold performance and 150% of target for achieving maximum performance or above. Straight-line interpolation will be used to determine achievement between threshold and target.
(6) Stock option awards on August 22, 2018 were issued as part of the annual incentive award under the 2013 Incentive Plan, which become exercisable at 25% per year for four years beginning on the first anniversary of the date of grant and have a maximum term of ten years.
(7) All options granted on August 22, 2018 have an exercise price equal to the closing sales price of the Common Stock on the date of grant.
(8) This column shows the grant date fair value of PSUs (assuming payout at target value), RSUs and stock options granted on August 22, 2018, in fiscal year 2019, computed in accordance with FASB ASC Topic 718, which was $20.98 for stock options and $49.05 for each of RSUs and PSUs. Also see Note 5: Stock-Based Compensation to our audited financial statements in Adtalem’s Annual Report on Form 10-K for the year ended June 30, 2019 for an explanation of the assumptions made by Adtalem in the valuation of stock option awards.
(9) Target for Mr. Beard is shown on a pro-rated basis based on his promotional date of January 9, 2019.

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2019 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

This table sets forth information for each NEO with respect to stock options, RSUs and PSUs held by the NEOs as of June 30, 2019.

Option Awards Stock Awards
Name Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
Option
Exercise
Price
($)
Option
Expiration
Date(1)
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)(2)
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(3)
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
(#)(4)
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
($)(5)
Lisa W. Wardell      127,813      66,756      17.54      5/26/2026                    
95,787 95,788 23.78 8/25/2026
335,975 33.90 8/23/2027
32,110 1,446,556 208,430 9,389,772
Patrick J. Unzicker 3,225 38.71 8/27/2020
3,775 41.87 8/24/2021
6,472 18.60 8/29/2022
7,125 28.32 8/21/2023
4,875 43.47 8/20/2024
6,693 2,232 26.23 8/26/2025
10,637 10,638 23.78 8/25/2026
6,718 20,157 33.90 8/23/2027
14,450 49.05 8/22/2028
9,378 422,479 24,730 1,114,087
Stephen W. Beard 15,475 49.05 8/22/2028
8,633 388,917 4,580 206,329
Kathy Boden Holland 15,475 49.05 8/22/2028
7,133 321,342 11,550 520,328
Mehul R. Patel 11,975 49.05 8/22/2028
7,723 347,921 11,870 534,744

(1) The table below details the vesting schedule for stock option grants based on the termination date of the relevant grant. In general, option grants vest 25% on each of the first four anniversaries of the date of grant, except for Ms. Wardell's August 23, 2027 expiration dated grant relates to a double grant award that vests 50% on each of the third and fourth anniversaries of the date of grant. Ms. Wardell’s May 26, 2026 expiration dated grant relates to an option granted to her as part of an initial sign-on award granted upon her appointment as President and CEO to compensate for forgone compensation at her prior employer and to align her compensation with Adtalem’s performance.

Option Expiration Dates Grant Dates Options Vesting Dates
8/27/2020       8/27/2010       8/27/2011       8/27/2012       8/27/2013       8/27/2014
8/24/2021 8/24/2011 8/24/2012 8/24/2013 8/24/2014 8/24/2015
8/29/2022 8/29/2012 8/29/2013 8/29/2014 8/29/2015 8/29/2016
8/21/2023 8/21/2013 8/21/2014 8/21/2015 8/21/2016 8/21/2017
8/20/2024 8/20/2014 8/20/2015 8/20/2016 8/20/2017 8/20/2018
8/26/2025 8/26/2015 8/26/2016 8/26/2017 8/26/2018 8/26/2019
5/26/2026 5/26/2016 5/26/2017 5/26/2018 5/26/2019 5/26/2020
8/25/2026 8/25/2016 8/25/2017 8/25/2018 8/25/2019 8/25/2020
8/23/2027 8/23/2017 8/23/2018 8/23/2019 8/23/2020 8/23/2021
8/22/2028 8/22/2018 8/22/2019 8/22/2020 8/22/2021 8/22/2022

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(2) The table below details the vesting schedule for RSUs, which vest 25% on each of the first four anniversaries of the date of grant.

Name Grant Date Number of RSUs Vesting
      Year 1 Year 2 Year 3 Year 4 Total
Lisa W. Wardell       5/26/2016                         13,185       13,185
Lisa W. Wardell 8/25/2016 9,462 9,463 18,925
Patrick J. Unzicker 8/26/2015 440 440
Patrick J. Unzicker 8/25/2016 1,052 1,053 2,105
Patrick J. Unzicker 8/23/2017 1,328 1,327 1,328 3,983
Patrick J. Unzicker 8/22/2018 712 713 712 713 2,850
Stephen W. Beard 2/13/2018 1,348 1,347 1,348 4,043
Stephen W. Beard 8/22/2018 1,147 1,148 1,147 1,148 4,590
Kathy Boden Holland 5/9/2018 1,358 1,357 1,358 4,073
Kathy Boden Holland 8/22/2018 765 765 765 765 3,060
Mehul R. Patel 11/7/2017 1,788 1,787 1,788 5,363
Mehul R. Patel 8/22/2018 590 590 590 590 2,360

(3) Represents the value derived by multiplying the number of shares of Common Stock covered by RSUs granted by $45.05 (the closing market price of Adtalem’s Common Stock on June 28, 2019).
(4) The table below details the vesting schedule for PSUs. In general, PSUs vest following the third anniversary of their grant date.

Name Grant Date Vesting
Date
Number of
PSUs Vesting
Lisa W. Wardell       8/25/2016       8/25/2019       75,690
Lisa W. Wardell 8/23/2017 8/23/2020 132,740
Patrick J. Unzicker 8/25/2016 8/25/2019 8,410
Patrick J. Unzicker 8/23/2017 8/23/2020 10,620
Patrick J. Unzicker 8/22/2018 8/22/2021 5,700
Stephen W. Beard 8/22/2018 8/22/2021 4,580
Kathy Boden Holland 5/9/2018 8/22/2021 5,430
Kathy Boden Holland 8/22/2018 8/22/2021 6,120
Mehul R. Patel 11/7/2017 11/7/2020 7,150
Mehul R. Patel 8/22/2018 8/22/2021 4,720

(5) Represents the value derived by multiplying the number of shares of Common Stock covered by the PSUs by $45.05 (the closing market price of Adtalem’s Common Stock on June 28, 2019). The value provided assumes a PSU payout at target value.

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2019 OPTIONS EXERCISES AND STOCK VESTED

This table provides information for the NEOs concerning stock options that were exercised and PSUs and RSUs that vested during fiscal year 2019.

Option Awards Stock Awards
Name       Number of
Shares Acquired
on Exercise
(#)
      Value Realized
on Exercise
($)(1)
      Number of
Shares Acquired
on Vesting
(#)
      Value Realized
on Vesting
($)(2)
Lisa W. Wardell 9,200 180,119 59,915 2,863,660
Patrick J. Unzicker 4,928 83,654 10,303 526,665
Stephen W. Beard 1,347 64,979
Kathy Boden Holland(3) 4,657 251,520
Mehul R. Patel 1,787 103,449

(1) Value Realized on Exercise. If the exercise was executed as part of a cashless transaction where the shares acquired were immediately sold, this represents the difference between the sales price of the shares acquired and the option exercise price multiplied by the number of shares of Common Stock covered by the options exercised. If the exercise was executed as part of a buy and hold transaction, this represents the difference between the closing market price of the Common Stock for the date of exercise of the option and the option exercise price multiplied by the number of shares of Common Stock covered by the options held.
(2) Value Realized on Vesting. For Ms. Wardell, this amount represents PSUs originally granted in May 2016 that vested in August 2018. For Mr. Unzicker, this amount represents PSUs originally granted in August 2015 that vested in August 2018 and PSUs originally granted in November 2015 that vested in November 2018. For Ms. Wardell, this amount represents RSUs originally granted in May 2016 that vested in May 2019 and RSUs originally granted in August 2016 that vested in August 2018. For Mr. Unzicker, this amount represents RSUs originally granted in August 2014, August 2015, August 2016 and August 2017 that vested in August 2018. For Mr. Beard, this amount represents RSUs originally granted in February 2018 that vested in February 2019. For Ms. Boden Holland, this amount represents RSUs originally granted in November 2017 that vested in November 2018 as part of her prior service on the Adtalem Board and RSUs originally granted in May 2018 that vested in May 2019. For Mr. Patel, this amount represents RSUs originally granted in November 2017 that vested in November 2018.
(3) For Ms. Boden Holland, includes director compensation in the form of RSUs for her prior service as a member of the Board.

2019 NONQUALIFIED DEFERRED COMPENSATION

This table sets forth information about activity for NEOs in our Nonqualified Deferred Compensation Plan during fiscal year ended June 30, 2019.

Name       Executive
Contributions
in Last
Fiscal Year
($)(1)
      Registrant
Contributions
in Last
Fiscal Year
($)(2)
      Aggregate
Earnings
in Last
Fiscal Year
($)(3)
      Aggregate
Balance at
Last Fiscal
Year End
($)(4)
Lisa W. Wardell 151,596 125,746 28,062 873,206
Patrick J. Unzicker 10,457 31,916 15,499 327,020
Stephen W. Beard
Kathy Boden Holland 93,574 26,391 4,268 210,867
Mehul R. Patel 13,317 28,720 1,843 54,028

(1) Executive Contributions in Last Fiscal Year. The amount of executive contributions made by each NEO and reported in this column is included in each NEO’s compensation reported on the 2019 Summary Compensation Table, either in the “Salary” or “Non-Equity Incentive Plan Compensation” column. See footnotes 1 and 5 of the 2019 Summary Compensation Table for specific deferrals made by each NEO.
(2) Registrant Contributions in Last Fiscal Year. The amount of Adtalem contributions made and reported in this column is included in each NEO’s compensation reported on the 2019 Summary Compensation Table in the “All Other Compensation” column.

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(3) Aggregate Earnings in Last Fiscal Year. These amounts represent the earnings in the Nonqualified Deferred Compensation Plan for fiscal year 2019. These amounts are not reported in the 2019 Summary Compensation Table.
(4) Aggregate Balance at Last Fiscal Year End. The aggregate balance as of June 30, 2019 reported in this column for each NEO reflects amounts that either are currently reported or were previously reported as compensation in the 2019 Summary Compensation Table for current or prior years, except for the aggregate earnings on deferred compensation.

DEFERRED COMPENSATION PLAN

The Nonqualified Deferred Compensation Plan covers directors and selected key employees approved for participation by the Compensation Committee. All of the NEOs are eligible to participate in the Nonqualified Deferred Compensation Plan. Under the Nonqualified Deferred Compensation Plan as it applies to employees, participants may make an advance election to defer up to 50% of salary and up to 100% of MIP compensation until termination of service with Adtalem or certain other specified dates. Adtalem credits matching contributions to participants’ accounts under the Nonqualified Deferred Compensation Plan to the extent they have elected to defer the maximum amount under Adtalem’s Success Sharing Retirement Plan, and their matching contributions to the Success Sharing Retirement Plan are limited by applicable Code provisions. Adtalem may also credit participants’ accounts with discretionary success sharing contributions. Participants are fully vested in their own deferral and matching contributions, plus earnings, and will vest in discretionary contributions, if any, as determined by the Compensation Committee. Participants may elect to have their Nonqualified Deferred Compensation Plan accounts credited with earnings based on various investment choices made available by the Compensation Committee for this purpose. Participants may elect to have account balances paid in a lump sum or in installments. Distributions are generally made or commence in January of the year following termination of employment (but not earlier than six months after termination) or January of the year in which the specified payment date occurs. In the event of death before benefits commence, participants’ accounts will be paid to their beneficiaries in a lump sum.

2019 POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL

Adtalem provides benefits to the NEOs upon termination of employment from Adtalem in specific circumstances. These benefits are in addition to the benefits to which these NEOs would be generally entitled upon a termination of employment (i.e., vested retirement benefits accrued as of the date of termination, stock-based awards that are vested as of the date of termination and the right to elect continued health coverage pursuant to COBRA). In addition, Adtalem’s equity compensation plans and the stock award agreements used to implement them provide for accelerated vesting of outstanding stock awards in the event of a change-in-control of Adtalem, regardless of whether a termination of employment occurs for awards granted prior to November 8, 2017.

Employment Agreements

MS. WARDELL

Adtalem entered into an employment agreement with Ms. Wardell effective as of her May 24, 2016 appointment as President and CEO. The employment agreement provides, among other things, that if her employment is terminated by Adtalem without “cause” or by Ms. Wardell with “good reason,” and if she executes a release of claims, she will be entitled to a lump sum payment equal to 12 months of base salary and a prorated MIP award based on actual performance for the fiscal year and paid in a lump sum at the same time MIP awards are paid to other employees.

If such termination of employment occurs within 12 months of a “change-in-control,” and she executes a release of claims, she will be entitled to (i) a lump sum payment equal to two times base salary and the average of the MIP award paid to her for the prior two fiscal years; and (ii) accelerated vesting of all outstanding stock options.

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OTHER NEOs

Adtalem has entered into similar employment arrangements with each of the other NEOs, Mr. Unzicker, Mr. Beard, Ms. Boden Holland and Mr. Patel. These employment agreements provide, among other things, that if the NEO’s employment with Adtalem is terminated by Adtalem without “cause” or by the NEO with “good reason”, and the NEO executes a release of claims, then the NEO will be entitled to the following benefits:

One and one-half times the sum of their base salary plus target MIP award, payable in 18 equal monthly payments;
A pro-rated MIP award (if employed for at least six months in the fiscal year during which termination occurs) based on actual performance for the relevant fiscal year, paid in a lump sum at the time MIP awards are paid to other employees;
18 months of continued health benefit plan coverage at active employee rates following the termination date; and
Access to a senior executive level outplacement program for 9 months.

In addition, the employment arrangements provide that if such termination occurs within 12 months of a “change-in-control”, and the NEO executes a release of claims, then the NEO will be entitled to the following benefits:

Two times the sum of their base salary plus target MIP award, payable in 24 equal monthly payments;
A pro-rated MIP award (if employed for at least six months in the fiscal year during which termination occurs) based on actual performance for the relevant fiscal year, paid in a lump sum at the time MIP awards are paid to other employees;
24 months of continued health benefit plan coverage at active employee rates following the termination date; and
Access to a senior executive level outplacement program for 12 months.

For purposes of all of the employment agreements:

“cause” means (i) the commission of a felony or other crime involving moral turpitude or the commission of any other act or omission involving misappropriation, dishonesty, fraud, illegal drug use or breach of fiduciary duty, (ii) willful failure to perform duties as reasonably directed by the CEO, (iii) the NEO’s gross negligence or willful misconduct with respect to the performance of the NEO’s duties under the employment agreement, (iv) obtaining any personal profit not fully disclosed to and approved by Adtalem’s Board in connection with any transaction entered into by, or on behalf of, Adtalem, or (v) any other material breach of the employment agreement or any other agreement between the NEO and Adtalem;
“change-in-control” shall have the meaning set forth in the 2013 Incentive Plan; and
“good reason” means, without the NEO’s consent, (i) material diminution in title, duties, responsibilities or authority, (ii) reduction of base salary, MIP target or employee benefits except for across-the-board changes for executives at the NEO’s level, (iii) exclusion from executive benefit/compensation plans, (iv) material breach of the employment agreement that Adtalem has not cured within 30 days after the NEO has provided Adtalem notice of the material breach which shall be given within 60 days of the NEO’s knowledge of the occurrence of the material breach, or (v) resignation in compliance with securities, corporate governance or other applicable law (such as the US Sarbanes-Oxley Act) as specifically applicable to the NEO. For Mr. Beard and Ms. Boden Holland, the definition of “good reason” also includes, without the NEO’s consent, requiring the NEO to relocate to an employment location more than 50 miles from the NEO’s current employment location.

EQUITY AWARD PLANS

The equity award agreements under which options, RSUs and PSUs are held by employees, including the NEOs, provide for the immediate vesting of unvested options and RSUs and of PSUs at the target levels in the event of a change-in-control of Adtalem. The provisions of the equity award agreements under which options, PSUs and RSUs were granted to employees, including the NEOs, provide the following:

If the participant’s employment is terminated due to death or disability (as defined in the agreement), options will become fully vested and exercisable for the remaining term of the option, RSUs will fully vest, and PSUs will continue to vest in accordance with their terms.
If the participant’s employment terminates due to mutual agreement, the participant will be credited with one additional year of service for the purpose of determining vesting of options, PSUs and RSUs. The participant’s options will remain exercisable until the earlier of one year from termination or the expiration of the term of the option. PSUs that vest following a termination will be paid out when paid out to other PSU recipients.
If the participant’s employment terminates due to retirement, options will continue to vest and be exercisable, and RSUs and PSUs will continue to vest in accordance with their respective terms. Retirement means the participant’s termination without cause after age 55 when the sum of his or her age and full years of service equals or exceeds 65.

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In August 2017, the Board adopted double-trigger vesting of equity awards as part of the 2013 Incentive Plan. In November 2017, Adtalem’s shareholders approved the 2013 Incentive Plan. As a result, vesting of future grants of equity awards (the “Awards”) will accelerate upon a change-in-control only in the event Adtalem (or its successor) ceases to be publicly traded, or the successor to Adtalem fails to assume outstanding Awards or to issue new awards in replacement of outstanding Awards. Under the new double-trigger vesting rules, newly issued Awards will vest if a participant is terminated without cause or resigns for good reason within two years following a change-in-control. All Awards issued prior to shareholder approval in November 2017 will continue to have a single-trigger vesting rules as described above.

2019 Potential Severance Payments

The tables set forth below quantify the additional benefits as described above that would be paid to each NEO under the following termination of employment or change-in-control events, had such an event occurred on June 30, 2019.

TERMINATION OF EMPLOYMENT — NO CHANGE-IN-CONTROL

Name:       Lisa W.
Wardell
      Patrick J.
Unzicker
      Stephen W.
Beard
      Kathy Boden
Holland
      Mehul R.
Patel
Salary: $ 1,100,000 $ 787,969   $ 880,828     $ 862,500 $ 670,800
MIP Target Amount: $ 551,578 $ 616,580 $ 603,750 $ 469,560
Pro-Rated MIP: $ 1,135,605 $ 370,808 $ 388,913 $ 405,226 $ 344,772
Continued Health Coverage: $ 25,380 $ 25,380 $ 25,038 $ 25,380
Outplacement Services: $ 11,250 $ 11,250 $ 11,250 $ 11,250
TOTAL $ 2,235,605 $ 1,746,985 $ 1,922,951 $ 1,907,764 $ 1,521,762

TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE-IN-CONTROL

Name:       Lisa W.
Wardell
      Patrick J.
Unzicker
      Stephen W.
Beard
      Kathy Boden
Holland
      Mehul R.
Patel
Salary: $ 2,200,000 $ 1,050,625   $ 1,174,438     $ 1,150,000 $ 894,400
MIP Target Amount: 1,163,237 $ 735,438 $ 822,106 $ 805,000 $ 626,080
Pro-Rated MIP: $ $ 370,808 $ 388,913 $ 405,226 $ 344,772
Continued Health Coverage: $ 33,840 $ 33,840 $ 33,384 $ 33,840
Outplacement Services: $ 15,000 $ 15,000 $ 15,000 $ 15,000
Value of Vesting of Unvested Stock $ 18,456,317 $ 2,029,591 $ 595,246 $ 841,669 $ 882,665
Options, RSUs and PSUs(1):
TOTAL: $ 21,819,554 $ 4,235,302 $ 3,029,543 $ 3,250,279 $ 2,796,757

(1) The value of the unvested stock options is based on the difference between the exercise price and $45.05 (the closing market price of the Common Stock on June 28, 2019). The value of the RSUs and PSUs is based on the closing market price of the Common Stock on June 28, 2019. PSUs vest at the target level.

CHANGE-IN-CONTROL — NO TERMINATION OF EMPLOYMENT

Name:       Lisa W.
Wardell
      Patrick J.
Unzicker
      Stephen W.
Beard
      Kathy Boden
Holland
      Mehul R.
Patel
Value of Vesting of Unvested Stock $ 18,456,317 $ 2,029,591     $ 595,246        $ 841,669 $ 882,665
Options, RSUs and PSUs(1):

(1) The value of the unvested stock options is based on the difference between the exercise price and $45.05 (the closing market price of the Common Stock on June 28, 2019). The value of RSUs and PSUs is based on the closing market price of the Common Stock on June 28, 2019. PSUs vest at target level.

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Executive Compensation Tables

CEO PAY RATIO

Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to disclose the median of the annual total compensation of all our employees (except our CEO) and the ratio of the annual total compensation of our President and CEO, Ms. Wardell, as disclosed in the 2019 Summary Compensation Table, to the annual total compensation of our median employee.

In 2018, we identified the median employee by comparing the annual salary rate of pay for all individuals, excluding our CEO, who were employed by Adtalem on June 30, 2018 using information from our company payroll system. We included all full-time and part-time employees, including adjunct faculty and federal work-study student workers, but did not include independent contractors and leased workers. Compensation was annualized for all employees who were hired by us in fiscal year 2018 but did not work for us for the entire year. No annualization was applied to any adjunct faculty or federal work-study student workers as permitted under the rules. Fiscal year 2019 annual total compensation for the median employee identified in 2018 was calculated in the same manner as reflected in the 2019 Summary Compensation Table for our CEO.

Based on the methodology described above, we have determined that our estimation of the fiscal year 2019 annual total compensation of our median employee was $33,781 and our estimation of the ratio of our CEO’s fiscal year 2019 annual total compensation to the fiscal year 2019 annual total compensation of our median employee is 70:1 (210:1 on a normalized basis reflecting the annualized value of LTI for the CEO provided in fiscal year 2018).

This CEO pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules. The CEO pay ratio reported by other companies may not be comparable to our CEO pay ratio reported above, because SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, apply certain exclusions and make reasonable estimates and assumptions that reflect their compensation practices.

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PROPOSAL NO. 4
Approval of Adtalem Global Education, Inc. 2019 Employee Stock Purchase Plan

Since 1993, Adtalem has offered its employees the ability to purchase Adtalem Common Stock through an Employee Stock Purchase Plan. The most recent Employee Stock Purchase Plan was approved by shareholders on November 9, 2005 and effective January 1, 2006, authorizing 200,000 shares of Common Stock for issuance thereunder (the “2005 ESPP”). From January 1, 2006 to February 28, 2019, eligible participants in the 2005 Plan purchased 450,095 shares of Common Stock causing the 2005 ESPP to be over-subscribed by 250,095 shares. Adtalem terminated the ability to purchase shares of Common Stock under the 2005 ESPP and the last purchase made through the 2005 ESPP was made on February 28, 2019. Additionally, effective March 31, 2019, Adtalem reduced the number of shares of Common Stock available under the 2013 Incentive Plan by 250,095 shares of Common Stock to reduce any potential dilution to shareholders.

The Board has adopted, subject to shareholder approval, the Adtalem Global Education Inc. Employee Stock Purchase Plan (“2019 ESPP”), under which an aggregate of five hundred thousand (500,000) shares of our Common Stock has been reserved for issuance. The 2019 ESPP is intended to qualify as an “employee stock purchase plan” under the Code. The purpose of the 2019 ESPP is to provide eligible employees with an opportunity to increase their proprietary interest in the success of Adtalem by purchasing shares of Common Stock on favorable terms and to pay for such purchases through payroll deductions. Executive officers and directors of Adtalem are not eligible to participate in the 2019 ESPP.

The Board believes that the 2019 ESPP promotes the interests of Adtalem and its shareholders by encouraging employees of Adtalem and its participating subsidiaries to become shareholders, and therefore promotes Adtalem’s growth and success. The Board also believes that the opportunity to acquire a proprietary interest in the success of Adtalem through the acquisition of shares of Common Stock pursuant to the 2019 ESPP is an important aspect of Adtalem’s ability to attract and retain highly qualified and motivated employees. A copy of the 2019 ESPP, as proposed, is attached to this proxy statement as Appendix B.

The following summary description of the 2019 ESPP is a summary of certain provisions and is qualified in its entirety by reference to Appendix B.

SUMMARY DESCRIPTION OF THE 2019 ESPP

Employee Stock Purchase Plan

Our Board has adopted, subject to shareholder approval, our 2019 ESPP. The ESPP is intended to give eligible employees an opportunity to acquire shares of our Common Stock and promote our best interests and enhance our long-term performance.

Purpose. The 2019 ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code. We may also authorize offerings under the 2019 ESPP that are not intended to comply with the requirements of Section 423 of the Code, which may, but are not required to, be made pursuant to any rules, procedures or sub-plans adopted by the Compensation Committee for such purpose.

Shares Reserved for the 2019 ESPP. The aggregate number of shares of our Common Stock that may be issued under the 2019 ESPP may not exceed 500,000 shares.

Administration. The 2019 ESPP will be administered by the Compensation Committee. The Compensation Committee may appoint one or more agents to assist in the administration of the 2019 ESPP and may delegate certain responsibilities or powers subject to ESPP terms and applicable law. Subject to ESPP terms and applicable law, the Compensation Committee will have full and final authority to take any action with respect to the 2019 ESPP, including, without limitation, the authority to: (a) establish, amend and rescind rules and regulations for administration of the 2019 ESPP; (b) prescribe the form(s) of any agreements or other instruments used in connection with the 2019 ESPP; (c) determine the terms and provisions of the purchase rights granted under the 2019 ESPP; (d) determine eligibility and adjudicate all disputed claims filed under the 2019 ESPP; and (e) construe and interpret the 2019 ESPP, purchase rights, the rules and regulations, and the agreements or other written instruments, and to make all other determinations deemed necessary or advisable for the administration of the 2019 ESPP. The Compensation Committee may also adopt sub-plans relating to the operation and administration of the 2019 ESPP to accommodate the specific

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Proposal No. 4 Approval of Adtalem Global Education, Inc. 2019 Employee Stock Purchase Plan

requirements of local laws and procedures for jurisdictions outside the United States, the terms of which sub-plans may take precedence over the terms of the 2019 ESPP, to the extent provided in the 2019 ESPP. To the extent inconsistent with the requirements of Section 423 of the Code, purchase rights offered under any such sub-plan will not be required by the terms of the 2019 ESPP to comply with Section 423 of the Code.

Term. The term of the 2019 ESPP will continue until terminated by the Board or until the date on which all shares available for issuance under the 2019 ESPP have been issued.

Eligible Participants. Subject to the Compensation Committee’s ability to exclude certain groups of employees on a uniform and nondiscriminatory basis, including Section 16 officers, generally, all of our employees will be eligible to participate in the 2019 ESPP if they are employed by us or by a designated company (as defined below) except for (a) any employee who has been employed for less than 90 days, (b) any employee whose customary employment is for not more than five months in any calendar year, or (c) any employee who is a Section 16(a) officer and/or is subject to the disclosure requirements of the Exchange Act; provided that the Compensation Committee may determine prior to any purchase period start date that employees outside of the United States who are participating in a separate offering will be “eligible employees” even if they do not meet the requirements of (a), (b) or (c) above if and to the extent required by applicable law. No employee will be eligible to participate if, immediately after the purchase right grant, the employee would own stock (including any stock the employee may purchase under outstanding purchase rights) representing 5% or more of the total combined voting power or value of our Common Stock. A “designated company” is any subsidiary or affiliate of Adtalem Global Education Inc., whether now existing or existing in the future, that has been designated by the Compensation Committee from time to time in its sole discretion as eligible to participate in the 2019 ESPP. The Compensation Committee may designate subsidiaries or affiliates of Adtalem Global Education Inc. as designated companies in an offering that does not satisfy the requirements of Section 423 of the Code.

Contributions. A participant may acquire Common Stock under the 2019 ESPP by authorizing the use of contributions to purchase shares of Common Stock. Contributions must be at a rate of not less than 1% nor more than 15% (in whole percentages only) of the participant’s total compensation (with certain exclusions as set forth in the 2019 ESPP or as otherwise determined by the Compensation Committee). All contributions made by a participant will be credited (without interest) to his or her account. A participant may discontinue plan participation as provided in the 2019 ESPP, but a participant may not alter the amount of his or her contributions during a purchase period. However, a participant’s contribution election may be decreased to 0% at any time during a purchase period to the extent necessary to comply with Section 423 of the Code or the terms of the 2019 ESPP. A participant may not make separate cash payments into his or her account except in limited circumstances when the participant is on leave of absence or unless otherwise required by applicable law. A participant may withdraw contributions credited to his or her account during a purchase period at any time before the applicable purchase period end date.

Purchase Periods and Purchase Price. The 2019 ESPP provides for quarterly offering periods, with one purchase period in each offering period. The purchase periods shall begin and end on dates as determined by the Compensation Committee. The Compensation Committee has the authority to change the duration of a purchase period, provided that the change is announced a reasonable period of time prior to its effective date and the purchase period is not greater than 27 months.

On the first day of a purchase period, a participant will be granted a purchase right to purchase on the purchase period end date, at the applicable purchase price, the number of shares of Common Stock as is determined by dividing the amount of the participant’s contributions accumulated as of the last day of the purchase period by the applicable purchase price; provided that (a) no participant may purchase shares of Common Stock with a fair market value (as of the date of purchase right grant) in excess of $25,000 per calendar year. The maximum number of shares that may be purchased by any single participant during any offering period shall not exceed 5,000, unless otherwise determined by the Compensation Committee.

In connection with each offering under the 2019 ESPP, the maximum number of shares that may be purchased during any single offering period shall not exceed 50,000, and, if the number of shares subject to purchase rights that would otherwise be granted during an offering period exceeds 50,000 shares, then Adtalem shall make a pro rata allocation of the number of shares subject to each participant’s purchase right for that offering period in as uniform a manner as practicable and as Adtalem shall determine to be equitable, so as not to exceed the 50,000 share limitation for any offering period.

The purchase price will be no less than 85% (or such greater percentage as may be determined by the Compensation Committee prior to the start of any purchase period) of the lesser of (i) the fair market value per share of our Common Stock as determined on the applicable purchase period end date or (ii) the fair market value per share of our Common Stock as determined on the applicable purchase right grant date (provided that, in no event may the purchase price be less than the par value per share of our Common Stock). The Compensation Committee may determine prior to a purchase period to calculate the purchase price for such period solely by reference to the fair market value of a share on the applicable purchase period end date or purchase period start date, or based on the greater (rather than the lesser) of such values. It is the current intent of the Compensation Committee to set the purchase price at 90% of the lesser of (i) the fair market value per share of our Common Stock as determined on the applicable purchase period end date or (ii) the fair market value per share of our Common Stock as determined on the applicable purchase right grant date.

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Proposal No. 4 Approval of Adtalem Global Education, Inc. 2019 Employee Stock Purchase Plan

A participant’s purchase right to purchase shares of Common Stock during a purchase period will be exercised automatically on the purchase period end date for that purchase period unless the participant withdraws at least thirty days prior to the end of the purchase period or his or her participation is terminated. On the purchase period end date, a participant’s purchase right will be exercised to purchase that number of shares which the accumulated contributions in his or her account at that time will purchase at the applicable purchase price, but not in excess of the number of shares subject to the purchase right or other ESPP terms. Subject to the terms of the 2019 ESPP, a purchase right will generally terminate on the earlier of the date of the participant’s termination of employment or the last day of the applicable purchase period.

Rights as Shareholder. A participant will have no rights as a shareholder with respect to our shares that the participant has a purchase right to purchase in any offering until those shares are issued to the participant.

Rights Not Transferable. A participant’s rights under the 2019 ESPP will be exercisable only by the participant and are not transferable other than by will or the laws of descent or distribution.

Effect of a Change-In-Control; Adjustments. If there is any change in the outstanding shares of our Common Stock because of a change-in-control, consolidation, recapitalization or reorganization involving Adtalem Global Education Inc., or if the Board declares a stock dividend, stock split distributable in shares of Common Stock or reverse stock split, other distribution or combination or reclassification of our Common Stock, or if there is a similar change in the capital stock structure of Adtalem Global Education Inc. affecting our Common Stock, then the number and type of shares of our Common Stock reserved for issuance under the 2019 ESPP will be correspondingly adjusted and, subject to applicable law, the Compensation Committee will make such adjustments to purchase rights or to any ESPP provision as the Compensation Committee deems equitable to prevent dilution or enlargement of purchase rights or as may otherwise be advisable. In addition, in the event of a change-in-control, the Compensation Committee’s discretion includes, but is not limited to, the authority to provide for any of, or a combination of any of, the following:

assumption or substitution of purchase rights by a successor entity (or parent or subsidiary of such successor);
selection of a date on which all outstanding purchase rights will be exercised on or before the consummation date of the change-in-control;
termination of outstanding purchase rights and refund of accumulated contributions to each participant prior to the change-in-control; or
continuation of outstanding purchase rights unchanged.

Amendment; Termination. The 2019 ESPP may be amended, altered, suspended and/or terminated at any time by the Board; provided, that approval of an amendment to the 2019 ESPP by our shareholders will be required to the extent, if any, that shareholder approval of such amendment is required by applicable law. The Compensation Committee may (subject to the provisions of Section 423 of the Code and the 2019 ESPP) amend, alter, suspend and/or terminate any purchase right granted under the 2019 ESPP, prospectively or retroactively, but (except as otherwise provided in the 2019 ESPP) such amendment, alteration, suspension or termination of a purchase right may not, without the written consent of a participant with respect to an outstanding purchase right, materially adversely affect the rights of the participant with respect to the purchase right. In addition, the Compensation Committee has unilateral authority to (a) subject to the provisions of Section 423 of the Code, amend the 2019 ESPP and any purchase right (without participant consent) to the extent necessary to comply with applicable law or changes in applicable law and (b) make adjustments to the terms and conditions of purchase rights in recognition of unusual or nonrecurring events affecting us or any parent or subsidiary corporation (each as defined under Section 424 of the Code), or our financial statements (or those of any parent or subsidiary corporation), or of changes in applicable law, or accounting principles, if the Compensation Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of benefits intended to be made available under the 2019 ESPP or necessary or appropriate to comply with applicable accounting principles or applicable law.

New Plan Benefits

Because participation in the 2019 ESPP by Adtalem’s employees is entirely discretionary and benefits under the 2019 ESPP depend on the fair market value of Adtalem’s Common Stock at future dates, it is not possible to determine the benefits that will be received by Adtalem’s employees. Please see the disclosure under “Purchase Periods and Purchase Price” above for the maximum number of shares a participant may purchase in any single offering. Executive officers and directors of Adtalem are not eligible to participate in the 2019 ESPP.

    The Board of Directors recommends a vote FOR the approval of the Adtalem Global Education Inc. 2019 Employee Stock Purchase Plan.

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Voting Securities and Principal Holders

EQUITY COMPENSATION PLAN INFORMATION

Adtalem currently maintains two equity compensation plans: the Amended and Restated Incentive Plan of 2005 (the “2005 Incentive Plan”) and the 2013 Incentive Plan. Adtalem’s shareholders have approved each of these plans.

The following table summarizes information, as of June 30, 2019, relating to these equity compensation plans under which Adtalem’s Common Stock is authorized for issuance.

Plan Category

      Number of
securities to be
issued upon exercise
of outstanding
options, awards,
warrants and rights
(a)
(1)
      Weighted-average
exercise price
of outstanding
options, awards,
warrants and rights
(b)
      Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected
in column
(a))(c)
(2)
Equity compensation plans approved by security holders 2,366,508 $31.33 4,736,148
Equity compensation plans not approved by security holders
Total 2,366,508 $31.33 4,736,148

(1) The number shown in column (a) is the number of shares that may be issued upon exercise of outstanding options and other equity awards granted under the shareholder-approved 2005 Incentive Plan (227,467 shares) and the 2013 Incentive Plan (2,139,041 shares).
(2) The number shown in column (c) is the number of shares that may be issued upon exercise of options or stock appreciation rights and other equity awards granted in the future under the 2013 Incentive Plan. All of the shares remaining available for the grant of future awards of options, warrants and rights are available under the 2013 Incentive Plan. No new awards may be granted under the 2005 Incentive Plan.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The table below sets forth the number and percentage of outstanding shares of Common Stock beneficially owned by each person known by Adtalem to own beneficially more than 5% of our Common Stock, in each case as of September 17, 2019, except as otherwise noted.

Name Amount and Nature of
Beneficial Ownership
Percentage
Ownership
(1)
BlackRock, Inc. 6,812,266(2) 12.4%
The Vanguard Group 5,390,512(3) 9.8%
Dimensional Fund Advisors LP 4,897,292(4) 8.9%
William Blair Investment Management, LLC 4,808,560(5) 8.7%

(1) The percentage of beneficial ownership is based on 55,069,846 shares of Common Stock outstanding as of September 17, 2019.
(2) The information shown was provided by BlackRock, Inc. in a Schedule 13G/A it filed with the SEC on January 24, 2019, indicating its beneficial ownership as of December 31, 2018 of 6,812,266 shares. BlackRock reported that it has sole voting power over 6,666,704 of these shares and sole dispositive power over all of these shares. The address of the principal business office of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10022.
(3) The information shown was provided by The Vanguard Group in a Schedule 13G/A it filed with the SEC on February 11, 2019, indicating its beneficial ownership as of December 31, 2018 of 5,390,512 shares. The Vanguard Group reported that it has sole voting power over 57,860 of these shares, shared voting power over 7,214 of these shares, sole dispositive power over 5,331,538 of these shares and shared dispositive power over 58,974 of these shares. The address of the principal business office of The Vanguard Group is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.
(4) The information shown was provided by Dimensional Fund Advisors LP in a Schedule 13G/A it filed with the SEC on February 8, 2019, indicating its beneficial ownership as of December 31, 2018 of 4,897,292 shares. Dimensional Fund Advisers reported that it has sole voting power over 4,809,362 of these shares and sole dispositive power over all of these shares. The address of the principal business office of Dimensional Fund Advisors LP is Building One, 6300 Bee Cave Road, Austin, Texas 78746.

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Voting Securities and Principal Holders

(5) The information shown was provided by William Blair Investment Management, LLC in a Schedule 13G/A it filed with the SEC on February 13, 2019, indicating its beneficial ownership as of December 31, 2018 of 4,808,560 shares. William Blair Investment Management reported that it has sole voting power over 4,354,080 of these shares and sole dispositive power over all of these shares. The address of the principal business office of William Blair Investment Management, LLC is 150 North Riverside Plaza, Chicago, Illinois 60606.

SECURITY OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS