DEF 14A 1 bp96917x1_def14a.htm DEF 14A

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant ☒

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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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LETTER FROM ADTALEM GLOBAL EDUCATION PRESIDENT AND CHIEF EXECUTIVE OFFICER

October 4, 2017

TO OUR SHAREHOLDERS:

Fiscal 2017 was a year of transformation for Adtalem Global Education. While we have some challenges ahead in fiscal 2018, I am confident that we are moving in the right direction and have a solid strategic roadmap to build on the successes we achieved in the past year.

We continue to lead our team with a sense of urgency and accountability to all of our stakeholders. Student outcomes remain a priority and our mission is fully aligned with delivering better financial performance.

It has truly been gratifying to lead such a mission-based organization and watch so many students, many of whom are first generation graduates just like me, walk across stages at our institutions’ graduation ceremonies.

It's equally gratifying to engage in conversations with faculty who wake up every morning eager to serve our students. They know who these students are and where they come from – and they are committed to supporting and empowering them.

We have a viable opportunity to democratize access to education by better pairing our programs with the students who can benefit most from them in a manner that improves their ability to learn.

This effort will increasingly call for us to partner with corporations, hospitals, government agencies and professional organizations to design education programs aimed at teaching new skills to employees. These organizations understand the need to adapt to changes in technology, business processes and customer preferences. We’re focused on helping them do that, while creating employment opportunities for our students.

I believe we can pursue these important endeavors, which are aimed at addressing currently unmet workforce skills gaps, while continuing to improve the underlying economics of how we operate. A stronger Adtalem is good for all of our constituents – our students, our business partners and our owners.

Adtalem Global Education is a new name, but our mission of empowering students through successful outcomes remains the same. In fact, Adtalem is now more inclusive of our portfolio as it aligns with all of our institutions. We are united in bringing to education what many traditional academic institutions do not: innovation, scale and continuous investment in academic quality.

LAYING THE GROUNDWORK TO RETURN TO GROWTH

Our fiscal 2017 operating results demonstrate that we have the right team in place to execute on our strategy and provide us with significant momentum to return to organic revenue growth in fiscal 2018.

We generated operating cash flow of $228 million in fiscal 2017. Net income excluding special items was $178 million for fiscal 2017, which resulted in earnings per share excluding special items of $2.79, up nearly 16 percent from fiscal 2016.

We strategically utilized our cash flow to invest in the academic quality and expansion of our programs aimed at enhancing our long-term growth profile, while further strengthening our balance sheet and enhancing returns to shareholders.

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EXECUTING OUR PLAN — FOUR CORE PRIORITIES

Our four priorities remain the same; they start with our students, allowing us to excel in a competitive industry:

Maintaining a heightened student-centric focus. We are a leading education provider, and to continue to be a leader we need to make sure that everything we do reflects academic quality and student services that empower our students to excel
Return to organic revenue growth and increase operating income and earnings per share to unlock shareholder value. The education sector is rapidly changing as students and employers demand new program offerings and skillsets. Therefore, we need to remain nimble and focus on innovation and respond to the market in order to grow revenue in high-demand areas such as healthcare
Operate more efficiently to not only manage costs but also to operate smarter with a focus on results for our students
Ensure a proactive and strategic approach to government relations.

The for-profit higher education industry, including Adtalem, has to work harder to make key stakeholders aware of the extraordinary students we are educating – from medical doctors who are educated in the international medical schools and then return to the U.S. and Canada to obtain residencies and practice in rural and underserved areas – to technology and business graduates who successfully upskill and use their newfound skills to expand their career opportunities.

BUILDING ON OUR MOMENTUM — FISCAL 2018 AND BEYOND

I am excited about the year ahead. Our team is energized as we continue to transform Adtalem Global Education. Our mission to empower our students influences everything we do – from the programs we develop, to the delivery channels we offer, to the corporate partnerships we pursue.

On behalf of our board and all of our colleagues across Adtalem, I would like thank you, our fellow owners, for your support and ongoing feedback. We still have much work ahead of us, but the steps we are taking are leading to improved results. We are very fortunate to have partners in education and investment who understand what’s at stake and have confidence in our ability to execute on our strategy.



Lisa W. Wardell
President & CEO

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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3005 Highland Parkway
Downers Grove, IL 60515-5799

NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS

Date:
November 8, 2017
Time:
9:00 a.m. Central Standard Time
Place:
Adtalem Global Education
3005 Highland Parkway
Downers Grove, Illinois 60515
   
 
Record date:
September 20, 2017
 
Items of business:
(1)
Elect the directors named in the attached Proxy Statement to serve until the 2018 Annual Meeting of Shareholders
 
 
 
 
(2)
Ratify appointment of PricewaterhouseCoopers LLP (“PwC”) as Adtalem’s independent registered public accounting firm for fiscal year 2018
 
 
 
 
(3)
Say-on-Pay: Conduct an advisory vote to approve the compensation of named executive officers
 
 
 
 
(4)
Say-on-Frequency: Conduct an advisory vote to determine the frequency of future advisory votes on the compensation of named executive officers
 
 
 
 
(5)
Approve the Third Amended and Restated Incentive Plan of 2013
 
 
 
 
(6)
Consider such other business as may come properly before the Annual Meeting or any adjournment thereof
 
 
 
Date of mailing:
This notice and Proxy Statement, voting instructions, and Adtalem Global Education’s 2017 Annual Report to Shareholders are being mailed to shareholders beginning on or about October 4, 2017.



GENA L. ASHE
Senior Vice President, Chief Legal Officer
and Corporate Secretary

October 4, 2017

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

VIA THE INTERNET
Visit the web site listed on your proxy card

BY MAIL
Sign, date and return your proxy card in the enclosed envelope

BY TELEPHONE
Call the telephone number on your proxy card

IN PERSON
Attend the Annual Meeting in Downers Grove, Illinois

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on November 8, 2017. Our Proxy Statement and the Adtalem Global Education Inc. Annual Report for 2017 are available online at www.proxyvote.com or at our investor relations website, http://investors.adtalem.com/.

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Proxies and Voting Information
PROXY STATEMENT

GENERAL INFORMATION

ANNUAL MEETING INFORMATION

We are providing this Proxy Statement to you in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Adtalem Global Education Inc. (“Adtalem”) for the 2017 Annual Meeting of Shareholders and for any adjournment or postponement of the meeting (the “Annual Meeting”). We expect to begin mailing our proxy materials on or about October 4, 2017.

Time and Place: We are holding the Annual Meeting at 9:00 a.m. Central Standard Time on Wednesday, November 8, 2017, at Adtalem’s home office at 3005 Highland Parkway, Downers Grove, Illinois 60515.

Attendance Requirements: You may attend the Annual Meeting and vote in person even if you have returned a proxy in writing, by telephone or through the Internet.

Street-Name Holders: If you hold shares in a bank or brokerage account (known as shares held in “street name”), you must obtain a valid “legal proxy,” executed in your favor from the holder of record, if you wish to vote these shares at the Annual Meeting.

Matters for Shareholder Voting

At this year’s Annual Meeting, we are asking our shareholders to vote on the following matters:

 
Proposal
Board Recommendation
Rationale for Board
Recommendation
1.
Election of Directors
   
Elect directors to serve until the 2018 Annual Meeting of Shareholders

• Diverse mix of backgrounds, represented by former Adtalem founder, current and former CEOs and a finance executive at a leading global company
2.
Ratification of Auditor
   
Ratification of appointment of PwC as Adtalem’s independent registered public accounting firm for fiscal year 2018

• Independent with few ancillary services for Adtalem
• Extensive global expertise
3.
Say-on-Pay
   
Advisory vote to approve the compensation of Adtalem’s named executive officers

• Strong linkage of pay to both academic and financial performance
• Balanced compensation program aligning performance to interests of students and all stakeholders
4.
Frequency of Say-on-Pay
   
Advisory vote to determine the frequency of future advisory votes on compensation awarded to named executive officers

• Our shareholders have expressed interest in annual say-on-pay proposals
• The Board values the opportunity to receive annual feedback to respond to changing market conditions
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PROXY STATEMENT
Proxies and Voting Information

 
Proposal
Board Recommendation
Rationale for Board
Recommendation
5.
Amended and Restated Incentive Plan
   
The Board has adopted the Third Amended and Restated Incentive Plan of 2013 and is recommending the shareholders approve it

• The amended and restated 2013 Plan authorizes an additional 3,300,000 shares for future issuance
• The amended and restated 2013 Plan includes a number of provisions that reflect best practice, including double-trigger vesting, minimum vesting requirements and an annual limit on equity awards to directors
• The amended and restated 2013 Plan is integral to Adtalem’s compensation strategies and programs

How to View Proxy Materials Online

Our Proxy Statement and the Adtalem Global Education Inc. Annual Report for 2017 are available online at www.proxyvote.com or at our investor relations website, http://investors.adtalem.com/.

Delivery of Proxy Statement

Adtalem will bear the expense of soliciting proxies and will reimburse all shareholders for the expense of sending proxies and proxy material to beneficial owners, including expenditures for foreign mailings. The solicitation initially will be made by mail but also may be made by Adtalem colleagues by telephone, electronic means or personal contact.

HOW TO VOTE

Please vote promptly. We encourage you to vote as soon as possible, even if you plan to attend the Annual Meeting in person. Your vote is important, and for all items other than ratification of our independent registered public accounting firm, your shares will not be voted by your bank or broker if you do not provide voting instructions. You may vote shares of Adtalem common stock (“Common Stock”) that you owned as of September 20, 2017, which is the record date for the Annual Meeting.

You may vote the following ways:

BY TELEPHONE
BY INTERNET
BY MAIL
IN PERSON
In the United States or Canada, you can vote your shares by calling 1-800-690-6903
You can vote your shares online at www.proxyvote.com
You can vote by mail by marking, dating and signing your proxy card or voting instruction form and returning it in the accompanying postage-paid envelope
Attend our Annual Meeting and cast your vote in person at Adtalem’s home office at 3005 Highland Parkway, Downers Grove, Illinois 60515

For telephone and internet voting, you will need the 12-digit control number included on your proxy card or in the instructions that accompanied your proxy materials.

Telephone and internet voting are available through 11:59 p.m. Eastern Standard Time on Tuesday, November 7, 2017.

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Proxies and Voting Information
PROXY STATEMENT

Revocation of Proxies

You can revoke your proxy at any time before your shares are voted at the Annual Meeting if you:

Submit a written revocation to our Secretary,
Submit a later-dated proxy or voting instruction form,
Provide subsequent telephone or Internet voting instructions, or
Vote in person at the Annual Meeting.

If you sign and return your proxy card or voting instruction form without any voting instructions with respect to a matter, your shares will be voted by the proxy committee appointed by the Board (and each of them, with full powers of substitution) in accordance with the Board’s recommendation.

Voting at the Annual Meeting

The way you vote your shares prior to the Annual Meeting will not limit your right to change your vote at the Annual Meeting if you attend in person and vote by ballot. If you hold shares in street name and you want to vote in person at the Annual Meeting, you must obtain a valid legal proxy from the record holder of your shares at the close of business on the record date indicating that you were a beneficial owner of shares, as well as the number of shares of which you were the beneficial owner, on the record date, and appointing you as the record holder’s proxy to vote these shares. You should contact your bank, broker or other intermediary for specific instructions on how to obtain a legal proxy.

Additional information regarding voting procedures and the Annual Meeting can be found under “Voting Instructions and Information” on page 83.

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PROXY STATEMENT
Corporate Governance

CORPORATE GOVERNANCE PRACTICES

KEY CORPORATE GOVERNANCE FACTS

 
 
 
Board Independence
8 out of 10 of our current directors are independent, including the chair of the Board (“Board Chair”)
Our Audit and Finance, Compensation, and Nominating & Governance committees are composed entirely of independent directors
Our CEO is the only member of management who serves as a director
Board Diversity
2 out of our 8 independent directors, and 3 out of our 10 directors, are female
3 out of our 8 independent directors are persons of color
5 out of our 10 directors are active or former CEOs or the equivalent
3 out of our 10 directors have experience in the higher education sector
Shareholder Rights and Engagement
Our Board is fully declassified and all directors are elected annually
Our Board has an established policy, set forth in our Governance Principles, to call a special meeting of shareholders under certain circumstances if requested by shareholders owning for a period of one year or longer more than 25% of our outstanding shares
Each share of Common Stock is entitled to one vote
We do not have a shareholder rights plan
We conduct regular outreach and engagement with our shareholders and value their insight and feedback
NEW THIS YEAR: Proxy Access: We have adopted proxy access, which allows any shareholder or group of up to 20 shareholders holding both investment and voting rights to at least 3% of Adtalem’s Common Stock for at least three years to nominate the greater of (i) two or (ii) 20% of Adtalem’s directors to be elected at an annual meeting of shareholders
NEW THIS YEAR: Majority voting with plurality carve out: Our By-Laws provide that any uncontested question brought before any meeting of Adtalem’s shareholders (other than the election of directors) will be decided by the affirmative vote of a majority of the total number of votes of Adtalem’s capital stock represented. Contested matters brought before any meeting of Adtalem’s shareholders will be decided by a plurality of the votes of Adtalem’s capital stock represented
NEW THIS YEAR: Independent Lead Director: Our Governance Principles require a Lead Independent Director to be appointed in the event that the Board Chair is not an independent director
NEW THIS YEAR: Director resignation requirement: Our Governance Principles require a director whose principal job responsibility changes substantially during his or her tenure to tender his or her resignation, subject to acceptance by the Board
NEW THIS YEAR: Outside board service limits: Our Governance Principles limit directors to service on only three other boards of publicly traded companies and limit members of Adtalem’s Audit and Finance Committee to service on two other audit committees of publicly traded companies
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Corporate Governance
PROXY STATEMENT

 
 
 
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 the committee meetings
Our Board and each of its committees are authorized to retain independent advisors
Director Stock Ownership
39% of our non-management directors’ annual compensation (excluding committee Chair fees) is in the form of restricted stock units (RSUs)
Our non-management 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 discussion with senior management
Our directors have access to all members of management

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PROXY STATEMENT
Corporate Governance

SUMMARY OF BOARD AND COMMITTEE STRUCTURE

Adtalem’s Board of Directors held 11 meetings during fiscal year 2017, consisting of 9 regular meetings and 2 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 current members and current chairs, its key responsibilities and the number of meetings held during fiscal year 2017. Current copies of the charters of each of these committees and a current copy of Adtalem’s Governance Principles can be found on Adtalem’s website, www.adtalem.com, and are also available in print to any shareholder upon request from the Secretary of Adtalem, 3005 Highland Parkway, Downers Grove, IL 60515-5799. The Board has determined that the members of the Audit and Finance, Compensation, and Nominating & Governance committees are independent within the meaning of applicable laws and NYSE listing standards in effect at the time of determination.

 
Key Responsibilities
Meetings in
fiscal year
2017
Directors
Report
Adtalem Board of Directors
   •
Strategic oversight
11
Chair: Christopher B. Begley
    •    8 of 10 directors are
          independent
n/a
   •
Corporate governance
   •
Leadership
   •
Risk oversight
   •
CEO succession planning
Academic Quality Committee
   •
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
3
Chair: Ronald L. Taylor
    •    Ann Weaver Hart
    •    Kathy Boden Holland
    •    James D. White
n/a
   •
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
   •
Monitors Adtalem’s financial reporting processes, including its internal control systems and the scope, approach and results of audits
9
Chair: William W. Burke(1)
    •    Kathy Boden Holland
    •    Fernando Ruiz
The Board has determined that Mr. Burke is qualified as an audit committee financial expert
Page 67
   •
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
Compensation Committee
   •
Oversees all compensation practices and reviews eligibility criteria and award guidelines for Adtalem’s compensation program
5
Chair: Fernando Ruiz
    •    William W. Burke
    •    Lyle Logan
    •    Michael W. Malafronte
Page 48
   •
Assists the independent members of the Board in establishing the CEO’s annual goals, objectives and compensation
   •
Reviews and recommends to the Board compensation paid to non-employee directors
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Corporate Governance
PROXY STATEMENT

 
Key Responsibilities
Meetings in
fiscal year
2017
Directors
Report
External Relations Committee
   •
Provides awareness and oversight of Adtalem’s external relations strategy, policy and practice
2
Chair: James D. White
   •   Ann Weaver Hart
   •   Michael W. Malafronte
   •   Ronald L Taylor
n/a
   •
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
Nominating & Governance Committee
   •
Reviews Board and committee structure and leads the Board self-evaluation process
4
Chair: Lyle Logan(1)
   •   Michael W. Malafronte
   •   James D. White
n/a
   •
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
(1) Following Ms. Wardell’s resignation from the position in connection with appointment as President and CEO of Adtalem in May 2016, Mr. Logan was appointed by the Board as chair of the Audit and Finance Committee. Mr. Logan served in such position until the Mr. Burke was appointed by the Board in February 2017 as chair of the Audit and Finance Committee. During the term of Mr. Logan’s service as chair of the Audit and Finance Committee, Mr. Begley served as Chair of the Nominating & Governance Committee. In connection with the appointment of Mr. Burke as chair of the Audit and Finance Committee, the Board re-appointed Mr. Logan as Chair of the Nominating & Governance Committee in February 2017.

INDEPENDENT BOARD CHAIR

Since 2004, the offices of Board Chair and CEO have been held by different individuals, with the Board Chair currently being Mr. Begley, an independent director. The Board believes that the existing leadership structure currently serves Adtalem and its shareholders well. The Board has no specific policy with respect to the separation of the positions of Board Chair and CEO. However, in order to ensure continued Board independence, the Board has adopted a policy that, in the event the Board Chair and CEO roles are combined, or the Board Chair is not otherwise independent, the Board shall appoint a Lead Independent Director. The Board believes that this issue should be part of the succession planning process and that it is in the best interests of Adtalem and its shareholders for the Board to make a determination regarding this issue when it annually elects the Board Chair. During fiscal year 2017, the Board met in executive session without employee directors or other employees present at each regular Board meeting. Adtalem’s Board Chair presided over these sessions as the non-executive Board Chair.

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PROXY STATEMENT
Corporate Governance

DIRECTOR ATTENDANCE

Attendance at Board Meetings

During fiscal year 2017, our Board met 11 times. All of the Adtalem directors attended 75% or more 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 2017.

Attendance at Annual Meetings

All of our directors who were directors at the time were present at the 2016 Annual Meeting of Shareholders, held in November 2016. Our Board encourages all of its members to attend the Annual Meetings but understands there may be situations that prevent such attendance.

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Corporate Governance
PROXY STATEMENT

SUMMARY INFORMATION ABOUT OUR DIRECTORS

Name and
Principal Occupation
Age
Director
Since
Independent
Committee Memberships
Other Public
Company Boards
AUD
ACA
COM
ER
NG
Christopher B. Begley (Chair)
Founder and former
Chairman and CEO,
Hospira, Inc. (Retired)
65
2011
x
 
 
 
 
 
2
William W. Burke(1)
President and Founder,
Austin Highlands Advisors, LLC
58
2017
x
c
 
x
 
 
2
Ann Weaver Hart
President,
University of Arizona
68
2016
x
 
x
 
x
 
 
Kathy Boden Holland(2)
Executive Vice President,
Elevate
50
2017
x
x
x
 
 
 
 
Lyle Logan
Executive Vice President
and Managing Director,
Northern Trust Corporation
58
2007
x
 
 
x
 
c
1
Michael W. Malafronte
Managing Partner, International Value
Advisers, LLC,
and President, IVA Funds
43
2016
x
 
 
x
x
x
1
Fernando Ruiz
Corporate Vice President
The Dow Chemical Company
61
2005
x
x
 
c
 
 
 
Ronald L. Taylor
Senior Advisor,
Former CEO,
Adtalem Global Education
73
1987
 
 
c
 
x
 
1
Lisa W. Wardell
President and CEO,
Adtalem Global Education
48
2008
 
 
 
 
 
 
 
James D. White
Retired Chairman, CEO and President
Jamba, Inc.
56
2015
x
 
x
 
c
x
1
AUD
Audit and Finance Committee
COM
Compensation Committee
ACA
Academic Quality Committee
ER
External Relations Committee
NG
Nominating & Governance Committee
c
Committee Chair
x
Committee Member
 
 
(1) Appointed to the board of directors on January 12, 2017. Mr. Burke was appointed to the Compensation Committee and as chair of the Audit and Finance Committee, on February 16, 2017.
(2) Appointed to the board of directors on January 12, 2017. Ms. Boden Holland was appointed to the Academic Quality Committee and the Audit and Finance Committee on February 16, 2017.
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PROXY STATEMENT
Proposal No. 1 — Election of Directors

PROPOSAL NO. 1 — ELECTION OF DIRECTORS

The current size of the Board of Directors is ten directors. The Board has nominated each of Adtalem’s sitting directors and recommends their re-election, each for a term to expire in 2018. 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 William W. Burke, Ann Weaver Hart, Kathy Boden Holland, Lyle Logan, Michael W. Malafronte, Ronald L. Taylor, Lisa W. Wardell and James D. White as directors unless otherwise specified in such proxy. A proxy cannot be voted for more than ten 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 “Additional Information — Director Nominating Process and Factors Considered,” 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, so for a nominee to be elected as a member of the Board, the nominee must receive more FOR votes than the aggregate WITHHOLD votes, abstentions and broker non-votes. 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 the CEO or the Secretary, subject to acceptance by the Board.

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

   
 
Election of Directors

The Board of Directors recommends a vote FOR each of the nominees listed below.

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Proposal No. 1 — Election of Directors
PROXY STATEMENT

NOMINEES

WILLIAM W. BURKE
William W. Burke has been a director of Adtalem since January 2017. 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 until June 2008. From 2001 to 2004, he served as Chief Financial Officer of Cholestech Corporation, a medical diagnostic products company. Mr. Burke has served on numerous public and private company boards and currently serves on the board of directors of Invuity, Inc., Tactile Systems Technology, Inc., and Myocardial Solutions, Inc. He previously served on the board of directors of LDR Holding Corporation (acquired by Zimmer Biomet in July 2016) and Medical Action Industries (acquired by Owens & Minor in October 2014). Mr. Burke received his BBA in Finance from The University of Texas at Austin and an MBA from The Wharton School of the University of Pennsylvania.

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.
President
Austin Highlands Advisors, LLC
Age: 58
Director since 2017
Committees:
Audit and Finance (Chair)
Compensation
   
 
ANN WEAVER HART
Dr. Hart has been a director of Adtalem since February 2016. Ann Weaver Hart served as President of the University of Arizona from July 2012 until her retirement from higher education administration in June 2017. Dr. Hart continues to teach as professor of educational policy studies & practice in the College of Education, a post she also held during her presidency at the University of Arizona. During her tenure as president at the University of Arizona, Dr. Hart successfully led efforts to create and implement a fully integrated strategic academic and business plan to sustain the University of Arizona’s world-class education, research, and impact. Prior to her service at the University of Arizona, Dr. Hart was President of Temple University from July 2006 to July 2012, President of the University of New Hampshire from 2002 to 2006 and provost and vice president for academic affairs at Claremont Graduate University in Claremont, California from 1998 to 2002. Prior to her university-wide service, Dr. Hart served as professor of educational leadership, dean of the Graduate School and special assistant to the president at the University of Utah. In addition to her role at the University of Arizona, Dr. Hart is a member of the Association of American Universities, the Association of Public and Land-Grant Universities, the Association of College and University Educators (ACUE) Board of Advisors, and she is an advisor for the Lincoln Project: Excellence and Access in Public Higher Education at the American Academy of Arts and Sciences. Dr. Hart has received numerous professional and community service awards for her work, including the Michael P. Malone International Leadership Award from the Association of Public and Land-Grant Universities; the Girl Scouts of the USA Take the Lead Award; the Jack Culbertson Award in Educational Administration from the University Council for Educational Administration; and the PoWer Award from the Professional Women’s Roundtable. Dr. Hart holds a BS and MS in History and a Ph.D in Educational Administration, all from the University of Utah.

Relevant Experience

•   
Dr. Hart’s experience as a successful president of and dean at several leading universities, deep experience as a teacher and scholar recognized internationally for research on leadership succession, organizational behavior, and work redesign in educational organizations, bring a strong and knowledgeable academic, operational, and strategic perspective to the Board deliberations.
President Emerita
University of Arizona
Age: 68
Director since 2016
Committee:
Academic Quality
External Relations
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PROXY STATEMENT
Proposal No. 1 — Election of Directors

   
 
KATHY BODEN HOLLAND
Kathy Boden Holland has been a director of Adtalem since January 2017. Since August 2016, Ms. Holland has served as Executive Vice President, Bank Products, of Elevate Credit, Inc., an online credit solution for non-prime consumers. She served as Chief Risk Officer and Executive Vice President, Corporate Development, of Elevate Credit from May 2014 until July 2016. From August 2012 to May 2014, she served as Executive Vice President, Corporate Development, of Think Finance Incorporated, an online financial product company. From October 2010 until August 2012, she served as President of RLJ Financial LLC, a portfolio company focused on developing and marketing new consumer credit products for the underbanked. Ms. Holland also serves as an Advisory Board Member of Capital A Partners, an early stage venture capital firm. Ms. Holland holds a BS in economics from University of Pennsylvania, The Wharton School, and an MBA from the University of North Carolina, Kenan-Flagler Business School.

Relevant Experience

•   
Ms. Boden Holland’s brings to the Adtalem board of directors a keen knowledge of, and a depth of experience with, corporate finance, acquisitions, risk management, regulatory compliance and strategic planning. Her leadership experience and subject matter expertise provide a perspective that is critical to ensuring continued and sustainable growth at Adtalem.
Executive Vice President, Bank Products
Elevate Credit, Inc.
Age: 50
Director since 2017
Committee:
Academic Quality
Audit and Finance
   
 
LYLE LOGAN
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 Northern Trust 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 undergraduate 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. Mr. Logan currently serves as a director of Heidrick & Struggles International Inc.

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.
Executive Vice
President and
Managing Director,
Northern Trust Corporation
Age: 58
Director since 2007
Committee:
Nominating & Governance
(Chair)
Compensation
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PROXY STATEMENT

MICHAEL W. MALAFRONTE
Mr. Malafronte has been a director of Adtalem since June 2016. Mr. Malafronte is a founding partner of International Value Advisers, LLC (IVA) where he serves as managing partner and is responsible for overseeing all aspects of IVA, including developing company strategy and managing resources. Prior to IVA, 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. Prior to the First Eagle Funds, Mr. Malafronte was a portfolio manager at Oppenheimer & Close, where he assisted in the launch of a domestic hedge fund and offshore partnership and was responsible for all facets of portfolio management for the investment partnerships, including idea generation, in-depth research and stock selection. Mr. Malafronte currently serves as a director of IVA Fiduciary Trust. Mr. Malafronte earned a B.S. in finance and investments from Babson College.

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 a firm understanding of Adtalem’s shareholders and deeply informs Adtalem’s financial planning.
Managing Partner,
International Value Advisers
Age: 43
Director since 2016
Committees:
Compensation
External Relations
Nominating & Governance
   
 
RONALD L. TAYLOR
Mr. Taylor has been a director of Adtalem since November 1987. In July 2004 he became Adtalem’s Chief Executive Officer and served in that capacity until November 2006. He has served as a Senior Advisor to Adtalem since November 2006. From August 1987 until his November 2002 appointment as Co-Chief Executive Officer, he was President and Chief Operating Officer. In 1973 Mr. Taylor co-founded Keller Graduate School of Management and was its President and Chief Operating Officer from 1981 to 1987 and its Chief Operating Officer from 1973 until 1981. For over thirty-five years, Mr. Taylor served as a consultant /evaluator for the Higher Learning Commission. Mr. Taylor is a former member of the Board of Trustees of the North Central Association of Colleges and Schools and the Higher Learning Commission. Mr. Taylor received his undergraduate degree, cum laude, in government and international relations from Harvard University, and his master’s degree in business administration from Stanford University. Mr. Taylor currently serves as a director of Fusion Education Group.

Relevant Experience

•   
Mr. Taylor’s experience as a co-founder, long-serving director and senior executive of Adtalem, including several years as co- or sole Chief Executive Officer, give him a deep understanding of Adtalem, a broad knowledge of the education marketplace and a historical perspective on its development. His role as the first and only person from a proprietary university to serve on the board of the Higher Learning Commission gives him unique experience in the accreditation process.
Senior Advisor,
Former CEO,
Adtalem Global Education
Age: 73
Director since 1987
Committees:
Academic Quality
(Chair)
External Relations
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PROXY STATEMENT
Proposal No. 1 — Election of Directors

LISA W. WARDELL
Ms. Wardell has been a director of Adtalem since November 2008 and was appointed as the President and Chief Executive Officer of Adtalem on May 24, 2016. 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 since 2004. 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 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 start-up 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 1994-1996, Ms. Wardell was an attorney with the Federal Communications Commission where she worked in the commercial wireless division. Ms. Wardell received her undergraduate degree in political science 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. Ms. Wardell formerly served as non-executive chairman of Christopher & Banks Corporation (NYSE: CBK), where she served as an independent director from June 2011 to January 2017. In addition to her work at Adtalem, Ms. Wardell serves on the advisory board of McLarty Capital Partners, a $225 million small business fund, is a member of the executive network of RLJ Equity Partners, a middle-market private equity fund, and is a National Association of Corporate Directors (NACD) Board Leadership Fellow.

Relevant Experience

•   
Ms. Wardell’s role as Chief Executive Officer 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.
President and CEO
Adtalem Global Education
Age: 48
Director since 2008
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PROXY STATEMENT

JAMES D. WHITE
Mr. White has been a director of Adtalem since June 2015. In 2016 he retired from his role as Chairman, President and Chief Executive Officer 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, he served as Senior Vice President of Business Development, North America at The Gillette Company, Inc. and held several positions at Nestlé Purina, including Vice President, Customer Interface Group. Mr. White began his career at the Coca-Cola Company. He serves as the Executive Chairman Bradshaw International and sits as a member on the board of Callidus Cloud. Mr. White previously served as a director of Jamba, Inc., Daymon Worldwide, Inc., Hillshire Brands Company, Panera Bread Co., and Keane Inc. Mr. White received his MBA from Fontbonne University and holds a Bachelor of Science Degree from the University of Missouri, Columbia.

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.
Retired Chairman, CEO and President,
Jamba, Inc.
Age: 56
Director since 2015
Committees:
External Relations (Chair)
Academic Quality
Nominating & Governance

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PROXY STATEMENT
Proposal No. 1 — Election of Directors

DIRECTOR INDEPENDENCE

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 New York Stock Exchange (“NYSE”).

As a result of this review, the Board affirmatively determined that, with the exception of Mr. Taylor and Ms. Wardell, all of Adtalem’s directors are “independent” of Adtalem and its management within the meaning of the applicable NYSE rules. Mr. Taylor is considered an inside director because of his status as a Senior Advisor to Adtalem. 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 Northern Trust Corporation, at a subsidiary of which Adtalem maintains depository accounts and through which a significant portion of Adtalem’s disbursement activity is conducted, because Mr. Logan is Executive Vice President and Managing Director, Global Financial Institutions Group, with Northern Trust Global Investments, a business unit of Northern Trust Corporation. In fiscal year 2017, Adtalem incurred approximately $317,000 in fees to Northern Trust Corporation, which were partially offset against compensating balance credits earned on an average monthly outstanding balance of approximately $22.9 million. The Board concluded, after considering (i) that the relationship with Northern Trust Corporation predates Mr. Logan joining the Board, (ii) that Mr. Logan has had no involvement in the Adtalem banking transactions, and (iii) the lack of materiality of the transactions to Adtalem and to Northern Trust Corporation, and (iv) the fact that the terms of the transactions are not preferential either to Adtalem or to Northern Trust Corporation, 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.

DIRECTOR CONTINUING EDUCATION

Members of the Board of Directors are encouraged to participate in continuing education and enrichment classes and seminars. During fiscal year 2017, Ms. Wardell and Mr. Burke attended the NACD’s Cyber Summit. Mr. Burke also attended the NACD Master Class and qualified as a NACD Board Leadership Fellow in fiscal year 2017.

DIRECTOR APPOINTMENT ARRANGEMENTS

On June 30, 2016, Adtalem entered into a Support Agreement (the “Support Agreement”) with each of the members of International Value Advisers, LLC (collectively, “IVA”) and Michael W. Malafronte, in his individual capacity and as a member of IVA, pursuant to which Adtalem increased the size of the Board by one director and appointed Mr. Malafronte to the newly-created vacancy. The Support Agreement also includes, among other provisions, certain standstill and voting commitments by IVA. The standstill period shall extend until such time as Mr. Malafronte, or any replacement of Mr. Malafronte designated by IVA pursuant to the Support Agreement, is no longer a member of the Board. Pursuant to the Support Agreement, Mr. Malafronte must resign from the Board if (i) he agrees to be included as a director nominee for election at any meeting of Adtalem shareholders other than as a director nominated by the Board for election at such meeting, (ii) IVA and its affiliated entities cease collectively to beneficially own or have other ownership interest in an aggregate net long position of at least 10% of the outstanding shares of Adtalem’s Common Stock (the “10% Ownership Requirement”) or (iii) either of IVA or Mr. Malafronte materially breaches any obligation under the Support Agreement and fails to cure such breach. On December 8, 2016, Adtalem entered into a letter agreement with IVA and Mr. Malafronte relating to the Support Agreement (the “Letter Agreement”). Pursuant to the Letter Agreement, Adtalem has agreed that Mr. Malafronte may remain a member of the Board for the duration of his term ending at the Annual Meeting. Due to Mr. Malafronte’s professional experience and the contributions he has made to the Board, the Board has nominated him for re-election for the term ending at the 2018 Annual Meeting of Shareholders and, in so doing, extended the Letter Agreement.

CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS

Various Adtalem policies and procedures, including the Code of Conduct and Ethics, which applies to Adtalem’s directors, officers and all other colleagues, and annual questionnaires completed by all Adtalem directors, director nominees and executive officers, require disclosure of transactions or relationships that may constitute conflicts of interest or otherwise

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Proposal No. 1 — Election of Directors
PROXY STATEMENT

require disclosure under applicable Securities and Exchange Commission (“SEC”) rules. The Board annually reviews the continuing independence of Adtalem’s non-employee directors under applicable laws and rules of the 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.

No relationships or transactions existed or occurred between Adtalem and any officer, director or nominee for director, or any affiliate of or person related to any of them, since the beginning of Adtalem’s last fiscal year, of the type and amount that are required to be disclosed under applicable SEC rules.

BOARD OF DIRECTORS’ ROLE IN 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
    •
Financial controls
    •
Risk management policies and procedures
    •
Legal and regulatory compliance, including compliance and ethics program
    •
Capital structure
    •
Investments
    •
Foreign exchange
Compensation Committee
    •
Compensation program
    •
Talent development
    •
Management succession planning
External Relations Committee
    •
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 Chair and CEO succession

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PROXY STATEMENT
Proposal No. 1 — Election of Directors

COMMUNICATIONS WITH DIRECTORS

Shareholders and other interested parties wishing to communicate with the Board or any member or committee of the Board are encouraged to send any communication to: Secretary, Adtalem Global Education, 3005 Highland Parkway, Downers Grove, IL 60515-5799 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 Secretary will compile and promptly forward all such communications to the Board.

Communicating Accounting Complaints

Shareholders, Adtalem colleagues 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 Chief Legal Officer of Adtalem at the following address:

Chief Legal Officer
Adtalem Global Education
3005 Highland Parkway
Downers Grove, IL 60515-5799

Accounting Complaints also may be submitted in a sealed envelope addressed to the Chair of the Audit and Finance Committee, in care of the Chief Legal Officer, 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 colleagues may also report Accounting Complaints using any of the reporting procedures specified in Adtalem’s Code of Conduct and Ethics. All reports by colleagues shall be treated confidentially and may be made anonymously. Adtalem will not discharge, demote, suspend, threaten, harass or in any manner discriminate against any colleague in the terms and conditions of his or her employment based upon any lawful actions taken by such colleague with respect to the good faith submission of Accounting Complaints.

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Stock Ownership
PROXY STATEMENT

STOCK OWNERSHIP

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 June 30, 2017, except as otherwise noted.

Name
Amount and Nature of
Beneficial Ownership
Percentage
Ownership
BlackRock, Inc.
 
5,987,058(1
)
 
9.6
%
Fairpointe Capital LLC
 
5,233,476(2
)
 
8.4
%
Dimensional Fund Advisors LP
 
4,765,119(3
)
 
7.6
%
The Vanguard Group.
 
4,075,758(4
)
 
6.5
%
(1) As reported in a statement on Schedule 13G/A filed with the SEC on January 23, 2017, BlackRock, Inc. reported beneficial ownership as of December 31, 2016, with respect to the shares as follows:
Sole voting power:
 
5,834,385
 
Shared voting power:
 
0
 
Sole dispositive power:
 
5,987,058
 
Shared dispositive power:
 
0
 

The address of the principal business office of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10022.

(2) As reported in a statement on Schedule 13G/A filed with the SEC on February 13, 2017, Fairpointe Capital LLC reported beneficial ownership as of December 31, 2016, with respect to the shares as follows:
Sole voting power:
 
5,098,324
 
Shared voting power:
 
0
 
Sole dispositive power:
 
5,172,776
 
Shared dispositive power:
 
60,700
 

The address of the principal business office of Fairpointe Capital LLC is 1 N. Franklin, Suite 330, Chicago, IL 60606.

(3) As reported in a statement on Schedule 13G filed with the SEC on February 9, 2017, Dimensional Fund Advisors LP reported beneficial ownership as of December 31, 2016, with respect to the shares as follows:
Sole voting power:
 
4,665,790
 
Shared voting power:
 
0
 
Sole dispositive power:
 
4,765,119
 
Shared dispositive power:
 
0
 

The address of the principal business office of Dimensional Fund Advisors LP is Building One, 6300 Bee Cave Road, Austin, TX 78746.

(4) As reported in a statement on Schedule 13G filed with the SEC on February 9, 2017, The Vanguard Group reported beneficial ownership as of December 31, 2016, with respect to the shares as follows:
Sole voting power:
 
72,621
 
Shared voting power:
 
7,214
 
Sole dispositive power:
 
3,999,178
 
Shared dispositive power:
 
76,580
 

The address of the principal business office of The Vanguard Group is 100 Vanguard Boulevard, Malvern, PA 19355.

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PROXY STATEMENT
Stock Ownership

SECURITY OWNERSHIP BY DIRECTORS AND NAMED EXECUTIVE OFFICERS

The table below sets forth the number and percentage of outstanding shares of Common Stock beneficially owned by (1) each director of Adtalem, (2) each named executive officer listed on page 22, and (3) all directors and officers of Adtalem as a group, in each case as of June 30, 2017, except as otherwise noted. Adtalem believes that each individual named has sole investment and voting power with respect to the shares of Common Stock indicated as beneficially owned by such person, except as otherwise noted.

Name of Beneficial Owner
Common Stock
Beneficially Owned
Excluding Options and
Full-Value Shares(1)
Stock Options
Exercisable and
Full-Value Shares
Scheduled to Vest
within 60 days
of June 30, 2017
Total
Common Stock
Beneficially Owned
Percentage
Ownership
Non-Employee Directors
 
 
 
 
 
 
 
 
 
 
 
 
Christopher B. Begley
 
11,417
 
 
 
 
11,417
 
 
*
 
William W. Burke
 
 
 
 
 
 
 
*
 
Ann Weaver Hart
 
 
 
 
 
 
 
*
 
Kathy Boden Holland
 
 
 
 
 
 
 
*
 
Lyle Logan
 
13,202
 
 
3,500
 
 
16,702
 
 
*
 
Michael W. Malafronte
 
 
 
 
 
 
 
*
 
Fernando Ruiz
 
13,316
 
 
3,500
 
 
16,816
 
 
*
 
Ronald L. Taylor
 
737,922
 
 
4,375
 
 
742,297
 
 
1.19
%
James D. White
 
2,636
 
 
 
 
2,636
 
 
*
 
Named Executive Officers
 
 
 
 
 
 
 
 
 
 
 
 
Lisa W. Wardell
 
32,828
 
 
127,611
 
 
160,439
 
 
*
 
Patrick J. Unzicker
 
11,021
 
 
48,033
 
 
59,054
 
 
*
 
Susan L. Groenwald
 
14,172
 
 
80,523
 
 
94,695
 
 
*
 
Robert A. Paul
 
11,994
 
 
82,173
 
 
94,167
 
 
*
 
Lisa M. Sodeika
 
4,056
 
 
14,115
 
 
18,171
 
 
*
 
Gregory S. Davis
 
1,046
 
 
100,760
 
 
101,806
 
 
*
 
Steven P. Riehs
 
12,611
 
 
138,911
 
 
151,522
 
 
*
 
All directors and officers as a Group (24 Persons)
 
910,811
 
 
984,238
 
 
1,895,049
 
 
3.04
%
* Represents less than one percent of the outstanding Common Stock.
(1) “Common Stock Beneficially Owned Excluding Options and Full-Value Shares” includes stock held in joint tenancy, stock owned as tenants in common, stock owned or held by spouse or other members of the holder’s household, and stock in which the holder either has or shares voting and/or investment power, even though the holder disclaims any beneficial interest in such stock. Options exercisable and Full-Value Shares that are scheduled to vest within 60 days after June 30, 2017 are shown separately in the “Stock Options Exercisable and Full-Value Shares Scheduled to Vest within 60 days of June 30, 2017” column.
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Stock Ownership
PROXY STATEMENT

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires that Adtalem’s directors, executive officers and holders of more than 10% of Adtalem’s Common Stock file reports of ownership and changes in ownership of Common Stock with the SEC. Based solely upon a review of copies of such reports, or written representations that all such reports were timely filed, with the exception of a late Form 4 reporting sales by Gregory S. Davis pursuant to a trading plan under Rule 10b5-1 of the Exchange Act that were reported late by Adtalem’s equity plan administrator and a late Form 3 filing by Kathy Boden Holland that was reported late due to administrative errors, Adtalem believes that each of its executive officers and directors complied with all Section 16(a) filing requirements applicable to them during fiscal year 2017.

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PROXY STATEMENT
Executive Compensation

EXECUTIVE COMPENSATION

The following pages summarize our executive compensation program for our named executive officers (“NEOs”). Our 2017 NEOs are:

Ms. Lisa W. Wardell, President and Chief Executive Officer, Adtalem Global Education
Mr. Patrick J. Unzicker, Senior Vice President, Chief Financial Officer and Treasurer, Adtalem Global Education
Dr. Susan L. Groenwald, President, Chamberlain University
Mr. Robert A. Paul, Former President, DeVry University
Ms. Lisa M. Sodeika, Senior Vice President, External Relations and Regulatory Affairs, Adtalem Global Education
Mr. Gregory S. Davis, Former Senior Vice President, General Counsel and Secretary, Adtalem Global Education
Mr. Steven P. Riehs, Former Group President, Medical, Professional and Online Education

Compensation Discussion & Analysis

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 leads 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
Our purpose is to empower our students to achieve their goals, find success and make inspiring contributions to the global community. Success 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.
Compete for Talent
Our compensation program is designed to attract, retain and motivate high-performing colleagues, particularly our key executives who are critical to our operations. Our compensation decisions take into account the competitive landscape for talent.
Reward Performance
We reward outstanding performance through:
 •
A short-term incentive program focusing our executives on achieving strong financial results, and superior academic and student outcomes, including through individual performance objectives, and
 •
A long-term incentive program providing a mix of equity vehicles designed to reward shareholder value creation, organizational performance, and successful academic and student outcomes.

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Executive Compensation – Compensation Discussion and Analysis
PROXY STATEMENT

Fiscal Year 2017 Year in Review

2017 FINANCIAL AND OPERATIONAL HIGHLIGHTS

Adtalem made progress in the four priorities established at the beginning of the fiscal year, aimed at strengthening its value proposition, elevating its growth profile, further improving operating leverage and fostering a proactive approach to government relations. Adtalem enters fiscal year 2018 with momentum in pursuit of its primary mission of empowering its students and filling the global work force skills gaps that are prevalent in society.

Adtalem’s fiscal year 2017 financial results reflect continued solid growth in its Medical and Healthcare; Professional Education; and Technology and Business segments, with revenue increasing 2.4 percent, 28.0 percent and 40.9 percent respectively, while U.S. Traditional Postsecondary revenue decreased 21.2 percent. Nonetheless, through substantial expense reduction initiatives, Adtalem achieved fiscal year 2017 net income excluding special items of $178.4 million, compared to $155.3 million in the prior year.

   
 
Fiscal year 2017 revenue was below our expectations, while net income, excluding special items, exceeded our expectations, each as reflected in our fiscal year 2017 operating plan, which served as the basis for our fiscal year 2017 MIP financial performance targets. As a result, the portions of executive officer Management Incentive Plan (MIP) awards based on Adtalem revenue and net income paid out at 91.2% and 123.1% of target, respectively

NEW COMPANY NAME MARKS CONTINUING TRANSFORMATION

In the second half of fiscal year 2017, the company, formerly known as DeVry Education Group, launched a colleague-driven process to select a new name and, in May 2017, obtained shareholder approval to change its name to “Adtalem.” The new name, chosen from over 5,000 colleague submissions, is derived from Latin words meaning “to empower” and signifies the company’s student-focused purpose. Now an owner and operator of seven institutions and a provider of professional education, the new name provides a more flexible platform to support its continued diversification across medical and healthcare, professional education, and technology and business.

CONTINUING STUDENT FOCUS AND STAKEHOLDER ENGAGEMENT

Adtalem continued to enhance its academic offerings and seek operational excellence throughout the year by developing and sharing best practices across its institutions. Notable academic achievements included:

Chamberlain College of Nursing’s recently established Chamberlain University and launch of a Master of Public Health degree program within a new College of Health Professions;
American University of the Caribbean School of Medicine (AUC) partnership with Western Connecticut Health System to enable AUC students to complete global health electives in Asia, Africa, and Latin America;
Ross University School of Veterinary Medicine collaboration with Johns Hopkins Bloomberg School of Public Health to explore research and joint educational activities;
Ross University School of Medicine’s establishment of its Center for Teaching and Learning;
Adtalem Brazil’s first national online MBA programs through its Damásio network; and
DeVry University’s development of its “DeVry Tech Path.”
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Executive Compensation – Compensation Discussion and Analysis

Adtalem also sought to extend its role as a leader in higher education and foster deeper understanding and engagement with policymakers and government officials through its “Student Commitments,” a series of practices and policies that establish critical new standards at all of our Title IV institutions and highlight efforts previously underway. Adtalem also acted to bring certainty to students, colleagues and shareholders by resolving governmental inquiries and actions concerning DeVry University’s advertising regarding student outcomes.

2017 Compensation Decisions and Actions

Factors Guiding Our Decisions
(see page 35 for details)
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
Student academic performance and outcomes
 
 
Updates
Implemented at
the Beginning of
Fiscal Year 2017
Expanded Performance-Based LTI Compensation
   
In fiscal year 2017, Adtalem expanded the portion of performance-based LTI compensation for Adtalem’s CEO, CFO and Group Executives responsible for multiple institutions from 25% to 40%.
   
Reintroduced Financial-Based Performance Shares
   
Adtalem reintroduced financial-based performance shares for certain leaders, and reduced the portion of LTI consisting of options. The new financial-based performance shares payout based on achievement of ROIC targets.
   
Adtalem’s CEO, CFO and Group Executives received annual LTI awards consisting of 40% options, 20% full-value shares (time vesting restricted stock units), 20% financial-based performance shares (performance vesting restricted stock units, based on ROIC attainment) and 20% mission-based performance shares (performance vesting restricted stock units, based on academic performance and student outcomes). Adtalem also expanded the portion of performance-based LTI for its other executive officers from 25% to 30%.
   
A summary of the new weightings, including the use of financial-based performance shares (discussed below), follows:
 
 
 
 
 
 
 
Options
(weight)
RSUs
(weight)
PSUs
(weight)
 
CEO
40%
20%
20% financial /20% mission
 
CFO & Group Executives
40%
20%
20% financial /20% mission
 
Single Institution Leaders
40%
30%
30% mission*
 
Home Office Functional Leaders
40%
30%
30% financial
 
*Performance Share Award for President of Becker Professional Education is financial-based.

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PROXY STATEMENT

 
 
 
 
Adjusted Mission-Based Performance Shares
   
In addition to annual adjustments to academic and student outcome performance targets based on past experience, Adtalem:
 
Changed the minimum financial performance threshold metric for fiscal year 2017 grants from ROIC to EBITDA margin (applicable to the CEO and CFO);
 
Focused performance goals for institutional leaders and group executives to goals solely for institutions under each executive’s leadership;
 
Added a banking feature for annual targets based on annual performance achievement; and
 
Expanded the performance curve for mission-based performance share awards from a range between 80 and 120 percent of target to a range between 50 and 150 percent of target.
Key Fiscal Year
2017
Compensation
Decisions
   
(see page 38 for details)
Base Salary
   
Reflecting Adtalem’s commitment to offering market competitive compensation to our key executives, in fiscal year 2017 Ms. Wardell received a 5% base salary increase. Mr. Unzicker did not receive a salary increase in September 2016 due to the fact that he was promoted to CFO in May 2016 and his salary was increased at the time of promotion. The annual base salary adjustments for the other NEOs, excluding mid-year market adjustments, ranged from 2.00% to 23.72% in September 2016.
   
Annual Incentives
   
For the CEO, 85% of the Management Incentive Plan (MIP) award is based on Adtalem measures of net income and revenue. The remaining 15% is based on individual performance. For the other NEOs, as in fiscal year 2016, 70% of the MIP award is based on financial performance at Adtalem (net income and revenue) or at the institutions for which NEO is responsible (operating income and revenue), and the remaining 30% is based on individual performance.
   
Following the end of fiscal year 2017, the MIP award was paid at 101% of target for the CEO and between 100% and 111% of target for the other NEOs, reflecting the financial performance of Adtalem and its institutions and individual contributions for fiscal year 2017.
   
Long-term Incentives
   
In fiscal year 2017, the CEO received a long-term incentive grant valued at $4.5 million. Values granted to the other NEOs ranged from approximately $344,000 to $571,000.
Changes for
Fiscal Year 2018
Adjusted Committee Leadership Compensation
   
Following a review of Adtalem’s director compensation practices with the Compensation Committee’s independent compensation consultant, Willis Towers Watson, the Compensation Committee approved increases to the annual retainers paid to all directors to $75,000 (from $70,000).
   
Changed Management Incentive Plan Metric to EPS
   
Based on feedback from several of Adtalem’s shareholders, the Compensation Committee approved using Adtalem’s FY18 earnings per share (EPS) as a metric for management incentive plan payouts in lieu of net income, which encourages a balanced capital allocation approach while also incentivizing pursuit of net income growth.
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Shareholder Outreach

We value our shareholders’ opinions on the design and effectiveness of our executive compensation program. At our Annual Meeting of Shareholders in November 2016, 85% of the votes cast in our advisory “say-on-pay” shareholder vote approved our executive compensation package.

As part of Adtalem’s continuing shareholder outreach, Adtalem’s President and CEO, Lisa W. Wardell, and Senior Vice President, CFO and Treasurer, Patrick J. Unzicker, visited Adtalem’s major shareholders during fiscal year 2017. These shareholders owned, to the best of our knowledge, more than 59.5% of our shares outstanding as of the Annual Meeting record date.

Adtalem’s major shareholders expressed varying perspectives, a few common themes emerged from the discussions. Below is a summary of what we heard and the actions we took in response:

What we heard
How we responded
Empower deeper investor engagement
Adopted proxy access. Shareholders holding three percent of our outstanding common stock for three years may include nominations for the greater of two or 20% of our directors in our proxy statement
Changed Adtalem’s voting standard. Except in the case of director elections, uncontested matters now require approval by majority of the votes represented, and uncontested matters must be approved by a plurality of the votes represented
Institutionalize Current Strong Board Leadership
Adopted Lead Independent Director policy. In the event that our Board Chair is not an independent director, we will require the appointment of a Lead Independent Director, who shall have the broad responsibilities set forth in our Governance Principles
Ensure Continued Refreshment
Adopted policy limiting outside directorships. Directors are limited to serving on four boards, including the Adtalem board, and members of the Audit and Finance Committee are limited to serving on three Audit and Finance Committees, including the Adtalem Audit and Finance Committee
Adopted director resignation policy. Directors whose principle job responsibility changes substantially during his or her tenure must tender their resignation, subject to acceptance by the Board

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.

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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, executives can earn in excess of target levels when their 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.


Program Design: Between 58% and 65% of the total direct compensation for our NEOs, is composed of variable pay.
The actual value realized from the annual Management Incentive Plan (“MIP”) award ranges from zero, if threshold performance targets are not met, up to 200% of targeted amounts for exceptional organizational performance.
Under the mission-based Performance Share component of our long-term incentive plan, payout is contingent on meeting academic or student outcome performance goals. The size of the payout is based on meeting academic or student outcome targets established for each institution across Adtalem, as outlined in the table below in “Pay-for-Academic-Performance”.
Under the financial-based Performance Share component of our long-term incentive plan, payout is contingent on meeting a minimum ROIC threshold. If the minimum level of ROIC performance is attained, the size of the payout is then based on achievement against ROIC targets.
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 organizational growth.
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Executive Compensation – Compensation Discussion and Analysis

Adtalem’s incentive compensation program for executives is 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:

 
Short-Term
(Cash)
Long-Term
(Equity)
Long-Term
(Equity)
Long-Term
(Equity)
Long-Term
(Equity)
 
Management
Incentive Plan
Performance Shares
(performance-based
restricted stock units)
Performance Shares
(performance-based
restricted stock units)
Full-Value Shares
(time-based
restricted stock units)
Stock Options
Objective
Short-term operational
business priorities
Medium-term improvement of student outcomes
Long-term shareholder
value creation
Long-term shareholder
value creation
Long-term shareholder
value creation
Time Horizon
1 Year
3 Year
cliff vesting
3 Year
cliff vesting
4 Year
ratable vesting
4 Year
ratable vesting
Performance
Measures
Revenue(1)
Net Income(2)
Individual Goals
Student Outcomes
ROIC
Stock Price
Stock Price
(1) 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.
(2) Metric will be earnings per share (EPS) for fiscal year 2018.

Other key features of our executive compensation program include:

Stock ownership requirements: Our stock ownership guidelines require all senior executives to meet specific ownership targets as a multiple of base salary. This requirement subjects these executives to the same long-term stock price volatility our shareholders experience. Currently, all NEOs and directors who are no longer subject to a phase-in period have met the minimum ownership requirements. See page 45 for more information.
Incentive Compensation Recoupment Policy: If the Compensation Committee determines that an executive received an incentive based on financial results that were restated due to knowing or intentional, fraudulent or illegal conduct on the part of the executive, Adtalem may recover the incentive (in whole or in part). This policy serves to increase transparency and discourage executives from engaging in behavior that could potentially harm Adtalem or its shareholders.
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PROXY STATEMENT

PAY-FOR-ACADEMIC-PERFORMANCE FOCUS

Adtalem’s Mission-Based Performance Shares Put Focus on Student Outcomes

Adtalem’s purpose is to empower students to achieve their academic and career goals. We believe our continuing focus on a student-centered culture of care has distinguished Adtalem, and is essential to preserving and enhancing shareholder value in a challenging regulatory and competitive environment. Our senior executives with direct influence over our institutions should be held accountable to, and rewarded for, the realization of our purpose — specifically, to sustain and continuously improve the quality of our educational programs as reflected in the performance and achievement of students. And since the ongoing achievement of our students is essential to the creation of long-term shareholder value, beginning in August 2012 we decided to tie a portion our Performance Shares to a combination of measures of student achievement for each of our core educational institutions. We call this our “Mission-Based” award, which comprised 20% to 30% of our certain executive officers’ LTI compensation in fiscal year 2017.

Our mission-based Performance Share program stands alone among publicly-held proprietary higher education organizations. Unlike most performance-based equity awards, our mission-based Performance Shares first and foremost reward academic performance and student outcomes. The measures we use in our Performance Shares are important standards of the success of our institutions but they are not widely used in the investor and executive compensation communities. In an effort to enhance investor understanding, we present in this section a review of Adtalem’s Performance Share program – reviewing its history, evolution and place in Adtalem, including a review of the Performance Shares vesting this year.

History of Performance Share Grants

In 2010, we developed a set of Executive Compensation Principles, set forth on page 35, to guide us in the design, evaluation and administration of our executive compensation programs. In 2011, the Compensation Committee reviewed Adtalem’s compensation program through the lens of its Compensation Principles and concluded that, since the success of Adtalem’s students is fundamental to Adtalem’s success, the executive compensation program should evolve to reinforce Adtalem’s student-centered purpose. While Adtalem’s success, as reflected in its financial performance and stock value, is aligned with student success, the Compensation Committee desired an added compensation component that would further align student success with the compensation of Adtalem’s executive leadership.

With this objective, the Compensation Committee engaged its independent consultant, Willis Towers Watson, to work with Adtalem’s leadership in the design of an LTI program focused on student success. The resulting Performance Shares, first awarded in August 2012, were designed to reward long-term academic and student outcome performance over a three year performance period.

We believe our program has served to distinguish us in our competition for leadership talent. Beginning in 2014, to further drive academic performance, Adtalem expanded its Performance Share program to senior management at Adtalem and each of its institutions. Institutional leaders, other than Adtalem’s executive officers, receive a portion of LTI as academic-based Performance Shares, with performance goals aligned to academic performance and student outcomes at their institutions. As noted above in “2017 Compensation Decisions and Actions,” we further refined the program, most notably by increasing the portion of mission-based Performance Shares awarded to our institution leaders from 25% to 30% of overall LTI and by focusing the metrics to reward performance solely at each executive’s institution.

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Review of Performance Share Payouts from 2014 Awards

Performance share awards granted in 2014 vested in 2017, with an overall payout of 66% of target, demonstrating that the high standards established for Adtalem’s institutions were challenging. The table below shows the performance measures and targets established for the 2014 Performance Shares, the performance of each institution against such goals, and the resulting payout attributable to such institution. A summary of each academic performance measure can be found in Appendix B of this Proxy Statement.

 
Performance Goals (FY15-17)
 
 
Institution
Performance Measure
Weighting
Threshold
(80% Payout)
Target
(100% Payout)
Maximum
(120% Payout)
Performance
Achieved
Payout
(as % of Target)
Medical Programs (RUSM & AUC)
USMLE 1st Time Pass Rate: Step II
 
CK
 
 
15
%
 
85
%
 
88
%
 
95
%
 
85
%
 
82
%
USMLE 1st Time Pass Rate: Step II
 
CS
 
 
15
%
 
85
%
 
88
%
 
95
%
 
90
%
 
105
%
Chamberlain
BSN NCLEX 1st Time Pass Rate
 
30
%
 
86
%
 
90
%
 
92
%
 
82
%
 
0
%
DeVry University
Persistence
 
30
%
 
81.7
%
 
82.7
%
 
83.7
%
 
82
%
 
89
%
Carrington
Retention
 
10
%
 
81.5
%
 
82.5
%
 
83.5
%
 
83
%
 
109
%
 
 
 
 
 
 
 
 
 
 
 
Total Payout (as % of Target):
 
66
%

Changes to Performance Shares for Fiscal Year 2017

After two years of experience and learning with the original performance measures used in the 2012 and 2013 grants, the Compensation Committee revised the academic and student outcome-based performance measures for the first time in the awards made to Adtalem executive officers in 2014. As described in Adtalem’s 2015 proxy statement, the Compensation Committee’s changes in 2014 were made with a focus on simplifying the Performance Share award to better motivate leadership, rebalancing the goals based on the contribution of each institution, and focusing the performance goals to allow for measures for acquired institutions in the future in keeping with Adtalem’s diversification strategy. In an effort to ensure that these changes had a balanced impact on the potential payout of the awards, based on the 2015 payouts, the Compensation Committee eliminated from the 2014 and 2015 awards measures that performed above and below target, namely the Step 1 USMLE Pass Rates used at American University of the Caribbean School of Medicine (“AUC”) and Ross University School of Medicine (“RUSM”) as well as the NAVLE 1st Time Pass Rate used at Ross University School of Veterinary Medicine (“RUSVM”).

In 2015, the Compensation Committee further revised the Performance Shares with a view to establishing goals, where feasible, relative to performance across other institutions so that the rigor of such goals is objective and more easily understood. Performance measures and targets at DeVry University and Carrington College were maintained but the performance scales were broadened to mitigate risks that small changes in performance would result in outsized payouts. For RUSM and AUC, a performance measure for the first time pass rate for the USMLE Step I exam was added back in recognition of its ultimate importance for residency placements.

In 2016, the Compensation Committee further revised the Performance Shares to refine the goals, driving greater focus on items that executive officers can control and further strengthening the alignment between pay and performance. Performance measures and targets were added for Adtalem Education of Brazil (“Adtalem Brazil”) in recognition of its size and growth potential. Additionally, the Compensation Committee widened the performance range for Chamberlain’s BSN NCLEX 1st Time Pass Rate goals and also reduced its weighting from 30% to 25%, strengthened the New Student Undergrad Persistence (3rd session of enrollment) metric of DeVry University and reduced its weighting from 30% to 20%, changed the payout curve for Performance Shares at threshold and maximum from 80% and 120% of target, respectively, to 50% and 150% of target, added a banking feature for annual targets, allowing participants to “bank” earned shares based on a single year performance, and changed the minimum financial performance threshold from ROIC to EBIDTA margin for our CEO and CFO.

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A summary of the changes follows:

 
Change
Rationale
Add Institution
Add Adtalem Brazil
Added in recognition of Adtalem’s status comprising the Technology and Business segment and growth potential
Re-weight
BSN NCLEX 1st Time Pass Rate goals weighting: 30% ➜ 25%
Increases pay and performance alignment
New Student Undergrad Persistence (3rd session of enrollment) metric of DeVry University weighting: 30% ➜ 20%
Provides reasonable balance to the equity portfolio
Widened Performance Curve
BSN NCLEX 1st Time Pass Rate goals: 400 bps less than or more than the national nursing college pass rate ➜ 500 bps less than or more than the national nursing college pass rate
To keep appropriate alignment with widened payout percentage possible payouts
Payout curve for Performance Shares at threshold and maximum: 80% and 120% of target, respectively ➜ 50% and 150% of target, respectively
Facilitates pay-for-performance alignment and differentiation
Changed Metric
Changed minimum ROIC requirement for CEO to EBITDA margin
Continue focus on delivering strong results in conjunction with re-introduction of stand-alone ROIC performance shares

Mission-Based Performance Shares Targets for Fiscal Year 2017

As a result of these changes, the resulting Performance Standards for the fiscal year 2017 Performance Share awards were established for the awards for Ms. Wardell and Mr. Unzicker.

 
Performance Goals (FY17-19)
Institution
Performance Measure
Weight
Threshold
(50% Payout)
Target
(100% Payout)
Maximum
(150% Payout)
Chamberlain
BSN NCLEX 1st Time Pass Rate
25%
500 bps less than the national pass rate norm
National nursing college pass rate norm(1)
500 bps more than national pass rate norm
DeVry University
New Student Undergrad Persistence (3rd session of enrollment)
20%
55.0%
56.0%
57.0%
Adtalem Brazil
General Course Index ("IGC")
15%
50th Percentile
60th Percentile
75th Percentile
Medical Programs (RUSM & AUC)
Step I
10%
International med school pass rate norm(2)
Midpoint between threshold and max
U.S. med school pass rate norm(3)
Step II CK
10%
International med school pass rate norm(2)
Midpoint between threshold and max
U.S. med school pass rate norm(3)
Step II CS
10%
International med school pass rate norm(2)
Midpoint between threshold and max
U.S. med school pass rate norm(3)
Carrington
Retention
10%
80.0%
82.5%
85.0%
(1) The national pass rate norm is defined as the 3-year average 1st time pass rate of U.S. national baccalaureate graduates taking the NCLEX exam, as reported by the National Council of State Boards of Nursing (NCSBN) for the CYs 2016, 2017, and 2018.
(2) The international pass rate norm is defined as the 3-year average 1st time pass rate of medical school students attending institutions outside the U.S. or Canada taking the USMLE exams, as reported by the Educational Commission for Foreign Medical Graduates (ECFMG) for CYs 2016, 2017, and 2018.
(3) The U.S. pass rate norm is defined as the 3-year average 1st time pass rate of medical school students attending U.S. institutions taking the USMLE exams, as reported by the National Board of Medical Examiners (NBME) for CYs 2016, 2017, and 2018.
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The following performance goals will be in place for the awards associated with the three-year performance period starting July 1, 2016 (FY17-FY19) for Dr. Groenwald.

 
Performance Goals (FY17-19)
Institution
Performance Measure
Weighting
Threshold
(50% Payout)
Target
(100% Payout)
Maximum
(150% Payout)
Chamberlain
BSN NCLEX 1st Time Pass Rate
33.33%
500 bps less than the national pass rate norm
National nursing college pass rate norm(1)
500 bps more than national pass rate norm
RN-BSN 1st Session Retention
33.33%
83%
85%
87%
Pre-Licensure BSN 3rd Session Retention
33.33%
88%
91%
94%
(1) The national pass rate norm is defined as the 3-year average 1st time pass rate of U.S. national baccalaureate graduates taking the NCLEX exam, as reported by the National Council of State Boards of Nursing (NCSBN) for the CYs 2016, 2017, and 2018.

The following performance goals will be in place for the awards associated with the three-year performance period starting July 1, 2016 (FY17-FY19) for Mr. Paul.

 
Performance Goals (FY17-19)
Institution
Performance Measure
Weighting
Threshold
(50% Payout)
Target
(100% Payout)
Maximum
(150% Payout)
DeVry University
New Student Undergrad Persistence (3rd session of enrollment)
50%
55.0%
56.0%
57.0%
End of Course Evaluation Score (ECE)
50%
3.25
3.45
3.60

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PAY-FOR-FINANCIAL-PERFORMANCE FOCUS

Adtalem’s Financial-Based Performance Shares Reward Strong Capital Allocation Decisions

As noted above, Adtalem acted in fiscal year 2017 to further align its mission-based performance shares with a focus on academic outcomes by removing the financial performance thresholds for grants to all executives other than Adtalem’s CEO and CFO. Adtalem also acted to focus executive performance on capital allocation and stewardship of Adtalem’s resources by shifting a portion of equity awards previously granted as options and time-based restricted stock units to financial-based performance shares. The financial-based performance shares vest after three years based on the greater of ROIC achieved during each fiscal year of the three year performance period or the average ROIC achieved during the three fiscal year performance period.

In fiscal year 2017, half of all Performance Shares awarded to Mr. Wardell, Mr. Unzicker and Mr. Riehs were financial-based performance shares and all of the Performance Shares awarded to Mr. Davis and Ms. Sodeika were financial-based performance shares. The financial-based performance shares, which have a three-year performance period starting July 1, 2016 (FY17-FY19), have the following Adtalem-level ROIC targets:

Performance
Period
Threshold
(50% Payout)
Target
(100% Payout)
Maximum
(150% Payout)
FY2017
 
8.00%
 
 
9.50%
 
 
11.00%
 
FY2018
 
8.00%
 
 
9.50%
 
 
11.00%
 
FY2019
 
8.25%
 
 
9.75%
 
 
12.50%
 
3-Year Goal
 
8.00%
 
 
9.50%
 
 
11.50%
 

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EXECUTIVE COMPENSATION GOVERNANCE AND PRACTICES

 
 
 
 
What We Do
What We Don’t Do
ü
Pay for economic and academic performance
û
Benchmark against other organizations
 
 
 
 
ü
Solicit and value shareholder opinions about our compensation practices
û
Provide tax gross-ups for severance payments
 
 
 
 
ü
Deliver total direct compensation primarily through variable pay
û
Re-price stock options
 
 
 
 
ü
Set challenging short- and long-term incentive award goals
û
Pay dividends on performance-based restricted stock units
 
 
 
 
ü
Use relevant academic and student outcome measures for a portion of our long-term incentive award
û
Provide excessive perquisites
 
 
 
 
ü
Provide strong oversight that ensures adherence to incentive grant regulations and limits
û
Offer a defined benefit pension or supplemental executive retirement plan (SERP)
 
 
 
 
ü
Maintain robust stock ownership requirements
û
Reward executives without a link to performance
 
 
 
 
ü
Adhere to an incentive compensation recoupment policy (“clawback” policy)
 
 
 
 
 
 
ü
Offer market-competitive benefits
 
 
 
 
 
 
ü
Consult with an independent advisor on pay
 
 
 
 
 
 
ü
Prohibit hedging and pledging Adtalem stock
   
 
 

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OVERSIGHT OF PAY AND PHILOSOPHY

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 constituents (including students, colleagues, employers, owners and taxpayers)
Focus on sustaining and enhancing the quality and outcomes of education programs
Promote continued differentiation and expansion of the 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 colleague’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, colleagues, 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 colleague 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 colleagues 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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