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Stock and Savings Plans
 12 Months Ended
Aug. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock and Savings Plans
Stock and Savings Plans
401(k) Plan
We sponsor a 401(k) plan for eligible employees which provides them the opportunity to make pre-tax contributions subject to certain restrictions as set forth in the Internal Revenue Code. Upon a participating employee’s completion of one year of service and 1,000 hours worked, we will match, at our discretion, 30% of such employee’s contributions up to the lesser of 15% of their gross compensation or the maximum participant contribution permitted under the Internal Revenue Code. We are also permitted to make additional discretionary contributions for certain eligible employees. Our contributions were $22.9 million, $20.0 million and $13.6 million for fiscal years 2014, 2013 and 2012, respectively.
Employee Stock Purchase Plan
At our discretion, our Third Amended and Restated 1994 Employee Stock Purchase Plan allows eligible employees to purchase shares of our Class A common stock at quarterly intervals through periodic payroll deductions at a price per share equal to 95% of the fair market value on the purchase date. This plan is deemed to be non-compensatory, and accordingly, we do not recognize any share-based compensation expense for shares purchased under the plan.
Share-Based Awards
We currently have outstanding awards under our Amended and Restated 2000 Stock Incentive Plan (“Plan”). Under this Plan, we may grant non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock units, performance share awards (“PSAs”), and other share-based awards covering shares of our Class A common stock to officers, certain employees, and the non-employee members of our Board of Directors. In general, the awards granted under the Plan vest over periods ranging from one to four years and stock options have contractual terms of 10 years or less. Restricted stock units issued under the Plan may have both performance-vesting and service-vesting components or service-vesting only. PSAs have both performance-vesting and service-vesting components tied to a defined performance period. The majority of our restricted stock units and PSAs contain rights to receive dividends or dividend equivalents, but these rights are forfeitable and Apollo has not historically issued dividends.
Approximately 28.6 million shares of our Class A common stock have been reserved for issuance over the term of the Plan. The shares may be issued from treasury shares or from authorized but unissued shares of our Class A common stock. As of August 31, 2014, approximately 14.1 million authorized and unissued shares of our Class A common stock were available for issuance under the Plan, including the shares subject to outstanding equity awards.
Under the Plan, the exercise price for stock options may not be less than 100% of the fair market value of our Class A common stock on the date of the grant. The requisite service period for all awards is generally equal to the vesting period.
Restricted Stock Units and PSAs
We granted restricted stock units during fiscal years 2014, 2013 and 2012 with both service-vesting and performance-vesting conditions, and with only service vesting. The vesting period of the restricted stock units granted generally ranges from one to four years. We also granted PSAs during fiscal years 2014, 2013 and 2012 that vest based on performance and service vesting conditions. The level at which the performance condition is attained will determine the actual number of shares of our Class A common stock into which the PSAs will be converted. The conversion percentage generally ranges from 0% up to 300% of the target level based on the performance condition attainment. The award holder will vest in one-third of the shares of our Class A common stock into which their PSAs are so converted for each fiscal year the award holder remains employed during the three year performance period. However, the PSAs will immediately convert into fully-vested shares of our Class A common stock at target level or above upon certain changes in control or ownership. The shares of our Class A common stock into which the PSAs are converted will be issued upon the completion of the applicable performance period.
The following provides a summary of activity for our restricted stock units and PSAs (granted PSAs are assumed to convert into shares of our Class A common stock at the target level):
 
Restricted Stock Units
 
Performance Share Awards(1)
 
Number of
Shares
(in thousands)
 
Weighted
Average
Grant Date
Fair Value
 
Number of
Shares
(in thousands)
 
Weighted
Average
Grant Date
Fair Value
Nonvested at August 31, 2011
2,932

 
$
45.78

 
260

 
$
45.74

Granted
1,692

 
36.81

 
145

 
37.50

Vested and released
(905
)
 
46.97

 
—

 
—

Forfeited
(193
)
 
47.12

 
(6
)
 
44.89

Nonvested at August 31, 2012
3,526

 
$
41.10

 
399

 
$
42.76

Granted
2,301

 
20.10

 
47

 
19.80

Vested and released
(1,334
)
 
42.25

 
—

 
—

Forfeited
(527
)
 
39.99

 
(81
)
 
37.45

Nonvested at August 31, 2013
3,966

 
$
28.68

 
365

 
$
40.97

Granted
2,022

 
26.71

 
41

 
26.63

Vested and released
(1,353
)
 
33.38

 
—

 
—

Forfeited
(592
)
 
26.15

 
(93
)
 
38.35

Nonvested at August 31, 2014
4,043

 
$
26.49

 
313

 
$
39.88

(1) The vesting of PSAs is subject to the achievement of the specified performance goals and the number of common shares that will ultimately be issued is calculated by multiplying the number of performance shares by a payout percentage that generally ranges from 0% up to 300%.
As of August 31, 2014, we have $79.4 million and $1.7 million of total unrecognized share-based compensation cost, net of forfeitures, related to unvested restricted stock units and PSAs, respectively. These costs are expected to be recognized over a weighted average period of 2.9 years. The fair value of restricted stock units that vested during fiscal years 2014, 2013 and 2012 was $45.2 million, $56.4 million and $42.5 million, respectively.
Stock Options
We have granted stock options during fiscal years 2014, 2013 and 2012 with a service vesting condition that generally ranges from one to four years. The following provides a summary of our stock option activity:
 
Options Outstanding
 
Number of
Shares
(in thousands)
 
Weighted
Average
Exercise Price
per Share
 
Weighted
Average
Remaining
Contractual Term
(Years)
 
Aggregate
Intrinsic Value ($)(1)
(in thousands)
Balance at August 31, 2011
9,276

 
$
57.18

 
 
 
 

Granted
176

 
36.89

 
 
 
 

Exercised
(157
)
 
43.57

 
 
 
 

Forfeited, canceled or expired
(736
)
 
58.53

 
 
 
 

Balance at August 31, 2012
8,559

 
$
56.90

 
 
 
 

Granted
945

 
17.95

 
 
 
 

Exercised
—

 
—

 
 
 
 

Forfeited, canceled or expired
(5,381
)
 
57.69

 
 
 
 

Balance at August 31, 2013
4,123

 
$
46.94

 
 
 
 

Granted
713

 
26.70

 
 
 
 

Exercised
(5
)
 
19.62

 
 
 
 

Forfeited, canceled or expired
(1,327
)
 
60.07

 
 
 
 

Balance at August 31, 2014
3,504

 
$
37.89

 
3.06
 
$
9,926

Vested and expected to vest as of August 31, 2014
3,398

 
$
38.29

 
2.99
 
$
9,581

Exercisable as of August 31, 2014
2,186

 
$
45.74

 
1.98
 
$
4,585

Available for future grant as of August 31, 2014
5,361

 
 
 
 
 
 
(1) Aggregate intrinsic value represents the sum of the differences between our closing stock price of $27.77 on August 31, 2014 and the exercise prices of all of our options with an exercise price less than $27.77.
As of August 31, 2014, we have $10.1 million of total unrecognized share-based compensation cost, net of forfeitures, related to unvested stock options. These costs are expected to be recognized over a weighted average period of 2.6 years. The fair value of stock options that vested during fiscal years 2014, 2013 and 2012 was $7.3 million, $10.6 million, and $22.8 million, respectively.
The following summarizes information related to outstanding and exercisable options at August 31, 2014:
 
 
Outstanding
 
Exercisable
Range of Exercise Prices
 
Number of
Shares
(in thousands)
 
Weighted Average
Contractual Life
Remaining
(Years)
 
Weighted
Average
Exercise Price
per Share
 
Number of
Shares
(in thousands)
 
Weighted
Average
Exercise Price
per Share
$16.75
 
600

 
2.53
 
$
16.75

 
360

 
$
16.75

$19.62 to $25.79
 
361

 
4.91
 
$
20.54

 
81

 
$
20.11

$26.74
 
682

 
5.95
 
$
26.74

 
—

 
$
—

$33.12 to $42.27
 
778

 
2.27
 
$
40.29

 
699

 
$
40.57

$42.41 to $63.79
 
613

 
1.87
 
$
53.10

 
576

 
$
53.46

$65.26 to $91.20
 
468

 
1.01
 
$
70.08

 
468

 
$
70.08

$169.47
 
2

 
0.66
 
$
169.47

 
2

 
$
169.47

 
 
3,504

 
 
 
 

 
2,186

 
 


The following summarizes information related to stock options exercised during the respective periods:
 
Year Ended August 31,
($ in thousands)
2014
 
2013
 
2012
Intrinsic value realized
$
79

 
$
—

 
$
1,498

Actual tax benefit realized by Apollo for tax deductions
$
30

 
$
—

 
$
573

Cash received by Apollo
$
101

 
$
—

 
$
6,754


Refer to Note 1, Nature of Operations and Significant Accounting Policies, for discussion of stock option valuation and related assumptions.
Share-based Compensation Expense
The following details share-based compensation expense for the respective periods:
 
Year Ended August 31,
($ in thousands)
2014
 
2013
 
2012
Instructional and student advisory
$
10,727

 
$
20,060

 
$
27,731

Marketing
3,702

 
5,182

 
6,807

Admissions advisory
813

 
849

 
1,691

General and administrative
23,296

 
21,363

 
41,153

Restructuring and other charges
4,281

 
2,008

 
1,323

Share-based compensation expense
42,819

 
49,462

 
78,705

Tax effect of share-based compensation
(16,754
)
 
(18,986
)
 
(29,874
)
Share-based compensation expense, net of tax
$
26,065

 
$
30,476

 
$
48,831