Volkswagen DEF 14A 2010
Documents found in this filing:
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
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o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to § 240.14a-12
Strayer 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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Dear Fellow Stockholder:
You are cordially invited to attend the 2010 Annual Meeting of Stockholders of Strayer Education, Inc. (the Corporation), to be held at 8:30 a.m. (EST) on Tuesday, April 27, 2010, at 2303 Dulles Station Boulevard, Herndon, Virginia, 20171.
At this years meeting, you will vote on:
This booklet is the formal notice of the meeting, and proxy statement. The proxy statement tells you about the agenda, procedures and rules of conduct for the meeting. Importantly, it also describes how your Board operates, gives information about director candidates, and provides information about the Corporation, including our compensation practices.
We have spent time revising this booklet to make it easier to read. I encourage you to read it; we welcome constructive feedback and comments from owners.
Your vote is important. We encourage you to sign and return your proxy before the meeting so that your shares will be represented and voted at the meeting even if you cannot attend in person.
We look forward to seeing you at the 2010 Annual Meeting of Stockholders.
ROBERT S. SILBERMAN
Chairman of the Board
and Chief Executive Officer
February 26, 2010
TABLE OF CONTENTS
The 2010 Annual Meeting of Stockholders of Strayer Education, Inc. (the Corporation), will be held at 2303 Dulles Station Boulevard, Herndon, Virginia, 20171, on Tuesday, April 27, 2010, at 8:30 a.m. for the following purposes:
THIS NOTICE IS BEING SENT TO COMMON STOCKHOLDERS OF RECORD AS OF FEBRUARY 25, 2010. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED STAMPED ENVELOPE.
By Order of the Board of Directors
Viet D. Dinh
February 26, 2010
While all of our historical financial reports and SEC filings are available online, we know it is also helpful to owners to have basic financial and operating data at hand as they analyze material in the Proxy. Below are the Selected Financial Data tables for the five years ending December 31, 2009 from our 2009 Annual Report. The tables provide key information on growth, profitability, returns, balance sheet strength, and capital allocation.1
1 The information set forth above has been derived from our consolidated financial statements and is qualified by reference to and should be read in conjunction with our consolidated financial statements and notes thereto and Managements Discussion and Analysis of Financial Condition and Results of Operations and other information included elsewhere or incorporated by reference in the Companys Annual Report on Form 10-K.
Annual Meeting of Stockholders
April 27, 2010
This Proxy Statement is furnished on or about February 26, 2010, to holders of the common stock of Strayer Education, Inc. (the Corporation), 1100 Wilson Blvd., Suite 2500, Arlington, VA 22209, in connection with the solicitation on behalf of the Board of Directors of the Corporation (the Board) of proxies to be voted at the 2010 Annual Meeting of Stockholders (the Annual Meeting). The Annual Meeting will be held at 8:30 a.m. local time on Tuesday, April 27, 2010, at Strayer Educations offices located at 2303 Dulles Station Blvd., Herndon, Virginia 20171.
The cost of soliciting proxies will be borne by the Corporation. Copies of solicitation material may be furnished to brokers, custodians, nominees and other fiduciaries for forwarding to beneficial owners of shares of the Corporations common stock, and normal handling charges may be paid for such forwarding service. Solicitation of proxies may be made by the Corporation by mail or by personal interview, telephone and facsimile by officers and other management employees of the Corporation, who will receive no additional compensation for their services. The Corporation has also retained MacKenzie Partners, Inc. to provide proxy solicitation services for a fee of approximately $10,000 plus reimbursement of its out-of-pocket expenses.
Any stockholders giving a proxy pursuant to this solicitation may revoke it at any time prior to exercise of the proxy by giving written notice of such revocation to the Secretary of the Corporation at the Corporations executive offices at 1100 Wilson Blvd., Suite 2500, Arlington, VA 22209, providing a later dated proxy, or by attending the meeting and voting in person. Attending the Annual Meeting will not automatically revoke a stockholders prior proxy.
At the close of business on February 25, 2010, there were 13,957,815 shares of the common stock of the Corporation outstanding and entitled to vote at the meeting. Only common stockholders of record on February 25, 2010 will be entitled to vote at the meeting, and each share will have one vote.
At the Annual Meeting votes will be counted by written ballot. A majority of the shares entitled to vote will constitute a quorum for purposes of the Annual Meeting. Under the Corporations By-laws, to be elected at the Annual Meeting, a nominee for election to the Board of Directors must receive more votes for his or her election than votes against his or her election. Ratification of the appointment of the Corporations independent registered public accounting firm and approval of any other business which may properly come before the Annual Meeting, or any adjournments thereof, will require the affirmative vote of a majority of the votes cast at the Annual Meeting. Abstentions and broker non-votes will have no effect on the outcome of any matter at the Annual Meeting, including the election of directors.
Proxies properly executed and received by the Corporation prior to the meeting and not revoked, will be voted as directed therein on all matters presented at the meeting. In the absence of specific direction from a stockholder, proxies will be voted for the election of all named director nominees and in favor of the other proposal. If a proxy indicates that all or a portion of the shares represented by such proxy are not being voted with respect to a particular proposal, such non-voted shares will not be considered present and entitled to vote on such proposal, although such shares may be considered present and entitled to vote on other proposals and will count for the purpose of determining the presence of a quorum.
The Board of Directors of the Corporation has adopted a corporate governance policy concerning the holdover of any director not elected by a majority vote in an uncontested election. Any such director who fails to receive the requisite majority vote would be required to promptly offer his resignation and the Board, following the recommendation of the Companys Nominating and Governance Committee, would have up to 90 days to decide whether to accept such offer, during which time the director nominee would continue to serve on the Board as a holdover director. A copy of this policy is available on our website at www.strayereducation.com.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE STOCKHOLDERS MEETING TO BE HELD ON APRIL 27, 2010
The proxy statement, Form 10-K and Annual Report to Shareholders are available at www.strayereducation.com/overview.cfm.
Election of Directors
The Corporation currently has a twelve member Board, all of whom are elected by the Corporations common stockholders. There are currently three vacancies on the Board; thus, nine nominees are being voted on at the Annual Meeting.
The Nominating and Governance Committee (the Nominating Committee) considers many factors when considering candidates for the Board. The four most important are true independence, business savvy, a shareholder orientation, and genuine interest in the Corporation. By true independence we mean the willingness to challenge a forceful, talented CEO with a good track record when something is wrong or foolish. People with this trait are both very valuable and hard to find; they are inevitably of the highest character and integrity. Commercial or business savvy is also crucial without it all the other great traits are of little help. The Board does not have a specific policy regarding diversity. However, the Nominating Committee does strive for the Board to be comprised of directors with a variety of experience and personal backgrounds. The Nominating Committee considers the prospective directors skills, specialized expertise, level of education, business experience, broad-based business acumen, experience at strategy development and policy-setting, and direct ownership of the Corporations shares. The Nominating Committee focuses on the prospective directors understanding that maintaining the high academic quality of Strayer University is central to maintaining and growing the Corporations value. (It is perhaps obvious, though worth noting, that the criteria for service on Strayer Universitys Board of Trustees, while sharing some of the same criteria as the Corporation, are different and it is important to have some individuals who can sit on both Boards effectively.) Depending upon the current needs of the Board, certain factors may be weighed more or less heavily by the Nominating Committee.
In considering candidates for the Board, the Nominating Committee considers the entirety of each candidates credentials and does not have any specific minimum qualifications that must be met by a Nominating Committee recommended nominee. However, the Nominating Committee does believe that all members of the Board should have the highest character and integrity; a track record of working constructively with others; sufficient time to devote to Board matters; and no conflict of interest that would interfere with performance as a director. In addition, the Nominating Committee believes that the ability of individual Board members to work constructively together is a key element of Board effectiveness.
The Nominating Committee will entertain recommendations from common stockholders that are submitted in writing to the Corporation, provided that such common stockholders (i) beneficially own more than 5% of the Corporations common stock or (ii) have beneficially owned more than 1% of the Corporations common stock for at least one year. Stockholders meeting such criteria may recommend candidates for consideration by the Nominating Committee by writing to Mr. Viet D. Dinh, Corporate Secretary, Strayer Education, Inc., 1100 Wilson Blvd., Suite 2500, Arlington, VA 22209, giving the
candidates name, contact information, biographical data and qualifications, as well as any evidence that the stockholder satisfies the criteria set forth above. All such recommendations will be treated confidentially and brought to the attention of the Nominating Committee in a timely fashion.
The Nominating Committee does not evaluate candidates differently based on who has made the proposal. The Nominating Committee has the authority under its charter to hire and pay a fee to consultants or search firms to assist in the process of identifying and evaluating candidates. No such consultants or search firms have been used to date and, accordingly, no fees have been paid to consultants or search firms in the past fiscal year.
Once it has been determined that a candidate meets the Boards criteria on paper, there is a vetting process which includes, but is not limited to, background and reference checks and interviews with not only the Nominating Committee but other board members, executive management, and other professionals such as the Corporations auditors or outside counsel as deemed necessary.
Stockholders who wish to formally nominate a director for election at an annual meeting of the stockholders of the Corporation must also comply with the Corporations By-laws regarding stockholder proposals and nominations. See Stockholder Proposals contained in this proxy statement.
It is intended that the votes represented by the proxies will be cast for the election as directors, for a term of one year or until their successors are chosen and qualified, of the persons listed below. The Board of Directors recommends that shareholders vote for the nominees listed below. Each of the nominees is currently a director of the Corporation. The following table and text presents information as of the date of this proxy statement concerning persons nominated for election as directors of the Corporation.
Nominees for Common Stock Directors
Director compensation is designed to:
The Nominating Committee reviews non-employee director compensation regularly and resulting recommendations are presented to the full Board for discussion and approval. The Nominating Committee has the authority to retain an independent consultant if it wishes, but heretofore has not.
Corporation employees receive no additional pay or benefits for serving as directors.
For 2009, non-employee director compensation was as follows:
A significant portion of director compensation is paid in restricted stock to align director compensation with the long term interests of shareholders. While on the Board, non-employee directors receive the same cash dividends on restricted shares as a holder of common stock.
Our Board is made up entirely of independent members, as independence is defined under the NASDAQ Listing Standards, with the exception of our Chief Executive Officer, who also serves as our Chairman. In the past, we have operated with a separate non-executive Chairman of the Board, but with the current make up of the Board, we believe that combining the two roles leads to the most efficient and effective leadership of Board activities. We have a talented and experienced Presiding Independent Director, Mr. David Coulter, who runs the Board in the Chairmans absence. The Presiding Independent Director meets with the Board of Directors without the Chairman present at least quarterly (at each regularly scheduled Board meeting) and solicits candid feedback on the Chairman and CEOs performance.
The Board of Directors is ultimately responsible for the risk management of the Corporation; the CEO is the Chief Risk Officer. The Board reviews and approves all annual budgets, major uses of capital, major projects, and University expansion plans. Two members of the Board of Directors also serve as members of the governing body (The Board of Trustees) of the Corporations chief asset: Strayer University. The Board of Trustees is made up of four independent members, in addition to the two members of the Board of Directors. The Board of Directors oversees, but generally defers to the Universitys Board of Trustees on issues related to academic affairs and quality, including specifically, the rate of the Universitys growth and expansion.
The Board of Directors has established an Audit Committee, a Compensation Committee and a Nominating Committee. The current Committee membership is as follows:
Audit Committee. For the year ended December 31, 2009, the Audit Committee was composed of Messrs. Grusky (Chair), Waite and Wargo. The Audit Committee assists the Board in its oversight of the quality and integrity of our accounting, auditing, and reporting practices. The Committee performs a variety of tasks, including being directly responsible for the appointment (subject to shareholder ratification), compensation and oversight of the Corporations independent registered public accounting firm. The Audit Committee also, among other things, reviews the Corporations accounting policies and reviews the Corporations unaudited quarterly earnings releases and periodic filings with the Securities and Exchange Commission (the SEC) that include financial statements, and regular reports to the Board of Directors. The Audit Committee relies on the expertise and knowledge of management, the internal auditor, and the independent auditors in carrying out its oversight responsibilities.
The Audit Committee met six times during 2009.
The Audit Committee has a written charter, which was last amended on February 9, 2010. The Corporation will provide a copy of the Audit Committee charter to any person without charge, upon request. Persons wishing to make such a request should contact Sonya G. Udler, Senior Vice President Corporate Communications, 1100 Wilson Blvd., Suite 2500, Arlington, VA 22209, (703) 247-2500. In addition, the Audit Committee charter is available on the Corporations website, www.strayereducation.com.
The Board of Directors has determined that all of the members of the Audit Committee are independent, as independence is defined under the NASDAQ Listing Standards and Rule 10A-3(b)(1) of the Securities Exchange Act of 1934 (the 1934 Act). The Board of Directors has determined that each member of the Committee qualifies as an audit committee financial expert, as defined by SEC rules, based on his education, experience and background.
A report of the Audit Committee is included below in this proxy statement.
Compensation Committee. From January 1, 2009 until April 30, 2009, the Compensation Committee consisted of Mr. Wargo (Chair), Mr. Johnson, and Mr. Milano. From May 1, 2009 until December 31, 2009, the Compensation Committee was composed of Messrs. Milano (Chair) and Brock, and effective January 1, 2010, Mr. Coulter.
The Compensation Committee is responsible for evaluating, and recommending to the full Board for approval, the compensation of the Chief Executive Officer, and other officers of the Corporation. The Compensation Committee is responsible for determining compensation policies and practices, changes in compensation and benefits for management, employee benefits and all other matters relating to employee compensation, including matters relating to stock-based compensation, subject to the approval of the Board. The Compensation Committee has the authority to retain and terminate any compensation consultant to be used by it to assist in the evaluation of director and executive compensation. During 2009, the Compensation Committee did not utilize the services of any compensation consultant. The Compensation Committee may form and delegate any of its authority to one or more subcommittees as it deems appropriate. For a discussion of the role of our CEO in determining or recommending the amount or form of executive compensation, see Compensation Discussion and Analysis below. The Compensation Committee met three times between February 12, 2009, the date of the last Compensation Committee Report and February 10, 2010, the date of the Compensation Committee Report below.
The Compensation Committee has adopted a written charter, a copy of which the Corporation will provide to any person without charge, upon request. Persons wishing to make such a request should contact Sonya G. Udler, Senior Vice President Corporate Communications, 1100 Wilson Blvd., Suite 2500, Arlington, VA 22209, (703) 247-2500. In addition, the Compensation Committee charter is available on the Corporations website, www.strayereducation.com.
The Board has determined that all of the members of the Compensation Committee are independent, as independence is defined under the NASDAQ Listing Standards. The Board also has determined that all of the members of the Compensation Committee qualify as non-employee directors as defined by SEC rules and outside directors as defined by the Internal Revenue Code of 1986.
Nominating Committee. For the year ended December 31, 2009, the Nominating Committee was composed of Mr. Coulter (Chair), Dr. Beason and Mr. Johnson. The Nominating Committee is responsible for establishing qualifications for potential directors and considering and recommending prospective candidates for Board membership. The Nominating Committee met three times during the year ended December 31, 2009.
The Nominating Committee has a written charter. The Nominating Committee charter will be made available to any person upon request without charge. Persons wishing to make such a request should contact Sonya G. Udler, Senior Vice President Corporate Communications, 1100 Wilson Blvd., Suite 2500, Arlington, VA 22209, (703) 247-2500. In addition, the Nominating Committee charter is available on the Corporations website, www.strayereducation.com.
The Board has determined that all of the members of the Nominating Committee are independent, as independence is defined under the NASDAQ Listing Standards.
During fiscal year 2009, Messrs. Wargo, Johnson, Milano and Brock served on the Compensation Committee. No member of the Compensation Committee was, during fiscal year 2009, an officer or employee
of the Corporation or was formerly an officer of the Corporation, or had any relationship requiring disclosure by the Corporation as a related party transaction under applicable SEC rules. No executive officer of the Corporation served on any board of directors or compensation committee of any other company for which any of the Corporations directors served as an executive officer at any time during fiscal year 2009.
The Board of Directors met five times during 2009. Each Director attended at least 75% of the meetings of the Board and of the meetings of the Board Committees on which he or she served as a member in 2009. At each regularly scheduled meeting of the Board, the independent directors met in executive session. The Boards Presiding Independent Director, currently Mr. Coulter, presides at these executive sessions. The Corporation requires all incumbent directors and director nominees to attend each annual meeting of stockholders. All nine incumbent directors attended the Corporations last annual meeting of stockholders held on April 28, 2009.
The Board of Directors consists of a majority of independent directors, as independence is defined under the NASDAQ Listing Standards. The Board of Directors has determined that all members of the Board of Directors, except for Mr. Silberman, are independent under these standards.
The Board of Directors adopted a Code of Business Conduct in February 2004, meeting the requirements of Section 406 of the Sarbanes-Oxley Act of 2002 and applicable NASDAQ requirements. The Code of Conduct was amended on February 12, 2008 to provide updates and clarifications but was not amended in any material respects. The Corporation will provide to any person without charge, upon request, a copy of such Code of Business Conduct. Persons wishing to make such a request should contact Sonya G. Udler, Senior Vice President Corporate Communications, 1100 Wilson Blvd., Suite 2500, Arlington, VA 22209, (703) 247-2500. In addition, the Code of Business Conduct is available on the corporate website, www.strayereducation.com. In the event that the Corporation makes any amendment to, or grants any waiver from, a provision of the Code of Business Conduct that applies to the Corporations principal executive officer, principal financial officer, principal accounting officer, controller or certain other senior officers and requires disclosure under applicable SEC rules, the Corporation intends to disclose such amendment or waiver and the reasons for the amendment or waiver on the Corporations website, located at www.strayereducation.com and, as required by NASDAQ, file a Current Report on Form 8-K with the SEC reporting the amendment or waiver.
The Corporation has a process for stockholders to send communications to the Board of Directors. Any stockholder that wishes to communicate with the Board of Directors may do so by submitting correspondence in writing to the Board, in care of Viet D. Dinh, Corporate Secretary, Strayer Education, Inc., 1100 Wilson Blvd., Suite 2500, Arlington, VA 22209. The mailing envelope must contain a clear notation indicating that the enclosed letter is a Stockholder-Board Communication. All such letters must identify the author as a stockholder. All correspondence from stockholders that (i) beneficially own more than 5% of the Corporations common stock or (ii) have beneficially owned more than 1% of the Corporations common stock for at least one year will be forwarded to the Board. Stockholder-Board communications from all other stockholders will be reviewed by the Chief Executive Officer and the Secretary of the Corporation who will forward all appropriate communications to the Board.
The 1934 Act requires the Corporations directors, executive officers and 10% stockholders to file reports of beneficial ownership of equity securities of the Corporation and to furnish copies of such reports to the Corporation. Based on a review of such reports, and upon written representations from certain reporting persons, the Corporation believes that, during the fiscal year ended December 31, 2009, all such filing requirements were met.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the ownership of the Corporations common stock as of February 25, 2010 (except as otherwise indicated), by each person known by management of the Corporation to be the beneficial owner of more than five percent (5%) of the outstanding shares of the Corporations common stock, each of the Corporations directors, its CEO and four other named executive officers and all executive officers and directors as a group. The information presented in the table is based upon the most recent filings with the SEC by those persons or upon information otherwise provided by those persons to the Corporation. The percentages reflected in the table for each beneficial owner are calculated based on the number of shares of common stock outstanding on the record date plus those common stock equivalents and exercisable options held by the applicable beneficial owner.
In accordance with the Compensation Committee charter, the Corporation employs the following general policies in determining executive compensation:
The Compensation Committee generally tries to set salary targets at or below the midpoint of comparable companies, annual cash bonus at or above the midpoint of comparable companies, and to set equity compensation in the upper quartile of such companies if specific performance targets are met. If, in the Boards judgment, the midpoint or upper quartile calculations of the
comparable companies yield too high a compensation level, the Board will not match these levels, but instead make reasoned judgments to lower the Corporations executive compensation to levels it deems more appropriate.
In accordance with the Compensation Committee charter, compensation for the Corporations CEO is determined by the Compensation Committee subject to approval of the Corporations Board of Directors (excluding the CEO, who is also a Director). In making its determination on CEO compensation, the Compensation Committee reviews a number of factors, including but not limited to:
For the other named executive officers, the Compensation Committee reviews, approves, and recommends to the full Board compensation based on:
The CEO provides recommendations for executive officer compensation (other than himself) to the Compensation Committee based on his review and analysis of each officers performance and contributions to the Corporation. While the Compensation Committee considers the recommendations of the CEO with respect to these elements of compensation, the Compensation Committee independently evaluates the recommendations for purposes of making its recommendations to the full Board.
The Compensation Committee meets in February of each year when audited year-end financial statements are available, to consider bonuses with respect to the just completed fiscal year, consider equity awards, and determine executive officer salaries with respect to the next fiscal year. The Committee meets from time to time during the year as may be required to address compensation and equity grant issues associated with new officer hires and director appointments, as well as, if applicable, making equity grants as long-term compensation and making other determinations or recommendations with respect to employee benefit plans and related matters.
During 2009, the Corporations executive compensation included salary, cash bonus and long-term compensation in the form of restricted stock awarded under the Corporations Equity Compensation Plan.
Under Section 162(m) of the Internal Revenue Code of 1986, as amended and applicable Treasury regulations, no deduction is allowed for annual compensation in excess of $1 million paid by a publicly traded corporation to its chief executive officer and four other most highly compensated officers. Under those provisions, however, there is no limitation on the deductibility of qualified performance-based compensation. In general, the Corporations policy is to maximize the extent of tax deductibility of executive compensation under the provisions of Section 162(m) so long as doing so is compatible with its determination as to the most appropriate methods and approaches for the design and delivery of compensation to the Corporations executive officers.
One of the Corporations guiding principles is that officers and directors think like owners. To this end, the Corporation has adopted a requirement that within three years of hiring or promotion (or for existing officers and directors, by March 1, 2013), senior officers and members of the Board of Directors purchase shares of the Corporation in the open market, or hold vested awarded shares equal to the amounts shown in the table below.
The following table sets forth all compensation awarded to the Corporations named executive officers for the fiscal years ended December 31, 2007, 2008, and 2009.
In 2009, All Other Compensation is comprised of dividends on unvested restricted stock, the Corporations match of contributions to a 401(k) plan, and Other. The table below sets forth this information by named executive officer for the fiscal years ended December 31, 2007, 2008, and 2009.
Supplemental All Other Compensation Table
The following table sets forth grants of plan-based awards to the Corporations named executive officers for the fiscal year ended December 31, 2009.
In setting compensation levels for the named executive officers in 2009 the Board of Directors considered the total value of all three components of executive compensation: salary and benefits, cash bonuses, and equity grants. Salary levels for the named executive officers in 2009 were set by the Board at a rate designed to be competitive, but at or below the midpoint of a group of peer companies. Salary levels were designed by the Board to comprise less than half of the targeted total compensation for the named executive officers if the Corporation achieved its objectives for 2009.
In determining the amount of cash bonus awards paid to the named executive officers for 2009, the Compensation Committee reviewed the Corporations performance against the objectives for 2009 adopted by the full Board of Directors in October of 2008. The Compensation Committee determined that the Corporation met or exceeded each of those corporate objectives. Specifically, the Compensation Committee noted the superior performance of the Corporations main operating asset, Strayer University, in areas such as faculty hiring and development, student learning outcomes, student retention rates, student graduation rates, and the development of new academic programs. The Compensation Committee also noted the Universitys successful opening of 11 new campuses, its approval to operate in 4 new states, and its entering into numerous institutional alliances and articulation agreements with community colleges. Finally, the Compensation Committee noted the Corporations 29% growth in revenue, 36% growth in
operating income, 30% growth in net income, 34% growth in EPS, and achievement of an operating margin of 33.7%, and a return on invested capital of 57%. It also noted the Corporations disciplined capital allocation, including the repurchase of approximately 452,000 shares at an average price of $177.34 per share.
As provided in the summary compensation table, actual cash bonuses awarded to the named executive officers for 2009 ranged from approximately 80% to 150% of base salary with differences in relative amounts resulting from the Board of Directors view of individual named executives officers relative contribution to the success of the Corporation in 2009. With regard to equity grants the Board took into account the length of the vesting period, and the difficulty of attainment of any performance criteria. Specifically, the longer the vesting period and the more stringent the performance criteria, the larger the grant date value of the equity award.
In 2009, our Chief Executive Officer, Mr. Robert Silberman, declined an increase in salary. In determining his cash bonus for 2009, the Compensation Committee noted Mr. Silbermans leadership of the Corporation in achieving all of its corporate objectives for 2009, as detailed above. The Compensation Committee also noted Mr. Silbermans success in assembling a leadership team and culture which combines the best aspects of a first rate university and an acknowledged highly successful public company. The Compensation Committee determined that Mr. Silbermans performance should be recognized with a cash bonus equal to 115% of his base salary. Mr. Silberman does not participate in the Corporations annual equity plan. In 2009, the Board awarded Mr. Silberman an equity grant of 183,680 restricted shares of the Corporations stock. This grant, equal to $40 million on its grant date, does not vest for ten years, and then only if the Corporation achieves specific goals. These goals include measures of academic, operational, and financial performance. The Board of Directors does not disclose the specific performance objectives in Mr. Silbermans grant because it feels such disclosure would cause significant competitive harm to the Corporation. The Corporation believes the achievement of these goals is realistic but not certain.
This grant was discussed by the Board with our shareholders and was fully disclosed in our 2009 proxy. In approving this grant, our Board of Directors was motivated by two counter balancing imperatives. First, was the desire to retain the services of Mr. Silberman in the leadership of the Corporation for a significant period of time. Since he joined as CEO in 2001, the Corporation has increased its revenue by 556% from $78 million to $512 million; increased its operating income 473% from $30 million to $172 million; increased its net income 400% from $21 million to $105 million; increased its earnings per share 439% from $1.41 to $7.60, increased the annual common dividend 1,100% from $.25 to $3.00 and returned $369 million to our stockholders in the form of repurchases of our common shares and special dividends. Under his leadership, the Corporations market capitalization has grown from $400 million to $3 billion. In that same time period, under Mr. Silbermans leadership, the Corporations main operating asset, Strayer University, has received approval from all accrediting, state, and Federal licensing authorities to which we have applied to expand our campus network from 12 campuses in two states and Washington, D.C. to 78 campuses in 18 states and Washington, D.C. The University has also significantly upgraded the quality of its faculty, increased its student enrollment, and achieved an accelerated ten year reaffirmation of its University accreditation from the Middle States Commission on Higher Education. The Board felt that these results were extraordinary for any company, and were directly related to Mr. Silbermans leadership. The Board noted that Mr. Silberman was elected in early 2008 as Morningstar, Inc.s CEO of the year, and that Mr. Silberman was a large owner of the Corporation, owning 21,336 shares outright or approximately $4.6 million in value.
The second imperative which influenced the Boards decision to approve this grant was the desire to protect our shareholders interests by having any equity grant for Mr. Silberman vest over the longest possible time frame and contain rigorous performance objectives. The Board was convinced that Mr. Silbermans grant, which is entirely restricted for a full ten years (i.e. none of the shares can be sold by Mr. Silberman before February 2019), and also requires the attainment of both academic and financial performance objectives (which include compounded annual growth rates of revenue, net income, and earnings per share over a ten year period), was as rigorously protective of shareholder interest as any equity grant issued at any public company. Mr. Silberman was not awarded any equity compensation in either 2007 or 2008.
In 2009, the salary of our President and Chief Operating Officer, Karl McDonnell was increased by 10% to $330,000. In determining his salary and cash bonus for 2009, the Compensation Committee considered the recommendation of the CEO, the COO compensation level at comparable companies, and noted Mr. McDonnells significant contribution to the achievement of the Corporations objectives in 2009 as noted above. The Compensation Committee determined that Mr. McDonnells performance should be recognized with a cash bonus equal to approximately 150% of his base salary. As of 2009, Mr. McDonnell no longer participates in the annual restricted share grant program. However, for similar reasons described for Mr. Silberman, the Board did approve an equity grant to Mr. McDonnell in 2009 of 20,192 restricted shares of the Corporations stock, equal to $10 million on the date of grant. These restricted shares have the same performance criteria as Mr. Silbermans, but vest in five years versus the ten year vesting for Mr. Silberman. The Board felt that securing the services of the top two officers of the Corporation over an extended period would create the stable leadership necessary to achieve the Corporations ambitious academic and financial objectives.
The salary, cash bonuses, and annual restricted stock bonuses for 2009 for our other three named executive officers all were based on achievement of our corporate goals and their relative contributions. In 2008 both the Executive Vice President and Chief Financial Officer, Mark Brown, and our Executive Vice President and Chief Administrative Officer, Lysa Hlavinka, were awarded by the Board grants of 6,170 shares of restricted stock in addition to their annual share grants. These special grants had a grant date value of $1 million, five year cliff vests, but no performance criteria. They were based on superior performance in 2007, and the Boards desire to retain these important senior officers. Upon her hiring in 2007, our University President, Dr. Sondra Stallard, was granted 6,185 restricted shares, with a grant date value of $1 million. These shares have a cliff vest of five years and performance criteria focused on the academic standing and achievement of the University.
The following tables set forth outstanding option and stock awards of the Corporations named executive officers as of December 31, 2009.
Outstanding Option Awards Table
Outstanding Stock Awards Table
The following table sets forth the value and share amounts realized during the fiscal year ended December 31, 2009 upon the exercise of stock options and vesting of stock awards for the Corporations named executive officers.
Mr. Silberman is the only named executive officer with an employment contract. In the event that Mr. Silberman is terminated by the Corporation without cause, he is entitled to receive a lump sum payment of three years salary, which is currently equal to $2.0 million. If such termination is in connection with a change of control, Mr. Silberman is entitled to receive a lump sum payment of an additional amount equal to three times his latest bonus award of $765,000 for a total payout of $4.3 million. (A change of control is defined in the contract as acquisition of more than 50% of the voting stock of the Corporation, completion of a merger or other business combination resulting in a change in control of more than 50% of the voting stock of the Corporation, election of a substantially different Board of Directors or approval by shareholders of a complete liquidation or dissolution of the Company.) In addition, Mr. Silberman is entitled to three years of medical benefits (estimated cost of $45,000) and to a gross-up payment for any excise taxes which may be imposed on termination payments. No excise taxes would have been imposed had there been a termination or change of control at December 31, 2009. The agreement also contains covenants restricting Mr. Silberman from competing with the Corporation for three years after his termination of employment and requires Mr. Silberman to keep confidential the Corporations proprietary information.
For all named executive officers, stock options and restricted stock awards vest immediately upon the occurrence of a change in control of the Corporation as defined in their respective stock option or restricted stock agreements. Change of control is defined in substantially the same way as in Mr. Silbermans contract. The valuation of the acceleration that would have been made for stock-based awards had there been a change in control at the closing price of $212.52 of the Corporations common stock at December 31, 2009 is set forth below.
Director compensation is designed to:
The Nominating Committee reviews non-employee director compensation every other year and resulting recommendations are presented to the full Board for discussion and approval. The Nominating Committee has the authority to retain an independent consultant if it wishes, but heretofore has not.
Corporation employees receive no additional pay or benefits for serving as directors.
For 2009, non-employee director compensation was a follows:
The following table sets forth compensation for each director for the fiscal year ended December 31, 2009.
The following table sets forth the number of outstanding options and stock awards held by each non-employee director at December 31, 2009.
Set forth in the table below is information pertaining to securities authorized for issuance under the Corporations equity compensation plans as of December 31, 2009. There are options but no warrants or other rights existing under these plans.
The Compensation Committee of the Strayer Education, Inc. Board of Directors is composed of three directors Messrs. Milano (Chair), Brock and Coulter. Between February 12, 2009, the date of the last Compensation Committee Report, and February 10, 2010, the Compensation Committee met three times.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis section and, based on the review and discussion, the Committee recommended to the Board to include this information in the Corporations Annual Report on Form 10-K and Proxy Statement.
Dated: February 10, 2010
AUDIT COMMITTEE REPORT
The Audit Committee of the Strayer Education, Inc. (the Corporation) Board of Directors is composed of three directors, all of whom are independent, as independence is defined under the NASDAQ Listing Standards and Rule 10A-3(b)(1) of the 1934 Act. For the year ended December 31, 2009, the Audit Committee was composed of Messrs. Grusky (Chair), Waite and Wargo. The Audit Committee operates under a written charter first adopted in 2001, which is currently reviewed annually and which has periodically been subsequently revised by the Committee to reflect regulatory developments. The Audit Committee Charter was last amended on February 9, 2010. The Corporation will provide a copy of the charter to any person without charge, upon request. Persons wishing to make such a request should contact Sonya G. Udler, Senior Vice President Corporate Communications, 1100 Wilson Blvd., Suite 2500, Arlington, VA 22209, (703) 247-2500. In addition, the Audit Committee charter is available on the Corporations website, www.strayereducation.com.
Under the Audit Committee Charter and the Audit Committees current policies, the Audit Committees purposes are to:
1. Assist the Board of Directors in fulfilling its responsibility for:
The Audit Committee shall have the direct authority and responsibility to appoint (subject to shareholder ratification), compensate, retain, and oversee the independent auditors.
The function of the Audit Committee is oversight. The management of the Corporation is responsible for the preparation, presentation and integrity of the Corporations financial statements. Management is responsible for maintaining appropriate accounting and financial reporting policies and internal controls and procedures that provide for compliance with accounting standards and applicable laws and regulations.
The independent auditors are responsible for planning and carrying out a proper audit of the Corporations annual financial statements, reviews of the Corporations quarterly financial statements prior to the filing of each quarterly report on Form 10-Q, and other procedures.
In connection with this responsibility, during 2009 the Audit Committee met and held discussions with management six times and together with the independent registered public accounting firm four times. The Audit Committee reviewed and discussed the audited financial statements with management. At least quarterly, as a matter of practice, the Audit Committee, in addition to the agenda with all present, meets separately with each of management, internal audit, PricewaterhouseCoopers LLP, and in executive session of itself. Management represented to the Audit Committee that the Corporations consolidated financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee reviewed and discussed the consolidated financial statements with management and, independently with PricewaterhouseCoopers LLP. The Committee also discussed with PricewaterhouseCoopers LLP the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (Communications with Audit Committees).
During the year 2009, management conducted the documentation, testing and evaluation of the Corporations system of internal control over financial reporting in response to the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. The Audit Committee was kept apprised of the progress of the evaluation and provided oversight during the process. In connection with this oversight, the Audit Committee received periodic updates provided by management and PricewaterhouseCoopers LLP at each regularly scheduled Audit Committee meeting. At the conclusion of the process, management provided the Audit Committee with a report on the effectiveness of the Corporations internal control over financial reporting. The Audit Committee also reviewed the report of management contained in the Corporations Annual Report on Form 10-K for the fiscal year ended December 31, 2009 filed with the SEC, as well as PricewaterhouseCoopers LLPs Report of Independent Registered Public Accounting Firm (included in the Corporations Annual Report on Form 10-K). This report of PricewaterhouseCoopers LLP related to its audit of (i) the consolidated financial statements and (ii) the effectiveness of internal control over financial reporting. The Audit Committee continues to oversee the Corporations efforts related to its internal control over financial reporting.
The Audit Committee has received from PricewaterhouseCoopers LLP the written disclosures and the letter required by the applicable standards of the Public Company Accounting Oversight Board regarding communications with the Audit Committee concerning the independence of PricewaterhouseCoopers LLP and has discussed with PricewaterhouseCoopers LLP its independence. PricewaterhouseCoopers LLP advised the Committee that there were no disagreements with management regarding the preparation of the Corporations financial statements or the conduct of the annual audit.
Based upon the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements for the year 2009 be included in the Corporations annual report on Form 10-K for the year ended December 31, 2009, filed with the SEC, and that PricewaterhouseCoopers LLP be retained as the Corporations independent registered public accounting firm for the fiscal year 2010.
Robert R. Grusky, Chair
G. Thomas Waite, III
J. David Wargo
Dated: February 9, 2010
The Corporation had no transactions with related parties during the fiscal year ended December 31, 2009. The Corporation prohibits conflict of interest activities by any Director or Officer unless specifically approved in advance and in writing by the General Counsel, CEO, and Audit Committee of the Board of Directors after full disclosure of all aspects of the activity. A conflict of interest is defined generally to include situations where a person (i) has a private interest that materially conflicts or interferes with the interests of the Corporation, (ii) has a material personal interest that will impair the persons ability to perform his or her work objectively and effectively, or (iii) derives a material personal benefit as a result of the person performing services for the Corporation. Among the other circumstances that may be considered conflicts of interest, any engagement in a personal business transaction involving the Corporation for profit or gain will be considered a conflict of interest requiring advance approval under the Code of Conduct.
The Audit Committee and the Board of Directors have appointed the independent registered public accounting firm of PricewaterhouseCoopers LLP to serve as the Corporations independent registered public accounting firm for the fiscal year ending December 31, 2010. PricewaterhouseCoopers LLP has acted as the Corporations independent registered public accounting firm for the fiscal year ended December 31, 2009. Representatives of PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they desire and to respond to appropriate questions. Although stockholder ratification of the appointment of auditors is no longer required as a technical matter, the appointment of PricewaterhouseCoopers LLP is being submitted for ratification as a matter of good corporate practice in order that the Audit Committee may take into consideration the views of stockholders on this matter. The ratification of the appointment of PricewaterhouseCoopers LLP requires the approval of a majority of the votes cast at the Annual Meeting.
The Board of Directors recommends a vote for the proposal to ratify the appointment of PricewaterhouseCoopers LLP as the Corporations independent registered public accounting firm for the fiscal year ending December 31, 2010.
Set forth below are the services rendered and related fees billed by PricewaterhouseCoopers LLP for 2008 and 2009:
It is the Audit Committees policy to pre-approve all audit and non-audit related services provided by the Corporations independent registered public accounting firm. All of the services described above were pre-approved by the Corporations Audit Committee.
All stockholder proposals intended to be presented at the 2011 Annual Meeting of Stockholders must be received by the Corporation no later than October 29, 2010 and must otherwise comply with rules of the SEC for inclusion in the Corporations proxy statement and form of proxy relating to the meeting.
SEC rules also establish a different deadline for submission of stockholder proposals that are not intended to be included in the Corporations proxy statement with respect to discretionary voting. The discretionary voting deadline for the Corporations 2011 Annual Meeting is January 12, 2011. If a stockholder gives notice of such a proposal after the discretionary voting deadline, the Corporations proxy holders will be allowed to use their discretionary voting authority to vote against the stockholder proposal when and if the proposal is raised at the Corporations 2011 Annual Meeting of Stockholders.
The Corporation knows of no other matters to be presented for action at the Annual Meeting other than those mentioned above. However, if any other matters should properly come before the meeting, it is intended that the persons named in the accompanying proxy card will vote on such matters in accordance with their best judgment.
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 27, 2010
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder hereby appoints Robert S. Silberman, Viet D. Dinh and Mark C. Brown and any of them, attorneys and proxies of the undersigned, with full power of substitution and with authority in each of them to act in the absence of the other, to vote for the undersigned at the Annual Meeting of Stockholders of the Corporation to be held on April 27, 2010 at 8:30 a.m. (EST) at 2303 Dulles Station Blvd., Herndon, Virginia 20171, and at any adjournments thereof, in respect of all shares of the Common Stock of the Corporation which the undersigned may be entitled to vote, on the following matters:
PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY TO ENSURE A QUORUM AT THE MEETING. IT IS IMPORTANT WHETHER YOU OWN FEW OR MANY SHARES. DELAY IN RETURNING YOUR PROXY MAY SUBJECT THE CORPORATION TO ADDITIONAL EXPENSE.
(Continued and to be signed on the reverse side)
ANNUAL MEETING OF STOCKHOLDERS OF
STRAYER EDUCATION, INC.
APRIL 27, 2010
Please sign, date and mail
your proxy card in the
envelope provided as soon
- Please detach along perforated line and mail in the envelope provided -
1. Election of nine Directors by all Common Stockholders:
To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted.
This proxy, when properly executed, will be voted as directed herein by the undersigned shareholder. However, if no direction is given, this proxy will be voted FOR the election of all nominated directors, FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the Corporations independent registered public accounting firm, and on other matters in the discretion of the proxy holder as he may deem advisable.
The undersigned hereby acknowledges prior receipt of a copy of the Notice of Annual Meeting of Stockholders and proxy statement dated February 26, 2010 and hereby revokes any proxy or proxies heretofore given. This Proxy may be revoked at any time before it is voted by delivering to the Secretary of the Corporation either a written revocation of proxy or a duly executed proxy bearing a later date, or by appearing at the Annual Meeting and voting in person.
If you receive more than one proxy card, please sign and return all cards in the accompanying envelope.
Please mark, sign and date this proxy and return it to ensure a quorum at the meeting. It is important whether or not you own few or many shares. Delay in returning your proxy may subject the Corporation to additional expenses.
Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as an executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please have a duly authorized officer sign under the full corporate name, giving full title as such. If signer is a partnership, please have an authorized person sign in partnership name.