Exhibit 10.1

Final

 

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Career Education Corporation

Amended and Restated

2015 Annual Incentive Award Program

pursuant to the

2008 Incentive Compensation Plan

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ARTICLE 1

PURPOSE AND PERFORMANCE PERIOD

1.1 Purpose. This document is created to set forth the amended and restated
terms and conditions for certain Grantees who have been selected to participate
in the Annual Incentive Award portion of the Plan for calendar year 2015. The
terms and conditions of the 2015 Annual Incentive Award Program approved by the
Committee on March 2, 2015 shall have no further force or effect and are hereby
replaced by the terms and conditions set forth in this document. To the extent
that there is any conflict between the terms of this document and the terms of
the Plan, the Plan shall control.

1.2 Performance Period. This document is effective for certain Annual Incentive
Awards calculated for Grantees under the Plan relating to calendar year 2015.
The 2015 Annual Incentive Awards earned pursuant to this Program shall be paid
no later than March 15, 2016.

1.3 No Misconduct. If at any time prior to the date the 2015 Annual Incentive
Award is paid by the Company or an Affiliate, a Grantee is determined by the
Administrator to have engaged in Misconduct, then no such Annual Incentive Award
shall be paid to such Grantee.

ARTICLE 2

DEFINITIONS

Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to such terms in the Plan. The following words and phrases shall have
the following meanings:

2.1 “Administrator” means a committee consisting of the Chief Financial Officer,
the General Counsel and the Chief Human Resources Officer (or their respective
designees), and/or any other executive officer as determined by the Committee.

2.2 “Affiliate” means any corporation, campus, or other entity that, directly or
indirectly through one or more intermediaries, is owned by the Company.

2.3 “Covered Management Position” means a position within the Company which the
Company has determined to be covered under 34 C.F.R.
Section 668.14(b)(22)(iii)(C).

2.4 “EBITDA” means the consolidated earnings of the Company (and its Affiliates)
from both continuing and discontinued operations, determined before interest,
taxes, depreciation and amortization, and before amounts paid under this
Program, the Key Executive Program and any other annual cash bonus program of
the Company or any Affiliate. EBITDA shall be calculated using the earnings and
other amounts as reported on the Company’s Form 10-K for the year ending on
December 31, 2015 (which is prepared in accordance with the generally accepted
accounting principles in the U.S.), excluding intra-Company management fees and
amounts paid pursuant to this Program, the Key Executive Program and any other
annual cash bonus program of the Company or any Affiliate, and including such
adjustment, if any, as may be made by the Committee pursuant to Section 5.1. For
2015, these adjustments may include items such as neutralizing for legal
expenses (including legal settlements), certain occupancy costs, impairment
charges, retention costs, and the impact of certain accounting changes, as well
as certain severance and related cost savings. To the extent the information
reported on the Form 10-K is not sufficiently specific to provide data for a
specific amount, the data will be obtained from the Company’s Finance Department
and will be based on the data upon which information in the Form 10-K is based.

2.5 “EBITDA Performance Factor” means a percentage (expressed to the second
decimal place) determined pursuant to the table set forth in the applicable
memorandum from the Company setting forth the criteria for a Grantee’s
Award. The EBITDA Performance Factor may not be less than 0% nor more than 200%.

 

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2.6 “Eligible Earned Wages” means compensation for services performed in an
incentive-eligible position (as determined pursuant to Article 3) that is
eligible for inclusion when determining a Grantee’s Annual Incentive Award.
Eligible Earned Wages are based on base earnings during the Performance Period
only and exclude any other payments made during the Performance Period (i.e.,
teach pay, allowances, reimbursements, equity grants, bonuses, incentive
payments, short-term disability payments, long-term disability payments, etc.).
For the avoidance of doubt, Eligible Earned Wages for the Performance Period
shall be determined consistent with Article 3 and any Grantee who is not
eligible for an award or payment pursuant to Article 3 shall have no Eligible
Earned Wages for the Performance Period.

2.7 “Individual Goals Performance Factor” means, with respect to each Grantee,
the Grantee’s achievement (expressed as a percentage and as determined by the
Grantee’s manager) of the individual performance goals, and weighting of such
goals, established by the Grantee’s manager or department head, as applicable,
and recorded in the Company’s performance management system as the Grantee’s
goals for the Performance Period. The Individual Goals Performance Factor may
not be less than 0% nor more than 200%.

2.8 “Key Executive Program” means the Career Education Corporation 2015 Annual
Incentive Award Program for Key Executives.

2.9 “Misconduct” means any one of the following in which a Grantee may engage
prior to or during the Performance Period or any time thereafter, but prior to
the date the 2015 Annual Incentive Award is paid: (a) any act of intentional
misconduct, dishonesty, gross negligence, conscious abandonment, or neglect of
duty; (b) any violation of the Company’s Code of Conduct, policies on
maintaining confidentiality of proprietary information, Code of Ethics or
non-discrimination or anti-harassment policy; (c) any commission of a criminal
activity, fraud, or embezzlement; (d) any failure to reasonably cooperate in any
investigation or proceeding concerning the Company or any of its Affiliates;
(e) any unauthorized disclosure or use of confidential information or trade
secrets; (f) any violation of any enforceable restrictive covenant, such as a
non-compete, non-solicit, or non-disclosure agreement between the Grantee and
the Company or an Affiliate; or (g) any conduct that causes the Grantee to be
ineligible for benefits pursuant the applicable Company severance plan.

2.10 “Performance Period” means the calendar year ending December 31, 2015.

2.11 “Plan” means the Career Education Corporation 2008 Incentive Compensation
Plan, as amended.

2.12 “Program” means this Amended and Restated 2015 Annual Incentive Award
Program which is established under the Plan.

2.13 “Target Incentive Percentage” means a Grantee’s target Annual Incentive
Award percentage of Eligible Earned Wages as communicated to the Grantee.

2.14 “Targeted EBITDA” means the targeted EBITDA for the Performance Period as
approved by the Committee, which shall be consistent with the Company’s revised
2015 operating plan approved by the Board of Directors of the Company on
June 23, 2015.

ARTICLE 3

ELIGIBILITY

3.1 General Eligibility Requirements. The Grantees for the Performance Period
are employees who are not in a Covered Management Position and are classified by
the Company as (a) Grade E55 or higher, or (b)

 

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Grade T09, T10 or T12. Grantees are separately notified of their eligibility to
participate in the Program. Employees who participate in the Key Executive
Program are not eligible Grantees for purposes of this Program. If an individual
is in a Covered Management Position at any point during the Performance Period,
then such individual will not be eligible for an award or payment under this
Program.

3.2 Campuses in Teach Out. Individuals classified as Transitional Group
employees relating to a campus in teach out will not be eligible for an award or
payment under this Program, unless otherwise determined by the Committee.
Notwithstanding the foregoing, and subject to Section 1.3 hereof, if a Grantee
pursuant to this Program becomes a Transitional Group employee relating to a
campus in teach out on or after October 1, 2015, then such Grantee shall remain
eligible to receive an Annual Incentive Award pursuant to this Program and such
Grantee’s Eligible Earned Wages earned during the Performance Period prior to
his or her classification as a Transitional Group employee relating to a campus
in teach out shall continue to be Eligible Earned Wages for purposes of this
Program.

3.3 Employment Changes. To the extent an individual is newly hired by the
Company or any of its Affiliates or first moves into an incentive-eligible
position on or after October 1, 2015, such individual shall not be eligible to
receive an Annual Incentive Award pursuant to this Program. Subject to
Section 1.3 hereof and unless otherwise determined by the Committee, a Grantee
must be employed by the Company or an Affiliate on the last day of the
Performance Period in order to be eligible to receive an Annual Incentive Award
payment hereunder. Notwithstanding the foregoing, and subject to Section 1.3
hereof, if a Grantee’s employment with the Company is terminated by the Company
without Cause as part of a reduction in force on or after October 1, 2015, then
such Grantee shall remain eligible to receive an Annual Incentive Award pursuant
to this Program and such Grantee’s Eligible Earned Wages earned during the
Performance Period prior to his or her termination shall continue to be Eligible
Earned Wages for purposes of this Program; provided that, unless otherwise
determined by the Committee, such Grantee shall not be eligible for a payment
hereunder to the extent such Grantee received a severance package in connection
with such termination and such severance package contained a payment related to
or otherwise based on annual bonus. In all cases, to the extent a Grantee is no
longer employed by the Company or an Affiliate on the date the Annual Incentive
Award becomes payable pursuant to this Program (a “Separated Grantee”), then the
Annual Incentive Amount shall only be paid to such Separated Grantee to the
extent the Separated Grantee has executed a release of claims against the
Company and its Affiliates, which release must be in a form satisfactory to the
Administrator, prior to the payment date for such Annual Incentive Award. In
addition, if applicable law requires that any such release be subject to a
revocation period in order to become fully effective, payment of the Annual
Incentive Award to a Separated Grantee shall only be required if, prior to the
payment date for the Annual Incentive Award, the applicable revocation period
for the release has lapsed without any such revocation occurring.

ARTICLE 4

AWARD AMOUNT

4.1 Annual Incentive Award Weightings. The following table identifies the Annual
Incentive Award element weightings based on the performance components and
Grantee classification. Grantee classification will be determined by the
Administrator and communicated to the Grantee.

 

Grantee Classification

   EBITDA   Individual
Goals   Total

E61 and Above

   80%   20%   100%

E58 - E60, T12

   70%   30%   100%

E55 – E57, T09, T10

   60%   40%   100%

For Grantees performing services during the Performance Period in multiple
Grantee classifications, the percentages set forth in the tables above may be
subject to proration pursuant to Section 5.2 hereof.

 

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4.2 EBITDA Performance Component. In respect of the EBITDA performance
component, each Grantee will be eligible to receive a payment equal to the
result of applying the following formula to such Grantee:

A x B x C x D:

Where:

 

  “A” equals such Grantee’s Eligible Earned Wages;

 

  “B” equals such Grantee’s Target Incentive Percentage;

 

  “C” equals the percentage set forth in the applicable box set forth in the
“EBITDA” column in the table in Section 4.1 hereof; and

 

  “D” equals the applicable EBITDA Performance Factor.

4.3 Individual Goals Performance Component. In respect of the individual goals
performance component, each Grantee will be eligible to receive a payment equal
to the result of applying the following formula to such Grantee:

A x B x Y x D x Z:

Where:

 

  “A” equals such Grantee’s Eligible Earned Wages;

 

  “B” equals such Grantee’s Target Incentive Percentage;

 

  “D” equals the applicable EBITDA Performance Factor;

 

  “Y” equals the percentage set forth in the applicable box set forth in the
“Individual Goals” column in the table in Section 4.1 hereof; and

 

  “Z” equals the applicable Individual Goals Performance Factor.

Notwithstanding the foregoing, the product of D x Z may not be greater than
200%, and any payment pursuant to this Section 4.3 shall be adjusted accordingly
to implement a 200% payout cap with respect to the individual goals performance
component.

4.4 Adjustment. The individual goals performance component of each Grantee’s
Annual Incentive Award (determined without application of this Section 4.4) is
subject to adjustment by managers. Such adjustment may be negative for those
Grantees who do not achieve the applicable goals, and positive for those
Grantees who demonstrate outstanding accomplishments. For purposes of applying
this Section 4.4, any positive adjustment made to the individual goals
performance component of the Annual Incentive Award of one Grantee must result
in a dollar-for-dollar negative adjustment to the individual goals performance
component of the Annual Incentive Award of one or more other Grantees so that,
in the aggregate, the application of the adjustment described in this
Section 4.4 to all the Grantees shall not result in any additional cost to the
Company and its Affiliates for the group of Grantees over which a particular
manager retains authority.

ARTICLE 5

MISCELLANEOUS

5.1 Miscellaneous. The Committee may modify or terminate this Program at any
time and for any reason, effective at such date as the Committee may determine,
without the approval of the Grantees or stockholders of the Company. Without
limiting the foregoing, the Committee reserves the right to adjust EBITDA, the
EBITDA Performance Factor, Targeted EBITDA, the Target Incentive Percentage and
the applicable individual goals, and to adjust, make or interpret any other
determination or classification, for any or all Grantees for any reason,
including if, in the Committee’s sole discretion, any unforeseen or unplanned
event results in a positive or negative impact on the performance of the Company
(or its Affiliates) during the Performance Period or its overall financial
position. All such modifications, terminations, adjustments, determinations and
interpretations relating to this Program shall be binding on all Grantees.

 

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5.2 Proration. If a Grantee’s move between two or more incentive-eligible
positions during the Performance Period impacts Grantee classification for
purposes of Section 4.1, then a proration may be applied to determine the amount
due to such Grantee pursuant to Article 4 hereof. To the extent it applies, such
proration shall be determined in the discretion of the Administrator, and shall
be based on relevant factors, which may include, but shall not be limited to
(a) the relative time spent by such Grantee working at each level, and (b) the
extent to which corporate or an education group was charged for the services of
such Grantee. Unless otherwise determined by the Administrator, such proration
will be based on whole months (rather than a day-by-day basis), and for purposes
of such proration, actions taken prior to the fifteenth day of any month will be
deemed to have happened on the first day of that month, while action taken on or
after the fifteenth day of any month will be deemed to have happened on the
first day of the following month.

5.3 Compliance With Laws. This Program was created to comply with the “incentive
compensation” provisions of the Higher Education Act, 20 U.S.C.§ 1094(a)(20),
and with the implementing regulations of the U.S. Department of Education
(“ED”), located at 34 C.F.R.§ 668.14(b)(22). The Company is aware that the ED
regulations changed, effective July 1, 2011, and this Program has been created
to comply with changed regulations that took effect July 1, 2011. All provisions
of this Program will be interpreted and applied so as to be consistent with that
statute and those regulations. If at any time the Committee determines that any
potential compensation action would, or in the Committee’s sole discretion
might, violate that statute or those regulations, the Committee may in its sole
discretion elect not to pay such compensation. If the statute or regulations
change or if ED provides guidance that changes the Committee’s understanding of
how the statute and regulations will be applied, the Committee will make
appropriate changes to this Program, or may terminate this Program, in its sole
discretion, with or without advance notice to the Grantees. The Committee
reserves the right to modify any element of this Program, to decline to make any
payments under this Program, or to terminate this Program in its entirety, at
any time for any reason, in its sole discretion, with or without advance notice
to the Grantees.

 

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