Exhibit 10.1
APOLLO GROUP, INC.
EXECUTIVE OFFICER PERFORMANCE INCENTIVE PLAN
I. PURPOSE OF THE PLAN
     The Apollo Group, Inc. Executive Officer Performance Incentive Plan (the
“Plan”) is intended to promote the interests of Apollo Group, Inc. (the
“Company”) and its shareholders by establishing a compensation program to
provide the Company’s executive officers with the opportunity to earn incentive
awards that are tied to the achievement of specific goals relating to the
financial performance of the Company and that accordingly qualify as
performance-based compensation for purposes of Section 162(m) of the Internal
Revenue Code of 1986, as amended from time to time (the “Code”).
II. PLAN STRUCTURE
     A. Bonuses shall be earned under the Plan on the basis of the Company’s
financial performance measured in terms of one or more pre-established
performance objectives to be attained over a designated performance period (the
“Performance Period”). Each applicable Performance Period under the Plan shall
be established by the Plan Administrator and may range in duration from a
minimum period of six (6) months to a maximum period of thirty-six (36) months.
The initial Performance Period shall be the twelve (12)-month period coincident
with the Company’s 2008 fiscal year beginning September 1, 2007 and ending
August 31, 2008.
     B. No Bonus shall be earned for a performance goal established for a
designated Performance Period unless that performance goal is attained at the
minimum threshold level. Bonus may be earned at a dollar amount in excess of the
target bonus set for the Participant for a particular Performance Period if the
applicable performance goals for that Performance Period are attained at an
above-target level.
     C. The Plan Administrator shall have the discretionary authority to reduce
the actual bonus amount payable to any Participant below the amount that would
otherwise be payable to that individual based solely on the attained level of
the performance goals for the Performance Period to which that bonus relates. In
no event, however, may the Plan Administrator increase the bonus amount payable
to a Participant beyond the maximum bonus amount set for the attained level of
performance.
III. PLAN ADMINISTRATION
     A. The Plan shall be administered by a committee of two or more
non-employee members of the Company’s Board of Directors, each of whom shall
qualify as an “outside director” under Code Section 162(m) and
Section 1.162-27(e) of the Treasury Regulations thereunder. Such committee in
its capacity as administrator of the Plan (the “Plan Administrator”) shall have
full power and authority (subject to the express provisions of the Plan) to:

 

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               a. establish the duration of each Performance Period:
               b. select the eligible individuals who are to participate in the
Plan for such Performance Period;
               c. establish the specific performance objectives for each
Performance Period at one or more designated levels of attainment and set the
bonus potential for each participant at each corresponding level of attainment;
               d. certify the attained level of the applicable performance goals
for the Performance Period and determine, on the basis of that certification,
the actual bonus for each participant in an amount not to exceed his or her
maximum bonus potential for the certified level of attainment; and
               e. exercise discretionary authority, when appropriate, to reduce
the actual bonus payable to any participant below his or her bonus potential for
the attained level of financial performance for the Performance Period.
     B. The Plan Administrator shall also have full power and authority to
interpret and construe the provisions of the Plan and adopt rules and
regulations for the administration of the Plan.
     C. Decisions of the Plan Administrator shall be final and binding upon all
parties who may have an interest in the Plan or any bonus amount payable under
the Plan.
IV. ELIGIBILITY AND PARTICIPATION
     A. The individuals eligible to participate in the Plan shall be limited to
the executive officers of the Company subject to the short-swing profit
liability provisions of Section 16 of the Securities Exchange Act of 1934, as
amended. The Plan Administrator shall have complete discretion in selecting the
eligible individuals who are to participate in the Plan for one or more
Performance Periods.
     B. An individual selected for participation in the Plan for a Performance
Period shall cease to be a participant and shall not be entitled to any bonus
payment for that Performance Period if such individual ceases Employee status
for any reason prior to the date that Performance Period ends (the “Completion
Date”); provided, however, that the following participants shall receive a
portion of the actual bonus to which they would otherwise have been entitled
pursuant to Articles V and VI had they continued in Employee status through the
Completion Date:
     (i) any participant who ceases Employee status prior to the Completion Date
by reason of death or Disability;
     (ii) any participant whose Employee status terminates under circumstances
entitling that individual to a full or pro-rata bonus pursuant to the express
terms of any agreement or arrangement to which that individual and the Company
are parties; and

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     (iii) any participant whose Employee status terminates under special
circumstances that warrant, in the Plan Administrator’s sole discretion, a
pro-rated bonus award for that Performance Period.
     C. In no event shall the bonus paid to any participant pursuant to
subparagraph (i) or (iii) of this Paragraph IV.B exceed the dollar amount
determined by dividing (a) the actual bonus to which that participant would have
become entitled pursuant to Articles V and VI on the basis of the attained level
of performance had he or she continued in Employee status through the Completion
Date by (b) a fraction the numerator of which is the number of days such
individual remained in active Employee status during that Performance Period and
the denominator of which is the total number of days in such Performance Period.
     D. For purposes of this Article IV, the following definitions shall be in
effect:
     (i) A participant shall be deemed to continue in “Employee” status for so
long as that individual remains in the employ of the Company or any subsidiary
of the Company.
     (ii) A participant shall be deemed to have ceased Employee status by reason
of a “Disability” if such cessation of Employee status occurs by reason of any
medically determinable physical or mental impairment expected to result in death
or to be of continuous duration of twelve (12) months or more.
     (iii) Each corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company shall be considered to be a “subsidiary”
of the Company, provided that each such corporation (other than the last
corporation in the unbroken chain) owns, at the time of determination, stock
possessing more than fifty percent (50%) of the total combined voting power of
all classes of stock in one of the other corporations in such chain.
     E. A participant who is absent from active Employee status for a portion of
a Performance Period by reason of an authorized leave of absence shall not be
deemed to have ceased Employee status during the period of that leave. However,
any bonus to which such participant may otherwise become entitled under the Plan
for that Performance Period shall be pro-rated based on the portion of the
Performance Period during which that individual is in active working status and
not on such leave of absence, unless the Plan Administrator otherwise deems it
appropriate under the circumstances to provide that individual with the full
bonus that he or she would have earned for that Performance Period had there
been no leave of absence.
V. DETERMINATION OF PERFORMANCE GOALS AND POTENTIAL BONUS AMOUNTS
     A. Participants shall be eligible to earn a cash bonus under the Plan for
each Performance Period for which one or more performance objectives established
by the Plan Administrator for that Performance Period are attained. The Plan
Administrator shall, within the

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first ninety (90) days of each Performance Period of twelve (12) or more months
duration and within the first forty-five (45) of each Performance Period of less
than twelve (12) months duration, establish the specific performance objectives
for that Performance Period. In no event may a performance objective be
established at a time when there exists no substantial uncertainty as to its
attainment.
     B. For each Performance Period, the performance objectives may be based on
one or more of the following criteria: (i) pre-tax or after-tax earnings or net
income, (ii) revenue growth, (iii) cash flow, (iv) return on assets or
stockholder equity, (v) total stockholder return, (vi) gross or net profit
margin, (vii) earnings per share, (viii) market share, (ix) earnings or
operating income before interest, taxes, depreciation, amortization and/or
charges for stock-based compensation, (x) economic value-added models,
(xi) operating income, net operating income or net operating income before or
after recorded tax expense; (xii) operating profit, net operating profit or net
operating profit before or after recorded tax expense, (xiii) operating margin,
(xiv) cost reductions or (xv) budget objectives. In addition, such performance
criteria may be based upon the attainment of specified levels of the Company’s
performance under one or more of the measures described above relative to the
performance of other entities and may also be based on the performance of any of
the Company’s business units or divisions or any subsidiary. Each applicable
performance criteria may be structured at the time of establishment to provide
for appropriate adjustment for one or more of the following items: (i) asset
impairments or write-downs; (ii) litigation judgments or claim settlements;
(iii) the effect of changes in tax law, accounting principles or other laws,
regulations or provisions affecting reported results; (iv) accruals for
reorganization and restructuring programs; (v) any extraordinary nonrecurring
items as described in Accounting Principles Board Opinion No. 30 and/or in
management’s discussion and analysis of financial condition and results of
operations appearing in the Company’s annual report to stockholders for the
applicable year, (vi) the operations of any business acquired by the Company or
any subsidiary or of any joint venture in which the Company or any subsidiary
participates, (vii) the divestiture of one or more business operations or the
assets thereof or (viii) the costs incurred in connection with such acquisitions
or divestitures.
     C. For each performance objective, the Plan Administrator may establish up
to three (3) designated levels of attainment: threshold, target and above-target
levels of attainment. At the time the performance objectives for a particular
Performance Period are established, the Plan Administrator shall also set the
bonus potential for each participant at each of the designated performance
levels. Alternatively, the Plan Administrator may establish a linear formula for
determining the bonus potential at various points of performance goal
attainment. Under no circumstance, however, shall the aggregate bonus potential
for any participant for any Performance Period exceed the applicable Maximum
Bonus Amount set forth in Paragraph VI.B.
     D. The actual bonuses to be paid for each Performance Period shall be
determined by the Plan Administrator on the basis of the level at which each of
the performance objectives applicable to that Performance Period is actually
attained. Accordingly, each performance objective shall be measured separately
in terms of actual level of attainment and shall be weighted, equally or in such
other proportion as the Plan Administrator shall determine at the time such
performance objectives are established, in determining the actual bonus payable
to each participant for the Performance Period. For example, if four
(4) performance objectives are

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established for the Performance Period and weighted equally, then each of those
objectives attained at target level will contribute an amount equal to
twenty-five percent (25%) of the total bonus payable to the participant at
target level performance, and each objective attained at above-target level will
contribute an amount equal to twenty-five percent (25%) of the total bonus
payable to the participant at above-target level performance. However, no bonus
amount shall be payable with respect any performance objective, unless the
specified threshold level for that objective is attained.
     E. The Plan Administrator shall certify in writing the actual level of
attainment of each performance objective for the Performance Period before any
bonuses are paid for that Performance Period.
     F. Except in the event of a Change in Control (as such term is defined in
the Company’s 2000 Stock Incentive Plan), the Plan Administrator shall not waive
any performance objective applicable to a participant’s bonus potential for a
particular Performance Period.
VI. INDIVIDUAL BONUS AWARDS
     A. The actual bonus to be paid to each participant for a particular
Performance Period will be determined on the basis of the bonus potential
established for that individual at the various levels of attainment designated
for each of the performance goals applicable to that Performance Period. Should
the actual level of attainment of any such performance goal be between two of
the designated levels, then the participant’s bonus potential will be
interpolated on a straight-line basis. In no event shall any participant be paid
a bonus in excess of the amount determined on the basis of the bonus potential
(as so interpolated) established for the particular levels at which the
performance goals are attained. However, the Plan Administrator shall have the
discretion to reduce or eliminate the bonus that would otherwise be payable with
respect to one or more performance goals based upon the certified level of
attained performance of those goals.
     B. The maximum bonus payment under the Plan (the “Maximum Bonus Amount”)
that any one participant may receive for a given Performance Period shall be
limited to:
          (i) five (5) times the participant’s base salary, at the rate in
effect at the start of the Performance Period, for any Performance Period with a
duration of at least twenty-four (24) months;
          (ii) three (3) times the participant’s base salary, at the rate in
effect at the start of the Performance Period, for any Performance Period with a
duration of at least twelve (12) months but less than twenty-four months; and
          (iii) one and one half times the participant’s base salary, at the
rate in effect at the start of the Performance Period, for any Performance
Period with a duration of less than twelve (12) months.

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     C. Except as otherwise provided in Paragraphs IV.B and C, no participant
shall accrue any right to receive a bonus award under the Plan unless that
participant remains in Employee status through the Completion Date of the
Performance Period. Accordingly, no bonus payment shall be made to any
participant who ceases Employee status prior to the Completion Date; provided,
however, that the provisions of Paragraphs IV.B and C shall govern the bonus
entitlement of participants whose Employee status terminates under the various
circumstances set forth in those provisions.
     D. The actual bonus which a participant earns for a particular Performance
Period shall be paid pursuant to the following procedures:
          (i) As soon as administratively practicable following the Company’s
release of the financial results for the fiscal period or periods coincident
with the Performance Period, the Plan Administrator shall meet to certify the
actual levels at which the performance goals for such period or periods have
been attained and determine, on such certified levels, the actual bonus amount
to be paid to each participant for that Performance Period.
          (ii) Within fifteen (15) business days following the completion of
such certification and determination process, the actual bonus amount determined
for each participant shall be paid, subject to the Company’s collection of all
applicable federal, state and local income and employment withholding taxes.
          (iii) In no event shall the bonus payment earned for any Performance
Period be made later than the fifteenth day of March of the calendar year
immediately following the calendar year in which the Completion Date for that
Performance Period occurs.
     E. All bonus payments shall be made in cash.
VII. GENERAL PROVISIONS
     A. The Plan shall be subject to approval by the holders of the Company’s
Class B common stock. Should such shareholder approval not be obtained prior to
the close of the Company’s 2008 fiscal year, then no bonus payments shall be
made under the Plan.
     B. The Plan and all rights hereunder shall be construed, administered and
governed in all respects in accordance with the laws of the State of Arizona
without resort to its conflict-of-laws provisions. If any provision of the Plan
shall be held by a court of competent jurisdiction to be invalid or
unenforceable, the remaining provisions of the Plan shall continue in full force
and effect.
     C. The Plan Administrator may at any time amend, suspend or terminate the
Plan, provided such action does not adversely affect the rights and interests of
participants accrued to date under the Plan or otherwise impair their ability to
earn a bonus award based upon the performance objectives established by the Plan
Administrator for the then-current Performance Period.

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     D. Any amendment or modification of the Plan shall be subject to (i) the
approval of the holders of the Company’s Class B common stock to the extent
required under Code Section 162(m) or other applicable law or regulation and
(ii) the approval of the holders of the Company’s Class A common stock but only
to the extent (if any) required under applicable law or regulation or pursuant
to the listing requirements of any securities exchange on which the Company’s
Class A common stock is at the time listed for trading.
     E. Neither the action of the Company in establishing or maintaining the
Plan, nor any action taken under the Plan by the Plan Administrator, nor any
provision of the Plan itself shall be construed so as to grant any person the
right to remain in Employee status for any period of specific duration, and each
participant shall at all times remain an Employee at-will and may accordingly be
discharged at any time, with or without cause and with or without advance notice
of such discharge.
     F. Should a participant die before payment is made of the actual bonus to
which he or she has become entitled under the Plan, then that bonus shall be
paid to the executor or other legal representative of his or her estate.
     G. No participant shall have the right to transfer, alienate, pledge or
encumber his or her interest in the Plan, and such interest shall not (to the
maximum permitted by law) be subject to the claims of the participant’s
creditors or to attachment, execution or other process of law.
     H. The terms and conditions of the Plan, together with the obligations and
liabilities of the Company that accrue hereunder, shall be binding upon any
successor to the Company, whether by way of merger, consolidation,
reorganization or other change in ownership or control of the Company.
     I. No amounts accrued or earned under the Plan shall actually be funded,
set aside or to otherwise segregated prior to actual payment. The obligation to
pay the bonuses that actually become due and payable under the Plan shall at all
times be an unfunded and unsecured obligation of the Company. Participants shall
have the status of general creditors and shall look solely and exclusively to
the general assets of the Company for payment.

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