Exhibit 10.1

APOLLO EDUCATION GROUP, INC.

AMENDED AND RESTATED EFFECTIVE AS OF OCTOBER 13, 2016

EXECUTIVE OFFICER PERFORMANCE INCENTIVE PLAN

 

I. PURPOSE OF THE PLAN

The Apollo Education Group, Inc. Executive Officer Performance Incentive Plan
(the “Plan”) is intended to promote the interests of Apollo Education 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
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
three (3) months to a maximum period of thirty-six (36) months.

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
(i) 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, and (ii) other key employees of the Company and its subsidiaries. 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 on the basis of actual performance goal attainment 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

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express terms of any agreement or arrangement to which that individual and the
Company are parties; and

(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

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Administrator for that Performance Period are attained. The Plan Administrator
shall, within the first ninety (90) days of each Performance Period of twelve
(12) or more months duration, within the first forty-five (45) days of each
Performance Period of less than twelve (12) months duration but six (6) months
or more duration and within the first fifteen (15) days of each Performance
Period of three (3) 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 net earnings or net
income, (ii) sales or revenue growth or other revenue or sales objectives,
(iii) cash flow, operating cash flow or free cash flow objectives, (iv) return
on assets or net assets, (v) return on stockholder equity, (vi) return on
capital or invested capital, (vii) Stock price per share or growth in Stock
price per share, (viii) total stockholder return, (ix) operating margin or gross
or net profit margin, (x) earnings per share, (xi) market share, (xii) operating
income or pre-tax or after-tax net operating income, (xiii) operating profit or
pre-tax or after-tax net operating profit, (xiv) operating earnings or pre-tax
or after-tax net operating earnings, (xv) earnings or operating income before
interest, taxes, depreciation, amortization and/or charges for stock-based
compensation, (xvi) economic value-added models, (xvii) cost reductions,
(xviii) budget objectives, (xix) litigation and regulatory resolution goals,
(xx) expense control goals, (xxi) measures of student academic success,
(xxii) measures of student satisfaction at one or more of the Company’s
universities or throughout the Company’s university system as a whole, as
formulated by the Committee and validated in one or more instances through one
or more independently-conducted surveys, (xxiii) measures of faculty performance
at one or more of the Company’s universities or throughout the Company’s
university system as a whole, (xxiv) measures of faculty satisfaction at one or
more of the Company’s universities or throughout the Company’s university system
as a whole, as formulated by the Committee and validated in one or more
instances through one or more independently-conducted surveys, (xxv) measures to
enhance student protection or student service at one or more of the Company’s
universities or throughout the Company’s university system as a whole, and
(xxvi) measures of employee productivity. Any of the foregoing criteria may be
measured either in absolute terms or as compared to any incremental increase or
as compared to results of a peer group or as measured in terms of one or more
business units or Subsidiaries of the Company. The Committee shall, within the
time prescribed by Section 162(m) of the Code, define in an objective fashion
the manner of calculating the Performance Criteria it selects to use for such
Performance Period for such Participant.

C. Each applicable performance objective may be structured at the time of
establishment to provide for appropriate adjustments for one or more of the
following items: (i) asset impairments or write-downs, including impairment
charges related to goodwill, intangible assets or other long-lived assets,
(ii) litigation verdicts, 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 and other related expenses, (v) extraordinary
nonrecurring items, including, without limitation, those addressed 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, and any other item that is either unusual or infrequent in
nature, as determined in accordance with

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Accounting Standards Codification Topic 225-20 “Extraordinary and Unusual
Items,” (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 of the Company or (any Subsidiary) or of any joint venture in which the
Company (or any Subsidiary) participates, (viii) the costs incurred in
connection with such acquisitions or divestitures, (ix) the financial results of
any businesses classified as discontinued operations for all or a portion of the
applicable performance or measurement period, (x) items of income, gain, loss or
expense attributable to the operations of any business acquired or divested by
the Company or any Subsidiary, (xi) stock-based compensation, (xii) cash
payments made in settlement of incentive awards under the Plan or any other plan
or program implemented by the Company or any Subsidiary, (xiii) intercompany
transactions between or among the Company and one or more of its Subsidiaries,
(xiv) the impact of foreign exchange gains and losses and (xv) employee
separation costs not in the ordinary course of business.

D. In addition to the foregoing adjustments set forth in Paragraph V.C above,
should the performance objective be tied to cash flow, operating cash flow or
free cash flow objectives, then the Plan Administrator may, in establishing the
applicable targets, authorize adjustments, deductions and/or exclusions with
respect to one or more of the following items to the extent those items are to
be utilized in the calculation of cash flow, operating cash flow or free cash
flow for any or all of the fiscal years within the applicable Performance Period
or any other fiscal year that serves as a base or comparative measurement year:
(i) cash amounts expended in the acquisition of property, plant and equipment,
(ii) cash amounts paid in connection with actual or proposed acquisitions of one
or more businesses or the assets of one or more businesses or in connection with
start-up enterprises, (iii) cash flows or adjusted cash flows attributable to
any businesses or assets acquired or divested during the Performance Period (or
other relevant measurement period), (iv) cash amounts paid as interest expense,
(v) cash amounts received as interest income, (vi) cash amounts paid in
connection with judgments, verdicts and settlements with respect to specified
litigation matters, (vii) increases or decreases in restricted cash attributable
to Title IV student funding, (viii) increases or decreases in working capital or
other working capital adjustments, (ix) cash flows or adjusted cash flows
attributable to new businesses or entities begun by the Company or any
Subsidiary, (x) cash flow impact of intercompany transactions between or among
the Company and one or more Subsidiaries involving the acquisition, licensing or
cost sharing of intangible assets, (xi) cash flow impact of costs or charges
related to internal corporate services, (xii) capital expenses, (xiii) capital
leases, (xiv) other items of income, gain (or credit) or expense or loss
associated with intercompany transactions and (xv) debt obligations.

E. In further clarification of the various adjustments that may be made to one
or more performance objectives in accordance with Paragraph V.C. above and
without limiting the scope or generality of those permissible adjustments,
should the performance objectives be tied to any net income, operating income or
operating profit objectives, such criteria may be structured at the time of
establishment to provide for appropriate adjustments with respect to one or more
of the following items to the extent those items are to be utilized in the
calculation of net income, operating income or operating profit for any fiscal
year within the applicable Performance Period: (i) the exclusion of all
acquisition costs expensed for the applicable fiscal year, whether relating to
acquisitions effected during that year or any prior fiscal year, (ii) the

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exclusion of all income, gain or loss attributable to companies or other
entities acquired during the applicable fiscal year, (iii)the exclusion of
impairment charges related to goodwill, intangible assets or other long-lived
assets, (iv) the exclusion of amounts expensed in connection with judgments,
verdicts and settlements with respect to specified litigation matters, (v) the
exclusion of stock-based compensation expense or costs, as computed in
accordance with applicable accounting principles, and (vi) any other applicable
adjustments authorized in accordance with the foregoing provisions of this
Paragraph V.E.

F. For each performance objective, the Plan Administrator may establish one or
more designated levels of attainment, including (without limitation) threshold,
target and/or 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 limitations of the Maximum Bonus Amount set forth in Paragraph
VI.B.

G. 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. By way of illustration only, if
four (4) performance objectives are 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.

H. 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.

I. 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

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between two of the designated levels, then the participant’s bonus potential
with respect to that performance goal 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 the applicable dollar amount set forth below, subject to an overall maximum
limit of Five Million Dollars ($5,000,000) per participant for any given
Performance Period:

(i) six (6) 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) four (4) 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) two-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.

The Five Million Dollar ($5,000,000) limitation on the Maximum Bonus Amount that
may be paid to a participant for any given Performance Period shall be applied
on an aggregate basis so that if an individual participates in two or more
Performance Periods that commence in the same fiscal year of Company, the bonus
amounts payable to that participant for those particular Performance Periods
shall not exceed Five Million Dollars ($5,000,000) in total.

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.

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(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 or, if earlier, the applicable short-term deferral deadline under
Code Section 409A.

E. All bonus payments shall be made in cash.

 

VII. GENERAL PROVISIONS

A. This October 2016 restatement of the Plan shall be subject to approval by the
holders of the Company’s Class B common stock.

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.

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.

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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.

IN WITNESS WHEREOF, APOLLO EDUCATION GROUP, INC. has caused this Amended and
Restated Executive Officer Performance Incentive Plan to be executed on its
behalf by its duly-authorized officer on this 13th day of October 2016.

 

APOLLO EDUCATION GROUP, INC. By:  

/s/ Gregory Iverson

Title:   Chief Financial Officer