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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:



 









 






               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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