SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934Filed by the Registrant
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
Payment of Filing Fee (Check the appropriate box):
0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
Table of ContentsSTRAYER EDUCATION, INC.
1100 Wilson Blvd., Suite 2500
Arlington, VA 22209
(703) 247-2500Dear Fellow Stockholder:
You are cordially invited to attend the 2008 Annual Meeting of Stockholders of Strayer Education, Inc. (the ‘‘Corporation’’), to be held at 8:30 a.m. local time on Tuesday, April 29, 2008, at the Twin Towers Conference Center, Mall Level, 1100 Wilson Boulevard, in Arlington, Virginia.
At this year’s meeting, you will vote on (i) the election of ten directors, (ii) the ratification of the appointment of PricewaterhouseCoopers LLP as the Corporation’s independent registered public accounting firm, and (iii) any other matters that may properly come before the meeting. We have attached a notice of meeting and a proxy statement that contain more information about these items and the meeting.
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 2008 Annual Meeting of Stockholders.
Chairman of the Board
and Chief Executive OfficerMarch 27, 2008
STRAYER EDUCATION, INC.
1100 Wilson Blvd., Suite 2500
Arlington, VA 22209
(703) 247-2500NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 2008 Annual Meeting of Stockholders of Strayer Education, Inc. (the ‘‘Corporation’’), will be held at the Twin Towers Conference Center, Mall Level, 1100 Wilson Boulevard, in Arlington, Virginia, on Tuesday, April 29, 2008, at 8:30 a.m. for the following purposes:
THIS NOTICE IS BEING SENT TO COMMON STOCKHOLDERS OF RECORD AS OF MARCH 7, 2008. 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.
SecretaryArlington, VA
March 27, 2008Important notice regarding the availability of proxy materials for the Annual Meeting of Stockholders to be held on April 29, 2008:
The Proxy Statement, Form 10-K and Annual Report to Shareholders are available at www.strayereducation.com/overview.cfm.
STRAYER EDUCATION, INC.
1100 Wilson Blvd., Suite 2500
Arlington, VA 22209
(703) 247-2500PROXY STATEMENT
Annual Meeting of Stockholders
April 29, 2008This Proxy Statement is furnished on or about March 27, 2008, 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 2008 Annual Meeting of Stockholders (the ‘‘Annual Meeting’’). The Annual Meeting will be held at 8:30 a.m. local time on Tuesday, April 29, 2008, at the Twin Towers Conference Center, Mall Level, 1100 Wilson Boulevard, in Arlington, Virginia.
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 Corporation’s 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 $5,000 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 Corporation’s 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.
At the close of business on March 7, 2008, there were 14,182,587 shares of the common stock of the Corporation outstanding and entitled to vote at the meeting. Only common stockholders of record on March 7, 2008 will be entitled to vote at the meeting, and each share will have one vote.
Voting Information
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. The election of the Board of Directors’ nominees for ten directors will require the affirmative vote of a plurality of the common shares present in person or represented by proxy and entitled to vote in the election of directors. Ratification of the appointment of the Corporation’s 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 common shares present in person or represented by proxy and entitled to vote thereon. Under Maryland law and the Corporation’s Articles of Incorporation and By-laws, the aggregate number of votes entitled to be cast by all common stockholders present in person or represented by proxy at the Annual Meeting, whether those stockholders vote ‘‘For,’’ ‘‘Against’’ or abstain from voting, will be counted for purposes of determining the minimum number of affirmative votes required for approval of such matters, and the total number of votes cast ‘‘For’’ each of these matters will be counted for purposes of determining whether sufficient affirmative votes have been cast. An abstention from voting on a matter by a common stockholder present in person or represented by proxy at the meeting, other than the election of directors, has the same legal effect as a vote ‘‘Against’’ the matter even though the stockholder or interested parties analyzing the results of the voting may interpret such a vote differently. Broker non-votes will have the effect of reducing the number of shares considered present and entitled to vote on the matter. Abstentions and broker non-votes will have no effect on the election of directors.
A common stockholder may, with respect to the election of directors, (1) vote for the election of all named director nominees, (2) withhold authority to vote for all named director nominees or (3) vote for
1
the election of all named director nominees other than any nominee with respect to whom the stockholder withholds authority to vote by so indicating in the appropriate space on the proxy card. A form of proxy card is attached hereto as Exhibit A.
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 common stockholder, proxies will be voted for the election of all named director nominees. 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.
PROPOSAL 1
Election of Directors
The Corporation currently has a twelve member Board, all of whom are elected by the Corporation’s common stockholders. There are currently two vacancies on the Board; thus, ten nominees are being voted on at the Annual Meeting.
All ten of the directors which the common stockholders are currently entitled to elect are to be elected at the Annual Meeting. 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. 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 including, in each case, their current membership on Committees of the Board of Directors, principal occupations or affiliations during the last five years and certain other directorships held.
2
Nominees for Common Stock Directors
Committees
elected to
Strayer Board
Stock
Stock
Options(a)
Options Robert S. Silberman,3
4
5
6
Board Committees
The Board of Directors has established an Audit Committee, a Compensation Committee and a Nominating/Governance Committee. The current Committee membership is as follows:
Audit Committee. For the year ended December 31, 2007, the Audit Committee was composed of Messrs. Gensler (Chair), Grusky and Waite. The Committee performs a variety of tasks, including being directly responsible for the appointment, compensation and oversight of the Corporation’s independent registered public accounting firm, reviewing the Corporation’s accounting policies and reviewing the Corporation’s unaudited quarterly earnings releases and periodic filings with the Securities and Exchange Commission (the ‘‘SEC’’) that include financial statements, and reporting to the Board of Directors. The Audit Committee met five times during 2007. The Audit Committee has 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 Audit Committee charter is available on the Corporation’s 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 Gary Gensler 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. For the year ended December 31, 2007, the Compensation Committee was composed of Messrs. Wargo (Chair), Johnson and Milano. The Compensation Committee is responsible for evaluating, and recommending to the full Board for approval, the compensation of the Chief Executive Officer. The Committee is also responsible for evaluating, approving, and recommending to the full Board for approval, the compensation of the 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 met three times between February 13, 2007, the date of the last Compensation Committee Report and February 12, 2008, 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 Corporation’s 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.
7
Nominating/Governance Committee. For the year ended December 31, 2007, the Nominating/Governance Committee (the ‘‘Nominating Committee’’) was composed of Mr. Brock (Chair) and Dr. Beason. The Board has determined that all of the members of the Nominating Committee are independent, as independence is defined under the NASDAQ Listing Standards. The Nominating Committee is responsible for establishing qualifications for potential directors and considering and recommending prospective candidates for Board membership. The Nominating Committee met twice during the year ended December 31, 2007.
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 Corporation’s website, www.strayereducation.com.
The Nominating Committee considers many factors when considering candidates for the Board. The Nominating Committee strives for the Board to be comprised of directors with a variety of experience and backgrounds and who represent the interests of stockholders as a whole. Other important factors in Board composition include diversity in its truest sense, skill, specialized expertise, level of education and/or business experience, broad-based business acumen, and experience and understanding of strategy and policy-setting, as well as having a commitment to maintaining the high academic quality of Strayer University and maximizing stockholder value. The Nominating Committee also encourages all Board members to make an economic investment in the Corporation by purchasing shares directly. 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 candidate’s 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 reputation for 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, it is anticipated that the Board as a whole be able to operate in an atmosphere where the chemistry of the individuals is a key element.
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.
In considering persons to nominate for election as common stock directors, 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 Corporation’s common stock or (ii) have beneficially owned more than 1% of the Corporation’s common stock for at least one year. Stockholders meeting such criteria may recommend candidates for consideration by the Nominating Committee by writing to Gregory Ferenbach, Corporate Secretary, 1100 Wilson Blvd., Suite 2500, Arlington, VA 22209, giving the candidate’s name, contact information, biographical data and qualifications, as well as evidence that the stockholder satisfies the criteria set forth above. A written statement from the candidate consenting to be named as a candidate and, if nominated and elected, to serve as a director should accompany any such recommendation. All such recommendations will be treated confidentially and brought to the attention of the Nominating Committee.
Stockholders who wish to nominate a director for election at an annual meeting of the stockholders of the Corporation must also comply with the Corporation’s By-laws regarding stockholder proposals and nominations. See ‘‘Stockholder Proposals’’ contained in this proxy statement.
8
Attendance at Meetings and Director Independence
The Board of Directors met four times during 2007. 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 2007. At each regularly scheduled meeting of the Board, the independent directors met in executive session. The Board’s Presiding Independent Director, currently Mr. Coulter, presides at these executive sessions. The Corporation strongly encourages all incumbent directors and director nominees to attend each annual meeting of stockholders. Eight incumbent directors attended the Corporation’s last annual meeting of stockholders held on May 2, 2007.
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.
Code of Business Conduct
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 Corporation’s 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 Corporation’s 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.
Stockholder Communication with Directors
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 Gregory Ferenbach, Corporate Secretary, 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 Corporation’s common stock or (ii) have beneficially owned more than 1% of the Corporation’s 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.
Section 16(a) Beneficial Ownership Reporting Compliance
The 1934 Act requires the Corporation’s 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, 2007, all such filing requirements were met.
9
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the ownership of the Corporation’s common stock as of March 7, 2008 (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 Corporation’s common stock, each of the Corporation’s 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.
Beneficially
Owned
Exercisable
or Exercisable
within 60 Days
Owned Stockholders:
(19 persons)10
(c) Based on a Schedule 13G filed with the SEC on February 12, 2008. Neuberger Berman, LLC, a subsidiary of Neuberger Berman Inc., is an investment adviser with respect to these shares for the accounts of other persons who have the right to receive, and the power to direct the receipt of dividends from, or the proceeds from the sale of, such shares of common stock. Neuberger Berman Management Inc., another subsidiary of Neuberger Berman Inc., also serves as investment manager for mutual funds which hold some of these shares. The address is: 605 Third Avenue, New York, New York 10158. (d) Includes 131,478 restricted shares which were granted on February 14, 2006 and which vest 100% on December 1, 2008, subject to the satisfaction of certain performance criteria. Mr. Silberman has the right to vote these shares and receive cash dividends thereon during the restriction period. (e) Includes 20,192 restricted shares which were granted on July 25, 2006 and which vest 100% on July 25, 2010, subject to the satisfaction of certain performance criteria. The amount also includes 1,056 restricted shares which were granted on February 13, 2007 and which vest 100% on February 13, 2010. The amount also includes 1,851 shares of restricted stock, which were granted on February 12, 2008 and which vest 100% on February 12, 2011. Mr. McDonnell has the right to vote these shares and receive cash dividends thereon during the restriction periods. (f) Includes 3,518 restricted shares which were granted on February 13, 2007 and which vest 100% on February 13, 2010. The amount also includes 7,651 shares of restricted stock which were granted on February 12, 2008. Of the 7,651 restricted shares, 1,481 shares vest 100% on February 12, 2011 and 6,170 shares vest 100% on February 12, 2013. Mr. Brown has the right to vote these shares and receive cash dividends thereon during the restriction period. (g) Includes 7,500 restricted shares which were granted on February 14, 2006 and which vest 100% on February 14, 2010. The amount also includes 1,583 restricted shares which were granted on February 13, 2007 and which vest 100% on February 13, 2010. The amount also includes 7,343 shares of restricted stock, which were granted on February 12, 2008. Of the 7,343 restricted shares, 1,173 shares vest 100% on February 12, 2011 and 6,170 shares vest 100% on February 12, 2013. Ms. Hlavinka has the right to vote these shares and receive cash dividends thereon during the restriction periods. (h) Includes 3,424 shares of restricted stock which vest 100% on February 15, 2009 and 1,583 shares of restricted stock which vest 100% on February 13, 2010. The amount also includes 1,173 shares of restricted stock, which were granted on February 12, 2008 and which vest 100% on February 12, 2011. Mr. Ferenbach has the right to vote these shares and receive cash dividends thereon during the restriction periods.Compensation Discussion and Analysis
Compensation Policies and Objectives
11
Who Determines Compensation?
In accordance with the Compensation Committee charter, compensation for the Corporation’s CEO is determined by the Compensation Committee subject to approval of the Corporation’s 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 Compensation 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. The 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.
12
Identification and Analysis of 2007 Compensation Programs
During 2007, the Corporation’s executive compensation included salary, bonus and long-term compensation in the form of restricted stock awarded under the Corporation’s Stock Option Plan.
13
Impact of Tax and Accounting Treatment
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 $1 million paid by a publicly traded corporation to its chief executive officer and four other most highly compensated officers. Under those provisions, however, there is no limitation on the deductibility of ‘‘qualified performance-based compensation.’’ In general, the Corporation’s policy is to maximize the extent of tax deductibility of executive compensation under the provisions of Section 162(m) so long as doing so is compatible with its determination as to the most appropriate methods and approaches for the design and delivery of compensation to the Corporation’s executive officers.
Stock Ownership and Retention Guidelines
The Corporation’s guiding principles are focused on encouraging officers and directors to think like owners. To this end, the Corporation recommends:
14
Summary Compensation
The following table sets forth all compensation awarded to the Corporation’s named executive officers for the fiscal years ended December 31, 2005, 2006 and 2007.
Summary Compensation Table(d)
Awards(b)
Other
Compen-
sation(c)15
Supplemental All Other Compensation Table
Payments
on Vested,
Unexercised
Stock Options
Restricted
Stock
Dividends
401(k) Match
Expenses and
Tax Gross-up
Compensation Robert S. SilbermanGrants of Plan-Based Awards
The following table sets forth grants of plan-based awards to the Corporation’s named executive officers for the fiscal year ended December 31, 2007.
Grants of Plan-Based Awards Table(a),(c)
Awards:
Number of
Shares of
Stock or
Units(b)
(#)
Fair Value
of Stock
Awards(b)
($) Robert S. Silberman,
Chairman & CEO
President & COO
Executive VP & CFO
Executive VP & Chief Administrative Officer
Senior VP & General Counsel16
(b) On February 12, 2008, the following awards of restricted stock, which are not reflected in the table above, were granted to the Corporation’s named executive officers:
The Corporation’s closing price of common stock was $162.10 on the date of these awards. (c) The Corporation did not grant any stock options in 2006 and, therefore, the columns related to stock option grants are excluded from the table.
Date Karl McDonnellNarrative Disclosure to Summary Compensation Table and Grants of Plan-based Awards Table
It is the policy of the Corporation that the three primary components of the Corporation’s total compensation package (salary, bonus, and equity grants) will be considered in the aggregate in determining the amount of any one component. With regard to 2007, the Board of Directors and the Compensation Committee did consider the three primary components of total compensation in the aggregate in determining the amount of any one component.
In reviewing and recommending the named executive officers’ total compensation, the Compensation Committee noted the Corporation’s superior growth in revenue, operating income, net income and earnings per share during 2007, as well as its sector-leading operating margins, return on invested capital, and academic performance. The Compensation Committee noted the strong performance of the Company relative to its peer group. The Compensation Committee also took into account the performance of the Corporation’s main operating asset, Strayer University, in terms of advances in faculty hiring and qualifications, expansion of campus network, and increase in learning outcomes and graduation rates. As such, the Compensation Committee confirmed that the Corporation met its annual corporate goals, which were established by the Board of Directors in October 2006.
17
Outstanding Equity Awards at Fiscal Year-End
The following tables set forth outstanding option and stock awards of the Corporation’s named executive officers as of December 31, 2007.
Outstanding Option Awards Table
Securities
Underlying
Unexercised
Options
(#)
Exercisable
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
Grant
Date
Exercise
Price
($)
Full
Vesting
Date(a)
Expiration
Date
Value of
Stock
Options at
12/31/07(b)
($) Robert S. Silberman,
Senior VP & General CounselOutstanding Stock Awards Table
Stock Award
Date
Shares or Units
of Stock That
Have Not
Vested
(#)
of Shares of
Stock at 12/31/07
That Have Not
Vested
Vesting Date Robert S. Silberman,18
to the achievement of cumulative annual growth rates in revenue, net income and earnings per share over the restriction period and maintenance of regional accreditation. The Corporation believes the achievement of these criteria is realistic but not certain. Expensing of these shares commenced following stockholder approval of a plan amendment at the Annual Meeting of stockholders on May 3, 2006. The closing price of the Corporation’s common stock was $103.60 on that day. Mr. Silberman has the right to vote these shares and receive cash dividends thereon during the restriction period. (b) On July 25, 2006 (when the closing price of the common stock was $ 99.05 per share), Mr. McDonnell was granted 20,192 restricted common shares which vest 100% on July 25, 2010, subject to the satisfaction of certain confidential performance criteria relating to the achievement of cumulative annual growth rates in revenue, net income, and earnings per share over the restriction period and maintenance of regional accreditation. The Corporation believes the achievement of these criteria is realistic but not certain. Mr. McDonnell has the right to vote these shares and receive cash dividends thereon during the restriction period. (c) These awards of restricted stock vest 100% on February 13, 2010. The Corporation’s closing price of common stock was $113.72 on the date of these awards. (d) On February 14, 2006 (when the closing price of the common stock was $91.27 per share), Ms. Hlavinka was granted 7,500 restricted common shares which vest 100% on February 14, 2010. Ms. Hlavinka has the right to vote these shares and receive cash dividends thereon during the restriction period. (e) On June 13, 2006, Mr. Ferenbach was granted 6,108 restricted common shares pursuant to a one-time offer to exchange 20,000 stock options. This one-time exchange offer was approved by the Corporation’s stockholders at the 2006 Annual Meeting on May 3, 2006. This exchange offer excluded the five highest compensated officers, which did not include Mr. Ferenbach at that time. Of the 20,000 stock options Mr. Ferenbach exchanged, 10,000 were granted on February 10, 2004, had a grant date fair value of $473,000 and were exchanged for 2,684 restricted shares which vested on February 10, 2008. The other 10,000 stock options were granted on February 15, 2005, had a grant date fair value of $414,000 and were exchanged for 3,424 restricted shares which vest on February 15, 2009. The fair value of the restricted shares issued to Mr. Ferenbach was equivalent to the fair value of the stock options he exchanged.19
Options Exercised and Restricted Stock Vested
The following table sets forth the value and share amounts realized during the fiscal year ended December 31, 2007 upon the exercise of stock options and vesting of stock awards for the Corporation’s named executive officers.
Options Exercised and Restricted Stock Vested Table
Shares
Acquired on
Exercise
(#)
Realized on
Exercise
($)
Shares
Acquired on
Vesting
(#)
Realized on
Vesting
($) Robert S. Silberman,
Chairman & CEO
President & COO
Executive VP & CFO
Executive VP & Chief Administrative Officer
Senior VP & General CounselPotential Payments upon Termination or Change in Control
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 $600,000 for a total payout of $3.8 million. In addition, Mr. Silberman is entitled to three years of medical benefits and to a gross-up payment for any excise taxes which may be imposed on termination payments. 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 Corporation’s 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. See ‘‘Outstanding Equity Awards at Fiscal Year-end’’ tables above for 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 $170.58 of the Corporation’s common stock at December 31, 2007.
20
Director Compensation
The following table sets forth compensation for each director for the fiscal year ended December 31, 2007.
Director Compensation Table(h)
Earned
or Paid
in Cash
($)
Awards(f)
($)
Compensation(g)
($)
($) Robert S. Silberman,
Chairman & CEO(a)
Director
Director
Director
Director
Director
Director
Director
Director
Director21
Directors who are employees receive no additional compensation for serving as directors. All directors are reimbursed for expenses incurred in connection with their attendance at Board and Committee meetings.
Director compensation is as follows:
22
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Strayer Education, Inc. Board of Directors is composed of three directors – Messrs. Wargo (Chair), Johnson and Milano. Between February 13, 2007, the date of the last Compensation Committee Report, and March 21, 2008, 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 Corporation’s Annual Report on Form 10-K and Proxy Statement.
Compensation Committee:
J. David Wargo, Chair
Robert L. Johnson
Todd A. MilanoDated: February 12, 2008
AUDIT COMMITTEE REPORT
The Audit Committee of the Strayer Education, Inc. 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. The Audit Committee is currently composed of Messrs. Gensler (Chair), Grusky and Waite. The Audit Committee operates under a written charter first adopted in 2001, which is reviewed annually and which has periodically been subsequently revised by the Committee to reflect regulatory developments. 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 Corporation’s website, www.strayereducation.com. Under the Audit Committee Charter and the Committee’s current policies, the Committee performs a variety of tasks, including (i) being directly responsible for the appointment, compensation and oversight of the Corporation’s independent registered public accounting firm, (ii) reviewing the Corporation’s accounting policies, (iii) reviewing the Corporation’s unaudited quarterly earnings releases and periodic filings with the SEC that include financial statements, and (iv) reporting to the Board of Directors.
The management of the Corporation is responsible for the Corporation’s internal controls and financial reporting process and for maintaining the Corporation’s compliance with applicable accounting standards. PricewaterhouseCoopers LLP, the Corporation’s independent registered public accounting firm, is responsible for performing an independent audit of the Corporation’s financial statements in accordance with generally accepted auditing standards and to provide a report thereon. The Committee is not involved in the preparation of the Corporation’s financial statements or audit, but instead its responsibility is to monitor and oversee these activities by management and the auditors, respectively.
In connection with this responsibility, during 2007 the Committee met and held discussions with management five times and together with the independent registered public accounting firm four times. The Committee reviewed and discussed the audited financial statements with management. As a matter of practice the Committee, at each meeting, in addition to the Agenda with all present, meets separately with each of management, internal audit, PricewaterhouseCoopers, and in executive session of itself. Management represented to the Committee that the Corporation’s consolidated financial statements were prepared in accordance with generally accepted accounting principles, and the 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).
23
During the year 2007, management conducted the documentation, testing and evaluation of the Corporation’s 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 and advice to management during the process. In connection with this oversight, the Committee received periodic updates provided by management and PricewaterhouseCoopers LLP at each regularly scheduled Committee meeting. At the conclusion of the process, management provided the Committee with a report on the effectiveness of the Corporation’s internal control over financial reporting. The Committee also reviewed the report of management contained in the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007 filed with the SEC, as well as PricewaterhouseCoopers LLP’s Report of Independent Registered Public Accounting Firm (included in the Corporation’s 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 Committee continues to oversee the Corporation’s efforts related to its internal control over financial reporting and management’s preparations for the evaluation in fiscal 2008.
The Committee has received from PricewaterhouseCoopers LLP the written disclosures and the letter required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees) 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 Corporation’s financial statements or the conduct of the annual audit.
Based upon the review and discussions referred to above, the Committee, consisting of the members for the fiscal year ended December 31, 2007, recommended to the Board of Directors that the audited financial statements for the year 2007 be included in the Corporation’s annual report on Form 10-K for the year ended December 31, 2007, filed with the SEC, and that PricewaterhouseCoopers LLP be retained as the Corporation’s independent registered public accounting firm for the fiscal year 2008.
Audit Committee:
Gary Gensler, Chair
Robert R. Grusky
G. Thomas Waite, IIIDated: February 11, 2008
Certain Transactions with Related Parties
The Corporation had no transactions with related parties during the fiscal year ended December 31, 2007. 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. Any such activity will be publicly disclosed. See ‘‘Code of Business Conduct’’ in this Proxy Statement for more information.
24
PROPOSAL 2
Ratification of Appointment of Independent Registered Public Accounting Firm
The Audit Committee and the Board of Directors have appointed the independent registered public accounting firm of PricewaterhouseCoopers LLP to serve as the Corporation’s independent registered public accounting firm for the fiscal year ending December 31, 2008. PricewaterhouseCoopers LLP has acted as the Corporation’s independent registered public accounting firm for the fiscal year ended December 31, 2007. 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 Corporation’s independent registered public accounting firm for the fiscal year ending December 31, 2008.
Principal Accounting Fees and Services
Set forth below are the services rendered and related fees billed by PricewaterhouseCoopers LLP for 2006 and 2007:
Recurring:It is the Audit Committee’s policy to pre-approve all audit and non-audit related services provided by the Corporation’s independent registered public accounting firm. All of the services described above were pre-approved by the Corporation’s Audit Committee.
Stockholder Proposals
All stockholder proposals intended to be presented at the 2009 Annual Meeting of Stockholders must be received by the Corporation no later than November 25, 2008 and must otherwise comply with rules of the SEC for inclusion in the Corporation’s 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 Corporation’s proxy statement with respect to discretionary voting. The discretionary voting deadline for the Corporation’s 2009 Annual Meeting is February 7, 2009. If a stockholder gives notice of such a proposal after the discretionary voting deadline, the Corporation’s 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 Corporation’s 2009 Annual Meeting of Stockholders.
Other Matters
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.
25
Exhibit A
REVOCABLE PROXY
STRAYER EDUCATION, INC.
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 29, 2008
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORSThe undersigned stockholder hereby appoints Robert S. Silberman, Gregory Ferenbach 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 29, 2008 at 8:30 a.m. (Eastern time) at the Twin Towers Conference Center, Mall Level, 1100 Wilson Boulevard, in Arlington, Virginia, 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)
A-1
ANNUAL MEETING OF STOCKHOLDERS OF
STRAYER EDUCATION, INC.
APRIL 29, 2008
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.- Please detach along perforated line and mail in the envelope provided -
THE BOARD OF DIRECTORS RECOMMENDS A VOTE ‘‘FOR’’ THE ELECTION OF DIRECTORS AND ‘‘FOR’’
PROPOSAL 2. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE
MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
O Dr. Charlotte F. Beason
FOR ALL NOMINEES
O David A. Coulter
O Gary Gensler
(See instructions below)
O Robert L. Johnson
O Todd A. Milano
O G. Thomas Waite, III
O J. David Wargo INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark ‘‘FOR ALL EXCEPT’’ and fill in the circle next to each nominee you wish to withhold. 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 and, FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the Corporation’s 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 March 27, 2008 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.
Signature of Stockholder: Date: Signature of Stockholder: Date:
A-2