American Public Education (APEI) DEF 14ADefinitive proxy

The 2022 Annual Meeting of Stockholders of American Public Education, Inc. will be held on May 20, 2022 at 8:00 a.m. Eastern Daylight Time as a virtual meeting of stockholders held over the Internet. Stockholders will be able to attend the Annual Meeting, vote, and submit questions during the Annual Meeting at www.virtualshareholdermeeting.com/APEI2022. The Annual Meeting will be held for our stockholders to consider and vote on the following proposals:

In addition, any other matters that properly come before the Annual Meeting or any adjournment or postponement thereof will be considered. Management is presently aware of no other business to come before the Annual Meeting.

Each outstanding share of American Public Education, Inc. common stock (Nasdaq: APEI) entitles the holder of record at the close of business on March 25, 2022 to receive notice of and to vote at the Annual Meeting or any adjournment or postponement of the Annual Meeting.

WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, WE URGE YOU TO VOTE YOUR SHARES BY INTERNET, TELEPHONE, OR BY SIGNING, DATING, AND RETURNING THE PROXY CARD YOU WILL RECEIVE IF YOU REQUEST PRINTED MATERIALS. IF YOU CHOOSE TO ATTEND THE VIRTUAL ANNUAL MEETING, YOU MAY STILL VOTE YOUR SHARES ONLINE AT THE MEETING, EVEN THOUGH YOU HAVE PREVIOUSLY VOTED OR RETURNED YOUR PROXY BY ANY OF THE METHODS DESCRIBED IN OUR PROXY STATEMENT. IF YOUR SHARES ARE HELD IN A BANK OR BROKERAGE ACCOUNT, PLEASE REFER TO THE MATERIALS PROVIDED BY YOUR BANK OR BROKER FOR VOTING INSTRUCTIONS.

The purpose of the Annual Meeting is for our stockholders to consider and act upon the proposals described in this Proxy Statement and any other matters that properly come before the Annual Meeting or any adjournment or postponement thereof. In addition, management will report on the performance of the Company and respond to questions from stockholders.

At the Annual Meeting, our stockholders will be asked to consider and vote upon the following four proposals:

In addition, any other matters that properly come before the Annual Meeting or any adjournment or postponement thereof will be considered. Management is presently not aware of any other business to come before the Annual Meeting.

The Board recommends that you vote FOR each of the nominees to the Board (Proposal No. 1); FOR approval of the amendment to the 2017 Plan (Proposal No. 2); FOR approval of the compensation of our named executive officers (Proposal No. 3); and FOR ratification of the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2022 (Proposal No. 4).

Pursuant to the “notice and access” rules adopted by the Securities and Exchange Commission (the “SEC”), we have elected to provide stockholders access to our proxy materials over the Internet. Accordingly, we sent a Notice of Internet Availability of Proxy Materials (the “Notice”) on or about April 1, 2022 to all of our stockholders as of the close of business on March 25, 2022 (the “Record Date”). The Notice includes instructions on how to access our proxy materials over the Internet and how to request a printed copy of these materials. In addition, by following the instructions in the Notice, stockholders may request to receive proxy materials in printed form by mail or electronically by e-mail on an ongoing basis.

The Annual Meeting will be a completely virtual meeting to be held over the Internet. We are again holding the Annual Meeting as a virtual meeting this year to ensure the health and safety of our stockholders, Board, and management and also because we believe that the virtual meeting platform offers expanded access to stockholders who may otherwise not attend in person. As a technology-enabled organization, a virtual meeting aligns with our commitment to innovation and our role as a provider of online education.

Whether you are a stockholder of record or hold your shares in “street name,” you may participate in and vote online at the Annual Meeting by visiting www.virtualshareholdermeeting.com/APEI2022 and using the 16-digit control number included on your Notice, on your proxy card, or on the instructions that accompanied your proxy materials to enter the Annual Meeting.

The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Participants should ensure that they have a strong internet or Wi-Fi connection to participate in the Annual Meeting. Participants should also give themselves plenty of time to dial-in to the conference call or log in and ensure that they can hear audio prior to the start of the Annual Meeting.

If you have questions regarding how to attend and participate in the Annual Meeting or encounter any technical difficulties with the virtual meeting platform on the meeting day, please call 844-986-0822 (Toll Free) or 303-562-9302 (International Toll). Technical support will be available starting at 7:45 a.m. EDT on May 20, 2022.

If you wish to submit a question, you may do so in a few ways. If you want to submit a question before the meeting, then beginning April 8, 2022 and until 11:59 p.m. EDT on May 19, 2022, you may log into www.proxyvote.com and enter your 16-digit control number. Once past the login screen, click on “Question for Management,” type in your question or comment, and click “Submit.” Alternatively, if you want to submit your question or make a comment during the meeting, log into the virtual meeting platform at www.virtualshareholdermeeting.com/APEI2022, type your question into the “Ask a Question” field, and click “Submit”. Any emailed questions or comments will need to include your 16-digit control number in order to be addressed at the meeting.

Questions and comments submitted via the virtual meeting platform that are pertinent to meeting matters will be addressed during the meeting. Consistent with our approach when the annual meetings were held in person, questions or comments that are not related to the proposals under discussion, are about personal concerns not shared by stockholders generally, or use blatantly offensive language may be ruled out of order. In the unlikely event that the volume of questions increases to the point that time constraints prohibit us from answering all pertinent questions, the remaining pertinent questions will be answered on our Investor Relations site.

The Board is soliciting your vote at the 2022 Annual Meeting or at any later meeting should the scheduled annual meeting be adjourned or postponed for any reason. Stockholders will be entitled to vote at the Annual Meeting on the basis of each share held of record at the close of business on the Record Date.

If on the Record Date you hold shares of our common stock that are represented by stock certificates or registered directly in your name with our transfer agent, American Stock Transfer & Trust Company (“AST”), you are considered the stockholder of record with respect to those shares, and AST is sending these proxy materials directly to you on our behalf. As a stockholder of record, you may vote online at the meeting or by proxy via Internet, mail, or telephone. Whether or not you plan to attend the Annual Meeting online, you may vote over the Internet by following the instructions in the Notice. If you request printed copies of the proxy materials by mail, you may also vote by submitting your vote by telephone or by signing and submitting your proxy card. Whether or not you plan to attend the Annual Meeting, we urge you to vote by way of the Internet, by telephone, or by filling out and returning the proxy card you will receive upon request of printed materials. If you submit a proxy but do not give voting instructions as to how your shares should be voted on a particular proposal at the Annual Meeting, your shares will be voted in accordance with the recommendations of the Board stated in this Proxy Statement.

Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before its use by (1) delivering a written notice of revocation addressed to American Public Education, Inc., Attn: Corporate Secretary, 111 W. Congress Street, Charles Town, West Virginia 25414, (2) submitting a duly executed proxy bearing a later date, (3) voting again by Internet or by telephone, or (4) attending the Annual Meeting and voting online. Your last vote or proxy will be the vote or proxy that is counted. Attendance at the Annual Meeting will not cause your previously granted proxy to be revoked unless you vote at the Annual Meeting or specifically so request.

If on the Record Date you hold shares of our common stock in an account with a brokerage firm, bank, or other nominee, then you are a beneficial owner of the shares and hold such shares in street name, and these proxy materials will be forwarded to you by that organization or person. As a beneficial owner, you have the right to direct your broker, bank, or other nominee on how to vote the shares held in its account, and the nominee has enclosed or provided voting instructions for you to use in directing it how to vote your shares. The nominee that holds your shares, however, is considered the stockholder of record for purposes of voting at the Annual Meeting. Because you are not the stockholder of record, you may not vote your shares online at the Annual Meeting unless you use your 16-digit control number to enter the meeting.

Whether or not you plan to attend the Annual Meeting, we urge you to vote by following the voting instructions provided to you to ensure that your vote is counted should you later decide not to attend the Annual Meeting.

If you are a beneficial owner and do not vote, and your broker, bank or other nominee does not have discretionary power to vote your shares, your unvoted shares may constitute “broker non-votes.” Unvoted shares that constitute broker non-votes will be counted for the purpose of establishing a quorum at the Annual Meeting. Voting results will be tabulated and certified by the inspector of elections appointed for the Annual Meeting. If you receive more than one Notice, it is because your shares are registered in more than one name or are registered in different accounts. Please follow the instructions on each Notice received to ensure that all of your shares are voted.

A list of stockholders of record as of the Record Date will be available for inspection during ordinary business hours at our offices located at 111 W. Congress Street, Charles Town, West Virginia 25414, from May 10, 2022 to the date of our Annual Meeting. Stockholders may contact our Corporate Secretary and arrangements will be made to review the records in person. During the Annual Meeting, the list of stockholders will be available for examination at www.virtualshareholdermeeting.com/APEI2022.

The presence at the Annual Meeting, whether online or by valid proxy, of the persons holding a majority of shares of common stock entitled to vote at the meeting will constitute a quorum, permitting us to conduct our business at the Annual Meeting. On the Record Date, there were 18,856,352 shares of common stock outstanding, held by 442 stockholders of record. Abstentions (i.e., if you or your broker mark “ABSTAIN” on a proxy) and “broker non-votes” will be considered to be shares present at the meeting for purposes of a quorum.

Broker non-votes occur when shares held by a broker for a beneficial owner are not voted with respect to a particular proposal and generally occur because the broker (1) does not receive voting instructions from the beneficial owner and (2) lacks discretionary authority to vote the shares. Brokers and other nominees have discretionary authority to vote on routine matters, such as the ratification of an independent public accounting firm, for clients who have not provided voting instructions. However, without voting instructions from their clients, they cannot vote on “non-routine” proposals, including the election of directors, approval of amendments to stock plans, and matters related to executive compensation.

We will bear the cost of solicitation of proxies. This includes the charges and expenses of brokerage firms and others for forwarding solicitation material to beneficial owners of our outstanding common stock. We have retained Georgeson LLC to assist in the distribution of proxy materials and the solicitation of proxies from brokerage firms, fiduciaries, custodians, and other similar organizations representing beneficial owners of shares for the Annual Meeting. We have agreed to pay Georgeson a fee of approximately $11,000 plus out-of-pocket expenses. We may solicit proxies by mail, personal interview, telephone, or via the Internet through our officers, directors and other management employees, who will receive no additional compensation for their services.

The Board has adopted Corporate Governance Guidelines (the “Guidelines”), a Code of Business Conduct and Ethics (the “Code of Ethics”), a Policy for Related Person Transactions and other policies as part of our corporate governance practices and in accordance with rules of the SEC and the listing standards of The Nasdaq Stock Market (“Nasdaq”).

The Guidelines, Code of Ethics, and Policy for Related Person Transactions are reviewed periodically by our NCG Committee, and changes are recommended to the Board for approval as appropriate. In March 2021, the Board updated the Guidelines to:

The amended Code of Ethics did not relate to or result in any waiver, explicit or implicit, of any provision of the previous Code of Ethics.

The Guidelines set forth a framework to assist the Board in the exercise of its responsibilities. The Guidelines cover, among other things, the composition and certain functions of the Board, director independence, stock ownership by our non-employee directors, management succession and review, Board committees, the selection of new directors, and director expectations.

The Code of Ethics covers, among other things, compliance with laws, rules and regulations, conflicts of interest, corporate opportunities, confidentiality, protection and proper use of Company assets, and the reporting process for any illegal or unethical conduct. The Code of Ethics is applicable to all of our officers, directors and employees. We also have a separate Code of Ethics that is specifically applicable to our Chief Executive Officer, Chief Financial Officer and other Principal Officers (as defined therein).

Any waiver of either Code of Ethics for our directors, executive officers, or Principal Officers may be made only by the Board and will be promptly disclosed as may be required by law, regulation, or rule of the SEC, or Nasdaq listing standards. If we further amend either Code of Ethics or waive any provision of either Code of Ethics with respect to our Chief Executive Officer, Chief Financial Officer, or other Principal Officers, we will post the amendment or waiver on our corporate website, www.apei.com. The information on our corporate website is not incorporated by reference into this Proxy Statement.

The Guidelines and Codes of Ethics are each available in the Governance section of our corporate website.

As a supplement to and extension of our Codes of Ethics, the Board has adopted a Policy for Related Person Transactions pursuant to which our NCG Committee, another independent committee of the Board or the full Board, must give prior consent before we may enter into a related person transaction with our executive officers, directors, nominees for director and principal stockholders, including their immediate family members and affiliates. Any request for us to enter into a related person transaction with an executive officer, director, nominee for director, principal stockholder or any of such persons’ immediate family members or affiliates must first be presented to our NCG Committee for review, consideration and approval. A related person transaction is a transaction in which the Company is or will be a participant and in which a related person has or will have a direct or indirect material interest, other than (i) a transaction involving $120,000 or less when aggregated with all related transactions, (ii) a transaction involving compensation to an executive officer that is approved by the Board or the Committee, (iii) a transaction involving compensation to a director or director nominee that is approved by the Board, the MDC Committee or the NCG Committee, and (iv) any other transaction that is not required to be reported pursuant to Item 404(a) of Regulation S-K under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All of our directors, executive officers, and employees are required to report to our NCG Committee any such related person transaction.

In approving or rejecting a proposed related person transaction, our NCG Committee considers the facts and circumstances available and deemed relevant to the NCG Committee, including, but not limited to the risks, costs and benefits to us, the terms of the transaction, the availability of other sources for comparable services or products, and, if applicable, the impact on a director’s independence. Our NCG Committee approves only those agreements that, in light of known circumstances, are in, or are not inconsistent with, our best interests, as our NCG Committee determines in the good faith exercise of its discretion. Under the policy, if we discover related person transactions that have not been approved, the NCG Committee will be notified and will determine the appropriate action, including ratification, rescission, or amendment of the transaction.

There have been no related person transactions since the beginning of 2021 and there are no currently proposed related person transactions.

To further align the interests of our executive officers and directors with the interests of our stockholders, and after evaluation of best practices and consultation by the MDC Committee with Willis Towers Watson, its independent consultant, the Board has implemented stock ownership guidelines applicable to our executive officers and directors. Each executive officer is expected to hold shares of common stock with an aggregate value greater than or equal to a multiple of the executive officer’s base salary as set forth below:

Each of our non-employee directors is expected to hold shares of common stock with an aggregate value greater than or equal to at least three times the amount of the annual retainer paid to non-employee directors for service on the Board, excluding additional committee retainers, if any.

Each of our executives is expected to meet the stock ownership guidelines within five years of the date the person first became an executive, provided that if they have not achieved the applicable stock ownership level by that date, the executive officer will be required to retain 50% of the net shares of common stock acquired pursuant to equity awards until the applicable levels are achieved. “Net shares” are those shares that remain after shares are sold or withheld to pay withholding taxes and/or the exercise price of stock options, if applicable. Each of non-employee directors is expected to achieve the stock ownership levels within five years of the date such person first becomes a non-employee director. As of December 31, 2021, all of our executive officers and non-employee directors were in compliance with the stock ownership guidelines to the extent required.

We have adopted a policy prohibiting our directors, officers, and employees from engaging in short sales, transactions in derivative securities (including put and call options), or other forms of hedging and monetization transactions, such as zero-cost collars, equity swaps, exchange funds, and forward sale contracts, that allow the holder to limit or eliminate the risk of a decrease in the value of our securities. We have adopted this policy in order to align the interests and objectives of individuals subject to the policy with those of our stockholders.

We have adopted a policy prohibiting our directors and officers from holding our securities in margin accounts, pledging our securities as collateral or maintaining an automatic rebalance feature in savings plans, deferred compensation or deferred fee plans. This prohibition is to avoid sales of our securities on behalf of an individual related to margin calls, loan defaults, and automatic rebalances, which may occur when the individual has material nonpublic information regarding the Company.

We believe that stockholder engagement is an important corporate governance practice. Regular dialogue with stockholders strengthens our relationship with the financial community and helps stockholders make informed investment decisions, assess our long-term financial performance, and evaluate our business practices. Through our stockholder engagement process, we receive valuable feedback that informs our decisions regarding our strategy, our executive compensation practices, and our corporate governance practice and policies, which we believe is a critical component to our success.

Our meetings with investors are attended by one or more members of APEI’s management team, including our Chief Executive Officer, our Chief Financial Officer, our Senior Vice President, Chief Strategy and Corporate Development Officer, and our Associate Vice President, Investor Relations and Corporate Development. In 2021, our management team participated in many investor meetings through a variety of forums. We regularly held one-on-one meetings following key company updates such as earnings releases and acquisition announcements. APEI also frequently participates in investor conferences and non-deal roadshows where we engage with both existing and prospective investors.

We continue to demonstrate a strong commitment to corporate governance and our commitment to best practices:

We believe that our intrinsic value can be measured by the impact of our activities on the communities that we serve – by our ability to make a difference. We seek to create positive environmental and social impacts that bring value to our students, employees, stockholders, other stakeholders, and society. And we believe that the Board of Directors and management play a critical role in delivering on these commitments. In March 2021, we formalized the Board’s responsibility to establish and support our commitment to positive environmental and social impacts and to ensure strong governance practices through amendments to the Guidelines and our NCG Committee’s charter. Our NCG Committee is responsible for assisting the Board in overseeing this commitment, including by overseeing our strategy and activities related to corporate social responsibility, sustainability and other ESG matters. The NCG Committee is also tasked with oversight of related risks, review and evaluation of ESG-related strategy, goals, initiatives, policies and practice, and oversight of the development and use of ESG metrics as well as ESG reporting and disclosure. We also have a management-led Environmental and Social Quality Committee that reports to our Chief Executive Officer and supports management’s execution of our ESG efforts and development of our ESG strategy. This committee is comprised of a chairperson designated by our Chief Executive Officer and members designated by our Chief Executive Officer and executive leadership team.

In addition to creating positive environmental impacts, we believe that our Company should have a positive social impact. We were built on the belief that quality education should be accessible to all, not reserved for the few. We strive for inclusiveness in our classrooms – our goal is to build bridges, not tear them down. Informed debate focused on finding solutions is incorporated into the heart of our curriculum. For example, in our criminal justice programs, we teach de-escalation to help police officers be more effective in the communities they serve. We also believe in making a difference in the communities in which we live and work. Our many volunteer and community service projects often emerge organically from the ideas and passions of our students. In 2020, through our network of 70-plus student organizations with more than 74,000 members, APUS students, graduates, faculty and staff took part in more than 1,300 activities supporting environmental and social causes.

Our ability to deliver on our corporate mission and to continue to transform our enterprise to focus on sustainable growth is tightly aligned with our human capital strategy. Our performance largely depends on the talents, experience, and efforts of our employees, and on our ability to foster a culture and practice of high performance, innovation, cooperation, integrity, and respect. During 2021, our key human capital efforts were focused on building our leadership strength organically by hiring key executives and inorganically

Diversity and inclusion are at the core of our values, and we believe they reflect the expectations of the students we serve. To support our diversity and inclusion efforts, we have task forces at APUS and RU that focus on diversity and inclusion matters. As of December 2021, approximately 53% of our professional staff at the corporate level, 54% of our faculty and staff at APUS, 76% of our faculty and staff at RU, and 78% or our faculty and staff at HCN identified as women. As of December 2021, approximately 22% of the positions held at the corporate level, and 21%, 26%, and 24% of the positions held at APUS, RU, and HCN, respectively, were held by persons self-identifying as Black or African American, Hispanic, Asian, Native American or more than one race. We believe a diverse and inclusive workplace results in business growth and encourages increased innovation, retention of talent, and a more engaged workforce. Consistent with our focus on diversity and inclusion, we strive to create ethical, safe, and supportive workplaces where our employees thrive.

We measure employee engagement on an ongoing basis by soliciting feedback in order to understand the views of our employees, faculty, and culture. The results from engagement surveys are used to implement programs and processes designed to enhance employee and faculty engagement and improve the employee experience. For example, based on the results of employee surveys in 2021, we added insurance coverage for in vitro fertilization and extended benefits coverage to domestic partners.

Our strategic initiatives require our management, faculty, staff, and skilled personnel to perform at a high level and to adapt and learn new skills and capabilities. We believe that the quality of faculty is critical to the student experience and student outcomes and is therefore vital to the success of our institutions. As a result, faculty members are required to participate in annual faculty development opportunities and requirements. In addition, RU and HCN train and develop new faculty through formal, structured on-boarding and orientation.

Our management is responsible for managing risks in our business, including by developing processes to monitor and control risks. The Board views its role as one of oversight and of responsibility for setting a tone that risk management should be properly integrated with our strategy and culture. The Board focuses on understanding management’s risk management processes, the effectiveness of those processes, and the way in which management proactively manages risks. The Board regularly meets with our management, particularly our Chief Executive Officer, Chief Financial Officer, Chief Technology Officer, and General Counsel, to receive updates on how management is assessing and managing risk in particular functional areas of our business, as well as monitors risks that have been delegated to its committees. The Board and its committees also request and receive regular reports from management on particular areas of risk, such as cybersecurity or threats to technology infrastructure.

The Board’s committees assist the Board in carrying out its oversight of risks, and each of the committee charters specifically address issues of risk. At the request of the full Board, from time to time the NCG Committee may discuss or examine in more depth specific risk areas and request presentations and information from management for that purpose. Pursuant to the Guidelines, the Board is expected to specifically consider risks that relate to our reputation and the general industry in which we operate, including with respect to privacy, information technology and cybersecurity, and threats to technology infrastructure. The NCG Committee considers and makes recommendations on how the Board is

While the NCG Committee and the Audit Committee have primary responsibility for assisting the Board with its risk oversight responsibilities, the MDC Committee also assists the Board with risk oversight. The MDC Committee is responsible for the oversight of our human capital policies, programs, initiatives, and strategies, including with respect to employee engagement, diversity and inclusion, culture, employee retention, training, and talent development. When establishing executive compensation and director compensation and in its role in implementing incentive compensation plans, the MDC Committee considers whether compensation practices properly take into account an appropriate risk-reward relationship or encourage unnecessary and excessive risks. The MDC Committee has concluded that our compensation policies and practices are not reasonably likely to have a material adverse effect on the Company; this conclusion has been confirmed by the Board.

The performance, reliability, and security of the networks and technology infrastructure we use or rely on is critical to our operations, our institutions’ reputation, and our ability to attract and retain students. The Board regularly reviews our cybersecurity and other information technology risks, controls, and procedures, including plans to mitigate such risks and respond to any cyber incidents. The Board receives regular reports from our Chief Technology Officer on these and related topics, including management’s approach to cybersecurity and potential investments in additional cybersecurity capabilities. In 2021, the Board oversaw efforts to further mature cybersecurity processes, grow and strengthen our cybersecurity organization, and increase measures for detection and prevention of threats, including by developing and beginning the implementation of a new three-year cybersecurity roadmap, implementing additional cybersecurity awareness training for all employees and hiring a dedicated Chief Information Security Officer.

The following table details certain basic information on our current directors, the composition of the Board and its standing committees, and the number of meetings held during the year ended December 31, 2021:

The Board believes, and the Guidelines require, that a substantial majority of its members should be independent directors. In addition, the respective charters of the Audit, MDC, and NCG Committees currently require that each member of such committees be independent directors. Consistent with Nasdaq’s independence criteria, the Board has affirmatively determined that all of our directors are independent, with the exception of Ms. Selden, who is our President and Chief Executive Officer. Nasdaq’s independence criteria include a series of objective tests, such as that the director is not an employee of the Company and

In accordance with the Guidelines, the independent members of the Board hold at least two “executive session” meetings each year. If the Chairperson of the Board were not an independent director, an independent chairperson would be selected for each executive session. These meetings serve as a forum to discuss the annual evaluation of the Chief Executive Officer’s performance, the annual review of the Chief Executive Officer’s plan for management succession, and such other topics as the independent directors deem necessary or appropriate.

The Guidelines specify that the Board shall select its Chairperson based on the Board’s determination of what is then in our best interests. Historically, we have split the positions of the Chairperson of the Board and Chief Executive Officer because we believe that this structure is appropriate given the differences between the two roles in our management structure. Our Chief Executive Officer, among other duties, is responsible for implementing the strategic direction for the Company and for the day-to-day leadership and performance of the Company, while the Chairperson of the Board, among other responsibilities, provides guidance to the Chief Executive Officer and presides over meetings of the full Board. Currently, Ms. Selden serves as our Chief Executive Officer and Mr. Andersen serves as the Chairperson of the Board.

Information concerning the Board and its three standing committees is set forth below. Each Board committee consists only of directors who are not employees of the Company and who are “independent” as defined in Nasdaq’s rules.

The Board and its committees meet regularly throughout the year, and also hold special meetings and act by written consent from time to time. The Board held a total of 17 meetings during the fiscal year ended December 31, 2021. During this time, all of our current directors attended at least 75% of the aggregate number of meetings held by the Board and all committees of the Board on which such director served (during the period that such director served). The Board does not have a formal policy with respect to Board member attendance at annual meetings of stockholders, but all members of the Board are encouraged to attend. Our 2021 Annual Meeting of Stockholders was attended by all of our director nominees who were then serving.

The Board has three standing committees: the Audit Committee; the MDC Committee; and the NCG Committee. The charters for the Audit, MDC, and NCG Committees can be accessed electronically on the “Governance — Governance & Ethics Documents” section of our corporate website, www.apei.com.

The Board conducts, and the NCG Committee oversees, an annual evaluation of the Board’s operations and performance in order to enhance its effectiveness. Recommendations resulting from this evaluation are made by the NCG Committee to the full Board for its consideration. Each committee also conducts an annual evaluation of its own performance and charter, and makes recommendations as necessary to either management, the NCG Committee, or the full Board, as applicable, as a result of these evaluations.

The Board has established a separately designated standing Audit Committee in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee is responsible, among its other duties and responsibilities, for overseeing our accounting and financial reporting processes, the audits of our financial statements, the qualifications of our independent registered public accounting firm, and the performance of

The members of our Audit Committee are Ms. Halle, who serves as chair of the Committee, Ms. Blevins, Dr. Kurshan, and Mr. Landon. Each member of the Audit Committee is able to read and understand fundamental financial statements, including our balance sheet, and statements of income, comprehensive income, stockholders’ equity, and cash flows.

The Board has determined that each of Ms. Halle and Ms. Blevins is an “Audit Committee financial expert,” as that term is defined under the SEC rules implementing Section 407 of the Sarbanes-Oxley Act of 2002. The Board has determined that each member of our Audit Committee is independent under Nasdaq’s listing standards and each member of our Audit Committee is independent pursuant to Rule 10A-3 of the Exchange Act.

The MDC Committee is responsible, among its other duties and responsibilities, for establishing the compensation and benefits of our Chief Executive Officer and other executive officers, monitoring compensation arrangements applicable to our Chief Executive Officer and other executive officers in light of their performance, effectiveness, and other relevant considerations, and administering our equity incentive plans. In addition, the MDC Committee is responsible for succession planning for our Chief Executive Officer and other key executive officers and for overseeing our human capital management efforts, including with respect to recruitment, development, and retention. Pursuant to our Bylaws, the MDC Committee may create one or more subcommittees, each subcommittee to consist of one or more members of the MDC Committee, and may delegate any or all of its powers and authority to those subcommittees.

The members of our MDC Committee are Mr. Robinson, who serves as chair of the Committee, Mr. Andersen, LtGen (Ret.) Stewart, and Dr. Kurshan. The Board has determined that each member of our MDC Committee meets Nasdaq’s independence requirements for approval of the compensation of our Chief Executive Officer and other executive officers.

The MDC Committee has the sole authority to retain and terminate any compensation consultant to assist in evaluating executive officer compensation. In 2021, the MDC Committee retained Willis Towers Watson directly as an outside compensation consultant to assist in evaluating our compensation programs, as it has since 2007. The MDC Committee assessed Willis Towers Watson’s independence, considering all relevant factors, including those set forth in Nasdaq rules. In connection with this assessment, the Committee considered Willis Towers Watson’s work and determined that it raised no conflicts of interest. Willis Towers Watson does no work for the Company other than work that is authorized by the MDC Committee or its chairperson. The Committee used information provided to it by Willis Towers Watson in connection with making 2021 compensation determinations. Willis Towers Watson also advised the MDC Committee on the use of a peer group and applicable survey data for comparative purposes. The consultant’s role in recommending the amount or form of executive compensation paid to our named executive officers during 2021 is described in the “Compensation Discussion and Analysis — Competitive Compensation — Assessing Competitive Practice” section on page 39.

The MDC Committee considers the results of the annual advisory vote on the compensation of our named executive officers. See “Proposal No. 3” on page 83 to review this year’s proposal. In 2021, approximately 85% of the stockholder votes cast on this proposal were voted in favor of our executive compensation proposal, which is less than the robust 96% approval the prior year. We believe that the 2021 result reflected an “against” vote by one greater than 5% stockholder that did not respond to management’s request to discuss its voting decision. We believe that the level of support received at our 2021 Annual Meeting for this proposal affirms our approach to executive compensation, but we continued to strive to

The MDC Committee works closely with our Chief Executive Officer on compensation decisions and has delegated certain aspects of the annual incentive plans for the other executive officers, including the named executive officers, to our Chief Executive Officer. For a discussion of the role of our Chief Executive Officer in determining or recommending the executive compensation paid to our named executive officers during 2021, see the “Compensation Discussion and Analysis — Other Compensation Policies and Practices — Role of Executives in Executive Compensation Decisions” section on page 55. None of our other executive officers participates in any deliberations related to the setting of executive compensation.

The NCG Committee is responsible for recommending candidates for election to the Board. The Committee is also responsible, among its other duties and responsibilities, for making recommendations to the Board or otherwise acting with respect to corporate governance policies and practices, including board size and membership qualifications, recommendations with respect to director resignations tendered in the event a director fails to achieve a majority of votes cast in favor of his or her election, new director orientation, committee structure and membership, and policies and practices regarding communications with stockholders. In addition, the NCG Committee assists the Board in understanding and overseeing management’s processes for the assessment and management of non-financial risks of the Company and the steps that management has taken to monitor and control exposure to such risks. The members of our NCG Committee are Mr. Landon, who serves as chair of the Committee, Ms. Blevins, Mr. Pianko, and Mr. Robinson. The Board has determined that each member of our NCG Committee meets Nasdaq’s independence requirements for directors that make director nominations.

From time to time, the Board may create ad hoc committees for specific purposes. In 2018, the Board created a temporary new committee of the Board called the Transaction Review Committee, which continued its work in 2021. The Transaction Review Committee was tasked with providing the Board with additional oversight, on a regular basis, of our strategic and diversification efforts. Mr. Andersen, Ms. Halle, and Mr. Pianko, as well as former director MG (Ret.) Barbara Fast, who retired from the Board upon the expiration of her term following the 2021 Annual Meeting, were the only members of the Committee during 2021.

Members of the Board may also be asked to serve in a committee role that involves service as a representative of the Board on the board of one of our wholly owned subsidiaries. During 2021, Mr. Robinson served in this role for APUS, and during portions of 2021, LtGen (Ret.) Stewart and Dr. Kurshan also served in this role for APUS, Mr. Pianko served in this role for RU, and MG (Ret.) Fast served in this role for HCN.

The NCG Committee recommends, and the Board nominates, candidates to stand for election as directors. Stockholders may also nominate persons to be elected as directors. If a stockholder wishes to nominate a person for election as director, he or she must follow the procedures contained in our Bylaws and satisfy the requirements of Regulation 14A of the Exchange Act. For a stockholder’s nomination of a person to stand for election as a director at an annual meeting of stockholders to be considered, our Corporate Secretary must receive such nominations at our principal executive offices not more than 120 days, and not less than 90 days, before the anniversary date of the prior year’s annual meeting, except that if the annual meeting is set for a date that is not within 30 days before or 60 days after such anniversary, the nomination must be received no later than the later of the 90th day prior to such annual meeting or the close of business on the tenth day following the notice or public disclosure of the meeting. Each submission must include the following information:

The Board may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as one of its directors.

Each director will be elected by the vote of the majority of the votes cast with respect to that director’s election, provided, however, that if, as of the tenth day preceding the date we first mail notice of the meeting for such meeting to our stockholders, the number of nominees exceeds the number of directors to be elected, which we refer to as a “Contested Election,” the directors shall be elected by the vote of a plurality of the votes cast. Under plurality voting, the director nominee with the most votes for a particular seat is elected for that seat. Our Bylaws require that the Board or a committee of the Board shall not nominate any incumbent director who, as a condition to such nomination, does not submit a conditional and, in the case of an uncontested election, irrevocable letter of resignation to the Chairperson of the Board. If an incumbent nominee is not elected in an uncontested election, the NCG Committee will promptly consider such director’s conditional resignation and make a recommendation to the Board regarding the resignation. Each incumbent director nominated for election to the Board at the Annual Meeting as described under “Proposal No. 1” on page 25 has submitted the conditional letter of resignation as required by our Bylaws.

Additional information regarding requirements for stockholder nominations for next year’s annual meeting is described in this Proxy Statement in the section titled “General Matters — Stockholder Proposals and Nominations” on page 91.

Stockholders wishing to communicate with the Board may do so by writing to the Board, the Chairperson of the Board, or the non-employee members of the Board as a group, at:

Complaints or concerns relating to our accounting, internal accounting controls, or auditing matters will be referred to members of the Audit Committee. Other correspondence will be referred to the relevant individual or group. All correspondence is required to prominently display the legend “Board Communication” in order to indicate to the Corporate Secretary that it is a communication subject to our policy and will be received and processed by the Corporate Secretary’s office. Each communication received by the Corporate Secretary will be copied for our files and in most cases will be promptly forwarded to the addressee. The Board has requested that certain items not related to the Board’s duties and responsibilities be excluded from the communications so forwarded under the policy. In addition, the Corporate Secretary is not required to forward any communication that the Corporate Secretary, in good faith, determines to be frivolous, unduly hostile, threatening, illegal or similarly unsuitable. However, the Corporate Secretary will maintain a list of each communication subject to this policy that is not forwarded and, on a quarterly basis, will deliver the list to the Chairperson of the Board. In addition, each communication subject to this policy that is not forwarded because it was determined by the Corporate Secretary to be frivolous shall nevertheless be retained in our files and made available at the request of any member of the Board to whom such communication was addressed.

The Board is currently comprised of nine members, all of whom except for Mr. Landon are standing for election at the Annual Meeting. Mr. Landon has not been renominated and will depart the Board following the election at the Annual Meeting this year. We are deeply grateful to Mr. Landon for his contributions to the Company.

Our nominees for the election of directors at the Annual Meeting include eight independent non-employee directors and our Chief Executive Officer. Each director is elected to serve a one-year term, with all directors subject to annual election. At the recommendation of the NCG Committee, the Board has nominated the following persons to serve as directors for the term beginning at the Annual Meeting on May 20, 2022: Eric C. Andersen; Granetta B. Blevins; Anna M. Fabrega; Jean C. Halle; Dr. Barbara L. Kurshan; Daniel S. Pianko, William G. Robinson, Jr.; Angela K. Selden; and LtGen (Ret.) Vincent R. Stewart. All of the nominees except for Ms. Fabrega are currently serving on the Board.

Proxies received in response to this solicitation will be voted FOR the election of each nominee named in this section unless otherwise stated in the proxy or in the case of a broker non-vote with respect to the proposal. Proxies submitted for the Annual Meeting can only be voted for those nominees named in this Proxy Statement. If, however, any director nominee is unable or unwilling to serve as a nominee at the time of the Annual Meeting, the persons named as proxies may vote for a substitute nominee designated by the Board, or the Board may reduce the size of the Board. Each nominee has consented to serve as a director if elected, and the Board does not believe that any nominee will be unwilling or unable to serve. Each director will hold office until his or her successor is duly elected and is qualified or until his or her earlier death, resignation, or removal.

The Board provides strategic direction to the Company and oversees the performance of our business and management. The NCG Committee periodically identifies and reviews with the Board desired skills and attributes of both individual Board members and the Board overall within the context of current and future needs. Among the Committee’s responsibilities is the development of general criteria, subject to approval by the full Board, for use in identifying, evaluating, and selecting qualified candidates for election or re-election to the Board. The Committee reviews the appropriate skills and characteristics required of directors in the context of the current composition of the Board, our operating requirements, and the long-term interests of our stockholders. It may use outside consultants to assist in identifying candidates. In determining whether to recommend candidates to serve on the Board, the Committee considers (i) whether candidates meet regulatory and independence requirements, (ii) the Board’s overall composition in light of current and future needs, (iii) the past performance of incumbent directors, and (iv) whether candidates have the qualities of integrity, judgment, acumen, and the time and ability to make a constructive contribution to the Board. In reviewing the composition of the Board, the Committee considers professional skills and background, experience in relevant industries, diversity, age, tenure, and geographic background. The Committee maintains a commitment to include candidates with a diversity of backgrounds, including women and minorities, and considers candidates submitted by directors and management, as well as candidates recommended by stockholders, which are evaluated in the same manner as other candidates identified to it. Final approval of director candidates is determined by the full Board.

As a part of our continued process of Board refreshment and succession planning, the NCG Committee determined to add an additional director to the Board in 2022, and engaged Spencer Stuart, a professional search firm, to assist with the search. After a comprehensive review, Spencer Stuart identified Ms. Fabrega as a potential Board member.

The demographic makeup of our current Board, as disclosed by the Board members themselves, is as follows:

Information for each nominee for director, including names, ages as of April 1, 2022, terms of office, principal occupations, and business experience is set forth below. In addition, for each nominee, we have included additional information regarding the experiences, qualifications, attributes, or skills that caused the NCG Committee and the Board to determine that the person should serve as a director for the Company.

Pursuant to our non-employee director compensation policy, for 2021, directors received an annual retainer of $70,000. The chairs of the Audit, MDC, and NCG Committees were entitled to receive an additional annual retainer of $15,000, $10,000 and $8,000, respectively. The non-employee Chairperson of the Board was entitled to receive an additional annual retainer of $50,000, and the Vice-Chairperson was entitled to receive an additional annual retainer of $15,000. The Chairperson was not entitled to receive any additional annual retainers for also serving as chair of any of the Board’s standing committees. Members of the Board may also be asked to serve as a representative of the Board on the board of one of our wholly owned subsidiaries. The MDC Committee recommended modifying the payments for service in these roles, and in September 2021 the Board approved a flat additional retainer of $30,000 for service with respect to American Public University System or Rasmussen University and for Hondros College of Nursing approved a payment of $3,000 ($3,600 for a director serving as chair) per in-person meeting, or $900 ($1,200 for a director serving as chair) per telephonic meeting, but with no more than one payment per day.

The annual retainers are payable in quarterly installments, and each director may, before the beginning of the applicable year, elect to receive his or her annual retainer in common stock having the same value as the portion of the annual retainer to be paid, calculated as of the close of business on the first business day of the year. In connection with our annual meeting of stockholders, our non-employee director compensation policy for 2021 also provided for an annual grant to each director of restricted stock having a value of $80,000 on the grant date. Consistent with past practice, the restricted stock grant vests on the earlier of the one-year anniversary of the date of grant or immediately prior to the next year’s annual meeting of stockholders.

We also reimburse all directors for travel and other necessary business expenses incurred in the performance of their services for us and extend coverage to them under the directors’ and officers’ indemnity insurance policies.

The following table sets forth information regarding compensation earned by our non-employee directors during 2021:

This Compensation Discussion and Analysis describes our executive compensation program and decisions for 2021. This section details the compensation framework applied by the Management Development & Compensation Committee (the “MDC Committee”) and, in particular, our compensation philosophy and objectives, elements of compensation, compensation decisions, and the link between executive compensation and performance.

In 2021, at American Public University System (“APUS”), there was a moderation in net registrations and enrollment, offset by above target EPS performance, while Hondros College of Nursing (“HCN”) delivered both strong financial performance and enrollment growth. This performance resulted in compensation of our NEOs generally slightly less in 2021 than in 2020, which is a direct reflection of the design of our executive compensation program and our intention to pay for performance. Under our annual incentive plan, our NEOs received above-target payouts in 2021, reflecting a range of achievement tied to company and education unit financial and enrollment goals and satisfaction of individual objectives and key results (“OKRs”). Ms. Selden’s total payout under our 2021 annual incentive plan represented 110.1% of her target opportunity (or 99.1% of her base salary), less than her total opportunity of 150% of target (or 135% of her base salary) and less than the percentage of target opportunity earned in 2020. In addition, based on performance above threshold for revenue and performance above target for adjusted EBITDA, which were the performance measures for performance-based deferred stock units (“PSUs”) that we granted in 2021, PSUs were earned by NEOs at 128.5% of the target opportunity, less than the total opportunity of 200% of target and less than the percentage of target opportunity earned in 2020.

2021 was a transformative year for American Public Education, Inc. (“APEI”) as we advanced our mission of “Educating the Service Minded.” This included a continued emphasis on core business growth and the acquisitions of new education providers that advance our mission. On September 1, 2021, we completed the acquisition of Rasmussen University (“RU”). We believe that RU adds an attractive portfolio of curriculum, and in particular a strong nursing curriculum ladder, along with a strong alignment around mission and culture. The addition of RU has resulted in a more diversified Company with three now roughly equal parts by revenue: one-third nursing education; one-third military and veterans’ education; and one-third other online education. In addition, in 2021 we announced, and on January 1, 2022, we completed, the acquisition of substantially all of the assets of Graduate School USA (“GSUSA”), one of the largest providers of training to the federal government workforce. The acquisition further advances APEI’s focus on providing training that provides students with pathways to employment and career advancement.

The charts below show the breakdown of the components of Ms. Selden’s target compensation opportunity for 2021 as well as the average target compensation for our other NEOs serving at the beginning of the year. As discussed in the overview section below, the breakdown of target compensation opportunity reflects our focus on variable compensation tied to performance, with our CEO’s fixed base salary representing only 23% of her total target compensation opportunity, with annual and long-term incentives tied to financial, enrollment, individual, and stock price performance representing the remainder.

Our compensation programs for our NEOs are designed to attract, incentivize, retain, and reward the talent that we need to maintain and strengthen our position in career-minded adult education and to achieve our business objectives, as well as to hold our executives accountable for our actual business performance.

Highlighted below are certain executive compensation practices that we employ in order to align executive compensation with stockholder interests. Also listed below are certain compensation practices that we do not employ because we do not believe they would serve our stockholders’ long-term interests.

For 2021, the MDC Committee continued its prior engagement of Willis Towers Watson as an independent consultant to the Committee, including to assist the Committee with a competitive assessment of base salary, annual incentives, long-term equity incentives, and total direct compensation. For the Committee’s assessment of its compensation program, Willis Towers Watson provides comparative data that includes survey data for each of the NEOs and data from a group of publicly traded companies against which we compare compensation, which we refer to as our peer group. For those executives for whom both survey data and peer group data are available, the MDC Committee uses the survey data for its primary comparisons because we believe, consistent with the advice of Willis Towers Watson, that the survey data is more robust and provides a better comparison for the Company than the peer group data. This is in part because peer group data is more limited and typically cannot be size-adjusted to account for revenue responsibilities.

For 2021 compensation decisions, Willis Towers Watson provided data from the following published surveys as a primary source: the 2020 Willis Towers Watson General Industry Executive Compensation U.S. Survey Report and the 2019-2020 College and University Professionals Association for Human Resources Administrators in Higher Education Annual Survey Report. Because of the variance in size among the companies included in the databases for the published surveys, Willis Towers Watson informed the MDC Committee that, to the extent possible, it had assessed the published survey data in the context of APEI’s, APUS’s, and HCN’s projected fiscal 2021 revenue, as revenue responsibility is typically one of the most reliable predictors of executive pay.

While the MDC Committee uses survey data as the primary source of comparative information, we believe our peer group is still an important element of the review of the competitive market for executive talent. Prior to making compensation decisions for 2019, the MDC Committee, with the assistance of Willis Towers Watson, had adopted a new peer group after screening for public companies within the education services, consumer services, commercial and professional services, and software and services industry that were similar in size (revenue, net income, total assets and number of employees), were peers of our peers, and that we had selected or proxy advisory firm Institutional Shareholder Services had identified as our peers. For 2021, the MDC Committee went through the same evaluation process. The 2021 peer group was unchanged from 2019 and consisted of the following companies:

The review of our peer group for setting initial 2021 compensation resulted in comparative information for Ms. Selden, Mr. Sunderland, and Dr. Dyke. The analysis indicated that there was insufficient comparable information for the other NEOs.

The compensation program for our NEOs is comprised of three core elements: base salary; annual incentive cash compensation; and long-term equity incentives.

In setting base salary, annual incentive cash compensation, and long-term equity incentives for 2021, the MDC Committee considered, among other factors, the compensation levels for our NEOs in 2020, the respective performances of each of our continuing NEOs in 2020, an enhanced focus on differentiation and pay-for-impact based on a culture of performance and accountability, and what the Committee believed was required based on the marketplace for executive talent, including based on the market information provided by Willis Towers Watson.

Base salary is an integral part of compensation for our NEOs and is generally set in January of each year, absent other factors, such as promotions or new hires. Ms. Selden was appointed to her position in September 2019, and her base salary was set at that time, and consistent with the MDC Committee’s general policy of not increasing base salary for executives who were recently hired, Ms. Selden did not receive a raise in January 2020. For 2021, the MDC Committee determined to increase Ms. Selden’s salary by 7%, taking into consideration that Ms. Selden’s base salary was slightly below the 50th percentile of survey data but significantly below the 50th percentile of peer data, as well as Ms. Selden’s performance and leadership of the Company, including successfully negotiating the agreement to acquire Rasmussen University.

Each of the other continuing NEOs received a 2% salary increase, except for Dr. Dyke, who did not receive an increase and Mr. Beckett, who received a 4% increase. Dr. Dyke, who was appointed to his position effective August 2020, did not receive a salary increase consistent with our practice of not providing an increase in the year after hire.

In approving these increases, the Committee considered that the budget had contemplated a general salary increase across the organization, the contribution and role of each NEO, the survey data regarding the compensation for each NEO with respect to market, and the recommendation of Ms. Selden and, with respect to Dr. Smith, the recommendation of Dr. Dyke. With respect to Mr. Beckett, the Committee considered that his salary was still below the 50th percentile of the survey data and was not yet competitive with market.

We believe that the proportion of target annual incentive compensation to target total cash compensation (base salary plus target annual incentive pay) for our NEOs should be a relatively high percentage. It is also the Committee’s general intent, as discussed above, that target annual incentives should be structured so that target total cash compensation approximates the 50th percentile of the survey data for achievement of target performance goals under the AIP. We believe that positioning to be competitive with the 50th percentile is appropriate for target total cash compensation because of the high level of performance that we believe is required from our executives in order for us to achieve our performance goals. We believe the high percentage of compensation tied to incentive compensation increases the focus of our NEOs on achieving our performance goals.

For 2021, the Committee determined that 80% of the target award would be based on business performance and 20% of the target award would be based on achievement of OKRs. This switch to OKRs, from the previous system of “management by objective” individual performance measures, was in part in connection with the MDC Committee’s enhanced focus on pay-for-impact and simplification with respect to the executive compensation program. In contrast to MBOs, in which each NEO receives a range of individual goals and only that NEO’s performance is taken into consideration with respect to payouts, OKRs are enterprise- or business unit-wide annual objectives with individualized component goal results, or “key results,” that are consistent with our strategic, financial, and operational goals. OKRs also include quarterly targets toward each key result that can be adjusted over the course of the year and serve as milestones toward achievement and help measure progress. OKRs are developed through collaborative goal-setting and are designed to be challenging, ambitious goals with measurable results. In setting OKRs, objectives are first defined by either Ms. Selden or the applicable business unit leadership, and key results are then established along with the quarterly milestones. OKRs for business unit leaders are approved by Ms. Selden, and Ms. Selden’s OKRs are recommended by the Chairperson of the Board, in consultation with Ms. Selden, and approved by the MDC Committee. Following the completion of the fiscal year, achievement of each NEO’s OKRs is assessed either at the minimum level (which represents strong performance), at the target level (which represents excellent performance), or at the stretch level (which represents superior performance).

Business Performance Measures (80% of the AIP target opportunity). The MDC Committee determined that the portion of each NEO’s 2021 AIP award that relates to business performance would be based on achieving and surpassing specified earnings per share (“EPS”) and enrollment metrics. The Committee initially selected EPS as a performance measure because of its strong alignment with stockholder value

The following table shows the business performance goals for the APEI-level executives and for the APUS executives expressed as a percentage of the portion of the AIP award that relates to business performance:

Earnings Per Share. The MDC Committee used the target EPS for consolidated financial performance, APUS financial performance, and HCN financial performance that was included in our budget when approved by the Board of Directors, with the target EPS for consolidated and HCN financial performance adjusted to reflect differences in forecasted HCN results as of January 2021 versus the budget. For 2021, the Committee also specified that 50% of the target amount would be paid if earnings per share thresholds were attained that reflected 80% achievement of the target levels, which the Committee thought was a level of achievement that would require effort for the Company to achieve. The Committee determined that it was appropriate to provide an incentive at a threshold level because it would provide an annual incentive that reflected the positive performance of the Company and the contributions of our employees and NEOs. The Committee provided that the stretch portion of the AIP related to financial performance would be payable on earnings per share that reflected 110% achievement of the target levels. This level of achievement was viewed as representing exceptional performance for which management should be rewarded. In setting the 80% and 110% levels, the Committee also considered analysis from Willis Towers Watson that reflected that achievement at these levels was neither certain at the threshold level or likely to be achieved at the stretch level.

When the MDC Committee initially set the target EPS for 2021 consolidated financial performance, it determined not to take into consideration the impact of the RU acquisition, and to make updates to reflect acquisition costs at a later date. The EPS targets were also set prior to our underwritten public offering in February 2021 and our debt financing that occurred in connection with the closing of the RU acquisition. As a result, when assessing achievement of EPS targets in January 2022, the MDC Committee disregarded the increase in outstanding shares as a result of the offering and earnings associated with RU, and it adjusted the calculation of EPS for expenses and taxes associated with merger and acquisition and integration activities for the acquisitions of RU and GSUSA and interest payments related to the debt financing.

For 2021, target goals were achieved for each of the APEI and APUS EPS metrics, and the stretch goal was received for the HCN EPS metric. As a result, (i) our NEOs earned 100% of the target portions of the AIP associated with APEI EPS performance and APUS performance, and (ii) Ms. Selden, Mr. Sunderland, Mr. Dyberg, and Mr. Beckett received 100% of both the target and stretch portions of the AIP associated with HCN EPS performance. In addition, our NEOs earned 14% of the stretch portion of the AIP associated with APEI EPS performance and 84% of the stretch portion of the AIP associated with APUS EPS performance.

Enrollment. In addition to EPS, for 2021, the MDC Committee used total enrollment at each of APUS and HCN as elements of the AIP in order to motivate NEOs to focus on enrollment. The MDC Committee set the target enrollment number based on the number of enrollments anticipated by our budget as approved by the Board. For 2021, the Committee also specified that 50% of the target amount would be paid if enrollment thresholds were attained at 95% of the target levels, which the Committee thought was a level of achievement that would still require effort to achieve. As with EPS, the Committee determined that it was appropriate to provide an incentive at a threshold level because it would provide an annual incentive that reflected the positive performance of the Company and the contributions of our employees and NEOs. The Committee provided that the stretch portion of the AIP related to enrollment would be payable for achievement at 103% of the target levels. This level of achievement was viewed as representing exceptional performance for which management should be rewarded.

For 2021, APUS had total enrollment of 345,270 and HCN had total enrollment of 9,475. As a result of these enrollments, our NEOs earned 74% of the target portion of the AIP associated with APUS enrollment and 100% of both the target and stretch portions of the AIP associated with HCN enrollment.

Objectives and Key Results (20% of the AIP target opportunity). OKRs are annual objectives with individualized, component goals, or “key results” set for each NEO and are consistent with our strategic, financial, and operational goals. OKRs are designed to be challenging, ambitious goals with measurable results. In setting OKRs, the annual objectives are first defined, the key results within those objectives are established, and the narrower quarterly targets toward each key result are then formulated.

In 2021, the Chairperson of the Board recommended, in consultation with Ms. Selden, Ms. Selden’s OKRs to the MDC Committee, which subsequently approved her OKRs. Ms. Selden approved the OKRs for

We believe that this structure encourages management to focus on not only the current year’s financial and business results, which are covered by other parts of the AIP, but also operational successes that will help prepare the Company for continued growth and improvement. By focusing on goals consistent with our strategic, financial, and operational plans, OKRs are intended to focus the executives on goals that will deliver long-term stockholder value. OKRs provide personal accountability and reward for Company performance because executives are directly responsible for or contribute to their achievement and are assessed on an individualized basis. In addition, the establishment of quarterly milestones encourages NEOs to work toward objectives throughout the fiscal year, allows for better tracking of progress toward those objectives, and provides us with the ability to flexibly adjust key results as conditions warrant.

The MDC Committee set overlapping objectives for all executives to reflect that executives must work together to achieve results. NEOs shared the following objectives for 2021, each with corresponding, individualized component goals and quarterly key results:

Each NEO also had an OKR related to improvement and optimization of service delivery, with APEI-level executives having an “Establish APEI Operating Framework” objective and APUS-level executives having a “Business Continuity” objective.

To assist in determining the extent to which OKRs were met, each NEO was required at the end of the year to provide a self-assessment with respect to their performance, and Ms. Selden provided her own assessment of each NEO, and Dr. Katherine Zatz, Acting President of APUS following Dr. Dyke’s departure, provided an assessment with respect to Dr. Smith. The MDC Committee affirmed conclusions after discussions with Ms. Selden and a review of the Company’s performance and, with respect to OKRs for APUS executives, coordination with the Chair and Vice Chair of the APUS Board of Trustees. The Committee reached its conclusions with respect to Ms. Selden’s performance in a session without any executives present.

For 2021, the MDC Committee designed the AIP so that no payments would be made to NEOs for OKR performance unless the Company’s consolidated EPS was at least at the threshold level, and that no payments would be made to NEOs for OKR performance above target unless the target EPS was achieved for the applicable business unit(s). As a result of APEI, APUS, and HCN all achieving at least target EPS, subject to achievement of the OKRs, NEOs were eligible for payments for OKR performance up to the stretch level.

The following tables show the target opportunities and payouts for each element of the AIP for each NEO, as well as total target opportunities and payouts. Further information about the OKRs for each NEO and the assessment of their performance against those OKRs is provided in footnotes to the “Opportunities and Results” tables.