AMENDMENT TO EMPLOYMENT AGREEMENT
EXHIBIT 10.8
The EMPLOYMENT AGREEMENT entered into by and between Apollo Group, Inc. (the “Company”) and
Xxxxxxx X. Xxxxxxxxx (the “Executive”), effective July 7, 2008 (the “Agreement”), is hereby amended
as follows, effective as of October 31, 2008. The purpose of this Amendment is to (i) bring the
Agreement into documentary compliance with the applicable requirements of the Treasury Regulations
issued under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii)
add a performance-vesting requirement to the supplemental restricted stock unit award to be made to
the Executive on October 31, 2008 in order to qualify that award as performance-based compensation
for purposes of Section 162(m) of the Code.
1. Section 4(d) of the Agreement is hereby amended in its entirety to read as follows:
(d) Vesting. The Initial Option Grant will vest and become exercisable in a series of four
successive equal annual installments upon the Executive’s completion of each year of employment
with the Company over the four-year period measured from the Commencement Date (regardless of the
actual grant date). In addition, the Initial Option Grant will be subject to the vesting
acceleration provisions set forth in Sections 8 and 11 of this Agreement. Both the Initial RSU
Award and the Supplemental RSU Award will be subject to the following performance and service
vesting requirements:
(i) The vesting of both the Initial RSU Award and the Supplemental RSU Award will be tied to
the Company’s attainment of net book income, after tax expense, of $250 million for the 2009 fiscal
year. Net book income, after tax expense, will be calculated on a consolidated basis with the
Company’s consolidated subsidiaries for financial reporting purposes and in accordance with
generally accepted accounting principles and shall be determined on the basis of the Company’s
audited financial statements, subject to the following modifications:
- There shall be excluded: (i) all stock-based compensation accrued for such fiscal year
pursuant to Statement of Financial Accounting Standards 123R and any other GAAP expense for such
fiscal year relating to equity compensation awards, (ii) any extraordinary, nonrecurring items as
determined in accordance with Accounting Principles Board Opinion No. 30, and (iii) all amounts
(including settlement payments, judgment or verdict amounts, legal fees, costs and other
litigation/settlement expenses) expensed during the 2009 fiscal year in connection with the
settlement or disposition of the litigation matters identified in Item 3 of the Company’s Form
10-K for the fiscal year ending August 31, 2008.
(ii) None of the Initial Restricted Stock Unit Award or the Supplemental RSU Award will vest
unless such performance goal is attained. However, if such performance goal is attained, then the
shares of Class A common stock underlying both the Initial RSU Award and the Supplemental RSU
Award will vest and become issuable in installments over the
Executive’s period of continued employment with the Company as follows: (a) forty percent (40%) of the
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shares
subject to the Initial RSU Award and the Supplemental RSU Award will vest upon the Executive’s
completion of one year of employment with the Company measured from the Commencement Date and will
be issued immediately upon the Compensation Committee’s certification of the attainment of the
performance goal, (b) an additional forty percent (40%) of the shares subject to the Initial RSU
Award and the Supplemental RSU Award will vest and become issuable upon the Executive’s completion
of two years of employment with the Company measured from the Commencement Date and (c) the
remaining twenty percent (20%) of the shares subject to the Initial RSU Award and the Supplemental
RSU Award will vest and become issuable upon the Executive’s completion of three years of
employment with the Company measured from the Commencement Date. In addition, both the Initial
RSU Award and the Supplemental RSU Award will be subject to the vesting acceleration provisions of
Sections 8 and 11 of this Agreement. All issuances under the Initial RSU Award and the
Supplemental RSU Award will be subject to the Company’s collection of the applicable withholding
taxes.
2. Section 7(d) of the Agreement is hereby amended in its entirety to read as follows:
(d) Termination due to the Executive’s Death or Disability. This Agreement will terminate
upon the death of the Executive. The Company may terminate the Executive’s employment hereunder if
he is unable to perform, with or without reasonable accommodation, the principal duties and
responsibilities of his position with the Company for a period of six (6) consecutive months or
more by reason of any physical or mental injury or impairment; provided, however, that in the event
the Executive is at the time covered under any long-term disability benefit program in effect for
the Company’s executive officers or employees, such termination of the Executive’s employment shall
not occur until the earlier of (i) the date he first becomes eligible to receive benefits under
such program or (ii) the date he is deemed to have a Separation from Service (as defined below) by
reason of such disability. The termination of the Executive’s employment under such circumstances
shall, for purposes of this Agreement, constitute a termination for “Disability.”
3. Subparagraphs (i) and (ii) of Section 8(b) of the Agreement are hereby amended in their
entirety to read as follows:
(i) an amount equal to (A) two times the Executive’s Base Salary and (B) two
times the average of his actual Annual Bonuses for the three full fiscal years of
employment (or fewer number of full fiscal years of employment with the Company)
immediately preceding the fiscal year in which such termination of employment
occurs or, solely with respect to a triggering event occurring during the Company’s
2009 fiscal year, the Executive’s target bonus for such year, with such payment to
be made in successive equal increments, in accordance with the Company’s normal
payroll practices for salaried employees, over the one-year period measured from
the date of the Executive’s Separation from Service, beginning with the first pay
day within the sixty (60)-day period following the date of such Separation from
Service on which the Required Release is effective following the expiration of any
applicable revocation period, but in no event later than the end of such sixty (60)-day period on which the Required Release is
so effective;
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(ii) accelerated vesting of the Initial Option Grant to the extent of the
greater of (A) fifty percent of the then unvested portion of such grant or (B) the
portion of such grant which would have vested had the Executive completed an
additional twelve (12) months of employment with the Company prior to the
Termination Date, and one hundred percent vesting of both the Initial RSU Award and
the Supplemental RSU Award if such termination of employment occurs either prior to
the completion of the performance period specified in those awards or on or after
the completion of that performance period in which the designated performance goal
is attained, with any shares which so vest under the Initial RSU Award and the
Supplemental RSU Award to be issued at the time or times set forth in the
applicable award agreements, subject to any required holdback under Section 14(b).
4. There is hereby added to the end of Section 14(c) of the Agreement the following
sentence:
In no event shall any 409A Gross-Up Payment to which the Executive becomes
entitled hereunder be made later than the later of (i) the end of the calendar year
in which the related Section 409A Penalty Tax is remitted to the appropriate tax
authorities or (ii) the end of the sixty (60)-day period measured from the date such
tax is so remitted.
5. Except as modified by this Amendment, all the terms and provisions of the Agreement shall
continue in full force and effect.
IN WITNESS WHEREOF, Apollo Group, Inc. has caused this Amendment to be executed on its behalf
by its duly-authorized officer on the date indicated below, and the Executive has executed this
Amendment on the date indicated below.
| XXXXXXX X. XXXXXXXXX | APOLLO GROUP, INC. | |||||||
/s/ Xxxxxxx X. Xxxxxxxxx
Dated: Dec. 12, 2008 |
By: Title: |
/s/ Xxxxxx X. X’Xxxxx
President, CFO & Treasurer |
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Dated: |
Dec. 12, 2008 |
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