<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Confidential, for Use of the
[_] Preliminary Proxy Statement Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
CORINTHIAN COLLEGES, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[LOGO OF CORINTHIAN COLLEGES, INC.]
October 15, 1999
Dear Stockholder:
On behalf of the Board of Directors, you are cordially invited to attend the
1999 Annual Meeting of Stockholders of Corinthian Colleges, Inc. to be held at
6 Hutton Centre Drive, Suite 400, Santa Ana, California 92707, on November 18,
1999 at 10:00 a.m., local time. The formal notice of the Annual Meeting
appears on the following page. The attached Notice of Annual Meeting and Proxy
Statement describe the matters that we expect to be acted upon at the Annual
Meeting.
During the Annual Meeting, stockholders will view a presentation by
Corinthian and have the opportunity to ask questions. Whether or not you plan
to attend the Annual Meeting, it is important that your shares be represented.
Regardless of the number of shares you own, please sign and date the enclosed
proxy card and promptly return it to us in the enclosed postage paid envelope.
If you sign and return your proxy card without specifying your choices, your
shares will be voted in accordance with the recommendations of the Board of
Directors contained in the Proxy Statement.
We look forward to seeing you on November 18, 1999 and urge you to return
your proxy card as soon as possible.
Sincerely,
/s/ DAVID G. MOORE
David G. Moore
President and Chief Executive
Officer
<PAGE>
CORINTHIAN COLLEGES, INC.
6 Hutton Centre Drive, Suite 400
Santa Ana, CA 92707-5765
(714) 427-3000
Notice of Annual Meeting of Stockholders
to be held on November 18, 1999
TO THE STOCKHOLDERS OF CORINTHIAN COLLEGES, INC.:
The Annual Meeting of Stockholders of Corinthian Colleges, Inc. (the
"Company") will be held at 10:00 a.m., California time, on November 18, 1999,
at 6 Hutton Centre Drive, Suite 400, Santa Ana, California 92707, for the
following purposes:
1. To vote for the election of Loyal Wilson and Dr. Carol D'Amico to the
Company's Board of Directors for a three-year term expiring at the Annual
Meeting in 2002;
2. To ratify the appointment by the Board of Directors of Arthur Andersen
LLP as the Company's independent auditors; and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on October 1, 1999 as
the record date for determining stockholders entitled to notice of, and to vote
at, the meeting.
By order of the Board of Directors,
/s/ DAVID G. MOORE
David G. Moore
Santa Ana, California
October 15, 1999
ALL STOCKHOLDERS ARE URGED TO ATTEND THE MEETING IN PERSON OR BY PROXY.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED POSTAGE PAID ENVELOPE FURNISHED FOR THAT PURPOSE.
<PAGE>
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of Corinthian
Colleges, Inc, a Delaware corporation (the "Company" or "Corinthian"), for use
at the Annual Meeting of Stockholders to be held at 10:00 a.m., California
time, on November 18, 1999, at 6 Hutton Centre Drive, Suite 400, Santa Ana,
California 92707, and any adjournments thereof. This Proxy Statement and
accompanying form of proxy were first sent to stockholders on or about October
15, 1999.
Record Date and Outstanding Shares
The Board of Directors has fixed the close of business on October 1, 1999,
as the record date (the "Record Date") for the determination of stockholders
entitled to notice of, and to vote at, the Annual Meeting and any adjournments
thereof. As of the Record Date, Corinthian had outstanding 10,345,623 shares
of common stock, consisting of 9,169,063 shares of voting common stock, par
value $0.0001 per share (the "Common Stock"), and 1,176,560 shares of
nonvoting common stock, par value $0.0001 per share (the "Nonvoting Common
Stock"). Each of the outstanding shares of Common Stock is entitled to one
vote on all matters to come before the Annual Meeting.
Voting of Proxies
Frank J. McCord and Dennis L. Devereux, the persons named as proxies on the
proxy card accompanying this Proxy Statement, were selected by the Board of
Directors to serve in such capacity. Messrs. McCord and Devereux are both
executive officers of Corinthian. Each executed and returned proxy will be
voted in accordance with the directions indicated thereon, or if no direction
is indicated, such proxy will be voted in accordance with the recommendations
of the Board of Directors contained in this Proxy Statement. Each stockholder
giving a proxy has the power to revoke it at any time before the shares it
represents are voted. Revocation of a proxy is effective upon receipt by the
Secretary of Corinthian of either (i) an instrument revoking the proxy or (ii)
a duly executed proxy bearing a later date. Additionally, a stockholder may
change or revoke a previously executed proxy by voting in person at the Annual
Meeting.
Required Vote
A plurality of the shares of Common Stock voted in person or by proxy is
required to elect the nominees for directors. A plurality means that the two
nominees receiving the largest number of votes cast will be elected. The
affirmative vote of a majority of the shares of Common Stock represented in
person or by proxy is required to ratify the appointment by the Board of
Directors of Arthur Andersen LLP as Corinthian's independent auditors. Each
stockholder will be entitled to vote the number of shares of Common Stock held
as of the Record Date by such stockholder for each director position to be
filled. Stockholders will not be allowed to cumulate their votes in the
election of directors.
Voting by Street Name Holders
If you are the beneficial owner of shares held in "street name" by a broker,
the broker, as the record holder of the shares, is required to vote those
shares in accordance with your instructions. If you do not give instructions
to the broker, the broker will nevertheless be entitled to vote the shares
with respect to "discretionary" items but will not be permitted to vote the
shares with respect to "non-discretionary" items (in which case, the shares
will be treated as "broker non-votes").
Quorum; Abstentions and Broker Non-Votes
The required quorum for transaction of business at the Annual Meeting will
be a majority of the shares entitled to vote that are issued and outstanding
as of the Record Date. Votes cast by proxy or in person at the Annual Meeting
will be tabulated by the election inspectors appointed for the meeting and
will determine
<PAGE>
whether or not a quorum is present. The election inspectors will treat
abstentions and broker non-votes as shares that are present and entitled to
vote for purposes of determining the presence of a quorum but as "unvoted" for
purposes of determining the approval of any matter submitted to the
stockholders for a vote. If a broker indicates on the proxy that it does not
have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present and entitled to vote
with respect to that matter.
Summary Annual Report to Stockholders
Corinthian's Form 10-K, which is incorporated into Corinthian's Annual
Report to Stockholders for the fiscal year ended June 30, 1999 and contains
financial and other information pertaining to Corinthian, is being furnished
to stockholders simultaneously with this Proxy Statement.
2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Corinthian's Board of Directors currently consists of six directors. Article
V of Corinthian's Certificate of Incorporation provides that the Board of
Directors shall be classified with respect to the terms for which its members
shall hold office by dividing the members into three classes. At the Annual
Meeting, two Class I directors will be elected, each for a term of three years
expiring at Corinthian's Annual Meeting of Stockholders in 2002. Both of the
nominees are presently serving as directors of Corinthian. The Board of
Directors recommends that the stockholders vote in favor of the election of
the nominees named in this Proxy Statement to serve as directors of
Corinthian. See "Nominees" below. The four directors whose terms of office do
not expire in 1999 will continue to serve after the Annual Meeting until such
time as their respective terms of office expire or their successors are duly
elected and qualified. See "Other Directors" below. If at the time of the
Annual Meeting any of the nominees should be unable or decline to serve, the
persons named as proxies on the proxy card will vote for such substitute
nominee or nominees as the Board of Directors recommends, or vote to allow the
vacancy created thereby to remain open until filled by the Board of Directors,
as the Board of Directors recommends. The Board of Directors has no reason to
believe that any nominee will be unable or decline to serve as a director if
elected.
Nominees
The names of the nominees for the office of director and certain information
concerning such nominees are set forth below:
Loyal Wilson, age 51, has served as a Director of Corinthian since its
inception in July 1995. He is a member of both the audit and compensation
committees of the Board. He has been a Managing General Partner of Primus
Venture Partners since 1983 and a Managing Director of Primus Venture
Partners, Inc. since 1993. In those capacities, Mr. Wilson has overseen
investments by various venture funds controlled by those entities in numerous
private companies. From 1975 to 1983, Mr. Wilson was employed by First Chicago
Corporation. He is also a Director of STERIS Corporation and was formerly a
Director of DeVry, Inc. He received a Bachelor of Arts in Economics from the
University of North Carolina and a Masters in Business Administration from
Indiana University.
Dr. Carol D'Amico, age 47, became a Director effective upon the consummation
of Corinthian's initial public offering in February 1999. She is a member of
the audit committee of the Board. Since January 1999, Dr. D'Amico has served
as Executive Director for Workforce, Economic and Community Development for
Ivy Tech State College in Indianapolis, Indiana. From July 1995 to January
1999, she was employed by the Hudson Institute, located in Indianapolis,
Indiana as Senior Fellow and Co-Director of the Workforce Development Center,
established to conduct research on the future of the American workforce and
American economic competitiveness. She is also co-author of Workforce 2020:
Work and Workers in the 21st Century, published by the Hudson Institute in
1997. Previously at the Hudson Institute, Dr. D'Amico served as Director,
Educational Excellence Network and prior to that as Research Fellow. From 1986
to 1990, she was a Policy and Planning Specialist with the Indiana Department
of Education. She also served as Senior Program Analyst for the Indiana
General Assembly from 1982 to 1986. Dr. D'Amico received a Bachelor of Science
in Biology from Ball State University, and a Master of Science in Adult
Education and an ED.D in Educational Leadership and Policy Studies from
Indiana University.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR ALL OF THE
NOMINEES FOR ELECTION AS CLASS I DIRECTORS.
3
<PAGE>
Other Directors
The following persons will continue to serve as directors of Corinthian
after the Annual Meeting until their terms of office expire (as indicated
below) or until their successors are elected and qualified.
David G. Moore, age 61, has served as President and Chief Executive Officer
and a Director of the Company since its inception in July 1995. Mr. Moore is a
Class III director and his term of office will expire at the annual meeting of
the Company's stockholders in fiscal year 2002. Immediately prior to forming
the Company, he was President of National Education Centers, Inc. ("NECI"), a
subsidiary of National Education Corporation. From 1992 to 1994, Mr. Moore
served as President of DeVry Institute of Technology in Los Angeles, where he
developed DeVry's West Coast operation and its growth strategy for the 11
western states. From 1980 to 1992 he was employed by Mott Community College in
Flint, Michigan, where he was President from 1984 to 1992. Mr. Moore served as
Dean, Management from 1982 to 1984 and Dean, Management Information Systems
from 1980 to 1982. From 1960 to 1980 Mr. Moore served a distinguished career
in the U. S. Army, retiring at the rank of Colonel. Mr. Moore received a
Bachelor of Arts in Political Science from Seattle University and Master of
Business Administration from the University of Puget Sound. He has also
completed the Management of Higher Education Program at Harvard University,
post graduate studies in Higher Education Management at the University of
Michigan and graduate study and research in Computer Science at Kansas State
University.
Paul R. St. Pierre, age 54, has served as Vice President, Marketing &
Admissions and a Director of the Company since its inception in July 1995. Mr.
St. Pierre is a Class II director and his term of office will expire at the
annual meeting of the Company's stockholders in fiscal year 2001. He was
promoted to Executive Vice President in April 1998. He was employed by NECI
from 1991 to 1995. His first assignment at NECI was as School President for
its San Bernardino, California campus. Subsequently, he held corporate
assignments as Director of Special Projects, Vice President of Operations for
the Learning Institutes Group (the largest colleges owned by NECI) and as Vice
President, Marketing & Admissions for NECI. From 1986 to 1991, Mr. St. Pierre
was employed by Allied Education Corporation, initially as School Director,
but the majority of the period as Regional Operations Manager. He was employed
as School Director at Watterson College in 1985. From 1982 to 1985, Mr. St.
Pierre was Executive Vice President and Partner for University Consulting
Associates, principally responsible for the marketing and sales of education
services, on a contract basis, to institutions of higher education. He was
previously employed, from 1980 to 1982, as Division Manager for the Institute
for Professional Development, a division of Apollo Group. Mr. St. Pierre
received a Bachelor of Arts in Philosophy from Stonehill College, a Master of
Arts in Philosophy from Villanova University and is a Ph.D. candidate in
Philosophy at Marquette University.
Jack D. Massimino, age 50, became a Director effective upon the consummation
of Corinthian's initial public offering in February 1999. Mr. Massimino is a
Class III director and his term of office will expire at the annual meeting of
the Company's stockholders in fiscal year 2002. Mr. Massimino is retired and
manages his personal investment portfolio. He was President and Chief
Executive Officer of Talbert Medical Management Corporation, a publicly traded
physician practice management company from 1995 through late 1997. Prior to
his association with Talbert, Mr. Massimino was Executive Vice President and
Chief Operations Officer of FHP International Corporation, a multi-state,
publicly traded HMO, with revenues in excess of $4 billion. He also served in
other executive positions since joining FHP in 1988, including Senior Vice
President and Vice President, Corporate Development. Mr. Massimino has held
other executive positions in the healthcare field since the mid 1970's. He
received a Bachelor of Arts in Psychology from California Western University
and earned a Master's Degree in Management from the American Graduate School
for International Management. Mr. Massimino has served on several boards,
including Talbert Medical Management Corporation, FHP, Inc., Texas Health
Plans, Great States Insurance Company, Art Institute of Southern California,
Thunderbird World Business Advisory Council and the Orange County Business
Committee for the Arts.
Linda Arey Skladany, Esq., age 54, became a Director effective upon the
consummation of Corinthian's initial public offering in February 1999. Ms.
Skladany is a Class II director and her term of office will expire at the
annual meeting of the Company's stockholders in fiscal year 2001. Ms. Skladany
has been Vice President for Congressional Relations at Parry, Romani &
DeConcini, a Washington D.C. lobbying firm, since 1995. Ms. Skladany joined
the Reagan administration in 1981 as Special Assistant, first to the Secretary
of Education and then later to the United States Attorney General, before
joining the United States Department of
4
<PAGE>
Transportation as Director of the Executive Secretariat under Secretary
Elizabeth Dole. In 1985, Ms. Skladany joined President Reagan's White House
staff as Special Assistant to the President and Deputy Director of the White
House Office of Public Liaison. In 1988, President Reagan appointed Ms.
Skladany to the Advisory Committee for Trade Negotiation. She was later
appointed by Presidents Reagan and Bush, respectively, to the positions of
Commissioner and Acting Chair of the Occupational Safety and Health Review
Commission. From 1990 to 1995, Ms. Skladany was a legislative attorney and of
counsel with the law firm of Holland and Hart. From 1993 to 1995, she also
served as Executive Director of the Foundation for Environmental and Economic
Progress. In 1994, Governor George Allen of Virginia appointed her to a four-
year term on the Board of Visitors of the College of William and Mary. Ms.
Skladany earned a Bachelor of Arts in Education from the College of William
and Mary, a Master of Arts in Education from Wake Forest University and a
Juris Doctorate from the University of Richmond Law School. She has been
admitted to the bar in Virginia and the District of Columbia.
Director Compensation
During fiscal 1999, each director of Corinthian who was not an employee or
consultant of Corinthian was paid a fee of $2,500 for his or her services as
director and was paid $1,000 for each Board of Directors meeting attended and
$500 for each Board Committee meeting attended. In addition, in connection
with Corinthian's initial public offering, each non-employee director was
granted stock options to purchase 6,000 shares of Corinthian's Common Stock at
the initial public offering price of $18.00 per share. Immediately following
the date of the Annual Meeting, each non-employee director will be granted an
option to purchase an additional 3,000 shares of Common Stock at the then-
current market price. The options granted to non-employee directors vest at
the rate of 50% on each of the first and second anniversaries of the grant
date. All non-employee directors are also reimbursed for their reasonable out-
of-pocket expenses incurred in attending Board of Directors and Committee
meetings.
For fiscal 2000, each director who is not an employee or consultant of
Corinthian will be paid a fee of $10,000 for his or her services as director
and will be paid $1,000 for each Board of Directors meeting attended and $500
for each Board Committee meeting attended.
Attendance at Meetings
During the time between the Company's initial public offering in February
1999 and the end of its fiscal year on June 30, 1999, the Board of Directors
held one (1) formal meeting. Each director attended that meeting.
Committees of the Board Of Directors
The Board of Directors has established an Audit Committee and a Compensation
Committee, each comprised entirely of directors who are not officers of
Corinthian. The Board of Directors has no nominating committee; selection of
nominees for the Board is made by the entire Board of Directors.
The Audit Committee is composed of Mr. Wilson, Mr. Massimino and Dr.
D'Amico. The Audit Committee is responsible for reviewing the internal
accounting procedures of the Company and the results and scope of the audit
and other services provided by the Company's independent auditors, consulting
with the Company's independent auditors and recommending the appointment of
independent auditors to the Board of Directors. The Audit Committee met once
during the fiscal year ended June 30, 1999. Each member of the Audit Committee
attended this meeting.
The Compensation Committee is composed of Mr. Wilson, Mr. Massimino and Ms.
Skladany. The Compensation Committee has the authority and performs all of the
duties related to the compensation of management of the Company, including
determining policies and practices, changes in compensation and benefits for
management, determination of employee benefits and all other matters relating
to employee compensation, including matters relating to the administration of
the Company's 1998 Performance Award Plan (the "Plan"). The Compensation
Committee did not meet between the time of Corinthian's initial public
offering in February 1999 and the end of Corinthian's fiscal year on June 30,
1999. However, the Compensation Committee met after the end of our 1999 fiscal
year on August 26, 1999 and established the compensation guidelines outlined
in the report below. Each member of the Compensation Committee attended this
meeting. See "Report of the Compensation Committee of the Board of Directors."
5
<PAGE>
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed Arthur Andersen LLP, independent certified public accountants, as
auditors of Corinthian's financial statements for the fiscal year ended June
30, 1999. Arthur Andersen LLP has acted as auditors for Corinthian since its
inception in 1995. The Board of Directors has determined to afford
stockholders the opportunity to express their opinions on the matter of
auditors, and, accordingly, is submitting to the stockholders at the Annual
Meeting a proposal to ratify the Board of Directors' appointment of Arthur
Andersen LLP. If a majority of the shares voted at the Annual Meeting, in
person or by proxy, are not voted in favor of the ratification of the
appointment of Arthur Andersen LLP, the Board of Directors will interpret this
as an instruction to seek other auditors. It is expected that representatives
of Arthur Andersen will be present at the meeting and will be available to
respond to questions. They will be given an opportunity to make a statement if
they desire to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE INDEPENDENT
AUDITORS OF CORINTHIAN'S FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE
30, 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934, as amended, requires
Corinthian's officers (as defined under Section 16), directors and persons who
beneficially own greater than 10% of a registered class of Corinthian's equity
securities to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the "Commission"). Based solely on a
review of the forms it has received and on written representations from
certain reporting persons that no such forms were required for them,
Corinthian believes that, except as set forth below, during fiscal 1999 all
Section 16 filing requirements applicable to its officers, directors and 10%
beneficial owners were complied with by such persons.
Each of the directors and Named Executive Officers (as defined below) filed
their initial Form 3 after the date prescribed under Section 16(a).
6
<PAGE>
EXECUTIVE COMPENSATION AND CERTAIN TRANSACTIONS
The following table provides information concerning the annual and long-term
compensation for services in all capacities to Corinthian for the fiscal years
ended June 30, 1999, June 30, 1998 and June 30, 1997 for our chief executive
officer and our four most highly compensated other executive officers
(collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
Annual Compensation
----------------------------------
Other Annual All Other
Fiscal Salary Bonus Compensation Compensation
Name and Principal Position Year ($) ($) ($)(1) ($)(2)
--------------------------- ------ ------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C>
David G. Moore................ 1999 236,250 50,000 15,240 3,249
President and Chief Executive 1998 232,356 0 14,256 3,189
Officer 1997 199,327 20,000 14,124 4,124
Paul St. Pierre............... 1999 194,250 50,000 19,457 3,885
Executive Vice President, 1998 191,048 0 20,142 3,748
Marketing 1997 173,019 20,000 24,750 3,224
Frank J. McCord............... 1999 183,750 50,000 22,304 0
Executive Vice President and 1998 180,721 0 21,158 0
Chief Financial Officer 1997 166,443 20,000 21,448 0
Dennis L. Devereux............ 1999 173,250 50,000 23,085 3,281
Executive Vice President, 1998 170,394 0 21,995 3,169
Human Resources 1997 159,866 20,000 28,697 4,500
Lloyd W. Holland.............. 1999 173,250 50,000 21,072 3,139
Executive Vice President, 1998 170,394 0 18,451 3,652
Business Analysis and 1997 159,866 20,000 21,316 4,500
Financial Aid
</TABLE>
- --------
(1) Includes $12,220 for auto allowance for each of the Named Executive
Officers.
(2) Represents the Company's matching contribution to the employees' 401(k)
Plan. This benefit is provided to all eligible Company employees on a 100%
matching basis up to 2% of each employee's annual salary.
OPTION EXERCISES IN FISCAL 1999 AND FISCAL YEAR END 1999 OPTION VALUES
The following table contains information regarding the Named Executive
Officers' unexercised options as of June 30, 1999. None of the Named Executive
Officers exercised any options during fiscal 1999.
<TABLE>
<CAPTION>
Number of Shares Value of Unexercised
Underlying Unexercised in-the-Money Options
Options as of as of
Name June 30, 1999(1) June 30, 1999(2)
- ---- ---------------------- --------------------
<S> <C> <C>
David G. Moore...................... 11,068 $70,891
Paul St. Pierre..................... 11,068 $70,891
Frank J. McCord..................... 11,068 $70,891
Lloyd W. Holland.................... 11,068 $70,891
Dennis L. Devereux.................. 11,068 $70,891
</TABLE>
- --------
(1) All of the options were granted as of June 30, 1998 and 25% of the options
vested as of June 30, 1999 and will become exercisable as of February 10,
2000.
(2) The value per option is calculated by subtracting the exercise price of
the option ($12.47 per share) from the price of the Common Stock as of
June 30, 1999 ($18.875 per share).
7
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee members are Loyal Wilson, Jack D. Massimino and
Linda Arey Skladany.
Loyal Wilson has served as a Director of the Company since its inception in
1995. Mr. Wilson is also a Managing Director of Primus Venture Partners, Inc.,
the sole general partner of Primus Venture Partners III Limited Partnership,
the sole general partner of Primus Capital Fund III Limited Partnership
("Primus"), which holds more than 5% of the Company's common stock, including
shares of the Company's Nonvoting Common Stock. In addition, BOCPII, Limited
Liability Company together with Banc One Capital Partners II, LLC ("Banc One")
hold more than 5% of the Company's common stock, including shares of Nonvoting
Common Stock.
On October 17, 1996, Primus and Banc One entered into a Subordinated Note
and Warrant Purchase Agreement with the Company (as subsequently amended on
November 24, 1997, the "Subordinated Note Agreement"). Pursuant to the
Subordinated Note Agreement, the Company incurred indebtedness to Primus and
Banc One evidenced by Subordinated Notes (the "Subordinated Notes") in an
aggregate principal amount of $1.0 million and $4.0 million, respectively. The
Company used a portion of the proceeds from the Company's initial public
offering to repay the Subordinated Notes.
Pursuant to the Subordinated Note Agreement, Primus received a warrant to
purchase 35,560 shares of Common Stock and Banc One received a Warrant to
purchase 142,241 shares of Nonvoting Common Stock, each for an aggregate
exercise price of $100 (the "Warrants"). Primus and Banc One also received
contingent stock warrants (the "Contingent Warrants") designed to prevent
possible dilution of the Warrants in connection with the vesting of certain
executives' Nonvoting Common Stock. In connection with the Company's initial
public offering and the concurrent vesting of certain executives' Nonvoting
Common Stock, Primus' Contingent Warrant allowed it to purchase 14,441
additional shares of Common Stock and Banc One's Contingent Warrant allowed it
to purchase 57,765 additional shares of Nonvoting Common Stock, all at an
exercise price of $0.0002 per share. Primus and Banc One exercised their
Warrants and Contingent Warrants in connection with the Company's initial
public offering.
On November 24, 1997, the Company, Primus and Banc One entered into an
amendment to the Subordinated Note Agreement which extended the maturity of
the Subordinated Notes from October 2004 to October 2005 (the "Subordinated
Note Amendment"). Pursuant to the Subordinated Note Amendment, the Company,
Primus and Banc One also entered into a Purchase Agreement (the "Purchase
Agreement") dated November 7, 1997, whereby Primus purchased 25,000 shares of
Series 3 Preferred Stock and Banc One purchased 25,000 shares of Series 2
Preferred Stock from the Company, all at a price of $100 per share. In
connection with the Company's initial public offering, all Series 3 Preferred
Stock was converted into Common Stock and all Series 2 Preferred Stock was
converted into Nonvoting Common Stock.
The Named Executive Officers, the Company, Primus, BOCPII, Limited Liability
Company and Banc One (as successor to Banc One Capital Partners II, Ltd.) are
parties to the Registration Rights Agreement (the "Registration Rights
Agreement") which was amended on November 24, 1997. Pursuant to the
Registration Rights Agreement, the parties thereto have certain rights with
respect to the registration under the Securities Act of 1933 of shares of
Common Stock owned by them (including Common Stock received upon the
conversion of Nonvoting Common Stock, upon the exercise of warrants or upon
the conversion of Convertible Preferred Stock) (the "Registrable Securities").
Primus and Banc One (the "Investors") are entitled to the following "demand"
registration rights. At any time, the holders of a majority of the Investors'
Registrable Securities (the "Investor Registrable Securities") may demand
registration on Form S-1 of all or any portion of their Registrable
Securities, and the holders of at least 10% of the Investor Registrable
Securities may demand registration on Form S-2, Form S-3 or any similar short-
form registration ("Short-Form Registration"), if available, of all or any
portion of their Registrable Securities. For the first two such registrations
on Form S-1, the holders of the Investor Registrable Securities are entitled
to have the Company pay all registration expenses, except underwriting
discounts and commissions
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such holders may also demand an unlimited number of registrations on Form S-1
in which the holders pay their pro rata share of the registration expenses,
provided that the aggregate offering value of the Registrable Securities in
each case must be at least $1,000,000. The holders of the Investor Registrable
Securities are entitled to request an unlimited number of Short-Form
Registrations in which the Company pays all registration expenses, except
underwriting discounts and commissions, provided that the aggregate offering
value of the Registrable Securities requested to be registered must be at
least $500,000. Demand registrations will be Short-Form Registrations whenever
the Company is permitted to use any applicable short-form.
The Investors and the Named Executive Officers are entitled to the following
"piggyback" registration rights. Whenever the Company proposes to register any
of its securities under the Securities Act (other than pursuant to a demand
registration), the Company must notify all holders of Registrable Securities
of the registration and must include in the registration all Registrable
Securities whose holders so request. If a "piggyback" registration is
underwritten, and the managing underwriters advise the Company that the number
of securities requested to be included exceeds the number which can be sold at
an acceptable price, priority in the registration is as follows: (i) the
securities the Company proposes to sell, (ii) the Investor Registrable
Securities and (iii) the Registrable Securities held by the Named Executive
Officers requested to be included. The Company will pay all registration
expenses, except underwriting discounts and commissions, in connection with
any "piggyback" registration.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The basic compensation of all Named Executive Officers for fiscal 1999 was
fixed by the full Board of Directors prior to the establishment of the
Compensation Committee in connection with the Company's initial public
offering. Accordingly, the Compensation Committee was not involved in
establishing executive compensation for fiscal 1999. Since the end of fiscal
1999, the Compensation Committee met to establish the following guidelines for
executive compensation in the future.
The Compensation Committee of the Board of Directors is composed entirely of
non-employee directors and establishes Corinthian's compensation strategy and
policies and determines the nature and amount of all compensation for
Corinthian's Named Executive Officers. The objectives of the Board of
Directors in determining the levels and components of executive and key
employee compensation are to (i) attract, motivate and retain talented and
dedicated executive officers and other key employees, (ii) provide executive
officers and other key employees with both cash and equity incentives to
further the interests of Corinthian and its stockholders and (iii) compensate
executive officers and other key employees at levels comparable to those of
executive officers and key employees at other comparable companies.
Generally, the compensation of all executive officers and other key
employees is composed of:
.a base salary,
.perquisites,
.performance bonuses, and
.periodic stock options.
The Compensation Committee believes that these components offer the
executive officers and other key employees competitive compensation while
aligning their interests with those of the Company's stockholders. Through the
use of stock options and annual bonuses, the executive officers and key
employees are individually rewarded for their improvement of the Company's
performance.
Base Salaries. In determining the base salaries of the executive officers in
future fiscal years, the Board of Directors will consider the performance of
each executive, the nature of the executive's responsibilities, the
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<PAGE>
salary levels of executives at comparable publicly-held companies and
Corinthian's general compensation practices. The base salaries of the Named
Executive Officers are effective until changed at the discretion of the
Compensation Committee.
Bonuses. Discretionary bonuses for the Named Executive Officers are directly
tied to achievement of specified goals of Corinthian and are a function of the
criteria which the Compensation Committee believes appropriately takes into
account the specific areas of responsibility of the particular officer.
Discretionary bonuses are paid as a percentage of the employee's base salary.
The performance objectives are based on quantitative financial criteria
established by the Compensation Committee at a time in which actual
performance in relation to the target remains uncertain (as defined in Section
162(m) of the Internal Revenue Code). The Compensation Committee may in the
future impose, in its discretion, additional conditions or terms for the
payment of bonuses, including the creation of other financial, strategic or
individual goals. The targeted bonus for any fiscal year for the Named
Executive Officers are expected to be between 75% and 100% of their respective
annual base salaries if the Company's performance criteria are met, and may be
more if the performance criteria are exceeded. If the performance criteria are
not met, the Named Executive Officers may receive bonuses of an amount less
than the targeted bonuses.
Stock Options. Periodically, the Company has granted, and the Compensation
Committee expects in the future to grant, stock options to the Named Executive
Officers and other key employees in order to provide a long-term incentive.
The value of such stock options is directly tied to the performance of the
Company's Common Stock. These options provide an incentive to maximize
stockholder value because they reward option holders only if stockholders also
benefit. The exercise price of these stock options is the fair market value of
the Common Stock on the date of grant. In general, the options vest in equal
annual installments over a four-year period beginning one year after the date
of grant. Vesting periods are used to retain key employees and to emphasize
the long-term aspect of contribution and performance. In making stock option
grants to executives and other key employees, the Compensation Committee
considers a number of factors, including the performance of such persons,
achievement of specific delineated goals, the responsibilities and the
relative position of such persons within Corinthian, review of compensation of
executives and key employees in comparable companies and review of the number
of stock options each such person currently possesses. In fiscal 1999, the
Compensation Committee did not grant stock options to any Named Executive
Officers of the Company.
Compensation of the Chief Executive Officer. For fiscal 1999, Mr. Moore's
annual base salary was set by the Board of Directors prior to the Company's
initial public offering and the formation of the Compensation Committee. The
Compensation Committee intends to set Mr. Moore's compensation in the future
at a level that is comparable to the salary earnings for chief executive
officers of companies of similar size and type. Mr. Moore's bonus will be
determined in the same manner as that of the other Named Executive Officers.
COMPLIANCE WITH SECTION 162(m)
The Compensation Committee currently intends for all base salary and bonus
compensation paid to the Named Executive Officers to be tax deductible to
Corinthian pursuant to Section 162(m) of the Internal Revenue Code of 1986, as
amended ("Section 162(m)"). Section 162(m) provides that compensation paid to
the Named Executive Officers in excess of $1,000,000 cannot be deducted by
Corinthian for federal income tax purposes unless, in general, such
compensation is performance based, is established by a committee of
independent directors, is objective and the plan or agreement providing for
such performance based compensation has been approved in advance by
stockholders.
THE COMPENSATION COMMITTEE
Loyal Wilson
Jack D. Massimino
Linda Arey Skladany
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TRANSACTIONS BETWEEN THE COMPANY AND CERTAIN EXECUTIVE OFFICERS
Executive Loans
On November 24, 1997, the Company entered into a separate Amended and
Restated Executive Stock Agreement with each of the Named Executive Officers
(the "Amended Stock Agreements"). Each Amended Stock Agreement amended and
restated an earlier Executive Stock Agreement between the Company's
predecessor, Corinthian Schools, Inc. ("CSi"), and each of the Named Executive
Officers dated as of June 30, 1995, (hereinafter collectively with the Amended
Stock Agreements, the "Executive Stock Agreements").
Pursuant to the Executive Stock Agreements, on June 30, 1995 each Named
Executive Officer purchased 440,945 shares of Common Stock and between 110,236
and 275,591 shares of Nonvoting Common Stock, each at a price of $0.2268 per
share. Each Named Executive Officer paid for the Common Stock by delivering
(i) between $80,025 and $80,063 in cash, and (ii) shares of common stock in
CSi which the Named Executive Officer had previously purchased, and with
respect to which each Named Executive Officer had made previous capital
contributions of $20,000. Each Named Executive Officer borrowed money from the
Company to purchase their respective shares of Nonvoting Common Stock.
Each of the Executive Stock Agreements provides for a severance benefit for
each of the Named Executive Officers in the event he is terminated by the
Company, other than for Cause (as defined below), in an amount equal to the
Named Executive Officer's base salary (excluding bonuses) during the preceding
12 months, payable on a monthly basis in equal installments for each of the
twelve succeeding months following the Named Executive Officer's termination.
"Cause" is defined as (i) the commission of a felony or a crime of moral
turpitude or any act involving dishonesty, disloyalty or fraud, (ii) conduct
that brings the Company into public disgrace or disrepute, (iii) substantial
or repeated failure to perform duties directed by the Board of Directors, (iv)
gross negligence or willful misconduct relating to the Company, or (v) any
material breach of the Executive Stock Agreement.
Each of the Named Executive Officers borrowed money from the Company to
purchase their Nonvoting Common Stock, as evidenced by Promissory Notes
(collectively, the "Executive Notes") entered into on June 30, 1995 between
each of the Named Executive Officers and the Company. The Executive Notes were
payable on demand and bore interest at the lesser of (i) 7.07% per annum, or
(ii) the highest rate allowed by applicable law, payable when the principal
became due and payable. Each Executive Note was secured by a pledge to the
Company of the respective Named Executive Officer's Nonvoting Common Stock.
Soon after the consummation of the sale of overallotment shares in connection
with the Company's initial public offering, each of the Named Executive
Officers repaid the Executive Notes in full.
Loan to David G. Moore
On August 31, 1999, the Company agreed to loan to David G. Moore, President
and a Director of the Company, an amount of up to $350,000 under the terms of
a Promissory Note and Pledge Agreement between the Company and Mr. Moore. The
terms of the Promissory Note provide for interest at a rate of 7% per annum,
payable on an annual basis and when the principal becomes due and payable in
August 2002. As security for this loan, Mr. Moore pledged to the Company
34,043 shares of his Common Stock in the Company. The pledged shares had a
market value of approximately $700,000 as of the date of the Promissory Note
and Pledge Agreement (based on the closing price of the Company's Common Stock
on the day prior to the execution of the Pledge Agreement).
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PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for
Corinthian, the Russell 2000 Index and an index of peer companies selected by
Corinthian during the period commencing on February 5, 1999, the date of
Corinthian's initial public offering, and ending on June 30, 1999. The
comparison assumes $100 was invested on February 5, 1999 in the Common Stock,
the Russell 2000 Index and the peer companies selected by Corinthian and
assumes the reinvestment of all dividends, if any. The companies in the peer
group, all of which are education companies, are weighted according to their
market capitalization. Included in the peer group are: Apollo Group Inc.,
Career Education Corporation, Computer Learning Centers, Inc., DeVry, Inc.,
Education Management Corporation, EduTrek International, Inc., ITT Educational
Services, Inc., Quest Education Corporation, Strayer Education, Inc. and
Whitman Education Group, Inc. The performance graph begins with Corinthian's
initial public offering price of $18.00 per share.
Cumulative Total Return
--------------------------------------------------
2/5/99 2/99 3/99 4/99 5/99 6/99
CORINTHIAN COLLEGES, INC. 100 124 122 91 97 105
PEER GROUP 100 104 112 92 89 90
RUSSELL 2000 100 96 95 104 107 111
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SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth, as of June 30, 1999, certain information
with respect to the beneficial ownership of the Common Stock by (i) each
person known by Corinthian to own beneficially more than 5% of the outstanding
shares of Common Stock, (ii) each Company director, (iii) each of the Named
Executive Officers and (iv) all Company executive officers and directors as a
group.
Unless otherwise indicated below, the persons in the table have sole voting
and investment power with respect to all shares shown as beneficially owned by
them.
<TABLE>
<CAPTION>
Shares of Common
Stock Percentage of
Beneficially Outstanding
Name Owned (1) Shares Owned
---- ---------------- -------------
<S> <C> <C>
Primus Capital Fund III Limited Partnership.... 2,918,652 28.2
5900 Landerbrook Drive
Suite 200
Cleveland, Ohio 44124
Banc One entities(2)........................... 1,415,112 13.7
300 Crescent Court
Suite 1600
Dallas, Texas 75201
Provident Investment Counsel, Inc.............. 617,025 6.0
300 North Lake Avenue
Pasadena, California 91101
David Moore.................................... 691,609 6.7
Paul St. Pierre (3)............................ 636,491 6.2
Frank McCord (4)............................... 526,254 5.1
Lloyd Holland.................................. 526,253 5.1
Dennis Devereux (5)............................ 526,253 5.1
Loyal Wilson (6)............................... 2,928,652 28.3
Jack D. Massimino (7).......................... 10,000 *
Linda Arey Skladany............................ 200 *
All directors and executive officers as a group
(8 persons) (2)(3)(4)(5)(6)(7)................ 5,845,712 56.5
</TABLE>
- --------
* Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Commission. The number of shares beneficially owned by a person and the
percentage ownership of that person includes shares of common stock
subject to options or warrants held by that person that are currently
exercisable or exercisable within 60 days of June 30, 1999. As of June 30,
1999, there were 10,345,623 outstanding shares of common stock, including
1,176,560 shares of Nonvoting Common Stock which are convertible into
Common Stock upon a sale of such Nonvoting Common Stock.
(2) Consists of shares held by BOCPII, Limited Liability Company ("BOCPII"),
and Banc One Capital Partners II, LLC ("BancOne"). BOCPII holds an
aggregate of 826,773 shares, including 588,221 shares of Nonvoting Common
Stock that are convertible into Common Stock on a share for share basis
upon the sale of such stock. Banc One holds 588,339 shares of Nonvoting
Common Stock that are convertible into Common Stock on a share for share
basis upon the sale of such stock.
(3) All such shares are held in a family trust of which Mr. St. Pierre is a
grantor and a trustee.
(4) All such shares are held in a family trust of which Mr. McCord is a
grantor and a trustee.
(5) All such shares are held in a family trust of which Mr. Devereux is a
grantor and a trustee. Does not include 400 shares owned by Mr. Devereux's
children.
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<PAGE>
(6) Such shares include 2,918,652 shares owned by Primus Capital Fund III
Limited Partnership and 4,000 shares owned by Sage Investments Limited
Partnership. Mr. Wilson, a director of the Company, is a managing director
of Primus Venture Partners, Inc., the sole general partner of Primus
Venture Partners III Limited Partnership, the sole general partner of
Primus Capital Fund III Limited Partnership. Mr. Wilson shares voting and
investment power with respect to such shares with four other directors of
Primus Venture Partners, Inc. Mr. Wilson disclaims beneficial ownership of
the shares held by Primus Capital Fund III Limited Partnership, except to
the extent of his pecuniary interest therein. Mr. Wilson is the general
partner of Sage Investments Limited Partnership.
(7) All such shares are held in a family trust of which Mr. Massimino is a
grantor and a trustee.
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<PAGE>
MISCELLANEOUS AND OTHER MATTERS; SOLICITATION
The cost of this proxy solicitation will be borne by Corinthian. Corinthian
may request banks, brokers, fiduciaries, custodians, nominees and certain
other record holders to send proxies, proxy statements and other materials to
their principals at Corinthian's expense. Such banks, brokers, fiduciaries,
custodians, nominees and other record holders will be reimbursed by Corinthian
for their reasonable out-of-pocket expenses of solicitation. Corinthian does
not anticipate that costs and expenses incurred in connection with this proxy
solicitation will exceed an amount normally expended for a proxy solicitation
for an election of directors in the absence of a contest.
PROPOSALS OF STOCKHOLDERS
Stockholder proposals intended to be considered at Corinthian's 2000 Annual
Meeting of Stockholders must be received by the Secretary of Corinthian at its
principal executive offices no later than June 17, 2000 in order to be
considered for inclusion in Corinthian's Proxy Statement and form of proxy
relating to that meeting. If a stockholder notifies Corinthian of such
stockholder's intent to present a proposal for consideration at Corinthian's
2000 Annual Meeting of Stockholders after August 31, 2000, Corinthian, acting
through the persons named as proxies in the proxy materials for such meeting,
may exercise discretionary voting authority with respect to such proposal
without including information regarding such proposal in its proxy materials.
OTHER BUSINESS
The Board of Directors is not aware of any other matters to be presented at
the Annual Meeting other than those mentioned in Corinthian's Notice of Annual
Meeting of Stockholders enclosed herewith. If any other matters are properly
brought before the Annual Meeting, however, it is intended that the persons
named in the proxy will vote as the Board of Directors directs.
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<PAGE>
ADDITIONAL INFORMATION
Included herewith is a copy of Corinthian's Annual Report on Form 10-K for
its fiscal year ended June 30, 1999, as filed with the Commission. Corinthian
files annual, quarterly and special reports, proxy statements and other
information with the Commission. You may read and copy any reports, statements
or other information we file at the Commission's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the
Commission at 1-800-SEC-0330 for further information on the public reference
rooms. Our Commission filings are also available to the public from commercial
document retrieval services and at the web site maintained by the Commission
at http://www.sec.gov
By order of the Board of Directors
/s/ DAVID G. MOORE
David G. Moore
President and Chief Executive
Officer
Santa Ana, California,
October 15, 1999
ALL STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED
PROXY PROMPTLY.
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<PAGE>
PROXY
Corinthian Colleges, Inc.
Proxy Solicited on Behalf of the Board of Directors
of the Company for the Annual Meeting, November 18, 1999
The undersigned, a shareholder of CORINTHIAN COLLEGES, INC., a Delaware
corporation (the "Company"), acknowledges receipt of a copy of the Notice of
Annual Meeting of Shareholders, the accompanying Proxy Statement and a copy of
the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1999; and, revoking any proxy previously given, hereby constitutes and appoints
Frank J. McCord and Dennis L. Devereux and each of them, his or her true and
lawful agents and proxies with full power of substitution in each, to vote the
shares of Common Stock of the Company standing in the name of the undersigned
at the Annual Meeting of Shareholders of the Company to be held at 6 Hutton
Centre Drive, Suite 400, Santa Ana, California 92707 on November 18, 1999 at
10:00 a.m. California time, and at any adjournment thereof, on all matters
coming before said meeting.
The Board of Directors recommends a vote FOR Items 1 and 2.
1. Nominees for a three-year term as a Class I director of the Company's
Board of Directors:
Loyal Wilson [_] For this nominee [_] Withhold authority to vote for
this nominee
Dr. Carol D'Amico [_] For this nominee [_] Withhold authority to vote
for this nominee
2. Ratification of Arthur Andersen LLP as the Company's independent auditors
for the fiscal year ended June 30, 1999.
[_] FOR [_] AGAINST [_] ABSTAIN
3. In their discretion, upon any other matters as may properly come before
the meeting or at any adjournment thereof.
(continued and to be signed on other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREBY
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2. IF ANY NOMINEE BECOMES UNAVAILABLE FOR ANY REASON,
THE PERSONS NAMED AS PROXIES SHALL VOTE FOR THE ELECTION OF SUCH OTHER PERSON
AS THE BOARD OF DIRECTORS MAY PROPOSE TO REPLACE SUCH NOMINEE.
(This Proxy must be signed exactly
as your name appears hereon.
Executors, administrators,
trustees, etc., should give full
title as such. If the shares are
held in joint name, either person
may sign this Proxy. If the
shareholder is a corporation, a
duly authorized officer should
sign on behalf of the corporation
and should indicate his or her
title.)
Dated: __________________________
_________________________________
(Signature of
Stockholder)
Dated: __________________________
_________________________________
(Signature of
Stockholder)
_________________________________
Please Mark, Sign, Date and Return the Proxy Card Promptly Using the Enclosed
Envelope.
