<PAGE> 1
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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DeVry Inc.
- - --------------------------------------------------------------------------------
(Name of Registrant as specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statements if other than the Registrant)
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(1) Title of each class of securities to which transaction applies:
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(3) Prior unit price or other underlying value of transaction computed
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the Form or Schedule and the date of its filing.
(1) Amount previously Paid:
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[DEVRY LOGO]
September 20, 1999
Dear Stockholder:
On behalf of the Board of Directors of DeVry Inc., it is my pleasure to
invite you to attend your Company's Annual Meeting of Stockholders at 10:30
a.m., Tuesday, November 16, 1999, at The Northern Trust Company, 50 South
LaSalle Street, Chicago, Illinois.
We will begin with a discussion of the items listed in the enclosed proxy
statement, followed by a report on the growth of DeVry during the last fiscal
year. DeVry's performance is also discussed in the enclosed 1999 Annual Report
to stockholders, which we think you will find to be interesting reading.
We strongly encourage you to attend the meeting to represent your shares.
Whether or not you plan to attend in person, please mark, sign, date and return
your proxy card promptly. Proxy cards may be retrieved immediately prior to the
meeting if you would like to vote in person.
We look forward to greeting you at the meeting.
Thank you.
Sincerely,
/s/ Dennis J. Keller
Dennis J. Keller
Chairman of the Board
<PAGE> 3
DEVRY INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 16, 1999
You are cordially invited to attend the Annual Meeting of Stockholders of
DeVry Inc. at The Northern Trust Company, 50 South LaSalle Street, Chicago,
Illinois on Tuesday, November 16, 1999, at 10:30 a.m. Central Standard Time, for
the following purposes:
(1) To elect four Directors to serve as Class II Directors to serve
until the 2002 Annual Meeting of Stockholders;
(2) To approve the adoption of the DeVry Inc. 1999 Stock Incentive
Plan;
(3) To ratify the appointment of PricewaterhouseCoopers LLP as
independent public accountants for the Company for the current fiscal year;
and
(4) To consider such other business as may properly come before the
meeting or any adjournment thereof.
You will find enclosed with this Notice a proxy card and a Proxy Statement
for the meeting and a copy of the DeVry Inc. Annual Report for 1999.
The Board of Directors has fixed a record date of September 17, 1999. Only
stockholders of record on that date are entitled to notice of, and to vote at,
the meeting. The principal office of the Company is situated at One Tower Lane,
Suite 1000, Oakbrook Terrace, Illinois 60181.
All stockholders are cordially invited to attend the meeting in person.
However, to assure representation at the meeting, you are encouraged to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope provided for that proxy. Postage is not required for
mailing in the United States. Upon request, the Company will reimburse
stockholders for the cost of mailing proxy cards from outside the United States.
You may attend the meeting in person even if you have returned a proxy.
MARILYNN J. CASON
Secretary
Oakbrook Terrace, Illinois
September 24, 1999
<PAGE> 4
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS, NOVEMBER 16, 1999
The Board of Directors of DeVry Inc. (the "Company") is sending you this
Proxy Statement and the accompanying proxy card in connection with its
solicitation of proxies to be voted at the Company's Annual Meeting of
Stockholders to be held on November 16, 1999, and any adjournment thereof. This
Proxy Statement and accompanying proxy are first being sent to stockholders on
or about September 24, 1999. The solicitation of proxies gives all stockholders
an opportunity to vote. Your shares can be voted only if you are present or
represented by proxy at the meeting.
When you have marked, signed, dated and returned your proxy card, the Proxy
Committee (and each of them, with full powers of substitution) will vote your
shares as you direct. Please indicate your choices by marking the boxes on the
enclosed card. If you sign, date and return your proxy card to us without
choices for each proposal, the Proxy Committee will vote your shares on the
unmarked proposals as recommended by the Board of Directors. Abstentions,
directions to withhold authority and broker non-votes (where a named entity
holding shares for a beneficial owner has not received voting instructions from
the beneficial owner regarding a particular matter and such named entity does
not possess or choose to exercise discretionary authority with respect thereto)
will be considered present at the meeting for purposes of a quorum but will not
be counted in determining the total number of votes cast. Anyone giving a proxy
may revoke it at any time before the proxy is voted at the meeting by: (1)
notifying the Company in writing that the proxy has been revoked; (2) executing
a later-dated proxy; or (3) voting in person at the meeting. The election of
Directors, the approval of the 1999 Stock Incentive Plan and the ratification of
the appointment of the independent public accountants will each require the
affirmative vote of a majority of the shares of Common Stock of the Company
present or represented at the meeting.
If you are a Company employee who is a participant in the DeVry Inc.
Employee Stock Purchase Plan and/or the Profit Sharing Retirement Plan's DeVry
Stock Fund, the accompanying proxy card, when returned properly signed, will
serve as direction to the Custodian of the Stock Purchase Plan or the Trustee of
the Stock Fund to vote the shares held in the Stock Purchase Plan and/or the
Stock Fund, respectively, for your account in accordance with your direction. If
you return a proxy card without indicating your voting preference, the shares
represented by your proxy card will be voted in the same proportion as shares
timely voted by proxies returned.
The Company will bear the expense of soliciting proxies. The solicitation
initially will be made by mail but also may be made by telephone, telefax or
personal contact by Company employees.
The Company will reimburse all stockholders for the expense of sending
proxies and proxy material to beneficial owners, including expenditures for
foreign mailings.
As of September 17, 1999, the Company had 69,432,273 shares of Common Stock
($0.01 par value) outstanding. Stockholders are entitled to one vote per share
owned on the record date.
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides for a Board of
Directors of not less than three nor more than twelve Directors, as determined
from time to time by resolution of the Board, that is divided into three classes
of Directors serving staggered three-year terms. The Board has set the number of
Directors at eleven. The members of Class II, whose terms of office expire in
1999, are David S. Brown, Dennis J. Keller, Robert E. King and Frederick A.
Krehbiel, all of whom have been nominated to stand for election as Directors at
the 1999 meeting to hold office until 2002 or until their respective successors
are elected and qualified. All of the nominees have served as Directors since
the last annual meeting.
It is intended that all shares represented by a proxy in the accompanying
form will be voted for the election of the persons listed below as Class II
Directors for a three-year term unless otherwise specified in such proxy. A
proxy cannot be voted for more than four persons. In the event any one or more
of such
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nominees shall be unable to serve as Director, votes will be cast pursuant to
the authority granted in the enclosed proxy for such person or persons as may be
designated by the Board of Directors. The Board has no reason to believe that
any nominee will become unavailable for election.
The nominees for election as Directors are listed below, along with brief
statements setting forth their current principal occupations, business
experience, and other information, including directorships in other public
companies.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED BELOW.
NOMINEES
CLASS II - TERM EXPIRES 2002
David S. Brown, age 58
Mr. Brown has been a Director of the Company since 1987 and was a founding
stockholder and director of Keller Graduate School of Management, Inc. ("KGSM").
Mr. Brown, a practicing attorney, was a partner in the Chicago law firm of
McBride and Baker from 1972 to 1979 and served as General Counsel of the U.S.
Office of Minority Business Enterprise from 1971 to 1972. From 1980 to 1996, Mr.
Brown was employed by United Laboratories, Inc., a manufacturer and seller of
specialty chemicals, most recently as Executive Vice President, Chief Financial
Officer and General Counsel.
Dennis J. Keller, age 58
Mr. Keller has been Chairman of the Board and Chief Executive Officer of
the Company since 1987. Mr. Keller co-founded KGSM and was from 1973 to August
1987 its Chairman of the Board and Chief Executive Officer. He is also a
director of NICOR, Inc.
Robert E. King, age 64
Mr. King has been a Director of the Company since 1987. He is Chairman of
Salt Creek Ventures, a private equity firm. From 1983 through 1994, Mr. King was
Chairman and Chief Executive Officer of the Newtrend Group, a software and
computer services company. He was President and Chief Executive Officer of
DELTAK, Inc., a video publisher, from 1971 to 1982.
Frederick A. Krehbiel, age 58
Mr. Krehbiel has been a Director of the Company since 1996. Employed since
1965 by Molex Incorporated, an electronic component manufacturer, he served as
CEO from 1988 to 1999 and as Chairman from 1993 to 1999. Since July 1999 Mr.
Krehbiel has served as Co-Chairman and Co-CEO. Mr. Krehbiel is also a director
of Tellabs, Inc., Nalco Chemical Co. and Northern Trust Corp.
INCUMBENT DIRECTORS
CLASS I - TERM EXPIRES 2001
Ewen M. Akin, age 69
Dr. Akin has been a Director of the Company since February 1997. He was
President of Kennedy-King College in Chicago from 1976 to 1986 and President of
Malcolm X College in Chicago from 1973 to 1976. From 1970 to 1973 he was Vice
President for Academic Affairs at Kennedy-King College, prior to which time he
was a member of the physics faculty there.
Thurston E. Manning, age 73
Dr. Manning has been a Director of the Company since 1990. He was President
of the Council on Post-secondary Accreditation from 1987 until July 1991, prior
to which time he was for 12 years Executive Director
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of the Commission on Institutions of Higher Education of the North Central
Association of Colleges and Schools. Since 1991, Dr. Manning has been a
self-employed consultant.
Hugo J. Melvoin, age 70
Mr. Melvoin has been a Director of the Company since 1987. He was a
founding stockholder and director of KGSM. A practicing attorney since 1953, Mr.
Melvoin was a partner in the Chicago law firm of Mayer, Brown & Platt from 1960
to 1981. He retired in 1999 from the law firm of Hugo Melvoin, P.C.
CLASS III - TERM EXPIRES 2000
Charles A. Bowsher, age 68
Mr. Bowsher has been a Director of the Company since February 1997. In 1996
Mr. Bowsher completed a 15-year term as Comptroller General of the United States
and head of the General Accounting Office. Prior to that he was affiliated with
Arthur Andersen and Co. for 25 years, except for a four-year period when he
served as Assistant Secretary of the Navy for Financial Management. Mr. Bowsher
is also a director of American Express Bank and National Steel Corporation.
Robert C. McCormack, age 60
Mr. McCormack has been a Director of the Company since 1995. He is a
founding partner of Trident Capital, Inc., a private equity firm established in
1993 to invest in information and business service companies. From 1990 to 1993
Mr. McCormack was the Assistant Secretary and Comptroller of the Navy, prior to
which time he served for 2 1/2 years in various positions on the staff of the
Secretary of Defense. Mr. McCormack spent 20 years in investment banking with
Dillon, Read & Co. Inc. and Morgan Stanley & Co. Incorporated before his
government service. He is also a director of Illinois Tool Works, Inc. and
MapQuest.com, Inc.
Julie A. McGee, age 57
Ms. McGee has been a Director of the Company since 1994. From 1991 to 1994
she was President of McDougal, Littell & Co. Upon its acquisition by Houghton
Mifflin in 1994, she became Corporate Executive Vice President of McDougal
Littel, Inc. a Houghton Mifflin Company, which publishes print and electronic
materials for elementary and secondary schools and colleges and references for
the office automation and microcomputer markets, as well as fiction and
nonfiction literature. Ms. McGee began her career at McDougal Littell in 1988 as
an editorial director. From 1986 to 1988 she held management positions at
Ligature, Inc. prior to which she was for three years Director of Marketing and
Software Development for a division of Tandy Corporation.
Ronald L. Taylor, age 56
Mr. Taylor has been a Director, President and Chief Operating Officer of
the Company since 1987. In 1973 Mr. Taylor co-founded KGSM and was from 1973 to
1981 its Chief Operating Officer and from 1981 to 1987 its President and Chief
Operating Officer. He is also a director of SPR, Inc.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
There were four regular meetings of the Board of Directors during fiscal
1999. During that year all incumbent Directors attended 75 percent or more of
the aggregate of the total number of meetings of the Board of Directors and of
the committees of the Board of Directors on which they served. The Board has
standing nominating, audit, finance and compensation committees.
Messrs. Keller (Chair), Taylor, King, McCormack and Brown serve as members
of the Company's NOMINATING COMMITTEE, which met by telephone during fiscal
1999. The Committee is responsible for proposing a slate of directors for
election by the stockholders at each annual meeting and for proposing
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candidates to fill any vacancies on the Board. The Nominating Committee will
accept and consider nominations of Directors from stockholders. Such nominations
should be sent to the Corporate Secretary, specifying the name of the nominee
and the qualifications of such nominee for membership on the Board of Directors.
All such recommendations will be brought to the attention of the Nominating
Committee.
Messrs. Bowsher (Chair), Akin and Brown, and Ms. McGee serve as members of
the AUDIT COMMITTEE of the Board of Directors of the Company. The principal
duties of the Audit Committee, which met four times during fiscal 1999, include
recommending the appointment of the Company's independent public accountants,
subject to ratification by the stockholders; review of the scope, approach and
results of the annual audits; review of annual and quarterly financial
statements; review of the representations of management and the findings and
suggestions of the independent public accountants regarding internal control,
financial policies and procedures and management's response thereto; monitoring
the effectiveness of the Company's internal controls; and review of unusual or
significant financial transactions or findings.
Messrs. McCormack (Chair), Keller, Taylor, King and Brown serve as members
of the Company's FINANCE COMMITTEE, which met once during fiscal 1999. The
Committee's principal duties include review and recommendation with respect to
the Company's financing policies, including cash flow, capital structure and
dividend policy.
Dr. Manning (Chair) and Messrs. King, Krehbiel and Melvoin serve as members
of the COMPENSATION COMMITTEE, which held two meetings in fiscal 1999. The role
of the Compensation Committee is to establish and oversee the policies that
govern Company compensation and benefit practices and includes review of the
salaries of the senior officers of the Company each year and approval of
management incentive awards and stock option grants. The report of the
Compensation Committee on Executive Compensation appears on pages 10 to 12 of
this Proxy Statement.
Directors are each paid a retainer of $20,000 per annum plus $1,000 for
each Board of Directors meeting attended. Additionally, non-employee committee
members are paid $500 per committee meeting attended. Also, Directors are
eligible to receive options under the Company's 1994 and 1999 Stock Incentive
Plans. Directors are reimbursed for any expenditures attendant to Board
membership.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires that the Company's Directors, executive officers and
holders of more than 10% of the Company's Common Stock file reports of ownership
and changes in ownership of Common Stock with the Securities and Exchange
Commission. During the fiscal year ended June 30, 1999, all such persons filed
on a timely basis all reports required by Section 10(a) of the Exchange Act,
with the following exception. Robert C. McCormack, a Director, was late in
filing one report due to the Company's failure to timely provide him with the
necessary forms.
STOCK OWNERSHIP
The table below sets forth the number and percentage of outstanding shares
of Common Stock beneficially owned by (1) each person known by the Company to
own beneficially more that 5% of the Common Stock, (2) each Director of the
Company, (3) each nominee for election as Director, (4) each executive officer
named in the Summary Compensation Table on page 6 and (5) all Directors and
officers of the Company as a group, in each case as of June 30, 1999, except as
otherwise noted. The Company believes that each individual or entity named has
sole investment and voting power with respect to the shares of Common Stock
indicated as beneficially owned by them, except as otherwise noted. All share
amounts
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referred to in this Proxy Statement have been adjusted to reflect the
two-for-one stock splits, on June 21, 1995, December 18, 1996 and June 19, 1998.
<TABLE>
<CAPTION>
SHARES PERCENTAGE
NAME OWNED(1) OWNERSHIP
- - ---- ---------- ----------
<S> <C> <C>
Dennis J. Keller............................................ 9,404,301(2) 13.6%
Ronald L. Taylor............................................ 2,340,305(3) 3.4
Ewen M. Akin................................................ 4,790(4) *
Charles A. Bowsher.......................................... 4,750(4) *
David S. Brown.............................................. 204,000(5) *
Robert E. King.............................................. 44,340(5)(6) *
Frederick A. Krehbiel....................................... 27,120(7) *
Thurston E. Manning......................................... 41,000(5) *
Robert C. McCormack......................................... 846,294(8) 1.2
Julie A. McGee.............................................. 29,000(9) *
Hugo J. Melvoin............................................. 138,228(5)(10) *
Bruno R. LaCaria............................................ 591(11) *
Michael J. LaForte, Jr. .................................... 5,569(12) *
O. John Skubiak............................................. 129,340(13) *
GeoCapital Corporation...................................... 3,879,575(14) 6.6
Baron Capital, Inc. ........................................ 7,458,300(15) 10.7
All Directors and Officers as a Group (28 Persons).......... 13,687,147 19.7
</TABLE>
- - -------------------------
* Represents less than 1% of the outstanding Common Stock.
(1) Calculated pursuant to Rule 13-3(d) of the Exchange Act. Under Rule
13-3(d), shares not outstanding which are subject to options, warrants,
rights or conversion privileges exercisable within 60 days are deemed
outstanding for the purpose of calculating the number and percentage owned
by such person, but not deemed outstanding for the purpose of calculating
the percentage owned by each other person.
(2) Includes 9,512 shares owned by Mr. Keller's wife and 209,625 subject to
purchase upon the exercise of stock options. Mr. Keller disclaims
beneficial ownership of the shares owned by his wife.
(3) Includes 2,200 shares owned by Mr. Taylor's children and 163,225 shares
subject to purchase upon the exercise of stock options. Mr. Taylor
disclaims beneficial ownership of the shares owned by his children.
(4) Includes 4,750 shares subject to purchase upon the exercise of stock
options.
(5) Includes 41,000 shares subject to purchase upon the exercise of stock
options.
(6) Includes 3,340 shares owned by Mr. King's wife. Mr. King disclaims
beneficial ownership of the shares owned by his wife.
(7) Includes 13,000 shares subject to purchase upon the exercise of stock
options.
(8) Includes 24,896 shares held by Northern Trust Company and Robert C.
McCormack Trust UA DTD 10-6-67; 760,000 shares contributed to McCormack DV
Management Limited Partnership by Mr. McCormack and 762 shares contributed
by his wife; 39,238 shares held by his wife and 13,750 shares subject to
purchase upon the exercise of stock options. Mr. McCormack disclaims
beneficial ownership of the shares owned or contributed by his wife.
(9) Includes 29,000 shares subject to purchase upon the exercise of stock
options.
(10) Includes 15,000 shared owned by the Melvoin Foundation.
(11) Includes 500 shares subject to purchase upon the exercise of stock options
and 91 shares held in the DeVry Inc. Profit Sharing Retirement Plan.
(12) Includes 5,010 subject to purchase upon the exercise of stock options and
59 shares held in the DeVry Inc. Profit Sharing Retirement Plan.
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(13) Includes 14,344 shares held in an IRA at Northern Trust Brokerage, 23,200
shares held in an IRA at Northern Trust Brokerage for his wife and 69,517
shares subject to purchase upon the exercise of stock options.
(14) GeoCapital Corporation, whose address is 767 Fifth Avenue, New York, New
York 10153, as of September 10, 1999 had shared voting power and sole
investment power as to 3,879,515 shares.
(15) Baron Capital, Inc. whose address is 450 Park Avenue, New York, New York
10022, as of August 31, 1999 had shared voting and investment power as to
7,458,300 shares.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------- ----------------------- -------
SECURITIES
RESTRICTED UNDERLYING
OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARD(S) SARS(#)(2) PAYOUTS COMPENSATION(3)
- - --------------------------- ---- -------- -------- --------------- ---------- ---------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dennis J. Keller, 1999 $381,811 $687,260 $16,630 31,125 $15,935
Chairman and Chief 1998 372,895 652,422 7,524 51,000 15,110
Executive Officer 1997 214,322 763,451 1,369 52,000 12,585
Ronald L. Taylor, 1999 381,811 687,260 9,942 31,125 21,618
President and Chief 1998 372,895 652,422 1,042 51,000 19,637
Operating Officer 1997 214,322 763,451 1,042 52,000 14,431
O. John Skubiak, 1999 175,000 140,000 1,725 15,585 10,722
Senior Vice President 1998 162,000 125,000 1,750 24,000 10,210
1997 150,000 100,000 2,279 20,000 7,529
Michael J. LaForte, 1999 165,000 100,000 5,550 5,050 7,605
Senior Vice President 1998 144,000 50,000 4,674 4,000 6,010
1997 105,000 1,492 4,000 130
Bruno C. LaCaria, 1999 165,111 30,000 814 2,500 2,769
Vice President and 1998
Chief Information Officer 1997
</TABLE>
- - ------------------------------
(1) During the covered fiscal years no executive officer named in the table
received any other annual compensation in an amount in excess of the lesser
of either $50,000 or 10% of the total of annual salary and bonus reported
for him in the two preceding columns.
(2) Options to acquire shares of Common Stock.
(3) These amounts represent the Company's contributions to its Profit Sharing
Retirement Plan and the dollar value of insurance premiums paid by the
Company with respect to term life insurance and supplemental health
insurance for the benefit of the named executive officers. Under its group
life insurance plan the Company provides life insurance to all employees in
the amount of their annual salary up to $500,000. The following premiums
were paid: Mr. Keller, $2,948; Mr. Taylor, $2,849; Mr. Skubiak, $412; Mr.
LaForte, $588; and Mr. LaCaria, $473.
Employment Agreements. The Company has entered into employment agreements
having substantially identical terms with Dennis J. Keller and Ronald L. Taylor
(each an "Executive"). Each agreement provides for an initial base salary,
annual salary increases and annual bonuses for an initial term of employment
ending on June 30, 1993, which thereafter continues until either the Executive
or the Company provides the other with at least 150 days' notice. Each
employment agreement provides that it may be terminated by the Company upon (1)
the death of the Executive, (2) the physical or mental disability of the
Executive which
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prevents him from performing his duties for a continuous period of 180 days or
(3) for cause (as defined in the employment agreement). The Executive may
terminate the agreement if (1) he is not accorded the authority, duties,
obligations and prerogatives set forth in the agreement; (2) such authority,
duties, obligations or prerogatives are materially or substantially reduced; (3)
he is not paid or reimbursed amounts due him under the agreement or (4) the
Company fails to observe its obligations under the agreement. In the event the
Company terminates the agreement or fails to continue or renew the agreement or
the Executive terminates the agreement for any reason stated in the preceding
sentence, the Executive is entitled to severance payments.
Restated Stock Incentive Plan. The Amended and Restated DeVry Inc. Stock
Incentive Plan (the "Restated Stock Option Plan"), which was adopted in 1988 and
expired in 1998, provides the Company's Directors and key executive and
managerial employees with opportunities to acquire Common Stock of the Company
on advantageous terms. The Restated Stock Option Plan has two components. The
first provides for an annual automatic nondiscretionary grant of the lesser of
500 shares or $15,000 in fair market value of Common Stock to Directors who are
Company employees for their service as Company Directors. These
employee-Directors, currently Dennis J. Keller and Ronald L. Taylor, comprise
the plan committee (the "Plan Committee") that administers the Restated Stock
Option Plan, subject to approval of employee grants by the Compensation
Committee of the Board of Directors. The second component of the Restated Stock
Option Plan provides for discretionary grants by the Plan Committee, which
determines the Directors and key officers and managerial employees of the
Company eligible to participate and the number of shares to be granted under the
option. The Restated Stock Option Plan authorizes the grant of nonqualified
stock options and incentive stock options. The prices at which and the periods
during which stock options may be exercised are fixed by the Plan Committee, but
in no case may the price be less than 100% of the fair market value of the
shares on the date of grant (110% in the case of an incentive stock option
granted to a 10% or larger stockholder), and all options must be exercisable
within ten years after the date of grant. Upon exercise of an option, payment of
the purchase price must be made in full in cash or such other consideration,
including shares of Common Stock and participant notes, as the Plan Committee
elects. All options terminate at the earlier of the date established by the Plan
Committee at the time of the grant or ten years after the date of grant (five
years in the case of an incentive stock option granted to a 10% or larger
stockholder). The Restated Stock Option Plan provides for adjustments in the
event of stock splits, reorganizations and similar transactions. Incentive stock
options granted under the Restated Stock Option Plan are not transferable except
at death; nonqualified stock options may be transferred by a grantee inter vivos
to members of the grantee's immediate family or to a trust for the benefit of
such family members. No option may be granted under the Restated Stock Option
Plan after June 30, 1998. The Plan does not limit the number of options that may
be granted to any participant or the number of individuals who may participate,
and additional options may be granted to previous recipients of options.
An aggregate of 288,610 shares of Common Stock are reserved for issuance
upon the exercise of options granted under the Restated Stock Option Plan.
1991 Stock Incentive Plan. The DeVry Inc. 1991 Stock Incentive Plan (the
"1991 Stock Option Plan") provides the Company's key executive and managerial
employees with opportunities to acquire Common Stock of the Company on
advantageous terms. The 1991 Stock Option Plan is administered by the Board of
Directors, which determines the key executive and managerial employees of the
Company eligible to participate and the number of shares to be granted under
option. The 1991 Stock Option Plan authorizes the grant of nonqualified stock
options and incentive stock options. The prices at which and the periods during
which stock options may be exercised are fixed by the Board of Directors, but in
no case may the price be less than 100% of the fair market value of the shares
on the date of grant (110% in the case of an incentive stock option granted to a
10% stockholder), and all options must be exercisable within ten years after the
date of grant. Upon exercise of an option, payment of the purchase price must be
made in full in cash or such other consideration, including shares of Common
Stock and participant notes, as the Board of Directors elects. All options
terminate at the earlier of the date established by the Board of Directors at
the time of the grant or ten years after the date of grant (five years in the
case of an incentive stock option granted to a 10% or larger stockholder). The
1991 Stock Option Plan provides for adjustments in the event of stock splits,
reorganiza-
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<PAGE> 11
tions and similar transactions. Incentive stock options granted under the 1991
Stock Option Plan are not transferable except at death; nonqualified stock
options may be transferred by a grantee inter vivos to members of the grantee's
immediate family or to a trust for the benefit of such family members. No option
may be granted under the 1991 Stock Option Plan after June 30, 2001. The 1991
Stock Option Plan does not limit the number of options that may be granted to
any employee or the number of employees who may participate, and additional
options may be granted to previous recipients of options.
An aggregate of 712,260 shares of Common Stock are reserved for issuance
upon the exercise of options granted under the 1991 Stock Option Plan. At
September 13, 1999, 1,310 shares of Common Stock remained available for grant
under the 1991 Stock Option Plan. Any shares issuable upon the exercise of
options under the 1991 Stock Option Plan may, however, thereafter be subject to
new options if there is a forfeiture, expiration or termination of any such
option.
1994 Stock Incentive Plan. The DeVry Inc. 1994 Stock Incentive Plan (the
"1994 Stock Option Plan") provides the Company's Directors and key employees
with opportunities to acquire Common Stock of the Company on advantageous terms.
The 1994 Plan has two components. The first provides for an annual automatic
nondiscretionary grant of the lesser of 500 shares or $25,000 in fair market
value of DeVry Common Stock to Directors who are Company employees for their
service as Company Directors. The second component of the 1994 Plan provides for
discretionary grants by the Plan Committee, currently Dennis J. Keller and
Ronald L. Taylor, which determines the Directors and key employees of the
Company eligible to participate and the number of shares to be granted under
option, subject to approval of employee grants by the Compensation Committee of
the Board. The 1994 Plan authorizes the grant of nonqualified stock options and
incentive stock options. The prices at which and the periods during which stock
options may be exercised are fixed by the Plan Committee, but in no case may the
price be less than 100% of the fair market value of the shares on the date of
grant (110% in the case of an incentive stock option granted to a 10% or larger
shareholder), and all options must be exercisable within ten years after the
date of grant. Upon exercise of an option, payment of the purchase price must be
made in full in cash or such other consideration, including shares of Common
Stock and participant notes, as the Plan Committee elects. All options terminate
at the earlier of the date established by the Plan Committee at the time of the
grant or ten years after the date of grant (five years in the case of an
incentive stock option granted to a 10% or larger stockholder). The Plan
provides for adjustments in the event of stock splits, reorganizations and
similar transactions. Incentive stock options granted under the 1994 Plan are
not transferable except at death; nonqualified stock options may be transferred
inter vivos to members of the grantee's immediate family or to a trust for the
benefit of such family members. No option may be granted under the 1994 Plan
after June 30, 2004. The Plan does not limit the number of options that may be
granted to any participant or the number of individuals who may participate, and
additional options may be granted to previous recipients of options.
An aggregate of 1,551,433 shares of Common Stock are reserved for issuance
upon the exercise of options granted under the 1994 Plan. At September 13, 1999,
347,405 shares of Common Stock remained available for grant under the 1994 Plan.
Any shares issuable upon the exercise of options under the Plan may thereafter
be subject to new options if there is a forfeiture, expiration or termination of
any such option.
Employee Stock Purchase Plan. On February 16, 1993, the Company's Board of
Directors adopted the DeVry Inc. Employee Stock Purchase Plan (the "Stock
Purchase Plan"), pursuant to which the Company grants to all employees who have
three months or more of service to the Company options to purchase through
payroll deduction up to $25,000 of the Company's Common Stock every year, not to
exceed, through open market purchases, an aggregate of 800,000 shares of the
Common Stock. The Company assumes all Stock Purchase Plan administrative
expenses, including brokerage commissions incurred in connection with the
purchase of shares. At June 30, 1999, options to purchase 254,762 shares had
been exercised by Company employees, including options by Company executive
officers for 51,880 shares.
8
<PAGE> 12
The following table provides information about options granted to the named
executive officers during fiscal 1999 under the 1991 Stock Option Plan and the
1994 Stock Option Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
----------------- AT ASSUMED ANNUAL RATES
NUMBER OF % OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION --------------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ------------ ------------ ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Dennis J. Keller........ 30,000 16.0% $22.2500 8/18/08 $419,787 $1,063,823
Dennis J. Keller........ 500 0.27 22.6875 7/1/08 7,134 18,079
Dennis J. Keller........ 625 0.34 20.9375 7/24/08 8,229 20,855
Ronald L. Taylor........ 30,000 16.0 22.2500 8/18/08 419,787 1,063,823
Ronald L. Taylor........ 500 0.27 22.6875 7/1/08 7,134 18,079
Ronald L. Taylor........ 625 0.34 20.9375 7/24/08 8,229 20,855
O. John Skubiak......... 15,000 8.2 22.2500 8/18/08 209,892 531,911
O. John Skubiak......... 585 0.32 20.9375 7/24/08 7,702 19,520
Michael J. LaForte,
Jr.................... 5,000 2.7 22.2500 8/18/08 69,964 177,303
Michael J. LaForte,
Jr.................... 50 0.02 20.9375 7/24/08 658 1,668
Bruno R. LaCaria........ 2,500 1.3 19.8125 8/10/08 31,149 78,940
</TABLE>
The following table provides information about options exercised by the
named executive officers during fiscal 1999 and the number and value of options
held at the end of fiscal 1999. The Company does not have any stock appreciation
rights outstanding.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END(#) FY-END($)(1)
SHARES --------------- ---------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Dennis J. Keller................ -- -- 162,200/129,925 $2,7550889/1,158,138
Ronald L. Taylor................ -- -- 115,800/129,925 1,854,639/1,158,138
O. John Skubiak................. -- -- 48,800/59,585 788,065/509,986
Michael J. LaForte, Jr.......... -- -- 2,400/10,650 23,574/51,621
Bruno R. LaCaria................ -- -- 0/2,500 0/6,406
</TABLE>
- - ------------------------------
(1) Represents the difference between the closing price of the Common Stock on
the New York Stock Exchange on June 30, 1999, and the exercise price of the
options.
Profit Sharing Retirement Plan. Employees of the Company and its
subsidiaries who have 30 days or more of service with the Company participate in
the 401(k) component of the DeVry Inc. Profit Sharing Retirement Plan (the
"Profit Sharing Retirement Plan"), which as of June 30, 1999, covered 2,747 of
the Company's employees, including 666 former employees. Under the Profit
Sharing Retirement Plan, employees share in the success and profitability of the
Company through a combination of Company matching and discretionary
contributions to its eligible employees. Regular full-time employees and regular
part-time employees who complete 1,000 hours of service during a Profit Sharing
Retirement Plan Year (July 1 - June 30) are automatically enrolled in the Profit
Sharing Retirement Plan following their completion of one year of service to the
Company. Eligible employees may choose to open a 401(k) account and contribute
from 1% to 15% of their annual eligible compensation. To those employees
contributing 1% to a 401(k) account, the Company makes a matching contribution
of 1% of their total annual eligible compensation (including salary, overtime
pay and bonuses); to those employees contributing 2% or more, the Company makes
a matching contribution of 1 1/2% of their total annual eligible compensation
(2% effective January 1, 2000). Allocations of the Company's discretionary
profit sharing contribution under a formula based on salary and
9
<PAGE> 13
seniority are made to eligible employees who have completed one year of service
as of the last day of any Profit Sharing Retirement Plan year.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
To Our Stockholders:
The Company applies a consistent philosophy to compensation for all
employees, including senior management. This philosophy is based on the premise
that the achievements of the Company result from the combined efforts of all
employees working toward common objectives. The Company seeks to achieve these
objectives through teamwork that is focused on meeting the expectations of its
customers (students and their employers) and its stockholders.
The Compensation Committee has the responsibility, with respect to the
Company's executive officers, to implement that philosophy in a manner that will
align executive compensation with the business objectives and performance of the
Company and will also enable the Company to attract, retain and motivate
executive officers to ensure its long-term success. To that end, the Committee
evaluates the performance of the Chairman and Chief Executive Officer ("CEO")
and of the President and Chief Operating Officer ("COO"), reviews with senior
management the performance of executive officers generally and, respectively,
determines or reviews recommendations for their compensation levels in terms of
salaries, bonuses and related benefits.
Under the current program, there are three components to the compensation
of executive officers: salary, annual incentive compensation and long-term
incentive compensation. The Compensation Committee considers the total
compensation of each executive, including the CEO and the COO, in establishing
the elements of executive compensation. The current compensation of the CEO and
the COO (who are deemed jointly and equally responsible for the success of the
Company and are therefore compensated equally), as well as the compensation of
all other executives, reflects another year of superior Company results. (In
1999, DeVry's revenues increased by 19%, its net income by 26% and its earnings
per share by 25% over the previous year.)
SALARY
In its annual review of the salaries of each of the Company's executives,
the Compensation Committee considers, among other factors, the responsibilities
and individual performance (both in the current year and over time) of the
executive, the Company's performance and the performance of the executive's
business unit. Salaries at companies of comparable size, with whom the Company
must compete for talent, are also considered. With respect to the CEO and the
COO, it was historically the Compensation Committee's practice to limit their
salary increases to the percentage established by the Company as the pool amount
for salary increases for all employees (from 4% to 4 1/2% in recent years, and
4% for fiscal year 1999). This practice caused, however, their base salaries to
become, over time, substantially lower, and to represent a substantially smaller
portion of total compensation, than those of CEO's of companies of comparable
size and type. Additionally, this salary practice produced salary compression
among Company executives, who, for the most part, aside from the CEO and the
COO, have received salary increases at levels higher than the increase in the
salary pool as a whole. Salary compression among DeVry executives had also begun
to affect the Company's external recruiting of executives.
To alleviate these problems, the Compensation Committee, which continues to
believe that the level of total cash compensation reflected in the historical
combination of salary and annual incentive compensation for the CEO and the COO
approximately conforms to the Committee's policy of providing total cash
compensation that represents salary reasonable in amount and additional
compensation determined by stockholder returns, changed for fiscal years 1998
forward the mix of salary and annual incentive compensation without changing the
total compensation. As a result $150,000 of the compensation determined under
the five-year growth in earnings per share bonus program (described below under
"Annual Incentive Compensation") has been deemed salary and added to the salary
component of the compensation of the CEO and the COO along with a salary
increase at the salary pool rate for salary increases. This change increases the
10
<PAGE> 14
salary portion of their total compensation from approximately 20%-30% to
35%-45%, while retaining annual incentive compensation, with its focus on
long-term growth in earnings per share, as their primary compensation vehicle.
ANNUAL INCENTIVE COMPENSATION
Annual incentive compensation for executive officers other than the CEO and
the COO consists of discretionary cash bonuses awarded annually to executives
(and certain other management employees) based on the achievement of certain
Company targets and personal objectives. These bonuses are the primary vehicle
for recognizing and rewarding accomplishments in a given year. The specific
bonus an executive receives is dependent on individual performance and level of
responsibility.
The Compensation Committee has adopted the premise that long-term growth in
earnings is the single best proxy for stockholder interests. The annual
incentive compensation program for the CEO and the COO, which is based primarily
on a growth in earnings per share bonus program, has been designed to that end.
Under the program, the Company's growth in earnings per share over the most
recent five years determines approximately two-thirds of the bonus amount, and
current year growth in earnings per share determines approximately one-third.
Under the amendment of the program adopted by the Compensation Committee for
fiscal year 1998, the first $150,000 of any bonus amount determined is deemed
salary and treated as such. (See "Salary" above.) For fiscal years 1999 forward
the redistribution of compensation between base pay and bonus has been
acknowledged by adjusting the bonus factor calculation. No annual incentive
bonus will be paid under this program if both five-year and annual earnings per
share growth is 5% or less. Additionally, because the Compensation Committee
believes that, in the Company's industry it is difficult to sustain annual
earnings per share growth at a rate greater than 25% while meeting the needs of
customers without some degradation in quality, the earnings per share growth
bonus factor has been capped at 25%. The Committee may, however, recognize or
provide additional objectives for the Company and tie other cash awards to the
achievement of those objectives and recommend approval of such to the Board of
Directors. The Company's steady and substantial growth in earnings per share
under the leadership of the CEO and the COO (approximately 25% per year from
1993 to 1999) has resulted in substantial growth in their compensation, which
the Committee believes is appropriate and in keeping with the total compensation
paid by comparable companies of similar size.
LONG-TERM INCENTIVE COMPENSATION
Stock options are used as the primary long-term incentive vehicle. Options
provide executives and other key employees with the opportunity to buy and
maintain an equity interest in the Company and to share in the appreciation in
value of its Common Stock. To assure that the value of every stockholder's
interest must appreciate before the option holder receives any benefit from the
option, options have been granted at no less than the fair market value of the
Company's Common Stock on the date of grant. Additionally, options are generally
granted with a 5-year vesting period and a 10-year exercise period so as to
encourage executives and others to take a longer-term view of their individual
contributions to the Company. The Compensation Committee believes that stock
options are an important tool to align the interests of management and
stockholders. The CEO, the COO, the three other named executive officers and
certain other executive officers were among the 215 Company employees granted
stock options based on their superior performance during fiscal year 1999.
The salary, annual incentive compensation and long-term incentive
compensation paid by the Company to the CEO, the COO and the three other named
executive officers of the Company in fiscal 1999 is set forth on page 6. The
Compensation Committee believes that the executive officers of the Company
continue to be dedicated to increasing stockholder value and that the
Committee's compensation policies contribute to this focus.
The Compensation Committee does not believe that the provisions of Section
162(m) of the Internal Revenue Code relating to the deductibility of
compensation paid to the executive officers named in the Summary Compensation
Table will limit the deductibility of such compensation expected to be paid by
the
11
<PAGE> 15
Company. Although the Board of Directors currently intends for all compensation
to be tax deductible to the Company, the Compensation Committee will continue to
evaluate the impact of such provisions and take such actions as it deems
appropriate.
This Compensation Committee report is not to be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this report by reference, and is not otherwise to be
deemed filed under such Acts.
COMPENSATION COMMITTEE
Thurston E. Manning, Chairman
Robert E. King
Frederick A. Krehbiel
Hugo J. Melvoin
CERTAIN TRANSACTIONS
For the fiscal year 1999 the Company paid The Revere Group, an information
systems consulting organization, $111,000 for consulting services. Robert C.
McCormack, one of the Company's Directors, is also a director of The Revere
Group, and Trident Capital, Inc., of which Mr. McCormack is a founding partner,
is an investor in The Revere Group.
During the same fiscal year, DeVry purchased $608,000 in college textbooks
from Houghton Mifflin Company. Julie A. McGee, a Company Director, is Corporate
Executive Vice President of Houghton Mifflin Company.
The Company's Center for Corporate Education earned $343,000 in revenues
from providing corporate education courses to SPR, Inc., an information
technology consulting company. Ronald L. Taylor, the Company's President and
Chief Operating Officer, who is also a Director of the Company, is a director of
SPR.
Management believes that these transactions and any relationships during
fiscal 1999 were on terms that were reasonable and competitive. Additional
transactions and relationships of this nature may be expected to take place in
the ordinary course of business in the future.
12
<PAGE> 16
PERFORMANCE GRAPH
The following graph and chart compare the total cumulative return (assuming
dividend reinvestment) on the Company's Common Stock during the period from June
30, 1994 through June 30, 1999 with the cumulative return on the NYSE Stock
Market Index (U.S. Companies), and two industry group indices. This graph
demonstrates the markets support of the Company's strong financial performance,
as the return on the Company's Common Stock has significantly outperformed both
the general market as represented by the NYSE index, and the industry as
represented by the industry groups.
COMPARISON OF CUMULATIVE TOTAL RETURN SINCE JUNE 30, 1994
AMONG DEVRY INC., NYSE MARKET INDEX,
AND INDUSTRY GROUP INDICES
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
NYSE MARKET INDEX - INDUSTRY GROUP INDEX INDUSTRY GROUP INDEX
DEVRY INC. U.S. COMPANIES -CURRENT -PRIOR
---------- ------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
'06/30/94' 100.00 100.00 100.00 100.00
'06/30/95' 137.90 122.90 143.70 143.70
'06/30/96' 310.30 154.80 246.90 246.90
'06/30/97' 372.40 202.80 343.70 343.70
'06/30/98' 605.20 260.00 411.40 410.70
'06/30/99' 617.20 298.10 329.20 326.80
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
June 30
-------------------------------------------------
1994 1995 1996 1997 1998 1999
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DeVry Inc. 100.0 137.9 310.3 372.4 605.2 617.2
---------------------------------------------------------------------------------------------------
NYSE Market Index - U.S. Companies 100.0 122.9 154.8 202.8 260.0 298.1
---------------------------------------------------------------------------------------------------
Industry Group Index - Current 100.0 143.7 246.9 343.7 411.4 329.2
---------------------------------------------------------------------------------------------------
Industry Group Index - Prior 100.0 143.7 246.9 343.7 410.7 326.8
---------------------------------------------------------------------------------------------------
</TABLE>
Data for this graph was prepared by The University of Chicago Graduate
School of Business -- Center for Research in Security Prices.
Assumes $100 was invested on June 30, 1994 in DeVry Inc. Common Stock, the
NYSE Stock Market Index (U.S. Companies), the Industry Group - Current(1) and
the Industry Group - Prior(1), and that all dividends were reinvested.
- - ------------------------------
(1) The Industry Group - Current consists of the following companies selected on
the basis of the similarity in the nature of their business: Apollo Group,
Inc., Argosy Education Group, Inc., Berlitz International, Inc., Career
Education Corp., Computer Learning Centers, Inc., Corinthian Colleges, Inc.,
Education Management Corp., EduTrek International, Inc., Flightsafety
International, Inc., ITT Educational Services, Inc., Learning Tree
International, Inc., Quest Education Corp., Strayer Education, Inc., Sylvan
Learning Systems, Inc., TesseracT Group, Inc. and Whitman Education Group,
Inc. The Company believes that, including itself, these companies represent
the majority of the market value of publicly traded companies whose primary
business is education.
The Industry Group - Prior consists of the following companies selected on
the basis of the similarity in the nature of their business: Apollo Group,
Inc., Berlitz International, Inc., Computer Learning Centers, Inc.,
Education Management Corp., Flightsafety International, Inc., ITT
Educational Services, Inc., Learning Tree International, Inc., Quest
Education, Corp., Strayer Education, Inc., Sylvan Learning Systems, Inc.,
TesseracT Group, Inc. and Whitman Education Group, Inc. Among the changes to
the index were the addition of several companies whose stock was initially
traded during the Company's 1999 fiscal year and the addition of other
companies considered to operate in the education industry. The Industry
Group - Current was deemed to be more representative of the industry in
which the Company operates than was the Industry Group - Prior. However, in
accordance with regulations promulgated by the Securities and Exchange
Commission, the performance of the Company's Common Stock must also be
compared to the Industry Group - Prior in the current year.
13
<PAGE> 17
ADOPTION OF THE DEVRY INC. 1999 STOCK INCENTIVE PLAN
BACKGROUND AND PURPOSE
Due to the limited number of shares remaining available for grants to
employees and Directors under the 1991 and 1994 Stock Option Plans, the Board of
Directors adopted at its August 1999 meeting, subject to stockholder approval, a
new stock option plan, the DeVry Inc. 1999 Stock Incentive Plan (the "1999 Plan"
or the "Plan") to provide the Company's Directors and key employees with
opportunities to acquire Common Stock of the Company on favorable terms. The
purpose of the Plan is: (1) to provide a means to attract, retain and reward the
Company's independent directors for their judgment and knowledge, on which the
Company relies for the continued success of its operations, by promoting a
greater identity of interest between them and the Company's stockholders and
providing an opportunity to share in the future success of the Company; (2) to
provide a means to attract and retain competent personnel; and (3) to provide to
participating executives and other key employees long-term incentive for high
levels of performance and for extraordinary efforts to improve the financial
performance of the Company. The 1999 Plan authorizes the granting, from
authorized but unissued shares or treasury shares, of options to purchase up to
1,500,000 shares of the Company's Common Stock. A summary of the 1999 Plan is
set forth below. This summary is qualified in its entirety by reference to the
full text of the 1999 Plan, which is attached to this Proxy Statement as Exhibit
A.
The 1999 Plan has two components. The first provides for an annual
automatic nondiscretionary grant of the lesser of 500 shares or $25,000 in fair
market value of DeVry Common Stock to Directors who are Company employees for
their service as Company Directors. The second component of the 1999 Plan
provides for discretionary grants by the Plan Committee, which determines the
Directors and key employees of the Company eligible to participate and the
number of shares to be granted under option. The 1999 Plan authorizes the grant
of nonqualified stock options and incentive stock options. The prices at which
and the periods during which stock options may be exercised are fixed by the
Plan Committee, but in no case may the price be less than 100% of the fair
market value of the shares on the date of grant (110% in the case of an
incentive stock option granted to a 10% or larger shareholder), and all options
must be exercisable within ten years after the date of grant. Upon exercise of
an option, payment of the purchase price must be made in full in cash or such
other consideration, including shares of Common Stock and Participant notes, as
the Plan Committee elects. All options terminate at the earlier of the date
established by the Plan Committee at the time of the grant or ten years after
the date of grant (five years in the case of an incentive stock option granted
to a 10% or larger stockholder). Incentive stock options granted under the 1999
Plan are not transferable except at death. Nonqualified stock options may be
transferred inter vivos to members of the grantee's immediate family or to a
trust for the benefit of such family members. No option may be granted under the
1999 Plan after June 30, 2009. The Plan does not limit the number of options
grantable to any participant or the number of individuals who may participate,
and additional options may be granted to previous recipients of options.
An aggregate of 1,500,000 shares of Common stock are reserved for issuance
upon the exercise of options granted under the 1999 Plan. Any shares issuable
upon the exercise of options under the Plan may thereafter be subject to new
options if there is a forfeiture, expiration or termination of any such option.
No options have been granted under the 1999 Plan.
FEDERAL INCOME TAX TREATMENT
The following is a brief summary of the principal federal income tax
consequences under current federal income tax laws relating to awards under the
1999 Plan. This summary is not intended to be exhaustive and does not, among
other things, describe state or local tax consequences.
Generally, the granting of an option under the 1999 Plan will not be a
taxable event and the recipient will not realize any income at that time. Nor
will the Company be entitled to a deduction at the time of grant. The tax
treatment after grant differs depending on whether the recipient is an employee
of the Company or a non-employee Director and whether the option is an incentive
stock option ("ISO") or a nonqualified stock option.
14
<PAGE> 18
a. FOR EMPLOYEES WITH INCENTIVE STOCK OPTIONS -- For employees of the
Company, exercising an ISO will generally not be a taxable event. However, the
excess, if any, of the fair market value of the shares acquired on exercise of
an option over the exercise price is an adjustment for computation of the
alternative minimum tax. Upon subsequent disposition, the difference between the
sale price and the aggregate option price of the shares is taxable as a
long-term capital gain or loss. Any sale within two years of the grant of an ISO
or one year after exercise causes a disqualifying disposition resulting in
ordinary income for the recipient. The amount of ordinary income realized is
equal to the difference between the sale price and the fair market value on the
date of exercise.
b. FOR NON-EMPLOYEE DIRECTORS OR EMPLOYEES WITH NONQUALIFIED STOCK
OPTIONS -- Any exercise of a nonqualified stock option under the Plan by either
an outside Director or an employee will result in ordinary income tax
consequences. The amount reported as ordinary income will be the aggregate
difference between the fair market value of the option stock on the date of
exercise and the option price. The Company will be entitled to deduct such
amount except to the extent that such deductions may be limited by the 1993 Tax
Act. Upon subsequent sale, the difference between the sale price and the fair
market value on the date of exercise is reportable as a capital gain or loss.
The gain or loss is long-term or short-term depending on how long the stock was
held after exercise of the option.
c. SECTION 162(M) -- The federal income tax deduction the Company may take
for otherwise deductible compensation payable to executive officers who are
treated as named executive officers in the Company's Proxy Statement is limited
by Section 162(m) of the Internal Revenue Code to $1,000,000. The deduction
limit on compensation applies to all compensation, except compensation deemed
under Section 162(m) to be "performance-based" and certain compensation related
to retirement and other employee benefit plans. The determination of whether
compensation related to the 1999 Plan is performanced-based for purposes of
Section 162(m) is dependent upon a number of factors, including stockholder
approval of the 1999 Plan and the exercise price at which options are granted.
Section 162(m) also prescribes certain limitations and procedural requirements
in order for compensation to qualify as performance-based. Although the Company
has structured the 1999 Plan to satisfy the requirements of Section 162(m) with
regard to its "performance-based" criteria, there is no assurance that awards
thereunder will so satisfy such requirements, and accordingly, the Company may
be limited in the deductions it may take with respect to awards under the 1999
Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE DEVRY INC.
1999 STOCK INCENTIVE PLAN.
15
<PAGE> 19
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of its Audit Committee, the Board of Directors has
appointed PricewaterhouseCoopers LLP, independent public accountants, as
independent public accountants for the Company and its subsidiaries for fiscal
year 2000. The Board of Directors recommends to the stockholders that the
appointment of PricewaterhouseCoopers LLP as independent public accountants for
the Company and its subsidiaries be ratified. If the stockholders do not ratify
the appointment of PricewaterhouseCoopers LLP, the selection of independent
public accountants will be reconsidered by the Audit Committee and the Board of
Directors. Representatives of PricewaterhouseCoopers LLP are expected to be
present at the Annual Meeting of Stockholders with the opportunity to make a
statement, if they desire to do so, and to be available to respond to
appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION
OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY.
STOCKHOLDER PROPOSALS -- 2000 ANNUAL MEETING
Stockholder proposals intended to be presented at the 2000 Annual Meeting
must be received by the Company no later than May 27, 2000, to be eligible for
inclusion in the Proxy Statement and form of proxy for the meeting.
OTHER BUSINESS
The Board of Directors is aware of no other matter that will be presented
for action at this meeting. If any other matter requiring a vote of the
stockholders properly comes before the meeting, the Proxy Committee will vote
and act according to their best judgment.
By Order of the Board of Directors
Marilynn J. Cason
Secretary
16
<PAGE> 20
EXHIBIT A
DEVRY INC. 1999
STOCK INCENTIVE PLAN
1. Purpose. The DeVRY INC. 1999 Stock Incentive Plan (the "Plan") has been
established by DeVry Inc. (the "Company") to provide the Company's directors and
key employees with opportunities to acquire Common Stock of the Company on
favorable terms. The purpose of the Plan is to: (1) provide a means to attract,
retain and reward the Company's independent directors for their judgment and
knowledge, on which the Company relies for the continued success of its
operations, by promoting a greater identity of interest between them and the
Company's stockholders and providing an opportunity to share in the future
success of the Company; (2) provide a means to attract and retain competent
personnel; and (3) provide to participating executives and other key employees
long-term incentive for high levels of performance and for extraordinary efforts
to improve the financial performance of the Company.
2. Administration. The authority to manage and control the operation and
administration of the Plan shall be vested in the Plan Committee, subject to
approval by the Compensation Committee of the Board of Directors. The Plan
Committee shall consist of members of the Company's Board of Directors who are
full-time, salaried employees of the Company. All determinations of the Plan
Committee shall be made by a majority of its members. Any interpretation of the
Plan by the Plan Committee and any decision made by it under the Plan are final
and binding on all persons.
3. Participation. Subject to the terms and conditions of the Plan and
approval by the Compensation Committee of the Board of Directors of actions
taken with respect to employees, the Plan Committee shall determine and
designate, from time to time, the directors and key employees of the Company and
its Subsidiaries to whom stock options are to be granted or awarded (the
"Participants"), and the number thereof to be granted or awarded to each
Participant. Except as otherwise agreed to by the Company and the Participant,
any grant or award under this Plan shall not affect any previous grant or award
to the Participant by the Company under this Plan or any other plan maintained
by the Company or its Subsidiaries.
4. Automatic Grant of Options to Plan Committee. Notwithstanding Paragraph
3 above, directors who are members of the Plan Committee shall receive, for
service as a director, only an automatic nondiscretionary stock option grant on
July 1 every year during the term of the Plan. The amount of shares subject to
option that will be automatically granted to each director who is a member of
the Plan Committee for service as a director shall be the lesser of (i) 500
shares or (ii) that number of shares equal to the largest multiple of 25 whose
fair market value on the date of grant does not exceed $25,000.
5. Shares Subject to the Plan. The shares of stock with respect to which
awards or grants may be made under the Plan shall be shares of the Company's
Common Stock, either authorized and unissued shares or shares issued and held in
its treasury. Subject to the provisions of paragraph 12, the aggregate number of
shares of Common Stock with respect to which awards or grants may be made under
the Plan shall not exceed 1,500,000 shares. If, for any reason, any award or
grant under the Plan shall expire, terminate or be forfeited with respect to any
number of shares, such number of shares shall again be available for award or
grant under the Plan.
6. Options. Subject to Paragraph 4 above, the Plan Committee may, from
time to time, grant options to Participants under the Plan. The Plan Committee
shall have complete authority to determine at the time an option is granted,
whether such option shall be an incentive stock option qualified under Section
422 of the Internal Revenue Code, as amended, or whether such option shall be a
nonqualified stock option. The price at which a share of Common Stock may be
purchased pursuant to the exercise of an option under the Plan shall be 100%
(110% in the case of an incentive stock option, as described in Section 422A of
the Internal Revenue Code of 1986, as amended, granted to a 10% stockholder) of
the Fair Market Value (as defined below) of a share of such Common Stock on the
date on which the option is granted. Subject to the provisions of paragraph 12,
for all purposes of the Plan, the "Fair Market Value" of a share of Common Stock
as at any date means the fair market value of such share determined in good
faith by the Plan Committee.
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<PAGE> 21
Notwithstanding the foregoing, in no event shall the aggregate Fair Market
Value (determined at the time the option is granted) of the Common Stock with
respect to which incentive stock options are exercisable for the first time by
any individual during any calendar year (under all plans of the Company and its
Subsidiaries) exceed $100,000.
7. Option expiration Date. The "Expiration Date" with respect to an option
granted to a Participant under the Plan means the earlier of:
(a) the date which is 10 years (5 years in the case of an incentive stock
option granted to a 10% stockholder) after the date on which the option
or stock appreciation right is granted; or
(b) the date established by the Plan Committee at the time of the grant.
8. Exercise of Options. Each option shall be exercisable at such time or
times as shall be determined by the Plan Committee at the time the option is
granted or at such earlier times as the Plan Committee may subsequently
determine. Except as otherwise agreed between the Company and the Participant, a
Participant's right to exercise any option under the Plan shall not be affected
by any other outstanding stock option granted to the Participant under this Plan
or any other plan maintained by the Company or its Subsidiaries. a Participant
may exercise an option by giving written notice thereof prior to the Expiration
Date to the Secretary of the Company at the Company's corporate headquarters.
Payment of the purchase price of the shares purchased pursuant to the exercise
of a stock option shall be in cash or other consideration, including shares of
Common Stock and Participant notes, as the Plan Committee may permit.
9. Compliance with Applicable Laws and Withholding of
Taxes. Notwithstanding any other provision of the Plan, the Company shall have
no liability to issue any shares under the Plan unless such issuance would
comply with all applicable laws and the applicable requirements of any
securities exchange or similar entity. Prior to the issuance of any shares under
the Plan, the Company may require a written statement that the recipient is
acquiring the shares for investment and not for the purpose or with the
intention of distributing the shares. All awards, grants, and payments under the
Plan are subject to withholding of all applicable taxes, which withholding
obligations may be satisfied, with the consent of the Plan Committee, through
the surrender of shares of Common Stock to which a Participant is otherwise
entitled under the Plan. Common Stock shares surrendered for withholding
purposes cannot be withheld in excess of the minimum number required for tax
withholding purposes.
10. Transferability. Incentive stock options granted under the Plan are
not transferable except by will or by the laws of descent and distribution;
nonqualified stock options may be transferred by the Participant inter vivos to
members of the Participant's immediate family or to a trust for the benefit of
such family members.
11. Employment and Stockholder Status. The Plan does not constitute a
contract of employment, and selection as a Participant will not give any
employee the right to be retained in the employ of the Company or any
Subsidiary. No award or grant under the Plan shall confer upon the holder
thereof any right as a stockholder of the Company prior to the date on which he
fulfills all conditions for receipt of shares of Company stock.
12. Adjustments to Number of Shares Subject to the Plan and to Option
Terms. Subject to the following provisions of this paragraph 12, in the event
of any change in the outstanding shares of Common Stock of the Company by reason
of any stock dividend, split, recapitalization, merger, consolidation,
combination, exchange of shares or other similar change, the aggregate number of
shares with respect to which awards or grants may be made under the Plan and the
terms of any outstanding option shall be equitably adjusted by the Plan
Committee subject to approval by the Compensation Committee. Notwithstanding the
preceding sentence, in no event shall any fraction of a share of stock be issued
under the Plan.
13. Agreement with Company. At the time of any grant under the Plan, the
Plan Committee may require a Participant to enter into an agreement with the
Company in a form specified by the Plan Committee, agreeing to the terms and
conditions of the Plan and to such additional terms and conditions (including
but
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<PAGE> 22
not limited to a call provision), not inconsistent with the Plan, as the Plan
Committee may, in its sole discretion, prescribe.
14. Term of Plan. Subject to the approval of the stockholders of the
Company at the Company's 1999 annual meeting of its stockholders, the Plan shall
be effective as of August 17, 1999. No options may be granted under the Plan
after June 30, 2009.
15. Amendment and Termination of Plan. Subject to the following provisions
of this paragraph 15, the Plan Committee of the Company may at any time amend,
suspend or terminate the Plan. No amendment of the Plan and, except as provided
in paragraph 12, no action of the Plan Committee shall, without further approval
of the stockholders of the Company:
(a) increase the total number of shares of Common Stock with respect to
which awards or grants may be made under the Plan or otherwise
materially increase the benefits to Participants under the Plan;
(b) permit any awards or grants to be made under the Plan after June 30,
2009; or
(c) materially modify the requirements as to eligibility for participation
under the Plan.
No amendment, suspension or termination of the Plan shall alter or impair
any option previously granted under the Plan without the consent of the holder
thereof.
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<PAGE> 23
PROXY PROXY
DEVRY INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Marilynn J. Cason and Norman M. Levine
as proxies, each with the power to act alone and with full power of
substitution and revocation, to represent and vote, as specified on the other
side of this Proxy, all shares of Common Stock of DEVRY INC. that the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be
held at 10:30 a.m., Central Standard Time, on Tuesday, November 16, 1999, at
The Northern Trust Company, 50 South LaSalle Street, Chicago, Illinois 60875,
and all adjournments thereof.
The shares represented by the Proxy will be voted as specified. If no
choice is specified, this Proxy will be voted FOR Proposals 1, 2, and 3.
The proxies are authorized, in their discretion, to vote such shares
upon any other business that may properly come before the Annual Meeting.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
(Continued and to be signed on reverse side.)
DEVRY INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
<TABLE>
<S><C>
1. Election of Directors: FOR WITHHOLD FOR ALL
Nominees: Class II (2002)- David S. Brown, ALL ALL (EXCEPT NOMINEE(S) WRITTEN BELOW)
Dennis J. Keller, Robert E. King and
Frederick A. Krehbiel. [ ] [ ] [ ]
2. Approval of the DeVry Inc. 1999
Stock Incentive Plan. For Against Abstain
[ ] [ ] [ ]
3. Ratification of selection of For Against Abstain
PricewaterhouseCoopers LLP as [ ] [ ] [ ]
Independent Public Accountants.
Dated: , 1999
-----------------------------
Signature(s)
------------------------------------------------
------------------------------------------------------------
Please date and sign above exactly as your name(s) appears
hereon. Joint owners should all sign. When signing in a
representative capacity (such as for an estate, trust,
corporation or partnership) please indicate title or
capacity.
</TABLE>
