Executive pay and ITT Educational Services and Compensation and Public Companies and Education & Workforce Development

ITT Educational awards top managers substantial raises

March 10, 2010

Kevin M. Modany, chairman and CEO of Carmel-based ITT Educational Services Inc., got a 63 percent raise last year, bringing his total compensation to $7.6 million. And the rest of his management team all enjoyed pay increases of 45 percent or more.

The for-profit educator, which has 5,500 employees, disclosed 2009 executive compensation Tuesday, when it filed an annual proxy statement with the Securities and Exchange Commission. ITT’s profit rose 49 percent in 2009 to $300 million. The company’s revenue was $1.3 billion, a 30 percent increase over 2008. And student enrollment grew to 80,766, another 30 percent increase.

Even so, the company’s stock improved just 1.8 percent during the year. After opening in January 2009 at $94.29 per share, ITT shares briefly soared as high as $133.21 on Feb. 3. But they fell back to $85.38 by early December before closing the year at $95.96. ITT shares closed Tuesday at $108.18.

Modany's raise amounted to $2.9 million. ITT paid the 43-year-old a base salary of $712,500 and $1.5 million in non-equity incentive plan compensation. The bulk of his total compensation came in the form of 100,000 stock options granted on Jan. 28, 2009. At that time, the company valued them at $5.4 million, but they eventually could be worth far more.

Other compensation for the chief executive included $42,006 in perks, including as $12,873 for a company car, a $14,500 tax return and financial planning allowance, and event tickets worth $7,280.

The rest of ITT’s top management also received substantial pay increases in 2009. ITT chief financial officer Daniel M. Fitzpatrick, 50, got $1.8 million, a 53 percent increase. Most of the pay came in the form of 20,000 ITT stock options granted Jan. 28, 2009. At that time, the company listed them as worth nearly $1.1 million.

ITT General Counsel Clark D. Elwood, 49, saw his compensation increase 56 percent, to $1.8 million. Like Fitzpatrick, he received 20,000 stock options worth nearly $1.1 million the date they were granted.

Eugene W. Feichtner, 54, president of the ITT Technical Institute Division, received $1.6 million in total pay last year, a 45 percent increase. The bulk came in the form of 17,500 stock options worth $945,875 the date they were granted.

Pay for June M. McCormack, 61, president of ITT’s Online Division, was disclosed among the company’s top five executives for the first time in 2009. She received $1.5 million in total compensation. Like Feichtner, she also received 17,500 stock options. McCormack was the top-ranking executive at student loan giant Sallie Mae's Fishers office. She left Sallie Mae about two years ago.

Farient Advisors LLC, which has offices in Los Angeles, San Francisco and New York, served as ITT’s compensation consultant. The board’s four-member compensation committee met three times in 2009.

ITT paid its eight independent board directors a combined $1.3 million, compared with $1.2 million in 2008. Board members each received $60,000 fees in cash plus another $100,060 in stock and options.

IBJ uses the Associated Press formula to calculate executive pay. It gauges the value of compensation such as stock and options grants at the time they are awarded, not the time they are cashed in.

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