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ITT Educational awards top managers substantial raises

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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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  • Hard Times
    My classes are full with students who love how I teach, but I was just reduced from full time to part time at ITT Tech. The reason given was low enrollment across the company. I know the school generally has low enrollment, but my enrollment is fine. Now I'm doing the same job for about 2/3 the money and no benefits. I wasn't able to make ends meet before, now it's going to be impossible. I'm having a very, very hard time not being bitter about it. If the Kevin Modany took a pay cut in solidarity, I could feel a bit better about it, but these days the idea seems so absurd to be laughable. But I've read that Japanese CEO's take a pay cut when their company isn't doing well. Lee Iacocca took a pay cut to $1/year. So why does this idea seem laughable?
  • Pay
    I cant believe they pay us 45k a year to tecach here, take our bonuses, and give it back to the CEO's. Kevin, can i borrow a cool million to pay for all the capstone projects so they wont come from my procurement card????? IJS?
  • FWSP
    i am in the federal work study program for itt-technical education services. i don't have my job anymore because of budget cuts. this article above might be the reason why. thanks for leaving a father unemployed.
  • Get a Grip
    People, ITT is a business. Why get ugly on the leaders of a successful business...is this not what the American Entrepreneurial spirit is all about? It is a FOR PROFIT organization. All people have choices in life, albeit some have a tougher road than others. Making money doesn't make you a bad person.
  • yeah well duh
    sounds like AIG, BOA and the others that torched the public for the money, it is an embarrasment to see someone make that much money at this time when so many are doing withou
  • no wonder
    why would anyone give their name, if they do termination would occur so fast it would make your head swim
  • Where is the football team
    This money should not be going to greedy executives, but to a college football staff. Everyone know that is the right thing to do.

    Sarcasm
  • Moderator
    Just to explain, we removed some earlier comments from a poster who claims to work at ITT. The poster did not leave a name or a valid e-mail address. We offered to contact the person and explain why the comments were removed, but that person has not provided contact information.

    IBJ does remove comments from time to time for various reasons (profanity, abusiveness,personal attacks, etc.) We do not, however,remove comments just to protect companies. Anybody who reads us regularly knows better.
    • Thanks Pete
      You're right, Pete. I know that I wrote nothing inappropriate, and I was intellectually and morally honest. I even readdressed, point by point, what was written in a later post and even that was censored. I had other comments deleted that had nothing to do with the original post, other than dare to question the site's censor about their need to silence a valid and truthful post. I'm truly disappointed in IBJ's attitude toward their customers. No wonder publications like theirs are dying all around the nation. Who wants to be belittled, ignored, and insulted? It's still the free market, for now at least, IBJ. Please note that we're able to take our business and readership elsewhere.
    • Poor Beast of Burden
      I happened onto this article by chance this morning and have been entertained by Beast of Burden's comments throughout this very slow day in the office. Man, give it up! The article wasn't written to be an expose on ITT. IBJ doesn't see ITT's success, regardless of the unethical means you cite, as a "bad" thing. It's the "INDIANAPOLIS Business Journal." They're singing the praises of ITT. They're encouraging businesses to come here and thrive, not trying to expose the corrupt but successful (meaning very rich) companies. Heck, if Enron had been here instead of in Houston, they would probably have never been busted by IBJ. Do you get it?

      Incidentally, the First Amendment applies only to IBJ in this case, under freedom of the press. Your First Amendment right to free speech only protects you from the government, not IBJ's censorship. Sorry, buddy.

      Pete

      P.S. Where in Indy do you live? The sky is not blue today! :)
      • Why removed?
        A comment made earlier titled "The Office" was removed for good reason. I will gladly contact the poster and explain why if he or she leaves an actual e-mail address with another post.
        • confused itt student
          What is this. The articel was bad enough makeing me wonder where my money is going, but what's up with all of these iTT employee comments and why do the comments from that one person keep disappearin? IUPUI doesnt seem to have these problems.

          Kate
        • Comp
          It is amazing to me that the government, who funds the loans that fuel their operations, allows this to happen. Clearly, you could get competent management at a fraction of this amount. Modany and his cronies are not worth anywhere near this money. And the board is in on this too. Scratch my back, I'll scratch your back.
          • School v. Business
            The 61 year old June M. McCormack, president of the online division, continually and unapologetically refers to ITT as a "business," and not a "school," and refers to the students as "customers" and not "students." She's made it crystal clear that the company's goals are motivated only by money, as she is only concerned about the stock holders (thus herself) and not the students. The perplexing aspect of this all is not ITT's immoral business ethics and its appalling slap in the face to academia, but it's that CEO Kevin Modany hired his 61 year friend to work as the online president despite losing over 15 BILLION DOLLARS as president of Sallie Mae. Where's the fiscal responsibility there share holders? I sure hope Kev isn't teaching any of their so-called "business" classes.
          • Cut employee salaries
            I work for ITT Tech as a representive. This year upper management cut our salaries by $10,000.00 allmost across the board in admissions department. It makes me very upset that Kevin Modany can increase his salary by allmost 50% but cut his workers salaries by 30% I was told cuts where made for budget issues, ITT Tech is a greedy company that has me looking for other employment. This company does not care about its employees!
          • Government Investigation?
            When will the government finally investigate the abuse of Title IV Funding and the GI Bill by these proprietary schools that profit at the expense of the duped student looking to improve himself/herself? A bachelor's degree, from this nationally accredited school, costs students over $76,000, and their associate's degree is over $41,000. Do you honestly think these worthless degrees ever allow for these students to recoup their losses? Do you think ITT cares, as the money is guaranteed through the Federal government? Sadly, as more and more people fall for these "schools," which are truly wolves in sheep's clothing, the sooner we will see the next heir to the sub-prime loan crisis. Hopefully, the government nips this blatant abuse sooner than later, or this bubble will burst as well, and the ones listed above making all of this money will not be the ones who are hurt.
          • amazing
            As usual the rich get richer off the sweat equity of those who actually do the work in cubes literally the size of a small coat closet....

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