IBJNews

New federal rules prompt ITT to change bonus-pay criteria

Back to TopCommentsE-mailPrintBookmark and Share

ITT Educational Services Inc. still will pay bonuses to its top executives, but the awards no longer will be tied to school enrollment, the Carmel-based for-profit educator said in its annual proxy statement.

The decision stems from new regulations by the Department of Education, which are designed to slow the growth of for-profit schools and boost graduation rates. The regulations were in response to concerns schools were placing too much emphasis on enrollment growth vs. the success former students had in finding employment.

Rules require that at least 45 percent of former students be actively paying down their loans after leaving a for-profit school. If former students fail to achieve that threshold, the government will not allow a for-profit education program to accept federal student-loan funding. And, if repayment rates fall below 35 percent, the government will cut off student-loan funding entirely for any new students.

“As a result of the prohibition on basing any portion of the executives’ compensation on performance, the Compensation Committee did not establish a bonus program for 2011,” ITT said in its proxy filed on Tuesday.

Still, ITT CEO Kevin M. Modany is slated this year to earn a $1.1 million bonus, according to the proxy, though the amount is no longer based on performance metrics, such as enrollment growth.

While ITT said it no longer can base compensation on performance, the company said it still will strive to offer pay packages that “reflect the competitive marketplace in order for us to attract, retain and motivate talented executives.” ITT said it also will include stock-based compensation in the packages “in order to align the executives’ interests with those of our shareholders.”

Daniel M. Fitzpatrick, ITT’s chief financial officer, is set to receive a $324,000 bonus, and three other executives should receive additional compensation ranging from $263,000 to $319,000.

Modany earned a total of $6.7 million in 2010, 11.5 percent less than the previous year. Much of the decline was in performance pay—$1.4 million in 2009 compared with $480,625 last year. He received nearly the same amount of stock option awards, valued at $5.4 million, both years.

ITT’s CEO earned a base pay of $769,000 in 2010 and is expected to receive a 2.5-percent raise this year, pushing his annual base salary to $788,250 in 2011.

CFO Fitzpatrick earned $1.4 million in total compensation last year, 20 percent less than in 2009. He also will receive a 2.5-percent increase this year in base salary, which will climb to $332,000.

Total pay in 2010 for other ITT top executives:

— Chief Administrative and Legal Officer Clark D. Elwood earned $1.4 million, down 21.9 percent.

— Technical Institute Division President Eugene Feichtner earned $1.3 million, down 17.1 percent.

— Online Division President June M. McCormack earned $1.2 million, down 18 percent.

ITT currently enrolls about 80,000 students.

For 2010, ITT grew profit by nearly 25 percent over the previous year, to $374.2 million. Revenue surged 21 percent, to nearly $1.6 billion.

Company shares were trading mid-morning at $57.03 each, down from a 52-week high of $64 reached in January.

 


 

ADVERTISEMENT

  • ITT gets hit
    What goes around...comes around for ITT. This company and its over paid executives have profited for too long, and now, this company is struggling to survive in an environment they will not be able to compete in any longer. The days of gouging students and the Federal government are gone!

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. By Mr. Lee's own admission, he basically ran pro-bono ads on the billboard. Paying advertisers didn't want ads on a controversial, ugly billboard that turned off customers. At least one of Mr. Lee's free advertisers dropped out early because they found that Mr. Lee's advertising was having negative impact. So Mr. Lee is disingenous to say the city now owes him for lost revenue. Mr. Lee quickly realized his monstrosity had a dim future and is trying to get the city to bail him out. And that's why the billboard came down so quickly.

  2. Merchants Square is back. The small strip center to the south of 116th is 100% leased, McAlister’s is doing well in the outlot building. The former O’Charleys is leased but is going through permitting with the State and the town of Carmel. Mac Grill is closing all of their Indy locations (not just Merchants) and this will allow for a new restaurant concept to backfill both of their locations. As for the north side of 116th a new dinner movie theater and brewery is under construction to fill most of the vacancy left by Hobby Lobby and Old Navy.

  3. Yes it does have an ethics commission which enforce the law which prohibits 12 specific items. google it

  4. Thanks for reading and replying. If you want to see the differentiation for research, speaking and consulting, check out the spreadsheet I linked to at the bottom of the post; it is broken out exactly that way. I can only include so much detail in a blog post before it becomes something other than a blog post.

  5. 1. There is no allegation of corruption, Marty, to imply otherwise if false. 2. Is the "State Rule" a law? I suspect not. 3. Is Mr. Woodruff obligated via an employment agreement (contractual obligation) to not work with the engineering firm? 4. In many states a right to earn a living will trump non-competes and other contractual obligations, does Mr. Woodruff's personal right to earn a living trump any contractual obligations that might or might not be out there. 5. Lawyers in state government routinely go work for law firms they were formally working with in their regulatory actions. You can see a steady stream to firms like B&D from state government. It would be interesting for IBJ to do a review of current lawyers and find out how their past decisions affected the law firms clients. Since there is a buffer between regulated company and the regulator working for a law firm technically is not in violation of ethics but you have to wonder if decisions were made in favor of certain firms and quid pro quo jobs resulted. Start with the DOI in this review. Very interesting.

ADVERTISEMENT