Carmel-based ITT Educational Services Inc.’s management team will get special cash bonuses if they remain with the company until the end of June, ITT disclosed in a regulatory filing last week.
Chairman and CEO Kevin M. Modany would get the biggest boost—nearly $1.2 million—if he stays at the helm through June 27, 2011. His compensation totaled $7.6 million in 2009, the latest year for which figures are available.
Other top managers are set to receive six-figure cash infusions: $324,000 for Chief Financial Officer Daniel M. Fitzpatrick; $319,000 for General Counsel Clark D. Elwood; $295,000 for Eugene W. Feichtner, president of the ITT Technical Institute division; and $263,000 for June M. McCormack, president of ITT’s online division.
ITT's offices were closed Monday, spokeswoman Lauren Littlefield said in an e-mailed response to a request for additional information on the newly approved bonuses.
But in a Dec. 23 filing with the Securities and Exchange Commission, ITT said its board’s compensation committee approved the bonuses “in order to help motivate and retain those executives“ and recognize their “extraordinary efforts” as the company and its for-profit peers have come under fire from federal officials.
New student-lending rules scheduled to go into effect in mid-2011 are expected to pinch profits by restricting access to federal loans—which now account for about 80 percent of ITT’s nearly $1.6 billion in annual revenue.
The U.S. Department of Education unveiled data in July showing that only 31 percent of former ITT students have repaid or are paying down their federal loans four years after leaving, suggesting their time at the school did not lead to “gainful employment.”
Analysts say ITT would likely have to cut prices, raise admissions standards or even eliminate some programs to meet the new standards, which likely would reduce its $375 million annual profit.