Scandal-Plagued Former For-Profit CEO Receiving $5 Million Settlement
Despite his resignation after investigations revealed deceptive reporting of job placement figures, former Career Education Corporation CEO Gary McCullough is set to receive a hefty severance package topping $5 million, according to a new federal filing.
- $1.6 million for two years of his salary
- $2.4 million for two years of his average bonuses
- $1 million for his prorated 2011 bonus
- $88,000 for retirement and other benefit plans
- up to $100,000 for outplacement services
- and two years of continued health, dental and vision benefit coverage and life insurance coverage
The payments are part of McCullough’s separation agreement with the company and are detailed in a recent filing with the Securities and Exchange Commission.
McCullough’s departure came shortly before a Securities and Exchange Commission filing that revealed some of the company’s schools—namely, Health Education and Art and Design campuses—were reporting job placement figures that “lacked sufficient supporting documentation or otherwise did not meet applicable placement guidelines.”
According to the filing, McCullough was not terminated for cause and is therefore entitled to the severance. According to California Watch, the for-profit school could have terminated McCullough with cause if “he admitted to or was convicted of fraud, was convicted on felony criminal charges, committed willful misconduct or malfeasance in performance of his duties, or willfully misrepresented anything material to the company or the board.”
In 2010, McCullough was paid $4.6 million in salary and other compensations, according to California Watch. The report also notes that a whopping 82 percent of Career Education Corporation’s tuition revenue came from taxpayers in the form of federal aid.
The company has struggled with a number of regulatory issues, like many other for-profit colleges, which face increased scrutiny from lawmakers after extensive research showed a number of shortcomings at the institutions.
Earlier this year, Career Education Corporation settled with former students from San Francisco’s California Culinary Academy who claimed that the school’s high job-placement rate misled them, as many of the “reported jobs” were students working as waiters or as baristas at Starbucks.
Career Education Corporation enrolls more than 100,000 students at various colleges across the country, including American InterContinental University, Colorado Technical University, Le Cordon Bleu North America, and others. The company has brought in nearly $1.5 billion in revenue already this year.
Brian Stewart is the Communications Director at Generation Progress. You can follow him on Twitter @brianstewart.