The Apollo Group Inc (NASDAQ:APOL) has yet again defied all expectation in continuing to outdo its previous scandalous behavior. On Footnoted.com, Michelle Leder caught an interesting SEC filing from the company, revealing the retirement plans for its former chairman.
The firm's outgoing Executive Chairman, John Sperling, will not fully retire, rather he will move to the position of Chairman Emeritus, a position that doesn't entitle him to a salary, but does offer him an expense account. In lieu of that salary, he will be granted a monthly annuity of $71,000 and possession of two cars purchased by the company for him. He will also receive a once off payment of $5 million.
In case there was much doubt, the board that granted the retirement package to Sperling included his son, Peter. The Apollo Group havve made several interesting moves in recent years, a couple of them, including a giant obfuscating SEC document dump, are mentioned in the Footnoted piece.
These type of shenanigans are bad enough when coming from a Wall Street bank, but at least they give some value to their investors. The Apollo Group Inc (NASDAQ:APOL) has lost more than 60% of its share value in the last twelve months, and more than 75% in the the last 5 years.
The Apollo Group is best known for its ownership of the University of Phoenix, which is one of several for profit education companies that have gained prominence in recent years for exactly these kinds of shenanigans.
The for-profit education sector works like this, the government backs loans for students who want to attend third level education, for profit education companies do anything they can to compel students to attend their institutions including complete misrepresentation of job opportunities, the for profit groups collect payment from students, or in the case of non payment, from the government.
The system results in a near worthless education being given out in many cases, on the other hand there are the kind of compensation packages we saw above. The industry is entirely subsidized by the federal government, and it's working for men like John Sperling, but it's not working for real education in America.
For profit education institutions have lower rates of everything good, and higher rates of everything bad. Higher student debt, lower pass rates in licensing exams, higher unemployment, lower wage levels, higher default rates, lower full four year degree completion rates.
The Apollo Group Inc (NASDAQ:APOL), being one of the most visible for profit education group, is no exception. The company provides less value to the students its supposed to serve than similar non-profit facilities, and has provided around 60 percent less value to its investors.
And yet, the lack of regulation, and the resultant corporate culture, result in retirement plans like the one offered to Sperling. The structure of the for profit education industry means that it is the ordinary American taxpayer paying for his $71,000 monthly annuity.