Corinthian Colleges Inc. Chief Executive Officer Peter Waller resigned and was succeeded by Jack D. Massimino, a former CEO of the for-profit educator and its chairman since July 2009.
Massimino, 61, CEO from November 2004 until July 2009, will remain chairman, the Santa Ana, California-based company said today in a statement. Waller, 56, also resigned from the board, according to the statement.
Corinthian’s shares have lost 72 percent in the 12 months through today’s close as the U.S. Education Department prepares to implement rules in July that will restrict for-profit colleges’ recruiting practices. Regulators may also tie the schools’ eligibility for student aid to graduates’ incomes and government loan repayment rates. Corinthian’s board decided the company needed a “different management style” at this time, Massimino said on a conference call with analysts and investors.
“The board asked for and Peter tendered his resignation,” he said. “I look forward to stepping back into the role I held for nearly five years.”
Corinthian shares declined 21 cents, or 5.1 percent, to $3.93 at 5:30 p.m. New York time in extended trading after falling 2.8 percent to $4.14 in Nasdaq Stock Market composite trading at 4 p.m.
A U.S. government probe found in August that for-profit college recruiters tried to mislead agents posing as applicants about the cost and quality of programs. Corinthian is working to make sure it doesn’t run afoul of Education Department regulations, Massimino said. The company received about 82 percent of its revenue from U.S. student financial aid in the year ending June 30, 2010, according to a regulatory filing.
Corinthian is upgrading its curricula, revising its faculty hiring and performance review procedures and surveying students to make improvements, Massimino said. The college has increased the frequency of a “mystery shopper” program designed to detect recruiting abuses.
The Education Department is considering stiffer penalties, including the loss of access to government aid, for companies that pay recruiters based on the number of students signed up, James Kvaal, deputy undersecretary of education, said this month. The practice, called “incentive compensation,” has been linked to misleading and abusive recruitment practices.
Corinthian is also piloting a process to make sure students make fully informed decisions about enrollment before they begin classes, Massimino said.
“The key to our success has been and will continue to be putting students first,” he said in the statement. “Our executive team is working diligently to improve the value we bring to students, strengthen operations, and reduce regulatory risk.”