Last updated: 11:50 a.m., January 12
The head of the parent company of the University of Phoenix, the country’s largest private university, resigned unexpectedly on Wednesday.
The company, the Apollo Group, gave no reason for the resignation of Todd S. Nelson, who had been the company’s chairman of the board, chief executive officer, and president. Mr. Nelson had been with Apollo for 18 years. He was named chairman in June 2004.
The company announced that Brian Mueller would succeed Mr. Nelson as president and that John G. Sperling, founder of the Apollo Group, would serve as interim executive chairman of the board.
Until recently, Mr. Mueller was the chief executive of the University of Phoenix Online. Just over a month ago, the company named him chief operating officer and said he would be responsible for the consolidation of marketing for the University of Phoenix’s online and on-ground campuses. Mr. Mueller began his career at the company as an enrollment adviser in 1987.
Mr. Nelson will be paid $18-million by Apollo, net of taxes, under the terms of a separation agreement made public on Thursday morning in a filing with the Securities and Exchange Commission. In return, he has agreed “not to commence any legal proceeding” against the company. He also has agreed not to work for any competing company for one year, and specifically pledged not to take a position with the Career Education Corporation, Corinthian Colleges Inc., ITT Educational Services, or Strayer Education Inc. -- the University of Phoenix’s leading competitors -- for two years.
The Apollo Group has annual revenues of more than $2.2-billion and enrolls more than 300,000 students, most of whom attend the University of Phoenix. It also operates Western International University and a division called the Institute for Professional Development, which provides student-recruiting services to colleges.
The resignation came as a surprise to many Wall Street analysts. “We doubt the company had planned this succession in advance and think it adds significantly” to the risk profile of the stock, said a report released by UBS Securities shortly after the evening announcement. UBS is one of several firms that have recently raised doubts about Apollo’s ability to meet its growth targets.
According to a report on executive compensation published in Forbes magazine last year, Mr. Nelson was paid $32.8-million by Apollo in 2004, mostly in the form of stock options (The Chronicle, May 6).