Todd S. Nelson, who abruptly resigned just over a year ago as head of the Apollo Group, parent company of the University of Phoenix, was named on Thursday as chief executive of the Education Management Corporation, a rival company.
Mr. Nelson, who has been largely out of the industry since January 2006 because of a noncompete clause in his $18-million severance package with Apollo (The Chronicle, January 12, 2006), said in a written statement that he was pleased to be joining Education Management because he admired the company’s management and its “reputation for quality and doing things right.”
Although Apollo is nearly four times the size of Education Management in terms of enrollment (and nearly twice as large by revenue), Mr. Nelson said he was attracted by the company’s potential for growth. The company is “positioned to become the pre-eminent higher-education company” in the industry, he said during a conference call on Thursday. It has “all the right pieces.”
In a telephone interview later with The Chronicle, Mr. Nelson said his statement was “not at all” intended as implied criticism of Apollo.
“I would put Apollo Group in the same category as EDMC,” he said, referring to Education Management. “Most of the big ones are good.”
Mr. Nelson worked at Apollo for 18 years, and was chairman of its Board of Directors from 2004 until his departure. Industry insiders speculated that Apollo’s founder and major stockholder, John G. Sperling, had engineered the ouster.
Best known for its Argosy University, Art Institutes, and South University, Education Management operates 74 primary locations in 24 states and two Canadian provinces. Just like the University of Phoenix, Education Management’s colleges offer programs leading to associate, bachelor’s, master’s, and doctoral degrees in a range of fields. The company, which had been publicly traded, was acquired by a team of private-equity investors in June for $3.4-billion (The Chronicle, March 7, 2006).
John R. McKernan Jr., chairman and current chief executive of Education Management, said Mr. Nelson’s experience at Apollo, including opening new campuses, expanding online-education programs, and concluding deals for international joint ventures, were factors in his hiring.
“All of these areas are essential for EDMC’s future growth,” Mr. McKernan said during the conference call. Mr. McKernan, a former Republican governor of Maine (and husband of U.S. Sen. Olympia J. Snowe, a Maine Republican), will become executive chairman when Mr. Nelson joins the Pittsburgh-based company, on February 20. Mr. McKernan will remain chairman of the board.
In his interview with The Chronicle, Mr. Nelson said the chance to develop Education Management’s international presence was particularly interesting to him. Except for Laureate Education Inc., “nobody else is really doing it on a major scale,” he said. Apollo executives continue to talk about major international expansion, but have yet to do more than dabble in overseas campuses.
That Education Management is controlled by a small group of owners -- unlike the publicly traded Apollo -- could make those kinds of inherently complex deals easier to execute because fewer stakeholders need to reach agreement, Mr. Nelson said. “When things are complicated,” he added, “people tend to hesitate more.”
Under the terms of his severance package, Mr. Nelson had pledged not to work for a competing company for one year or to take a position with four particular companies for two years. That list, which he said he did not draw up, included the Career Education Corporation, Corinthian Colleges Inc., ITT Educational Services, and Strayer Education Inc., but not Education Management.
Background articles from The Chronicle:
