Founder John Sperling, sharecropper's son, Cambridge Phd, activist for medical marijuana, and man in charge of Apollo Group, with 600,000 students
With 600,000 students in over 200 locations, the University of Phoenix is America's largest for profit university. And it is the wholly owned subsidiary of Apollo Group, which is tightly controlled by a single Arizona family.
According to Jahna Berry, writing in The Arizona Republic, "Rank-and-file shareholders have no voting power. The corporate board of directors serves at the pleasure of the company's founder, whose family has complete control. The board is packed with company executives and their friends.
That is the case at Phoenix-based Apollo Group Inc., the largest for-profit education company in the U.S., at which John Sperling and his son have held the reins for decades."
The AZ Republic articles details the arrangements by which shareholders in a publicly traded company consent to have no voting rights.
"Apollo Group has two sets of shares, Class A shares and Class B shares. The University of Phoenix's 90-year-old founder, John Sperling, and his son, Peter Sperling, 52, together own 100 percent of the company's Class B shares. According to the company's regulatory filings, the holders of the Class B shares decide who is appointed to Apollo's board of directors.
The 130 million Class A shareholders are regular investors, hedge funds and other institutions. Of that group, the Sperlings are also the largest shareholders: The pair own 13 percent."
(for more on the structure of the company and its board, see Berry's article: http://www.azcentral.com/business/articles/2012/01/09/20120109apollos-structure-called-risky.html#ixzz1jY4814pu )
For- Profit universities under investigation, including the University of Phoenix
The for-profit industry depends on student tuition, which is heavily subsidized by taxpayers as federal financial aid.
Rising defaults on student debt have fueled investigations into federal funding of for-profit universities. Institutions under investigation include the Sperling-controlled University of Phoenix.
"Last year, the Department of Justice joined a whistle-blower $11 billion lawsuit filed against Apollo's top rival, Education Management Corp. The company operates Arizona schools such as Brown Mackie College and the Art Institute of Phoenix. The suit alleges that the company violated federal rules on paying enrollment advisers."
"Should there be a significant regulation or new rule imposed that would in any way limit Apollo access to Title IV (federal financial aid) funding, the impact to the share price would be significant," said Marshall of GovernanceMetrics.
The AZ Republic article focuses on the risk to shareholders, and asks whether Sperling's role at Apollo-University of Phoenix might be comparable to that of Rupert Murdoch at News Corp, another closely controlled giant corporation.
The insular nature of the group's management give rise to other questions as well. How did a single man gain control over the education of more than half a million students each year? What portion of Apollo group's sales (tuition) are tax-payer funded? What is the graduation rate of Sperling's students? And what is their default rate on federally funded student debt? Who, precisely, is overseeing this? (neither board nor shareholders, according to business reporter Jahna Berry)
How, one wonders, did this happen?
Read more: http://www.azcentral.com/business/articles/2012/01/09/20120109apollos-structure-called-risky.html#ixzz1jY59oQ1t
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