K12 Inc. Tries to Pivot from Virtual School Failures to Profit from "Non-Managed" Schools
If you were a public school and Wall Street didn’t like you that might not seem like such a big deal. What do financiers know about educating children? It’s a big deal, however, if you are K12, Inc., and enticing investors to buy into your low-cost, high yield “cyber school” idea is key to your bottom line.
At K12, Inc.’s stockholder meeting in December, its own investors criticized the schools’ lamentable academic performance and voted down its executives’ proposed salary increases. This is just the latest piece of bad news, which has been coming in rafts for K12 since 2013.
As K12’s executives were being rebuffed by stockholders inside the law offices of Latham & Watkins, in Washington, D.C., outside K12 was picketed by members of the California Teachers Association for more or less the same list of educational shortcomings, as Diane Ravitch noted.
Some editorial boards crow when they receive criticism from two opposing sides of a controversial issue. “If both sides are unhappy we must be doing something right” is the familiar refrain, as if there are only ever two sides to an issue or the sides have equal merit.
In the case of K12, however, it is hard not to wonder how much longer the company can withstand this loud unanimity of animus--even a firm Wall Street insiders like convicted fraudster Michael Milken helped launch, as the Center for Media and Democracy (CMD) detailed in "From Junk Bonds to Junk Schools: Cyber Schools Fleece Taxpayers with Phantom Students and Failing Grades."
No major supporters have yet publicly called for pulling the plug, but anti-public education zealots like the billionaire Walton family and the Koch brothers have plenty of other places to invest in to try to bring down “government schools.”
Big, Big Payouts to Execs at Taxpayer Expense
In its recommendation that shareholders vote against the pay proposal, the advisory firm Glass Lewis & Co. said K12 exemplifies a “substantial disconnect between compensation and performance results.” Glass Lewis gave the company an "F" for how it paid its executives compared to peers.
In 2015, K12 CEO Nathaniel Davis was making $5.3 million and CFO James Rhyu was making $3.6 million. Their base salaries were $700,000 and 478,500, respectively, which were dwarfed by additional pay and stock for their “performance.” (See more details on their total compensation in the pdf uploaded below.)
In all, K12's five highest paid executives received a total of more than $12 million in compensation last year. That’s one of the reasons CMD has called K12 Inc.'s former CEO, Ron Packard, the highest paid elementary and secondary school educator in the nation.
Nearly 90% of K12’s revenues--and thus its huge pay for executives--come from Americans’ state or federal tax dollars.
K12 Inc. also pays each member of its Board of Directors between $155,000 and $216,000 annually for a few hours of
- See more at: http://www.prwatch.org/news/2016/01/13009/k12-inc-tries-pivot-virtual-school-failures#sthash.4dHDIGMj.dpuf
