The head of Britain's first for-profit university college was paid £738,000 ($1,177,000) in one year, while the co-chief executive officer of the firm’s U.S. owner has a long-term pay deal valued at £15.8 million ($25.2 million).
The pay packets at BPP University College and Apollo Group, its parent company, are revealed this week in a Times Higher Education investigation into Britain's private higher education sector. BPP students borrowed £2 million ($3.2 million) from the Student Loans Company in fee and maintenance loans in 2010-11, government data show.
David Willetts, the universities and science minister, has announced that students on designated private courses will be allowed to borrow up to £6,000 ($9,500) a year in taxpayer-subsidized loans in 2012-13 – up from £3,375 ($5,300) this year. Willetts awarded university college status to legal and accountancy education firm BPP in 2010, the year after it was bought by Apollo Global, a joint venture between private equity firm the Carlyle Group and US for-profit Apollo Group.
Carl Lygo, the CEO of BPP Holdings and principal of BPP University College, was paid £738,000 in 2009-10, accounts show. He said this was "exceptional," with one-off payments accounting for 75 percent of the award. It included the purchase of shares and "one-off incentives" when Apollo bought BPP, he added.
Papers filed by Apollo Group with the U.S. Securities and Exchange Commission list a 2011 award to co-CEO Gregory Cappelli of $25.1 million (£15.8 million). Of that sum, $620,000 was cash salary and $1 million was a cash "incentive plan," with the remaining $23.5 million representing the accounting value of option and share grants over his three-year contract to 2014.
The company’s SEC submission indicates that part of Cappelli's long-term pay could be tied to the future success of BPP. It states that a share component "is appropriate for Mr. Cappelli because of his significant involvement with our Apollo Global and AES subsidiaries… Accordingly, we believe that it was important for him to have a more direct equity interest in those subsidiaries that would tie a portion of his compensation to the success of those entities."
Sally Hunt, general secretary of the University and College Union, the main faculty union in Britain, said: "It is completely unacceptable that Mr. Cappelli’s bonus is based on increasing Apollo’s cash flow from taxpayer-funded student loans."
But Mark Brenner, senior vice-president for external affairs at Apollo Group, said that "Mr. Cappelli’s realized compensation is tied to the overall success of Apollo Group, including certain financial measures and non-financial measures" such as "student success."
"Apollo Global, of which BPP is a part, represents 8 percent of Apollo Group’s revenue," he added.
A BPP spokeswoman said the firm’s regulations "state that any surpluses made are held in the UK by BPP University College to be reinvested in BPP University College." She added: "The [SLC] allocation is irrelevant here, in the sense that it is not money received by BPP; the loans are awarded under UK regulations to home students by the UK government."
Read more by
Today’s News from Inside Higher Ed
What Others Are Reading