SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14 INFORMATION
Proxy Statement Pursuant To Section 14(A) Of The Securities Exchange Act of 1934
Filed by the registrant [ ]
Filed by party other than the registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CAREER EDUCATION CORPORATION.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
BOSTIC R STEVEN
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
(5) Total fee paid
--------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
--------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
--------------------------------------------------------------------------------
(3) Filing Party:
--------------------------------------------------------------------------------
(4) Date Filed:
--------------------------------------------------------------------------------
Steve Bostic distributed the attached letter to certain stockholders of Career
Education Corporation on May 12, 2006:
May 11, 2006
Dear Steve:
I have been watching the proxy battles and other events unfold between you and
CEC, with the advantage of the internet and open communications it affords. I
questioned whether or not I should speak my mind about some of this and finally
decided that some things need to be said, if only for you to get another's
perspective and for you to be reminded that many of us in the field recognized
the operations and educational quality of you and your university system at AIU.
As I was the Sr. V.P. for Admissions and Marketing at the time CEC acquired your
schools, I had a first hand experience with the schools during their integration
into CEC. At the time CEC acquired your schools the company executives expressed
excitement about the potential to grow the schools from an admissions and
marketing perspective. I recall that most of the conversation regarding the
operations and educational delivery was critical in that Jack Larson felt that
the high quality collaborative teaching model you had installed serving your
bachelor and masters programs was cumbersome and limiting to the kind of "start
numbers" he would be expecting from me and the Admissions group at the schools.
Forgive me, but these are things that need to be said. I feel, only if
personally, that you are not receiving a fair shake in all of the negative
publicity that is being directed by CEC. You were seen as a very ethical, sound
thinking business man who understood the proprietary education business and one
who did not lose site that "....the student indeed comes first." I remember that
Pat Kapper (Sr. V.P. Education at corporate) was excited and impressed with what
you had created. I recall that the Executive Committee (which I was a member)
was very high on the fact that they could change "certain things" and realize
the company's goal to gain educational credibility with a regionally accredited
"University". I recall the promise that Jack wanted you and your team to remain
very involved with the company. Following the acquisition, everything changed
and CEC gutted most of the management team and a massive shift away from your
quality values was underway.
Ironically, your teaching model was what we in Admissions saw as our greatest
advantage to attracting good students to the academic programs. The model was
unique, unlike any delivery system being offered by competing schools or by CEC
for that matter. AIU gave us a competitive edge to bring students into a really
exciting environment of learning that could get them to graduation with a more
competitive edge as they entered the workforce to pursue their careers.
From the beginning, the Managing Director for the Universities was given
marching orders from Jack Larson and Pat Pesch to "cut deep" the existing
personnel and other operational costs (per the established CEC standards). What
was confusing was that the people who were fired were the very people who had
built and were trying to maintain the system in order to maintain the high
standards of education excellence and to support Admissions efforts so that they
could keep the promises made to students currently in school and to those who
were being recruited. Shortly thereafter the tuition at the campuses
skyrocketed. This of course put great pressure on the recruiting of students. We
could still attract the numbers of students but the problems started
with the ability for students to afford the programs being offered as the Title
IV and secondary financing was simply not enough money to keep their monthly
costs in line with their ability to pay. Then, as the teaching model was
dismantled it became increasingly difficult to attract students, let alone keep
them to start and to keep them in school at all. The internal school system was
very negatively affected by the "CEC-Way". Financial Aid packaging lagged
behind. No system seemed to be effective, nor did the new campus personnel feel
any responsibility to secure important information for student files. One
example was the extremely high number of students who were in school and did not
have a Proof of Graduation in their file, thus not meeting admissions standards
to the school. Some of this was finally resolved, but I don't know how much of
it was ultimately resolved. This was not an issue when you had owned the
schools. I do not recall any bad debt, retention or start issues that were in
existence when we did our due diligence to purchase AIU. All this is to say,
Steve, that I believe you are not getting a fair shake on your reputation and
for what you had created at your Universities.
Eventually, this all resulted in a number of substantive changes that I believe
are at the crux of the AIU problems today.
These are problems born out of, as Jack would say, "THE CEC-WAY". The "probation
problem" AIU has today is a reflection of what CEC did not continue to do versus
what many say you either were doing or failed to do to run a good business.
Again, it is only my opinion, but I believe the various changes, turn over of
key personnel and lack of attention to curriculum standards (all those let go
earlier were not replaced - rather CEC believed it could continue to manage the
curriculum in Chicago) were two of the major negatives that effected the
schools.
The changes and lack of attention to issues with the schools included:
1. Changing of the President numerous times leaving a vacuum or lack of
stable management and leadership at the school.
2. Terminating so many of the key education people had a very negative
effect on the school's ability to deliver a consistent and current
curriculum which - over time - began to effect student retention,
bad debt, etc.
3. Changing the Divisional Corporate structure on numerous occasions in
an attempt to gain tighter control of the school operations. These
changes in key personnel did not afford the school personnel any
sense of continuity and caused much unrest and uneasiness that
eventually filtered to the students.
4. Driving the enrollment and start numbers beyond being "aggressive"
to a level of abusive. This triggered enormous turnover of
Admissions management positions and Admissions Reps. This in turn
effected the conversions from enrollment to start because students
who no longer have their Admissions Representative are less likely
to follow through to start school. These students are often referred
to as orphans with high probability of NOT starting school.
5. Dismantling the "in-take" team you had in place to enroll, service
and transition the student into the school became too difficult to
manage in the CEC culture.
6. Tuition increased beyond any level I had ever seen in my years
working with schools. Packaging the students with a financial
package that the student could honestly afford became extremely
difficult.
Steve, I didn't intend this communique' to you to be like a business letter, yet
it is difficult to turn one's head when information that I have viewed on the
Web is simply not accurate when it comes to the company bashing you or your
ability to create and deliver a unique and quality school system.
If I recall correctly, AIU On-Line was actually your creation and you handed
over all the work you had done in the creation of AIU On-line. I also recall
that accreditation with SACS was very solid, and I believe the accreditation
grants were earned either right at the end of your ownership or during the very
beginnings of CEC ownership. It is no wonder, considering the fact that your
concept of the collaborative learning model was replaced (more room for more
students), resulting in the problems the company has with SACS today.
The sad irony in all this is that CEC could be the financial successful model it
has always strived to be and be able to do so without compromising quality and
without compromising their clients: students, communities, government agencies,
etc.
I believe you have, as I have followed along with many others viewing the Web,
made a valiant effort to bring to light changes that could turn the company away
from its negative issues and replace itself with a reborn energy and improved
reputation to better serve accreditation agencies, government relations,
community pride and - most important of all - students. Remembering that the
commitment to Promises Made and Promises Kept" is how--- long term --- any
company operating in the proprietary sector of education will ultimately
maintain a respectable, quality product and service.
Well, I've rattled on far too long, Steve. I hope you've taken the time to get
to this point in my letter to you. I wish you all the best fortune and hope that
you prevail in your continued effort to bring the positive change that can drive
this company to a multi-billion dollar institution of higher learning without
compromising commitments to its students and employees.
Best
Jon Coover