Exhibit 10.48

 

Description of ITT Educational Services, Inc.’s Compensation of Directors, 2005
Executive Bonus
Parameters, Payment of 2004 Bonus Compensation and 2005 Executive Salaries and
Perquisites

 

Compensation of Directors

 

On January 25, 2005, the Company’s Board of Directors approved the following
compensation for non-employee directors, effective April 1, 2005:

 

•                  an annual retainer of $40,000;

•                  a meeting fee of $1,500 for each meeting of the Board of
Directors attended;

•                  a meeting fee of $2,000 for each meeting of a standing
committee of the Board of Directors attended by the chairperson of the
committee; and

•                  a meeting fee of $1,500 for each meeting of a standing
committee of the Board of Directors attended by a member of the committee, other
than the chairperson.

 

The Company’s Board of Directors also reaffirmed the following additional
compensation for non-employee directors who are members of the Special Committee
of the Board of Directors:

 

•                  an annual retainer of $15,000 for the chairperson of the
Special Committee;

•                  an annual retainer of $10,000 for a member of the Special
Committee, other than the chairperson; and

•                  a meeting fee of $500 for each meeting of the Special
Committee of the Board of Directors attended by a member of the committee.

 

The Company also reimburses non-employee directors for reasonable out-of-pocket
travel expenses incurred in connection with serving on the Company’s Board of
Directors.

 

2005 EXECUTIVE BONUS PARAMETERS

 

On January 25, 2005, the Compensation Committee of the Company’s Board of
Directors approved the 2005 Executive Bonus Parameters (the “Bonus Parameters”)
for participation by the Company’s Chief Executive Officer, and the Company’s
Board of Directors approved the same Bonus Parameters for participation by the
other executive officers of the Company, as well as other vice presidents and
key employees.  Bonuses payable to individual participants are based upon a
formula that takes into account the Company’s ability to achieve specified
targets in 2005 in each of four performance categories, each weighted equally:

 

•                  earnings per share (excluding workers’ compensation expense
and special legal and other investigation costs and any settlements or fines
paid in the U.S. Department of Justice (“DOJ”) or Office of Attorney General for
the State of California investigations, the Securities and Exchange commission
inquiry and the securities class action and shareholder derivative lawsuits
arising from the DOJ investigation);

•                  new student enrollment;

•                  total student enrollment; and

•                  graduate employment rate.

 

The Bonus Parameters establish for each participant a standard bonus target
percentage of 2005 annual base salary, ranging from 10% to 100%, and a maximum
bonus percentage ranging from 20% to 200%, with the percentage depending on the
participant’s position within the Company.  An individual participant’s bonus
may be more or less than the participant’s potential award as calculated under
the formula, depending upon the individual participant’s personal performance
and contribution toward achieving the specified targets in the four performance
categories.  The

 

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total amount available for the payment of bonuses is capped at an amount equal
to the cumulative sum of the products of each participant’s bonus percentage
multiplied by each participant’s 2005 annual base salary.

 

Bonuses will be paid in cash.  Bonuses payable under the Bonus Parameters are
determined by the Compensation Committee, upon the recommendation of the Chief
Executive Officer, except for the Chief Executive Officer’s bonus, which is
determined by the Compensation Committee without a recommendation from the Chief
Executive Officer.

 

PAYMENT OF 2004 BONUS COMPENSATION

 

On January 25, 2005, the Compensation Committee approved the payment of cash
bonus awards for 2004 in the following amounts to the Company’s named executive
officers:

 

Name and Principal Position

 

Bonus

 

 

 

 

 

Rene R. Champagne

 

$

775,000

 

Chairman and Chief Executive Officer

 

 

 

 

 

 

 

Kevin M. Modany

 

$

198,000

 

Senior Vice President and Chief Financial Officer

 

 

 

 

 

 

 

Clark D. Elwood

 

$

178,000

 

Senior Vice President, General Counsel and Secretary

 

 

 

 

 

 

 

Martin A. Grossman

 

$

153,059

 

Senior Vice President, Director of Marketing and Investor Relations

 

 

 

 

 

 

 

Eugene W. Feichtner

 

$

146,852

 

Senior Vice President, Operations

 

 

 

 

2005 EXECUTIVE SALARIES AND PERQUISITES

 

On January 25, 2005, the Compensation Committee also approved an increase,
effective April 1, 2005, in the annual base salary level of the Company’s Chief
Executive Officer, and the Board of Directors approved an increase, effective
April 1, 2005, in the annual base salary level of the Company’s other named
executive officers, to the following amounts:

 

Name and Principal Position

 

Salary

 

 

 

 

 

Rene R. Champagne

 

$

530,000

 

Chairman and Chief Executive Officer

 

 

 

 

 

 

 

Kevin M. Modany

 

$

256,000

 

Senior Vice President and Chief Financial Officer

 

 

 

 

 

 

 

Clark D. Elwood

 

$

230,000

 

Senior Vice President, General Counsel and Secretary

 

 

 

 

 

 

 

Martin A. Grossman

 

$

196,000

 

Senior Vice President, Director of Marketing and Investor Relations

 

 

 

 

 

 

 

Eugene W. Feichtner

 

$

190,000

 

Senior Vice President, Operations

 

 

 

 

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On January 25, 2005, the Compensation Committee also approved the following
executive perquisites for 2005 for the Company’s Chief Executive Officer, and
the Board of Directors approved the following executive perquisites for 2005 for
the Company’s other named executive officers:

 

•                  for the Chief Executive Officer, the use of a leased car;

 

•                  for the Chief Executive Officer and each Senior Vice
President:

 

•                  an allowance to be used for tax return preparation and
financial planning; and

 

•                  tickets to sporting, theater and other events.

 

The aggregate incremental cost to the Company from all of the perquisites
described above is not expected to exceed $45,000.

 

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