Exhibit 10.48

Description of ITT Educational Services, Inc.’s Compensation of Directors, 2006
Executive Bonus

Parameters, Payment of 2005 Bonus Compensation and 2006 Executive Salaries and
Perquisites

Compensation of Directors

The compensation that ITT Educational Services, Inc. (the “Company”) currently
pays its non-employee directors for their service on the Company’s Board of
Directors consists of:

 

  •   an annual retainer of $40,000;

 

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

 

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

 

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

On January 24, 2006, the Company’s Board of Directors modified the compensation
that the Company will pay its non-employee directors for their service on the
Company’s Board of Directors as follows, effective January 1, 2007:

 

  (1) eliminated the payment of any meeting or participation fee for any
regular, special or standing committee meeting of the Company’s Board of
Directors that a non-employee director attends, whether in person or
telephonically; and

 

  (2) increased to $60,000 the annual retainer paid to each non-employee
director for his or her service on the Board of Directors of the Corporation,
payable in shares of the Corporation’s common stock in semi-annual installments
on January 1st and July 1st of each calendar year.

2006 Executive Bonus Parameters

On January 23, 2006, the Compensation Committee of the Company’s Board of
Directors approved the 2006 Executive Bonus Parameters (the “Bonus Parameters”)
for participation by the Company’s executive officers, as well as other vice
presidents and key employees. Bonuses payable to individual participants are
based on a formula that takes into account the Company’s ability to achieve
specified targets in 2006 in each of four performance categories, each weighted
equally:

 

  •   earnings per share before equity-based compensation expenses (excluding:
(i) workers’ compensation expense; and (ii) 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);

 

  •   total student enrollment;

 

  •   free cash flow; and

 

  •   graduate employment rate.

The Bonus Parameters establish for each participant a standard bonus target
percentage of 2006 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 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 2006 annual base salary.

 

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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 2005 Bonus Compensation

On January 23, 2006, the Compensation Committee approved the payment of cash
bonus awards for 2005 in the following amounts to the Company’s named executive
officers:

 

Name and Principal Position

   Bonus

Rene R. Champagne

Chairman and Chief Executive Officer

   $ 530,000

Kevin M. Modany

President and Chief Operating Officer

   $ 217,000

Clark D. Elwood

Senior Vice President, General Counsel and Secretary

   $ 126,500

Eugene W. Feichtner

Senior Vice President, Operations

   $ 95,000

Daniel M. Fitzpatrick

Senior Vice President, Chief Financial Officer

   $ 87,300

2006 Executive Salaries and Perquisites

On January 23, 2006, the Compensation Committee also approved an increase,
effective April 1, 2006, in the annual base salary level of the Company’s named
executive officers, to the following amounts:

 

Name and Principal Position

   Salary

Rene R. Champagne

Chairman and Chief Executive Officer

   $ 560,000

Kevin M. Modany

President and Chief Operating Officer

   $ 332,500

Clark D. Elwood

Senior Vice President, General Counsel and Secretary

   $ 246,100

Eugene W. Feichtner

Senior Vice President, Operations

   $ 202,200

Daniel M. Fitzpatrick

Senior Vice President, Chief Financial Officer

   $ 247,500

 

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On January 23, 2006, the Compensation Committee also approved the following
executive perquisites for 2006 for the Company’s named executive officers:

 

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

 

  •   for the Chief Executive Officer, the President and Chief Operating Officer
and each of the Senior Vice Presidents:

 

  •   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 $65,000.

ESI Pension Plan and ESI Excess Pension Plan

On January 24, 2006, the Company’s Board of Directors decided to freeze the
benefit accruals under the ESI Pension Plan and ESI Excess Pension Plan for all
employees of the Company who participate in those plans. The effective date of
the freeze will be March 31, 2006. The ESI Pension Plan is a cash balance
defined benefit plan, which provides a set benefit to the Company’s
participating employees at their retirement that is not affected by the amount
of the Company’s contributions to the ESI Pension Plan trust or the investment
gains or losses with respect to such contributions. The ESI Excess Pension Plan
is an unfunded, non-qualified retirement plan for a select group of the
Company’s management and highly compensated employees. The purpose of the ESI
Excess Pension Plan is to restore benefits earned, but not available, to
eligible employees under the ESI Pension Plan due to federal limitations on the
amount of benefits that can be paid and compensation that may be recognized
under a tax-qualified retirement plan.

The freeze on the ESI Pension Plan and ESI Excess Pension Plan will stop all
further benefits from accruing under those plans after March 31, 2006.

 

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