Exhibit 10.3

 

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August 15, 2012

Ms. Teresa Cotton Santos

8613 Preservation Way

Indianapolis, IN 46278

Dear Terri,

It has been a pleasure getting to know you over the last several weeks and to
discover the potential and experience you can bring to the compliance function
at Career Education Corporation. I am pleased to offer you the position of
Senior Vice President and Chief Ethics and Compliance Officer reporting to Steve
Lesnik, Chairman, President and Chief Executive Officer. Your start date is
Monday, September 10, 2012 and your position will be based at our Campus Support
Center in Schaumburg, IL. This offer is contingent upon successful completion of
a criminal background check as per our standard protocol for all employees and
subject to approval by the Compensation Committee of the Career Education
Corporation Board of Directors.

The terms of our offer are as follows:

 

  1. Your salary will be $275,000 on an annualized basis.

 

  2. You will earn 20 vacation days per year. In 2012 you may take up to five
vacation days commencing with your start date and may carry over up to five
unused vacation days to 2013.

 

  3. You will be eligible to participate in the benefit programs available to
our employees as soon as you meet the eligibility requirement of each plan.
Generally, eligibility begins on the first day of the month following thirty
days of employment.

 

  4. You will be eligible to participate in the Annual Incentive Award Program
(AIP) with a target opportunity of 40% of your eligible earnings (i.e. generally
defined as the amount of base salary earned during the year). However, as
discussed with you previously, the Board of Directors reduced the 2012 target
opportunity for all participants to better align with the financial realities of
our business this year. As a result, your target opportunity for 2012 will be
20% and payment will be dependent upon the Company achieving certain objectives.
It is my hope that reducing participants’ target opportunity will not be
required again in 2013. However, as I’m sure you can appreciate, the
Compensation Committee of the Board of Directors will not make this
determination until later this year or early in 2013.

 

  5. You will receive a cash signing bonus of $63,400 to offset the reduction in
your 2012 AIP opportunity as well as your forgone bonus opportunity at Eli
Lilly. This payment will be made within 30 days of your start date. You must pay
taxes on the entire bonus amount. If you decide to leave Career Education
Corporation of your own free will within your first year of employment, you will
be required to reimburse Career Education Corporation the entire amount of your
signing bonus.

231 N. MARTINGALE ROAD • SCHAUMBURG • ILLINOIS 60173

TEL (847) 781-3600 • FAX (847) 781-3610 • www.careered.com

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Ms. Teresa Cotton Santos

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August 15, 2012

 

  6. You will receive an initial equity grant under the terms of the 2008 Career
Education Corporation Incentive Compensation Plan (the Plan) as follows:

 

  a. You will receive 12,000 restricted stock units [RSU] which grant you the
right to receive a Share of Company Common Stock for each RSU if the
restrictions in the award are satisfied. The restrictions of this award will be
satisfied and the award will vest in its entirety if you remain employed with
the Company three years from the grant date.

 

  b. You will also receive a grant of 5,455 non-qualified stock option shares
which gives you the right to purchase the Company’s common stock at a specified
price within a specified period of time. The exercise price of the options will
be the closing price of the Company’s common stock on the grant date. Vesting of
this award will occur ratably over four years (i.e. 25% per year) as long as you
remain employed with the Company each year on the anniversary of the grant date.

 

  c. This initial equity grant will be made as soon as feasible following your
start date and in compliance with regulations established by the Securities and
Exchange Commission (i.e. an award cannot be granted during a blackout period).
To accept the award, you will be required to sign an Award Agreement that
contains certain restrictive covenants such as non-compete and non-solicitation
requirements. Execution of this agreement will be a condition of your
employment.

 

  7. Beginning in 2013 you will be eligible to participate in the Long-Term
Incentive Award Program [LTIP] with a target opportunity of 60% of your base
salary. LTIP awards are made annually, typically during the first quarter, and
participation in the LTIP and award amounts granted thereunder are subject to
approval annually by the Compensation Committee of the Board of Directors. In
2012, awards granted to senior officers under the LTIP were comprised 80% of
restricted stock units and 20% non-qualified stock options.

 

  8. As a senior officer of the company, you will be subject to the Company’s
Officer Stock Ownership Guidelines which require that you achieve and maintain a
certain level of stock ownership [expressed as a multiple of your base salary].
We believe these guidelines help align interests of the senior officer team with
those of the Company’s stockholders. Participation in the annual LTIP and your
new-hire equity grant are intended to enable you to satisfy the requirements
specified in these guidelines.

 

  9. You are eligible for our Tier A relocation package. Please see the
relocation policy documents for further details. All terms, agreements and
restrictions apply to the Company Relocation Policy as administered by our
vendor. If you decide to leave Career Education Corporation of your own free
will within your first year of employment you will be required to reimburse
Career Education Corporation the entire amount of your relocation cost. In
addition, the company will reimburse you up to $50,000 if you experience a loss
on the sale of your primary residence as determined by the difference between
the sales price and your original purchase price.

 

  10. In the event you are terminated without Cause [as defined in the Career
Education Corporation Executive Severance Plan], you will be eligible to receive
52 weeks of pay equal to your annual salary at the time of your termination. You
will also be eligible to receive other benefits as specified in the Executive
Severance Plan. In the event you are terminated without Cause or as the result
of a Change-in-Control [as defined in the Plan] within 52 weeks of your start
date, you may exercise the option to relocate to your current residence in
Indianapolis, IN at Career Education Corporation’s expense, according to the
terms of the Tier A relocation package.

231 N. MARTINGALE ROAD • SCHAUMBURG • ILLINOIS 60173

TEL (847) 781-3600 • FAX (847) 781-3610 • www.careered.com

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Ms. Teresa Cotton Santos

Page Three

August 15, 2012

 

  11. This letter contains all agreements, and supersedes all other agreements,
verbal and written, pertaining to your employment with Career Education
Corporation. Employment at Career Education Corporation is at-will and may be
terminated at the will of either you or Career Education Corporation.

Teri I am excited about you joining Career Education Corporation. Our company is
at a pivotal point in its history and I believe you have the skills and
experience to help make a positive difference. I look forward to working with
you.

 

Sincerely,   /s/ Colon S. McLean   Colon S. McLean  
Senior Vice President and Chief Human Resources Officer   Career Education
Corporation

 

Enclosures       Accepted and Agreed to:       /s/ Teresa Cotton Santos     16
Aug 2012     Teresa Cotton Santos     (Date)  

231 N. MARTINGALE ROAD • SCHAUMBURG • ILUNOIS 60173

TEL (847) 781-3600 • FAX (847) 781-3610 • www.careered.com