Ousted NEC Chief Gets $5 Million to Settle Claim

National Education Corp. has agreed to pay H. David Bright, its former chairman and chief executive ousted in a management shake-up last year, about $5 million in cash and future pension benefits to settle a claim that he was wrongfully terminated last year.

The company said Monday that the award, which it would not specify, will all but erase the $5.5-million payment National Education will receive from an insurance carrier as reimbursement for settlements of several unrelated shareholder suits against the company.

National Education, the nation’s largest provider of vocational education services, announced with its insurance carrier the settlements in an effort to end speculation about the payment to Bright, which has weakened the company’s stock price.

In light trading Monday on the New York Stock Exchange, National Education stock closed down 12.5 cents at $5.50 a share. It traded as high as $28 in 1988.

Some stock analysts had said that resolving the Bright case could cost the ailing company as much as $9 million.

National Education would not discuss the actual value of the severance package, calling that a private matter.

But Jeffrey Brill, the company’s general counsel, said the settlement--part of which will be paid as an increase in Bright’s pension payments when he reaches age 60--will almost nullify the effect of the unrelated insurance payment.

The immediate net impact on the company, Brill said, will be a “small positive contribution” to National Education’s as-yet-unreleased second quarter results because of the insurance payment. The company had already charged the lawsuit settlement against its income.

Brill said the company is happy to have resolved the uncertainty over the amount of the Bright settlement. “Now we can get back to business,” he said.

Bright, who lives in Newport Beach, could not be reached for comment.

National Education operates a nationwide chain of vocational education programs, offering both classroom and in-home study. The company also has textbook and consulting subsidiaries. It was problems in meshing several subsidiary acquisitions, particularly its Applied Learning unit, with National Education’s core business that led to the company’s troubles last year.

National lost $29.3 million for 1989, contrasted with a profit of $46.1 million the year before. In 1988, Bright was paid $1,056,000, including a bonus of $455,400. He earned $195,462 in 1989, before being dismissed in July.

The company blamed Bright for its financial troubles, ousting the longtime executive just two days after reporting a $1.5-million second-quarter loss, its first in years. He was replaced by David C. Jones, a former chairman of the Joint Chiefs of Staff.

Bright, who was a top executive at National Education since 1978, had a five-year revolving employment contract with the company. He claimed that he was wrongfully terminated and called for an independent arbitrator to hear the case, as stipulated in his employment agreement.

Earlier this year, an independent arbitrator ruled that Bright had not been fired for cause and was therefore due severance payments and other benefits. The amount was not determined, but the ruling prompted widespread speculation in investment circles.

The company’s losses last year also prompted several class-action suits brought by shareholders, who alleged that the company had misled investors about its problems. In March, National Education said it would pay $11.8 million to settle the suits.