Corinthian Colleges CEO resigns

The chief executive of the for-profit Corinthian Colleges chain has resigned amid questions about the school’s recruiting techniques and a plunge in its stock price.

Peter Waller’s resignation, which was requested by the board, marked the second exit of a top executive at the Santa Ana-based chain in less than two months. In October, Matt Ouimet quit the president post.

Corinthian, which is publicly traded, owns 122 campuses across the country that offer training for medical and dental assistants, auto mechanics and other skilled workers, as well as entrepreneurship programs.

The value of the company’s stock has fallen more than 70% this year.

Corinthian and other for-profit college chains have come under fire in recent months as congressional investigators and others seek to find out whether federal financial aid money awarded to students is allocated properly, and whether the colleges supply the high-quality education that they promise. For-profit colleges receive about 82% of their funding via federal student loans.

Corinthian spokesman Kent Jenkins said Wednesday that Waller resigned because of a “personality conflict” with the board of directors. He said the resignation was not related to the company’s current woes, which include a General Accounting Office investigation that found irregularities in the way Corinthian’s recruiters handled questions about financial aid from potential students.

Jenkins also denied that the departure was related to the company’s languishing stock, which has fallen at a much steeper rate than the average for for-profit colleges. Overall, the industry’s stocks are down about 24% this year.

Jack Massimino, who has replaced Waller as chief executive, said in a conference call to Wall Street analysts Tuesday that the move “does not signal broader problems at the company.”

But, he said, the company needed a leader with a different approach. Waller was brought in less than two years ago as chief operating officer and helped guide the company through a major acquisition.

“The board concluded that a different management style was needed to guide the company at this time,” said Massimino, who previously ran the company and is chairman of the board.

Peter Appert, who analyzes the for-profit education business for investment firm Piper Jaffray, said Corinthian is “the most challenged” public company in its industry. The company gets 89.9% of its tuition and fees from federal student loans — just a hair under a proposed new limit of 90%. And its students are among the least likely to repay their loans, which signals to federal regulators that many are not graduating and getting good jobs, Appert said.

Moreover, Appert said, the company’s stock performance shows that investors are more skeptical about Corinthian’s prospects for making money than they are of similar companies.

sharon.bernstein@latimes.com