Top Executives Ditch Clinton’s Laureate Education Company

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Top executives at a company with ties to former President Bill Clinton called Laureate Education are leaving the firm only months after they launched its IPO, The Daily Caller News Foundation Investigative Group has learned.

The Baltimore-based company became an issue during the 2016 presidential election campaign when the public learned it paid Clinton nearly $18 million over a period of five years to serve as a consultant and “honorary chancellor.” The firm also faced accusations it operated as a “pay-to-play” company by donating between $1 to $5 million to the Clinton Foundation while receiving hundreds of millions of dollars in government funds.

But the latest problem for Laureate appears to be the exodus of its top executives only months after the company went public Feb. 1. To date, Laureate’s founder and chief executive officer, chief operating officer, general counsel and its chief human resources officer have resigned or announced their resignation.

Enderson Guimaraes resigned as chief operating officer in March. Alfonso Martinez, who was chief human resources officer, left the company in May. Long-serving general counsel Robert Zentz departed Sept. 7. One week later, the company announced the resignation of founder and chief executive officer Douglas Becker.

Financial experts tell TheDCNF the flight of Laureate’s high-level executives so soon after it launched its IPO is not a good sign.

The departures of such high-level executives “is very unusual,” according to Aswath Damodaran, a professor of finance at the Stern School of Business at New York University, where he teaches corporate finance and equity valuation.

“Right after an IPO, the top management departs. It’s not good news,” Damodaran told TheDCNF, stressing that executives fleeing for the doors following an IPO is “never a good sign.”

“Are they doing it because they see a hammer coming,” Damodaran asked. “Is something else coming down the road that’s catastrophic? We don’t know. But it’s never a good sign.”

The IPO included a signed “Letter From Doug Becker,” in which he repeatedly stressed the “long-term” view he had for the company:

With the benefit of a long-term view, we will balance the needs of stockholders with the needs of students, employees and the communities in which we operate, and we believe that this approach will deliver the best results for our investors. We plan to seek out and engage with investors who see the benefit of this approach, and who want to be a part of an enduring, mission-driven company that we believe has strong prospects for long-term growth and the opportunity to help millions of people change their lives through education.

Laureate told investors in the S-1 the company’s top executives were key to its future success. “Our success depends on the skills of our executive officers, particularly our Chairman and Chief Executive Officer,” the S-1 stated, referring to founder, chairman and CEO Becker. “If we lose key personnel or are unable to hire additional qualified personnel, our business may be harmed,” Laureate added.

Becker was vital to the company’s success, the S-1 said. “Our future success depends to a significant degree on the skills, experience and efforts of Douglas L. Becker, our Chairman, Chief Executive Officer and founder, who has always played and continues to play an integral role in developing and executing our growth strategy,” the company stated.

The S-1 also stressed how damaging the loss of top management could potentially be to the company’s growth.

“We cannot assure you that we will have an internal candidate to take on the role of Chairman and Chief Executive Officer should Mr. Becker become unable or unwilling to serve,” the S-1 states. “We also have other very experienced and valuable executives in senior management roles who would be extremely difficult to replace, the loss of whose services could affect the growth or results of our company.”

Amy Borrus, the deputy director of the Council of Institutional Investors, echoed Damodaran’s comments. “For any company to have four senior executives leave within months, there must be a problem lurking somewhere at this company,” she told TheDCNF.

The council of Institutional Investors was established in 1985 as a nonpartisan, nonprofit association of employee benefit funds and endowments, with combined assets that exceed $3 trillion.

Borrus said investors crave stability in a company. “Companies when they go public, typically are looking for stability in the first year of a public company,” she said. “This is anything but.”

“That is quite a number of C-level execs,” noted Barrett Daniels, the CEO and managing partner of Nextstep, a company that assists companies with IPOs. “This feels pretty significant,” he told TheDCNF in an interview.

Laureate has had a rocky start since it went public in February.

On opening day, Laureate’s executives failed to meet its expected price of $17 to $20 a share.

Since Feb. 1, the same day Laureate launched its IPO, Wall Street has continued a post-election boom. The Dow Industrials have risen 14 percent, the NASDAQ is up 16 percent and the S&P 500 is up 11.3 percent. All three indexes continue to shatter new records.

Laureate hovered in the $14 range in its opening months, and returned to that level in August after a breakout in June and July when prices briefly approached $19. When all three indexes broke new records Tuesday, Laureate reported a drop in its stock price by one percent.

The company, including its equity owners KKR, had hoped the IPO would raise at least $1 billion to offset more than $4 billion in debt. Kathleen Smith told TheDCNF Laureate is a “highly leveraged” company with more than $4 billion in debt. Smith is a manager of IPO Exchange Traded Funds at the Greenwich, Conn.-based Renaissance Capital.

To date Laureate has only raised about half that amount.

Laureate may also face another new problem. When the company announced Becker’s surprising resignation on Sept. 14, the statement said his departure was part of a “transition plan” that had been in the works for “several years.” The company emphasized that their transition plan for Becker’s departure had been “developed over several years by the Board of Directors.”

Becker repeated the claim the transition plan had been in place for “several years” in a statement to TheDCNF.

“I have worked with our Board of Directors on the leadership transition plan over several years,” he said.

But the company’s prospectus does not appear to mention any “transition plan” for Becker’s departure, and it explicitly noted there may not be a good option for a successor if key employees. “We may not have identified clear successors to our management team and other key employees, which could result in lost opportunities and disruptions to our operations in the event of an unexpected departure,” the S-1 stated.

The company declined to respond to a DCNF query about where the company might have informed prospective investors it had a “transition plan” in place.

“Something doesn’t smell right,” Borrus told TheDCNF. “If the company’s filing when it went public talked about the importance of maintaining the current management and they now claim they had a long-standing transition plan, it begs the question: was there really a transition plan in place, or are they trying to put lipstick on a pig when the CEO left?”

Borrus told TheDCNF that the company also was unattractive to investors because it issued two classes of stock: Class “A” and “B.” As a result, “insiders have all the control,” Borrus said. “Shareholders don’t have the means to hold managers accountable when they lack controlling voting power.”

The first two Laureate departures were announced in March of this year, one month after the company went public.

Guimaraes lasted at Laureate less than two years, departing on March 23. On Aug. 10 of this year, Laureate awarded him 47,578 shares of company stock, according to

Martinez, who also resigned in March as the company’s chief human resources officer, joined Laureate in 2013. Martinez’s human resources office was not insignificant. He oversaw 77,000 employees at 80 universities in 29 countries.

Zentz, Laureate’s long-serving general counsel, received 42,076 shares of stock also on Aug. 10, 2017, just ahead of his September departure, according to Marketwatch.

Becker told TheDCNF Laureate has confidence in the incoming CEO and COO. “We believe that the team of Eilif Serck-Hanssen as our incoming CEO, and Ricardo Berckemeyer as our new President/Chief Operating Officer, effective January 1, 2018, is uniquely qualified to take on the leadership of the company,” he said in a statement.

Becker will serve in a “non-executive” position.

Laureate Education has been closely entwined with the Clintons and the Clinton Foundation. In addition to $17.6 million the company paid to Bill Clinton and its donations to the foundation, both the foundation and Laureate have held joint programs.

The Clinton Foundation also works with a nonprofit foundation created by Becker called the International Youth Foundation. While Hillary Clinton was Secretary of State, the U.S. Agency for International Development, a part of the State Department, awarded at least $17 million to IYF.

A World Bank unit also invested $200 million directly into Laureate. After he left as World Bank President, Robert Zoellick agreed to serve on Laureate’s board of directors. On Aug. 10, Laureate awarded 6,855 shares of company stock valued by the company at $112,500.

Laureate also elected to its board George Munoz, who was appointed by Bill Clinton to head up the Overseas Private Investment Corporation. On June 1, Laureate awarded Munoz 13,770 shares of company stock valued at $225,000.


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