| Board of Trustees responds to congressional inquiry BY MIKE UNGER Cooperating with a congressional request for information surrounding the compensation, tenure, and ouster of former president Benjamin Ladner, AU’s Board of Trustees on Thursday delivered documents and a lengthy letter detailing its role in the matter to the Senate Finance Committee. A key part of the materials submission was a cover letter of introduction and explanation from board chair Gary Abramson and vice chair Thomas Gottschalk, which was made available to the AU community as part of the board’s effort to be open and transparent. In their letter to Sens. Charles Grassley (R-Iowa) and Max Baucus (D-Mont.), Abramson and Gottschalk acknowledged deficiencies in the board’s past practices while expressing its desire to be more transparent and accountable in its governing practices. “In the wake of the public controversy surrounding the departure of Dr. Ladner, the board, with input from the entire university community, has begun a comprehensive review of the university’s governance processes,” the letter reads. “The board is committed to learning from, and responding to, the lessons of the Ladner episode, and to do its part to help . . . the university on its educational mission.” The letter details the board’s compensation committee’s April decision to cut Ladner’s salary from $886,750 to a potential high of $793,000. The reduction came after an outside consultant advised the board that Ladner’s compensation was at the high end and could be subject to challenge as excessive. A month earlier the board’s executive committee received an anonymous letter alleging Ladner and his wife had been engaged in improper spending. An outside firm was hired to conduct an audit, and on Aug. 24 Ladner was placed on administrative leave. On Oct. 10, the board removed Ladner as president, reported to the Internal Revenue Service an additional $398,911 of imputed income for Ladner, and demanded that he pay back $125,703 plus interest to the university. Fifteen days later, Ladner accepted a severance package that included $2.75 million in deferred compensation and a one-time payment of $950,000. The letter provides an explanation as to how the severance decision was reached. “In all of these matters, we believe that the university’s board, comprised wholly of volunteers and acting without any compensation, endeavored individually and collectively to take actions and reach decisions that were in the best interests of the university and [its] constituencies,” the letter states. “Notably, by reducing the compensation of a successful president when advised to do so by outside experts, and by conducting a thorough investigation of allegations of improper expenditures by the president which led to his suspension and eventual resignation, we believe that the board acted with fidelity to its fiduciary obligations to the university.” Congress got involved on Oct. 28 when Grassley, the Senate Finance Committee’s chairman, sent a letter to Gottschalk asking the university for a number of items related to the board’s responsibilities regarding compensation, governance, transparency, and other operations. Under the leadership of Grassley and Baucus, the Finance Committee has been engaged in a review of nonprofits and their tax exempt status and whether reforms are needed. |
