Links, letters, and lots of thoughts from a rabble rouser at AU. All the information one could humanly find on the situation at American University is posted here. Get informed and get involved.

Saturday, December 03, 2005

AU gives documents to Senate

The Senate Finance Committee just got a whole ton of info from us on Dec. 1 -- along with a 13 page letter "explaining" the decisions made along the way... the letter is available in PDF form from the AU Governance website.

Also, the Post has an article today (Saturday) briefly updating the situation. Probe turns focus to AU's Trustees:

The chairman of the Senate Finance Committee said yesterday that its investigation of American University will now focus on the current board of trustees.

After getting several requested boxes of documents from the private university, a 12-page letter from the chairman and vice chairman of the board explaining the decisions surrounding the ouster of president Benjamin Ladner, and hearing from students, faculty and alumni, Sen. Charles E. Grassley (R-Iowa) made clear that the congressional inquiry is not over.

"The best way to avoid problems like Benjamin Ladner's excessive compensation and severance is for boards to know that the buck stops with them," Grassley said in a statement yesterday.Ladner's presidency ended in October after an audit questioned hundreds of thousands of dollars of spending by Ladner and his wife for travel and personal expenses over the past three years. He agreed to sever ties with the school in exchange for a $3.75 million severance package -- a deal that angered many on campus, who had asked that he be fired without a "golden parachute."

Along the way, five of the 25 trustees quit. The U.S. attorney's office has been looking into the matter. And a congressional committee reviewing nonprofit institutions -- which must avoid excessive compensation because of their tax-exempt status -- has jumped in, too.

In their most detailed public explanation to date, trustees Chairman Gary M. Abramson and Vice Chairman Thomas A. Gottschalk sent a letter -- made public yesterday -- to Grassley and Sen. Max Baucus (D-Montana) describing the events of the past months, defending some of the board's actions and saying others are being corrected.

Gottschalk and Abramson explained why the board had been impressed with Ladner's presidency, and wrote, "Perhaps, because of the university's success under his leadership and concern that Dr. Ladner might be recruited to another university, the board failed to follow sufficiently rigorous procedures for reviewing and approving the president's employment contract and compensation, as well as effectively auditing expenses."

They wrote about a contract signed in 1997 by Ladner and then-Chairman William I. Jacobs that had no end date and ambiguous terms that allowed Ladner to be reimbursed for expenses over and above what was allowed for other university employees. The full board -- including Gottschalk and Abramson -- did not know about that contract until this year, they said.

Ladner has defended his spending as consistent with the terms of that contract.

Based on the advice of consultants that Ladner's total compensation could be considered excessive, the board decided this year to reduce it from $886,750 to no more than $793,000.

And they explained the reasoning that went into his severance package: They worried about a potential lawsuit, particularly given the ambiguity of the 1997 contract.

This week, in a letter to the university community, four of the five former trustees proposed rescinding the severance package and removing the 13 board members who the four say opposed them when they pushed for an investigation, cuts in Ladner's pay and other changes.

They said the current board is stalling on making changes and recommended that the search for a new president begin right away.

"Now more than ever, the university needs new leadership," said the letter, which was signed by two former chairmen, Leslie E. Bains and George J. Collins, and former trustees Leonard R. Jaskol and Paul Martin Wolff.

The four said they will return to the board and start the changes if students and faculty members want them back -- and if the 13 opposing members are removed. The board is self-appointed.

Gottschalk responded: "Since these other trustees are no longer involved in the board, it's hard for them to have current information or accurate information about all of the good efforts and good motivations that are proceeding."

One of those efforts is their response to the Senate Finance Committee, Gottschalk said, adding that it ". . . certainly gets us farther along in explaining the good reasons that the board had for the actions they've taken."

Wednesday, November 30, 2005

Open Letter #3: The Plan

An Open Letter to the American University Community

In an Eagle editorial, Chris Hunter took us to task for not outlining "a clear path for resuscitating the University." It was not our intention to leave the AU Community in the lurch but to express our complete disgust for the majority of the Board’s lack of adherence to the basic tenants of good governance. Mr. Hunter chided us for limiting our open letters to the University community to setting the record straight and correcting misstatements by members of the ad hoc committee. The article called on us to put forth our program for change.

Here it is.

1. Remove all 13 members of the ad hoc committee from the Board. It is for good reason that the faculty and the students have no confidence in them. Over the last year, they have demonstrated an unmistakable record of putting the interests of Ben Ladner above those of the University. Only members of the ad hoc committee voted to give Ladner a salary raise even though the Board's outside advisors recommended to the contrary. Only members of the ad hoc committee favored bringing Ben Ladner back as President with an $80,000 to $100,000 salary for his wife and reinstating the chef and social secretary. Only members of the ad hoc committee took the lead in overruling the severance negotiation committee and raising the dismissal package so that Ladner would have his back taxes and reimbursement obligation covered out of the University’s own funds. It was the ad hoc committee which turned the golden parachute into platinum.

Keep all other remaining Board members. Although we disagree with their voting in favor of a severance package, we do not question their loyalty to American University. We believe their decisions on severance and discharge were wrong; but we also believe that they have mostly put their fiduciary duty to the University first and foremost.

Remove the President from the Board. Develop a program for selecting Trustees that will include the input and participation of the President, the faculty, the students and the alumni.

2. The delay of formal changes in governance to May, 2006 by the current Board is a sham. This stall tactic is an attempt to have the proactive students graduate and the faculty and alumni lose interest or hope. Therefore, immediately begin open forums on the 14 point plan (a copy of which is attached) for improved governance developed by Leslie Bains and, after consultation with all constituencies, implement a final plan within 60 days. Schedule 4 Board meetings a year, with the spring meeting a "retreat" involving students and faculty. While the Bains plan is discussed, take immediate action to make all Committee and Board meetings more open and their actions more public.

3. Once the Board governance plan has been approved, begin discussions with all concerned groups on improving the governance of the University at all levels. The faculty, student and alumni organizations should have rules of governance that mesh with and complement those of the Board. There should be an interwoven fabric of governance that brings together cohesively all interest groups.

4. As under George Collins and Leslie Bains, insure that the Compensation Committee has members and most specifically a Chairman who are well versed in compensation issues. Continue having the Committee use outside advisors. We were quite pleased with the work of Arnold&Porter and Mercer&Associates and would urge their continued retention. As the search for a new President goes on, the Compensation Committee should be involved in setting the parameters of any compensation proposals. The Committee should also undertake a long overdue review of the salaries of all senior administrators to assure the Board that the salaries are fair, reasonable and consistent with the University's salaries for the faculty and staff. The University has limited resources and thus must assure itself that it has properly set compensation at all levels.

5. Likewise, the Board needs a strong Audit Committee, similar to that which conducted the investigation of the Ladners’ spending and underreporting of imputed income. It should be chaired by a member with audit and accounting experience who has no strong personal or emotional ties to the President. The President’s expenses should be reviewed annually. The Committee should also be allowed to hire, as needed, outside advisors. It should immediately begin a thorough analysis of University procedures so as to assure the Board that improper expenses will no longer slip through the cracks or, even worse, be countenanced. Over the past six months, several anonymous letters have been received outlining alleged abuses in procurement, hiring of contractors, etc.

6. Begin immediately the search for a new President. Now more than ever, the University needs new leadership. As various deans have repeatedly commented, an ethical cloud hangs over the University. The selection of a new President will go far to remove this impediment. The Search Committee should be composed of Board members, faculty, deans, students, alumni, and staff. We would also add to the Search Committee, as advisors, outsiders who can give a unique and varied perspective. The new President should work with the Board to ensure that they do annual reviews and evaluations of the key members of the Administration.

7. Co-operate fully with the Grassley investigation.

8. Disavow and recover the severance package paid to Ladner. Make it a matter of University record that the 1997 contract written and signed by Ladner and former chairman Bill Jacobs is invalid and that the University had ample reason to discharge Ladner for cause. If this means litigation, do not shy from it, but embrace it. Litigation may not be the easy way, but, if required, the right way. We have a principle to uphold which quite simply is that American University does not reward improper behavior. We must make it clear that there is a cost to breaching one's loyalty to the University.

9. We are prepared to return to the Board and work to make this program successful, but only if there is substantial agreement among the faculty and students that we should serve and only if the 13 members of the ad hoc committee are removed..

This program is only a beginning. It is neither definitive nor final. But it is plan that can have immediate positive results. We welcome comments.

Sincerely,

Leslie E. Bains, Former Chair of the Board of Trustees

George J. Collins, Former Chair of the Board of Trustees

Leonard R. Jaskol, Former Chair of the Audit Committee

Paul Martin Wolff, Former Trustee
An Open Letter to the American University Community
September 30, 2005

Since assuming the Chair of the Board of Trustees in May, I have spent much time with all the Trustees discussing changes in how the Trustees operate and in a reform agenda for the campus.

I propose this to the community as a proud 1965 American University graduate who wants to see our great University continue to grow into one of the leading higher institutions of learning in the country, and be a campus that is leading a reform movement not just here, but setting new standards across the country.

Having participated in an extraordinary, indeed historic, set of meetings on Wednesday with leaders from the American University community, I am more convinced than ever that the University is capable of playing this leadership role.

I am proposing a 14-point reform agenda and I encourage members of the AU community to let me know their thoughts as the Board considers these changes. My plan is:

1) We will encourage and institutionalize more Board interaction with the community. I will host a series of town meetings on campus during the academic year inviting other Trustees and the University President to join those meetings. The aim is to encourage a free flow of ideas and debate over the direction AU should take.

2) I will propose to the Board of Trustees that we should add one student to the Board.

3) I will propose to the Board of Trustees that we should add one faculty member to the Board.

4) I will propose to the Board that we increase from three to four Board meetings a year.

5) I will set up a Committee to rapidly update the Board Bylaws and make them more consistent with 21st Century practices.

6) I will propose that the Board adopt a Bylaw that revokes Board membership from any Trustee who misses more than two meetings in a year without an excused absence. Except for the faculty and student members, each Trustee should be a contributor to the University relative to their own means.

7) I will propose reinforcing the University’s existing spending controls, annual audits of senior Officers of the University, with clear guidelines for spending and travel costs, especially in the office of the President. The Audit Committee Chairman has already put in place new financial controls. We need to do even more.

8) We will continue to formally evaluate the President’s salary and benefits in line with the appropriate comparisons and institute a more rigorous annual performance review.

9) There will continue to be zero tolerance at all levels of the University for financial or ethical lapses.

10) I propose that the Board of Trustees consciously focus on the need for greater diversity on the Board to reflect the diversity on campus and our values.

11) I have already established breakfasts and a luncheon with the Deans, appropriate members of the faculty and our student leaders for the November Board meeting. This will become a regular practice.

12) The President will not be a member of the Board of Trustees but will come to our meetings as appropriate.

13) We will reinforce the whistleblower policy at the University.

14) We will assure that Code of Conduct and Conflict of Interest statements are signed by all Trustees and appropriate members of management annually.

At the November Board meeting, I will encourage our Trustees to adopt these changes as soon as possible.

This is a truly outstanding university. We attract top faculty, students who become leaders of our country and in the various professions, staff that proudly does its work every day. We have a loyal group of alumni and donors without whom this university could not exist.

The time has come – and is long overdue – for more and better communication on this campus.

I welcome any and all suggestions from anyone associated with this university.

I look forward to working with the Board of Trustees and the American University community to advance the institution’s important mission.

Sincerely,

Leslie E. Bains
Chair, Board of Trustees
American University

Open Letter #3: The Plan

An Open Letter to the American University Community

In an Eagle editorial, Chris Hunter took us to task for not outlining "a clear path for resuscitating the University." It was not our intention to leave the AU Community in the lurch but to express our complete disgust for the majority of the Board’s lack of adherence to the basic tenants of good governance. Mr. Hunter chided us for limiting our open letters to the University community to setting the record straight and correcting misstatements by members of the ad hoc committee. The article called on us to put forth our program for change.

Here it is.

1. Remove all 13 members of the ad hoc committee from the Board. It is for good reason that the faculty and the students have no confidence in them. Over the last year, they have demonstrated an unmistakable record of putting the interests of Ben Ladner above those of the University. Only members of the ad hoc committee voted to give Ladner a salary raise even though the Board's outside advisors recommended to the contrary. Only members of the ad hoc committee favored bringing Ben Ladner back as President with an $80,000 to $100,000 salary for his wife and reinstating the chef and social secretary. Only members of the ad hoc committee took the lead in overruling the severance negotiation committee and raising the dismissal package so that Ladner would have his back taxes and reimbursement obligation covered out of the University’s own funds. It was the ad hoc committee which turned the golden parachute into platinum.

Keep all other remaining Board members. Although we disagree with their voting in favor of a severance package, we do not question their loyalty to American University. We believe their decisions on severance and discharge were wrong; but we also believe that they have mostly put their fiduciary duty to the University first and foremost.

Remove the President from the Board. Develop a program for selecting Trustees that will include the input and participation of the President, the faculty, the students and the alumni.

2. The delay of formal changes in governance to May, 2006 by the current Board is a sham. This stall tactic is an attempt to have the proactive students graduate and the faculty and alumni lose interest or hope. Therefore, immediately begin open forums on the 14 point plan (a copy of which is attached) for improved governance developed by Leslie Bains and, after consultation with all constituencies, implement a final plan within 60 days. Schedule 4 Board meetings a year, with the spring meeting a "retreat" involving students and faculty. While the Bains plan is discussed, take immediate action to make all Committee and Board meetings more open and their actions more public.

3. Once the Board governance plan has been approved, begin discussions with all concerned groups on improving the governance of the University at all levels. The faculty, student and alumni organizations should have rules of governance that mesh with and complement those of the Board. There should be an interwoven fabric of governance that brings together cohesively all interest groups.

4. As under George Collins and Leslie Bains, insure that the Compensation Committee has members and most specifically a Chairman who are well versed in compensation issues. Continue having the Committee use outside advisors. We were quite pleased with the work of Arnold&Porter and Mercer&Associates and would urge their continued retention. As the search for a new President goes on, the Compensation Committee should be involved in setting the parameters of any compensation proposals. The Committee should also undertake a long overdue review of the salaries of all senior administrators to assure the Board that the salaries are fair, reasonable and consistent with the University's salaries for the faculty and staff. The University has limited resources and thus must assure itself that it has properly set compensation at all levels.

5. Likewise, the Board needs a strong Audit Committee, similar to that which conducted the investigation of the Ladners’ spending and underreporting of imputed income. It should be chaired by a member with audit and accounting experience who has no strong personal or emotional ties to the President. The President’s expenses should be reviewed annually. The Committee should also be allowed to hire, as needed, outside advisors. It should immediately begin a thorough analysis of University procedures so as to assure the Board that improper expenses will no longer slip through the cracks or, even worse, be countenanced. Over the past six months, several anonymous letters have been received outlining alleged abuses in procurement, hiring of contractors, etc.

6. Begin immediately the search for a new President. Now more than ever, the University needs new leadership. As various deans have repeatedly commented, an ethical cloud hangs over the University. The selection of a new President will go far to remove this impediment. The Search Committee should be composed of Board members, faculty, deans, students, alumni, and staff. We would also add to the Search Committee, as advisors, outsiders who can give a unique and varied perspective. The new President should work with the Board to ensure that they do annual reviews and evaluations of the key members of the Administration.

7. Co-operate fully with the Grassley investigation.

8. Disavow and recover the severance package paid to Ladner. Make it a matter of University record that the 1997 contract written and signed by Ladner and former chairman Bill Jacobs is invalid and that the University had ample reason to discharge Ladner for cause. If this means litigation, do not shy from it, but embrace it. Litigation may not be the easy way, but, if required, the right way. We have a principle to uphold which quite simply is that American University does not reward improper behavior. We must make it clear that there is a cost to breaching one's loyalty to the University.

9. We are prepared to return to the Board and work to make this program successful, but only if there is substantial agreement among the faculty and students that we should serve and only if the 13 members of the ad hoc committee are removed..

This program is only a beginning. It is neither definitive nor final. But it is plan that can have immediate positive results. We welcome comments.

Sincerely,

Leslie E. Bains, Former Chair of the Board of Trustees

George J. Collins, Former Chair of the Board of Trustees

Leonard R. Jaskol, Former Chair of the Audit Committee

Paul Martin Wolff, Former Trustee

Monday, November 28, 2005

Back from Break

I apologize for the lack of posts... I hope that everyone had a great Thanksgiving (and for you AU community members, that you took some time off and enjoyed break).

I'll have some things to post soon. In the meantime, I have to get to bed because I have class at 8:30.

Thursday, November 17, 2005

Board "report"

Up at the AU governance website. I'll let you all draw your own conclusions.

American University Board of Trustees
Report of the Fall 2005 Meeting
November 10-11, 2005

Opening Statement

In the spirit of good governance and openness, the Board of Trustees leadership is working with the AU administration to make available information on the trustees meetings that took place on campus November 10 and 11. Presuming this information will be helpful and well received, we intend to continue to do this into the future. These meeting summaries and other trustee information will be posted at the new governance Web site, as well as on the president’s own Web page.

Committee Activities

Much of the research and general business of the Board of Trustees take place in the work of the board’s standing and ad hoc committees. Campus representatives participate in the general sessions of some of the committees’ meetings, including meetings of the Academic Affairs, Campus Life, Finance and Investment, and Campaign Steering and Development Committees. At the regular board meetings, the chairs of the various committees report out to the full board and may include recommendations for the board to approve various resolutions and policies affecting the operations of the university. On Thursday, November 10, 2005, several standing committees met:

  • Audit Committee – Chaired by trustee and AU alumnus Charlie Lydecker, the committee reviewed the report of the university’s external auditor, KPMG, on the university’s financial statements for academic years 2003-2004 and 2004-2005 and discussed ongoing validation and testing of internal financial and management controls. In addition, the committee decided that the president’s expenses and those of other executives will be regularly reviewed.
  • Trusteeship Committee – Chaired by trustee and vice chair Tom Gottschalk, the committee discussed the composition and leadership for the next two-year term (2005-2007) of the board’s standing and ad hoc committees. Of particular note was the committee’s goal of having a more diversified board and discussion of trustees’ responsibilities.
  • Finance and Investment Committee – Chaired by trustee and AU alumnus Gary Cohn, managing director and co-head of the Equities Division of Goldman Sachs & Co., the committee considered the mid-year report on budget and capital refinancing.
  • Academic Affairs Committee – Chaired by Bishop John Schol, the committee discussed the acting provost’s report in general session and heard from the student representatives to the board from the Student Government and Graduate Leadership Council about their opposition to the proposed change to the Faculty Manual regarding voting members of the schools’ and colleges’ rank and tenure committees.
  • Campus Life Committee – Chaired by trustee and AU alumna Pamela Deese, the committee focused mainly on the annual presentation of a set of campus “metrics,” which were prepared by vice president of campus life Gail Hanson and her staff and by Karen Froslid-Jones, director of the university’s Office of Institutional Research and Assessment. As part of the discussion on the presentation, the committee reviewed the 2004 Freshman Census, 2005 Graduation Census, and 2005 Campus Climate Survey.
  • Campaign Steering Committee – Board chairman Gary Abramson led the discussion. Vice president of university relations Al Checcio updated the committee on the progress of AnewAU, the university’s capital campaign. Since the campaign was announced in 2003, AU has received to date approximately $109 million in gifts and pledges toward a total goal of $200 million. In addition, the number of alumni participating in the campaign has increased 14 percent over the same time last year. The committee discussed the resignation of Mr. Checcio, effective January 1, and the organization and management of the office following his departure.

Full Board Meeting

On Friday, November 11, 2005, the board held its regular fall meeting in the Board Room on the sixth floor of Butler Pavilion. Eighteen (17 in person and 1 person by phone) of the board’s 20 trustees and representatives from all six of the campus constituencies (undergraduate, graduate and law students, and faculty, staff and alumni) participated in the general session.

Report of the Chair – New board chairman Gary M. Abramson welcomed the other trustees, the interim president Neil Kerwin, the university’s vice presidents, and the six campus representatives (Professor Tony Ahrens, chair of the Faculty Senate; Kyle Taylor, president, Student Government; Peter Brusoe, executive director, Graduate Leadership Council; Adam Cohen, president, Student Bar Association; Robin Beads, president of the Staff Council; and Margot Herron, representative of the Alumni Association). In his opening remarks, Mr. Abramson thanked the AU community for its loyalty, its concern for the university’s progress, and its offers to assist the board in its efforts to return the university to stability and further growth.

Report of the Trusteeship Committee –Following the board’s discussion of Thursday’s Trusteeship Committee meeting, the full board approved new committee memberships and leaders for 2005-2007. Committee chair Thomas Gottschalk noted that the Trusteeship Committee will work in conjunction with the board’s Governance Committee (see below) to make recommendations for committee charters and defining board committee roles and functions and will present them to the full board at its winter 2006 meeting.

Committee chairs for the 2005-2007 term are as follows: Academic Affairs – Bishop John Schol; Athletics – Jack Cassell; Audit – Charles Lydecker; Campaign Steering and Development – Gary Abramson and Gary Cohn, co-chairs; Campus Life – Pamela Deese; Compensation – Gary Abramson; Finance and Investment – Gary Cohn; International Affairs – Jeffrey Sine; and Trusteeship – Thomas Gottschalk.

Report of the Special Committee on Governance – Chaired by trustee and AU alumna Pamela Deese, the board’s Special Committee on Governance updated the full board on its activities since being appointed in late October. The committee –whose other members are AU alumnus and board chairman Gary Abramson, AU alumna Regina Muehlhauser, Bishop John Schol of the Baltimore-Washington Conference of the United Methodist Church, and AU alumnus Jeffrey Sine – has requested consultancy proposals from the American Council on Trustees and Alumni’s (ACTA’s) Institute for Effective Governance, the Association of Governing Boards of Universities and Colleges (AGB), and the National Association of Corporate Directors (NACD) to consult with the committee to fulfill its charter.

The committee’s charter is “to evaluate board governance and make recommendations to the full board for improvements in such governance to enable the board to more fully and effectively meet its fiduciary responsibilities to the university.” The board directed the committee to consult with university constituencies, other universities, and appropriate consultants to inform its perspective and to otherwise contribute to its work and eventual recommendations.

In addition to describing the committee’s work with consultant organizations, Trustee Deese informed the board of the committee’s timeline for its activities:

  • Mid-November to mid-December 2005 – determine which consultant(s) to retain.
  • January to mid-February 2006 – conduct a formal self-assessment of the board under the direction of the consultant(s).
  • Mid-February 2006 board meeting – make its preliminary report to the board.
  • End of February through March 2006 – conduct extensive and inclusive consultations with the university community, including the university-wide Working Group on Governance, the Faculty Senate’s ad hoc Committee on Governance, the ad hoc University-wide Student Task Force on Reformation of University Governance, and whichever consultant is selected.
  • May 19, 2006 board meeting – make final recommendations to the board.

Report of the Special Committee on the Presidential Search Process –Chaired by AU alumnus Matthew Pittinsky, the board’s Special Committee on the Presidential Search Process is composed of AU alumnus Jack Cassell, The Rev. Jerome King Del Pino, the general secretary of the General Board of Higher Education and Ministry of the United Methodist Church, and AU alumna Robyn Mathias. The committee’s charter from the board directs it: “to involve American University students, faculty, donors, alumni, and other trustees in establishing a process for identifying a new university president, and to recommend to the Board of Trustees such an inclusive and informed search process as to ensure the best possible leadership for the future of the university.” At the November 11 meeting, Mr. Pittinsky made the committee’s first report to the b oard, following several meetings the previous week with the university’s deans and representatives from the university’s Faculty Senate, student leadership, and Staff Council. Based on the committee’s report, the board decided to schedule the kick-off of an inclusive presidential search process no earlier than June 2006, after the end of the academic year, so that the board can focus on governance changes that will help it attract the best possible candidate and ensure that important lessons from recent events have been learned. In the meantime, no solicitation or appointment of a candidate will be made outside of a committee-based search process.

Report of the Standing Committees –In addition to the board meeting’s general session, the campus representatives also participated in several of the standing committee meeting general sessions. The committee chairs reported to the board on each committee’s general session. Bishop John Schol, the chair of the Academic Affairs Committee, reported on the committee’s discussion of Interim Provost Ivy Broder’s report and asked her to highlight for the full board some of the university’s academic achievements since the May board meeting. Following that report, the committee asked student representatives to speak about their opposition to the Faculty Senate’s proposal to amend the Faculty Manual and end voting membership positions for students on the schools’ and colleges’ rank and tenure committees.

As was reported in the summary of the Campus Life Committee’s Thursday meeting, the chair, Pam Deese, asked vice president of campus life Gail Hanson and director of institutional research and assessment Karen Froslid-Jones to summarize their findings from the “campus metrics,” the results of the 2004 Freshman Survey, the 2005 Graduation Survey, and the 2005 Campus Climate Survey.

Mr. Abramson, the chair of the Campaign Steering and Development Committee, reported on the Thursday committee meeting and presented some of the highlights of its discussion. The “Campaign for AnewAU” will continue as a university priority. As part of the committee’s review of the capital campaign’s performance, Mr. Abramson spoke about the successful leadership and recent resignation of vice president of university relations Al Checcio, who will take a similar position at Fordham University. In light of Vice President Checcio’s significant contributions to the work of the Office of University Relations and the current success of the university’s capital campaign, the board approved a formal resolution of appreciation of Mr. Checcio’s achievements and wished him well in his next role.

Reports of the President, Provost, Vice Presidents, and Campus Representatives – The materials the president sends to the board to prepare for its meeting includes reports from the president, provost, vice presidents, and the six campus representatives. These reports inform the trustees about significant events and achievements since the board’s last regular meeting (May 2005) and present to the board the issues and concerns affecting the university’s offices and representative organizations. The reports also provide material for comment and discussion during the general session. Later this month, these reports will be made available on the university’s governance Web site, www.american.edu/governance .

Another item that will be accessible from the AU governance Web site is the report of the ad hoc University-wide Student Task Force on Reformation of University Governance. Among the committee’s recommendations are to:

  • Add three students and three faculty to the Board of Trustees as voting members;
  • Remove the president as an ex-officio member of the board;
  • Increase the number of annual regular board meetings from three to four.

Executive Session

The board met in executive session following the open meeting.

Other Board Activities

  • Town Meeting – On Thursday, November 10, six trustees (David Carmen, Jack Cassell, Pamela Deese, Robyn Mathias, Matthew Pittinsky, and Bishop John Schol) held a town hall meeting with close to 200 students, faculty, and staff in attendance. The meeting was co-hosted by Matt Pittinsky and Student Government president Kyle Taylor. The gathering prompted a straight-forward exchange between trustees and the campus community on the events of recent weeks. The topics discussed included the settlement agreement; the various campus petitions and “no confidence” votes; the presidential search; future governance, oversight, and changes to the board; openness, inclusion, and communication; the Senate Finance inquiry; and others.
  • Breakfast for Student Leaders – On Friday morning, November 11, the board hosted a breakfast for approximately 40 undergraduate, graduate, and law student leaders.
  • Post-Board Meeting Sessions with Students –After the formal board meeting concluded, vice chair Thomas Gottschalk met with approximately 20 students who had assembled outside of the board room to voice their concerns. Mr. Gottschalk summarized some of the board activity from the day, reviewed the recent chain of events and answered student questions. In addition, chairman Gary Abramson and Interim President Neil Kerwin met with reporters from the Eagle and the American Weekly to summarize the board meeting.

Conclusion

I hope that you find this summary to be both informative and helpful. You can provide comments and suggestions to trustee leadership at aubot@american.eduand to the AU interim president at president@american.edu.

Gary Abramson
Chairman, Board of Trustees

Wednesday, November 16, 2005

Hm.

It's not online, so generally I would just link, but I'm going to repost it in its entirety, since you can't read it unless you grab an Examiner today! Check out the very very interesting comments from Carmen. Someone is scared...

By MIKE RUPERT
Examiner Staff Writer
Four former American University trustees who resigned amid the investigation into ex-school president Benjamin Ladner said in an open letter Tuesday that the current board is disseminating “inaccurate” and “flat-out false” information about what happened behind closed doors this summer.
The trustees — former board chairwoman Leslie Bains, George Collins, Leonard Jaskol and Paul Wolff — said assertions that the ad hoc committee of 13 pro-Ladner trustees, dubbed the “Gang of 13,” never existed are completely false and that the “gang” tried to negotiate a quick reinstatement of Ladner before the students or faculty could voice their opinions.
Current trustee David Carmen, considered the leader of the “gang,” said he feels the former trustees’ letter is “sad.”
“The writers of this letter seem intent on sowing dissent, squandering university resources and misleading the public about the matters of the last few months,” Carmen told The Examiner on Tuesday. “Each of these individuals chose to continue to pursue their personal agendas and remove themselves from the fray rather than make the tough choices needed to chart a new, positive course for American University.”
The four trustees said that early in the investigation, the larger group repeatedly attempted to “cut back” the audit process from three years to one and consistently tried to gain complete control of negotiations.
Trustee Matthew Pittinsky, who organized a town hall meeting with students last Thursday, said the group never existed.
“The idea that the board was split with factions — that their even was a group of 13 trustees who acted as a block — is false,” said Pittinsky. “I personally watched all trustees vote their conscience, change their mind over time, agree and then disagree with certain colleagues, etcetera.”
The letter states the group routinely sent e-mails under the title “ad hoc committee” and listed 13 members.
The letter also disputes statements that the report by the board’s Audit Committee was accepted “without reservations.”
“This statement is completely and absolutely reckless and bears no relationship to the truth,” the letter states. “[The] effort is marked by repeated efforts by various board members to curtail its effort and ultimately to dilute its conclusions — all in ways that only benefited Ben Ladner.”
mrupert@dcexaminer.com
-----
Turmoil continues at AU
- Four former trustees sent a second open letter to the AU community.
- The letter states current trustees are trying to bury the truth.
- Current trustee David Carmen called the Ladner drama “a reign of terror in the board room.”
- Carmen said former board chairwoman Leslie Bains refused to share audit information for months.



___________________

Now that's funny. Because they pretty much say the same thing about you, Mr. Carmen. And funnily enough, they actually have the record to BACK that statement, unlike you.

Tuesday, November 15, 2005

Questions?

By the way guys, if anyone has questions on the letter from the 4 former trustees posted below, esp. on some of the more specific stuff, please comment and I'll do my best to answer it. I should be able to answer most of the specific questions you guys could come up with.

My personal stance on the letter? These 4... they're the ones who are looking out for us, and they're the ones telling the truth. I wouldn't trust the current board or its members further than I could throw them (and for those of you who haven't seen my pathetic, puny arm muscles, let me tell you, it's about an inch).

I bet we'll get another weak rebuttal about moving on and the wonderful future the BOT can provide all us students who pay $40K a year... don't buy it. No confidence in this BOT means we don't trust them. They have been reactive, not proactive. We have the jump on them. They think they can outlast us on this. We have to show them that is not the case!

An Open Letter (#2)

An Open Letter to the American University Community


We write again to set the record straight. Both in the press and "town hall" meeting with the students, statements were made that were far from accurate and in certain instances flat-out false. It is important that you know the truth.

The Ad Hoc Committee

It was repeatedly stated that there was no group, no faction of the Board. A Trustee went so far as to call the idea of a group "a myth." The facts speak differently. The name ad hoc committee was created by its members. They sent e-mails to other Board members under this title and identified in their mailings who made up the committee. They are Gary Abramson, David Carmen, Jack Cassell, Pam Deese, Jerome Del Pino, Fuad El-Hibri, Hani Farsi, Charles Lydecker, Robyn Mathias, Regina Muehlhauser, John Petty, Bob Pincus, and Jeff Sine. At the "town hall" meeting, it was further stated that there had been no relationship with Ladner by any group of board members. To the contrary, some or all of them met with Ladner after he was suspended and negotiated his return. The terms included the reinstatement of the chef and the social secretary and, a new benefit, a salary for Nancy Ladner of $80,000 - $100,000, a level attained by only a few faculty members. They also called for a review of Ladner’s compensation within the year. Jeff Sine further negotiated a reduction in reimbursements to the University of $21,000 and not the $125,000 recommended by the Audit Committee. They agreed with Ladner not to enforce the imputed income amount set by the Audit Committee, but rather to have it negotiated between them and a third party. They attempted (luckily unsuccessfully) to call a special board meeting and pass their proposal before either the students or the faculty had an opportunity to express their views on Ladner's return.

The 2005 Salary Negotiations with Ladner

David Carmen, the leader of the ad hoc group stated he had been concerned about not paying Ladner above his peer group and that reducing Ladner's salary was the "right thing to do." This was clearly not his view at the time the salary issue was resolved. The Board's outside advisors recommended a salary at which they were willing to give the Board a "comfort letter" that the compensation was fair and reasonable. The advisors' recommendation was approved by the Board, with six dissenting votes-all of whom argued for higher compensation. The six dissenting votes all became members of the ad hoc committee, including its leader.

In addition, there were at least six Board meetings in 2004 and 2005 at which Ben Ladner’s compensation, with updates by the consultants, was discussed with the full Board. For Mr. Carmen and the ad hoc committee to claim they did not know the President’s compensation is disingenuous.

The Audit Report

Matt Pittinsky stated that the report of the Audit Committee was accepted "without reservations," "without amendment." This statement is completely and absolutely reckless and bears no relationship to the truth. The history of the Audit Committee's investigation is marked by repeated efforts by various board members to curtail and ultimately to dilute its conclusions--all in ways that only benefited Ben Ladner. The members who so acted all became part of the ad hoc committee. In early May of this year, Len Jaskol, Chairman of the Audit Committee, made a three hour presentation of the Committee's preliminary findings. The Board voted unanimously to continue the investigation. From that moment forward, there were constant attacks on the Committee and its outside advisors. The objectivity of the advisors was constantly questioned. They were accused of being "out to get Ben." John Petty tried to get the audit cut back, arguing for something he called a "standard audit." He ultimately, as a member of the Audit Committee, dissented from the report, arguing that the recommendations should be prospective only. This meant that Ladner would get a slap on the wrist, but would not have to pay the University one cent or have his tax returns amended to show additional imputed income. David Carmen in an e-mail urged Leslie Bains, as Chairman, to devote the University's energy to uncovering the whistleblower rather than the audit. At the September 12 board meeting, Bob Pincus urged that the audit go back only one year and not the three years chosen by the Audit Committee.

This opposition to the Audit Committee's work was only a prelude to the efforts made at the October 10 board meeting. After Len Jaskol made the Committee's report, amendments were made by the ad hoc committee to change the proportion of reimbursements and imputed income, an action which would have benefited Ben Ladner at the University’s expense. The amendment passed with all members of the ad hoc committee present voting in favor. Len Jaskol, George Collins and Gary Cohn refused as members of the Audit Committee to sign any altered report or audit. Only John Petty offered to sign. The Audit Committee report and an affirmation letter to KPMG (the University’s auditors) attesting to the validity of AU’s financial condition, if left unsigned by its Chairman, would have grave financial repercussions to the University. Despite this, several board members (all members of the ad hoc committee) voted to uphold the amendments. The amendment was eventually reconsidered and voted down, not as a matter of doing the right thing, but because Len Jaskol demanded they do the right thing.

The Severance Package

At the October 10 Board meeting, the ad hoc committee proposed that a group comprised entirely of their members negotiate a severance package with Ladner. This was defeated and a more objective committee was appointed. The ad hoc committee, however, had the last word. When the negotiators made their recommendation of a severance amount, it was amended upward by the ad hoc committee members. They raised the amount so that Ladner would come out "whole" and not suffer any consequences of paying taxes on his improper behavior. Bob Pincus made an amendment and the ad hoc committee approved over $500,000 be added to the package with the clear result that University is funding Ladner's reimbursement as well as paying the taxes on his imputed income. The committee also tried to negotiate (unsuccessfully) that Ben Ladner did not have to pay interest on the $125,000. After the meeting, one of the ad hoc committee members tried to increase the package even further and add $800,000 to the deal to compensate Ladner for his alleged lost professorship.

To this day, they assert that the severance package would minimize the University’s financial exposure. Just the opposite is true as litigation, if pursued by Ladner, would have cost approximately $400,000. The package totaled $3,750,000, a difference of $3,350,000. As they say, just do the math. Also to this day, they assert that the severance package would bring closure and allow the University to go forward. In fact, just the opposite has occurred. The AU community has reacted negatively, the Justice Department has begun a formal investigation, the IRS is poised to audit, and the Senate Finance Committee is probably going to use AU as the poster child for bad governance. Is this closure?




The 1997 Contract

Former Chairman Bill Jacobs and Ben Ladner secretly negotiated the 1997 contract. It was never authorized nor ratified by the Board. Jacobs never informed his successor George Collins of its existence. Until early 2005, no one on the Board knew of its existence with the possible exception of John Petty, then Chair of the Audit Committee, with whom Ben Ladner says he discussed certain of its terms. Petty had a duty to inform the Board of the existence of the contract, as did Ben Ladner, Bill Jacobs, and Mary Kennard as Secretary. On numerous occasions, Paul Wolff and others asked John Petty, as then Chairman of the Audit Committee, what the costs were of maintaining the presidency above and beyond Ladner's salary. The Board was repeatedly told that the imputed income amounts were quite small, always only a few thousand dollars. Petty never told the Board until 2005 that there had been no audit and that the numbers came from Ladner.

The Audit Committee gave Ladner the benefit of any doubt and determined his tax and reimbursement obligations as if the '97 contract were valid. To determine, however, what, if any, obligation the University had to Ladner if he were discharged, the issue of the contract's validity had to be confronted. Two law firms and University counsel opined that the contract was invalid. There was and is no opinion to the contrary. Yet seven members of the ad hoc committee voted to uphold the contract.

Resignations

In a recent DC Examiner article it was stated, “Trustees said they feel no pressure to resign”. Given the votes of no confidence by the students, Faculty, Deans, staff and other stakeholders of the University, how could they not feel pressure to resign? This insensitivity does not bode well for American University. If they are the agents of change, as they claim to be, the various constituencies ought to be extremely concerned.

We hope this information will be of assistance to you in assessing the current Board's statement to always put American University first.

Sincerely,

Leslie E. Bains, Former Chair of the Board of Trustees

George J. Collins, Former Chair of the Board of Trustees

Leonard R. Jaskol, Former Chair of the Audit Committee

Paul Martin Wolff, Former Trustee

Monday, November 14, 2005

News Round-up

I apologize for not posting over the weekend. I have my thesis proposal due this week, so I was trying to make sure I was all set for that.

In the meantime, the Chronicle just released its annual numbers for executive compensation, and some of the numbers are pretty massive. Of course, Ladner's name comes up both times as an example of how things can go horribly wrong.

From the Chronicle of Higher Education:
Main index of articles on compensation (picture of Ladner on the main page... what a suprise).
The Federal Lens Focuses on College Chiefs' Pay
A possible cause of such episodes, he says, is that many college presidents spend a lot of time with wealthy board members and donors — American University's board, for example, has included several senior executives of Fortune 500 companies — and can forget that a president who adopts the lifestyle of a corporate executive is unlikely to be accepted by faculty members, students, or the news media.

"In moving in these glitzy circles, you begin to believe that you're part of that scene," Mr. Ingram says. "It becomes, psychologically, a sense of entitlement." Even so, he adds, cases of lavish presidential expenses are rare.


For a summary, the New York times picked up the story:
New York Times: College Leaders' Earnings Top $1 Million

It's also Monday, which means The Eagle!

Students Express Frustration in Town Hall Meeting with Board Members
Monica Price, a graduate student in the School of International Service and a member of the activist group Students for a New AU, read a statement in which she blasted the board. "It is your actions and inactions that have brought us here," she said. "You were in the driver's seat, not us."

SG Senate supports ex-board members' frustrations
The Undergraduate Senate passed a resolution yesterday supporting the four former members of the board of trustees who have resigned in recent months, in addition to a bill calling on the board to amend its bylaws in accordance with the recommendations by the Ad-Hoc University-Wide Committee on Reformation of University Governance.

Staff Editorial: Board of Trustees: close, but no cigar

The board met last Thursday in an open forum with students and faculty. The aim was to make the transition process more transparent, but it was apparent that wounds still run deep over the departure of former president Benjamin Ladner.

Board of Trustees Strives for Transparency
The topic of a student serving on the board was mentioned several times during the meeting, Abramson said. "We have heard loud and clear about student member or members on the board" said Abramson, adding that board members are "keeping an open mind on this and no one has made a clear decision either way yet."