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.

Monday, October 31, 2005

Very quickly

Quickly, because Monday has lasted forever... and actually, now it's Tuesday. Hm.

Tomorrow a group of student leaders will be meeting with Chair Gary Abramson. I have been invited to this meeting. The official purpose to address any questions about the settlement and to then start discussion on governance. If you would like to leave comments here, I will keep them in mind during the meeting, and try to voice concerns as best I can.

We are hoping that there will be a town hall meeting with at least one trustee sometime this week. As in, the entire school is invited. So, when the announcement is made, I'm basically asking you guys to show up. to ask the tough questions, and to show the board that this is a process we want to be involved in, but that we also want the governance question resolved before any major decisions about the new president are made.

Related to this, we will be tabling Tuesday through Friday between 12-4, when we can the people there. We will be raising awareness about the Town Hall meeting, and also starting on engaging people by providing a jumping off point for questions for the Board members.

Sound good guys?

I'll try to post tomorrow with some thoughts post-meeting. In the meantime, hope you all sleep well and everyone (well, everyone who is a student at least) has completed their homework for tonight. Happy Halloween!

I almost forgot. Here's the link to the Editorial in the Post today: Rethink the Ladner Deal. And something else as well, a Letter to the Editor.

Saturday, October 29, 2005

Some thoughts and a link

If you haven't read Sen. Grassley's letter to The Board, it's hosted at the Washington Post and also at the Finance Committee's website (currently second item down). It's a PDF file both times, just to warn you.

My thoughts on the Senate thing are pretty simple... it's going to work. It's not bad press for American University, it's bad press for the Board of Trustees. A distinction MUST be made between the two entities. The Board of Trustees does not represent American University. Simple. End of story. American University as a community... our deans, our faculty, our students, our staff, our campus as a whole, is strong, and perhaps stronger than ever. Not only are the students of American University learning a lot, but everyone here is... other schools are learning their lessons. AU is not the joke here, the Board is, and Ladner is.

A professor-friend called this situation "an eminently teachable moment." And I completely agree 100%. We just need to make sure we aren't the only ones learning the lesson.

Friday, October 28, 2005

Good news!

50th post, and some good news.

Senate Panel Requests Records From AU on Ladner and Board

In a four-page letter, Sen. Charles E. Grassley (R-Iowa) asked for details on all no-bid contracts over $100,000, copies of all correspondence with the Internal Revenue Service for the past five years, biographies of each trustee and documentation of how the board made certain decisions.

AU is the first college to get an inquiry letter in an ongoing review of charities led by Grassley and Sen. Max Baucus (D-Mont.), and it broadens the scope of the committee's oversight. "It appears the AU board could be a poster child for why review and reform are necessary," Grassley wrote in a letter sent to the acting AU board chairman, Thomas A. Gottschalk, yesterday afternoon.

Please please, continue signing the forms. We will be tabling between 12 and 4 tomorrow in MGC with laptops as well, if you'd rather do it then. In the meantime, it's only a link away.

INFORM CONGRESS!

Why is this good news? It's above the Board. They're finally going to be held accountable by someone with real power. Also, AU can set an example, which is not necessarily a bad thing. If we truly turn this school around and SHOW that we're a strong community, and that we CAN do what's right, then I think we will get a lot of respect. BU went through something similar, and yet I can't think of anyone from back home who thinks of that first when they think of BU (I actually think of the McDonalds there, because they have one of those policies where if your food isn't ready in under 90 seconds, it's free -- lemme tell you, AU's McD's could use some of that same speediness).

P.S. Editorial/Opinion in USA Today mentions us as well...

Thursday, October 27, 2005

Listserv up

I gave up on OIT setting up a listserv, so I set up a Google Group for Students for a New AU. If you're interested in joining (and PLEASE, only those who are serious), come join. I have to approve each membership, so if I don't know who you are, expect an email first.

We welcome students, faculty, staff, parents, alumni, pretty much anyone who is interested and connected to AU in some form. But please join only if you want updates on the group, and you want to help out.

Thanks guys.

In response...

I had a very lengthy response written to the letter sent out today over Today@AU by Tom Gottschalk and Gary Abramson. And then Blogger ate more than half of it because of an HTML issue. Sigh.

So, to summarize my thoughts, since I should be writing a paper.

First, this is too little, too late. The Board is reacting to the letter from Leslie, Paul, Len, and George, they're reacting to the media, they're reacting to all of the schools' and groups' statements. There is a tidal wave going against the Board, and this is their attempt to placate the AU community. For me, however, this did the opposite. In the letter, they admit they would have fired Ladner "for cause" had he not taken the sweet resignation package they offered him. And only a fool wouldn't have taken it. It's bad enough that they padded the amount they gave to him, but what's worse, and much more offensive, is that they gave it to him at all. The Board, completely untrustworthy as it is, was still smart enough to pull it together and decide to 1) fire him for cause, 2) declare Ladner an "at-will" employee and the '97 contract invalid, and 3) determine that he should not receive a severance package. But they decided to be nice: offer him one last chance to resign. And regardless of what they say, this was not out of fear of litigation (Gottschalk said in the faculty meeting on Monday that there was a "Strong" chance of winning, although no lawyer would ever say a case was "iron clad") but instead out of that same misplaced loyalty for Ladner.

Furthermore, they've decided to add insult to injury by trying to move onto the Presidential search without fully focusing on their own internal problems. Ah, Gottschalk says, we have a subcommittee for governance! Well, we all know that. And you also say that you want to be more involved on campus. Yet, there are no students on this subcommittee, no faculty, no staff. Sure, you might not trust the students, fine. With your track record in mind, that's not surprising. But how about a faculty member or a staff member? Surely, they are people on campus who have the "Specialty" knowledge you're looking for. I'm not going to trust the Board to reform itself when they've shown no indication they want to change. Every single decision they make looks the same: ethically and financially stupid. If I was a Presidential candidate looking for a job at AU, I would love the community that I see after this event... the way the deans, faculty, students, and staff have come together after this crises. The only thing that would make me hesitate is the Board. AU is strong, the Board is not.

The Board is on the run. With every resolution passed, with every student's comment that they can't be trusted, they lose ground. They know that the AU deserves better. And this Board will never, ever, be able to deliver that.

Letter from Gottschalk and Abramson

TO:

AU Community

FROM:
Tom Gottschalk, Acting Chair, Board of Trustees


Gary Abramson, Chair-Elect, Board of Trustees

SUBJECT:
Resolving the Past, Improving the Future
_____________________________________________

We want to share with the campus our perspective on what we as officers
of the board have learned from what has become a very emotional and
highly charged issue. We also want to make clear our commitment to
improve board governance and provide leadership and direction to the
university.

We hope this communication and the ensuing dialogue with the community
will be considered not only responsive to the faculty resolutions and
student expressions of concern, but also to what we see as our
responsibilities as trustees of this great university.

Apology to the Campus

First, we want to be clear. We are chagrined that the board’s own
processes over the years did not allow us to have a clear understanding
of what contracts were in place, their provisions, and the various forms
of compensation which the president was receiving. We acknowledge this
deficiency, and we apologize to the entire community for it.

Had we been more vigilant and had more robust processes, the situation
we have had to confront might never have occurred. The board has
resolved to do better, much better, in the future—to be a board fully
worthy of the fine institution to whom its care is entrusted.

This controversy has placed a great strain on the university and the
board. Many in the greater university community respected Dr. Ladner as
an effective leader under whom the university prospered. Applications
tripled. Selectivity improved measurably. The endowment grew eight times
in size in one decade. Most importantly, the national stature of
American University improved in external rankings thanks to the quality
of the faculty and the students attracted here.

The 23 trustees wrestled with the allegations against Dr. Ladner and the
record of university performance during his tenure out of fairness to
him, but most of all in fairness to the university and all its
stakeholders. This was made more difficult by ambiguous contract issues
and blurred boundaries of conduct appropriate to the president on behalf
of the university. Notwithstanding vigorous internal debate and too
often public disagreement, the board followed the appropriate process of
an independent review by its Audit Committee aided by professionals,
acceptance of the committee’s report and recommendations, a
determination that Dr. Ladner under the circumstances should not
continue in his leadership capacity, and ultimately that he should
resign his employment or face termination.

Our Decision to End the Controversy

We will not here revisit all the arguments which we fully considered in
deciding whether to risk probable litigation between the university and
Dr. Ladner or, instead, to resolve all disputes and avoid altogether the
risks, costs, and delay inherent in litigation.

The board did agree that there had to be a limit to the consideration
which might be paid to Dr. Ladner were he to agree to resign and release
all claims against the university. The board held two sessions where it
heard the strong views from the campus that he not receive a “golden
parachute.” We also heard from the campus that it wanted a prompt
resolution of the controversy.

Hence, the board debated and decided what its final and best offer would
be. We gave Dr. Ladner approximately three days to accept or reject it.
That offer had a one-time severance payment and allowed him to retain
previously awarded retirement funds which had accrued to his benefit.
Had he rejected it, the board was prepared to accept litigation as the
only alternative.

In reaching our decision we received and relied on the advice of counsel
from two prestigious law firms who were selected specifically for their
expertise on tax and litigation matters. These counsel advised us that
each issue in the university’s relationship to Dr. Ladner could be
contested as part of any litigation, that there could be no guarantee
the university would prevail, and that the litigation which would likely
ensue would be costly, lengthy, and potentially disruptive of university
operations. Finality is something lawyers and the board had to value as
an important benefit of a prompt and comprehensive resolution of the
controversy.

Moving On and Moving Forward

There are many lessons to be learned from this episode so we can try to
prevent history from repeating itself at American University. We haven’t
identified them all yet. But, among them:

The need for the trustees to be less isolated and insulated from the
campus and to have a better understanding of the concerns and
priorities of all who work and learn here.
The need for improved and more inclusive governance. To this end, the
board has formed a Governance Committee which will reach out to
include all university constituencies in its work. The board is
supportive of initiatives by the university community to develop and
communicate suggestions to meet this need, including principles of
governance, board structure and composition, operating procedures,
agenda prioritization, and other aspects of governance.
The need for the board to be more vigilant with respect to financial
matters, including but not limited to compensation. We have made a
good start on this, but there is more that needs to be thought about
and developed.
The need for the board to be more transparent in its discussions and
decisions. The Governance Committee will involve campus
representatives in developing recommendations in this respect as
well.
The need to assure that the board itself, as a matter of leadership,
reflects the values of the university in its work and processes.

We are concerned that some donors who identify with Dr. Ladner may
withhold their contributions, just as other donors may do in reaction to
headlines and emotionally charged statements in the media. We will
encourage the trustees who are continuing on the board to do all they
can within their means and ability to support the university themselves
and to encourage other donors to do likewise.

The campus needs now to come together in conducting a professional
search for a new president. We want be united in our expectations, as
well as in our commitment to support whomever emerges as the successful
candidate for this most important position. Trustees will be meeting on
campus next week with faculty, student, and other campus representatives
to consider how such a search should be structured and conducted.

However long that process takes, we want to express our support and
appreciation to Neil Kerwin, Ivy Broder, the deans, and other officers
and faculty for the continuing strong leadership they have provided to
AU throughout this difficult period.

We do not expect to convince all those who have disagreed with the
board’s actions that we were right in all that we did. We do ask that
you respect that our actions were taken with fidelity to our fiduciary
obligation to do what we sincerely believed as a matter of conscience to
be best for the university and in its long-term interest. That we were
not always unanimous within the board reflects that reasonable people
can disagree on these issues and do so on principle as well as
practicality.

We respect those who disagree with our actions, but we hope that their
disagreement will not prevent them from working with us to avoid any
future repetition of the mistakes of the past and, above all, that they
will help all of us to keep American University moving forward to
achieve its educational mission more fully than ever before.

Eagle Online Links

The Eagle had a lot of coverage today... here are the links. (Check out that awesome U-Haul. Sorry, I just loved that truck. I want a U-Haul for everyday life. They're so much fun to drive.)

Ladner takes $3.7 million to sever all ties with AU
Former AU president Benjamin Ladner accepted a severance deal this week that will cost the university almost $3.8 million but will avoid a potential legal battle, university officials said.

SG lobbies Congress to protect higher education
Student Government President Kyle Taylor is encouraging students to send letters to their Congressmen and women to protest former President Benjamin Ladner's settlement package.
Staff Editorial: Ben Ladner's platinum parachute opens wide
The sweetness of Ben Ladner's dismissal from AU has been soured by the board of trustees' recent decision to award his dishonesty and unethical behavior with a $3.75 million severence package. He will receive $950,000 in compensation, as well as rights to a $1 million life insurance policy and $1.75 million in retirement funds.

Ben Ladner's New Joke on AU students

There's a new joke being passed around the halls of American University these days. It goes something like this. How do you know when your University's Board of Trustees have been corrupted? When you wake up in the morning and Ben Ladner's there to pee in your corn flakes because he stole your milk money.

Letters to the Editor
Wow. So Ben Ladner signs a contract that was never approved by the Board of Directors, then rips the school off for hundreds of thousands, if not millions, of dollars, until the scandal is discovered and he is fired. Now the board wants to give him an extra $4 million? Way to get tough, guys.

Wednesday, October 26, 2005

Some more media links

DCist: DWU Professor Suggests Ladner Lawsuit

WTOP Radio: Controversy at AU Far from Over

AARCRAO Transcript: Former AU President Gets $3.75 Million "Golden Parachute"

GLC Resolution

This evening at a Special Meeting of the Graduate Leadership Council, the following resolution was passed by a 4-0 vote (the Kogod president was unable to attend):

"We, the Graduate Students of American University, are appalled at the compensation package that the Board of Trustees has given Dr. Ladner. We condemn and denounce in the strongest manner the opacity under which this board operates. We call for the immediate reconstitution of the Board of Trustees in consultation with the faculty, staff, students, and alumni of this University. Additionally, we call on the Board to cease all searches for a permanent president pending such reconstitution. At such time, we strongly call for broad student representation and participation in the presidential search. Finally, we strongly encourage institutional governance reform in collaboration with all campus constituencies."

WCL resolution

RESOLUTION OF THE FACULTY OF THE WASHINGTON COLLEGE OF LAW (WCL)

The Faculty of the Washington College of Law condemns the decision of the Board of Trustees of American University to offer a multimillion dollar settlement to former President Benjamin Ladner, and expresses its lack of confidence in the Board. The Board’s decision represents a waste of university resources and betrays the educational mission of the institution. The reported settlement entered into by the Board is a violation of its legal duties, and should be revoked.

Only a thorough restructuring of the university’s system of governance, emphasizing transparency and representativeness, can put behind us the continuing crisis created by Mr. Ladner’s and the Board’s actions. Therefore, the Faculty urges that no search for a new President takes place before the systemic issues of governance are addressed and resolved.

Unanimously adopted by the WCL Faculty on October 25, 2005.

Wednesday's Post Article

OK, I lied, bed was not meant to be right off the bat. Here's the latest from the Post, including an update on what each school has done.

Ladner Package Outrages AU Campus

Of random interest, they're back to using the "grumpy-face" picture of Ladner on the website.

The School of International Service Council unanimously voted no confidence in the trustees, called on them to resign and asked for reforms in governance. The council asked them to rescind the severance package or recover the funds and voiced support of efforts by members of the AU community to enjoin the board from moving forward with the settlement.

The faculty of the Washington College of Law voted to condemn the settlement, calling it a waste of university assets and a betrayal of the school's educational mission.

The Kogod School of Business faculty passed a resolution saying it was disappointed with the departure package and wanted the board to focus on a new governance system that would be more inclusive of school constituencies and be more transparent.

The School of Communication faculty expressed its deep concern over the settlement, particularly the $950,000, "especially if this money is being given to him so he can repay the university for his excessive spending."

The communication faculty also admonished the board for its lack of stewardship of the university and urged trustees to create an independent panel to study the governance structure, asking for more transparency and accountability.

Contact Congress

There are very few things above the Board of Trustees, and most people will tell you there are none. That's not entirely the case, however... Congress was the entity that chartered the school. They have amended the charter as recently as 1996. They could easily look into this situation now and remove the Board.

So tell them what you think. Here's a handy link:
http://www.demaction.org/dia/organizations/AUSG/campaign.jsp?campaign_KEY=1402
to target your representatives and the ones who would be looking into this. It emails/faxes them for you after you input your information, just like the things the HRC, etc. have.

As this is put into place, I'll keep you updated, but obviously this is Kyle's thing and we are only helping. I know something is going up on the AU SG website (ausg.org), but I'm not sure if its everything or just a link, but I'll post it when it happens.

And on that note, I retire for the night. And it's even before 1 AM!

Tuesday, October 25, 2005

Quick link to NYT

New York Times: President of American University Agrees to Resign

SIS council info

School of International Service Faculty Council

Resolution passed by a special meeting of the SIS Council, October 25, 2005
Resolution passed by a vote of 34-0

The SIS Council:
*Calls upon the Board of Trustees (BOT) to rescind the settlement or recover the funds,
*Expresses no confidence in the BOT,
*Calls for the resignation of the current Board of Trustees,
*Supports efforts of members of the AU Community to seek an injunction against the Board of Trustees to prevent it from moving forward with the settlement,
*Supports efforts to reconstitute the governance policies of the University



Having Resolved:

1. The School of International Service Council condemns in the strongest of terms the settlement reached between the American University Board of Trustees and Benjamin Ladner. American University should spend money only to support the educational mission for which the University was founded. Rewarding Benjamin Ladner for his malfeasance is contrary to our mission,moral values and standards. The American University Board of Trustees should rescind immediately any offer of severance and dismiss Benjamin Ladner for cause.

2. Members of the Board of Trustees who bear responsibility for the drafting and flawed execution of Benjamin Ladner's 1997 contract, lapses in auditing, and the October 24 settlement should resign from the Board because they have clearly demonstrated a complete lack of understanding of the mission, standards, traditions and values of American University. They have also failed as fiduciary stewards of American University.

3. The flawed decisions and processes of American University's Board of Trustees underscore the necessity of undertaking a thoroughgoing reform of Board governance. The goal of the reform should be the adoption of twenty-first century governance practices that embrace transparency, accountability and participation. As part of the reform process, the University should carry out a best-practices study of outstanding North American universities.

4. Before embarking on a search for a new permanent president, American University must put its house in order. Specifically:

- A new governance structure for the Board of Trustees that reflects the
will of those who study and work at American University must be developed
and implemented. Only a reformed Board of Trustees would have sufficient
confidence of the faculty and staff to undertake a presidential search
successfully.

- A new compensation procedure for the University president and vice-presidents must be introduced that ensures that University officers are compensated consistent with market rates found at peer institutions.

- A transparent, rigorous and regular auditing system must be developed and
adopted.

- The University must adopt full transparency in the process and contents of
budgeting.

- The University executive must be pared down to its essential mission of
managing the University. All programs and positions that do not contribute
directly to that mission should either be eliminated or transferred into the
most appropriate teaching unit.

The acting University president should be tasked with achieving these
objectives over the course of the 2005-2006 academic year. The University
can then proceed in the fall of 2006 on a sound footing with a search for a
new permanent president.”

Our Statement re: settlement/Board of Trustees

October 25, 2005
Official Statement from Students for A New American University

We strongly condemn the decision made by the Board of Trustees to offer Dr. Benjamin Ladner a multi-million dollar settlement. As students who fund 90% of the operating costs of our university, we demand clear channels of communication and objective information. We are outraged by the current misinformation that the Board of Trustees has provided to the AU community. The inadequate method and final results of the settlement show that the Board of Trustees cannot be trusted with its governing, fiduciary, and ethical responsibilities. The Board of Trustees has consistently shown that it has no inclination of becoming a transparent and accountable governing body. We maintain our position of no confidence in the Board of Trustees and call for all members of the Board to resign. The Board of Trustees does not and cannot accurately represent the values of service and integrity of American University. The University can only move forward through extensive restructuring and reform.

Post...

Quickly, the Post article is moving up in the world... originally on the main page, it was under "more headlines" but now it's right under the Rosa Parks coverage... I wonder what that means? It's still in the list of the top-5 viewed articles for the Metro section.

An Open Letter from 4 Ex-Trustees

An Open Letter to the American University Community


We write to set the record straight. The golden, now platinum, parachute given Ben Ladner is not a mere $950,000 the Board of Trustees has disingenuously claimed. It is the entire $3.75 Million reported in the newspapers. Each and every dollar is a gift. The University owes Ben Ladner nothing.

First, the Board has placed itself and the University in the midst of an outrageous and expensive inconsistency. The Board is on record as having determined at its Board meeting October 20th that Ben Ladner was an employee at will, with no contractual rights against the University and that Ben Ladner should be discharged for cause. Notwithstanding these findings, the Board gave him $950,000 as severance. There can be no more contradictory positions. To be consistent and to fulfill its fiduciary obligation, the Board had only one option and that was to give Ladner zero, as the four of us have repeatedly urged.

Second, the Board only tells half the story regarding the insurance policy. Yes, Ben Ladner was entitled to the $1 Million in the split dollar policy. But he was also obligated under the policy to repay the University the premiums it had paid on his behalf. Because the investments in the policy were quite unsuccessful, the policy's value was almost exactly the same as the premiums owed. Thus, the University owed Ben Ladner $1 Million and he owed the University $1 Million in premiums paid. Accordingly, he was owed nothing. Giving him the policy without asking for the premiums back is exactly the same as writing him a check for $1 Million.

Third, the reference to $1.75 Million in two trusts is flat-out misleading. Here's the true story. Ben Ladner had $1.75 Million in deferred compensation which did not become his until 2010. Between now and 2010, he risked losing all of it, 100%, if he were to be fired for cause. Since the Board determined at its last meeting that he should be fired for cause, allowing him to resign is effectively a gift of the $1.75 Million. Had principle and not expediency carried the day, the University would have kept each and every cent of the $1.75 Million.

But that is not the whole story. Remember he misspent over $125,000 for purely personal enjoyment. He also misspent almost $400,000 which the audit committee in its generosity called imputed income, giving Ben the benefit of calling the invalid 1997 contract valid. Now that two law firms, University counsel and the Board itself have opined that the contract has no merit and was neither authorized nor ratified, we can add this amount to the list of misspent University money. Add to this the over $1 Million that the investigation cost. Thus, the true dollar cost is over $5 Million. And this is only part of the damage. Because of Ladner’s behavior, an ethical cloud hangs over the University. The School has become the target of jokes and criticism. And most importantly, several significant donors have withdrawn pledges and we assume more will follow. After all, who would want their donation to fund a reward for bad behavior?

We dismiss the Board’s alleged fear of litigation as a mere excuse for the Board's largesse. It is totally without merit. First, principle should rule. There should be no deviation from the only guideline to be followed - wrongdoing must not be compensated. Second, we repeat that the Board has three legal opinions that the 1997 contract has no validity. The Board has adopted this position. The insurance policy is clear. Ben Ladner owes the University the premiums. There is no ambiguity in the deferred compensation arrangement. Ben takes nothing if he's fired for cause. Third, the cost of litigation to the University if pursued by Ladner would be only a small fraction of the severance package just awarded to him. The University has in-house counsel and we are certain that the law school faculty would provide any additional assistance needed.

We are dismayed not only by the amount of the platinum parachute, but also by the way it was determined. The students, the deans, the faculty, and donors should have been heard before a decision was made. The trustees only worsened the matter by holding their meetings in secret and demanding oaths of confidentiality. We now know why. They needed to hide behind a cloak of secrecy to avoid listening to dissent, to conceal as long as possible their goal to put Ben Ladner's demands first and the University's needs a distant second. If this is the Board's new approach to governance and transparency, we are certainly glad that we are no longer part of it.

The Board has significantly worsened an already sad chapter in the University's history. It has lost sight of its true constituency - the students, the faculty and the alumni. The Board has given $3.75 Million to an undeserving individual. Had it earmarked this money for the deserving, Ladner’s platinum parachute could have funded the salary of over three dozen faculty members for a year; provided for almost 200 full tuition scholarships for a year; and provided in perpetuity 10 full scholarships. This is where American University's resources should go and that is why we voted for no money for Ben Ladner and why ultimately we sadly resigned from the Board.

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

SG statement from Kyle Taylor

The Student Government would like you to know that former-President Ladner’s real settlement totals $3.8 million in compensation. This leads us to question whether or not this Board, with close ties to Ben Ladner, accurately represents the values of our University. We the students provide 90% of the operating budget for this University, and thus deserve objective information from our Board of Trustees. As your representatives, we are determined to seek it out.

Today's events

OK, first off... today is going to be the information game. There are back-up plans, and they are mostly what someone just commented with. There's groundwork for walk-outs, there's groundwork for contacting Congress, there's groundwork for a class action lawsuits. Whatever we have to pull out, we're ready for it. And this isn't just my group, there are faculty, deans, and student government working at some level on these plans. So don't fret yet... we just need to see what deck of cards we're playing with first.

That said, SIS is the only school having a council meeting today. So if you are an SIS student, and you are otherwise not doing much at 2 pm, go to the SIS lounge to see what your school is saying. This is going to be a meeting primarily for the dean and the faculty, but students are welcome to attend.

I've been trying to get info on the other schools, but it looks like the others will not be having council meetings (so you should ENCOURAGE your professors to ask for one). Kay from CAS met with dept. heads this morning, so CAS is heading in the right direction, but SPA seems to have no plans. Please please encourage your school to have a council meeting.

In disappointing news, Tony Ahrens has cancelled the extraordinary meeting of the Faculty Senate planned for this Wednesday. I understand the need to have more discussions amongst each school, but I feel that that could have still effectively been done today with council meetings, as SIS is proving.

I shall try to provide an update after the SIS meeting with the results, etc. In addition, more information is coming to me today and I am trying to find out what can be made public and what cannot be.

SIS people, see you at 2!

Last update of the night

Since I am simply about to pass out, I am so exhausted.

First, I know it's going to be hard to keep the students interested. I do not view today as a "victory" by any stretch of the imagination. I have a lot of concerns with the numbers and where they are coming from. I have concerns with the $950K number and possible inflation, I have concerns that Ladner should not be getting any of the premium involved in the life insurance, which is a $1 million figure, I have concerns about the if the trusts have been vested (as Ladner has claimed), the taxes on them, if he can claim them, etc. These are complicated (and rather boring) issues... the deans and faculty will be asking these questions over the next 48 hours, as will student government.

I guess I'm just asking, please, withhold judgment. Yes, it's a settlement, and it could be worse. But if they're giving us these numbers, and they are basically inflated, or they're possibly padding it by a million or two, this is not a victory. It's going to be an information game in the next 48 hours.

The questions that the deans/faculty/student leaders will be asking tomorrow basically revolve around each of the three main parts of the package:
1. Where the $950K figure is coming from, if the amount has been inflated to compensate for what he's losing, the reference to the severance package for cause for faculty/staff.
2. Life insurance: is Ladner getting both the premium and the appreciation of the amount AU has put in for him? (Imagine it is not insurance, but stock. AU buys stock for Ladner, and holds it in his name... he is able to get whatever the stocks make, but not the stocks themselves. He should not be getting the premiums, as that is not money directed to his earnings).
2. Trusts: Gottschalk told the faculty representatives that they would have had a "Strong case" to litigate against Ladner. They had already drafted a statement firing him "for cause of dishonesty" if he had not accepted. So why are we settling at all? Furthermore, Ladner says the trusts were vested 2 years ago... he has not been paying taxes on this if it did happen, but G. said that they were set to vest in 2010. What are the policies on vesting them now, etc?

That's what we're looking at with the settlement itself. As for the board, I think everyone agrees that it needs to reform dramatically, and we are not stopping on that. There has been a task-force created to examine the bylaws... there is one with students, and the faculty senate is also looking at them.

Basically, there are a lot of actions in the works... but there's going to be a brief period where nothing much happens besides some talking and comparing of notes. So in the meantime, don't start your celebrating yet.

Sorry to be the bearer of bad news, and you can, by all means, disagree with me. But personally, I am not yet convinced of this, in any way.

Post covers

Just as a brief interlude, the Post has gotten their article online already (With a fun picture of our u-haul!).

Ladner's $3.75 milion deal severs ties to AU

Aw, man, check out that U-haul.

OH! It's been updated since I first read it: Ladner has spoken! I'm working to see if that's the extent of his statement or if there is more.

In a statement sent by e-mail last night, Ladner said: "Nancy and I will always regard the opportunity we had to serve American University for eleven years as a great honor and privilege. We are especially grateful for the quiet but strong support expressed by so many friends, colleagues and students."

In other news from this article, George Collins has also resigned. Which means hopefully tomorrow I'll have a letter posted (although I'm not sure, to be honest, if he has one).

Last night, another trustee resigned, saying he could not accept the deal. "It is too excessive," said George J. Collins, who was one of only a few trustees who voted last week to give Ladner nothing. "Unfortunately, my position was the minority opinion."

Collins joins three trustees who have left in the past 15 days with public statements criticizing the majority on the board who, Collins said, "put Ben Ladner before American University." A fourth trustee recently resigned citing demands at work.

OK, my reactions next. I'm trying to be in bed by 1 AM, as I have to TA a class tomorrow at 9:55, so I might make them brief, but yes. Soon.

Monday, October 24, 2005

Notes - mtg with Gottschalk

I must emphasize... these are not my thoughts. These are the notes that I took during the meeting... therefore they are mostly expressing the views of the Board, and as they were explained by Gottschalk. If I have a comment (which I shall try to refrain from until my next post) it will be in red. G. = Gottschalk, since his name is impossible to type repeatedly.

Part I. Introductions, etc.
* Concluded negotiations with Dr. Ladner; G. to explain as much of the rational as he can.
* Settlement in its nature means that neither side is happy with it; attempt to avoid litigation; a prudent step for the Board to take.
* Aware that the campus disagreed, esp. students; the board did keep this in mind.
* Ladner is resigning effective today; has cut ties; everything; no tenure. "He is leaving altogether."

Part II. Severance
* Gross $ number is 950,000.
* 2005 salary + bonus = $725,000 (bonus = $225K)
* Slightly more than a one-year severance.
* So the gross number is 950K, from that 3 deductions: 1) $134,000 for money he owes AU per the audit committee; 2) income taxes (46%) on all 950K; 3) the amount AU would have withheld for tax purposes on the $398K that he has to report to the IRS (25%).
* Any faculty/staff member fired for cause is given a year's severance (Meg's comment: Where? Where is this given? This was told to the faculty as well, and the phrase "for cause" was used. This, as far as we all could tell, is not true.)

Part III. Deferred Income.
* Ladner has worked for 11 years.
* The 1997 board approved two things (independent of the contract, which was not done by the board as a whole): 1) a deferred income system, and 2) a split dollar life insurance policy. This was all done on the table... the whole board knew of these two things (a point will be made later about the contract).
* Part A: Split Dollar Life Insurance. The current balance is currently somewhere slightly under $1.1 million. Ladner is to be given this balance, plus the annual premium for the academic '05-'06 year. (Meg's comment: I am going to have a lot to say about this later on.)
* Part B: Trusts for deferred income. It's split into two trusts. Both are fully taxable at the 46% rate. Together they total $1.75 million. (Meg's comment: Again, questions on this later.)
* G. was very careful to make clear that the 2.75 million from the insurance/deferred income is not new tuition money (though the $950K is from the tuition reserve)... it is money already spent by the university.

Part IV. Additional Details
* 90 days to vacate house; $20,000 for relocation, i.e. "actual moving costs." G. mentions U-haul and can't help but smile.
* '97 board did approve the insurance and deferred income packages, but while unaware of the secret contract. In hindsight, "insurance policy was a dumb idea."
* Ladner's actions are destructive to his repuation, G. expressed doubts about his being hired by any prominent entity.
* IRS/DOJ/FBI investigations have no impact. This is a done deal, clean break, "those problems are his problems."
* Ladner has signed something releasing AU from all further claims, and AU has released Ladner from all known claims, but if anything comes up in the future, they can pursue him (which Ladner cannot do to us).
* No additional payment to Nancy Ladner; settlement is primarily designed with Ladner himself in mind.
* The $950K check should not affect the 2 year budget. Expecting a drop in expenses in the presidential office (which did indeed get a laugh from us.)

Part V. Discussing the Board.
* Still relatively far apart; "spirited" discussion; aware of campus concern; willing to say to Ladner "this far, no further."
* Working on a town hall meeting in early November with a few trustees. Not sure of size or time, etc. Something they are trying to work out though.
* Gary Abramson is trying to catch up on board governance issues (is also on subcommittee?). G. has informed him of student demands for 3 students and 3 faculty.
* G.: "We've got to figure out how we help the board get comfortable with regular interaction with campus." "Connect routinely and effectively with campus."
* Gary A. has to decide by Nov. 11 who the vice-chair will be, may keep G.
* G. is going to propose to Gary A. composing an open letter to AU re: the climate/culture of the board.

This is essentially the Board's side of the story, and doesn't disagree with what students are getting in their inbox right now:

STATEMENT FROM THE
AMERICAN UNIVERSITY BOARD OF TRUSTEES
Thomas Gottschalk, Vice Chair


Dr. Benjamin Ladner, president of American University, today resigned as
president and professor at the university. The Board of Trustees
accepted Dr. Ladner’s resignation and thanked him and Mrs. Ladner for
their years of service and contributions to the success of the
university. Dr. Ladner has agreed to relinquish any claim to tenure or a
faculty appointment.

Dr. Ladner released the university from any and all claims arising under
his contract. The university agreed to pay a one-time settlement payment
of $950,000. This payment is subject to federal and local income tax
deductions. From the gross amount, the university will also deduct
withholding taxes on the additional imputed income of $398,000 being
reported for Dr. Ladner for the years 2002–2005 and $125,000 in
reimbursable personal expenses due the university for the same period,
as determined by the Board of Trustees’ Audit Committee and accepted by
the board.

Acting chair of the Board of Trustees Thomas Gottschalk said, “The board
felt it was in the best interests of the entire university community to
put the controversy surrounding the Audit Committee’s investigation and
Dr. Ladner’s employment behind it. I along with many others have been
saddened that recent events have overshadowed the great achievements of
American University during Dr. Ladner’s presidency, and I hope over time
some balance and perspective will enable people to focus on the
positives of his presidency as this controversy recedes into the past.”

Incoming board chair Gary Abramson said, “American University has grown
stronger and stronger in every respect over the past 10 years due in
large part to an outstanding and dedicated faculty and motivated, bright
students who chose American to prepare them for their future success. We
will now return the board’s full attention to providing the governance
and resources which will help the university retain its position as one
the of country’s leading universities and to grow even stronger as it
continues to develop its enormous potential.”

Over his 11-year tenure, Dr. Ladner previously earned and has had set
aside annual amounts of deferred compensation which he will retain. This
deferred compensation includes approximately $1 million which is the
present cash value of a split dollar insurance policy for which Dr.
Ladner is named beneficiary. It also includes current account balances
in two deferred compensation trusts established for Dr. Ladner’s
benefit, which now total about $1.75 million.

It should be clearly understood that these balances accumulated over the
period of his employment and reflect investment returns on the amounts
contributed. These balances had been held in trust for Dr. Ladner’s
benefit as deferred compensation. No new cash payments or contributions
are being made to these deferred compensation accounts other than one
final payment of the annual premium that was already due in this
academic year on the life insurance policy.

Dr. Ladner has agreed to vacate the president’s house in 90 days, and
the university has agreed to reimburse him for relocation expenses
actually incurred by him up to a maximum of $20,000.


October 24, 2005


I am going to say in this entry until I can get to the next one... I think that these numbers do not necessarily have an objective basis. I have A LOT of questions after getting this information, and I know the deans and the faculty do as well. This is not as cut and dry as they present it.

I shall have more...

Rundown of today

There is a lot a lot a lot of information gathering in my brain right at the moment, and I'm basically going to have to do this in chunks. I have been at AU since 6:30 this morning, and I left at 11 tonight. There's a lot of conversations, a lot of events, and a lot of things to go through.

Things that I am going to try to get to by tonight:
1. I was invited to the debriefing with Tom Gottschalk (vice chair of the Board) today at 4 PM. I have about 3 pages of notes to organize and type up.
2. My reaction to the package, what's going to happen in the week to come.
3. General events of today.

So... yes. I'll be updating until I collapse basically.

Sunday, October 23, 2005

Ladner must accept by...

So, as the Post says:
American University trustees have agreed to offer ousted president Benjamin Ladner a choice: Accept a departure package of between $3 million and $4 million by the beginning of next week or be fired "for cause" and risk losing some or all of it, sources said.

The interesting bit that I've only been informed of JUST NOW?

Ladner must make his decision by midday Monday
, giving the campus no time at all to respond. Thanks Board... once again you are ever so helpful.

As more comes in, I'll keep you posted.

Leo Jaskol's resignation letter

You know, I really hate to have to keep posting these things. As the Post said, the source is not Mr. Jaskol, but I can't reveal who if you'd like to keep getting this kind of information from me. We do need to thank the people behind the scenes who are willing to pass the information on anonymously, like the whistle-blower. These people will never get the credit they deserve for their unwavering support during these difficult times for AU. They are, however, doing the most they can for our University.

As for Mr. Jaskol, after reading this letter, and having been priviledged enough to speak with him briefly after the Sept. 28th board meeting, I can say with confidence that the AU community has lost a great ally on the Board.

I have one note. Mr. Jaskol quotes a current employee of AU in his resignation letter. I am leaving the quote, but omitting the name -- simply so this person does not have negative repurcussions experienced due to the posting of the letter. It is not my place to make this person's name public, and I hope you all can respect that. Thank you.

October 20, 2005

Mr. Thomas A. Gottschalk
Acting Chairman
Board of Trustees


It is with deep regret that I now tender my resignation from the American University Board of Trustees effective October 21, 2005.


I am compelled to take this action because of the events that have taken place during this past year. There is no need to recount what has transpired, first with Dr. Ladner’s compensation and then with the audit of his expenses, because that has already been well-chronicled by Leslie Bains and Paul Wolff in their resignation letters.


The primary motivation to resign lies with the behavior of the “Ad Hoc” Committee. In my view they have lost sight of the Board’s mission to serve American University. Their agenda appears to be the support and defense of Dr. Ladner and only when confronted by the enormous outpouring of no confidence by the students, Deans, Faculty, and staff did they finally agree that Dr. Ladner could no longer serve as President of American University. Now they want to reconstitute the Board leadership and implement their “programs”. Given what I have observed during these past months, I am not encouraged.


There has been an effort to come to an agreement with Dr. Ladner to resign, involving substantial sums of money. Having been a businessman for more than forty years, I understand the practicality of settling these matters rather than litigating them. However, in this case, my conscience won’t allow me to vote for any payment of funds, no matter how rationalized. As [name omitted], said, “It’s not about the contract, but about conduct”. Further [he/she] said that, “Dr. Ladner exercised poor judgment, has become a public embarrassment, does not have the good will or trust of the AU community, and has evidenced years of disengagement”. [He/She] also made clear their complete rejection of any golden parachute for Ben Ladner. I believe [he/she] spoke for all of the stakeholders of AU, and I cannot improve upon [his/her] words.


The Board is deeply divided and has become far less able to carry out its fiduciary duties. Disagreements are inevitable but a return to civility, cohesiveness, and effectiveness does not appear likely. I have waited until now to resign because, as Chairman of the Audit Committee, I could not leave until the investigation was complete and all remedial actions had been taken. Dr. Ladner has been invoiced for the amounts owed by him to AU for unauthorized expenses plus interest. Various Federal and state tax filings have been revised for imputed income not yet recognized for the past three years and have been submitted to the IRS. I can now affirm to KPMG, AU’s outside auditors, that the financial statements truly reflect the University’s strong financial condition. My work is finished.


I commend my fellow Executive Committee members and four other trustees for their unfailing support. I want to make specific mention of George Collins, immediate past Chairman, Paul Wolff, and Leslie Bains. George brought transparency and good overall governance to the Board. Paul gave freely of his superior intellect and energy. Leslie, as our new Chair, had ambitious plans and, had they been implemented, would have achieved new milestones for American University.


The Trustees who resigned before me and those that are likely to follow should not be criticized for leaving the Board. We no longer comprise the majority and, therefore, cannot overcome the potential bad governance that is likely to ensue. Officially, our voices may no longer be heard, but we stand ready to join with others to help in any way we can.


I have been a Trustee of American University for more than twelve years and have enjoyed my association with many past and present Trustees. The Deans, Cabinet, Faculty, staff, and other employees, as well as the students of American University rank among the finest individuals I have ever been affiliated with and collectively deserve credit for AU’s success. They are entitled to a Board of Trustees who puts all personal allegiances aside, places the interests of the University first and foremost, and exists for no other purpose.


Very truly yours,

Leonard R. Jaskol


In other news, apparently $4 million/# of undergrad students at AU = $618 per student. FUN!

Saturday, October 22, 2005

Student Reaction

So now that the AU students have woken up and are starting to hear about the article from the Post...

One theory is that the BOT is leaking that number so that way they look like good guys when they announce severance will actually only be 2 million or the original package that we thought we were giving him. The problem is, I don't think that's going to happen. From what I've heard, Ladner was not negotiating... he was just asking for insane amounts until they gave it to him.

AU shouldn't be afraid of litigation with Ladner. The Board even voted that the '97 contract wasn't valid. It was a narrow vote, but even with the Ad Hoc committee in control now, it still happened. We should not be giving this man oodles of money.

And this news story is hitting during Family and Alumni weekend over at AU. Wonder if the parents will finally get wind of what's going on.

CONTACT THE BOARD NOW!

Here's the two comments I have...
1. Make your comments intelligent. If you're angry, make sure they know it, but don't swear or insult them (or if you do, keep it subtle).
2. Aim for persuasion. Not ranting. We want to convince these people that $4 million is too much money.

OK. Now, you all know this one:
aubot@american.edu

But you probably don't know these:
Gary Abramson: gma@towercompanies.com

David Carmen carmend@carmengroup.com

Jack Cassell jackvae@aol.com

Pamela Deese deese.pamela@arentfox.com

Jerome Del Pino ogs@gbhem.org

Fuad El Hibri felhibri@ewrcorp.com

Farsi Hani hani@dircon.co.uk

Thomas Gottschalk t.gottschalk@gm.com
Charles Lydecker clydecker@bbdaytona.com
Robyn Mathias arrmathias@aol.com
Regina Muelhauser reginaliang@aol.com
John Petty johnp@tecsec.com
Robert Pincus rpincus@milestonecap.com
Matthew Pittinsky matthew@blackboard.com
Bishop Schol jschol@bwcumc.org
Jeffrey Sine jeff.sine@ubs.com

Late night news...

Straight off the presses... or at least it will be tomorrow morning. At the Post online:

AU to Offer As Much as $4 Million to Ladner

American University trustees have agreed to offer ousted president Benjamin Ladner a choice: Accept a departure package of between $3 million and $4 million by the beginning of next week or be fired "for cause" and risk losing some or all of it, sources said.

He's going to take it. You know he is. $3/4 million? Of course! Of course, if he takes it, he's GONE gone. No tenure. No nothing. See you later.

Is it worth it guys? Another $4 million? I doubt a law suit would cost *that* much.


ETA: It's made the Reuters alert system. Press Digest says: Embattled American University President Benjamin Ladner will be given the choice of accepting as much as $4 million to leave his job or risk being fired.

Friday, October 21, 2005

Severance package

Word on the street is saying:

Ladner's severance is going to be 3-4 million.
Leo Jaskol, head of the audit committee, resigned in protest.

This info is coming from reliable sources. Wait for the Post tomorrow. There is going to be a major major article.

Hey AU? Going to sit back and take this one?

Thursday, October 20, 2005

New Chair

And I didn't even break the embargo like a good kid. Gary Abramson is our new chair of the Board of Trustees.

Big article from the Eagle about pretty much everything today.

I'll post more about the rally later; however, my pizza was just delivered to my roommate and I, and I am going to eat first and formulate my thoughts over a few hours tonight.

Basically, I think the message is strong, but the interest from students is wavering because of the short term fix with Ladner. It may come to a smaller group to keep things moving forward, but I still think a lot of people on campus do care and are willing to speak out.

In the meantime, have a good night all. I'm going to go enjoy my steak pizza. Woot!

Wednesday, October 19, 2005

Gang of 13

You wanted the Gang of 13, here they are, in alphabetical order too! So if you don't like these people (who don't particularly like you), please come to the rally. Call them out. Make them accountable. Put pressure on them. Most of them just don't know better: they're new trustees who don't know AU. There are a few though who are as dedicated to their insider games as I am to keeping things open. Let them know: WE ARE WATCHING YOU.

Gary Abramson – his name has been mentioned as the next Chair.

David Carmen – the ring leader

Jack Cassell - the biggest surprise to me.

Pamela Deese – voted against accepting the Audit Committee report

Jerome Del Pino – the Methodist representative from their Higher Ed dept.

Fuad El Hibri – voted against the Audit report

Hani Farsi – horrible attendance rates at board meetings

Charles Lydecker – brand new Trustee and has never attended a Board meeting, listens to everyone else

Robyn Mathias – a former school principal who also voted against the Audit report

Regina Muelhauser – brand new Trustee, is a fan of secret Board action

John Petty – Ben’s best friend and former head of the Audit Committee, voted against the Audit Committee report (remember? Ben threw this guy a birthday party at $250 a head! gee, no wonder why he's biased)

Robert Pincus – a former Washington DC banker

Jeffrey Sine – UBS securities in NYC; worked to cut a deal with Ben for repaying the University for only $21,000 versus $125,000.

Rally, rally, rally!

I'm just going to keep mentioning the rally, so it's always at the top. Yes, shameless self-promotion. RALLY. QUAD. THURSDAY. 5 PM. BE THERE.

The quick point of this post:
Because some people on various message board apparently don't trust my word that another trustee has resigned, here is the stone cold evidence from the Washington Post (completely buried in the Metro section today):

Another Trustee Resigns from AU Board

American University trustee Michael D. Capellas, chairman and chief executive of MCI, has resigned, citing a need to devote more time to his company, according to Thomas A. Gottschalk, the acting chairman of the Board of Trustees.

The board, which is continuing talks on the terms of departure for ousted president Benjamin Ladner, now has 21 members. The departure of Capellas follows that of former chairwoman Leslie E. Bains on Oct. 9 and Paul M. Wolff two days later.

The board voted last week to dismiss Ladner and also asked him to reimburse the university $125,000 and report an additional $398,000 in taxable income for three years that auditors investigated.

Tuesday, October 18, 2005

STUDENT RALLY, 10/20, 5 PM, QUAD

I'm keeping the same subject line, just to emphasize how much we need this, more than ever. Each event is going to build on the last.

Michael Capellas was one of the trustees who is pro-student and was against Ben Ladner's return, as well as his severance package.

There are 13 trustees in the ad hoc group, the "Gang of 13," whatever you want to call them. They are not in this for AU, they are in this for themselves. They are willing to pay off Ladner, instead of taking a stand and saying that AU is an instution that will stand by its own principles of service and intergrity. These people are not our friends.

On the other side, there were, at first, at least 9 trustees. Leslie Bains was one, Paul Wolff was another. With Michael Capellas and his resignation, we are now down to 6 trustees who are willing to put principles before pay offs.

We have to let the Board know that the students will not stand for this. We changed their minds once. Let's do it again.

QUAD. THURSDAY. 10/20. 5 PM.
MAKE YOUR VOICE HEARD.

STUDENT RALLY, 10/20, 5 PM, QUAD

Well, the title says it all. Student Rally, this Thursday (10/20) @ 5 PM on the Quad in front of Mary Graydon Center.

Please please come. Let the board know that:
*We are against an excessive severance package, "the golden parachute."
*We believe Ladner should be fired for cause.
*We, the students, faculty, staff, and alumni of AU still care about this issue.
*We are still watching the Board and will hold them accountable for their decisions.
*We demand transparency of the Board, as well as student and faculty representation.

The students (myself included) who have formed the ad hoc response to this situation were officially recognized as a student group today, which means very little, except that we are now able to get events and signs approved under our own name.

In news for the day, Trustee Michael Capellas of MCI resigned today, stating that he needed to essentially "get back to work." I'm not entirely sure where he stood on the board or what positions he endorsed, but we are working on seeing if there is a resignation letter and his track record on the Board.

Some links for you to read from within the university:
*AU Weekly has an interview with Acting President Kerwin up at their website. It's on the main page now, and when the new issue comes out I will update the link.
*Staff Council Letters Sent to AU Board of Trustees: Robin Beads posted this back on October 2, but I only have been digging around there today.

Also, if you see people on out the quad with a petition that says:
We, the undersigned members of the American University community, hereby affirm our commitment to the highest moral and ethical standards for this University by asking the Board of Trustees to terminate Benjamin Ladner for cause—that is, without a "golden parachute" severance package that allows Dr. Ladner to derive further personal economic gains from his misdeeds.
PLEASE SIGN IT! And if anyone wants, I can upload a .doc file with the petition so you can make all your friends sign, and then you can get it back to us. This goes for alumni as well.

That's all for now, I'll update if anything happens tonight though.

Monday, October 17, 2005

Thursday

Stay tuned for details on Thursday... the plans are being finalized tonight. The Board will be meeting all day Thursday: let's remind them that the students still care, and that we will not be satisfied with a golden parachute for Ben Ladner.

I'll post tonight as soon as I have confirmed the times.

Your Morning Reading

Well, it's been quiet over the weekend... gearing up for this week, I suppose.

If you go to AU, or are an alum, check this link out:
Make Your Voice Heard
Courtesy of the AU Methodists.

The latest news to read:

Washington Post: Deconstructing a Man of Contrasts
Bit of a biography of Ladner. But then it gets into his personal life at AU, and some rather frightening quotes from his staff:
"I worked for the university," he said, with a $40,000 salary. "But I felt like their personal little slave boy."

The Chronicle of Higher Education: Trustees at American U. Fire President but Remain Divided Over Severance
Ms. Bains, in her resignation letter, blamed a "very small, yet mean-spirited" faction of trustees for her resignation, while Mr. Wolff wrote that a group of 13 trustees "is motivated by a desire for the days of the past when secrecy prevailed and the president's expenses were never audited." Mr. Wolff also said trustees had made "baseless" accusations about conflicts of interest involving him and another trustee. Lawyers representing the group of 13 trustees did not respond to a request for comment last week.

Yes, as I heard from someone from the top, the phrase the ad-hoc committee has even used for their desire to return to secrecy, not only out of the public eye, but out of the AU community as well:

Big Brother knows best.

Frightening, hm?

Friday, October 14, 2005

Wolff finishes online chat

Well, the online chat is over, and the transcript is up in its entirety at the Washington Post website.

A lot of questions as to why he resigned, which isn't all that surprising. Pretty much the same points he stated in his letter. I do also find it concerning that the -- ok, we need a name for the members of the Board who aren't part of the ad hoc committee, for now, I'm going with pro-student -- that the pro-student members of the board are now down two members. I don't necessarily think that all the members of the ad hoc committee are anti-student, but I do think they are not necessarily invested in what's best for AU. The good thing about his resignation, as well as Leslie's, is that it puts the Board in a very public eye, outside of American University. These people are under a lot of pressure, and a lot of scrutiny. They're probably turning down phone call after phone call from the press. They're probably getting a lot of emails from the students, from faculty, from staff. The decision will not be made lightly.

Re: the 1997 contract. Two law firms, and highly respected ones at that, have made the call that Ben Ladner is an employee at will. Just one more reason why Ben should NOT be floating away on his golden parachute (and who am I kidding? At this point, we should probably be calling it platinum.)

Re: the "witchhunt." Thank you, Mr. Wolff, for telling it like it is. A lot of Board members put aside friendships to do the right thing. Ben Ladner may be a perfectly nice man, but his actions do not add up. I have never met Ben Ladner, so I cannot attest to this personally, but I can say for myself that the first student rally was never meant as a witchhunt, the following student actions were never meant as witchhunts, and any further student actions will have nothing to do with witchhunts. Dr. Ladner, I was actually born in Salem, MA. I know what one of those looks like.

I think this was my favorite question:

AU senior, Washington, D.C.:
Would you ever consider a post as president of AU?

Paul Wolff: If you're offering, you're overly kind but I have to believe that there are literally hundreds of better qualifed people out there, including many now at American University.

It is sort ofa silly question, but Mr. Wolff is right when we have qualified people here at AU that could quite reasonably take over as president. Dr. Kerwin especially, but I can think of a few other people who would be excellent choices.

Of course, we're getting ahead of ourselves here in even thinking about a new president while the issue of severance and new board members is still up in the air.

All in all, many more excellent points from Mr. Wolff. He's definitely not one to mince his words, but that's exactly what we need at the moment.

Wolff online chat @ 12:30

Wolff will be online once again at the Post website, and in about 2 minutes. Sorry to post the link so late, got distracted by a few phone calls.

Go and ask your questions!


Unlike Ladner, Wolff will probably even answer the tough ones!

Thursday, October 13, 2005

Some other things

Well, the big read of the day is obviously Wolff's resignation letter. I just heard that the Eagle has a received a copy, so I assumed it was safe to post.

NBC covered Wolff's resignation, and interestingly enough, their informal online poll has some rather overwhelming results:

Should American University's board of trustees award Benjamin Ladner a severance package?


Yes
Votes
130

8%
No 1565 92%


92% is a pretty large number. Pretty hard to argue with too.

Paul Wolff's Resignation Letter

From a confidential source. It's been bouncing around a bit, but I think it's finally starting to get leaked out.

Here it is in its entirety. Let me know what you think. Personally? I love it.

My Fellow Trustees:

I resign from the American University Board of Trustees effective immediately. I can not and will not continue to serve on a Board that counts among its members individuals who show so little regard for the most basic canons of board governance.

The atmosphere in the boardroom remains polluted with mean spiritedness. The call for better governance by the self-appointed Ad Hoc Committee has now been exposed as the sham I always worried that it was. My conscience forbids me being a party to any agreement with Ben Ladner that either allows him to be affiliated with AU or to receive severance other than that irrefutably mandated by law. I cannot be involved, no matter how well-intentioned, in any additional payment. I stand four-square with the deans, the faculty, and the students. They are right. We cannot compensate ethical blindness. To do so, undermines AU’s core values.

A board can only operate effectively if its members are collegial and treat their fellow trustees with respect and deference, no matter how strongly they may disagree. They discuss; they do not disparage. It is on this principle that all other principles of governance build. Yet the Ad Hoc Committee, and most particularly several of its members, have never missed an opportunity to attack our outside advisors, question their competency, belittle the motives of the Chair, challenge the integrity of fellow trustees, and make baseless claims of conflict of interest against Margery Kraus and me, all without any support, only with innuendo and meanness.

I had hoped that once we all recognized the need for Ben to leave, the sniping would stop. When Jerome DelPino, early in the meeting, asked that the “trashing” of fellow trustees stop, I felt that a new day had arrived for the Board. My hopes were immediately dashed. Literally within minutes, the attacks began anew. First there was a gratuitous challenge to Tom Gottschalk’s right as Vice-Chair to run the meeting, but more importantly, an attack on his objectivity and loyalty to the Board. This was the beginning, not the end.

Leslie Bains has served this University for many years – longer than all members of the Ad Hoc Committee. She has been generous in both her time and her money, unlike several members of the Ad Hoc Committee. She has always put the interest of AU first, at no time more than when she offered her resignation so that her Chairmanship would not be an issue during the debate over Ben Ladner. Notwithstanding that act of ethical generosity, people on the Board sought to exact the last pound of flesh and tried mightily to make sure that her exit from the Board was not defined by her grace, but by their nastiness. Although she made it clear to the Vice-Chair that she would resign effective Tuesday, this did not satisfy her detractors who, ignoring the by-laws, sought her removal at yesterday’s meeting and made clear their displeasure when the Vice-Chair ruled them out of order.

The attacks on the integrity of Arnold & Porter have been continuous, strident and without merit. They have been raised to such levels of vituperation as to be almost humorous except that they clearly evidence an abandonment of decency. It is hard to believe, but true. One of our Trustees has spread the ridiculous rumor that Arnold & Porter is the subject of the United States Attorney’s investigation regarding the University. As I said yesterday and as bears repeating today, I have worked with Arnold & Porter and its lawyers for over three decades. Before the Board hired Jim Joseph, I knew him by reputation. I have now seen him at work. His reputation, as significant as it is, understates his excellence, his devotion and his decency.

When Manatt, Phelps was hired to give a second opinion (an unnecessary expense only incurred because of the relentless attacks on Arnold & Porter by the Ad Hoc Committee), the assignment was given to Steve Ryan, a well-known and well-respected attorney in this city. Notwithstanding the impeccable credentials of both him and his firm, the work of Manatt, Phelps has been attacked as biased, improper and to use its detractors’ words, “out to get Ben.”

It is not acceptable governance to ignore the message, but attack the messenger. This practice continued unabated yesterday. My letter to the Trustees outlining my opposition to Ben’s retention is still unanswered. Not a word; not a call; not an e-mail. Just an attack on my and my wife’s integrity. The same is true for Arnold & Porter’s opinion letter on my and Margery Kraus’s alleged conflict. Unanswered. No opposition. No apology. Indeed there has never been any opposition on the merits to the actions of the Executive Committee or the Audit Committee. Tom Gottschalk’s fitness to chair the meeting yesterday was challenged because, as an Executive Committee Member, he had voted to suspend Ben. Yet his speech and letter explaining the decision elicted not one word of response from his critics. The attacks on Protiviti, Arnold & Porter and Manatt, Phelps not only continued yesterday, but became even more shrill. The wait continues for a response to the law firms’ various memoranda and opinion letters. As the decibels of attack got higher, so did the level of disregard for their research and their opinions, backed not only by Jim Joseph and Steve Ryan, but with the full support of their respective firms.

That these attacks continued unabated yesterday would be reason enough to leave the Board. I defend Leslie Bains, Jim Joseph and Steve Ryan not because they are either friends or fellow lawyers, but because they are good people who did nothing but what was best for AU.

Under the Chairmanships of George Collins and Leslie Bains with Len Jaskol, as chair of the Audit Committee, a new transparency came to the Board replacing the secret agreements, concealed activities, and dereliction of duty we experienced under the leadership of Bill Jacobs as chairman and John Petty as Audit Committee Chairman. The Ad Hoc Committee has made numerous calls for changes in governance. I found this quizzical but was willing to press on. I questioned whether their requests had substance because so many of its members had been leaders in the attempts to derail the audit, no one more so than John Petty with his constant drumbeat about “standards audits.” His position reached unthought-of levels of silliness when the Board was presented with a statement by Ben’s personal chef, complaining that the investigation of the Ladners did not appear to be a “standard audit.” I concede, as Ben and Nancy have proved, that the chef knows his lobster, foie gras and fine wines. But auditing procedures. Come on.

My hopefulness that the Ad Hoc Committee truly wanted better governance became skepticism when they showed no interest in Leslie Bains’ 14-point program. Their response to her call for openness and more participation by faculty and students was a demand for her resignation. Yesterday, my skepticism turned to disbelief. It is now clear that the Ad Hoc Committee is motivated by nothing but a desire for the days of the past when secrecy prevailed and the President’s expenses were never audited. They continue to embrace Bill Jacobs’ heretofore hidden 1997 contract that was neither authorized nor ratified by the Board. They simply brush off the fact that two law firms have opined that the ’97 contract is invalid.

When it worked to their advantage, the Ad Hoc Committee demanded strict obedience to the by-laws. Yet yesterday, when the by-laws were an impediment to their actions, they flouted them. Only the strength of the Vice-Chair in ruling their actions out of order prevented us from having improper action approved. Nothing highlights the Ad Hoc Committee’s disregard for good governance more than its attempt to override the by-laws and install a new chairman. What made their actions that much more reprehensible was the fact that the new Chairman had been selected by them without consultation or even warning to any other Board member. Their confidence that they could ignore the by-laws and force their demands upon the Board was made abundantly clear in a document that they inadvertently allowed non-members to see. In this paper they refer (as if it were a fait accompli) to their candidate as the new Chairman.

Juxtapose these actions with their earlier complaints about the over-reaching of the Executive Committee. We have heard repeatedly, and again yesterday, how the properly empowered Executive Committee erred in suspending Ben without discussion with them. The Executive Committee had the power to act. It explained its reasoning. The Ad Hoc Committee has no power to act. It never explained its decision or sought anyone’s advice. They simply tried to force a new chairman upon us.

The Trustees are fiduciaries to the University, not Ben Ladner. Yet many on the Ad Hoc Committee still do not seem to grasp this most basic tenet. How else can one explain their behavior during the compensation review in early 2005. The Compensation Committee under George Collins, for the first time in my years on the Board, sought a thorough analysis of Ben’s compensation. Not happy with the results, members of the Ad Hoc Committee, and only members of the Ad Hoc Committee, voted to reject the recommendations of our outside advisors, shrug off any need for a comfort letter, thumb their noses at the IRS and invite government sanctions. Etched in my mind is the smug statement of one Ad Hoc Committee member that we should give Ben whatever he wants.

I was prepared to attend yesterday’s meeting and overlook their loyalty to Ben, rather than the University, as misguided, but well intentioned. I was prepared to start with a clean slate and disregard the fact that they were ready to bring back the chef, the social secretary and to give Nancy Ladner a salary greater than many professors. This was clearly false exuberance. When a committee was chosen to negotiate with Ben, the Ad Hoc Committee members again revealed where their loyalties rest and nominated only their own, not interested in any other views. Wiser heads prevailed and a committee of balanced views was chosen. A committee of multiple voices and not just one was clearly anathema to two of the committee’s leaders who voted against the selections.

I have great respect for the three members of the committee designated to negotiate severance with Ben. I have every belief that they will do everything possible to get the absolute best deal for AU. My disagreement is not with those people, but with their mission. I am opposed under any circumstances to any negotiation with Ben. I do not back off out of the fear that he may sue the University. As Dean Grossman pointed out, expedience should not trump ethics. We should not alter our position out of fear of litigation. As the Dean further stated, it is likely that, severance package or no severance package, there will be litigation. Litigation from Ben if he is not satisfied. Litigation from concerned faculty members and other stakeholders if the package is too rich.

The deans, the faculty and the students have spoken out unequivocally. They have asked not only that Ben be discharged but that he be given no more of the University’s money. They have asked repeatedly that there be no golden parachute, no severance package and nothing that is not legally required. I agree.

I had hoped in the past that Ben would do what is best for the University and resign quietly and apologetically. He has done just the opposite. He has been steadfast in his statements that he is right and that he should be retained. He has dismissed the votes of no confidence as “uninformed.” He has labeled his transgressions “mistakes.” He has been steadfast in giving a deaf ear to calls for his resignation. He has shown no contrition. As time has made clear, nobody but a very few diehard supporters on the Ad Hoc Committee agrees with Ben. The deans, the faculty, the students, noted university presidents, and the media have condemned his unseemly behavior and his waste of precious University assets. His response has been to hunker down and to give and to write self-serving interviews and editorials belittling the investigation as a vicious attack on a “man of change.” Quite frankly, he simply doesn’t get it. He still sees 13-course meals, posh hotels, chauffeured limousines, all paid for by tuition dollars, as appropriate. This is why, as I stated yesterday, he should be discharged. We have long gone past the time to allow him the luxury of resignation.

Ben Ladner is an at-will employee. There is no contract between him and the University. As I have stated, and two major law firms have confirmed, the 1997 contract is invalid. Even if people believe it is valid, the Board should follow the expert advice of our counsel and force Ben to prove, in a court of law, the contract’s validity. To ignore the legal opinions and to give Ben a single benefit under the ’97 contract is quite simply a breach of fiduciary duty.

The question of the validity of the ‘97 contract is really only an academic exercise. The issue of its effect on any severance to Ben is a moot issue. Under its provisions, Ben can be discharged for dishonesty. If so discharged, he gets nothing in benefits, no severance. I will not enumerate the laundry list of untruthfulness uncovered by the Audit Committee’s investigation. It is only sufficient to cite two – one major; one minor – to make clear that even under the ’97 contract nothing is owed to Ben Ladner. Minor is the fact that, in the face of uncontested documentation to the contrary, Ben told the media not once but repeatedly that he never sought a raise in compensation. Major is the uncontradicted fact that after this investigation began, Ben altered his records without disclosure so as to show that certain trips were for business, not pleasure.

My call for no severance is not vindictive, but necessary to show how serious we take his misdeeds, his damage to AU. We must remember the cost already of Ben’s excessive behavior. The over $500,000 in imputed income and reimbursables if diverted from fine wines, fancy parties and luxury travel would have covered the salaries for one year of at least four faculty members. The earnings alone from this waste of University assets would have provided in perpetuity a full tuition scholarship for one student.

Members of the Ad Hoc Committee have complained repeatedly about the cost of the investigation. No question about it. It has been huge. It will total nearly $1 million. But we must remember that this $1 million was spent because of Ben’s behavior. It was necessary to do so. The whistleblower letter could not be ignored. The Audit Committee had to be thorough. It could not brush off the allegations or sweep them under the rug. As Len Jaskol made clear on several occasions, the cost, moreover, was exacerbated by Ben’s unwillingness to cooperate and stonewalling. The cost was further increased by the delaying tactics of the Ad Hoc Committee.

The need to sever all relationships with Ben Ladner and to have him leave with no severance package is not only a question of money, but a question regarding the future of AU. As Acting Provost Ivy Broder so eloquently stated, “an ethical cloud” hangs over the school. There is an unfathomable depth of resentment on the campus toward Ben Ladner. As our faculty pointed out, Ben’s behavior has subjected the University, the deans, the faculty and the students to embarrassment. We must remove the cloud. We must speak out clearly and unequivocally. We must tell the University and all of our constituencies that a new day is dawning and that behavior such as Ben’s will not be countenanced. Any payment beyond that required by law will send a clear message that bad behavior has its rewards. People will continue to look cynically upon our University. To compensate ethical lapses only compounds our problems. As I leave the Board, I urge you to do what is right, not what is expedient. If we are to be a school that shows zero tolerance for misbehavior, we must also mete out zero reward for such lapses.

I leave the Board with sadness. I have great affection for AU. I always had respect and admiration for the deans and faculty. No more so than yesterday. I never fully understood the depth of their love for this University. I always knew we had an outstanding student body. I now know that they are not only outstanding but committed to this University and its core values.

It has been a pleasure to work over the years with so many outstanding fellow trustees. I have admired the work of George Collins and Leslie Bains for bringing a new openness and transparency to the Board. I have and will always have a soft spot in my heart for George Collins who sacrificed his friendship with Ben Ladner for fiduciary duty. The list goes on. Len Jaskol for his tireless work as Chairman of Audit Committee. Tom Gottschalk, Ed Carr and Gary Cohn for their dedicated service to the Board and the Executive Committee. I wish all of you, both friend and foe, good luck. I leave with a fervent hope that you will do the right thing for AU, the deans, the faculty, the students, the alumni and all those, like myself, who wish nothing but the best for the University.

Sincerely,



Paul Martin Wolff