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 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:

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...


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