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Wednesday, November 30, 2005

Open Letter #3: The Plan

An Open Letter to the American University Community

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

Here it is.

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

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

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

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

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

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

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

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

7. Co-operate fully with the Grassley investigation.

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

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

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


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


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Anyone have emails for leslie or George so we can respond to their plan?

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