Ladner Memo in 2004 Sought $5 Million Boost

Julie Weber, AU's executive director of housing and dining programs, turns away after addressing student protesters outside the board of trustees meeting at Butler Pavilion.
Julie Weber, AU's executive director of housing and dining programs, turns away after addressing student protesters outside the board of trustees meeting at Butler Pavilion. (By Rich Lipski -- The Washington Post)
By Valerie Strauss and Susan Kinzie
Washington Post Staff Writers
Thursday, September 29, 2005

A 2004 confidential memo from American University President Benjamin Ladner asks the school's governing trustees to do their best to pay him an additional $5 million in pretax compensation over five years that he felt he needed to "maintain my current living level" at retirement. The disclosure apparently contradicts recent statements Ladner made that he had never asked for more compensation.

The memo, obtained by The Washington Post, was made public as about 500 students staged an emotional -- and loud -- rally on campus demanding that Ladner, 63, resign or be fired.

Some students waved tennis rackets -- the tennis teams recently were threatened with cuts -- and shook their fists as they carried hand-lettered signs saying "Resign Now" and "I'll be in debt for the rest of my life for a PARTY for Ben Ladner's wife."

Ladner, who was suspended in August with pay, said late yesterday that he would not resign and was waiting for the process underway by the trustees to be completed. He has said he has not done anything that his contract did not permit and that his activities have been misconstrued by opponents.

"I'm reviewed every year for a raise" under his contract, Ladner said. "I didn't have to ask them."

He said he was not asking for extra compensation in the memo but was responding to a request from the chairman of the board of trustees, then George J. Collins, for ideas about his compensation.

Ladner said last week that Collins had asked him to find out how certain insurance policies and investments were performing, and they were lower than the board had expected.

"Good grief, I'm not crazy. I would not demand a million or 3 million or whatever," Ladner said. The conversation, he added, was, "What are the gaps? Are there ways to close the gaps?"

Collins said yesterday that he had personally asked Ladner to talk with a financial adviser about compensation and an insurance policy that the school had purchased for Ladner and to submit a memo. But Collins said he was not expecting what Ladner delivered.

Board Chairman Leslie E. Bains has scheduled a meeting Oct. 10 for the full board to discuss the results of the months-long audit of Ladner, prompted by an anonymous letter questioning spending by the president and his wife, Nancy Bullard Ladner. Trustees supporting Ladner have written a new contract for him that they want the board to consider immediately; it includes about $800,000 in compensation for Ladner and a salary of more than $80,000 for his wife.

Amid the drama on the campus of the private, 11,000-student university, a memo surfaced from Feb. 19, 2004, that Ladner gave to Collins asking for millions in new compensation.

The memo, authenticated by three trustees then serving, sparked a period of conflict between many board members and Ladner that has escalated.

The document says that Ladner's insurance policy, projected to reach a value of $2.9 million over 10 years, was worth $650,000 at the time and that it was not likely to increase before retirement. Therefore, the memo says, the gap between Ladner's financial position then and what it should be at retirement to maintain his "current living level" was approximately $3.7 million after taxes, or $5 million pretax.

The memo then lists several proposals for the board to close that gap, "as much as reasonably possible," including almost $1.13 million in incentive bonuses, a "much larger percentage increase in my annual base salary" and other options.

In an interview with Post editors and reporters last Friday, Ladner said that he had never asked for additional compensation and that he was always "surprised" at how much he was paid.

Ladner was seen by the board at the time as having made major advances for the university, improving the academic and financial standing of the school. Collins said the board considered him a "hot property" and wanted to make sure he stayed.

But Collins said he thought Ladner's proposals were so high that he never distributed the memo to the full board "to protect Ben," though he read some portions of the memo to members of the compensation committee. The memo was obtained by The Post from someone other than Collins.

The compensation committee and Ladner wrangled for months over the subject, with one member, Pete Smith, quitting over Ladner's demands, according to Smith's resignation letter. Amid rising concern nationally over executive compensation, a board meeting was held in February 2005, and a majority of trustees agreed to lower Ladner's overall compensation from more than $850,000 to $800,000, according to three trustees at the meeting. Ladner told trustees at the time that he was very disappointed.

Yesterday, a group of trustees -- some of whom believe Ladner should leave and others who support his continued tenure -- met with the deans of the school's six colleges and then with representatives of the Faculty Senate. The deans and faculty told trustees that Ladner must go, according to several participants.

One trustee, David M. Carmen, told those assembled that they were making a hasty judgment based on newspaper reports, the participants said. Carmen would not detail the meeting but said in an e-mail that he "did NOT blame the newspaper."

Later in the day, as trustees met with a handful of students in a university building, protesters assembled in the heart of campus in an action to support Monday's no-confidence vote by most of the school's tenured faculty.

Today, the Faculty Senate will gather to consider a vote of no confidence.

After yesterday's trustees meeting, students ran down to an amphitheater, usually a place for hacky sack and guitar jams, and talked about what the board members had said, still mad, still yelling, saying they need a student representative on the board, and other changes.

Staff researcher Bobbye Pratt contributed to this report.

© 2005 The Washington Post Company