Ladner's $3.75 Million Deal Severs Ties to American U.

Some American University students who oppose Benjamin Ladner rented a U-Haul truck and hung a sign on its side that offered to move him for free.
Some American University students who oppose Benjamin Ladner rented a U-Haul truck and hung a sign on its side that offered to move him for free. (By James M. Thresher -- The Washington Post)
By Susan Kinzie and Valerie Strauss
Washington Post Staff Writers
Tuesday, October 25, 2005

Benjamin Ladner, the ousted American University president, agreed to a nearly $3.75 million departure package yesterday that ends his ties to the school and allows him to resign rather than be fired.

The deal includes about $2.75 million in deferred compensation and a one-time $950,000 severance payment.

Last week, the university's board of trustees voted to fire Ladner "for cause" if he did not accept its offer, according to sources. Ladner had asked for about $6 million, according to some people close to the negotiations, who spoke on condition of anonymity because of a confidentiality agreement.

If he had turned down the offer, he would have risked walking away with nothing, the sources said.

Ladner was dismissed as president Oct. 10 after an investigation into personal and travel expenses by him and his wife, Nancy Ladner. The board did not agree on the terms of his departure at the time, including whether he was terminated "for cause."

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."

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.

The deans of AU released a statement last night that said, in part, "we condemn the decision of the Board of Trustees to offer former President Ladner a multi-million dollar settlement package and the closed process by which that decision was reached. We do not believe this is an appropriate way to manage the University. We must have transparency and accountability consistent with principles of good governance and the values of American University."

In exchange for the money, Ladner gives up any claim to a tenured faculty position, his positions on boards of AU's overseas campuses and all other connections to the school. He and his wife will leave the university-owned house within 90 days, with up to $20,000 in moving expenses paid by the school.

"This should end the potential for litigation and litigation expense," acting board chairman Thomas A. Gottschalk said. "That obviously is one of the factors that affected our thinking in reaching this resolution."

The $2.75 million includes just over $1 million in insurance and about $1.75 million in two trusts, Gottschalk said. That's money already set aside by the university, he said. The $950,000 is the only part of the payment "that might be colloquially referred to as a parachute," Gottschalk said.

Ladner will have to reimburse the school $134,000 for three years in question, Gottschalk said; report an additional $398,000 in taxable income to the IRS; and pay AU the amount the school would have withheld on that income.

"He doesn't walk away with the lion's share of that $950,000" after paying taxes and reimbursing AU, Gottschalk said.

Faculty and student leaders met with Gottschalk yesterday afternoon, and word spread quickly on campus.

"If somebody's due money, the honorable thing is you pay that," Professor Lenny Steinhorn said after hearing about the departure package. "Anything beyond that, one really has to ask why the university would give him that money, with all that he's done to cause it heartache. . . .

"If he should be fired for cause -- if that is something the board even considered -- why would they give him any additional money beyond what he's owed? . . . It seems topsy-turvy bizarro-world logic."

Some students got so angry at the news of Ladner's proposed severance that they rented a U-Haul truck and hung big signs on the side -- one telling Ladner that he didn't need a "golden parachute" -- they'd move him for free. They drove the truck around campus yesterday morning and up and down the street where Ladner lives. Then they parked the truck near the center of campus until noon, Ladner's deadline for making a decision.

Some marched around campus with banners during class breaks. The group Students for a New American University wrote a letter to the campus paper that said the possibility of a multimillion-dollar buyout "is a colossal slap in the face of the many students and faculty members who have demonstrated, petitioned, and written letters in opposition to a 'golden parachute.' We are outraged at this Board's abandonment of their fiduciary duties to AU, and we echo the concerns of many students, faculty and staff in voicing our resolution of 'no confidence' in this Board of Trustees."


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