American University Controversy

Majority Of Trustees Say Ladner Must Leave

A majority on American University's Board of Trustees has concluded that suspended President Benjamin Ladner must be replaced, according to two sources close to the board. One trustee said some board members are negotiating to get Ladner a generous package for his departure.

Ladner's Severance Could Top $1 Million (Post, Oct. 2)

Ladner, who took over as president of the university in 1994, was suspended last month after the board began looking into his personal and travel expenses, an inquiry sparked by an anonymous letter sent to the board in March.

Paul M. Wolff , member of American University's Board of Trustees, was online Monday, Oct. 3, at 11 a.m. ET to discuss the controversy over suspended President Benjamin Ladner and his spending practices.

Programming Note: A request for an online discussion has been made to Mr. Ladner.

A transcript follows.

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washingtonpost.com: Paul Wolff, thank you for being our guest today on washingtonpost.com.

A Washington Post report stated that A.U. President Benjamin Ladner could walk away with a severance package of $1 million but that the Board of Trustees is questioning the validity of a contract he signed in 1997.

Can you comment on this report. And do you expect Mr. Ladner to step down.

Paul Wolff: Two questions. Let me start with the second first. Do I expect him to step down? I won't hazard a guess. He has given no indication whatsoever that he is considering stepping down despite the fact that the faculty, the deans and the students have called for his resignation. I have yet to hear any faculty member speak out on his behalf yet he has indicated not withstanding this lack of support that he intends to stay. I believe that it is in the university's best interest that he step down before the Oct. 10 board meeting.

Your second question deals with The Post article on severance. First, for him to get the severance package outlined in The Post, the board would have to ratify the '97 contract. To date, there has been no approval of this contract by the board. Second, if the board chooses to ratify the contract, it would then have to decide if it's going to discharge Mr. Ladner and whether this discharge is for dishonesty.

So, if the contract is ratified and if he is discharged without a finding of dishonesty, then he would be entitled to the terms of the contract. If either the contract is not ratified or if it is ratified and he's discharged for dishonesty, he would take nothing.

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Washington, D.C.: Paul:

Besides looking at any misappropriations, are the Trustees examining any bad management practices such as awarding no bid contracts authorized by Pres. Ladner or work/contracts that produced no results but cost the University lots of money?

Paul Wolff: Nobody has brought to the board's attention evidence of any no-bid contracts awarded by Mr. Ladner nor has anybody brought to our attention any contracts awarded by him for which no work or inferior was provided. Obviously, if there are such instances, the board would like to know. But the board is looking into the much larger and overriding issues of judgment, leadership, values and morale bearings. It is not simply a question of legal contract rights. The larger issue is whether Ladner has used the judgment in leadership in spending precious university funds.

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Washington, D.C.: Does the Board of Trustees feel that it has the option of dismissing Dr. Ladner without a "golden parachute"?

Paul Wolff: I can't speak for the board but I will speak for myself, I believe very strongly that we can choose to discharge him without any golden parachute and without any further loss of valuable university funds. I support the resolution of the business school asking the trustees to provide no golden parachute.

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Chicago, Ill.: I've heard the investigation into Ladner's practices is costing the institution $1 million. Is this true?

Paul Wolff: I don't know the exact number but when we are finished it will probably be close to that number. It is regrettable that the money had to be spent but you must do what is required by your fiduciary duty to the university. After we received the whistle blower letter, we could not sweep it under the rug. We had to investigate. Such investigations are expensive, especially when the subject, Mr. Ladner, made it increasingly difficult.

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Towson , Md.: Do you think it is proper to accuse President Ladner of these charges in the press instead of allowing him to answer his accusers? Didn't you forbid him from speaking in his own defense?

Paul Wolff: That is false. He was allowed to speak at some length at the September board meeting. His lawyers were also allowed at the September board meeting to make presentations. Both he and his lawyers have been given every opportunity to present, statements and any other materials that they have and which they believe can help Dr. Ladner's position.

His lawyers specifically were asked if they, on behalf of Dr. Ladner, would render opinions on the legal issues before the board. They refused. Most importantly, Dr. Ladner has taken his case to the press. His supporters arranged a lengthy interview with The Washington Post Editorial Board. He has also given lengthy interviews to the Chronicle of Higher Education and the Journal of Philanthropy.

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A.U. Senior, Mass. Ave.: Most people nationally don't even know about A.U. How do you think this will affect perception/recruitment/standards when the first time many people here about A.U. it's in the context of a scandal in the New York Times or Washington Post? And what will the school do to combat fallout?

Paul Wolff: I think the best way to deal with the fallout is to as quickly as possible remove Dr. Ladner, either by his own resignation or by board action. The university has an excellent faculty, a fine and ever improving student body. If we remove Dr. Ladner, we will have no trouble finding an outstanding leader who will take the university to higher levels and will take them there without the excessive use of university funds for living expenses.

The damage to American University will be long term only if we keep President Ladner.

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Washington, D.C.: I have found through my classes that many students are frustrated that school officials and faculty/staff are not informing students about what is happening in the investigation and that the majority of our news is coming from the media. Why is the university trying to downplay the situation with Ladner?

Paul Wolff: I don't think the university is downplaying it. The deans and faculty senate have spoken out loudly and clearly calling for Ladner to resign or to be removed. The student demonstration last week followed by the meeting of a group of students with certain board members made it clear to me that the faculty and the students are well informed. From everything I see, the Eagle (student newspaper) is getting the word out and if this isn't sufficient, then BenLadner.com certainly is getting the word out.

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Washington, D.C.: Hi, Don't the you think the Board of Trustees' apparent and dismal failure to effectively oversee the president's activities is a source of greater concern? One trustee/chairman negotiating a generous contract without the knowledge of others! Shouldn't we also be looking at revamping the entire Board?

Paul Wolff: It is most regrettable that a past chairman negotiated in secret a contract with Ladner. It is that much more regrettable that he never informed the board of its existence of sought either authorization or ratification from the board. That is in the past. His successor, George Collins, and our current Leslie Bains have brought a new transparency and openness to the board. That is why Ladner's last contract went through extensive evaluation -- not only by the compensation committee but by outside advisors and lawyers. The overwhelming majority of the board refused to approve any compensation agreement with Ladner unless the advisors and lawyers would sign off on such an agreement. There was a minority of trustees who opposed this approach and favored simply giving Ladner whatever he wanted. These are some of the same trustees who want Ladner reinstated. The board does not have governance problems. Our current and past chairs have been excellent at governing the board and making sure the board is kept abreast of all important decisions. What we do have it a people problem. People who wanted to give Ben compensation that was out of line with reasonable standards and who now not only want to return Ladner to office but have negotiated with him a contract at not only a higher salary but one that brings back the personal chef, his wife's personal secretary and gives his wife a salary that is rumored to be between $80 and 100,000. Nobody supporting Ladner has denied or refuted these numbers.

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Silver Spring, Md.: Let's put aside the fact that Ladner behaved without dignity and honesty and used AU as his private treasury at the same time nickeling and diming the faculty for necessary expenses. Don't you think the AU board also deserves the blame for being asleep at the wheel for such a long time?

Paul Wolff: I certainly think the board has not covered itself with honor. I do point out that when Bill Jacobs was chairman I and others specifically stated on the record at board meetings that it was a breach of fiduciary duty for any chairman to negotiate without authorization or ultimately ratification a contract with Ben Ladner. Although he was not pleased with these remarks, Mr. Jacobs indicated that he would abide by them. Thus it came as a shock in 2005 to learn that the '97 contract existed. Mr. Jacobs did not even tell his successor, Mr. Collins, of the contract's existence. Furthermore, under its terms Mr. Ladner was supposed to bring the contract before the board every year for review. This he never did. Furthermore, members of the board, including myself, repeatedly asked John Petty, when he was chairman of the audit committee, to audit the cost of the presidency. We were told repeatedly that it had been determined that the imputed income, that is, personal expenses paid for by the university, were minimal, always less than $10,000 per year. We now know that the audit committee never audited these expenses, rather it simply took Ladner's word for it.

Under the new chairman of the audit committee, Len Jaskol, things have changed.

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Washington, D.C.: What role, if any, can the AU student body and government play in the Ladner affair?

Paul Wolff: Speak out. Speak out. Speak out. Let us know what you think. There is a board meeting at A.U. next Monday, Oct. 10. Come to the meeting. Make your opinions known.

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Clifton, Va.: Why doesn't A.U. have a large endowment? G.W. G'town and even my Alma mater GMU have large endowments. If AU would have bought real estate 30 years ago like GWU it would have been in better shape financially.

Paul Wolff: I agree. We are working to increase the endowment. The finance committee of the board, the investment committee, has done a good job of wisely managing the endowment. Al Checcio, our head of development, has brought a whole new spirit and enthusiasm to fundraising. We have a long way to go but Al has started us in the right direction. He is not only getting more alumni and friends to donate but he is getting larger contributions. I believe under his leadership and that of a new president, we will do better than we've ever done before.

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NYC: Dear Mr. Wolff:

Thank you for doing this chat. I sent you an email a couple weeks ago, outlining my opposition to the continued employment of Mr. Ladner as AU President and am glad to again have the opportunity to hear your thoughts on the matter.

I just don't see how the John Rigas-esque Mr. Ladner, especially after signing the secret contract in 1997, can establish credible leadership any more.

Additionally, myself, along with other alumni, have ceased donations to the University until this matter has been successfully resolved with his removal.

What do you see has the timeline for a final conclusion, and what that conclusion will be?

Finally, as a concerned alum, I want to make sure that no more of the University's money is wasted, and Mr. Ladner receives NO golden parachute whatsoever.

Please address these questions/thoughts/concerns. Thank you.

Paul Wolff: First of all, I agree with everything you said as has been made abundantly clear in statements I've made and the letter I wrote to my fellow trustees which I now learn is published on BenLadner.com. I wish it were already over. I had hoped that when the deans, the faculty senate and the students overwhelmingly asked Ladner to resign that he would have recognized that American University comes first and he would have resigned.

Regrettably, he has done just the opposite. He has dismissed the votes of no confidence and made it clear that he will fight to the end, including, as he has stated, litigation. This saddens me no end. I hope before the board meets next Monday, the 10th, that Ladner will rise above his selfish pursuits and do the right thing for the university by resigning.

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AU 2006: I've heard a lot of random guesses, but no real hard data on how Ladner's salary compares to those of university presidents nationwide. Could you provide such a comparison, how is Ladner's salary compared to GW, Georgetown, Harvard, a state school, a liberal arts school, etc...

Thanks for taking the time.

Paul Wolff: Prior to the chairmanship of George Collins, when Ladner's salary was secretly negotiated between him and Bill Jacobs, it was always wildly out of line. Even though A.U. does not rank among the top 75 universities in this country measured either by size or reputation, Ladner's total compensation would have ranked him among the top 10 of all university presidents in the country. One can only assume now that the audit committee has uncovered the additional expenses incurred by him that his total compensation would clearly put him near/if not at the very top.

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D.C .20005: In the chronicle article Ben Ladner spends much time discussing the disconnect between the executive committee and the board and that the former acted without the authorization of the latter. Comments?

Paul Wolff: That's false. The executive committee is empowered to act for the university on all matters between board meetings with the single exception of hiring a new president. As has been explained fully to all board members, the executive committee did this reluctantly but necessarily to protect the integrity of the university.BenLadner.com

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Davidson, N.C.: In press coverage of this affair, various people on both sides of the issue have praised Dr. Ladner as an effective fund raiser. Yet AU is still 90 percent tuition dependent, a figure that hasn't changed in a decade. I know there is a nice new arts building. What other evidence is there of Dr. Ladner's fundraising prowess?

Paul Wolff: I think he's done a decent job. That's all that I will say. He has done better than his predecessors who did a dismal job. The audit committee, in reviewing his records and calendar, determined that he spent at maximum, 10 percent of his time on fundraising. The arts center and other significant donations came from long-time A.U. supporters, people who were generous long before Ladner became president. I know of no new significant donor that he was brought in.

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Burke, Va.: As an AU alum, I'm getting communications from the university assuring me that my donations did not go Ladner. I think that's a laughable statement. Can you assure us that the money we've given the school actually went to education?

Paul Wolff: No, I can't. Obviously, the money spent by Ladner contract or no contract, for lavish birthday parties for himself and his wife, for an engagement party for his son and for chauffeuring his wife to the beauty parlor, obviously came from university funds that could've been used for scholarships or faculty salaries. I pointed out in my letter to my fellow trustees that the difference between a business class ticket and the first class ticket which Ladner purchased would have covered the tuition of one student for one semester. I also pointed out that the extraordinary salaries and raises given by Ladner to his chef and his wife's personal secretary could have been obviously better used to raise the salary of our faculty.

I have repeatedly pointed out that the salary of our longest serving tenured professor is but a few thousand dollars more than the salary and benefits Ladner gave his chef. I asked why wasn't the $500 dinner given by Ladner with university money to the chef and his wife not given to our teacher of the year.

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Paul Wolff: I thank you for your questions. I am heartened to hear that there were many questions, many more than I could answer. This clearly shows that the A.U. family has an interest in this matter.

I call upon all alumni, faculty and students to speak out. I, of course, would hope that you agree with me that Ladner should resign or be discharged but even if you do disagree and have a different view of the mater, I urge you nonetheless to make your views known. The board in its deliberations must know what the students, the alumni, the faculty and friends of A.U. believe. Thank you.

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Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.