The roughly $3.75 million departure package awarded to ousted president Benjamin Ladner by American University's board of trustees provoked angry reaction on campus yesterday, with some students and faculty calling for the deal to be rescinded and the board to be reformed or swept.
Off-campus reaction was swift, too, as four former trustees, including two former board chairmen, issued an open letter condemning the deal that included a $950,000 one-time severance payment and about $2.75million in deferred compensation as a "platinum parachute" that Ladner did not deserve.
"What we wanted defended were our values and beliefs, and that didn't happen," said Student Government Association President Kyle Taylor.
Discussions were underway among several former trustees, major donors, faculty members and students about possible litigation to set aside the severance and reclaim money paid to Ladner under his 1997 contract, which has been disputed. And a committee of student leaders drafted a revised set of bylaws that they hope to approve, give to the Faculty Senate and ultimately present to the board.
There is also a sizable, perhaps quieter, group of people, said Professor Wendell Cochran, who feel that it's good to have finished a deal -- even though they might disagree with the terms -- and are ready to just move on.
The deal announced Monday comes after months of investigation sparked by an anonymous letter that questioned the personal and travel expenses of Ladner and his wife. The board voted Oct. 10 that he could no longer be president, but its members did not agree on the terms of his departure.
The agreement reached Monday ends his connection with the private Northwest Washington university and allows him to resign.
It's not the first time the AU community has protested a settlement. In 1990, a $1million severance offer to Richard Berendzen, who had resigned as president after making obscene telephone calls, sparked such an outcry on campus that trustees rescinded the offer.
The Ladner package gives the former president, who came to AU in 1994, about $1.1 million in an insurance policy purchased for Ladner and about $2.7 million in deferred compensation that acting chairman Thomas A. Gottschalk said Ladner had earned already. The four former trustees said Ladner should not have received the money because it was not guaranteed to him until 2010.
Ladner and his wife, Nancy, have 90 days to leave their university-owned residence, with up to $20,000 in moving expenses paid by the school. Gottschalk said Ladner is paying his attorneys' fees. He must reimburse AU $134,000 for spending over the three years investigated by the auditors, report an additional $398,000 in taxable income and pay the school the amount it would have withheld in taxes on that additional disputed income, Gottschalk said.
Yesterday's letter by the four former trustees said the board had created "an outrageous and expensive inconsistency" by giving him a severance package even after deciding he "had no contractual rights against the University and that [he] should be discharged for cause." The letter, which dismissed the fear of potential litigation by Ladner and called some of the explanations for the package misleading, was signed by Leslie E. Bains, George J. Collins, Leonard R. Jaskol and Paul M. Wolff.
Gottschalk said the letter "does a disservice" to the school, "states facts and legal certainties that were very much in question and violates assurances of confidentiality in ways that misrepresent the board's action and misleads the public." He said that the school had budgeted money to cover the entire package and that the agreement was reached in part to avoid litigation.
"A good settlement is one that both sides are unhappy with," Gottschalk said. "That's what we have."
Late Monday, the university's deans issued a terse statement saying the financial arrangement was unacceptable. Some of the individual schools met yesterday to pass their own judgment.
The School of International Service Council unanimously voted no confidence in the trustees, called on them to resign and asked for reforms in governance. The council asked them to rescind the severance package or recover the funds and voiced support of efforts by members of the AU community to enjoin the board from moving forward with the settlement.
The faculty of the Washington College of Law voted to condemn the settlement, calling it a waste of university assets and a betrayal of the school's educational mission.
The Kogod School of Business faculty passed a resolution saying it was disappointed with the departure package and wanted the board to focus on a new governance system that would be more inclusive of school constituencies and be more transparent.
The School of Communication faculty expressed its deep concern over the settlement, particularly the $950,000, "especially if this money is being given to him so he can repay the university for his excessive spending."
The communication faculty also admonished the board for its lack of stewardship of the university and urged trustees to create an independent panel to study the governance structure, asking for more transparency and accountability.
Several board members reached last night declined to comment on the faculty votes.