American University trustees have agreed to offer ousted president Benjamin Ladner a choice: Accept a departure package of between $3 million and $4 million by the beginning of next week or be fired "for cause" and risk losing some or all of it, sources said.
That figure, which is higher than negotiators had discussed originally, includes salary, deferred compensation owed to Ladner and moving costs, according to sources knowledgeable about actions taken at a board meeting Thursday.
The trustee who led the audit committee, and who looked through thousands of pages documenting Benjamin and Nancy Ladner's spending, resigned from the board effective yesterday. In a letter to the acting chairman, given to The Washington Post by someone else, Leonard R. Jaskol said his conscience would not allow him to vote for any money to be paid to Ladner, even though he said he understands "the practicality of settling these matters rather than litigating them."
Jaskol's departure shifts the balance of power even further on a board that has been deeply split over Ladner. In the past two weeks, three other trustees have quit, including some of Ladner's sharpest critics. In the days and weeks ahead, the board will try to reach an agreement with Ladner, address its own structure and begin searching for a new president.
The board dismissed Ladner last week after a months-long investigation of his and his wife's spending. Trustees launched an audit in the spring of Benjamin and Nancy Ladner's personal and travel expenses after receiving an anonymous letter. On Oct. 10, the board concluded that he should reimburse the university $125,000 and add $398,000 to his taxable income for the three years investigated.
What was left unresolved were the terms of his departure -- whether he was terminated "for cause" and whether he would get a severance package, a faculty position or nothing.
Ladner has asked for more, sources said.
Ladner said yesterday evening: "I'm restrained from talking about that. I'm sorry. I'd be helpful if I could, but after what I've been through. . . ."
His attorneys, David Ogden and Randy Goodman, did not respond to messages.
Any deal arranged with Ladner is likely to be confidential, sources said.
On the AU campus in Northwest Washington, some students were shocked by the potential numbers. "It's abhorrent," said Chris Sgro, a senior and outgoing student government member. "Why are we rewarding this man for dragging the university through the mud and casting shadows over everything good the university does? . . . I'm furious."
Sgro said he was sorry the news was coming on a weekend of positives for the school, with parents and alumni visiting and the big opening gala for the Cyrus and Myrtle Katzen Arts Center on Thursday night. As for the trustee resignations, he said, "All that is good about that board is one by one marching out of that conference room."
In a split vote Thursday, the board concluded that an agreement that Ladner had signed in 1997 was not a valid contract, the sources said. That agreement has been a key element of Ladner's legal defense of his spending and could ensure him a generous severance package.
In 1997, Ladner signed a deal with then-Chairman William I. Jacobs that raised Ladner's salary, guaranteed to reimburse him for "entertainment and first-class travel expenses" reasonably incurred on the job and added benefits for his wife. If dismissed without cause, he could get a year's worth of salary and benefits plus another year's worth of base salary, $50,000 for relocation and the right to continue living in the university-owned house next to campus for three months after his termination. And the 1997 contract includes "the continuation of his tenured faculty appointment at the university at the rank of full professor, with faculty benefits and a salary that is always 20 percent above the highest AU faculty salary."
Some trustees and lawyers have said the 1997 contract was never approved by the board and it probably would not hold up in court; others, including Jacobs, have said that he discussed the components of the contract with the board and that Ladner had been operating under the contract for years.
The package does not include an offer of a faculty position, according to sources who spoke on condition of anonymity because the negotiations are confidential.
Thomas A. Gottschalk, who has been serving as acting head of the trustees since the chairwoman, Leslie E. Bains, resigned early this month, said he and other trustees could not speak about the Ladner negotiations because they are confidential.
Although some on campus say they are ready to move on, others have been insisting that Ladner not be given a large severance package and are trying to find ways to increase oversight at the school. As trustees met Thursday, a small group of students rallied on the main quad. They read out the names and booed a group they called the Gang of 13 -- trustees who aligned in opposition to the board leaders who pushed for the audit. They gathered hundreds of signatures on petitions asking the board "to terminate Benjamin Ladner for cause -- that is, without a 'golden parachute' severance package that allows Dr. Ladner to derive further personal economic gains from his misdeeds."
This week, the Faculty Senate unanimously approved a statement of confidence in the acting president, Cornelius Kerwin, and the acting provost, Ivy Broder. Professor Wendell Cochran told the group he wanted to send a message that the board need not rush to find a new president, and another professor there agreed that it might be best to delay a search until questions about the board are resolved.
The board is expected to talk about its structure and effectiveness when it meets next month with a new chairman, longtime trustee and AU alumnus Gary M. Abramson.
In his resignation letter, Jaskol said the 13 members of the self-named Ad Hoc Committee, "have lost sight of the board's mission to serve American University. Their agenda appears to be the support and defense of Dr. Ladner."
There are just 20 board members to vote on critical issues ahead, down from 25. Kerwin will not vote on issues about Ladner or board governance, he said, in order to avoid a possible conflict of interest and to let the panel discuss whether the president should remain a member of the board, as Ladner had been.