Adelphi University’s former trustees and president agreed to a multimillion-dollar settlement with the institution Tuesday, resolving several lawsuits and years of controversy. The settlement -- which provides Adelphi with more than $4-million in cash and canceled debt -- is unusual in that the former trustees are being held personally liable for their actions in setting the salary of the former president, Peter Diamandopoulos.
As part of the settlement Adelphi’s former trustees agreed to pay about $1.5-million to cover the university’s legal costs and their own that had been billed to the university during the controversy. Neither Mr. Diamandopoulos nor the former trustees admitted any wrongdoing. Their lawyer did not return a telephone call.
The lawsuits followed a historic vote by the New York State Board of Regents in February 1997 to remove all but one of Adelphi’s trustees from its governing board. The regents ousted 18 trustees -- including Mr. Diamandopoulos -- for neglect of duty. The regents said that the trustees had failed to oversee Mr. Diamandopoulos’s compensation -- which the regents calculated at $837,113 for the 1995-96 academic year -- and had failed to review his job performance. The regents installed a new Board of Trustees, which promptly fired Mr. Diamandopoulos from the presidency.
A month later, the New York Attorney General, Dennis C. Vacco, sued “to recover millions of dollars misspent by former Adelphi University trustees to support a lavish lifestyle for the college’s ex-president.” The state Charities Bureau, under Mr. Vacco’s direction, had been investigating the actions of Adelphi’s board since 1995, after The Chronicle reported that Mr. Diamandopoulos was the second-highest-paid university president in a national survey and after a faculty group called attention to expenditures that did not show up on the university’s tax forms.
The finding of personal liability for trustees is rare in higher education, and has worried some observers who fear that the Adelphi case could discourage people from becoming college trustees. Steven L. Isenberg, the new chairman of Adelphi’s board, cautioned that the situation at Adelphi had been unique and “should not stop anyone who is ready to provide trusteeship in a caring and attentive way.” But he also said, “This stands as a clarion call to anyone who assumes the duties of a trustee that you’ve got to measure up to your fiduciary obligations.”
As part of a complicated agreement to settle the Attorney General’s lawsuit and the other suits and countersuits, the former trustees paid Adelphi about $1-million to cover legal fees and other costs incurred by the university during the regents’ proceedings. In addition, the former trustees have picked up the $400,000 tab for outstanding legal costs that were billed to the university. The university’s insurance company refunded Adelphi $1.45-million in legal fees.
For Mr. Diamandopoulos’s part, he has agreed to relinquish his right to buy a million-dollar Manhattan apartment from the university at a reduced price. Instead, he agreed to pay the university $106,000 in rent since his termination and to vacate the apartment.
He has also agreed to surrender his tenured post on the faculty and give up significant portions of his deferred compensation and sabbatical pay. As part of the settlement, those deferred payments were readjusted based on a finding by the regents that every contract negotiated between Mr. Diamandopoulos and the former trustees after 1992-93 had been excessive. At that time, he was earning $250,000 a year and accruing $50,000 in deferred compensation. The deal requires Mr. Diamandopoulos to repay the university $649,583 for excessive compensation and to relinquish more than $765,000 in deferred compensation and sabbatical pay.
The university has agreed to pay Mr. Diamandopoulos about $385,000 to settle his breach-of-contract countersuit and to release to him $1.8-million in deferred compensation that had been in accrued accounts. Ultimately, after $800,000 was taken out in taxes, Adelphi sent Mr. Diamandopoulos a check for $650,000.
“This settlement is important and satisfying in its financial terms and because it closes the books on a difficult time in Adelphi’s history,” the board’s new chairman, Mr. Isenberg, said in a statement. “All of Adelphi’s energy and resources are now totally devoted to enhancing the educational mission of the university.”