Benjamin Ladner, American University’s embattled president, resigned last week and accepted a severance payment of $950,000, according to the university’s Board of Trustees. But the university will withhold a large portion of that to cover taxes and to recover what it says were Mr. Ladner’s excessive expenses.
Mr. Ladner, 63, will also receive $2.75-million in deferred compensation from an insurance policy and two trusts, the board announced. The trustees said the sum was not a new payment to Mr. Ladner but money set aside during his 11-year tenure as American’s president, as well as the interest those accounts earned. Under the terms of the agreement, he will leave the university rather than assume a highly paid faculty position, as his contract had provided, and will vacate the president’s house within 90 days. He will be reimbursed for up to $20,000 in relocation expenses.
“The board felt it was in the best interests of the entire university community to put the controversy surrounding the audit committee’s investigation and Dr. Ladner’s employment behind it,” Thomas A. Gottschalk, acting chairman of the board, said in a written statement.
The controversy over Mr. Ladner’s spending began with an anonymous letter sent to the board last spring.
The board subsequently commissioned an audit, which found that Mr. Ladner had improperly charged $125,000 in personal and travel expenses to the university during the past three years, and that $398,000 in other charges he had made must be reported to the Internal Revenue Service as part of his taxable income.
Neither Mr. Ladner nor his attorney was available for comment last week. However, Mr. Ladner has previously defended his spending, saying the few mistakes he made with his expenses were minor and inadvertent.
Trustees Quit
The board, although sharply divided over both the investigation’s findings and the nature of Mr. Ladner’s severance, voted on October 10 to terminate him, arguing that he could no longer lead the university effectively (The Chronicle, October 11). Four trustees, including the chairwoman, resigned during the course of the investigation, leaving 20 voting members.
After the board agreed to fire Mr. Ladner, the issue of severance was complicated by his 1997 contract. It promised him generous terms, including a high-paying faculty position for life, unless his firing was deemed to be “for cause.”
Some trustees noted that law firms hired by the board had determined that the 1997 contract was not valid, because it was never presented to the full board. According to the settlement, Mr. Ladner agreed to relinquish tenure and a faculty appointment.
The $950,000 settlement will be subject to federal and state taxes, and the university will deduct a further amount for taxes owed on the $398,000 deemed in the audit to be part of Mr. Ladner’s income. The total will be reduced by an additional $125,000 for personal and travel expenses that the audit found were owed to the university.
Although some observers were surprised that Mr. Ladner accepted what appears to be a relatively small severance package, his critics were not placated.
“We condemn the decision of the Board of Trustees to offer former President Ladner a multimillion-dollar settlement package and the closed process by which that decision was reached,” deans representing American’s six colleges and schools said in a statement. “We do not believe this is an appropriate way to manage the university.”
http://chronicle.com Section: Money & Management Volume 52, Issue 11, Page A24
