Millions for American's Ex-President

October 25, 2005

Benjamin Ladner walked away from American University Monday night -- with millions of dollars.

Ladner -- president for 11 years -- was fired this month by American University's Board of Trustees amid reports of profligate spending. For the last two weeks, Ladner and board members have negotiated the financial terms of his departure, with faculty members and students expressing outrage over reports that he would receive a multi-million dollar settlement.

He did receive such a settlement, but American University officials maintained that most of the money was already earned in deferred compensation plans and that there was nothing that the board could do now.

In a statement outlining the agreement, the board said that Ladner has earned an insurance policy worth $1 million and two trusts with a total value of $1.75 million.

On top of that, the board agreed to pay Ladner $950,000 to leave the university -- both as president and professor. However, in addition to deducting taxes on that $950,000, American will also deduct $125,000 for expenses for which the university believes it should be reimbursed, and the taxes on $398,000 in income that the university now believes Ladner should have declared earlier because of the value of all of the benefits he received as president.

The university found that Ladner received funds to hire a personal chef, for vacations in Europe, and for an engagement party for his son, among other questionable expenses. Ladner did not release any statement Monday except to say that he had resigned, but he has previously defended his spending as appropriate (with a few exceptions) and also said that board members had authorized it.

The board statement quoted Thomas Gottschalk, acting chair of the board, justifying the payment. "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," he said. Board members have been divided in recent weeks about how to view Ladner's years as president -- years in which many trustees (and others) believe the university improved.

Gottschalk's statement added: "I along with many others have been saddened that recent events have overshadowed the great achievements of American University during Dr. Ladner's presidency, and I hope over time some balance and perspective will enable people to focus on the positives of his presidency as this controversy recedes into the past."

At least for now, the settlement does not seem to be making people want to move on. A statement released last night by American's deans and chief librarian condemned both the settlement and the "closed process" in which it was negotiated. "We do not believe this is an appropriate way to manage the university. We must have transparency and accountability consistent with principles of good governance and the values of American University," the statement said.

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