Stevens Institute of Technology on Friday struck a deal with New Jersey's attorney general to settle her unusual lawsuit charging that the private college's leaders overpaid President Harold J. Raveché and engaged in other forms of financial mismanagement. Raveché will resign in July, and the arrangement calls for several major changes in the institute's governance structure.
But the president will remain on contract with Stevens through 2014, and Attorney General Anne Milgram's other primary target -- Lawrence T. Babbio, the board chairman -- will remain in his position for three more years, though board leaders will face term limits.
Stevens had filed its own lawsuit accusing Milgram of overstepping her authority last fall when her office issued a 90-page complaint that accused Raveché and Babbio of secretly bolstering the president’s pay without authorization, concealing damning reports from trustees and violating the wishes of donors. The attorney general's lawsuit accused the two men of engaging in a broad series of activities designed to keep the institution's other leaders in the dark about questionable financial and accounting practices, and about the institution's deteriorating financial situation.
Although it is not technically part of the settlement, Stevens announced (at the same time as the settlement) that Raveché would resign as of July; he will receive his base salary for another year and then receive compensation for "non-compete and consultancy arrangements" through July 2014. The president agreed as part of the settlement to repay hundreds of thousands of dollars in low-interest loans that he had received from Stevens (about half of which had been forgiven) -- in violation, the attorney general had alleged, of state laws governing nonprofit entities. (Note: This article corrects erroneous information from an earlier version.)
Under the settlement accord, which Milgram settled in her final days in office as New Jersey's new Republican administration takes over the executive branch, trustees will face a new series of limits on their terms and powers. What had been an executive committee made up of the president, Babbio, and two vice chairmen will instead become an advisory panel, vesting a wide array of duties that the executive committee had controlled to the full board.
Milgram's 16 count lawsuit had sought to bring about additional changes at Stevens, including forcing Raveché to repay some of his $1.1 million annual direct compensation and immediately ending Babbio's reign as the board's chairman. In addition, neither Stevens nor either of the two men admitted to any wrongdoing.