Tuesday, September 7, 2010

Milton Hershey School Trust - Excessive Trustee Compensation?

WITF, the Harrisburg NPR affiliate, reports that Protect the Hersheys' Children (PHC), a Pennsylvania not-for-profit corporation, submitted a nine-page letter to the Internal Revenue Service, the Pennsylvania Department of Banking, and the two senior members of the Sentate Finance Committee alleging excessive compensation practices at the Milton Hershey School Trust (MHS Trust) and its sole beneficiary, the Milton Hershey School (MHS).  The trustee of the MHS Trust is the Hershey Trust Company, a for-profit Pennsylania corporation the entire stock of which is owned by the MHS Trust. MHS is a cost-free, private, coeducational home and school for children from families of low income, limited resources, and social need.  PHC is a self-proclaimed "watchdog group that monitors MHS and apprises oversight officials of conduct that we believe warrants action."

In the letter, PHC alleges that the MHS Trust's trustee (the Hershey Trust Company and, therefore, its board of directors) is excessively compensated and exerts poor governance, thereby dissipating the funds available to achieve the MHS Trust's mission of supporting children in need.  With supporting newspaper articles, PHC asserts the Hershey Trust Company pays its board in excess of $1.1 million annually.  MHS has responded to the allegations by stating that the board members are subject to a high standard of fudiciary responsibility as to investment and management decisions affecting the MHS Trust.  PHC also alleges that the Pennsylvania Attorney General has failed to effectively exercise its oversight responsibility with respect to the trust.  The attorney general responded to the allegations as "borderline political attacks," affirming that his office ensures that charitable trusts are properly administered, but does not "micromanage" the trusts.

NAM

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