Wednesday, May 29, 2013

Hershey Trust & Pennsylvania AG Reach Settlement

Pennsylvania Attorney General Kathleen G. Kane recently announced that her office had resolved an investigation into the administration of the Milton Hershey School and the Hershey Trust Company by entering into an agreement with the School and Trust that implements a variety of governance reforms for both entities.  Attorney General Kane also noted that her office had not found any breach of fiduciary duty during its investigation.  The agreed upon reforms included:

  • Limiting overlapping board members between the School and Trust on one hand and the for-profit Hershey companies on the other hand.
  • Reduced board compensation, new procedures for any future adjustment to such compensation, and a new, more restrictive policy for reimbursement of board member expenses.
  • A strengthened Conflicts of Interest Policy.
  • Required reports to the AG relating to compliance with the agreement, increased AG access to various materials, and advance notice to the AG for certain real estate transactions.

For previous posts about the concerns that led to this investigation, see Eisenberg on the Hershey School, Pressure Continues on Hershey Trust Board of Directors, and Milton Hershey School Trust - Excessive Trustee Compensation?  It is far from clear that the report and agreement will satisfy those critical of how their respective boards have managed these charities - Pablo Eisenberg has already written a negative assessment of the investigation's resolution.

Media Coverage: Chronicle of Philanthropy (opinon); Philadelphia Inquirer.

LHM

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Comments

I would respectfully note the possibility that the Attorney General may have conducted a thorough, fair and unbiased review of the board members. The presumption, raised in the media and with certain outside observers, that the subject transactions represented massive breaches of fiduciary duty was not sustained after a two year investigation. Despite what some critics may claim, would appear that the actual record provided no basis whatsoever for the "public hanging" of these directors; i.e. that the facts showed they had acted reasonably.

Posted by: Michael Peregrine | May 30, 2013 5:47:18 AM

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