High cost of Hershey School-related boards (Phila Inquirer article about $500K a year boardseats)

[JPZenger]

http://www.philly.com/philly/business/99184764.html

Jul. 25, 2010 Philadelphia Inquirer
By Bob Fernandez, Inquirer Staff Writer

Excerpts:

"Four prominent Pennsylvania Republicans are earning more than a combined $1 million a year as directors on three boards connected with the Milton Hershey School, one of the state's wealthiest charities and the nation's largest residential school for disadvantaged children. LeRoy Zimmerman, a former two-term attorney general who has headed the charity since 2006, earned the most, $499,996, according to the group's latest tax filing with the Internal Revenue Service. The others are:

- James Nevels, a Philadelphia investment manager, who was compensated $325,359 on two Hershey-related boards.

- Former Gov. Tom Ridge, who is earning $200,000 a year on the Hershey Co. board.

- Lynn Swann, former gubernatorial candidate and Pittsburgh Steeler star, who is making $100,000 a year on the board of the company that operates Hersheypark.

The Hershey organization is complex, including three for-profit companies: The giant candy-maker Hershey Co., the Hershey Entertainment & Resorts Co., which manages Hersheypark, and the Hershey Trust Co., the private bank that manages the huge endowment that operates the Hershey School. Each company has its own board.

Director compensation at the three for-profit companies in the Hershey organization has soared in recent years, despite a spate of problems afflicting their primary beneficiary, the Hershey School. A plan to increase enrollment to 2,000 students had to be postponed and various programs cut because of the bad economy. The school also closed Springboard Academy, an expansive $40 million structure meant to boost student retention. The building was shuttered after just three years. In May, the institution was shattered by news that administrators paid $3 million to settle claims by former students who said they were sexually abused by a man on campus. The attacks were made by Charles Koons, whom a prosecutor described as the most prolific pedophile in the Harrisburg area in recent times. Koons' mother was a longtime "houseparent" at the school.

The prevalence of Republicans and the level of compensation reflect the composition of the Hershey boards after a state-led restructuring of the organization ... the main regulatory agency for Pennsylvania charities is the state attorney general.

"In Philadelphia, not only do prominent businesspeople serve on charitable boards without compensation, but in many cases they are expected to raise and contribute funds to the charity," John W. Schmehl, a partner with Dilworth Paxson L.L.P., said Friday. "The constant increase in board fees in Hershey is troublesome, even if they do come from subsidiaries of the Trust." Schmehl noted that directors at the Hershey Trust Co. and Hershey Entertainment were paid more in compensation than the two companies returned in dividends to operate the charity in fiscal 2009."