HERSHEY, Pa., May 8, 2013 /PRNewswire/ -- Milton Hershey School and Hershey Trust Company announced today that they have reached an agreement with Pennsylvania Attorney General Kathleen Kane on a series of operational reforms that will boost public confidence and strengthen the management of the historic institutions created more than 100 years ago by Milton and Catherine Hershey. The agreement was reached in conjunction with the satisfactory conclusion of the Attorney General's investigation of the Hershey Trust Company's administration of the Milton Hershey School Trust.
In bringing to a close its two year review of the Trust Company and School management practices, the Office of the Attorney General ("OAG") stressed that "the Commonwealth did not find any evidence sufficient to establish the breach of fiduciary duties" by anyone involved in the administration of the School Trust. At the same time, however, both the OAG and the Trust's Board of Directors acknowledged that certain reforms will enable the School to better serve its mission.
The reforms are set forth in a detailed agreement between the OAG, Milton Hershey School and Hershey Trust Company. The agreement is an exhibit to the formal petition that the OAG filed today in Dauphin County Orphans' Court.
"The Board is undertaking this action as part of its continuing effort to better serve needy children in perpetuity," said Robert F. Cavanaugh, Chairman of the Milton Hershey School Board of Managers and of the Trust Company Board of Directors. "We worked cooperatively with the Attorney General's Office throughout this process. While the Office of Attorney General has reaffirmed that there was no wrongdoing on the part of the Board, it also led to the development of new policies and practices that will serve our mission better."
Key elements of the reforms include two new provisions addressing so-called "overlapping" board membership – that is, the ability of individuals to serve on more than one Hershey board at a time – and the level of compensation that board members can earn for their service.
The new compensation levels were recommended by an independent compensation consulting firm, which calculated that the new pay levels were on the "low end" of compensation paid by comparable institutions nationwide. The new levels represent a substantial reduction in total Board compensation. The reforms provide that future changes to Board compensation will be the product of a pay study to be conducted by an independent consultant jointly selected by the Trust Company with input from the OAG.
"The Board's compensation has always been set with the help of outside expert review," said Lieutenant General Richard Zilmer, USMC (Ret.), Vice Chairman of the Milton Hershey School Board of Managers and Trust Company Board of Directors, "This latest review considers an important new factor: With the 2011 sale of the Hershey Trust Company's wealth-management business, the Board no longer directly oversees that for-profit enterprise. The Board recognized that a compensation reduction was in order."
With respect to the appointment of School Managers, the Trust Company has agreed that Directors shall "use their best efforts to identify for election to [the Board] individuals whose education, training and experience reflect the full range of the Board's responsibilities, including . . . at-risk/dependent children; residential childhood education; financial and business investment; and real estate management."
Both the Trust Company and the OAG acknowledge that the changes announced today stem in part from the events that led to the commencement in 2010 of the Attorney General's review – specifically, the 2006 purchase by the Trust Company of the former Wren Dale Golf Course property adjacent to the Hershey campus, which the OAG concluded "was consistent with the property's fair market value . . ."
"We are pleased that the Attorney General concluded that there was no wrongdoing on the part of the Board," Cavanaugh said. "We believe that the decision to purchase this property was the right decision for the long-term future of the School. The Board has always sought to meet the best interests of the School and the Trust. Thanks to the leadership of the Attorney General, we believe we are setting a course that enhances our ability to serve children in need in perpetuity."
The OAG Petition and the Agreement announced today can be found on the School's website at www.mhs-pa.org.
Milton Hershey School, founded in 1909 by chocolate magnate Milton Hershey and his wife Catherine, provides a home and an education to more than 1,800 children from pre-kindergarten to 12th grade who come from families in poverty.
SOURCE Milton Hershey School