Office of Attorney General reaches agreement with Hershey Trust Company and Milton Hershey School

This is an archived article and the information in the article may be outdated. Please look at the time stamp on the story to see when it was last updated.

HARRISBURG — Attorney General Kathleen G. Kane's office today announced it has reached an agreement with the Hershey Trust Company and the Milton Hershey School that implements significant reforms to improve the operation and governance of both entities.

The agreement was the result of an investigation conducted by the Office of Attorney General's Charitable Trusts and Organizations Section, which works to protect the public's interest by ensuring that charitable assets are used appropriately.

"All of our efforts that led to this agreement were made to ensure that the vision of Milton and Catherine Hershey remains intact," Attorney General Kane said. "They had the foresight to establish a Deed of Trust to provide a superb education for generations of disadvantaged children. The reforms in this agreement will help ensure that continues."

The agreement was filed today in the Orphans' Court Division of the Dauphin County Court of Common Pleas to update the Court’s docket and public record. The terms agreed upon by the Office of Attorney General, the Hershey Trust Company (HTC) and the Milton Hershey School (MHS) represent a variety of important new terms while continuing a number of past reforms.

Summarizing the terms of the agreement:

  • Board service for Managers/Directors is now limited to a maximum of 10 years. The tenure limit for a certain Manager or Director may be extended for up to one year, at the discretion of the applicable board, to assure continuity of leadership or to respond to other exceptional circumstances. Meanwhile, each Manager and Director shall be subject to an annual performance evaluation.
  • Managers/Directors Robert F. Cavanaugh, Joseph M. Senser and James E. Nevels must retire from the MHS Board of Managers and the HTC Board of Directors effective no later than Dec. 31, 2016; and James M. Mead and Velma A. Redmond must retire from the MHS Board of Managers and the HTC Board of Directors effective no later than Dec. 31, 2017.
  • Prior to the election of any new Manager/Director, the MHS and the HTC must now give the Office of Attorney General 30 days written notice, including a resume of the candidate's education, experience and relationship, if any, to incumbent Managers/Directors.
  • A Manager/Director may not be elected to serve as a compensated Director of the Hershey Entertainment and Resorts Company without providing 30 days written notice to the Office of Attorney General.
  • The compensation of the Directors of the Trust Company is now set at $110,000 per year, with annual cost of living adjustments limited to those set by the federal Social Security Administration. Any Director of the Trust Company who also serves as a Director of The Hershey Company or Hershey Entertainment and Resorts Company may not receive more than $80,000 for their Trust Board service. The Board Chair may receive additional compensation of no more than $30,000 and may not receive any additional compensation for serving as the Chair of any Board Committee; Board Committee Chairs may receive additional compensation of no more than $10,000 regardless of how many committees they may chair. No compensation is permitted for an employee of the School or Trust Company who serves as Manager/Director or as a Director of the Hershey Entertainment and Resorts Company.
  • The Managers of the MHS and the Directors of the HTC must continue to “use their best efforts to identify for election to their boards individuals whose education, training and experience reflect the full range of the boards' responsibilities, including, but not limited to: at risk/dependent children; residential childhood education; financial and business investment; and real estate management."
  • The Hershey School Trust may continue to elect Managers/Directors to the Board of Directors of The Hershey Company, provided that no more than three Managers/Directors may at the same time be Directors of The Hershey Company, and provided further that neither the President of the School nor the Chief Executive Officer of the HTC shall be eligible to serve as a Director of The Hershey Company.
  • The Managers of the MHS and the Directors of the HTC continue to be prohibited from electing to their boards any person who is a director or executive officer of the Milton S. Hershey Medical Center, which now includes The Pennsylvania State University; Managers/Directors also remain prohibited from serving contemporaneously on all three related Hershey entity boards.
  • Nothing in the agreement affects the School Trust’s right to continue to vote all of its stock in the manner set forth in the bylaws of The Hershey Company in all matters coming before its stockholders, including, without limitation, the election of the Directors of The Hershey Company.

The agreement provides clarification to the MHS and HTC existing conflict of interest policy and continues the requirement that the MHS and HTC provide written notice to the Office of Attorney General of at least 30 days prior to all real estate transactions involving more than $250,000, or a lease of more than three years.

The agreement continues prior reforms addressing auditors, legal counsel, school admissions, academic standards, the MHS year-round program and student safety. The agreement also calls for the school to continue providing annual written reports to the Office of Attorney General describing economic and academic characteristics of students admitted to MHS, year-round programs, policies on student safety and other matters of importance.

Attorney General Kane stressed the agreement announced today should not impact or influence The Hershey Company, which remains strong and economically viable. The Office of Attorney General's investigation of this matter was not related to The Hershey Company, but focused on the Trust's compliance with the 2013 agreement it reached with the Office of Attorney General.

Attorney General Kane further explained the Hersheys established the Deed of Trust in 1909 for the purpose of founding and endowing in perpetuity an institution to be known as the Milton Hershey School, located in Derry Township, Dauphin County.

The school was designed for disadvantaged children, and now provides year-round living and education to students from across the country.

Attorney General Kane further stressed that her office would continue to provide oversight of the MHS and HTC to ensure that the school continues to fulfill its mission.

"I have seen firsthand the benefits of this institution and the incredible educational programs that prepare Milton Hershey School students for bright futures," Attorney General Kane said. "It is imperative for us to continue working to keep the school functioning efficiently, and as Mr. and Mrs. Hershey intended."

This matter was handled on behalf of the Commonwealth by Chief Deputy Attorney General Mark A. Pacella and Senior Deputy Attorney General Heather J. Vance-Rittman of the Charitable Trusts and Organizations Section, along with Executive Deputy Attorney General James A. Donahue, III and First Deputy Attorney General Bruce L. Castor, Jr

Source: Pa Attorney General's Office press release

Notice: you are using an outdated browser. Microsoft does not recommend using IE as your default browser. Some features on this website, like video and images, might not work properly. For the best experience, please upgrade your browser.