$12.5B Hershey charity appoints 3 new members to oversight boards

The scandal-battered Milton Hershey School for impoverished children has appointed three new board members who bring a “mosaic” of skills and experience to the positions, the institution said on Thursday.

But critics assailed the national search as cloaked in secrecy and said the charity overlooked people who would have served without the lucrative board compensation, which amounts to more than $1 million for a 10-year tenure.

Four prominent people with extensive board experience — among them former Philadelphia Managing Director Philip R. Goldsmith and Philadelphia philanthropist Carole Haas Gravagno — said they would serve on the Hershey charity boards without pay, according to a letter obtained by the Inquirer and sent to Velma Redmond, who chairs the Hershey boards, and Pennsylvania Attorney General Josh Shapiro.

The letter, sent this week by email and the U.S. Postal Service, noted that despite its vast wealth, $12.5 billion, the Hershey School helps only 0.0046 percent of the income-eligible poor children in Pennsylvania, or 2,000 students, on its Hershey-area campus.

Many believe the school could open satellite campuses or expand its service for impoverished at-risk youth.

Ric Fouad, a Milton Hershey School alumnus and activist who has sought reforms for years, said he was aware of several leading experts on residential education who applied for the board positions "but were completely rebuffed, even though they were happy to serve without pay."

Fouad added that the Hershey board "is repopulating itself with status-quo defenders for hire — individuals who lack the qualifications or desire for retooling this troubled charity."

The new board members are Melissa L. Peeples-Fullmore, a Milton Hershey School alumna; James C. Katzman, a retired Goldman Sachs investment banker; and Jan Loeffler Bergen, a Lancaster health-care executive.

Hershey spokesman Kent Jarrell said the new board members would be compensated consistent with the attorney general's agreement in July of $110,000 a year. The charity looked over 240 resumes as part of the national search, the organization said.

Spokesman Joe Grace said, "Attorney General Shapiro is taking a more hands-on approach to the oversight of Hershey Trust to require more accountability to the people of Pennsylvania. As part of that effort, our office investigated these board appointments, including their qualifications for service. This is the first example of the more proactive approach to the Hershey Trust and other charities and nonprofits in Pennsylvania."

Hershey board members serve in two capacities, overseeing the Milton Hershey School itself and the Hershey Trust Co., which manages the educational institution's billions in assets. The Hershey charity owns about 10,000 acres in the Hershey area, boards students in more than 175 homes, and controls the Hershey Co. candy giant.

With the new appointments, the two Hershey boards — composed of the same people — grow to nine members, short of the full complement of 13 that the Office of Attorney General has said it would like for proper oversight.

Redmond, the Hershey chair, said in a statement that the new board members "will bring a rich mosaic of relevant skills to the boards." She added that the individuals "have good governance temperament and personal attributes to be effective board members."

Since 2015, the charity has spent about $4 million on outside law firms investigating accusations of conflicts of interest and insider trading by board members against other board members.

The Hershey charity settled the attorney general’s investigation into these matters and excessive board compensation with five board members agreeing to leave their posts — three of them in December 2016 and two in December of this year.