Harrisburg insiders tapped for Hershey chocolate's $240,000-a-year corporate board

Two Harrisburg-connected trustees at the super-rich Hershey Trust for poor children have been nominated to lucrative corporate board posts at the trust-controlled Hershey chocolate company.

Two Harrisburg political insiders and trustees at the super-rich Hershey Trust for poor children have been nominated to lucrative corporate board posts at the trust-controlled Hershey chocolate company that will pay at least $240,000 a year.

But in a concession to critics, the two, James Brown and M. Diane Koken, won't double-dip on charity-related board fees and will be relinquishing the $80,000 a year that they could have earned from the current, lower-paying board on which they remain: the Hershey Trust Co.

Brown is a former chief of staff to U.S. Sen. Bob Casey Jr. (D., Pa.) and served on Gov. Wolf's transition team. Koken is a former Pennsylvania insurance commissioner.

Hershey Trust spokesman Kent Jarrell said Wednesday that the trust's oversight boards decided to voluntarily end the controversial double-dipping on board fees in January. He called the action "appropriate and consistent" with other changes that the scandal-plagued charity is "currently undergoing."

Under the old policy, Brown and Koken could have collected $80,000 as directors of the Hershey Trust Co., which manages the finances for the 2,000-student Milton Hershey School, and $240,000 as directors for the chocolate company. Now, Brown and Koken will collect only the higher fee for the chocolate company.

The publicly traded Hershey chocolate company — which the trust controls through super-voting stock — recently disclosed the nominations of Brown and Koken to its board in a filing with the Securities and Exchange Commission. Shareholders will formally vote on their nominations at the stockholders meeting May 3.

Neither Brown nor Koken were available for comment.

In March, four prominent Pennsylvanians, among them former Philadelphia Managing Director Philip R. Goldsmith and philanthropist Carole Haas Gravagno, told state Attorney General Josh Shapiro and the trust's oversight boards that they would serve the institution without any pay.

The four noted that, despite its vast wealth, the Milton Hershey School helps only 0.0046 percent of the income-eligible poor children in Pennsylvania. They stated in a letter that they would "serve without compensation," and that they would not serve on the board of the Hershey Co. chocolate giant or "any board of any company affiliated with" the assets of the Milton Hershey School.

The state Office of Attorney General has investigated the charity twice since 2010, partly over board members' excessive compensation. Observers and critics say that the Hershey Trust board's pay, disclosed on federal tax documents, seems inappropriate given its mission to lift children out of poverty.

"You have a great vision established a long time ago to create an opportunity for children in need that has been entwined with such generous benefits for the trustees," said Christopher Borick, an associate professor of political science at Muhlenberg University. "It sets up some troubling scenarios."

Most institutions attempt to appoint board members who will donate to the institution as opposed to earning compensation for their service, noted Kyle Kopko, political science professor at Elizabethtown College.

Milton and Catherine Hershey created the orphanage and trade school in 1909. In addition to control of the Hershey chocolate company, the trust owns the privately held Hershey Entertainment and Resorts Co.'s tourism properties and manages a multibillion-dollar investment portfolio.

Brown and Koken are now part of a growing list of Pennsylvania officials and school alumni who have cashed in on millions of dollars in compensation related to the Milton Hershey School, which has faced federal and state investigations, lawsuits, and questions over its high costs per student.

Among those people was John Estey, a former chief of staff for Gov. Ed Rendell who pleaded guilty to wire fraud in 2016. 

Estey was a top executive in the Hershey Trust Co. after leaving the Rendell administration. He also presided for a year as interim president at the Milton Hershey School itself, with oversight of the education, boarding and nutrition of the children there.

Estey secretly cooperated with the FBI in a corruption sting in Harrisburg while on the charity's payroll. The charity fired him after learning of his guilty plea.

Former Gov. Tom Ridge has been a longtime board member at the chocolate company, earning more than $1 million over time.

Former two-term Attorney General LeRoy Zimmerman headed the charity and sat on its three boards — for the Hershey Trust Co., the chocolate company and the entertainment-and-resorts company — earning hundreds of thousands of dollars a year until he resigned.

Brown, 65, of Malvern, a lawyer, has political ties to the Casey political dynasty. He served as chief of staff for Pennsylvania Gov. Robert P. Casey in the 1990s. Most recently, he had the same role with Casey's son, Sen. Casey, in Washington, quitting that post in early 2016 to join the Hershey Trust board.

Koken, 64, also has deep political ties in Harrisburg. She served as Pennsylvania insurance commissioner between 1997 and 2007.