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July 14, 2016

Hershey Trust Pressured to Expedite Governance Changes

Pennsylvania’s attorney general is threatening to take trustees of the charity that controls Hershey Co. to court if they do not make changes in governance by the end of the month, The Wall Street Journal reports, citing unnamed people familiar with the matter. State regulators have been wrestling with the Hershey Trust over implementing reforms outlined in a 2013 agreement, particularly the departure of three long-serving trustees.

The regulatory wrangling could present a distraction at a pivotal time for the trust, which faces a possible bid to take over Hershey Co., according to the Journal. The board recently rejected a $23 billion offer for the chocolate company from snack-food giant Mondelez International, but sources tell the newspaper Mondelez could renew its pursuit if it sees an opening.

The trust was established more than a century ago to fund and operate the Milton Hershey School for needy children. It is one of the country’s richest charities, with an endowment of $12.1 billion, but has been the subject of numerous state investigations into its governance and spending on property and pay and perks for board members. Along with possible legal action on reform, Pennsylvania could have a say in a Hershey Co. sale under a quirk in state law that would require trustees to prove in court that the deal serves the charity’s best interests.

A Hershey Trust spokesman said the board is in talks with the attorney general’s office and hopes to reach a resolution.