Posts
The Board That Serves Itself
The Same People Sit on Both Boards. They Are Paid $112,000-$130,000 Each. One of Them Earned $332,633 From the Hershey Company Alone. Another Received $80,000 Per Year Just for Flights From Los Angeles. The Trust's Own General Counsel Pled Guilty to Wire Fraud. And the Sitting Chairman Had to Sue the School He Chaired to See Its Financial Records.
THE CHOCOLATE MACHINE — Post 3 | February 2026
"In trust for a permanent institution for the residence and accommodation of poor children."
Post 1: The Gift — What Milton Hershey actually said. What the trust actually heard.
Post 2: The Surplus — 91 years of "embarrassingly large" accumulation
Post 3: The Board That Serves Itself — Same people. Two boards. Multiple scandals. ← YOU ARE HERE
Post 4: The Sale That Never Happened — $12.5 billion, 10,000 protesters, trustees fired
Post 5: The Billion Sitting Idle — $1 billion in unspent income. The math the trust won't explain.
Post 6: The Children Who Didn't Get In — The waitlist. The admissions criteria. The human cost.
Post 7: The Maneuver — Catherine Hershey Schools: genuine mission or sophisticated optics?
Post 8: The 116-Year Question — What enforcement would require. And why it probably won't happen.
The Structural Conflict: Two Boards, Same People
The foundational governance problem of the Hershey Trust is structural — and it was built into the architecture from the beginning.
The Hershey Trust Company is a Pennsylvania state-chartered trust company founded by Milton Hershey in 1905. Its sole business is managing the Milton Hershey School's trust. It has no retail banking products. It has no other clients. Its entire reason for existence — its only function — is as trustee for the school.
Its directors are paid at least $112,000 per year each.
Those directors are the same individuals as the Milton Hershey School's board of managers.
HERSHEY TRUST COMPANY:
Purpose: Managing the Milton Hershey School trust
Other clients: None
Retail banking products: None
Director compensation: At least $112,000/year
Directors: Same individuals as MHS board of managers
MILTON HERSHEY SCHOOL BOARD OF MANAGERS:
Purpose: Overseeing the school’s operations and spending
Director compensation: $100,000-$130,000/year (as of 2011 lawsuit)
Directors: Same individuals as Hershey Trust Company board
THE STRUCTURAL PROBLEM:
Each board member holds two paid positions simultaneously —
one from the trust company managing the assets,
one from the school spending those assets.
Both positions require them to serve the children’s interests.
Both positions pay them from the children’s trust.
Neither position has independent oversight of the other.
COMBINED ANNUAL COMPENSATION PER BOARD MEMBER:
Trust Company: $112,000+
School Board: $100,000-$130,000
Potential combined total: $212,000-$260,000+
Source: Children’s charitable trust. Tax-exempt.
EXTERNAL OVERSIGHT: Pennsylvania Attorney General only.
No federal oversight. No independent board auditor.
No public beneficiary representation.
The children the trust serves have no seat at the table.
The Pay That Tripled While Enrollment Stayed Flat
In 2002, board compensation was $35,000 per year for a full year of service. By 2011, it had tripled — reaching $100,000 to $130,000 per year. This increase is documented not in the trust's own disclosures, but in a lawsuit filed against the trust by one of its own board members.
Robert Reese — grandson of H.B. Reese, the inventor of Reese's Peanut Butter Cups, one of the Hershey Company's most valuable brands — was a board member and president of the Hershey Trust Company in 2011. He filed a 20-page suit alleging that his fellow board members were violating their fiduciary duties to spend the charity's assets wisely for the benefit of poor children.
His lawsuit documented the compensation tripling. It also documented something else: a $12 million golf course purchase made with no financial analysis to support the price.
WHAT HAPPENED (2010, documented by Philadelphia Inquirer):
The Milton Hershey School purchased a money-losing golf course for $12 million.
The school’s own appraisal valued the course at roughly half that amount.
The purchase “quietly tossed a financial lifeline to local investors” — including
Richard H. Lenny, then-CEO of the Hershey Company, who was simultaneously
a member of the board that approved the purchase.
AFTER THE PURCHASE:
Board members spent an additional $5 million building a Scottish-themed clubhouse
with a restaurant and bar, then opened it to the public.
Total spent: $17 million. From the children’s trust.
On a golf course and clubhouse.
ROBERT REESE’S LAWSUIT (2011):
Alleged “no financial analysis done by the trustees and its officers
to support the $12 million price.”
Alleged board members were “violating their fiduciary duties to wisely spend
the charity’s assets to benefit poor children.”
Also documented: board compensation had tripled since 2002.
THE LANCASTER NEW ERA EDITORIAL:
“The Trust’s wheeling and dealing up to this point has emitted an odor,
and it doesn’t smell like chocolate.”
REESE’S OUTCOME:
Later dropped his lawsuit. Reason: deteriorating eyesight made
it impossible to continue. He was the grandson of the Reese’s Cup inventor.
He sued the trust that manages his grandfather’s legacy brand.
He could not finish the lawsuit.
The First AG Investigation: 2010-2013
The golf course revelation triggered a Pennsylvania Attorney General investigation. The AG's office — then under Tom Corbett, then Kathleen Kane — investigated the trust's property purchases, including the golf course and other real estate acquisitions that critics argued served board members' interests more than the school's mission.
The investigation concluded in May 2013. Kane announced the state found no legal improprieties in the specific property purchases — but still imposed requirements. The trust had to notify the state of any property purchase costing more than $250,000 or involving a lease of more than three years. Board compensation was reduced to $30,000 per year, with the chair allowed an extra $10,000.
The settlement lasted three years.
The Second Scandal: 2015-2016
What the Capital Research Center documented — sourced to contemporaneous reporting — about what happened between 2013 and 2016 is extraordinary even by the standards of this investigation.
ROBERT CAVANAUGH — BOARD MEMBER SINCE 2003:
Also held one of the three Hershey Trust seats on the Hershey Company board.
Annual compensation from Hershey Company board seat: $332,633
Deferred compensation account: $3.8 million
Annual reimbursed travel expenses from the Trust: $80,000+/year
Reason for travel expenses: Flying to board meetings in Pennsylvania from Los Angeles.
All of this continued despite the 2013 settlement limiting board pay to $30,000/year.
THE INTERNSHIP REQUEST (April 2015):
Cavanaugh — then board chair — asked Hershey Trust CEO Eric Henry
for internship recommendations for his son, a Bucknell University junior.
Henry emailed two firms managing Hershey Trust investments:
— Legato Capital Management: managing $25 million of Trust assets
— JKMilne Asset Management: overseeing $584 million of Trust assets
Henry forwarded the son’s resume, referencing “our board chair’s son.”
The firms managing hundreds of millions of children’s charitable assets
were asked to employ the board chair’s son.
THE GENERAL COUNSEL:
Bob Estey, the Trust’s general counsel, resigned after pleading guilty
to one count of wire fraud — in an FBI sting operation.
Estey had been a top adviser to Democratic Governor Ed Rendell (2003-07).
He was sentenced to probation and disbarred.
THE BOARD’S PRIMARY ACCOMPLISHMENT (2013-2015):
Per Capital Research Center documentation:
“The chief accomplishment of the Hershey Trust board from 2013 to 2015
was to spend vast amounts of the trust’s funds suing each other.”
The Second AG Settlement: July 2016
In 2016, the Pennsylvania Attorney General opened a new investigation — for apparently violating the 2013 agreement, along with documented lavish travel, board infighting, and new conflicts of interest. Internal reports and travel expense records were leaked to the press, revealing the board's behavior in detail.
In July 2016, the trust entered a second settlement with the AG's office. The board agreed to reconstitute itself — several members retiring, others limited to maximum 10-year terms. The attorney general gained power to approve new board members. The chairperson said she was "satisfied with the outcome."
Two settlements. Two investigations. Two rounds of reconstitution. The same structural conflict of interest — same people, two boards, paid from children's trust — remained in place after both.
Bob Heist: The Chairman Who Sued His Own Institution
Bob Heist graduated from the Milton Hershey School in 1982. He became a lawyer. He served as chair of the alumni association. He was elected to the board in 2011. In 2018, he became chairman of the school's board and president of the Hershey Trust Company simultaneously — the highest governance position in the institution.
In September 2019, he began requesting internal financial records. Over the next year and a half, he made at least five formal requests. The school provided thousands of pages of documents — but Heist said they did not include the specific spending records he needed to perform his oversight duties.
In April 2021, he filed suit.
WHO BOB HEIST WAS:
1982 graduate of Milton Hershey School
Board member since 2011
Board chairman since 2018
Simultaneously: President of Hershey Trust Company
The highest governance officer of the institution
WHAT HE WANTED:
Internal financial records to ensure school funds were not “wasted”
Verification that the school reported accurate information to the IRS
Determination of whether consultants “exerted undue influence
in order to receive funds”
WHAT THE LAW SAYS:
Don Kramer, nonprofit law chair, Philadelphia firm Montgomery McCracken:
“A director of a nonprofit corporation in Pennsylvania is fundamentally
allowed to see the books and records of the organization to determine
whether the funds are being spent properly.”
WHAT THE SCHOOL DID:
Denied access for 19 months across multiple formal requests.
After Heist sued: argued he “has an agenda” and “no authority
to conduct his own investigation.”
Spent money from children’s charitable trust fighting the lawsuit.
At the hearing: judge asked whether the school had “locked the doors”
or “shuffled the documents from place to place.”
THE ADDITIONAL DETAIL:
Among the records Heist sought: documents bearing his own signature
authorizing legal expenses. He was trying to find out what he had signed.
The institution he chaired had authorized legal expenses under his signature
without giving him access to the underlying records.
THE OUTCOME:
The case was resolved without public findings.
The Pennsylvania AG monitored but did not intervene.
The structural governance problem: unchanged.
What the Pattern Proves
Four documented episodes across 15 years: the golf course, the Cavanaugh compensation, the general counsel's wire fraud conviction, the chairman's lawsuit for financial records. Two attorney general investigations. Two settlements. Two board reconstitutions.
Each episode is different in its specifics. Each involves different actors, different transactions, different amounts. What they share is structural: a governance architecture in which the people responsible for oversight are the same people who benefit from the assets they oversee, paid from the same charitable trust whose mission they are supposed to maximize, with no independent board and minimal external accountability.
The Pennsylvania Attorney General is the sole external check. It has intervened twice. Both times, the intervention produced settlements that reformed compensation and board tenure without changing the dual board structure that enables the conflicts in the first place.
The 2016 reforms were real. Board term limits (10 years maximum), AG approval of new board members, board reconstitution — these are genuine governance improvements over what existed before 2013. The post-2016 board is more constrained than its predecessors.
Compensation was reduced after investigations. The 2013 settlement cut board pay to $30,000. When violations were found, the AG acted. The Cavanaugh-level compensation ($332,633 from Hershey Company board alone) is an example from a period now partially reformed.
Bob Heist’s lawsuit was resolved. The school provided documents. The case concluded. Whatever the underlying dispute was, it did not result in public findings of wrongdoing by the post-2016 board.
The school’s current leadership is not the same as its 2002-2016 leadership. The individuals responsible for the golf course, the Cavanaugh compensation, and the general counsel’s wire fraud conviction are not the current board. Holding current trustees responsible for predecessors’ actions is not fair without current evidence.
What remains unchanged: The dual board structure — same people, two boards, paid from children’s trust — persists. The structural conflict of interest documented across four episodes over 15 years is not a personnel problem. It is an architectural one. New people in the same architecture face the same incentives their predecessors did.
The Architecture Is the Argument
Milton Hershey did not design the dual board structure to enable self-dealing. He designed the Hershey Trust Company to provide professional management of his charitable gift. The trust company's board overlap with the school's board was likely intended to ensure alignment between asset management and mission delivery.
What 116 years and four documented scandals show is that the alignment it created runs in the wrong direction. The board is aligned — very efficiently — around maximizing the trust's assets and minimizing its distribution obligations. That alignment benefits the trustees, who are paid from those assets. It does not benefit the children, who are the sole named beneficiaries of the deed.
The four words Milton Hershey wrote — as many as possible — describe a mandate to maximize distribution to children. The architecture he created to fulfill that mandate has, for 116 years, maximized something else.
In Post 4, we document the moment when the board went furthest in that direction: the 2002 attempt to sell the entire Hershey Company — the engine of the trust's mission — to Wrigley for $12.5 billion, while 10,000 people marched in the streets of Hershey, Pennsylvania to stop them.
PRIMARY SOURCES FOR THIS POST:
Spotlight PA / ProPublica / Philadelphia Inquirer joint investigation (April 2021): “Board Member Sues Powerful Hershey School, Claims He’s Being Denied Financial Records” — confirmed Bob Heist’s identity (1982 MHS graduate, board member 2011, chairman 2018), his 19-month records request, five formal requests in 2021, the lawsuit filing, the school’s legal response (“has an agenda”), AG monitoring. Spotlight PA follow-up (August 2021): “‘Have They Locked the Doors?’ Judge Presses for Details on Hershey Charity Spat” — confirmed hearing details, judge’s direct quotes, Don Kramer’s legal opinion, Heist’s signature on legal expense authorizations. Capital Research Center, “Milton’s Bittersweet Legacy” (multiple parts): Confirmed Robert Cavanaugh’s $332,633 annual Hershey Company board compensation, $3.8 million deferred compensation, $80,000 travel reimbursement, internship email to JKMilne ($584M in MHS assets) and Legato ($25M). Confirmed Bob Estey wire fraud guilty plea, disbarment. Confirmed “chief accomplishment was spending vast amounts suing each other.” Philadelphia Inquirer (2010): Original golf course reporting — $12 million purchase, school’s own appraisal at roughly half the price, Richard Lenny conflict of interest as simultaneous Hershey Company CEO and approving board member. Robert Reese lawsuit (2011): Confirmed $35,000 → $100,000-$130,000 compensation tripling, “no financial analysis” allegation. First AG settlement (2013): Confirmed $30,000 compensation cap, property notification requirement. Second AG settlement (July 2016): Confirmed board reconstitution, 10-year term limits, AG approval of new members.
WHAT COMES NEXT:
Post 4 documents the 2002 Wrigley sale — the most dramatic single event in the trust’s history, when the board voted to sell the Hershey Company for $12.5 billion, 10,000 people protested in the streets, the Pennsylvania AG blocked it, and the trustees who approved the deal were eventually removed.
