Settlement retains Princeton's control, use of Robertson funds
Posted December 10, 2008; 09:00 a.m.
Princeton University will have full control of the endowment associated with the Robertson Foundation and will continue to use the endowment to support the graduate program of the Woodrow Wilson School of Public and International Affairs under a settlement agreement that ends the six-year-old lawsuit brought against the University by members of the Robertson family.
Under the terms of the agreement, the Robertson Foundation will be dissolved and its assets will be transferred to the University to create an endowed fund that will be controlled solely by the University. The fund will provide the same kind of support for the graduate program of the Woodrow Wilson School as these funds have been providing for the past 47 years. In addition, over a three-year period the foundation will reimburse the Banbury Fund, a Robertson family foundation, for $40 million of legal fees that were paid by that fund during the course of the litigation, and beginning in 2012 the Robertson Foundation will provide $50 million, paid over seven years, to a new charitable foundation designated by the Robertson family that will support the preparation of students for government service.
"This settlement achieves the University's highest priorities in this lawsuit, which were to ensure that Marie Robertson's gift will continue to support the graduate program of the Woodrow Wilson School and that the University would have full authority to make academic judgments about how these funds are to be used," said Princeton President Shirley M. Tilghman. "The funds will continue to be managed by our investment managers at PRINCO [the Princeton University Investment Co.], who have significantly increased the value of the Robertson gift since being engaged by the Robertson Foundation in 2004.
"It is tragic that this lawsuit required the expenditure of tens of millions of dollars in legal fees that could have and should have been spent on educational and charitable purposes," Tilghman said. "We had every confidence that we would prevail at trial, and looked forward to the opportunity to refute the claims that were made and demonstrate Princeton's diligent stewardship of this gift over almost five decades. We agreed to this settlement so that we could bring the rapidly escalating legal expenses to a halt before a lengthy trial added even more tens of millions of dollars. The settlement also allows the Banbury Fund to resume funding the charitable objectives for which it was established, and it restricts the spending of the new foundation to activities that are compatible with the purposes we serve in carrying out the terms of Marie Robertson's gift."
Princeton's attorneys estimate that each party to the litigation likely would have incurred additional legal expenses in excess of $20 million to continue to prepare the case for trial, conduct the lengthy trial and pursue any subsequent appeals.
The specific terms of the settlement agreement include the following:
- The Robertson Foundation will be dissolved and its funds will be transferred to an endowment fund at Princeton with the same object and purpose as the Robertson Foundation, as understood and interpreted by Princeton.
- Robertson Foundation funds will be used to reimburse the Banbury Fund for certified legal fees and expenses in connection with the Robertson v. Princeton litigation of $40 million under the following schedule:
o $20 million in the first year (2009);
o $10 million in the second year;
o $10 million in the third year.
- Robertson Foundation funds will be used to provide $50 million (plus interest) in funding for a new foundation to prepare students for careers in government service under the following schedule:
o $5 million a year in years four through eight of the agreement;
o $10 million in year nine;
o $15 million in year 10.
It is expected that the initial $20 million payment will be made in 2009 and that the payment schedule will extend through 2018.
In coming weeks the seven trustees of the Robertson Foundation will act to dissolve the foundation under the terms of its certificate of incorporation, which provides that all remaining assets of the foundation are to be transferred to the University as a restricted fund with the same purposes that are specified in the certificate.
The Robertson lawsuit was filed in July 2002 by members of the Robertson family who sought to seize control of the Robertson Foundation's funds and redirect them to purposes other than the purpose agreed to by the donor and the University in 1961, when Marie Robertson made a $35 million gift to Princeton and the foundation's certificate of incorporation was adopted. The family members filed the lawsuit after William Robertson opposed a recommendation by the other two members of the foundation's investment committee to engage PRINCO to provide professional investment management. Between the engagement of PRINCO in 2004 and June 30, 2008, the end of the foundation's most recent fiscal year, the net market value of the Robertson funds increased from $561 million to just over $900 million, even after annual withdrawals of $22 million to $33 million for programmatic and capital expenses of the graduate program of the Woodrow Wilson School.
The plaintiffs in the lawsuit included the three Robertson-appointed members of the Robertson Foundation board, while the defendants included three of the four University-appointed members, including Tilghman who has chaired the board, and the University itself.
The fourth University-appointed trustee, who was not named in the lawsuit, is former New Jersey Gov. Thomas Kean.
Both parties are filing papers today with New Jersey Superior Court Judge Maria Sypek asking for the settlement to be approved.
Background information about the lawsuit is available at www.princeton.edu/robertson.