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Amid IRS probe, school rector announces an early retirement

CONCORD, N.H. -- The rector of the elite St. Paul's School, whose tenure has been marked by scrutiny from state officials and the Internal Revenue Service, is retiring three years before his contract expires.

Bishop Craig B. Anderson will step down June 30. Bill Matthews, an alumnus, former vice rector, and most recently the school's director of development, has been named acting rector. Vice Rector Sharon Hennessy, whose salary has been scrutinized along with Anderson's, will remain in her job.

School spokeswoman Michele Clarke declined to give a reason for Anderson's early retirement or say whether he will receive a financial settlement, and neither Anderson nor Hennessy was available for comment.

In a written statement, the board of trustees said the decision was in the best interest of the school.

Anderson's departure comes at a high-profile time for the school, which is preparing for graduation next week and will mark its 150th anniversary next year -- both big fund-raising opportunities. The departure follows media reports that the IRS is investigating the school.

The nature of that inquiry has not been disclosed. But in 2002, the state attorney general's office investigated Anderson's use of the school's discretionary fund, part of which is restricted to charitable giving.

Anderson spent nearly $4,000 from the fund at a Maine yacht club, $5,200 at a country club, and nearly $2,000 for auto repair.

Under an agreement reached between the state and the school last year, school officials have said they have tightened control on the discretionary fund and required Anderson to repay some of the money. Trustees have rewritten several of the school's bylaws as recommended by independent auditors.

Anderson also pledged to take a 10-percent pay cut this school year. During his time at the school, his salary and benefits package have more than doubled, growing from $250,142 in 1997 to $502,394 in 2003-2004. His compensation made national news in 2003, when the Wall Street Journal published a story detailing his salary and lavish benefits, including a 14,000-square-foot house and a salary for his wife.

At the time, the school defended Anderson's pay and Hennessy's $300,000 salary, saying it was the only way to keep two sought-after leaders at the school. But several alumni and parents have withdrawn or withheld gifts because of Anderson's leadership, and a group of alumni has been planning to hold protests at reunions.

Peter Ames, a 1963 graduate who pulled his donations four years ago, took heart in news of Anderson's retirement.

''The fact that the powers that be see the light restores my faith," he said.

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