HERSHEY, Pa., July 23 (UPI) -- Hershey Trust Co., a $12 billion charitable organization that controls the Hershey Chocolate empire, has agreed in principle to a deal with the Pennsylvania attorney general's office to institute governance reforms in the wake of a failed $23 billion takeover attempt.
The Hershey Trust was set up by the company's founder, Milton Hershey, in the early 1900s and owns a 30 percent stake in the company and controls 81 percent of its voting power.
Members of the trust's 10-member board of directors have faced scrutiny recently for lavish salaries, exorbitant travel reimbursements and setting board term limits of longer than 10 years.
Hershey has struggled of late with an ill-fated expansion in China and sluggish U.S. sales, Bloomberg News reported.
In addition to its majority share of Hershey, the Hershey Trust also oversees the Hershey Entertainment & Resorts company, which operates a resort and amusement park in Hershey, Pa. The trust also operates the Milton Hershey school for some 2,000 underprivileged children, where all the charity's profits are supposed to go.
The Wall Street Journal reported Saturday under terms of the agreement, several Hershey Trust board members have agreed to step down at the end of the year.
The trust's operations came under scrutiny recently after it blocked a $23 billion takeover offer from Mondelez International Inc., the makers of Oreo cookies and Ritz crackers. The Hershey board, which includes three members of the Hershey Trust Co. board, unanimously rejected the Mondelez offer.
The company has faced pressure from the community to remain an independent business rather than succumb to a takeover. The changes in governance structure at the Hershey Trust, long seen as a backstop against any potential sale, could make a takeover process easier, though the Pennsylvania attorney general's office could take the trust to court to halt a sale if it deems it against the public interest.