Problems with J. Peter Lark seen as
early as 2009
January 22, 2015
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Steven R. Reed had a story in Sunday's
Lansing State Journal titled "Peter
Lark’s contract under fire: How a one-year deal grew to a five-year
golden parachute that could cost BWL nearly $1 million." He
gives me credit for obtaining copies of contracts going back to
2007. I got those "employment agreements" as part of a study of the
Board of Water and Light I did in 2009. There was a
story about it in the City Pulse. At that time, I posted 5
stories on this website about what I found, and they are still there
(with some updates):
2008 Employee Wages
Other Employee Benefits
J. Peter
Lark Compensation
BWL
Campaign Contributions to Mayor Bernero
The
July 2007 Massacre
Rate
Increases and BWL Extravagance
The
J. Peter
Lark Compensation story reveals that Mr. Lark was determined
from the get-go to make some BIG MONEY. It comes not only from the
contracts, but from Board meeting minutes. The following is what I
wrote back in 2009:
Initial employment agreement. BWL commissioners offered Lark the General
Manager job at a salary of $185,000. He
apparently made a counter offer. The following is from the minutes of
the July 2, 2007 Executive Committee meeting:
On motion by Commissioner Cochran,
seconded by Commissioner Calkins, to increase the salary amount
offered to J. Peter Lark by $5,000 totaling $190,000 with
clarification in regards pension benefits.
Discussion: Commissioner Rios
introduced a friendly amendment in response to three (3) items that
Mr. Lark requested [emphasis added] the Board consider relative to the General
Manager’s employment contract: 1) As a matter of policy, the
Board of Commissioners will not consider a modification to the
current benefit plan as the rates are based on employment start
date, 2) based on Board discussion they would not extend a severance
agreement, and 3) with respect to salary, the Executive Committee
was authorized by the Board of Commissioners to negotiate a contract
within the parameters of the salary range. He went on to note that
he would support an offer of up to $190,000.
So he got the $190,000, but not the
severance agreement. And it looked like he wasn't going to get his way
on the benefit plan start date, but there was a "clarification" at the
July 17, 2007 Committee of the Whole
meeting:
[Associate Attorney] Brandie Ekren
noted that while Mr. Lark was reviewing his benefit package, he
noted that the defined contribution account would not begin until a
6-month probationary period had ended. In developing the total
rewards package, a probationary period had not been considered, as
that would have significantly changed the total rewards amount. In
speaking to Commissioners Rios and Smith, it was determined that it
would be feasible to clarify that Mr. Lark does not have a
probationary period due to the nature of his contract and the
employment offer previously presented.
Making a special exception for Lark and
bypassing the standard 6-month probationary period for DC participation
gave him another $11,020 in his first year. (The BWL contribution to the DC accounts of
exempt employees is 11.6%; 11.6% of $190,000 is $22,040; $22,040 divided
by 2 is $11,020.) Skipping the probationary period was not mentioned in
the employment agreement Lark
signed 7/2/07.
The 7/2/07 employment agreement did say
(on page 2) that he gets 5 weeks
of vacation and 6 days free choice time in his first year. All employees
get 6 days free choice time in their first year, but regular employees
don't get any vacation until after their first year, and they don't get
5 weeks vacation - 25 days - until they've worked 20 years.
2008 employment agreement. A year later, he got his severance
agreement and
more. After what must have been a glorious performance review, the
commissioners approved a resolution to extend his contract for one year,
increase his salary from $190,000 to $239,000 and increase the
contribution to his DC account from 11.6% to 15%. Should his employment
agreement be
terminated, he would get six months severance pay, six months
employer-paid health insurance and outplacement services valued up to
$6000.
Commissioners also resolved to consider a multi-year contract.
The extra 3.4% contribution to Lark's
DC plan is worth $8,126 a year, and it is tax-deferred. Add $8,126 to
his $49,000 salary increase and you get a total increase in yearly
compensation of $57,126.
And then there is the "outplacement services". Here is
how outplacement services are defined at the site
USLegal.com:
Outplacement is a group of services
given to displaced employees that provides them with support or
assistance in making the career transition. Outplacement programs
may be offered on a voluntary basis to personnel who are being
terminated, those who are encouraged to take early retirement, as
well as those who remain with the organization. Outplacement
services may be offered because of ethical concerns for displaced
workers, to reduce the stress-level of managers involved in layoffs,
to maintain the morale of remaining employees, to preserve the
company's reputation as a good corporate citizen, and other reasons.
It appears that if Lark's contract is
terminated, BWL is obligated to find him another job. It is hard for me
to imagine how that would work. My guess is it is one of those
extravagant perks that U.S. corporate executives ask for when they've
got everything else.
The above is what was posted in
2009. The following was added
later:
2009
employment agreement. Lark got no salary increase in the 2009
employment agreement, but he did get that multi-year contract - 3
years - and with it, a much more generous severance pay provision. It
went from 6 months pay to "payment for the remainder of the term of
employment", which started at 3 years on July 1, 2009 and diminishes as
time passes. For example, if he gets terminated December 31, 2009 he
would get paid for 2.5 years, or $597,500. This was just 5 months after
the articles in the Lansing State Journal questioning expensive payouts
to former BWL executives (see
The July
2007 Massacre).
2012
employment agreement. This time, Lark got
a salary increase from $239,000 to $248,560 and an increase in the term
of the contract from 3 to 5 years. The severance agreement stays the
same: If terminated "at will" (without cause), he gets payment for the
remainder of the term of the contract. With a 5-year contract, this
could mean a heftier severance payment. For example, if he was fired on
July 1, 2013 (4 years left on his contract), the payout would be
$994,240. On top of that, he would get paid his accumulated vacation and
"free choice" time, 6 months of COBRA and outplacement services valued
up to $6000. If terminated "for cause", the severance would be the same
except instead of payment for the remainder of the term, he'd get only 6
months salary - a mere $124,280. Also, the employer
contribution to his defined contribution plan increases from 15% of base
salary to 18.5%, for a total contribution of $45,983.60 a year. And if
all that isn't enough to "incentivize the Employee to remain employed
with the LBWL until June 30, 2016" the Employer will credit the
following amounts to a deferred compensation account for the benefit of
the employee:
Credit Date |
Amount |
June 30, 2013 |
$30,000 |
June 30, 2014 |
$40,000 |
June 30, 2015 |
$50,000 |
June 30, 2016 |
$50,000 |
June 30, 2017 |
0 |
To sum up:
Salary: |
$248,560 |
|
Defined
Contribution: |
$45,983 |
|
Deferred Comp: |
$40,000 |
|
Total: |
$334,543 |
|
The contract was signed
May 15, 2012. It was approved by the Board's Human Resources Committee
on May 22 after Mr. Lark received his performance evaluation in closed
session. It was approved by resolution by the entire Board on July 24.
Board meeting minutes provide no contract details other than the
expiration date.
This last addition to the story is dated January
7, 2014:
2013 employment agreement. Only a year passed before Lark got a new
contract with a salary increase from $248,560 to $258,502. As with the
2012 agreement, there was no mention of it in the Board meeting minutes.
In yesterday's City Pulse, Mickey Hirten wrote this in a story titled "Chain
of Command: Lansing Mayor wants BWL General Manager to Report to Him:"
Bernero said this
sort of compensation package is unacceptable for city employees,
adding that he knew nothing about it when BWL's commissioners
negotiated the latest contract.
It is hard to believe Bernero was
aware neither of how much Lark was getting paid nor the long-term
contracts and severance agreements. The contract period has been 3
years since 2009 and went up to 5 years in 2012. Bernero may not be
a regular reader of this website, but I'm pretty sure it was also
reported in the Lansing State Journal.
Send comments to
stevenrharry@gmail.com.
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