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Problems with J. Peter Lark seen as early as 2009

January 22, 2015

 

Steven R. Reed had a story in Sunday's Lansing State Journal titled "Peter Larkís 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 Managerís 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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