Thursday, December 2, 2010
United Way Defends $700,000 Payout To King
The day after ending their legal fight with Gloria Pace King, United Way officials defended their $700,000 settlement by saying it would have cost more in legal fees to go to trial against their former CEO.
King sued the agency for discrimination and wrongful termination after it fired her in 2008 amid controversy over her compensation package.
The agency agreed to pay her $233,333, while its insurance carrier will pay $466,666. The United Way's share will come from a variety of sources, including donor dollars from past campaigns and investment revenue.
King had sought a $2.1 million supplemental retirement account, plus about $500,000 in back pay remaining from her three-year employment contract.
"It makes the decision look easy when you look at it like that," United Way Executive Director Jane McIntyre said. "That $233,000 is a big amount of money, but you can see the difference."
Russ Sizemore, the lawyer who handled the United Way's case, noted that the settlement came after a judge said no trial would happen until 2012, and that the pre-trial "discovery" process of exchanging documents and interviewing witnesses would run until the end of next July.
Lawyers, who have already been working - and billing - on the case for months, would be working another year before setting foot in court for a trial.
"That's a good benchmark for people to sit back and say, 'Well, let's see if we can't resolve this' out of court," Sizemore said Thursday. "It's a good settlement for the community."
Asked how big his bill would be, Sizemore said he and his partner on the case, Bo Ketner, were still tallying their fees, which would be paid by the United Way and its insurance carrier. Sizemore added that the settlement doesn't require the United Way to pay King's legal fees.
Veteran Charlotte trial lawyer Jim Cooney said legal fees on a case like King's would likely run "substantially into six figures." In addition, the United Way's staff would have been swamped producing documents for lawyers and preparing themselves for possibility they'd be called to testify.
King's lawyer, Bill Diehl, had suggested he might depose as many as 75 people.
A trial "can be an enormous distraction for an organization," said Cooney, who wasn't involved in the King case. "At a place like the United Way that potentially has to re-fund itself every year (through fundraising campaigns), it can be devastating."
Virtually all civil lawsuits end in settlements, partly because trials are so costly and unpredictable, said Charlotte employment lawyer Brian Clarke.
"You have to (consider settlements), it just makes good business sense," he said.
The United Way's $233,333 will come from $822,507 set aside for King's supplemental pension account in 2007. The rest - about $500,000 - will be returned to the Community Care Fund, the pool of money divided up each spring among United Way's member charities.
Sizemore said the settlement also resolves all claims against United Way board members King named as defendants. Left unclear is the status of a criminal investigation of King by the local U.S. Attorney's Office and the Internal Revenue Service.
Sizemore said he had no knowledge about the probe. A spokesperson for the U.S. Attorney's office said she couldn't confirm or deny the existence of any investigation.
United Way Settles Lawsuit With Former CEO, Gloria Pace King
The United Way of the Central Carolinas has settled a divisive discrimination lawsuit brought by ousted CEO Gloria Pace King for $700,000 although only a third of that money will come from the agency and none from the current fund raising campaign.
The United Way will pay $233,333 out of a reserve fund set aside for the costs of the lawsuit and the remaining $466,666 will be paid by insurance policies.
King was fired after a NewsChannel 36 I-Team investigation in July of 2008 revealed that she was being paid more than $2 million in retirement funds over the course of three years.
The revelation brought a firestorm of public criticism and changes at the charity agency.
New United Way Executive Director Jane McIntyre said she was relieved to have the 26 month ordeal behind her but added, "I don't think there are ever winners in a situation like this."
King hired prominent Charlotte attorney Bill Diehl and filed a race, gender and age discrimination claim. King had earlier dropped a defamation lawsuit against interim United Way CEO Mac Everett. Diehl's assistant said he was out of town conducting a deposition and unavailable for comment.
In August of 2008 then-board Chairman Graham Denton publicly apologized on behalf of the board for the retirement package which he said "...exceeds what the community expects." Faced with plummeting contributions and an erosion of confidence, Denton said, "We have made a serious mistake. We owe the community an apology."
King never apologized.
In a February 2009 radio interview on WBAV-FM 101.9 King defended her salary and retirement benefits saying, "I raised over $500 million." King said she thought the board was fully aware of her salary and benefits. "I have never given myself a raise. I have never asked for a specific amount of money.... Whatever they gave me, I said, 'Thank you very much.'"
But an extensive outside review of the board action leading up to the $2 million retirement commitment concluded that King engineered her own pay by controlling the flow of information from compensation consultants to the board.
The United Way put in checks and balances governing executive compensation after the I-Team's report. The agency also cut the size of the board by two-thirds - from 67 to 22 - and cut the staff more than half - from 97 to 42.
The new leader of the United Way of the Central Carolinas, Jane McIntyre, earns less than half what King was paid.
United Way CEO Hires Lawyer Richard Diehl
United Way President and CEO Gloria Pace King has hired prominent Charlotte lawyer Bill Diehl to represent her in negotiations with her board of directors stemming from the growing controversy over her pay and benefits.
The board added $822,000 to King's retirement benefits last year, a six-fold increase over the $108,000 paid in 2006. It plans to pay between $450,000 and $500,000 into her retirement account each year for the next three years.
King's salary and bonus make her the fourth-highest-paid United Way executive, according to an Observer survey of 32 agencies. Only the United Ways in New York, Detroit and Miami pay more.
The Charlotte board has said the additional retirement payments were needed to make up for short payments in previous years. It has declined to explain why the catch-up payments were needed or say how it set the size of King's pay package.
In response to Diehl's hiring, the Observer called King, and the board's attorney, public relations firm and spokesman, former board chairman Ned Curran. But none commented Saturday.
It's unclear why King hired an attorney. But Diehl told the Observer on Saturday: “She came to me because there's been a big splash in the newspaper.
“The board is making a big to-do about something they previously approved. They're very defensive about the fact that she's gotten this retirement plan they gave her. It's crazy. They gave her the plan two years ago. And now they're concerned about it because somebody's written about it.”
On the eve of the United Way's 2008 fund-raising campaign, anger towards the agency continues to grow, threatening donations that support 91 non-profits.
“It's a publicity nightmare because the board hasn't taken the right approach to the situation,” Diehl said. “If somebody did something wrong, it's not Gloria King.”
Diehl said the board has not asked King to resign. He said she signed a three-year contract in January. “She's 63 years old and she expects to retire in two years.”
King, president and CEO since 1994, has declined to comment since reports about her pay surfaced in June. Her board has defended her salary and benefits as appropriate for top-performing executives.
United Way of Central Carolinas is ranked among the United Way's top 20 largest fund-raisers. The watchdog group, Charity Navigator, gives King's agency high marks for efficiency. The board credits King with boosting the agency to No. 2 in the number of donors giving at least $10,000.
Yet, the controversy over the board's handling of her pay has hung over the city for months.
For the first time in 40 years, philanthropist David Barnhardt will withhold his United Way contribution in protest. He plans to write checks for charity this year, but says they “will go directly to the Girl Scouts or some other nonprofit.”
Barnhardt, 72, whose father was an original director of what became Foundation for the Carolinas, says he's most bothered by “the fact that the board has been sneaky and tried to slip all this past the public.
“They've come up with a lot of excuses and they're not good excuses.”
Richard Snyder served on United Way of Central Carolinas' executive committee in 2000 and said he doesn't remember any discussion about retirement benefits.
“It seems like somewhere along the line the ball was dropped,” he said. “I don't understand what the benefit package was supposed to be that wasn't being met….I don't ever remember discussing retirement benefits. We discussed salary and bonus.”
“The shame of it is the United Way is a good organization,” he said. “And unfortunately, they're going to be hurt by this…there are services in the community that won't be funded because of this.”
Diehl said the board's leadership approved King's retirement plan.
“She had no role in that,” he said. “She didn't ask for it. They offered it to her.”
Diehl often represents people in the spotlight. Clients have included Charlotte Hornets owner George Shinn and speedway mogul Bruton Smith.
Diehl said he expects that something is going to happen within a week. There are, he said, three choices: King can continue in her job; she can resign; or she can be fired.
“Those are the choices in any employment dispute,” Diehl said.
Diehl said he's negotiating with United Way's attorney. He would not provide specifics.
“We're negotiating about the situation and how it can best be solved,” Diehl said. “I think they need to honor Gloria King's contract.”
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Sources: Biz Journals, McClatchy Newspapers, United Way, Wall Street Journal, WCNC, Wikipedia, Google Maps