Herman Morris didn’t get to the top of Memphis
Light, Gas & Water without sweating details and knowing which way
the wind’s blowing. When it became clear years ago that there was a quiet rift
between him and Mayor Willie Herenton, Morris — an attorney for MLGW for
nine years before being named president — got the board to approve a unique
package of severance benefits for himself, other officers, and MLGW employees in
case they lost their jobs.
When the mayor decided last month not to reappoint Morris, the
Flyer requested details of MLGW’s severance and benefits policy from the utility
company and the city. Documents show Morris is seeking severance,
pension, outplacement, sick leave, and vacation benefits worth $1,171,286.
The Commercial Appeal reported in a front-page
story Tuesday that “Morris bows out with $205,000.” That is less than one-fifth
of his total proposed severance and benefits package.
Under his proposal, Morris would agree not to sue the city, disclose
proprietary information, or solicit existing or prospective customers from MLGW
or Memphis Networx. Morris also would agree to “forfeit” $113,267 of
compensatory time “earned through business travel on weekends, storm
restoration, and out-of-town meetings” and 58
percent of his unused “sick leave days,” worth $127,425 by his calculations.
The greater impact of the 15-page Severance Benefit Personnel Policy is
that it applies not just to Morris but to other top executives and hundreds of
employees. Several managers with longer tenure than Morris could be entitled to
packages worth well over $1 million if they “voluntarily enter into separation and
release agreements.” In other words, if they quit, they define the terms.
Herenton was stunned when he learned details of the severance
provisions two weeks ago. He called them
“vulgar” in a meeting with MLGW board
members in his office last week and scolded board members for being derelict in
their duty. He earlier made an oblique reference to the severance provisions as
“something troubling I learned yesterday”
when he met with City Council members last Tuesday.
The stealth severance deal was adopted without discussion or publicity by
the board effective January 1, 2001, and revised November 18, 2002. Morris’ five-year
term expired in 2002 but he continued to serve as president through 2003. He
proposes that a few days of his vacation days be bumped into 2004 so his service will
total 15 years.
Part of Morris’ proposed package could be money
he contributed to MLGW’s pension plan. The summary doesn’t say exactly
how much, if any, Morris contributed. Instead, it uses a multiplier to bring the
figure to $513,937. In addition to that, Morris proposes that he be paid
another $518,926 “representing the difference between the value of a normal
pension based on 15 years of service and the amount of the multiple of
contributions refunded by the pension plan.”
Parts of the proposal are unusual, although Morris is hardly the only
public employee to exploit the complicated array of city, county, school-board,
and MLGW pensions and retirement policies. MLGW officials responded to
the Flyer with a one-paragraph faxed statement saying, “MLGW employees are
eligible for severance benefits under a policy that covers both management and
bargaining unit employees.”
Several things about MLGW’s pension/severance plan bother the
mayor, who was sharply criticized himself 13 years ago for “double-dipping” his
pension after he resigned as school superintendent.
The concept of severance pay for appointed public officials whose terms
expire is “something I have never seen in government anywhere in
America,” Herenton said. Storm restoration pay
is another puzzler. The mayor, police director, and several other division
directors are generally considered to be on call for emergencies around the clock as
part of their duties. The pension multiplier is a third area of concern.
Herenton is in an awkward position to criticize the policy since he
appointed Morris and all five board members and is supposed to get regular briefings
from them. In reality, however, his relations with MLGW have been strained for
several years. In 1998, Herenton made an aborted proposal to the City Council
to consider selling publicly owned MLGW to a private utility. MLGW
executives have been on guard ever since. The
breaking point came when Herenton blasted MLGW management in remarks to
the council and told Morris that he and the board would not be
reappointed. Herenton would like to replace Morris with Joseph Lee, director of the
Division of Finance and Administration. But the council balked at Lee and wants a
national search instead.
Barring a legal challenge, Herenton’s hands may be tied by the severance
surprise. It applies to employees and officers appointed to full-time positions
who lose their jobs due to downsizing, change in control or ownership of MLGW, or
— as in the case of Morris — expiration of their appointed term. At least 12
MLGW managers make more than $100,000 annually, and some of them have
worked longer than 15 years.
In the corporate world, an anti-takeover provision is known as a poison
pill. Herenton is familiar with the tactic from serving on the boards of First
Tennessee and Holiday Inns years ago. “We did
that to insulate management,” he said.
“This is a corporate model applied to a
public agency.”
The severance policy specifically addresses several shake-up scenarios,
from privatization to merging MLGW with another government entity. One
clause talks about reorganization as an authority and consolidation of city and
Shelby County government. Neither of those would be considered a change in control.
In a column in The Commercial
Appeal last week, former MLGW president William Crawford proposed
reorganizing MLGW along the lines of the Memphis and Shelby County Airport
Authority. Herenton, however, has something quite different in mind. He
believes MLGW has become wasteful, overpaid, and “an island unto itself.”
“For years MLGW has wanted me to support them becoming an authority,”
said Herenton. “I would never go for it. This
is why it is so important to me to get Joseph Lee in as president. I want someone
with the same philosophy I have of the relationship of MLGW to city government as
a whole. [MLGW] just absorbed a $27 million budget reduction without making
personnel cuts. That conveys to me that there is a lot of fluff.”