United Way's challenge: Rebuilding a region's trust

For months, the United Way of Central Carolinas board said Gloria Pace King was worth every penny of her controversial $1.2 million pay package.

Tuesday, 37 of those board members unanimously called on their longtime CEO to resign or be fired.

King's fall was breathtakingly quick, but not clean.

Critical questions remain. How the board handles them will affect 91 nonprofit agencies and the thousands in need that they serve.

Can the board regain enough public trust to rescue its ongoing fundraising campaign?

How will it settle accounts with King, even as it pays her interim replacement $20,000 a month?

And the most fundamental question of all: How did a group that includes some of the region's savviest corporate leaders allow all of this to happen?

At its hastily called Tuesday press conference, the board offered no specific explanation about what had gone wrong and why King has been asked to leave.

“This was not an error made by a single individual at a single point in time, but a collective breakdown at many levels over a period of time,” board chairman Graham Denton said.

“We owe the community a sincere apology.”

King's attorney, Bill Diehl, listened to Denton's comments from the back of the room. He contends his client is owed an apology and more – at least $1 million remaining on a retirement contract the board agreed to in 2006.

Denton said the board has a legal right to cancel the remaining payments, and will do so.

“She is not happy with this,” said Diehl. “She worked there for 14 years and did a great job. Everybody agrees on that … It's hard to figure where (the board) is coming from.”

Denton said the board authorized firing King by Sept. 30 if she doesn't resign.

He said the board believes it needs a new CEO to restore public confidence.

Mac Everett, a retired Wachovia Corp. executive, will step in as interim president to lead the organization through its campaign drive.

He declined to discuss the King situation, commenting instead on the difficulty of raising money in a down economy. Last year, the United Way drive raised an unprecedented $43.5 million.

“I'm an optimist,” he said, “and what's done is done. We can't change the economy today. We'll have to deal with it and do the best we can.”

Everett will be paid $20,000 a month for up to four months. Denton said the board plans to seek private donations to pay him and King. If the money isn't raised, he said, the board will trim expenses in the agency's budget to avoid cutting aid to nonprofits. The dispute with King centers on a decision by the board's executive committee to add $822,000 to her retirement benefits in 2007. That was more than seven times the $108,000 paid the year before. The board has said the increase was to make up for short payments in previous years.

But Denton called the decision a mistake. He said six past and future board presidents studied the issue the past two months. They concluded that, while such retirement plans aren't unusual for top United Way executives, Charlotte residents found it excessive.

An Observer analysis of tax records shows that King's combined salary and benefits are the highest among 31 United Way organizations nationwide. Her salary ranks fourth; her bonus is the biggest among a sampling of 14 agencies of similar or larger size. Even at $108,000, her retirement benefits were the highest found among the 31 groups.

The board will pay the 21/3 years remaining on the three-year employment contract King signed in January. It pays her $290,000 annually, but allows that amount to be cut if she gets another job. Denton said he has talked with business leaders about finding King a new post. If nothing pans out, he added, the board will pay off her contract in full – even if it winds up having to pay a permanent replacement simultaneously.

The United Way will not pay what's left on King's retirement plan: $450,000 to $500,000 a year through 2010. Denton and Russ Sizemore, the board's attorney, said King's retirement contract lets the board cancel benefits if her employment ends.

Diehl disagrees. He said the board approved King's salary and benefits but is backtracking because of negative publicity. He said he's been seeking a solution, but that the board opted instead for what he called “a grandstand play” at the press conference.

“That's not something I can do anything about,” he said. “It might be something I can do something about later.”

A search committee will be appointed within weeks to find King's replacement, Denton said. He also said prominent Charlotte lawyer Robert Sink will lead a task force charged with finding out what went wrong and how to keep it from happening again.

Denton and others said the board likely will be revamped as a result of the inquiry.

Sink told the Observer he plans to ask seven or more people to join his group within the next 10 days. He expects to present findings to the board and the public by the end of the year.

In a statement Tuesday, United Way of America called the task force's creation “important and necessary.”

“United Way of America believes local United Way leaders have a duty of transparency and accountability to their stakeholders: donors, agencies, corporate partners and the United Way system.”

Critics say a lack of openness and accountability have worsened the King situation.

Asked whether minutes from board meetings cast light on King's upgraded retirement, Denton said the minutes were unclear. Asked for copies of the minutes, he and Sizemore said such documents are confidential and would be shared with Sink's panel, but not the public.

When reporters asked for copies of the employment and retirement plan contracts, they said those were confidential as well.

Incoming board chair Carlos Evans said he'll push to make both board meetings and the minutes public when his term starts in 2009. The Wachovia executive said the full board never voted on King's pay, only on the agency's multi-million dollar budget.

But, “as board members, we should all take responsibility (for CEO pay),” he said. “I take responsibility for not asking more questions.”

Related stories from Charlotte Observer