FINAL Approved 11/08//05
MINUTES OF THE BOARD OF COMMISSIONERS' SPECIAL MEETING
LANSING BOARD OF WATER AND LIGHT
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The Board of Commissioners met in the Boardroom of the Administrative Offices, 1232 Haco Drive, Lansing, Michigan.
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Present: |
Commissioners Ron Callen, Gary L. Calkins, Joseph Graves, Jr., Santiago Rios, Robin M. Smith, and Nancy Wonch |
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Absent: |
Commissioners Tim Haggart and Ifield Joseph. |
The Secretary declared a quorum present.
Chairperson Smith called the meeting to order at 4:00 p.m.
PUBLIC COMMENTS
THE CHAIR ANNOUNCED THAT MEMBERS OF THE PUBLIC ARE WELCOME TO SPEAK TO THE BOARD ON ANY AGENDA SUBJECT.
No persons spoke.
A meeting of the Human Resources Committee of the Board of Water and Light was held at the Executive Offices, Lansing, at 12:00 noon, Tuesday, September 20, 2005.
Committee Chair Santiago Rios, called the meeting to order and asked the secretary to call the roll. The following members of the Human Resources Committee were present: Commissioners Gary Calkins, Joseph Graves, Jr., Tim Haggart, Santiago Rios and Robin Smith, ex officio.
Public Comment
There was no public comment.
PENSION FUND MATTERS
Pension Fund Manager Recommendation
Senior Vice President of Finance and Administration Dennis McFarland reported that utilizing the expertise of the BWL’s pension consultant LCG Associates, staff has conducted an extensive search for investment managers to manage approximately 30% of the Defined Benefit (DB) Pension Fund to be invested in large cap equities. The search was conducted in accordance with the investment policy effective November 23, 2004. Mr. McFarland noted that the Human Resources Committee is a subcommittee of both the Board and the DB Pension Fund Trustees charged with oversight responsibility of the Plan and Trust Investment. The Investment Policy gives the Human Resources Committee authority to make investment manager selections and terminations for the DB Pension Fund.
Mr. McFarland reported that LCG used both qualitative and quantitative criteria to reduce the qualified candidates to four finalists in each of the large cap growth and large cap value categories. An internal committee, comprised of individuals from the Finance, Accounting and Human Resources functions, evaluated and ranked the finalists. Those rankings were reviewed with LCG and recommendations were made.
Following discussion, the following committee action was proposed:
WHEREAS, the Trustees of the Lansing Board of Water and Light Defined Benefit Plan for Employees’ Pensions has adopted an investment policy effective November 23, 2004, and
WHEREAS, that policy delegated authority to the Human Resources Committee to select and terminate investment managers, and
WHEREAS, a search has been conducted to identify qualified professional, independent investment managers, and
WHEREAS, the Human Resources Committee has determined Wells Capital Management and LSV Asset Management to be such qualified investment managers.
RESOLVED, That Wells Capital Management and LSV Asset Management be retained to manage the large cap growth and large cap value portion, respectively, of the Defined Benefit Pension Fund in accordance with the Fund’s investment policy.
On motion by Commissioner Calkins, seconded by Commissioner Graves, to approve the resolution. Carried unanimously.
Chair Rios noted that this information would be communicated to the Pension Fund Trustees at their annual meeting scheduled for November.
Agenda Items for the Pension Fund Trustees Meeting
Mr. McFarland reported that if the Committee has no objection, staff would be bringing the following proposals to the Pension Fund Trustees in November for consideration:
1. To revise the VEBA Trust Investment Policy. The current investment policy was approved April 24, 2001. Since then, the VEBA has accumulated up to $30 million. Staff would like to recommend amending the policy to clarify the statement of intent and move toward a more appropriate asset allocation.
2. To reduce the investment options in the Defined Contribution (DC) Plan to 15 to 20. The DC Plan currently has 38 options. Due to performance considerations, management plans to eliminate 9 of the investment options currently in the DC Plan right away, which will leave 29 options. Recommendation will be presented to reduce that number even further. Discussion has already begun with employees on the need for a best in class plan.
3. To revise the Defined Benefit (DB) Pension Investment Policy to incorporate a diversity consideration in money manager selection. Recommendation would be presented to amend the policy by adding a paragraph to indicate that once all the criteria has been met to fulfill the Trustees’ fiduciary role, the diversity of a money manager can be taken into account in making a selection.
After lengthy discussion, the Committee consented on bringing the proposals to the Pension Fund Trustees for discussion at the November meeting.
BOARD STAFF APPOINTEE PERFORMANCE EVALUATIONS
Moved by Commissioner Calkins, seconded by Commissioner Graves, to go into executive session. Carried unanimously. The Committee entered into executive session at 12:30 p.m.
Moved by Commissioner Calkins, seconded by Commissioner Smith that the Committee return to open session. Carried unanimously.
The Committee returned from executive session at 1:50 p.m.
Chair Rios reported that the Committee had extensive discussion with regard to the following three components related to the annual performance for the three Board Appointees:
Chair Rios reported that consensus was reached on the following:
· The Committee had the opportunity to review the written performance evaluation summaries for the Board Appointees, and it was concluded that each has been performing at an excellent level over the past fiscal year. The Committee agreed that each of the Appointees be given the opportunity to extend their employment contract with the Board of Commissioners for another year. The Committee recommends that the employment contract and the issue of compensation be discussed further with the full Board for consideration. The Staff Appointees have the option to request a closed session during continued discussion on their performance evaluations.
· The Committee deferred the immediate vesting option pending further review and discussion. This item will be placed on the Human Resources Committee agenda for the immediate future.
· Draft performance objectives for FY 2006 from the General Manager, Internal Auditor and Corporate Secretary are to be submitted to the Human Resources Committee for review and subsequent referral to the Committee of the Whole.
Other Matters
At the request of Commissioner Calkins, the Board’s Travel Policy was referred to the Committee of the Whole for a status report and recommended changes.
On motion by Commissioner Calkins, seconded by Commissioner Smith, the Human Resources Committee adjourned at 2:16 p.m.
Respectfully submitted,
Santiago Rios, Chair
Human Resources Committee
Discussion: Commissioner Graves asked that the immediate vesting option be taken up for discussion at this time. Chair Smith responded that the Human Resources Committee has recommended deferring this item until such time that additional research is completed and information on the costs for such a benefit is received. Commissioner Rios stated that the Human Resources Committee plans to discuss pension vesting in the near future. Human Resources Director Mary Dwyer noted that a letter addressing trends with pension vesting in the utility industry was sent to the Commissioners in mid-September for review.
Action: Carried unanimously.
Performance Evaluations
Chair Robin Smith announced that the three Board Staff Appointees have requested a closed hearing for their performance evaluations with the full Board as permitted under Section 8 of the Open Meetings Act (MCL 15.268 regarding closed sessions and permissible purposes.) The Chair stated that a motion is now in order to hold an executive session to consider performance evaluations for the three Staff Appointees.
Motion by Commissioner Calkins, seconded by Commissioner Wonch, to go into executive session. Carried unanimously.
The Board entered into executive session at 4:15 p.m.
Motion by Commissioner Wonch, seconded by Commissioner Rios that the Board return to open session. Carried unanimously.
The Board returned from executive session at 5:40 p.m.
Resolution #2005-10-2
Reappointment of the Charter Positions of
Director and General Manager, Corporate Secretary,
and Internal Auditor
The Board’s Rules of Administrative Procedures specify that the Board is to appoint a Director and General Manager, Corporate Secretary, and Internal Auditor, respectively, at the its first regular meeting following July 1 of each year or as soon thereafter as may be appropriate.
RESOLVED, That the Board of Commissioners hereby reappoints the following individuals to the Charter positions of Director and General Manager, Corporate Secretary and Internal Auditor for fiscal year 2005-2006, or, until a successor is appointed, whichever last occurs:
Sanford Novick, Director and General Manager
-and-
Mary Sova, Corporate Secretary
-and-
Glenn Holloway, Internal Auditor
RESOLVED, That Mary Sova and Glenn Holloway’s current employment contracts be amended to reflect the new reappointment and contract commencement period of July 1st, 2005.
RESOLVED FURTHER, That Sanford Novick’s current employment contract be amended to reflect the new reappointment and continue beyond the fiscal year 2006 up to and including August 18, 2006. Further that his current contract be amended to reflect the new contract commencement period.
Resolution # 2005-10-3
Performance Evaluation and Compensation Increases
For Charter Positions of
Director and General Manager, Corporate Secretary, and Internal Auditor
WHEREAS, the Board of Commissioners separately discussed the performance evaluations and compensation increases for the three appointed charter positions: Director and General Manager, Corporate Secretary, and Internal Auditor.
WHEREAS, the Board considered information provided to them, including current objectives during fiscal year 2004-05 and self-evaluations, current contract, current skill family, current salary and range placement, compensation market analysis, and the non-bargaining unit performance increase matrix.
WHEREAS, the Board discussed the compensation package for the Director and General Manager, Sanford Novick. The terms of the compensation package are currently under negotiation and will be finalized within thirty days for subsequent Board action.
RESOLVED, That the Corporate Secretary, Mary Sova, is hereby eligible to receive a compensation increase of 2.5% effective as of July 1, 2005.
RESOLVED FURTHER, That pursuant to the current contract with the Internal Auditor, Glenn Holloway, that no additional compensation increase occur for the past fiscal year 2004-05.
Motion by Commissioner Calkins, seconded by Commissioner Wonch, to approve the resolutions on the reappointment of the three Board-Staff Appointees and Compensation Increases.
Discussion: Commissioner Rios reported that as part of the performance evaluation process all the Commissioners completed Performance Evaluation Forms for each of the three Staff Appointees. The Human Resources Committee then reviewed the summary forms that were compiled for each of the Staff Appointees. He briefly recapped the discussion held by the Commissioners during the executive session and noted that without exception the Commissioners agreed that the Staff Appointees’ job performance was excellent. He also reported that the Board engaged in extensive deliberation regarding compensation and the immediate pension vesting option. Input was received from General Manager Novick in terms of his compensation package. Commissioner Rios commented that after discussion, the Commissioners requested more information regarding potential costs of immediate pension vesting and the ramifications of providing this benefit. The Commissioners decided not to address the immediate vesting issue at this meeting.
Action: Carried unanimously.
Chair Smith invited Commissioner Callen to read the following resolution:
Resolution #2005-10-4
MEMORIAL TRIBUTE TO DIANE R. ROYAL
WHEREAS, The members of the Board of Commissioners wish to express their sadness over the passing of former Commissioner Diane R. Royal on August 9, 2005. She was a pillar of strength on this Board.
WHEREAS, Diane R. Royal was a woman of vision and conviction with genuine concern for utility-related issues and their relationship to the citizens. Her intelligence, integrity and strong convictions exerted a significant impact on the Board of Water and Light by ensuring the financial strength of this Utility remained strong and that electric, water and steam were reliable and delivered at the lowest price possible; and
WHEREAS, Diane R. Royal was appointed Commissioner to the Lansing Board of Water and Light on October 9, 1995 and served until February 18, 2004. She was elected Vice Chair of the Board in 1996 and held that post four times. She became Chair of the Board in 1998 and also served in that capacity four times. As a Board Commissioner, Diane R. Royal played an integral role in a variety of matters affecting this utility. Her expertise in utility law and depth of experience in the utility industry brought an exceptional understanding of policy-setting responsibilities. Her deep commitment to the Board of Water and Light and the City of Lansing was well demonstrated by the countless hours she contributed to this Board. Her involvement in public issue advocacy on behalf of disadvantaged people clearly demonstrated the highest qualities of citizenship and unselfishness. She may never know how many lives she has touched, but there are many who know her value; and
Commissioner Callen commented that he had worked closely with former Commissioner Diane Royal and that he had enormous respect for her. He moved the adoption of the resolution, and the motion was seconded by Commissioner Wonch. Carried unanimously.
Chair Smith requested that the family of Diane Royal be invited to the next Board meeting to accept a formal presentation of the memorial tribute.
Chair Robin Smith invited the Commissioners and staff to Lansing Community College Foundation’s upcoming “Motown” Lip Sync event. She noted that Commissioner Rios and many others from the community would be participating in this program.
On motion by Commissioner Wonch and seconded by Commissioner Graves, that the absences of Commissioners Haggart and Joseph be excused.
Carried unanimously.
On motion by Commissioner Callen, seconded by Commissioner Wonch, the meeting adjourned at 5:47 p.m.
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/s/ Mary E. Sova, Corporate Secretary
Filed with Lansing City Clerk
October 18, 2005