Golden Parachute Protects LP&L’s CEO from Firing or Pay Cut

Had the Lubbock Power & Light Board fired LP&L Director and CEO Gary Zheng in October or November, it would have cost a pretty penny.
By James Clark and Monica Yantosh

LUBBOCK, TX – Had the Lubbock Power & Light Board fired LP&L Director and CEO Gary Zheng in October or November, it would have cost a pretty penny. Ever since May 22, 2012 Zheng has been protected by a separation agreement.

Zheng can leave LP&L anytime he pleases with no penalty. But if LP&L fires him “for reasons other than Cause” he is entitled to two years of base salary, benefits and accrued vacation.

Zheng’s base salary is $251,337. Mayor Glen Robertson told that benefits bring the total value to more than $300,000 per year.

LP&L does get some legal protection in the document; it says, “the CEO shall waive the right to bring suit against LP&L for any cause whatsoever as consideration for this severance agreement.”

The agreement came to light in an open records request by the Sandstorm Scholar.

The possibility of firing Zheng was listed in LP&L meeting agendas for the last two months. Twice, a majority of the board voted to take no action against Zheng. He was accused of mishandling bids on a major power supply contract.

The board approved the hiring of an outside attorney to investigate, and the investigation is still underway.

Is that cause for firing? The agreement defines cause as “willful and serious misconduct.” It can also mean the conviction of a felony or other crime of moral turpitude.

Mayor Glen Robertson is no fan of the agreement.

“I think it’s way too lucrative. Two years of pay is way beyond the industry normal,” Robertson said. “It strikes me as odd that you have severance with an employee once that employee is in place for several years.”

Zheng has been with LP&L since 1997 and he has been the Director/CEO since 2005. Robertson calls the severance agreement a “golden parachute.”

The parachute also covers a pay cut. It says in part, “In the event the CEO’s salary shall be reduced by a greater percentage than that of any universal salary reduction for all LP&L employees, such salary reduction may be deemed a termination by LP&L with no Cause.”

Robertson thinks a severance agreement can be okay when recruiting a new high-profile employee. But Zhen had already been on the job for several years.

“That’s unbelievable,” said City Councilman Jim Gerlt upon hearing the terms of Zheng’s severance agreement for the first time. “Wow!”

Gerlt agrees that a severance agreement can be a useful tool. But he thinks the Zheng agreement is too much.

Gerlt and other Council-members recently voted to replace five of the nine LP&L board members and said, “I hope we can get that back under control with the new board.”

Former board member Marc McDougal said, “I agree. That is too much.”

McDougal said, “I think he ought to be fired for cause and he should get nothing. But I lost that vote.”

Was the severance agreement the reason that the board took no action against Zheng in October and November? According to McDougal the answer is no.

“It never was discussed,” McDogual said. requested an interview or a statement from Zheng. An LP&L spokesman wrote a brief statement saying in part, “It is part of the employees benefit package that was voted on an approved by the [LP&L Board of Directors].”

When asked at after the LP&L Board Meeting Tuesday about this agreement, Dr. Zheng deferred to the chair of the board, who is Greg Taylor. When asked, Taylor said he could not comment on it.

The agreement was approved by the board – not the Lubbock City Council.
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