You asked us to update OLR Report 2002-R-0518, soliciting information from the state's quasi-public agencies on bonuses, salaries, benefits, and severance agreements. You especially want to know whether the agencies altered any of their compensation or benefit management policies after Governor Rell directed their boards of directors to do so.

SUMMARY

BACKGROUND

The state's eight active quasi-public agencies are the:

1. Capital City Economic Development Authority (CCEDA),

2. Connecticut Development Authority (CDA),

3. Connecticut Health and Educational Facilities Authority (CHEFA),

4. Connecticut Higher Education Supplemental Loan Authority (CHESLA),

5. Connecticut Housing Finance Authority (CHFA),

6. Connecticut Innovations, Inc. (CI),

7. Connecticut Lottery Corporation (CLC), and

8. Connecticut Resources Recovery Authority (CRRA).

(1) Has the agency changed any of its compensation and benefit management policies since Governor Rell asked the boards of quasi-public agencies to review and alter such policies on February 17, 2005?

(2) If yes, explain.

(3) Has the agency given a bonus to a director or employee since February 17, 2005?

(4) If yes, to whom, when, and how much?

Table 1 shows the quasi-public agencies that paid bonuses since Governor Rell's February 17, 2005 directive, the total amount paid, the average bonus, and the highest and lowest bonuses. The following quasi-public agencies paid no bonuses since February 2005:

1. Capital City Economic Development Authority;

2. Connecticut Development Authority;

3. Connecticut Innovations, Inc.; and

4. Connecticut Resources Recovery Authority.

Table 1: Quasi-Public Agency Bonuses Paid Since

February 17, 2005

(5) What are the criteria the agency uses for awarding bonuses? Are bonuses linked to the individual's performance, the quasi-public agency's performance, or to the growth of its assets?

(6) What is the agency head's current salary?

The following list shows the current or latest salary (not including any bonus payments) for each quasi-public agency's head:

* The total amount of a personal services agreement with the Connecticut Conference of Independent Colleges, including the services of its vice president who acts as CHESLA's executive director and is paid by the CCIC.

(7) Does the agency provide agency-owned or -leased motor vehicles or other benefits to directors or employees? If so, please provide specifics.

(8) Has the agency included as part of a severance package for a former director or employee a requirement that precludes the person from publicly criticizing or speaking against the agency? If so, please identify the former director or employee and describe details of the arrangement.

(9) Describe the severance agreement for any former director or employee that provides benefits beyond those negotiated in that person's employment contract or included in the agency's personnel policy.

CAPITAL CITY ECONOMIC DEVELOPMENT AUTHORITY

Policy Change

As a result of the governor's mandate, the authority reviewed its compensation policies. It stopped awarding bonuses independent of, and prior to, the governor's directive. It made no other major changes.

Bonuses

The authority has not given a bonus to a director or employee since February 17, 2005.

Salary

Effective January 1, 2006, the executive director's salary increased 3% from $139,900 to $144,097.

Benefits

The authority does not provide agency-owned or -leased motor vehicles or other benefits to directors or employees.

Severance Agreement

The authority has no severance agreements in effect with former directors or employees.

CONNECTICUT DEVELOPMENT AUTHORITY

Policy Change

The Human Resources Committee and the Board of Directors amended the Compensation and Benefits section of CDA's operating procedures to adopt as guiding principles the recommended policies and minimum procedures set forth in the Report and Mandatory Minimum Procedures for Compensation and Benefit Management at Connecticut's Quasi-Public Agencies. Going forward, the board's Human Resources Committee will recommend, and the board will establish, compensation plans and employee benefit programs and policies in accordance with the report.

Bonuses

The authority has not given a bonus to a director or employee since February 17, 2005. But if it did award bonuses, it would link them to both individual and agency performance, following the recommendations in the panel's report.

Salary

The executive director's salary is $155,641 and the president's salary is $130,000.

Benefits

The authority does not provide agency-owned or -leased motor vehicles or other benefits to directors or employees.

Severance Agreement

The authority has no severance agreements in effect with former directors or employees.

CONNECTICUT HEALTH AND EDUCATIONAL FACILITIES AUTHORITY

Policy Change

Beginning with the 2006 performance reviews, the Human Resources Committee will review the executive director's findings as to the performance and compensation of the managing directors and recommend to the board of directors whether to approve any increase in compensation for them. The board's approval will be based on its review of the committee's findings and recommendations. (The board commissioned Owen-Pottier Human Resource Consultants to conduct an independent study and provide input into whether it should alter its compensation policies.)

CHEFA also eliminated agency-owned credit cards, with the exception of two that it uses for central purchasing of supplies and computers.

Bonuses

The CHEFA Employee Incentive Plan awards bonuses based on (1) individual performance that is above standard as measured against personal goals established at the beginning of each fiscal year and (2) agency performance as measured by the authority's strategic business plan. Table 2 shows the bonuses CHEFA paid in FYs 2005 and 2006.

Table 2: CHEFA Bonus Recipients and Amounts

Salary

The executive director's annual salary is $185,839.76 with an opportunity for a bonus.

Benefits

The authority provides the executive director with a cell phone and a laptop computer. It also retains two agency-owned credit cards for central purchasing of supplies and computers.

Severance Agreement

The authority has no severance agreements in effect and does not utilize employment contracts.

CONNECTICUT HIGHER EDUCATION SUPPLEMENTAL LOAN AUTHORITY

Policy Change

Bonuses

Table 3: CHESLA Bonus Recipients and Amounts

Salary

CHESLA has a $102,000 personal services agreement with the Connecticut Conference of Independent Colleges (CCIC). As part of that agreement, the CCIC's vice president serves as CHESLA's executive director. CCIC pays her salary.

Benefits

The executive director and deputy director both have an authority-owned credit card to use for business-related travel expenses.

Severance Agreement

The authority has no severance agreements in effect with former directors or employees.

CONNECTICUT HOUSING FINANCE AUTHORITY

Policy Change

Bonuses

Since 1997, the authority's board of directors has awarded Success Sharing Program payments to employees based on the agency's performance. Regular employees, other than the president-executive director and the vice president, are eligible to receive between $250 and $1,000 in a lump sum. A “regular employee” is one who is not temporary, works more than 20 hours a week between January 1 and October 1, and is still employed as of December 31. The award depends on whether the agency's net operating revenue or total net revenues exceeds the year's budget projections by more than 5% or 10%. Award amounts and criteria appear below.

CHFA employees also may receive a payment when the authority's bond rating is increased and the president-executive director has the authority to grant non-budgeted, one-time salary payments of up to $5,000 to individuals for extraordinary performance. Table 4 shows bonuses employees received in 2006 for FY 2005.

Table 4: CHFA Bonus Recipients and Amounts

Salary

The president-executive director's annual salary is $243,540.

Benefits

CHFA provides the president-executive director with an agency-leased motor vehicle for business-related travel. He is prohibited from using it for personal use, except for commuting roundtrip to work and some travel to lunch. To calculate the taxable fringe benefit on the vehicle usage, the authority uses a prorated annual lease value method and adds a fuel cost rate of 5.5 cents per mile. It adds these amounts to the president-executive director's W-2 tax form so that he pays federal and sate taxes on the total amount. The vehicle is a 2005 Buick LeSabre.

Severance Agreement

It is standard CHFA personnel policy to include the following language in any separation agreement and general release:

“The employee agrees not to communicate or disseminate in any form or manner any adverse, false, negative, or derogatory information about the company, and/or its predecessors, successors, assigns and/or each of its present and former agents, officers, employees, directors, representatives and attorneys. Employee agrees not to disclose to anyone any information with regard to the company's business matters or any private or confidential information concerning the company unless compelled to do so under subpoena, judicial process, or otherwise by law.”

There have been no severance agreements that provided benefits beyond those included in the agency's personnel policy. CHFA does not use employment contracts.

CONNECTICUT INNOVATIONS, INC.

Policy Change

Bonuses

Salary

The president and executive director's annual salary is $197,000.

Benefits

Severance Agreement

CI has no severance agreements in effect with former directors or employees.

CONNECTICUT LOTTERY CORPORATION

Policy Change

Bonuses

The corporation has two incentive compensation plans: one for management and one for its sales employees. The Management Incentive Compensation Plan is comprised of three weighted performance measures; 60% of the incentive compensation is based on the corporation's transfers to Connecticut's General Fund in relation to budget projections, 30% is linked to the corporation's per capita sales increase over the prior year, and 10% is based on individual performance in relation to approved performance objectives. Management bonuses are paid in lump sums not later than 90 days after the end of the fiscal year.

The Sales Incentive Compensation Plan provides employees with an incentive compensation opportunity based on the achievement of sales goals within their assigned territory or on a statewide basis, depending on the position. To be eligible to participate, employees must have attained a certain sales classification. Participants are eligible for a lump sum incentive payment at the end of each quarter and a “fifth payment” at the end of the fiscal year. They may also be eligible for additional opportunities during the year for specific promotions (e.g., Power Play promotion).

Table 5 shows the management incentive bonuses payments for fiscal years 2005 and 2006. Table 6 shows the sales incentive bonus payments for fiscal year 2005 beginning February 17 of that year. Table 7 shows the sales incentive bonus payments for fiscal year 2006.

Table 5: Connecticut Lottery Corporation

FY 2005 and FY 2006 Management Incentive Bonuses

Table 6: Connecticut Lottery Corporation

FY 2005 Sales Incentive Bonuses

(Beginning February 17, 2005*)

* Data includes bonus payments made on or after the governor's February 17, 2005 directive only.

Table 7: Connecticut Lottery Corporation

FY 2006 Sales Incentive Bonuses

Salary

The president receives an annual salary of $147,423 and has an opportunity for a bonus.

Benefits

Severance Agreement

The corporation has no severance agreements in effect with former directors or employees.

CONNECTICUT RESOURCES RECOVERY AUTHORITY

Policy Change

Bonuses

Salary

Benefits

Severance Agreement

While no directors, officers, or senior managers have been terminated since February 17, 2005, CRRA includes the following non-disparagement provision in its employee termination arrangements:

“The Employee will not, either verbally or in writing, make any adverse, negative, derogatory or disparaging remarks or statements about any of the CRRA Released Parties to anyone. However, this paragraph shall not prohibit Employee from giving truthful testimony pursuant to a lawful subpoena.”

CRRA has had no severance agreement with a former director or employee that provides benefits beyond those negotiated in the employment contract or included in the authority's personnel policy.

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