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Panel faults perks set by big agencies

Bonuses, guaranteed raises are deemed inappropriate

By Andrea Estes
Globe Staff / September 19, 2009

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A panel created by Governor Deval Patrick to review the pay of heads of the state’s quasi-public agencies has concluded that their compensation is reasonable, but that perks such as severance pay, guaranteed raises, and bonuses are out of place in the public sector, according to a report issued yesterday.

“The process of setting senior executives’ compensation at quasis is a very flawed process, with some resulting features which are completely inappropriate,’’ said Stephen Crosby, dean of the McCormack Graduate School of Policy Studies at the University of Massachusetts at Boston and chairman of the special panel.

The governor created the commission in March as he tried to quell the furor that erupted after he attempted to give state Senator Marian Walsh a $175,000-a-year agency job. Walsh ultimately withdrew her name from consideration.

Of the 10 highest-paid officials, all received tens of thousands of dollars in extra pay.

For example, Michael Travaglini, executive director of the state’s Pension Reserves Investment Management Board, earned a $45,000 bonus, boosting his pay to $367,000. James Rooney, executive director of the Massachusetts Convention Center Authority, received a $57,000 bonus and a car allowance, bringing his total pay to $350,000. Benson Caswell, executive director of the Massachusetts Health and Educational Facilities Authority, collected $67,500 in deferred compensation and a $15,000 bonus, bringing his total pay to $335,000. Salaries are based on the current year’s pay, with bonuses averaged over the past three years.

Travaglini said his agency pays bonuses only when the state pension fund surpasses its performance goals.

“Our bonus plan does not provide automatic bonuses on an annual basis,’’ Travaglini said. “Only when the fund exceeds its investment objectives do we even talk about bonuses. If the commission were assembling information this fiscal year, there would be no bonus information for Michael Travaglini.’’

A consultant to the PRIM board, he said, has found that the agency’s total compensation is not overly generous compared to other public plans.

Rooney could not be reached for comment. Caswell said he had not yet read the commission’s report. “I really have nothing that I can say at this time,’’ he said.

Of the 42 agency chiefs, the Berkshire Regional Transit Authority administrator was paid the least, with base pay of $72,100. At $322,000,Travaglini’s salary was the highest.

“There is just no standardization in compensation features,’’ Crosby said. “Some people have bonuses. Some have deferred compensation. Some don’t have either. There are differences even within the same industries. The results cry out for some kind of standardization and oversight.’’

The least defensible benefits, Crosby said, were sick pay buyouts. For example, when Thomas Kinton leaves his job as executive director of the Massachusetts Port Authority, he will be eligible to receive cash for 478 accumulated sick days, the report says.

“The concept of paying people [for unused sick days] makes no sense,’’ said Crosby. “It’s just not a reasonable use of public money and not what sick pay is all about.’’

The commission also concluded that the agencies should be able to terminate executives without having to make huge severance payments, as in the case of former MBTA general manager Daniel A. Grabauskas. The MBTA board, which pressured Grabauskas to resign in early August, paid him more than $300,000 to buy out the remainder of his employment contract.

“It’s important that people can be terminated without cause if the board wants to go in a different direction,’’ Crosby said. “They should be able to do that without paying years and years of severance. We think that’s way out of line.’’

The panel recommended that each agency’s board set up an independent compensation committee that conducts formal pay reviews. Each board should also adopt a code of ethics and a written compensation policy. The work of the committee should be made public, the panel said.

A spokesman for Patrick did not return calls seeking comment. But in a Sept. 18 letter, Administration and Finance Secretary Leslie Kirwan and Inspector General Gregory Sullivan urged the agencies to promptly implement the panel’s important recommendations.

“While legitimate reasons may exist for higher compensation to be paid to specialized employees of quasi-public entities with unique job responsibilities,’’ they wrote, “this should be the exception and not the rule.’’