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6 3 13 Transcript

6 3 13 Transcript

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Published by Rob Port
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Published by: Rob Port on Aug 13, 2013
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 North Dakota Board of Higher Education
June 3, 2013 Executive Session TranscriptShaft: So, as President Espegard indicated, we have all of the Board members present. In goinginto executive session, we indicated that the president of the Board has received,essentially, two proposals. One is a proposal to enter into an employment agreement withChancellor Shirvani that would essentially continue his current contract for the remainingtwo-year period, subject to more formalizing language that isn’t contained in the currentcontract, especially concerning terms of departure that became necessary. The second is aseparation agreement option that was presented by Dr. Shirvani. As I understand, withinthat option, there are terms of buyout, along with some additional payments. Iunderstand, per my direction, that you have been in contact with Dr. Shirvani's counsel atDorsey Whitney, and through that process, you have entered into negotiations that will present options for this Board concerning the separation agreement that we can consider.Is that your understanding?- - - (attorney consultation with Sara McGrane) - - -Espegard: Grant, would you go over the four options, then? You can start with number one,which seems terribly unfair.Shaft: So I’ll start out with—first, is everybody clear with the employment agreement option?Okay, then we can set that aside for now. With regard to the buyout options, the broadestoption was: he gets paid out under his contract, but he would, right now, if he gets a new job, he gets paid no matter what, whether he’s employed or not. Then he had someadditional options which included moving expenses, some damages for reputation, and a provision that provided for a tenured position at UND and NDSU. That was the broadest.As Sara indicated, that really wasn’t acceptable. What it boils down to is one acceptableoption to them and one unacceptable option for them. The acceptable option was,essentially, he gets paid under his contract, and he gets paid no matter what. Period.Everybody fully releases each other; he doesn’t get any a la carte. The other option is justthe difference that he doesn’t get paid no matter what; he gets paid only until he gets a job, and then the only payments we would owe him is if his new salary is less than whatit is currently, so if it is a hundred grand less, he gets a hundred grand. And that’s thedifference. They’ve indicated it is not acceptable, and what we don’t know is if that is posturing or not. I will tell you that they capitulated quickly on most of the other items, but they did draw the line in the sand on this item, and they have drawn the line in thesand on this item for a while, now. Our attorney’s recommendation is option two, and that just says we pay him, good luck; if you get a job, good for you, it was a good day atthe office; if you don’t, you’re covered because we’re paying out your contract.Espegard: It does include salary increases.Shaft: It’s the same payment that you would get if he was continually with us.Espegard: At maximum, four and three.
Shaft: The same as what the legislature gave him, the retirement contributions—no different.Espegard: And that’s in all options.Shaft: All options. As I understand it from Sara, that is not an uncommon thing, as far as whathe’d be paid. The question is, does he keep being paid no matter what? That’s thedifference.Espegard: That’s the only difference now on these last two.Diederich: Which one had the clause where he became a consultant? That stayed in there?Shaft: They all have that, but, just so you know, that’s just a way to clear him over 2013 for tax.Diederich: Other question I had—if Duaine and I are negotiating this, it’s not negotiating tochange; what we adopt, it’s going to be…Shaft: Right. So, without coming to a conclusion here, we cannot do that. We need to at leastdiscuss a framework of which the president and vice-president could negotiate with Ham.So what we don’t want to do—I shouldn’t say we don’t want to, but what we shouldn’tdo—is go out in the general and start talking five percent, three percent, these types of things, unless the Board wants to get into that, and we can. But more typically, you would see is you have a framework that comes out of here from a negotiating standpoint inconsultation with our attorney. There is a motion that says that we would accept therecommendation of our attorney with regarding continuation or separation or both, and we direct our president and vice-president to negotiate that within the confines of whatwas recommended by our attorney and accepted, or recommended by our attorney.Espegard: If we got into trouble, and he says no, we stop, right?Shaft: Right. We don’t come back into executive, no.Reichert: You will give him two options?Espegard: No, we give him one option.Shaft: No; what you have to consider, you have to consider three scenarios. One scenario is theynegotiate a continuation agreement and they negotiate a separation, and they basically lay before Ham and say we’ll go either way; that’s one. The other is, you just give him acontinuation; we’ve decided we don’t want to accept the separation, we want to continue,so they negotiate that and lay it before him. And the third is, we don’t want to continue,we just want a separation, so we just lay that before him. So those are the three options.So, what the Board—and we can’t come to a decision right now—those three options wehave to view. Do we want to give him the chance of both? And I think we know theconfines where we’re at, from the attorney’s recommendation. The only issue we would have that I see in all of this is that we may want to have a discussion as to, do we just payhim no matter what, or does it get reduced if he gets a new job? And that would be up toa Board member to bring that up. If somebody wants to bring that up, we can. Otherwise,the acceptance of the option from the attorney is to pay him no matter what. And thatwould, in essence, mean that the first isn’t something we’ll consider. So coming out oexecutive session, what the best way to do it mechanically is to have somebody move thatwe forward both, okay? Now, if somebody disagrees with that, then the discussion would  be to remove one of the options. If you wanted to just give him the separation, the
discussion would be let’s remove the continuation; or let’s remove the separation; or let’sgo with both.Reichert: We discuss that here between us, that’s an issue of risk.Shaft: And I, that’s why I would want to be careful about that.Franzen: Fundamentally, here’s the issue; if you’re talking about whether it’s a continuation or a buyout, you’re fundamentally going to have questions with regard to performance, and that’s what we can’t do here.Reichert: I’m just saying this option leads to the most amount of uncertainty. So, if we’re goingto give options, we just open the doors with what’s going to happen versus, if you do asix-month thing, again, it’s just a lot of uncertainty there, versus this option, I mean,there’s no risk, you know what’s going to happen.Diederich: And with the continuation, that’s where I want it somehow defined that in our negotiation, we could not completely change what we’ve decided and what we’ve heard from…Shaft: The difficulty with continuation agreement is this, and this is the difficulty that I see, isthat one, Ham has indicated that he does want extension, because that will be more of astamp of approval of the direction, and such things. And I think that’s going to be hard for this Board to agree to go beyond his initial term. But the second thing is he’s going torequire, he’s going to want some fairly strong language solidifying his position, and we’re going to want some very strong language as to how this eval process goes, and Ireally think it’s going to be hard to come to a meeting of the minds. I really do. With him.With him.Diederich: Do we have our lawyers assisting us in that?Shaft: Oh yeah. Most of this happens with the two of them; you’re not talking to Ham ever.Hull: Are we allowed to talk about whether or not we think… All I want to point out is thatGrant said that the language for the continuation is very strong, and I agree. I thought thatthat would be hard to meet in the middle ground on that one… that is really stronglanguage.Reichert: It’s still the term that’s so… the continuation language is… I think that there is cause,and we’re still open in the universe about what that means.Shaft: And you’re right. And, to be clear, so we don’t get confused, if we did nothing, he’s stillour chancellor right now under his existing contract. What the first option essentiallydoes is keep him under the existing term, but gives us a better contract from both sides.We get that stuff we wish we would have had in, and he gets to add stuff that he wants in.But I’m saying getting to that is a difficult prospect, okay? And you already know theconfines of that. The issue is that the mechanics of how we want these two to be able tonegotiate it. Otherwise, it’s no, and we’re hauled back in. So at least it’s nice to getnarrowed in, not so you’re comfortable that they’ll do that, and I’m not saying you haveto, but…Reichert: Yeah, I guess, basically, this continuation of employment option is basically anaffirmation of the existing contract with a little, I mean, you know, because right now,

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