The Virginia legislature's audit commission has found that a six-figure severance bonus given to the former head of the state's public pension system was granted without the proper permission of the governing board.
In a special report released Monday, the Joint Legislative Audit and Review Commission called the $263,000 exit package for W. Forrest Matthews Jr. -- chief of the Virginia Retirement System for three years -- "excessive." The review found that the payment, equal to two years' pay for Matthews, was part of an undisclosed contract signed in December between Matthews and former board chairman Alfonso I. Samper.
The contract was not addressed during a public meeting, which violates the agency's own regulations, the 21-page report says. In addition, it said, the negotiations were conducted in a way "to prevent disclosure" as required by law.
"The severance provided to the former director was not authorized by the board," said Trish Bishop, an analyst for the commission. "While the board may delegate authority to the chairman, it must do so by resolution in an open meeting. In this case, the board did not consider or adopt a resolution directing the chairman to execute a severance agreement. And never approved a final severance package in an open session."
Matthews left his position in April, months after it became clear that the board was looking for different leadership and he was considering retirement. But under state law, employees who leave as Matthews did are not eligible for severance packages. Severance payments, when they are made under the state's Workforce Transition Act, typically are limited to the equivalent of 36 weeks' pay.
The Virginia Retirement System Board is to meet Tuesday in part to consider the payment for the first time. Board Chairman Paul W. Timmreck, who began his tenure in May, told lawmakers Monday that he planned to vote against the package. Two other board members also said they would seek to void the payment.
Samper, now vice chairman of the retirement board, said he believed he was working under the auspices of the board's authority.
"Every step of the way, I acted on the direction of the board," he said in an interview. "I did what I believed the board wanted me to do, and what was done was with the guidance . . . of the staff and the office of the attorney general."
Matthews has said that he accepted the severance offer he was given and that he acted properly.
Two board members said they had given Samper the authority to begin negotiations with Matthews to end his tenure as director, not to offer him a bonus package. One of the members, J. Douglas Conway, said he did not "know about the severance package until last week."
He added: "What I thought we discussed with [Samper] was . . . to come back to the board for final approval of the severance package. That did not happen."
The Virginia Retirement System, which oversees benefits for the state's teachers, state troopers and other employees, has more than 540,000 retired and employed members. It is currently valued at $43.9 billion.
Several legislators said that in light of the report, Samper should consider resigning.
"It may have been well-meaning negligence," said House Majority Leader H. Morgan Griffith (R-Salem). But he added that a severance package worth two years' salary "is so excessive it shocks the conscience."
A spokesman for Gov. Mark R. Warner (D), who elevated Samper to board chairman, would not comment on whether the governor would ask Samper to step down from his current position on the board of directors.
"I think it's now clear that this was inappropriate, improper, and I think it's important that the board have the opportunity to correct this, and that will happen" Tuesday, said Kevin Hall, adding that the governor was angry about the situation.
The report by the legislative audit commission does not let board members off the hook, however. It says that "the Board did not properly monitor the process under which the former director terminated his service."
Two board members and lawmakers agreed. "I'll take responsibility as a board member for not following up on it myself," Conway said.