VideoWhite, who managed the PeopleSoft consulting practice at Idea Integration, says the payout of his bonus plan — approved by Idea executives and similar to his staff's plans — depended solely on meeting personal performance goals. Those goals included revenue targets and business development, but not Idea's profitability. Larry Reissman of Hay Group, a Boston-based compensation consulting firm, says it's common for companies to focus on revenues when designing incentive plans during a start-up phase.
But as the business grows, Reissman adds, companies need to change their plans to emphasize profitability rather than growth. "Where companies get in trouble is if they don't manage the compensation system," he says. Idea, at one point intended to be spun off via an initial public offering, was already in trouble when White began pressing his case, and it showed in a constant reshuffling of management throughout 2001. Indeed, James Albert, the senior vice president who tried to resolve White's case in 2002, admits to White in one of his recordings that "with the changes in management...it does look like at least for some period of time, the ball got dropped...."
White, however, sees more of a pattern. He and five other former employees who claim they are owed bonus money worked under Patrick J. McCall, and several insist McCall was the executive who ultimately blocked their payments. McCall was managing director of Idea's Atlanta office during the second quarter of 2001, when Idea as a whole recorded a $7.1 million loss under income from operations. (Other E-business consultancies were swooning at the time, thanks to the deflation of the Internet bubble.) That was the primary cause of an overall year-over-year decline in second-quarter income from operations at MPS Group of 64.6 percent, which, say ex-employees, put McCall's unit under tremendous pressure. A large number of consultants were laid off that quarter, and the following quarter Idea lost $7.5 million. Under those circumstances, it's easy to see why management expected White to share the hit.
McCall referred all questions to MPS Group's Tutor. But when asked in his deposition why White had not been paid, he replied, "You know, in every comp plan, there's their interpretation and there's their manager's interpretation. And I think it says in there that, you know, it's not absolute." In his deposition, McCall questioned White's performance as well as his claims.
McCall's boss, Ray Smith, who initially denied payouts to White's staff, claimed in the same September E-mail that White's bonus plan wasn't "management approved," even though White had received partial payment under the plan the first quarter. However, White's immediate boss, Scott Salter, suggested in a conversation secretly taped by White in November that management was horrified by the cost of White's accumulated bonuses as business dropped off, and balked at paying his bonus because the former Big Five consultant was "the highest-paid practice leader in the company in terms of base pay" and was already owed more than $100,000 in bonuses.
"No one wants to get near these plans," Salter told White. "I think they just want them to go away, and they want next year to come so we can create a new plan." (Salter has since left the company.)
"I Didn't Write the Plan"
White maintains that Idea's overall performance was irrelevant to his bonus. Not only did he meet his plan's performance metrics, he states, but revenue for his PeopleSoft practice grew 22 percent and profitability increased 211 percent in the second quarter of 2001. Therefore, he argues, there was no reason to deny him his incentive pay.
In January 2002, Albert was brought in by Salter to adjudicate White's claims, now for all four quarters of 2001. On January 18, a meeting was held in Salter's office with White. Albert attended it via speakerphone. Once again, White wore a sweater and, underneath, his concealed recorder.
Albert asserted that White's plan had been changed in the second quarter of 2001. In a heated exchange recorded by White, Albert said: "I'm just staggered that you would think in an office that lost $2.5 million that you...would be independent of that.... Your expectation is that independent of office profitability and company profitability, you think you should make all this money."
"I didn't write the plan, Jim," responded White, noting that profitability was not one of his plan's metrics.
"But the plan also says the plan can be changed at management discretion," countered Albert.
"But it never was," said White, who steadfastly denies ever receiving a new plan or any notice that his existing one had changed.
White's plan did include one sentence that noted, "if business conditions warrant, this plan is subject to change at management discretion." But that clause, by itself, is ambiguous, contends attorney James Eccleston of Chicago-based Shaheen, Novoselsky, Staat & Filipowski PC. Eccleston says such ambiguities are typically interpreted against the drafter of the contract.
Attorney Spaulding, by contrast, argues that "if the employer reserves the right to amend the plan any time prior to the bonus being vested or earned, then the employer has that right." However, he adds, "when the employee has a vested right in the bonus, at that point the employer may not change the amount or the criteria upon which the amount was calculated." White claims he had met all of his performance targets for the third quarter by September 20 — the first time management claimed his plan did not exist, he says.
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