The Pulse

Ex-head of NC’s public-private economic development group got $30K bonus to stay, left three months later

By: - July 30, 2015 1:03 pm

This post has been updated with reaction from SEANC, the State Employees Association of North Carolina.

The former head of North Carolina’s public-private economic development group received a $30,000 “stay” bonus in January, an enticement that only kept him at the new endeavor for three months.

Richard Lindenmuth
Richard Lindenmuth

Richard Lindenmuth, a Raleigh business executive, was selected in January 2014 to get the largely publicly-funded Economic Development Partnership of North Carolina off the ground. He had specialized in helping troubled companies but had no prior economic development experience.

The public-private partnership, which received $17.5 million in state funding last year, has been a central piece of Gov. Pat McCrory’s economic development strategy, after state lawmakers granted the McCrory administration’s request to move Commerce’s job recruitment, tourism and marketing arms out of state government. The privatization of the state’s job recruitment strategies, which proponents say allow for more aggressive and effective job recruitment, has encountered accountability issues in some states that have taken similar approaches.

Here in North Carolina, Lindenmuth was in the interim chief executive officer role for the partnership until December 2014, when McCrory administration officials announced that an experienced economic developer from Missouri, Christopher Chung, would take over the organization.

Lindenmuth would be staying on a consultant, McCrory administration officials said at the time.

Records (scroll down to view) recently obtained by N.C. Policy Watch through a public records request show that the public-private partnership also opted to pay Lindenmuth a $30,000 “stay” bonus to continue as a contractor while also receiving the same pay he got as an interim director – $10,000 a month, or $120,000 a year.

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The stay bonus didn’t manage to keep Lindenmuth at the organization for very long.

He submitted a resignation that was effective as of March 31, less than three months after he received the $30,000 stay bonus, according to Mary Wilson, a spokeswoman for the agency.

When asked for the date when Lindenmuth submitted his resignation for the contract position, Wilson responded on Thursday that the public-private partnership had no comment.

N.C. Policy Watch requested a copy of his resignation letter, which was not immediately released.

In all, Lindenmuth received $71,770 for his three months of consulting work in 2015 – the $30,000 stay bonus, $35,538 in regular pay and $6,231 for accrued time off.

Lindenmuth declined to comment for this article, and hung up on an N.C. Policy Watch reporter who reached him by telephone this week.

State employers are not generally entitled to bonuses, but the public-private partnership can pay employees outside the standard wages that were allowed when the economic development functions were housed in the N.C. Department of Commerce.

Flexibility in pay was one of several reasons the McCrory administration pushed to move the economic development functions outside of state government.

For example, Chung, the new head of the partnership, is entitled to a performance bonus of up to 25 percent of his $225,000 annual salary, according to the terms of his contract.

Ardis Watkins, the government relations director for the State Employees Association of North Carolina (SEANC), said a $30,000 stay bonus for performing a public duty is a classic case of what can go wrong when government privatizes its functions and oversight lessens.

“A $30,000 bonus for a person that is working for the public, no matter how you couch the terms of the employment, is offensive to a [state-employed] housekeeper or correctional officer,” Watkins said. “A bonus that is more than they make in a year is offensive.”

John Lassiter, a Charlotte attorney who serves as the chair of the public-private partnership, said the $30,000 stay bonus paid to Lindenmuth came out of privately-raised funds. He added that he was sorry to see Lindenmuth move on from the organization.

“We were pleased” with his performance, Lassiter said, adding that Lindenmuth left when offered a job elsewhere.

During the three-month contract period with EDPNC, Lindenmuth worked on projects related to extending fast Internet service to rural areas, re-employing military veterans and looking at how data analysis could aid economic development opportunities, Lassiter said.

“We didn’t need him [Lindenmuth] to focus on management of the organization and we wanted him to continue work on those projects,” Lassiter said.

The state legislature has not finalized its budget for the current fiscal year, though both House and Senate versions included funding for the partnership in versions of their budget.

More of an uncertainty is the future of financial incentives in the state, a need that Chung highlighted he comments he recently made to the Charlotte Business Journal.

“If we want to unilaterally disarm while the rest of our competitors continue to offer these tools, I really worry about our risk that we fall behind,” Chung said, according to the CBJ article.

View a copy of the EDPNC contract with Lindenmuth:
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Sarah Ovaska-Few

Sarah Ovaska-Few, former Investigative Reporter for N.C. Policy Watch for five years, conducted investigations and watchdog reports into issues of statewide importance. Ovaska-Few was also staff writer and reporter for six years with the News & Observer in Raleigh, where she reported on governmental, legal, political and criminal justice issues.