Following a Freedom of Information request filed by the Herald-Banner, the Attorney General of the State of Texas ordered that the settlement agreement between the City of Royse City and former City Manager Karen Philippi be released to the local news media.
The Herald-Banner also obtained a copy of the original employment contract as well as the salary information of the former city manager, both of which are public information.
Under the terms of Philippi's employment contract which was negotiated prior to her being hired, the former city manager was entitled to six month's worth of her annual salary and benefits in the event that she was terminated by the city. She was also entitled to six month's value of her car allowance.
At the time of her termination, which was noted as Aug. 12 in the settlement agreement, Philippi was receiving an annual salary of $96,304.90.
The total face value of her benefits package was not fully calculated as of press time. Philippi also received an additional $4,800 annually as a car allowance, which was paid in monthly installments.
The total monetary amount paid to Philippi equalled $101,104.90, not including the value of the city manager's benefits package.
Under the contract in which Philippi was hired, she would have been entitled to $50,552.45 plus half the dollar value of her benefits package in the event that she was terminated from her position. An estimation of the total value of such a settlement would have ranged from $60,000 to $70,000 based on average benefits costs and contributions to the Texas Municipal Retirement System.
There was a termination “with cause” clause in the contract that would have absolved the city’s obligation to pay a settlement at all, but the attached terms of that clause defined “cause” as various acts of fraud, legal and moral violations or insubordination, for which Philippi was never accused.
The reason for the shortfall has been defined as “error;” which though potentially devastating, is not defined as “cause” under the terms of the contract.
Philippi settled with the city on Feb. 17 for a lump sum payment of $41,500. In addition to the lump sum severance payment, Philippi was also paid a $1,500 retainer for which she agreed that she would make herself available to the city to provide background information in any matters that involved her tenure with the city or to cooperate with the city in any legal proceedings that might arise out of actions taken by the city or its employees during the time in which she served as city manager.
That makes the total amount of compensation to Philippi an even $43,000.
For that sum, the former city manager agreed to waive any rights to any claim based on employment, any right to file legal action against the city and any additional claim for legal fees.
Philippi also agreed to a non-disclosure agreement pertaining to any confidential information regarding city business. The city likewise agreed not to make any remarks regarding Philippi's termination “except as required by law.”
The document was signed by both Philippi and city attorney Jason Day. Day has stated that he cannot comment on the matter to explain the reasoning why the former city manager accepted only 61 to 70 percent of her contract’s severance value.
Local News
AG orders release of former city manager’s settlement with Royse City
Philippi accepts less than amount stipulated in employment contract
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