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ACA approves Watson contract with less pay than predecessor

Arizona Commerce Authority names Sandra Watson as new CEO

Sandra Watson (Photo from Arizona Commerce Authority website)

The Arizona Commerce Authority’s salary and benefits for its new CEO pared down some of the more contentious parts of her predecessor’s contract.

Sandra Watson, whom the ACA named as its new CEO earlier in the month, will receive a two-year, $250,000 a year contract. The authority’s executive committee unanimously approved the terms of the new contract Tuesday, though the final contract has yet to be set. Watson recused herself from the vote.

Former CEO Don Cardon, who stepped down in June, had a $300,000 salary, which raised the ire of lawmakers on both sides of the aisle. Mary Peters, chair of the ACA’s compensation committee, said Watson’s lower base salary wasn’t meant to avoid a repeat of last year’s criticism.

Peters said the authority was trying to be conservative while giving Watson a fair salary that was commensurate with other CEOs at similar organizations across the country. She also noted that different people set the terms of the two contracts.

“We think it’s a good agreement that reflects consensus with what other organizations are paying, fairly compensates her and make sure that we’re conservative when we’re using an expenditure of public funds,” Peters said. “It certainly is based on different people, different sets of eyes looking at the compensation package and doing what we thought was very fair to get the kind of leader we wanted that we wanted to lead the Arizona Commerce Authority.”

While Peters said the lower salary wasn’t meant to alleviate criticism of the ACA, other aspects of Watson’s contract were. Unlike Cardon, Watson will not receive a $50,000 signing bonus. The bonus, much of which Cardon returned after resigning one year into a three-year contract, was one of the most contentious parts of his contract.

“Again, we wanted to be conservative with public funds,” Peters said. “I would also say, though, that there was a great deal of controversy associated with that, and looking conservatively about how we put this CEO compensation package together, we nor Sandra felt like that was necessary.”

In another change that could blunt some of the concerns of the authority’s critics, none of Watson’s salary or benefits will be paid for by Team ACA, a nonprofit corporation created to assist the Commerce Authority with the use of private funds. Team ACA paid for half of Cardon’s contract, which some questioned because the group does not disclose most of its private-sector contributors.

Peters said Team ACA will still pay for client entertainment and other expenses that may not be appropriate uses of taxpayer dollars by the authority. But Watson’s contract will be covered solely by public funds.

“We felt that this should be paid for with public funds. So the contract compensation terms will be paid with public funds,” she said.

In addition, Watson will not receive the $30,000 annual health and wellness allowance that was part of Cardon’s contract. Instead, she will receive the same health benefits as other ACA employees.

Many aspects of Cardon’s contract won’t change under the new CEO. Watson will be eligible for an annual performance bonus of up to 25 percent of her contract, along with an additional 5 percent bonus for “extraordinary” results. The compensation committee will determine the benchmarks for the performance bonuses.

Watson will also receive the same $12,000 vehicle allowance per year that Cardon received. Her contract also includes up to $10,000 for “professional development.”

Lobbyist Tim Lawless, the president of the Arizona chapter of the National Association of Industrial and Office Properties, said the new contract shows that the ACA is being receptive to some of the criticism it received over Cardon’s contract and Team ACA’s involvement. Not renewing Team ACA’s involvement with the CEO contract will also help alleviate criticism of that group, he said.

“That’s a positive development,” said Lawless, who worked for the old Arizona Department of Commerce, which the public-private ACA replaced last year. “The fact that there’s no signing bonus, the fact that it’s less money and that fact that it’s all within the ACA, rather than Team ACA, are three positive signals that get Sandra off on the right foot.”

Others were still upset by the contract. House Minority Leader Chad Campbell, a frequent critic of the ACA, said the lower salary, lack of a signing bonus and separation with Team ACA were all steps in the right direction. But he was unhappy about the vehicle allowance and performance bonus.

“There’s no way we can justify that contract. The 250 was pushing it. It was better. Like I said, a step in the right direction. But there’s no way you can justify this,” said Campbell, D-Phoenix. “This is almost as bad as the Cardon contract.”

Watson is a 16-year veteran of the old Arizona Department of Commerce and the ACA. She served as the authority’s second-in-command until taking over for Cardon as interim CEO in July. Her current salary is about $218,000.

Watson thanked Gov. Jan Brewer, ACA Co-chair Jerry Colangelo and other members of the executive committee for giving her the opportunity to head up the authority.

“It truly is my privilege to serve you governor, our board, the Arizona lawmakers and the entire state as the next president and CEO of the Arizona Commerce Authority. Our focus on producing positive results will continue and I look forward to further success in the months and years ahead,” she said after the committee approved her contract in a teleconference meeting.

Brewer, who co-chairs the ACA board of directors, said she was thrilled to have Watson on board as the new CEO.

“We thank you for your willingness to lend your talents to the ACA,” Brewer said.

Speaking to reporters after the meeting, Peters praised the job Watson did as interim director.

“She’s worked with more than 21 clients, more than 4,000 jobs have been created, capital investment of almost $500 million. She’s doing a good job,” Peters said.

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