The former CEO of Goodwill Omaha, ousted last year amid a scandal involving excessive pay, says he’s owed another $550,000 by the charity.
Frank McGree filed suit in federal court Monday, saying the charity’s board has refused to make good on a severance payment he is due.
The suit says McGree had a signed agreement with the charity’s board entitling him to receive two years of base pay upon leaving the charity, even if the departure was an “involuntary separation.”
The chairman of the charity’s board declined to discuss whether the charity had a separation agreement with McGree or to detail why it denied his claim for payment. But Mark Stokes said he thinks the charity has fulfilled all its financial obligations to McGree.
“It’s disappointing to see Mr. McGree do this,” Stokes said. “It’s not going to distract us from ... moving forward and working to rebuild the public trust.”
McGree was fired by Goodwill’s board on Oct. 28 last year, days after The World-Herald published an investigation detailing corporate-style executive pay at the widely known charity that sells publicly donated used goods to employ needy job-seekers.
McGree received base pay, retirement pay, bonuses and other compensation exceeding $400,000 annually — more than double the average for CEOs at other Omaha social service nonprofits. A $519,000 lump sum payment in 2014, part of a retirement agreement intended to retain McGree, brought his pay that year close to $1 million.
In all, 14 executives and managers at the charity were paid $100,000 or more, including McGree’s daughter. Nationwide, no Goodwill affiliate of its size had more employees paid in six figures.
Goodwill spent so much on executive pay and other administrative costs that scant dollars from its signature thrift stores were left to support the community jobs programs that are central to the charity’s mission.
In the 11 months since the revelations, the charity has made wholesale changes, including the firing or departure of nearly all its highest paid executives. The number of employees paid $100,000 or more is now at four.
The State Attorney General’s Office, which by law is charged with protecting the assets of nonprofits, in December launched a review of the operations of Goodwill Omaha. The current status of that review is unclear, but it is believed to be ongoing.
Goodwill officials have declined in the past year to say whether McGree was due any kind of severance payments.
McGree’s lawsuit, filed in federal district court, touts the former CEO’s role in expanding Goodwill from an operation with $1.5 million in revenues and 85 employees in 1986 to $30 million and 600 employees in 2015.
“By 2008, Frank was generally recognized as one of the top Goodwill executives in the United States by Goodwill Industries International,” the suit says.
In order to induce McGree to stay with Goodwill, a compensation committee of board members in that year entered into an agreement calling for him to receive additional compensation upon the termination of his employment.
The agreement gave Goodwill the right to terminate McGree’s employment without cause, but if it did so it was required to enter into a separation agreement with McGree entitling him to two years of base pay, the suit says.
The suit notes that after the agreement was signed, McGree uniformly received excellent reviews, resulting in salary increases and performance bonuses.
After McGree was fired last year, he made a claim for the payment, which, based on his base pay, would have been approximately $550,000. But the charity’s board and interim CEO Pauli Bishop denied his claim. His appeal to Bishop and the board was denied last month, prompting the suit.
The suit asks the court to enforce the claim and determine the amount of compensation he is due, including interest.
The attorney for McGree could not be reached for comment.
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